|Case Abstracts: 2009 Meeting
HOW MUCH CAN WE AFFORD TO LOSE?
Business & Society Ethics
THE BOOKSTORE COOPERATIVE: TEXTBOOK TRAVAILS
The teaching objectives for this case include increasing student’s abilities to: (1) analyze and document basic activities of sales and cash collections in a simple setting; (2) evaluate risk of loss from cash collections resulting from internal control deficiencies and (3) recommend appropriate controls for cash collections. Applicable concepts illustrated include procedures for: transaction authorization and recording, segregation of duties, custody of cash, and physical protection of assets. This case is appropriate for any graduate or undergraduate accounting class where internal controls are analyzed and documented. Depending on how curriculum is structured, this could include courses in accounting information systems, internal auditing and external auditing.
Troy Wheeler, associate dean of the School of Business and Public Policy at Westland University was asked to write a letter to the university’s internal auditor reassuring the auditor that controls on the cash register in the college were adequate to prevent major theft. Troy wrote the letter, but the request awakened nagging concerns regarding cash control with respect to the register in question. The register was primarily used to sell course packets to students, and while only about $20,000 of cash passed through the register each year, the more Troy thought about it, the more concerned he became about the potential for loss. Since he was the one who signed the deposit slip, he felt considerable responsibility to evaluate the control system for the register. Troy met with Lily Woodring, the business manager for the school, in order to increase his knowledge of current procedures and maybe suggest some changes. At the request of the internal auditor, Lily had already filled out a self evaluation for cash and check handling. In addition to this document, Troy got Lily’s answers to a longer, more specific list of questions. Equipped with this information, Troy needed to make feasible recommendations to improve control.
TROUBLE AT RENT-TEX
The case illustrates the difficulty of inventory valuation and management in an evolving market. Students are introduced to the effects of rapid market changes on demand for textbook inventory and the effects of obsolescence on financial statements. The case details operations of a college bookstore, the Bookstore Cooperative, and focuses on valuation and timing of obsolete textbook write-downs, retail inventory accounting and flawed inventory controls. The Bookstore Cooperative director questions whether newly discovered textbook obsolescence is serious enough that board members need be apprised and whether the losses will be reported in current year financial statements. The Cooperative textbook manager is concerned with control procedures to prevent large, obsolete textbook inventories from building up again. The case objectives are: to develop a logical approach to accounting-oriented decision-making using Statement of Financial Accounting Concepts No. 2, to apply analytical auditing procedures to a business with a high level of student familiarity, and to design a set of control procedures that minimize future obsolete inventory. The case demonstrates how a client’s business and its environment affect the identification of inherent risks related to inventory. The case was written for business school undergraduate courses in intermediate accounting and auditing.
The Bookstore Cooperative, a university auxiliary running bookstore operations, was contemplating an overvalued inventory at year-end. The overvaluation was largely a result of changes in the textbook industry, including more frequent text revision cycles and increased competition from internet sellers and e-books, as well as traditional competitors. The immediate issues were to account for the valuation loss for inventory of non-returnable, obsolete books and to value the remaining retail inventory for reporting purposes. Since the non-profit employed generally accepted accounting principles, it was required to report its inventory accordingly, valuing inventory at lower of cost or market. Of long-term concern to the management of the Cooperative was the need to manage the risk of inventory obsolescence. Managers needed to assess the weaknesses in inventory management processes and develop control procedures minimizing future inventory obsolescence.
The case shows students how theft can occur even with a proper system of internal controls. Red flags are missed in both the application of the employee and the life style of the employee after she is hired. The case was written for undergraduate or graduate classes in the area of auditing, fraud, ethics, and/or entrepreneurship. Major topics include internal controls, ethics, small business, and accounting entries. The objectives are for students to be able to analyze facts related to fraud detection, evaluate internal controls and policies/procedures in a small entrepreneur office setting and apply ethical and fraud frameworks.
Rent Tex (A)
Rent Tex was a family orientated rent-to-own business that operated ten stores throughout Texas. Three partners bought Rent Tex in 2001 for investment purposes. Dan Albright, President of Rent Tex, had been a CPA for over twenty years with experience in the rent-to-own industry. He was the only partner involved in the day-to-day operations of the business. Rent Tex started with five stores and quickly expanded to ten. Most clients rented the household items with the possibility of buying them in the future. One morning the police arrived at the Rent Tex office and arrested the bookkeeper. The officer informed Albright she had been convicted of embezzlement but was being arrested because of a probation violation. Albright immediately started an investigation of Rent Tex books to determine if Webb had stolen from the company. He was convinced the internal controls were sufficient to prevent theft and believed he would find no irregularities. Students are challenged to try to determine if, and how, a theft might have occurred based on information in the case and exhibits, and evaluate internal controls, red flags, hiring practices and company procedures Rent Tex (B)Case B reveals that fraud had been perpetrated by the bookkeeper. Dan Albright was faced with the decision of whether to pursue prosecution against her. He discovered that the fraud was concealed through payroll entries. The question of what internal control had been circumvented or omitted caused him anxiety.
BAYER CROPSCIENCE: THE PUBLIC’S RIGHT TO KNOW?
This case examines the potentially conflicting interests of potential public health concerns, public security concerns and PR and brand management issues after a crisis. The chemical explosion may have endangered nearby citizens but public disclosure of the incident could alert terrorist organizations to key security information. Public disclosure could also damage the Bayer brand image. This case is designed to facilitate discussion in graduate and undergraduate courses in business ethics and/or social responsibility. It is also well suited for discussion as in graduate and undergraduate courses on consumer behavior, particularly when studying brand image and positioning as well as brand equity.
An explosion at the Bayer CropScience (a component of Bayer Group) plant in Institute, West Virgina on August 28th, 2008 could be felt for miles. The explosion occurred around 10:35 pm when an industrial tank of methomyl, a highly toxic chemical used in pesticides, ignited into a fireball that left a visible cloud hovering around nearby residential areas. With a history of incidences, the plant moved quickly to minimize the damage. Bayer cooperated with the U.S. Chemical Safety Board (CSB), the federal organization to investigate chemical hazards, by providing numerous documents regarding the incident.
When CSB announced that is wished to publicize all the information received from Bayer, the corporate legal team evoked disclosure protection of federal laws created to ensure homeland security, including the Maritime Transportation Security Act (MTSA).
The case considers whether the public’s rights to access information regarding a health hazard would supersede the public’s need to be protected from the threat of terrorism.
FORTIS AND THE CHALILLO DAM: BALANCING ECONOMIC DEVELOPMENT AND ENVIRONMENTAL IMPACT
This case describes the unethical behavior of a partner in a business who has been rebuffed in an attempt to buy-out his business partner. ExI Corporation rents a variety of test equipment to large manufacturing firms, power plants, and to firms in different process industries and also provides qualified engineering technicians that will operate the test equipment during a turnaround. The partner’s unethical behavior involves (1) using $1 million of ExI’s cash and equipment to start a company that will compete against ExI; (2) luring customers away from ExI, and (3) taking important documents from ExI’s files. The case also describes the dilemma faced by ExI’s remaining partner as he attempts to salvage ExI’s profitability. The case was written for use in a course in which Ethics is taught at either the undergraduate or graduate level. The course can also be used in an executive education program.
ExI Corporation was started six years ago by Kenneth Davis and Ronald Maak. Kenneth who also owns another company which is highly profitable invested $1.5 million in the venture and Ronald made no monetary investment in the start-up. Kenneth played a major role in planning and implementing ExI’s start-up. After the start-up phase, Kenneth agreed to withdraw from the day-today activities of managing of ExI, leaving those tasks to Ronald. Portia, Ronald’s wife is hired to manage ExI‘s finances and administrative services and Ronald’s personal friend, Jason Henry, becomes ExI’s sales manager. During ExI’s start-up, Kenneth and Ronald agreed that upon achieving certain milestones Ronald would own 49% of ExI and then have the opportunity to acquire Kenneth’s 51%. However, at the time the ownership agreement was developed between Kenneth and Ronald, nothing was specified on how much Ronald would pay Kenneth for Kenneth’s portion of ExI, nor was any methodology agreed upon on how the value of Kenneth’s ownership would be determined.
Six years later, ExI has become extremely profitable and Ronald has achieved a 49% ownership of ExI. Ronald offers Kenneth $1 million for Kenneth’s share of ExI and is rebuffed. Following a very confrontational meeting, Ronald, Portia, and Jason Henry leave ExI. Following an outside audit, Kenneth learns that Ronald has taken $600,000 in equipment and $400,000 belonging to ExI to start a competing company. Ronald is faced with the task of rebuilding ExI.
HEAVEN HELP US
The case is focused on a decision that Fortis Inc. management must make relating to a hydropower dam that will enhance the economy of Belize but that will also harm the environment. The magnitude of ENGO activities in opposition to the project is outlined as well as the economic benefits. A linkage is made to published research on the strategies of ENGOs and why they target particular projects. The case demonstrates the challenges of balancing the economic, social and environmental benefits and harms when involved with a large construction project in a developing company. The case illustrates how a corporation decides whether or not to proceed with a project given substantial and sustained opposition.
The case is written for courses in business and society, business ethics, and business and the environment. It might also be appropriate for global/international business and corporate strategy courses. It is written for senior undergraduates but is appropriate for graduate level and management development courses.
Fortis Inc., a company with interests in various North American electric utilities, is proposing to build the Chalillo dam on the Macal River in Belize, Central America. The dam would contribute to the economic development of the country by meeting the increasing demand from industry and consumers for electricity. The company believes that the dam is the most feasible, reliable and cheapest supply of electricity. Environmental non-governmental organizations (ENGOs) oppose the project because of the destruction of wild animal and plant life and its adverse downstream impact, and allege that there are more viable and more cost effective sources. The case reviews the company’s presence in Belize, the environmental impact studies, and the activities of the ENGOs during 2001. At the beginning of 2002, management is faced with a decision of whether or not to go ahead with the project.
HELEN DRINAN: GIVING VOICE TO HER VALUES
The case was designed for use at both the undergraduate and graduate levels in courses such as business ethics, general business, or management. Major topics include ethics, ethical decision-making and corporate governance. A 90-minute class should be adequate for discussion of the case if students have reviewed the case prior to class time. It could be used as an exam case, as a means of testing the students’ ability to identify and understand ethical dilemmas, ethical theories, and other influences on decision-making which are specific to the non-profit sector. The case purposely ends in a way that may cause students to immediately begin to identify alternative courses of action for the protagonist. However, “which” action plan the protagonist should utilize is not the right question. Instead, it should be “whether” the protagonist should get involved at all. Many times an individual is faced with an ethical dilemma because their own values and those of their employer are in conflict. This case is unique in that both sets of values are aligned; but, acting on those values (“doing good”) may put both the protagonist and his employer at risk.
Larry Barnes, Executive Director of the Southwest Missouri Baptist Association (SMBA), received a telephone call that no CEO wants. The pastor at Hilltop Baptist Church called to report his suspicions of embezzlement by the church’s long-time bookkeeper. Whatever course of action Barnes suggested to the pastor would impact the church, its members, the SMBA, the community, and a number of stakeholders, including himself.
