1. Case Study by: Hannah McArthy Published by the Harvard Business School
Olam: On a New Course
Case Study by: Hannah McArthy
Published by the Harvard Business School

2. Assumptions Recommendations and implementations are made currently.
Traditional risks (price, credit) are taken care of by a system already in place.
Olam’s systematic approach is sufficient for human capital, it is not a major issue.
Olam will continue to focus on sustainability and transparency.
The company does not currently have a public relations department.
Olam’s management structure is sufficient.
Sunny Verghese has not put the shareholders interest in mind during his extensive purchase of fixed assets.
Olam wants to focus on long-term shareholders, but has not been able to accomplish this goal.
Olam is focused on fixing their fixed assets problem and will provide funds to do so.

3. Olam’s Problems
Olam has a problem with cash flow; sales are not keeping up with expenses. Olam is an undertrader (long-run problem).
The cause is their excessive investments (farms) or fixed assets.
The new strategy opens Olam up to additional risks such as customer complaints and maintaning the corporate brand.
Because of the above problems, Olam is having trouble with their shareholders.
Too much net worth is tied up in fixed assets: profitability will suffer, firm will over-utilize debt.
Undertrader: company’s sales have stopped growing, in the short-run the company is profitable, but in the long-run the company may not survive.
Found this by conducting the trading ratio (net sales/net worth). 2012: : = small and decreasing

4. Recommendations
Increase cash flow by analyzing investments (fixed assets) and the business portfolio.
Manage strategy risk and external risk.
Increase long-term shareholders.

5. Implementation
Restrict further investment in fixed assets (avoid Hubris) until they review and update their current investment strategy in order to balance short-term and long-term investments.
Divest non-core assets by establishing a dedicated team, which will help keep the core businesses that are worth more to shareholders.
Create a risk management system tailored to reduce strategy risk.
Create a public relations department to stay ahead of customer complaints and maintain the corporate brand.
Favor long-term shareholders over short-term shareholders.
Hubris may be developed after a person encounters a period of success. Corporate executives and traders overcome by hubris may become a liability for their firms. A manager might start making business decisions without fully thinking through the consequences, or a trader may begin taking on excessive risk. In many cases, people overcome by hubris will bring about their own downfall.

6. References
Bell, D.E., Reinhardt, F., & Shelman, M. (2013). Olam: On a New Course Harvard Business School. 1-32
Berman, J. (2013). Seven Reasons Why Africa's Time Is Now. Harvard Business Review, 91(10),
Fox, J., & Lorsch, J. W. (2012). What Good Are Shareholders?. Harvard Business Review, 90(7/8),
Gosset, S. (2001). Avoiding PR Disasters. Harvard Management Communication Letter, 4(5), 9.
Kaplan, R. S., & Mikes, A. (2012). MANAGING RISKS: A NEW FRAMEWORK. Harvard Business Review, 90(6),
Krivkovich, A., & Levy, C. (2013). Managing the people side of risk. Mckinsey Quarterly, (4),
Lev, B. (2011). How to Win Investors Over. Harvard Business Review, 89(11),
Mareuse, O. (2011). Fostering Long-term Investment and Economic Growth: A Long-term Investor's View. OECD Journal: Financial Market Trends, 2011(1),
Martin, R. (2011). How To Make Companies Think Long-Term. Harvard Business Review, Retrieved Dec. 1, 2013 from
Mankins, M. C., Harding, D., & Weddigen, R. (2008). HOW THE BEST DIVEST. Harvard Business Review, 86(10),
Mohana, R. (0009, July). Avoiding a Twitter PR disaster. Washington Post, The.
Monea, M., Monea, A. A., & Orboi, M. (2010). ACTIVITY RATIOS ANALYSIS. Agricultural Management / Lucrari Stiintifice Seria I, Management Agricol, 12(3), 1-6.
Rodriguez, E., & Edwards, J. S. (2012). Transferring knowledge of risk management to the board of directors and executives. Journal Of Risk Management In Financial Institutions, 5(2),