Case1 final revised
Kroll Bond Rating Agency (HBS 9-212-034)
October 23, 2014
Tzyy-Shiuan Chiu, Yuanyuan Hao, Mofan Shi, Hsin-Ping Tso
A Good Time and A Good Idea to Enter the Credit Rating Business
Jules Kroll is planning to enter into the ratings industry. To determine whether it is a good idea and a good time for him to enter into the new business, we project the 5-year NPV for KBRA and apply SWOT analysis to KBRA. The 5-year projected NPV is $341.1 million, a positive number. It is a good time and a good idea for KBRA to enter the business. However, through our SWOT analysis, it would be difficult for KBRA to become competitive in a short time. Thus we suggest it add a credit rating division into the company to make attempts to it but not start up a totally independent credit rating company.
The Strengths of Kroll Bond Rating Agency are that Jules Kroll has a plenty of related experience about corporate management and that Kroll’s former company was worldwide renown, even listed in the public capital market. The Kroll corporate intelligence firm, which had shares listed on NASDAQ, and K2 Global Partners, which also performed intelligence and risk management work for clients, are evidences that Kroll may have adequate knowledge and experience about corporate management. The experience helps him extend into a credit rating business. With the strengths, the new company established could attract some people’s attention and gain users’ first trust for KBRA. Finally, those users might choose to purchase the agency’s service.
Although Kroll has much experience about corporate management, the credit rating business is still a new business field for him. The Weaknesses of KBRA will be a lack of qualified staff, difficulties to get NRSRO status, substantial startup costs of KBRA business, and little interests from users and issuers of credit rating. According to Kroll, “If I can’t put the same kind of talent [of PhDs from MIT], I can’t compete”. Finding and paying appropriate staff will
October 23, 2014
Tzyy-Shiuan Chiu, Yuanyuan Hao, Mofan Shi, Hsin-Ping Tso
A Good Time and A Good Idea to Enter the Credit Rating Business
Jules Kroll is planning to enter into the ratings industry. To determine whether it is a good idea and a good time for him to enter into the new business, we project the 5-year NPV for KBRA and apply SWOT analysis to KBRA. The 5-year projected NPV is $341.1 million, a positive number. It is a good time and a good idea for KBRA to enter the business. However, through our SWOT analysis, it would be difficult for KBRA to become competitive in a short time. Thus we suggest it add a credit rating division into the company to make attempts to it but not start up a totally independent credit rating company.
The Strengths of Kroll Bond Rating Agency are that Jules Kroll has a plenty of related experience about corporate management and that Kroll’s former company was worldwide renown, even listed in the public capital market. The Kroll corporate intelligence firm, which had shares listed on NASDAQ, and K2 Global Partners, which also performed intelligence and risk management work for clients, are evidences that Kroll may have adequate knowledge and experience about corporate management. The experience helps him extend into a credit rating business. With the strengths, the new company established could attract some people’s attention and gain users’ first trust for KBRA. Finally, those users might choose to purchase the agency’s service.
Although Kroll has much experience about corporate management, the credit rating business is still a new business field for him. The Weaknesses of KBRA will be a lack of qualified staff, difficulties to get NRSRO status, substantial startup costs of KBRA business, and little interests from users and issuers of credit rating. According to Kroll, “If I can’t put the same kind of talent [of PhDs from MIT], I can’t compete”. Finding and paying appropriate staff will