Barnes worried about jeopardizing his working relationship and his many friendships with Hilltop’s members, particularly if the accusations were incorrect. Of equal concern was whether the church would continue to exist. Financial problems had plagued Hilltop in recent years and the relationship between the pastor and members was already contentious. An embezzlement scandal could cause the 150 year-old church to close its doors. His primary duty as Executive Director was to provide guidance and advice to pastors of SMBA churches, to help them expand, and to assist in establishing new churches. However, did his professional responsibilities encompass embezzlement? If not, did he have an ethical obligation to help? What if his involvement put him and his employer at risk?
In preparation for discussing the Helen Drinan case, M.B.A. students study the “Giving Voice to Values” (GVV) curriculum. GVV, developed by Dr. Mary Gentile, Aspen Institute Center for Business Education and the Yale School of Management, enables students to develop strategies for handling situations where an organization’s values are in conflict with their own. The Drinan case may be taught in a career strategies course because the decision to act or not act in a values conflict situation is heavily weighted by potential career-threatening consequences. The Drinan case and GVV may be used in organizational behavior (OB) courses that discuss ethical issues.
In early 2006, Helen Drinan, Senior Vice President, Human Resources, Caritas Christi Health Care, Boston, received two sexual harassment charges against the organization’s CEO and President Robert Haddad. While she knew she was legally charged with acting, she faced a complicated situation: the hospital system is owned and operated by the Archdiocese of Boston with Cardinal O’Malley as the Chairman of the Board; and these charges came soon after the priest molestation cases which rocked the Catholic Church of Boston. In Case A, Drinan presented the well-documented results from an independent investigator into the sexual harassment charges against Haddad. Although Drinan’s investigator presented clear evidence as to Haddad’s guilt, the Cardinal decided to launch a second investigation, using the Church’s lawyers. Drinan, interpreting this action as a delaying or avoidance tactic, decided that she must act. But, what should she say, to whom and how should she frame this critical conversation? In Case B, students learn how Drinan acted in this tough, politically charged situation and the outcome of her actions.
MOODY’S CREDIT RATINGS AND THE SUBPRIME MORTGAGE MELTOWN
Analytical Dimensions- Develop ability to apply ethical principle to real and particular context. - Propose ideas or decisions that are relating the ethical principle with a particular context or situation.- Make ethical priorities based on facts.- To know how to apply particular ethical theories in particular concept. Conceptual Dimension- Apply theories of Utilitarianism, Ethical Relativism, and Corporate Responsibility to a real case.
In Guadalajara, Jalisco Mexico, the microbrewery La Minerva recentedly launched a new beer named Malverde. The figure, Malverde, is well known as ´the saint of drug traffickers.´ The case analyses whether La Minerva´s decision to name the beer, Malverde was or was not ethical. La Minerva was a small business without sufficient resources to conduct a publicity campaign for their latest beer and the controversy provoked by the name provided publicity that the company needed but could not afford. However, a class visiting the microbrewery asked each other ¨was this decision ethical? ¨
SARAH MANAGER’S ETHICAL DILEMMA
This descriptive case explores the role of a leading credit rating agency in the financial crisis of 2008. Intended for use in a graduate or upper-division undergraduate course in business and society, the cases spans a range of topics, including corporate social responsibility, stakeholder analysis, codes of ethical conduct, conflicts of interest, government regulation of the securities industry, shareholder rights, and personal responsibility. As such, it may be used in conjunction with coverage of any of these topics or as an integrative assignment towards the end of the course. It may also be used in a course in business ethics, in the context of a discussion of conflict of interest or moral hazard; or in the course in finance, in the context of a discussion of ethics. After studying the case, students should be able to:· analyze the impact of a credit rating firm’s actions on multiple stakeholders;· apply the concept of “conflict of interest” to a particular fact situation and propose strategies to eliminate or reduce that conflict of interest;· evaluate the respective responsibility of credit rating agencies and their executives, home buyers, mortgage lenders, investment bankers, government regulators, policymakers, and investors for the financial crisis of 2008; and· formulate an appropriate strategy for society to protect investors’ interests with respect to the integrity of the credit rating system.
In the mid-2000s, Moody’s, the world’s leading credit rating agency, evaluated thousands of bonds backed by subprime residential mortgages—home loans made to people with low incomes and poor credit. When housing prices began to decline in 2006, the value of many of these bonds collapsed, and Moody’s was forced to downgrade them steeply. In late 2008, several investment banks, commercial banks, and mortgage lenders that had been heavily involved in the subprime market failed. In the wake of these failures, credit froze up, consumer confidence plunged, and job losses deepened across the global economy. Although the financial crisis had many causes, some analysts believed that Moody’s and other credit rating agencies had played a key role by underestimating the risks inherent in mortgage-backed securities. The case draws on publicly available data, including internal documents released by Moody’s in connection with a Congressional hearing in October 2008, to explore the multiple causes of the financial crisis and Moody’s role in it. It challenges students to consider how businesses, governments, and society can better assure the integrity of the credit rating industry.
SOS FOR THE SEACOAST SCIENCE CENTER (SSC)
This case is an illustration of the ethical dilemma that Sarah Manager underwent as former manager of an indoor air quality wholesale company called High Quality-IAQ Ultraviolet Products (HQ-IAQ UV). Sarah either had to turn a blind eye towards a trusted employee’s illegal activities or to report her trusted employee’s wrongdoings to uphold her duty as a trusted manager of the company.
HQ-IAQ UV Products was founded in 2000 as a wholesale dealer of indoor air quality (IAQ) products. The primary target market of HQ-IAQ UV Products was contractors who installed heaters and air conditioners. The owner of the company was Skip Bossman. The company’s leading sales representative, Emily Colleague, worked for Sarah Manager, the manager of the company. Ms. Manager was under the direct supervision of Mr. Bossman. HQ-IAQ’s UV units were designed to purify the air in homes. These products were manufactured to be handled, installed and repaired by specialized technicians. If UV bulb components were not handled properly, they may cause harmful effects, such as blindness or death.
Due to Emily’s knowledge in the IAQ products industry, she had many opportunities for professional growth within the company. Emily was a high achiever, as evidenced by her hard work and dedication. During early 2005, Emily began to face personal hardships that directly affected her professional performance. As a result, Emily’s sales commissions decreased significantly, which resulted in economic hardship. Sarah began to feel sympathy for Emily’s personal and professional situation. Sarah covered up Emily’s absenteeism and tardiness. In addition, Sarah implicitly allowed Emily to steal the company’s UV bulbs, with the purpose of Emily selling the items on eBay for Emily’s economic gain.
Sarah was caught in an ethical dilemma: To continue to assist a close colleague in distress or to demonstrate loyalty to the company by informing her superior regarding her colleague’s pilfering activities?
THE COURTYARD HOMEOWNERS ASSOCIATION, INC.
The Seacoast Science Center (SSC) case is designed to provide students with an opportunity to analyze and discuss the roles of top management and the Board of Directors in a not for profit organization. It is also designed to demonstrate the importance of long term planning while making short term decisions. It asks how management and the Board should respond to financial problems brought on by reductions in funding sources. Most not for profits face such problems even in the best of times. During economic downturns, most not for profit organizations face decreased donations. Since economic downturns occur periodically, students should become familiar with the process of facing decreased funding, and how to deal with those issues. The case can be used in a variety of courses, including Business, Government and Society (BGS), Strategic Management, Not For Profit Management, and Corporate Governance, at either the senior undergraduate or graduate level. In BGS, the case would be used in that section of the course dealing with governance, and the interaction between management and the Board of Directors. The case can also be used in that section of the course relating the mission to the environment. The case can be used in the section of the course dealing with stakeholder relations.
Wendy Lull, President of the Seacoast Science Center (SSC), a not for profit organization, located in Rye, New Hampshire, has just realized that instead of a break even budget for fiscal year 2009, the organization is faced with a potential $180,000 deficit. Several of the members of the Board of Directors had announced that not only would they have to reduce their donations to the organization, but that they had heard from other donors that they would also have to do the same. The economic downturn of 2008-09 was mentioned as the cause for these reductions in donations. Since 80% of the expenses for the SSC were related to personnel costs, Wendy knew that most cost savings would have to come from personnel costs. Wendy and her V.P. had come up with several potential options for cost savings. One was that the Board fire her, since her salary was the largest personnel expense. Other proposals included reducing everyone’s salary, reducing benefits for all employees, eliminating several other positions, and reducing several of the positions to half time. All of the options would have serious implications for the short and long term operations of the organization, and its mission.
UNION CARBIDE INDIA LIMITED: A NEVER ENDING TOXIC NIGHTMARE
This case is a follow-on to Arthur Sherman and John Seeger, “A Troubled Time in the Courtyard,” The CASE Journal, 3:2, Spring 2007 (abstract available at caseweb.org). This case is suitable for graduate or upper-division undergraduate courses, or course segments, in ethics, corporate culture, non-profit organization management, strategic management, public policy, law, and real estate. It is likely to be especially well-received in executive and part-time MBA programs, where many students are members or former members of homeowner associations (HOAs). Also, the case is useful in training programs for real estate professionals and property managers involved in owner association administration. HOAs are an often neglected type of non-profit corporation, though they govern the lives of more than 50 million Americans and produce an estimated $50 billion in annual revenue.
Sam Ryan came to Austin, Texas in 2007 to stay with his Aunt Mary in the Courtyard while he earned his MBA. He found the subdivision both diverse and beautiful. The values of the 320 homes there ranged from around $150,000 for some townhomes to as much as $2 million for the twenty or so dwellings that enjoyed frontage on Lake Austin. The neighborhood had an elaborate park and extensive walking trails.
A resident told Sam of an attempt by the HOA, a non-profit corporation, to take over the waterfront behind his home and eleven others. He learned that the HOA was continuing its aggressive behavior mainly focused on one homeowner, a retired management professor who had helped defeat the walkway effort. Certain disgruntled neighbors of the professor were apparently collaborating with the Apgars, who headed the HOA and its architectural committee.
The professor claimed to have been wrongly accused of several covenant violations, threatened with a lawsuit and refused access to HOA records. Letters from a lawyer hired by the Apgars, apparently without board approval, seemed to tell a story of harassment of the professor and lack of attention to legal niceties. By August 2007, the lawyer had pulled back but the HOA directors were threatening to take matters into their own hands by removing a line of large pots Sherman had installed without architectural committee approval.
VERMILION IRON MINING COMPANY
This case could be used to discuss topics pertaining to multinational operations in foreign locations, business ethics, corporate accountability and implementation of safety regulations. It can be employed in the subjective areas of International Business and Business Ethics at both undergraduate and graduate levels to gain insights about multinational operations, their policies and its subsequent implications in terms of safety regulations, environmental issues and corporate code of ethics and social accountability and cross cultural issues.
The case study offers an account of the horrific gas tragedy which occurred at the UCIL gas plant site of Bhopal in Northern India in 1984. The case probes into the background, attitude and motivation of Union Carbide, UCC which is the parent company of the Indian branch UCIL, leading to the fatal disaster.
Nandu, a lowly uneducated maintenance worker at the plant is witness to the toxic nightmare unleashed by poisonous MIC gas fumes on the night of 3rd December, 1984. Within minutes, the bustling industrial city of Bhopal is the picture of death as people, livestock fall prey to the fatal gas vapors. Nandu collapses on the floor of his one room unit after vainly trying to revive his dead brother and unconscious sister- in- law. His last thoughts while hitting the floor are full of despair and anger – anger at the UCC management and officials who did not pay heed to the unsafe production practices – despair that no one listened to his cry for help and support when he had felt ‘something was not right!’
