Page 223 - The Case Lab Book

- Management
- Customer groups
- Shareholders
- Press
- Other Stakeholders

Each group is given a brief e.g. the management team were asked to take
a functional role each and explore the impact of the primary issue on their
function. These decisions would then be presented to the board and CEO.

Likewise, the other groups representing the shareholders etc. were given a
brief to explore what impact the primary issue would have on them and
what they would decide.

Each group presented their opinions and decided what they would do. This
open forum can lead to some heated debates as there is little theory that
can be applied to support one view or the other definitively.

PHISSONS: SHORTING EXAMPLE

Phissons is used here to explain how shorting works

Shares in Phissons plc. currently trade at $10 per share.

1. A short seller investor borrows from a lender 100 shares of Phissons plc.
and immediately sells them for a total of $1,000.
2. Subsequently, the price of the shares falls to $8 per share.
3. Short seller now buys 100 shares of Phissons plc. for $800.
4. Short seller returns the shares to the lender, who must accept the return
of the same number of shares as was lent despite the fact that the market
value of the shares has decreased.
5. Short seller retains as profit the $200 difference (minus borrowing fees)
between the price at which he sold the shares he borrowed and the lower
price at which he was able to purchase the shares he returned.

TRADING & COMPETITION