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Multinational or Global: What a Small World!1

The Mission

It was late afternoon and the CEO from English, Inc. had a meeting with the

Chairman of the Board. John Robertson is well known for his negotiation skills,

financial knowledge, and has been Chairman for 2 years now. Robert Johnson

is the newly appointed CEO and has received a very challengi mission to

accomplish.

The conversation took place after the Board Meeting and John and Robert

discussed the lack of stock appreciation since the IPO held 5 years ago. More

specifically, the Total Shareholder Return (TSR) at present value discounted by

the weighted average cost of capital of English, Inc. is negative and is stressing

the situation.

John told Robert that there is no alternative. He said, “the market still sees us

as a small, old fashioned, English multinational that is not profiting from the

advantages offered by globalization. Your mission, Robert, is to shift the

current market assessment so that our company is recognized as truly Global

and our stocks are appreciated in real terms.”

The Company

English, Inc. is a traditional company that has explored confectionaries since

1890 and started its expansion overseas in 1910. In addition, English, Inc.

decided to go for an IPO in 2001.

Today the company is present in 60 countries, owns 80 plants – at least one per

country. NOTE: Table I shows sales behavior for the last 5 years and Table II

shows EBTIDA for the same time period.

The product portfolio of English, Inc. for confectionary is composed of chewing

gum and candies. The company has the leadership position in chewing gum in

1 Developed