The Vermilion Iron Mining case is used to specifically discuss ethical decision-making, this case can also be tied in to a variety of topics throughout the duration of a course. The strategy in presenting this case is to focus on the ethical decision-making aspect of the Board of Directors. In order to do so it is necessary to provide a brief introduction to basic ethical theories such as Utilitarianism, Formalism, Rights, etc. prior to assigning the case. Utilizing these theories as a foundation, instructors can then proceed to conduct an ethical assessment of the issue that the Board faces.
The Board of Directors of for Vermilion Iron Mining Company is faced with a difficult decision. Since the early 1900s Vermilion had operations in the tiny town of Ely, Minnesota. In 1967 Vermilion was forced to abandon its operations in Ely due to the increased cost to remove the hematite (high grade iron ore) deep within ore fields. Vermilion’s departure from the mines of Ely was devastating. Not only were mining jobs lost, but the entire town was affected. The population of Ely dropped drastically leaving the town a shell of its former self. Recent research found that it is now possible to extract the remaining hematite in the ore fields and an option for a return to the mines of Ely is now on the table with the Board of Directors of Vermilion. However, the hematite supply will only last for three to four years and then it will be necessary to depart from Ely. Although bringing business back to Ely would be beneficial, there is concern from Josh Nordland, a Board Member that was born and raised in Ely, that proceeding with this plan would revive the town only to devastate it once again. The CEO and Chairman of the Board, Jon Eriksson though is focused on the stockholders and his dedication to their needs. Now a decision must be made. Should Vermilion return to Ely to mine the remaining hematite for the sake of the shareholders, or should they consider the town and all of the individuals that re-newed mining in Ely would affect?
ABBOTT LABORATORIES: HERO OR VILLAIN IN THE GLOBAL HIV/AIDS EPIDEMIC?
Cases in Spanish
ALLOW THE BARBARIANS THROUGH THE GATE?
Abbott Laboratories had developed a potent drug (Kaletra) that the World Health Organization considered to be the preferred HIV/AIDS treatment in resource-restricted societies. Although widely lauded for this innovation, Abbott was also under fire from AIDS activists and the governments of Thailand, Brazil and Mexico (among others) over the pricing of the drug. This case challenges students to examine the balance between Abbott’s moral responsibilities as the producer of a potent life-saving drug and the firm’s obligations to maximize the wealth of its shareholders. By examining the company’s relevant stakeholders and their interests, students are asked to develop and evaluate strategies for effectively responding to the issues Abbott faces. This case is suitable for graduate or upper-division undergraduate courses in business and society, business ethics, marketing strategy, or strategy. It is especially useful in modules dealing with stakeholder analysis, environmental analysis and pricing strategies. Courses that include modules on intellectual property may also find this case useful.
This case focuses on the issues faced by Abbott Laboratories in 2007. Abbott utilized a tiered pricing strategy for Kaletra, charging lower prices in less developed countries to make the drugs more affordable. Higher prices were charged in more developed/high income countries such as the United States. Despite the firm’s attempt to make Kaletra more widely available in countries where demand was high but ability to pay was low, the firm’s pricing strategy was widely criticized. Abbott faced pressure from governments (Brazil, Thailand and Mexico are covered in the case) to significantly reduce Kaletra prices or the governments would break Abbott’s patent protection and produce generic equivalents themselves.
How could Abbott continue to achieve the firm’s overarching goal—“to advance medical science to help people live healthier lives” while simultaneously appeasing the governments, critics and the activists? If Abbott cut the price in every country that complained, how would the firm continue to fund cutting-edge research and development? Was Abbott a hero or a villain?
CONTINENTAL AIRLINES – 2009
The case has been written in order to introduce ethical aspects of decision making into the undergraduate/graduate introductory strategy course. The case focuses on the CEO of a US-based Japanese subsidiary who is confronted with a situation that, while not illegal, runs counter his personal ethics. However, following his ethics by making a counter offer to the envisaged Chapter 11 filing entails putting his own career and personal wealth at risk.
The case requires students to ponder a decision of personal ethics based on a solid understanding of the industry and the company. Often, strategy and ethics are treated as separate issues. In this case, a counter offer only makes sense if the strategic analysis indicates that there is a chance for the company to prosper in the future. Therefore, students will have to analyze (1) the competitive trends in the industry; and (2) the company’s resources and capabilities in the light of #1. (3) Based on these 2 steps students can then develop and evaluate options with regard to their strategic, financial and ethical dimensions. (4) As part of #3 students will have to make suggestions how to negotiate with the Japanese owners as well as (5) offer a post-acquisition strategy. The last objective therefore closes the loop and links back to #1 and #2.
The case deals with a company in the PVC pipe industry. This is a rather obscure industry providing a product that we all take for granted without much thought. The case deals with a crucial decision the CEO of National Pipe & Plastics (NP&P) has to make, namely whether he should remain passive and let the Japanese corporate owners of NP&P file for Chapter 11 as part of a sale to a private equity firm. If this were to happen NP&P would probably be liquidated and all personnel would be dismissed. Since the CEO considered this to be immoral he pondered buying the company himself. This was risky because the company was in debt, and he would need to borrow the funds. Very little time was left and rumors about the impending bankruptcy were flying.
The case describes the industry, its key material PVC and the producers of PVC resin; the mode of competition in the pipe industry and the checkered past of the company as a basis for developing a post-acquisition strategy should the current CEO decide to negotiate a risky acquisition.
COSTCO: MAXIMUM EMPLOYEE BENEFITS OR MAXIMUM SHAREHOLDER RETURN?
This case study was developed to examine the complex interaction of political, economic and competitive forces in the general and industry environments that impact upon an airline’s profitability and ultimate survivability. The case was designed to hone analytical skills and decision-making ability and provide opportunities to apply Michael Porter’s Five Forces Model, Barney’s VRIO Model, and Slywotsky’s Value Migration theory. Other objectives involve exploring why many of the major airlines are suffering staggering financial losses and bankruptcy. Is the problem the hub and spoke structure, the inability to cope with escalating fuel and labor costs, inefficient aircraft mix, or is it a lack of experienced, effective, visionary management leadership needed to turnaround an airline in trouble? This case was primarily designed for undergraduate, graduate, and executive level courses in strategic management. It may also be of interest in union management courses and in the curricula of university aviation departments.
The case study opens by focusing on a fatal accident involving Continental Airlines flight 3407 on February 12, 2009 and its bearing upon the airline’s ridership and crew training. The growth of the airline industry is addressed from its earliest passenger flight (1914), to the delivery of mail (1920s), and the attendant legislation governing and nurturing the aviation industry that created the Civil Aeronautics Act (1938) which regulated competition and prices, the Federal Aviation Act (1958) overseeing safety, and the Airline Deregulation Act (1978), which marked the end of the reign of government over an infant industry that had outgrown its diapers. The swashbuckling founding years of Continental Airlines, functional aspects of airline operations, Continental’s competition, and the turnaround after two Chapter 11 bankruptcies by Gordon Bethune, who lead Continental from worst in the industry to first, and the post- Bethune years. The case ends by questioning whether Continental beset by high fuel prices, cut-throat competition, and a deep recession and the retirement of the highly respected Gordon Bethune, a $585 million loss in 2008, and a series of accidents can right itself and fly safely and profitably into the future.
GLOBAL OFFSHORING OF INFORMATION TECHNOLOGY SERVICES: INDUSTRY & RIVALRY
This case describes a company that broke the mold in the warehouse membership industry to become the industry leader. Costco offered limited quantities of low-cost, high-quality merchandise to warehouse members. Costco prided itself on offering excellent employee compensation and benefits. Over the years, Costco’s stock price rose; yet, so did Wall Street criticism. Some analysts questioned the expensive use of company funds on employees; while others believed Costco’s methodology served them well and substantively contributed to the increasing stock price.
This case provides students with the opportunity to apply stakeholder theory to a company. Students can identify Costco’s primary stakeholder groups and determine the relative importance each group has for the company. Students can examine the weaving interrelationships between groups. The case beckons the questions – should shareholders be considered the most important stakeholder group? Is there a most important stakeholder group? What effects do stakeholders groups have on one another? The case was written for an undergraduate Strategic Management course.
Costco entered the warehouse industry in 1983 and established their first store in Seattle, Washington. From the early years, Costco had a strong commitment to members to provide merchandise with high value and low-prices. They had a growing reputation as a company that valued employees by providing above-average compensation. In the late 1990s, as competition increased and pressure to perform in the stock market escalated, many warehouse companies cut employee costs. Costco did not follow suit. Costco operated under the tenant that happy employees translated into satisfied customers and profitable shareholders. Some analysts raised issue with Costco’s approach. The title of a Wall-Street Journal article clearly stated the issue at hand - should Costco be kind to its employees or to its shareholders. Costco had been creating value for its shareholders, with increased stock prices, but would a decrease in employee expenses create more value? Management was left to ponder this question.
GO GREEN MART AND MORE: GROWING MORE GREEN ONLINE?
These case materials describe and invite strategy recommendations on positioning and rivalry on the Global Offshoring Information Technology Services Industry with special reference to India and the United States, The teaching objectives are to: Analyze the evolution and dynamics of a modern global service industry; Distinguish positioning and differentiation within and between groups of players in different continents with shared customers; Anticipate the behavior of players and competitive interplays as well as the overall structure of the evolving industry; and introduce students to an industry that has lifted millions of destitute people to an attractive standard of living while building wealth for residents of technically more advanced nations. This case study and associated materials can be used in graduate business programs at any level. Also the materials are suitable for senior level undergraduate courses. The material can be used in Strategy, Information Technology Management, and International Business courses.
This case dives into possibly the most dramatic business development of recent decades, the globalization of the information technology services industry that exploits the almost instant transfer of data between continents. It explores the phenomenon at global, industry, and business levels from both USA and Indian perspectives.
The material includes: (1) an industry description with examples of how the industry functions inside corporations.; and (2) details of seven industry competitors including three based in the United States (Accenture, Electronic Data Systems, and IBM,) and four based in India (Tata Consulting Services, Infosys, Wipro, and Cognizant.) Summary descriptions are provided also of industry developments in China and other countries because these national economies also impact the rivalry of the USA and Indian based players. Financial summaries are provided for all seven companies.
KUAN LONG PLASTIC INJECTION INC: STRATEGIC PLANNING DEVELOPMENT FROM SCRATCH
This case presents the reader with the opportunity to analyze a newly developed internet company by putting them in the position as primary decision maker. Go Green Mart is an internet business in the first years of existence and seems to be having trouble growing despite the seeming growth of demand for green products. The major issues for students to deal with involve defining the organization’s mission, analyzing the business model and strategy, and determining the actions necessary to implement the strategy. Questions and decisions for the reader to discuss involve the affiliation with Amazon.com, the need for additional time and marketing investment, and the likelihood of increasing the performance of the business. The ultimate objective for students is to determine a course of action that will improve the performance of Go Green Mart.
This case was developed for use in a graduate level Business Policy and Strategy course but would be ideal for courses focused on strategy, entrepreneurship and ecommerce at both the graduate and undergraduate level. There is a significant marketing component, which might make the case suitable in a strategic marketing class.
