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Monash Business School

Case motivation: NORWAY SELLS WAL-


MART

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Learning objectives
1. Define and understand the purpose and functions of Sovereign
Wealth Funds (SWFs).

2. Explore the tensions between the investment and political


objectives of SWFs.

3. Introduce the concepts of socially responsible investments,


ethical and impact investments.

4. Examine and analyse different rationales for embedding a


concern with sustainability in a SWF.

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Learning objectives
5. Explore the implications of ethical/socially responsible investing
on the part of large institutional investors.

6. Evaluate the impact that activities of SWFs have on host


countries and target firms.

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Case Synopsis
This case focuses on the decision by Norway Sovereign Wealth
Fund to divest all securities of Wal-Mart, as directed by Norway’s
Minister of Finance. Norway SWF is the second largest SWF in the
world, and differs in that it has adopted Ethical Guidelines
prohibiting the Fund from owning securities of companies that
manufacture certain types of weapons and of companies that
commit serious violations of human rights. Wal-Mart has come
under Norway’s Ethical Council’s scrutiny due to allegations that it
committed serious human rights violations in its supply chain as
well as in its US stores.

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Case Synopsis
Wal-Mart was sent a draft of the report prepared by the Ethics
Council, which was supported by its investigation into violations of
UN conventions and ILO (International Labor Organisation)
standards. Wal-Mart did not respond, and Norway proceeded with
its decision to divest all Wal-Mart securities owned by the Fund.
The case opens with Ray Bracy, a senior Wal-Mart official, learning
for the first time that this divestiture has happened by reading a
press release issued by the Norwegian Minister of Finance.

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Potential questions to be addressed in report
submission
 Was the divestiture of Wal-Mart stock consistent with the ethical and
economic mandates of the Norwegian Fund?
 Were there alternative courses of action which could have been pursued
by the Ethics Council or the Minister of Finance?
 What are the potential implications of the Norwegian Fund’s divestiture
of Wal-Mart stock? Consider this from the perspectives of Wal-Mart, its
shareholders, all its stakeholders and also from the perspective of
Norway’s fund members.
 What should Ray Bracy’s plan of action be now that Wal-Mart stock has
been divested by Norway? Recommend a plan involving internal and
external actions by Wal-Mart.
 Are there any economic and regulatory issues raised by the growth of
sovereign wealth funds (SWFs)?
 Is the Norwegian Fund a good model for other SWFs? Why or why not?

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Submission (Case: Norway sells Wal-Mart)
 You may work in groups but document and submit individually:
– Penalties will apply if we spot collusion
– Groups must be registered with teaching associate (Tony Nguyen)
 You must document:
 The assumptions you have made, if any, that are not in the case
 Show calculations and results as an appendix (not always required)
 Depending on your formatting, about 2-3 pages and not more than 3 pages in
1.5 spacing, 12 point font.

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Sample Template
Key points facts and problems:

1. What are the problems and the key issues that arise
2. Address the given discussion points or questions
3. Conclusions and recommendations if any

Do Not use a Q and A answer format : make this a business type briefing.
And avoid simply restating what is already in the case.

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