The growth of environmental awareness has accelerated in recent years resulting in the growth of consumer demand for “green” products, which are products that result in or are produced with less environmental damage than traditional products. It is with this awareness that Halcyon Moses founded Go Green Mart and More in 2008 (http://www.gogreenmartandmore.com). Go Green is a commercial website selling environmentally friendly products selected personally by Halcyon. Halcyon hired a local web design firm to design the website which won the American Graphic Design Award for 2008. The problem for Go Green Mart is that the expected growth has not materialized.
MCDONALD’S: BACK TO THE MISSION
The core learning objective of this case centers upon how to prepare and implement the strategic planning development for a small family business in Taiwan. This case is designed to be used in an undergraduate or graduate course in strategic management or strategic planning. The case could also be used in a small business management course or in a comparative management course, because it illustrates management in a typical Chinese family business in Taiwan.
As China keeps growing at an unprecedented rate, many neighbouring Asian countries are threatened by its expanding economic influence. In Taiwan, many small suppliers have been affected as their local industrial customers have migrated to China. This case examines the experience of a small Taiwanese plastic injection company as it faces the challenges of global recession in early 2009. By developing a customized strategic plan using the Balanced Scorecard, some questions about its prospects are addressed and examined. Could Kuan Long Plastic Injection Inc continue to prosper and expand in the cost oriented plastic injection industry?
MYSTIC MONK COFFEE
This case describes a company with unprecedented growth, which experienced losses in 2002, yet, rebounded in 2003 with an intentional new focus and strategy. In the last quarter of 2002, McDonald’s experienced unfavorable same-restaurant sales, decreasing profit margins, and its first quarterly loss. Management implemented a strategic turnaround plan beginning in 2003 to restore profitability.
This case provides the opportunity for students to compare and contrast McDonald’s old strategy, an aggressive growth strategy, with their new turnaround strategy, a mission-centered strategy. McDonald’s turnaround strategy instituted the mission statement into core operations and focused on customer service. Students come to understand the prominence and pervasiveness the mission statement can have on company operations and on profitability. This case was developed for an undergraduate strategic management course and lends itself to discussion of the mission statement and its potential impact on strategic change.
What began as a single streamlined hamburger restaurant in California grew to become one of the largest, most successful fast food chains across the globe. Ray Kroc, the founder of McDonald’s, made the brand into a household name. Yet in the late 1990’s, market share dropped, and in 2002 the company hit a low point with its first reported loss. In 2003, top management refocused the company on the principles that Kroc had founded the company on. Management implemented a number of strategic initiatives referred to as “The Plan to Win.” The strategy entailed reinstituting the mission into core operations. The focus was to reorient the company to better suit customers’ desires and to limit domestic growth.
NOBLE SYSTEMS INC.: GET BIG OR GO HOME?
The case is an ideal introduction to the tasks of crafting and executing strategy. The case is brief and the day-to-day life of the cloistered Carmelite monks should capture the interest of students. Instructors are able to use the case to introduce and illustrate the concepts of strategic visions, strategic and financial objectives, crafting strategy, strategy execution, business models, and the evolving nature of strategy. At the conclusion of the case, students should be able to offer recommendations to improve the monks’ approach to crafting and executing strategy.
As Father Daniel Mary, the Prior of the Carmelite Order of monks in Clark, Wyoming walked to chapel to preside over Mass, he noticed the sun glistening across the 4-inch snowfall from the previous evening. Snow in June was not unheard of in Wyoming, but the late 2009 snowfall and the bright glow of the rising sun made him consider the opposing forces accompanying change and how he might best prepare his monastery to achieve his vision of creating a new Mount Carmel in the Rocky Mountains. His vision of transforming the small brotherhood of 13 monks crammed into a small home used as makeshift rectory into 500-acre monastery with accommodations for 30 monks, a retreat center for lay visitors, a Gothic church, a convent for Carmelite nuns, and a hermitage presented a formidable challenge. However, as a former high-school football player, boxer, and bull-rider, Father Prior Daniel Mary was unaccustomed to shrinking from a challenge. Father Prior had identified a nearby ranch for sale that met the requirements of his vision perfectly, but its current listing price of $8.9 million presented a financial obstacle to creating a place of prayer, worship, and solitude in the Rockies. The Carmelites had received a $250,000 donation that could be used toward the purchase and the monastery had earned nearly $75,000 during the first year of its coffee roasting operations, but more money would be needed. The coffee roaster used to produce packaged coffee sold to Catholic consumers at the Mystic Monk Coffee website could produce up to five times more coffee than what was sold in 2008. Also, local Cody, Wyoming business owners had begun a foundation for those wishing to donate to the monk’s cause. Father Prior Daniel Mary did not have a great deal of experience in business matters but considered to what extent the monastery could rely on its Mystic Monk Coffee operations to fund the purchase of the ranch. If Mystic Monk Coffee was capable of making the vision a reality, what were the next steps in turning the coffee into land?
OLIVER WINERY – EXPERIENTIAL MANAGEMENT & GROWTH
The case shows how a college faculty member and a business partner started one of the first eLearning system companies. The case follows the development of the business from start-up to a critical strategic decision. The case illustrates the challenges faced by typical start-up businesses. The company has never earned a profit. Losses are being covered by cash infusions by angel investors. While significant business opportunities are present, the company does not have the money to pursue all of them. Essentially, the case involves problems of growth, vision, potential, and management. The case was written for undergraduate or MBA courses in entrepreneurship or in strategic management.
John Noble and Jack O’Brien, who both worked for a university, founded Noble Systems in 1995 as one of the original companies to develop and market eLearning systems for the higher education market. The company grew to 35–40 university accounts (including several of the largest university systems in the country), 12–15 employees, and revenues of $354,000 in the first half of 2001. As Noble Systems grew, John and Jack faced many challenges: expenses exceeding revenues, cash flow problems, customer support difficulties, in-house management coordination problems, rapid technological change, emergence of strong competitors, a sales process to universities that was slow and frustrating, and a lack of partnerships with textbook publishers. In the Summer of 2001, Noble Systems has reached a critical decision point. The competitors in the higher education market have developed better financing, marketing, and partnerships with textbook publishers, which Noble Systems has not been able to match. Noble Systems has tested the waters outside of higher education by making a sale to a major insurance corporation to use Noble’s eLearning system for corporate training. While corporate training markets are attractive for their huge sales potentials, John and Jack do not understand these markets as well as they understand higher education. The decision they face in Summer 2001 is: Where will they get their future business? Higher education? Corporate training? Can they raise the capital to do both? Can they find partners? Should they sell the business?
RAVENTÓS I BLANC AT A CROSSROADS
The case illustrates a company whose business model involves providing customers with a wine experience in its tasting room and vineyard that will then help to pull wine sales through wholesale channels. The southern Indiana company, Oliver Winery, has incorporated a mix of corporate culture, customer experience, and a broad product focus in this effort. These elements make for an interesting example of the company's unique culture and approach have successfully driven growth. It also raises questions about whether new avenues should be explored when facing unprecedented growth challenges.
Oliver Winery is a southern Indiana company that has taken a values-based approach to business and reaped the benefits in becoming the single largest Indiana winery with sales just under $15 million and a wine selection that sells in states such as (name states here) and is the home of the largest selling wine in both the states of Indiana and Kentucky. Oliver Winery focuses on providing employees with empowerment to take ownership of the company, customers with a memorable experience that will grant even inexperienced wine drinkers access to wine enjoyment and quality highly drinkable wine that can be enjoyed by a wide range of palates. The company’s experiential offering merges idyllic landscaping, an artistically designed tasting room staffed with helpful servers and winery tour guides eager to share the story and legends of Oliver, a selection of gourmet foods, and a very wide selection of excellent wines. Through this offering, the company provides visitors with an exceptional winery experience, memories of which are revisited when they choose Oliver Wines to share with friends at home. Customers become ambassadors, as well as a part of an extended corporate culture. They spread the Oliver story and request Oliver wines from local vendors, helping to pull the company's product through the supply chain into their own communities. As Oliver has continued to grow and succeed over the years it has remained a solid organization that has relied upon its business model and value proposition to remain stable and successful. Now Oliver is entering a new phase of growth and has choices ahead of it in order to determine the future success and corporate culture of the company. These choices may challenge the very business model that has made the company so successful.
THE TALBOTS, INC., 2008
The “Raventós i Blanc at a Crossroads” case study was designed to be used in a Strategy (or Competitive Strategy) course and/or in an International (or Global Marketing) course. It is, however, recommended for advanced rather than basic or introductory courses. The case demands the application and discussion of a significant number of aspects and interrelated strategic dimensions, such as competitive advantage, product concept, market segmentation, positioning, distribution channel management, strategic alliances and growth strategies, as well as other strategic aspects specific to the sector being dealt. It requires decisions to be made regarding the analysis and selection of markets that the company could focus on, as well as alternative strategies to enter foreign markets.
Josep Raventós i Vidal, General Manager of Raventós i Blanc, stood at a crossroads. His father and his grandfather had founded Raventós i Blanc more than 20 years ago. After the difficult early years setting up the business, and a second phase of company consolidation, the moment seemed to have arrived for decisions that would have far-reaching consequences for the future of the company.
Raventós i Blanc produced wines and ‘cava’ –the name given to a sparkling wine produced using the Champagne or ‘traditional’ Method in certain winemaking regions of Spain. From the outset, Raventós i Blanc’s vision was to be the benchmark for premium cavas and wines, emphasising the quality of its strong viticultural roots, which meant it could produce high quality wines and cavas with grapes exclusively from its own vineyards. The Raventós family’s long history and experience, and its integration of land, vineyard, wine and cellars, gave its products their own unique character. In 2008, the company had a sales turnover of €5 million and sales exceeding 900,000 bottles, with exports representing 14% of them.
In its early years The Talbots, Inc., had successfully differentiated itself as a purveyor of traditional women’s clothing. But in 2008, the company is struggling financially and trying to re-establish its focus. The case lends itself well to issues of market segmentation and to evaluation of strategies for expansion. The company’s expansion into men’s and children’s wear provides an example of straying from the perceived target market with dire results. Also, the rapid expansion (opening 50 new stores in 2007) could be used in a discussion of sustainable growth.
The case is well suited for an in-depth analysis of the retail apparel industry and its general environment. The acquisition of the retail chain, J. Jill, offers opportunities to assess the merits of acquisitions that result in a significant debt burden. Has J. Jill contributed to the overall corporate strategy?
The Talbots, Inc., a retailer of women’s classic apparel and accessories since 1947, had a clear target market in the 35-year-and over age group. Its core customers tended to be professional women for whom tailored business wear was important. But by 2006, Talbots seemed to have lost its focus and was encountering serious financial problems. Sales had declined dramatically, with the company’s clothing designs viewed as dowdy and out of touch with customer needs. Also, Talbots had been rapidly expanding geographically and expanding into men’s and children’s wear. The acquisition of J. Jill left the company burdened with considerable debt. A new CEO, Trudy Sullivan, came to the helm in 2007 and developed plans for a turnaround.
In 2008, as Sullivan tried to implement a new strategy, economic recession hit retailers hard. Talbots was still struggling to find its niche. It had strayed from its original base and felt a need to return to its roots. But the environment around it had changed and its competitors were turning to more contemporary designer styles. Talbots needed to establish a distinctive competence. What could the company do?
ALICIA MENECES: APRENDIENDO DE AGUABLANCA
CENTRAL ELECTRICA DE SAN FRANCISCO
Alicia es una mujer con experiencia en los barrios pobres y con vivencia directa de los procesos cotidianos de movilización comunitaria en relación al microcrédito en comunidades desfavorecidas. La participación de Alicia en el Simposio internacional: “Microfinanzas y Construcción de Paz”, realizado en Cali-Colombia, donde participan más de 70 expertos nacionales e internacionales en microfinanzas, es crucial para las decisiones que se toman en este simposio. Alicia piensa en el mensaje que transmitirá al público del simposio, el cual es ajeno a la realidad del microcrédito de las comunidades pobres del país. Con este caso se pretende exponer la dimensión institucional de la pobreza vs. Las definiciones económicas más tradicionales de la pobreza; así mismo, se busca ilustrar el potencial y las limitaciones del microcrédito para hacer frente a la pobreza; finalmente se explican las situaciones que caracterizan el liderazgo, el desarrollo de capacidades para la inserción en el desarrollo económico y social y el coraje de una mujer que afronta los desafíos de la pobreza en Aguablanca. Este caso se dirige a estudiantes de los cursos de desarrollo sostenible y estudiantes de gestión que trabajan aspectos de responsabilidad social en el MBA o a nivel de licenciatura.
Este caso presenta a Alicia Meneses líder comunitaria desde hace 20 años en el distrito de Aguablanca en Cali-Colombia. Alicia es ponente en el panel de inauguración del SIMPOSIO Internacional: Microfinanzas y Construcción de Paz”, junto con el presidente del Banco interamericano de Desarrollo (BID), el presidente de la república y el presidente de la Corporación Andina de Fomento (CAF). Alicia en este panel es la única mujer con experiencia práctica en los procesos de microcrédito para la población más desfavorecida y con los mayores indicadores de violencia en el país. En efecto, cerca de 400 pandillas operan principalmente en Aguablanca y Siloé y en el 2004 el 36% de los homicidios de país ocurrieron en Aguablanca. Alicia victima del agiotismo del sistema informal del microcrédito, puede darle un giro a la realidad de estas comunidades en el tema de microcrédito. Este es el momento crucial en la vida de Alicia y la decisión que debe tomar al final del caso, se refiere al mensaje que ella pronunciará en el panel de inauguración. ¿Cómo y porqué afrontar los desafíos del microcrédito para los pobres?
Este caso describe una situación real de un Project Finance en Brasil: la construcción y posterior explotación de una central hidroeléctrica por un período de treinta y cinco años, con datos modificados para salvaguardar la confidencialidad. El proyecto se constituye como un servicio público con alto impacto económico y político, con una considerable inversión en un plazo de maduración largo, y con posibles dificultades técnicas durante la construcción y posterior explotación de la planta. En este tipo de proyectos, tanto los promotores como los bancos financiadores deben identificar y gestionar los diversos riesgos operativos, tecnológicos, económicos, financieros, políticos, de suministro, regulatorios, etc, durante un largo período temporal. El objetivo del caso es ilustrar los diversos aspectos que se deben considerar en este tipo de proyectos, con especial énfasis en el análisis de la viabilidad y rentabilidad económica y en la gestión de riesgos.
En una calurosa tarde madrileña de agosto, Alberto Gómez tenía cosas en que pensar. Como analista senior de riesgos en la entidad financiera para la que trabajaba, debía realizar un informe sobre la conveniencia de participar en el crédito sindicado para financiar el proyecto de la Central Eléctrica de San Francisco, en Brasil.
En efecto, a finales de 2001, la Agencia Nacional de Energía Eléctrica (ANEEL), el organismo regulador del sector eléctrico en Brasil, adjudicó a la compañía Energía de Brasil (EDB) la concesión para construir y operar una central hidroeléctrica por un período de treinta y cinco años. La concesión daba derecho a utilizar los recursos naturales del río San Francisco, para lo cual se planeó construir una planta de energía hidroeléctrica de 450 MW y una línea de transmisión de 50 km. de longitud que conectase la planta con la subestación eléctrica más cercana.
El Sr. Gómez conocía el interés de su banco por participar en el proyecto, ya que durante el año 2002 la situación del mercado y la feroz competencia habían erosionado la rentabilidad de operaciones de inversión. Por otra parte, era consciente de los riesgos inherentes a un proyecto de este tipo.
GOVERNMENT INTELLIGENCE IN CATALAN PUBLIC UNIVERSITIES
El caso muestra cómo Alfredo Ruiz, un mexicano nacido en la ciudad de Culiacán Sinaloa, decide comprar un terreno para dedicarse a producir vino en la conocida región de Burdeos en Francia a pesar de las transformaciones sufridas en esta competida industria. Nuevos países productores de vino; Chile, Estados Unidos, Argentina y Australia entre otros han estrado al mercado ocupando importantes cuotas de mercado. Alfredo Ruiz se preguntaba “Qué debo hacer para lograr que el viñedo sea competitivo y rentable”. Una pregunta estratégica que debe resolver antes de iniciar el próximo ciclo comercial. El caso presenta el reto para un nuevo productor debe elegir entre seguir la tendencia de los nuevos productores (etiquetas simples, calidad medio, precio medio y bajo) o seguir con la tradicional producción francesa de alta calidad y precio relativamente más alto. El caso ha sido escrito para estudiantes de cursos de estrategia en los semestres avanzados en pregrado, y nivel medio de maestría en negocios
Alfredo Ruiz era el co-propietario y presidente (CEO) de Château Fonchereau, un viñedo ubicado en la zona productora de vinos en Burdeos Francia. La propiedad se localizaba 15 km al este de la ciudad de Burdeos. Château Fonchereau, era una edificación del siglo XV que tenía 50 hectáreas de terreno, de las cuales 30 eran viñedos. La propiedad fue adquirida en 2.5 millones de euros en el año 2005. Dos años después comenzó a producir 35 mil botellas anuales de vinos tintos, blancos y espumosos. Un poco más tarde la casa ya contaba con una capacidad de producción de 160 mil botellas, algunos de sus vinos fueron premiados en concursos internacionales. En octubre del año 2008, Alfredo Ruiz cumpliría tres años y 10 meses de ser el primer y único productor latino en la zona y con la alegría de ver su sueño hecho realidad, poseer y operar un viñedo en Francia, reflexionaba: “En los últimos años el mercado del vino ha cambiado y se ha vuelto muy competido. Los nuevos países productores como Australia presentan un amenazante crecimiento año con año”. Las ventas para el siguiente año habían comenzado y Alfredo necesitaba definir a qué mercado debía enfocarse en el corto plazo y con qué estrategia. “¿Cómo puedo ser competitivo en esta industria? Con la economía global en crisis, la estrategia será decisiva para permitir la permanencia y consolidación de Château Fonchereau en el mercado y comenzar a ser redituable el próximo año” reflexionaba.
LA NUEVA FORMA DE VIAJAR. LAN PERÚ S.A.
The case puts forward the use of Business Intelligence by a public body, the DURSI, which is the public body responsible for allocating budgets to public universities in Catalonia. The case shows the various stages involved in such a project and the difficulties that are faced until the final decision is taken. The case represents a great opportunity to assess the factors to be taken into consideration when undertaking a project of these characteristics, and to analyse the strategic complexity of adopting a solution of this type in a public-sector environment.
The ‘Government Intelligence in Catalan Public Universities’ case was designed to be used on Business Intelligence or Management Information Systems courses, as well as on general Information Systems courses.
The ‘Government Intelligence in Catalan Public Universities’ case presents how Business Intelligence is applied within a public administration body, specifically the DURSI (Department of Universities, Research and Information Society, in the original Catalan Departament d’Universitats, Recerca i Societat de la Informació) belonging to the Government of Catalonia (Spain).
The case presents the changes that have been produced in the university system, the changes within the Catalan university system, the organisational structure that was used, the various stakeholders’ need to obtain decision-making information and how the project was carried out. The case concerns the adoption and implementation of Business Intelligence and the evolution of the system introduced by the DURSI with the aim of establishing a more equitable distribution model for financing public universities. The case shows the evolution in the use of Business Intelligence, and puts to those responsible for the new DIUE (formerly known as DURSI) the issue of evaluating the project that has been undertaken in addition to proposing its future development.
The protagonist of the case, Eudald Mestres, has recently joined the DIUE and should, in addition, offer support to Catalan public universities in terms of implementing the Bologna Plan, with the economic pressures that this implies.
LA RSE EN ALIAR S.A
El caso expone la situación de Lan Perú, en un contexto en el cual la empresa lideraba el sector, con un crecimiento sostenido y con márgenes muy por encima del promedio; aunque participando de un mercado con la más baja penetración de la región. En este escenario, la compañía se cuestiona como lograr un crecimiento sostenido, teniendo en cuenta que su principal competidor era el servicio exclusivo ofrecido por empresas de transporte terrestre. El caso nos llevará a analizar desde una visión antropológica el comportamiento de la persona, usuaria y no usuaria del servicio aéreo, el análisis de toda la cadena de valor, política de precios, rediseño de canales y revisión de la estrategia en su conjunto (modelo comercial y operativo) para dar coherencia a una serie de acciones orientadas a permitir el acceso de nuevas personas al servicio de transporte aéreo. El caso ha sido escrito para ser utilizado en programas de dirección de empresas en los tópicos de estrategia de negocios, antropología del consumidor, estrategia de canales y propuesta de valor.
Manuel Van Oordt era el Gerente Central de Ventas y Marketing de Lan Perú S.A. , empresa que había iniciado operaciones en el Perú en el año 1999, aunque ya venía operando en Chile, país de origen, desde el año 30. Para el año 2006, Manuel y el equipo comercial en su conjunto se cuestionan el modelo de negocio, buscando romper paradigmas que les permitiera lograr una mayor penetración del servicio aéreo. La demanda de pasajes aéreos era elástica, por lo que era preciso tener una política de menores precios para lograr el crecimiento del sector. Sin embargo, el modelo de negocio de la compañía hacia inviable ofrecer precios más baratos, mas aún en una coyuntura en la que el precio del petróleo presentaba una tendencia al alza. Por otro lado, era preciso revisar el comportamiento y motivaciones de la persona que viajaba en el país, dado que por ejemplo se tenía que el principal motivo de viaje por avión era por trabajo o negocios, en contraste con el total de la población que viajaba principalmente a visitar familiares y por bus. El análisis y desarrollo del caso nos llevará a plantearnos como llegar al potencial usuario del servicio aéreo y por ende a cuestionarnos el rol de las agencias de viaje. ¿Las agencias de viaje podrían ayudar a que Lan Perú llegara a quien tradicionalmente no usaba el servicio aéreo?, ¿era posible transferir un menor precio al usuario final y gestionar la demanda bajo el modelo comercial tradicional?
LAS PREOCUPACIONES DE JUAN ANTONIO FERNANDEZ
Tiene aplicabilidad en cursos de Responsabilidad Social Empresarial (RSE), agro-negocios, estrategia de marketing y de negocio, gestión de marcas, innovación, emprendimiento y de negocios y marketing en base de la pirámide (BOP).
- Analizar la RSE en el ámbito de los agro-negocios latinoamericanos.
- Analizar un esquema de relacionamiento con los stakeholders o grupos de interés, en este caso, especialmente, con la comunidad local, los grupos indígenas y los consumidores de ingresos bajos.
- Contextualizar las prácticas de RSE en el ámbito latinoamericano, en este caso el colombiano, integrando la perspectiva social en el mapa estratégico de la empresa.
- Analizar estrategias para implementar prácticas de RSE con los proveedores y los consumidores de ingresos bajos (BOP).
- Formular una estrategia de marketing para consumidores BOP.
Este caso presenta una iniciativa empresarial de alto impacto social en los Llanos Orientales colombianos. Se presentan el plan de negocio y su implementación basados en el concepto de la integración la cadena de valor en la producción de cerdos, buscando capturar un mayor valor agregado en las actividades empresariales “después del campo”. El elemento fundamental del proyecto ALIAR es la “seguridad alimentaria” de los colombianos. En el texto se muestra cómo un emprendedor rompe los modelos mentales y los esquemas predominantes que existían frente a las oportunidades de negocio en una zona geográfica de suelos “infértiles”, y frente a la manera tradicional, racional y economicista de aproximarse a las decisiones de negocios. Se describen las relaciones de la organización con los diferentes grupos de interés (stakeholders) y las iniciativas de responsabilidad social (RSE) emprendidas con cada uno de ellos, buscando la creación de valor mezclado. El caso hace énfasis en las relaciones con la comunidad local y especialmente con los indígenas de la región, con quienes implementó una alianza de largo plazo para promocionar la “seguridad alimentaria” bajo un esquema de respeto por su identidad y legados culturales.
TELEFÓNICA CHILE - TELEVISIÓN DIGITAL (B)
Este caso permite comprender importancia que tiene realizar una adecuada planificación de las finanzas personales y familiares. Además de brindar la oportunidad de reflexionar sobre los elementos clave de la planificación financiera personal posibilita una introducción en el funcionamiento de los mercados de capitales y los diversos vehículos de inversión. Lo interesante es que esto último se produce desde la óptica del inversor (en este caso el estudiante) lo que genera un aprendizaje “interesado” por parte de este último. El uso de este caso persigue tres objetivos diferentes: 1) El primer objetivo es que los directivos de empresa puedan lograr comprender y valorar la importancia que tiene la planificación anticipada de sus finanzas personales y familiares. Esto que es algo normal en directivos anglosajones es, sin embargo, un elemento muy descuidado por parte de sus pares latinoamericanos. 2) El Segundo objetivo es lograr el interés en los cursos de finanzas, por parte de los directivos que participan en programas de Management general. El tratamiento del caso hace evidente la necesidad de contar con una comprensión básica del funcionamiento de los mercados de capitales y de los diversos instrumentos de inversión, por lo cual se convierte en un elemento inspirador del aprendizaje de Finanzas. Esto puede resultar muy importante para el desarrollo de capacidades básicas de análisis económico y financiero, en muchos directivos que por formación o vocación no tienen una inclinación o predilección natural por estos temas. 3) El tercer objetivo es introducir los elementos básicos de los mercados de capitales y los instrumentos financieros disponibles para el inversor. El caso ha sido preparado especialmente para ser usado en la primera sesión de los cursos de finanzas de programas de Management general dirigidos a directivos a cargo de gerencias funcionales de compañías. Es un caso que permite una introducción sencilla e interesada de los participantes en los elementos básicos de las inversiones financieras, por lo cual no se requiere un extensivo conocimiento previo de finanzas por parte de los estudiantes.
El caso describe un encuentro de 4 directivos de empresa que, aunque fueron compañeros de estudios y grandes amigos, por razones de trabajo no se ven desde hace unos cuantos años. La reunión hace que Juan Antonio Fernández se de cuenta que a 20 años de su edad de retiro no tiene un adecuado planteo de sus finanzas para dicho momento. El muestra las diferentes formas en que estos directivos han planteado sus objetivos al retiro y como están gestionando sus inversiones personales para lograr conseguirlos. La pregunta es ¿podrá Juan Antonio lograr una planificación que en unos pocos años le permita tener un retiro satisfactorio?
El caso muestra a una empresa multinacional, “Telefónica”, en su estrategia de diversificación de producto. En particular la compañía se enfrenta al desafío de ingresar al mercado de la televisión de pago. ¿Deberá Telefónica, con una casa matriz en España, ingresar al mercado de Televisión de pago en Chile?. ¿Posee la compañía los recursos y capacidades para competir en ese mercado? ¿Cómo reaccionarán los competidores?. Estos son temas estratégicos, tanto del punto de vista corporativo como de la estrategia dinámica. El caso muestra también el efecto que tubo la decisión de Telefónica Chile de entrar al mercado de la televisión de pago, sobre los diferentes actores, tanto de la industria de Telecomunicaciones como de la industria de Televisión de Pago. Dado los buenos resultados obtenidos por la compañía y el nuevo escenario competitivo, se deja abierto al análisis del estudiante cual debiera ser la estrategia a seguir por Telefónica para mantener o mejorar su posición competitiva.El caso es un excelente vehículo para exponer a los alumnos de programas de MBA en el análisis y toma de decisiones en mercados muy dinámicos y con gran tendencia a la convergencia tecnológica.
En junio del año 2006, Telefónica Chile entró al mercado de la televisión con su nuevo producto denominado “Telefónica Tv Digital”. En ese momento, el mercado de la Televisión de Pago estaba dominado por un competidor, VTR, quién ofrecía un “bundling” de productos (Telefonía Fija, Internet de Banda Ancha y Televisión de Pago) lo cual era altamente valorado por los clientes. Esto le permitió alcanzar una participación en el mercado de la Televisión de Pago de un 84% en el 2005. Telefónica Chile pensaba que con este lanzamiento podría igualar la oferta de productos de su principal competidor y con ello, diversificar su negocio ingresando a una nueva industria. Este hito generó un cambio en el mercado de la Televisión de Pago tanto en la forma de competir de los participantes como en las ofertas y promociones realizadas hasta ese momento. Frente a este nuevo escenario competitivo, José Molés, Gerente General de la compañía y su equipo directivo, se preguntaba ¿Cuál debería ser el siguiente paso para Telefónica Chile? ¿Cómo debería competir en estas nuevas condiciones? y ¿Cómo podría aumentar la rentabilidad de la empresa y consolidar su posición competitiva?
A RESEARCH-BASED PRE-PRACTICUM MODEL: IT SEEMED SO PROMISING…
Finance & Economics
ANTI-SEMITISM IN FIRST YEAR COMPOSITION
The case was developed primarily to use with higher education faculty and K-12 administrators and teachers who partner as part of the Professional Development Schools model. This case specifically focuses on the pre-practicum experience and how despite efforts and a spirit of collaboration, there can be a disconnection of theory to practice. The purpose of the case is to provide a discussion about the many reasons that a planned, research-based pre-practicum experience may fail to provide the rich meaningful experience that partners had intended and how to better plan and design effective experiences for pre-service teachers and K-12 staff, as well.
Dr. Venice was initially very excited about the pre-practicum experience for her reading method’s students. She had planned it in cooperation with the elementary partnership or Professional Development School (PDS). The model was carefully researched to ensure a quality field experience that connected and deepened students’ knowledge and application of reading pedagogy, as well as, teacher reflection. However, despite her efforts and what seemed like a collaborative spirit on the part of the PDS, a few weeks into the semester, students’ reflections and cooperating teachers’ feedback indicated that all was not so promising. The college’s Education Department Chair emails Dr. Venice that he wants to know if the model is succeeding and if Dr. Venice will be continuing the model for next semester. Should the pre-practicum model just be revised, relocated or abandoned?
TEACHERS AS LEADERS: MULTIPLE MODELS
The case is designed to stimulate discussion of an awkward situation in a first-year English composition class. A student has prepared an essay which contains language which could be interpreted as anti-Semitic. The instructor, who happens to be Jewish, is troubled by the discussion and wonders whether she could have handled the situation more effectively. The case addresses three major teaching objectives. The first is to identify ways to respond to students who exhibit a lack of awareness of the impact of their words on others. A second objective is to discuss ways to deal with awkward situations which arise in the classroom and to which a faculty response is required. Finally, the case addresses the issue of generating “trust” in discussion groups so that sensitive issues can be discussed without fear of reprisal or discrimination.
Rachel Cohen, Assistant Professor English at Fairbanks University, has just completed a contentious meeting of her First Year Composition class, which had discussed a paper written by one of the students. Joe Anderson’s paper contained statements that have been historically used as anti-Semitic slogans. Cohen attempted to avoid embarrassing Joe in front of others but felt she must address the issue directly. At the end of class, though, she wasn’t sure that she had avoided embarrassing Joe or gotten through to him. What should she have done differently?
These six snapshots of exemplary high school teachers provide examples of how outstanding teachers are leaders. While conventional approaches to leadership may downplay the notion that teachers must lead in their classrooms, these stories of exceptional teachers illustrate how they engage in all the behaviors of leaders. In The Leadership Challenge, James Kouzes and Barry Posner have distilled through twenty-five years of research and writing the five fundamental practices of exemplary leaders. Juxtaposing Kouzes & Posner's leadership model to the exemplary high school teachers' stories should convert skeptics to thinking that teachers need to behave as leaders, both inside and out of classrooms. These snapshots may be used in educational leadership courses and in workshops for second-stage teachers to challenge their thinking about their approach to professional development and to their careers.
These stories portray six exceptional teachers who work in the public schools of New Jersey. While these teachers differ along demographic factors such as gender, race and ethnic background, they also exhibit remarkably similar behaviors in how they teach and lead in their schools. In particular, they serve as role models for their colleagues. They show remarkable compassion for less well off students and new colleagues. They challenge students to learn and apply themselves in interesting, creative and useful ways. They bring appropriate emotional timbre to their classrooms and interactions with students and colleagues. And, importantly, they are clear about their values and how their values undergird their roles as teachers and educational leaders. In short, these teachers provide multiple models of how to lead from the classroom.
AMDATA SOFTWARE CHINA LTD.: SELL NOW OR LATER?
BLACKBOARD’S ACQUISITION PROBLEM
The case has several major objectives:
1. To understand the Chinese business environment and the Chinese software industry in order to do business in China.
2. To analyze various financial accounting adjustments and reclassifications in recasting the company’s financial accounting system to international financial reporting standards (IFRS) for a possible initial public offering (IPO).
3. To apply free cash flows and market multiples for business valuation purposes.
4. To understand various methods for calculating the international cost of capital.
5. To analyze various business valuation methods, foreign exchange risks, and deal structures in order to understand their impacts upon the key entrepreneurial decision (exit now or later?) and upon the net proceeds for the three partners.This case is intended for senior undergraduate and advanced graduate courses in financial accounting and finance where financial statement recasting and business valuation topics are taught.
This is a decision based case written from the point of view of the chief executive officer (CEO) who was attending the March 2008 Asia Pacific Partner Conference of a major U.S. software vendor. This CEO has just received a surprising and unsolicited offer from a Japanese company to purchase his AmData Software China company which owns the exclusive mainland China franchise to distribute this U.S. vendor’s software. The Japanese company owns a similar exclusive franchise in Japan. After preliminary negotiations, including a demand by the Japanese company to state the business sale amount in U.S. dollars, the initial $2.5 million offer was raised to $5.5 million. However, this amount was not yet agreed to by both parties and a business valuation analysis would be critical to the key decision of the case: should the CEO sell the company now or continue to develop it for sale at a future date? Such a subsequent sale might be an IPO on one of the Chinese stock exchanges.
CONSTELLATION: THE DISTRIBUTION OF MINIBONDS
This case is intended for an advanced undergraduate or an MBA corporate finance elective. The objectives of this case include:
1. Value firms using discounted cash flow and comparable multiples analysis
2. Evaluate a firm’s strategy and find acquisition targets that match that strategy
The case discussion questions can be assigned, most appropriately after a lecture or a theory review concerning valuation. This case allows students to value possible acquisition targets using common corporate finance methods, discounted cash flow and comparable multiples.
Blackboard, Inc. was a leading educational software developer in the post secondary market. The firm’s and just purchased competitor WebCT, and its desired strategy included expanding into the K-12 market. Three potential acquisition targets were identified: Scientific Learning Corporation, Renaissance Learning Corporation and SumTotal. Which firms, if any, would be good fits for Blackboard? If Blackboard acquired any of the firms, what would be an appropriate price? Which acquisition target was the best value?
DISTRIBUCIONES CANARIAS, S.A. (DISCASA)
The case places the students in the role of a commercial banker who must decide the appropriateness and method of distribute a complex structured finance product to retail bank customers. The case is best used in a banking course with students who are familiar with traditional commercial banking and banks’ expansion into retail wealth management services. Through their analysis of this case, students learn the nature and pricing of credit default swaps, the structure of synthetic securitizations, how conflicts of interest may arise in retail banking and brokerage with unsophisticated customers and the obligations of a banker/investment advisor who in sells complex financial products.
Winston Kwok-keung Auyeung, Managing Director of Personal Banking for Bao An Bank of Hong Kong, has the opportunity to distribute minibonds, to his retail banking and wealth management customers. Minibonds are securities issued in a retail synthetic securitization, a structured investment using a special purpose vehicle which purchases riskless securities and issues credit default swaps. Each dollar of minibond issues eight dollars of seven year credit default swaps. Each credit default swap is a bet that a reference party will not default on its debt. The reference parties in the minibonds are highly respectable global banks and investment banks, whose probabilities of default individually are extremely low; however, the chance that at least one reference party will default in at least one year is substantial. This substantial risk is priced and the price allows the minibonds to offer attractive “interest” to investors. Winston Kwok must decide whether or not to distribute the minibonds to his customers, given that competitors are selling them and that customers appear to be comfortable with financial risk. In deciding the issue, Winston Kwok must consider not only matching the risk appetite of clients but also the ability of clients to understand the complexities of the minibonds. He must also confront the potential conflict of interest in distributing minibonds through his sales team, in view of the possible inability of clients to understand the difference between a bank deposit and a structured investment vehicle. To the extent that customers rely solely on the advice of his sales team to purchase investments which they do not understand, the bank may incur liability detrimental to its profitability and future reputation.
ENTERCOM COMMUNICATIONS: DIVIDENDS, REPURCHASES OR BOTH?
This case study aims to illustrate the various factors that have to be taken into account to evaluate strategic alternatives from a financial point of view. More specifically, it describes in detail how to value a potential candidate to be acquired, including how the take-over is financed. The case study offers an excellent opportunity to analyse the link between strategic decisions and their associated economic value. It also gives answer to questions like: Can we measure the value of a given strategy? Can we measure the value of expected synergies? How can we negotiate on the price in an acquisition operation?The case is aimed at post-graduate students on an advanced financial management course, as they address the topic of Mergers and Acquisitions. It could also be used in seminars on corporate finance or valuation.
In a rainy day of February 2008, Heriberto Gómez, General Manager and shareholder of Distribuciones Canarias, S.A. (Discasa) was trying to organize his ideas, develop arguments and draw conclusions to be able to defend his new and ambitious strategy for the company at the next meeting of the Board of Directors. While he stared at the rain beating down against his windowpane he tried to concentrate on the facts…
This case study describes, from the point of view of the General Manager, the alternatives Discasa is facing in order to ensure its survival.
NEW YORK LIFE INSURANCE COMPANY: THE COMPANY YOU KEEP
This case is intended for an advanced undergraduate or an MBA corporate finance elective. The objectives of this case include:
1. Compare and contrast dividends vs. share repurchases as cash distribution vehicles for a firm
2. Discuss the theory behind dividends and share repurchases, and use this theory to determine which choice is best for a firm
This case allows students to look at why firms pay dividends and/or make irregular or regular share repurchases. Students can discuss the pros and cons of each choice and determine which is right for Entercom Communications. The case discussion questions can be assigned, most appropriately after a lecture or a theory review concerning dividends and share repurchases.
“Entercom Communications: Dividends, Repurchases or Both” is about this firm’s decision to initiate a dividend and its decision to continue its share repurchase program. Entercom had been making regular share repurchases, and recently started paying quarterly dividends. Were the dividends and share repurchases likely to continue? Was Entercom a good candidate for regular dividends or for regular (or irregular) share repurchases, or both?
SURVEY RESEARCH ASSOCIATES
The case describes the challenges facing the investment management team of the New York Life Insurance Company (NYLIC) during a weakening US economy. Chief Investment Officer, Gary Wendlandt, proposed that a larger percentage of investable cash flow be placed in US government securities instead of corporate securities than in previous years. Was a “quality tilt” program necessary? What would be its effects on the company’s future earnings? The case is most appropriate for courses in Strategic Financial Management, Financial Statement Analysis, and Financial Instruments. The purpose of the case is to provide students with a better understanding of US life insurance companies and how they operate. In particular, the case will: (1) expose students to the types of investment decisions made by executives of life insurance companies and their consequences, (2) provide students with the tools to analyze the financial statements of life insurance companies (e.g., how to calculate loss ratios, expense ratios, and solvency ratios) and, (3) give students practice in industry and competitor analysis.
In February 2007, Gary Wendlandt, Chief Investment Officer of the NYLIC, was faced with an important decision. Emerging signals in the financial markets pointed towards an uncertain future. The US housing market was weakening at a time when financial institutions had significant assets tied up in mortgage-backed securities and collateralized debt obligations. Companies that had been taken private through leveraged buyouts were underperforming and could default on their loans. Investments, even in corporate bonds issued by large US businesses, were becoming risky.
The question before Wendlandt and his investment management team was whether or not to place more of NYLIC’s investable cash flow into safer but lower yielding fixed income products. NYLIC had a responsibility to its policyholders. It was management’s duty to protect the longevity and financial strength of the firm, so that it could continue to pay policyholder claims, distribute payments from annuities, and issue dividends. This required high levels of capital surplus. Wendlandt proposed to divert assets from corporate bonds to government bonds, even if it meant foregoing higher short-term returns. Was this an overly conservative strategy? What proportion, if any, of investable cash flow should be diverted?
THE IPO OF FRAPORT
The case documents the career of an entrepreneur, Alfredo Sanchez from his Ph.D. in Geology (University of Madrid) to his ownership and pending sale of survey Research Associates upon his retirement. After being employed as a geologist for a few years, Alfredo and his family moved to Spain where he started a wholly owned subsidiary of his employer. Its mission was to analyze sand deposits for beach restoration for a number of countries bordering the Mediterranean Sea.
The case involved two aspects of Mr. Sanchez’s decision; what is the value of the firm and what type of compensation agreement will maximize his return on an investment of time and finances that spanned more than 40 years.
As a private company operated to maximize cash flows rather than reported net income, students have an opportunity to restructure the income statements and recalculate those cash flows. The concept of the “entrepreneurial wage” can be discussed as well as estimates of the cost of capital to be used for discounting purposes. The case has been written for MBA students in a capstone finance course.
After his 12 years in Spain, Alfredo brought his family back to the United States and in a few a years, decided to set out on his own. He started SRA and developed valuable contacts in the Federal Government, State Governments and private companies. The firm grew steadily and provided a comfortable life style for the family. When his son, Steve, graduated from Williams College, Alfredo convinced him to come into the firm. Reluctantly he agreed and for more than a decade became an integral component of operating management as well as critical business strategic decisions. On a part time basis, he also directed two films and wrote a proposal for a TV sitcom. When it became evident that Steve did not desire to continue at SRA, a sale of the firm became the only viable alternative for the family.
TRANSIT AUTHORITY OF NORTHERN KENTUCKY (TANK) VERSUS WILSON HOLDINGS, INC.
This case study deals with discounted cash flow valuation for an initial public offering (IPO). Issues examined include the difficulties to be encountered while developing cash flow forecasts, the risk in using multiples for valuation and the advantages of using discounted cash flow methods, especially the APV (adjusted present value) method instead. The case suits first or second year graduate students, especially majors in Finance. It can be used in classes on Corporate Finance, Financial Management or Valuation. Its presentation takes about 90 minutes in class and 15 hours of preparation by students. The teaching objectives are: (1) identification of the information relevant for a cash flow forecast, (2) understanding the challenges in building up a cash flow forecast, (3) understanding the risks of using multiples and (4) using discounted cash flow valuation for a company which provides more challenges than a textbook problem. The case deepens the knowledge of students regarding valuation. Thus, it can be used for classroom discussion after the relevant chapters in standard textbooks like Ross/Westerfield/Jaffe/Jordan, Corporate Finance, or Brealey/Myers, Principles of Corporate Finance, have been discussed. Excel spreadsheets can (but do not have to) be distributed in order to structure the discussion.
This case deals with the IPO of Fraport, especially the challenges while determining the issue price including the valuation itself but also the discussion with investment banks. It uses the perspectives of two managers of Fraport who are heading the IPO team and their external advisors. Data sources are the corporate plans of Fraport as used internally for preparing the IPO. Fraport allowed those real data to be used as a case study. An additional source of information was the issue prospectus.
The case is designed to introduce finance students to similarities and differences between analyzing financial statements of for-profit corporations and not-for-profit quasi-governmental agencies using TANK, a regional bus service serving three counties in Northern Kentucky as the not-for profit. It also introduces the student to the topic of eminent domain, since TANK is trying to acquire a local business property in order to build a new bus terminal, and leads to a lively discussion of when eminent domain is appropriate and when it is not. Six years of historical financial data and two years of projected financial statements are presented to the reader. Some of the data appears similar to a for-profit corporation, but some is quite dissimilar. Because the three counties, federal, and state government share the expenses not covered by passenger revenues, assessing the financial condition of the organization requires the analyst to re-arrange the information into a format that is suitable for analysis using traditional financial tools. If eminent domain is invoked, how will TANK be able to pay for the land and improvements? What pressure will this place on the three counties’ own financial operations? The case is written primarily for undergraduate courses in finance, but could also be used in an introductory MBA class.
Mike is a recent college graduate hired as a financial analyst working for the Budget Director of Kenton County. If TANK’s eminent domain suit is successful, the county, which has agreed to cover almost half of the annual operating deficit of the bus line, could face a substantial increase in contributions if the resulting project is not self-sustaining. Thus, an analysis of TANK’s present financial situation and trends is essential. But the financial statements have a lot of line items different from what Mike encountered in his finance classes. In order to do the analysis, he needs to first understand the differences, rearrange the statements so that they look similar to what he (and the county board of supervisors) are used to, and then analyze them and provide recommendations. Finally, he needs to analyze the impact on Kenton County if TANK borrows over $7 million to fund the acquisition and thus incurs substantial principal and interest payments that were not in the previous budget or their pro-formas.
A LAND OF DREAMS
THE CASE OF THE NEW DOCTOR
This case is centrally designed for use in a bio-ethics segment or class which is part of a pre-med or medical program. It may be of use in many other settings, including business ethics, strategic management, marketing ethics, and organizational behavior. The case discusses the travails of four brothers as they discover various conflicts within the medical system and their impact on the delivery of cardiovascular care. An important purpose is to help develop empathy for the plight of the Sharplins, as representative of others with cardiovascular concerns, and to develop a reasonable plan of action. Accomplishing this will inevitably involve a wide-ranging discussion of the current state of medical ethics in relation to cardiology and, metaphorically, other fields of medicine.
Four brothers from Louisiana, USA lost their father and two brothers to heart attacks at relatively early ages. So they have lived in anticipation, if not fear, of sudden death. All have taken usual measures to stave off heart disease. In 2007, a nephew had a coronary artery bypass and one of the four brothers suffered chest discomfort. At about the same time research studies and news reports revealed that much that the brothers had believed about coronary disease was based on research apparently biased by corporate profit-seeking. They were in a quandary about what to do with the information, especially in terms of their own lives.
USING BRIEF CASES TO TEACH HEALTH CARE ETHICS
When young doctors decide about the practice they want to establish, they are suddenly confronted with business problems that small businesses typically face. An MBA for medical students has been designed at Rockhurst University which starts students in their first summer with an integrated economics/accounting case which is solved by teams of up to four students. The case requires proficiency in applying their accounting and economics; they must apply and interpret a fully dynamic EXCEL model of their practice that automatically makes ledger, balance sheet, cash flow statement and income statement compatible. The scenarios they examine with the model face them with the decision of what form of organization they wish to choose; a solo practice, a partnership, or a corporation. They also must choose what demographic communities, third party payers, price discounting and size of practice that would be most practical and profitable. However, in making the choices they must make tradeoffs in the quality of care and quality of life for themselves. The choices force them to explore the constraints and objectives of four kinds codes; (1) their professional code (eg. the Hippocratic oath), (2) their personal ethics and religion, (3) corporate social responsibility, and (4) the law (particularly antitrust law).
Bill Soper, a family practitioner, graduated from medical school and had to decide where to locate and what size of practice he wanted. He could work for a large corporation or set up his own practice. Once he decided he wanted to set up his own practice he had to decide where. At first he started a solo practice in Liberty, Missouri, but after several years, even as he attained an MBA, he established a clinic. However, the running of the clinic involved a heavy management burden. Furthermore the clinic relied on the highly risky, limited base of a single institutional customer. Dr. Soper decided to sell the clinic, relocate to North Kansas City, and set up a new practice. When asked to address medical students about locating and sizing a practice, he realized there were many considerations that he would like to have thought through BEFORE he set up his practice.
A series of brief health care ethics cases provide the basis for instructing undergraduate students in applied ethics. The cases originate from The Intercollegiate Ethics Bowl and are reproduced with the permission of the Association for Practical and Profession Ethics, which is the sponsor of this annual competition among undergraduate teams. This set of cases has been combined with a narrow purpose in mind, namely, to help prepare undergraduates for competition in the Ethics Bowl. It may also have a broader application in an introductory course in health care ethics or as a unit or module in a broader applied ethics course. The first author is himself a former “coach” of his university’s Ethics Bowl team and the second author a former participant. The accompanying instructional materials seek to utilize the individual cases to introduce appropriate analytic categories and decision-making approaches especially suited to the field of health care ethics. Thus students are challenged to make connections across the individual cases and, where appropriate, to test the adequacy ethical theories, professional standards, public policy guidelines and personal values.
The emphasis in this selection of cases is breadth rather than depth. Collectively the cases represent a wide spectrum of health care issues: professional responsibility and its limitations, genetic testing and its application, end-of-life issues and the application of health care to the enhancement of human performance and appearance. For example, a registered nurse protests against an assignment to perform a procedure for a terminally ill patient. In another case, parents seek to use genetic engineering to produce a second child that will potentially provide bone marrow stem cells for the treatment of seriously ill first-born child. An Islamic family resists the counsel of medical professionals from a U.S. community hospital to remove their brain-dead relative from a ventilator. And a plastic surgeon, who performed a procedure on a patient when she was eleven-years-old, has reservations when faced with a subsequent request when she is seventeen. Other cases similarly challenge students think critically and draw the connection between thought and action.
BEHIND THE VEIL: A GLASS CEILING EPISODE IN INDIA
This case could be used in classes of Organizational Behavior, Human Resources Management, International Business, Legal Environment of Business, Legal Issues in Human Resources Management, Gender Issues in Management, Labor Laws and Multinational Corporations. It is useful in highlighting the role and plight of women in different countries, existing legal laws in different countries and changing role of management and differences in managerial styles.
The case study opens in a medium scale MNC- owned events management firm located in New Delhi suburb of Gurgaon, India. It is the year 2006 and events manager G.T. finds that she has been bypassed for the top job of Creative Director. The job is given to her junior, Satish Verma who is less qualified and experienced than her. His only advantage is that he is a man. Colleague junior events executive, Diya Mathur wonders why the top management behaved in that manner.
MANAGING GROWTH AT BACKCOUNTRY.COM
This disguised case is a real situation used to provide undergraduate and graduate students with an opportunity to make practical application of sound management principles within a small pediatric medical practice. Students are given the opportunity to diagnose the various management issues facing the practice and to suggest possible solutions. The clinic is beset with problems of lack of supervision, failure to exert effective controls, lack of leadership, and conflicting personalities. Dr. Abdul-Aziz is considering separating from the group practice in which he is a partner and establishing his own independent practice in the same market. The case is appropriate for students to develop alternative management strategies and provide Abdul-Aziz with a reasoned analysis for staying or moving to a new practice. Students should be encouraged to evaluate different scenarios related to the case. This case is suitable for written reports, oral presentations, and examination purposes.
This case deals with an actual situation involving Dr. Abdul-Aziz (all names are disguised) who must make a decision about his future with the small group pediatric practice he is a partner with. Dr. Abdul-Aziz has been with the group for about five years, but has been disappointed in how the practice is managed. The lack of effective staff supervision has resulted in several significant problems. Physicians have established certain policies without informing other partners. Nurses and reception staff have been poorly supervised and as a result some have resorted to surfing the Internet instead of handling important office tasks. Improper supervision of filing has caused slowdown and embarrassment with patients. Billing carelessness and pricing inaccuracies have cost the partners hundreds of thousands of dollars over the last few years. With the growing patient base of Dr. Abdul-Aziz, he has the opportunity to leave with his patients and establish a new independent practice.
The case focuses on the decision of Abdul-Aziz to remain with the group and try to change people, philosophies, and procedures or to separate and establish a new practice where he can implement the professional systems with properly trained and supervised staff, guided by his own philosophy of service and medicine and unfettered by his current environment.
The main learning objective of this case is to understand how organizational culture caneffectively support a company’s strategy, how organizational culture develops, and how it is maintained. Relevant management theories applicable to this case include Edgar Schein’s (1992) conception of organizational culture and Ben Schneider’s (1987, 1999) Attraction-Selection- Attrition framework for employee selection.This case was written for a class session on organizational culture in an introductoryorganizational behavior course and can be used in undergraduate, graduate, and executiveclasses. The case can also be used for an HR course in a class session on recruiting and selection. In a corporate strategy class, the case can demonstrate the importance of organizational culture in the support of an organization’s business strategy. In an entrepreneurship class, the case can illustrate innovative ways to manage growth.
This case portrays the rapid growth and unique culture of Backcountry.com, an online retailer of outdoor gear headquartered in Park City, Utah. The company was founded in 1996 by Jim Holland, an Olympic ski jumper, and John Bresee, an outdoor writer. At the time the case ends in July 2008, the company employed 500 people and had sales of $200 million. The year before, the company had been bought by Liberty Media, a large holding company of businesses like Expedia, Ticketmaster, and the QVC home-shopping network.Students are asked to assume the role of Charla Brown, Director of Human Resources atBackcountry.com. Charla has to decide how to repeat her annual fourth quarter task of hiring hundreds of new employees within a few months while at the same time ensuring that Backcountry’s unique culture remains intact. The case includes a video featuring one of Backcountry’s annual employee parties which signals the start of the company’s main selling season. The video was produced by the company to show visitors on its Facebook website what it is like to work for Backcountry. The video is available on YouTube at http://www.youtube.com/watch?v=s65ViAklmnY or from the case authors.
SHENZHEN FILTROIL: FINDING BALANCE
This case shows the challenges a small business often has with the attraction and retention of a highly skilled position. The case illustrates the importance of this position and the potential loss of reputation that the winery could suffer should the turnover of winemakers continue. The case was written for business school undergraduate or MBA courses in recruitment and selection.
Oliver Peninsula, general manager of Peninsula wines, a winery operating in the Niagara Region of Ontario, had worked hard with his family to establish a reputable name for producing quality wines at their winery. Sitting at his desk, he faced critical decisions in terms of staffing. In less than four years of operation, the company had lost its first two winemakers to local competitors. It is widely accepted in the wine industry that a qualified winemaker is critical to the success of the winery. The job of winemaker is a highly skilled position requiring an individual with experience in the winemaking process, solid management skills, education in lab testing for sugar, acid and PH levels, physical strength to be deeply involved in every aspect of the winemaking process (e.g. stirring and cleaning barrels, bottling wine), knowledge of inventory management, strong interpersonal skills and someone who is detail oriented and self-motivated.
Oliver knew he must determine how to ensure that they retain their current winemaker, Don Milan, who has worked for Peninsula for less than a year. Oliver was happy with the performance of Don and his associate winemaker, Carl Dore, and felt that they fit well with the culture of the family run winery. Oliver knew that both the quality of their wines and the consistency in their styles were critical to the company’s ongoing success. Peninsula had received comments from customers that the taste and style of their wines were different from year to year, which Oliver knew was a result of the different winemakers they have employed in such a short period of time. He believed that the inconsistency of their wines was starting to negatively affect sales.
This case can be used to exemplify the challenges of changing a U.S.-based company into a global competitor. Issues that are discussed include: cross-cultural relations, global effectiveness, global entrepreneurship, human resources, leadership, organizational development, and business strategy. The material could be used to focus on what it takes to build effective working relationships, allowing students to explore issues including dealing with conflict, building trust, managing performance, and having difficult conversations in a global context. The case is suitable for use in organizational behavior, human resource management, and strategy classes at the MBA and executive education levels. The case could be taught near the end of a term to serve as a review of managing stakeholders; it could also be taught at the close of a global leadership module focusing on issues of managing across cultural differences, individual behavior, and teams, experiencing issues that confront global managers, developing management skills and style, leading negotiations, and recognizing personal leadership models.
Jeremy Leahman, president of Filtroil, Inc., and Albert Randolph, founder of the firm, had created a partnership with a supplier in China to ramp up the manufacture of their China-based filtration system and start a new zinc alloy venture. They opened a new factory in Dongwan that was a merger between Shenzhen Filtroil and their supplier, Liu Li—whose own factory was on the verge of bankruptcy. Liu would own 10% of the merged factory and Shenzhen Filtroil would own the rest and acquire all of the necessary equipment. The two businesses filter and zinc would operate under the same roof.
One year later Leahman was on a plane headed for China to hash out problems with Liu, who had demanded a monthly raise for himself and his wife, a new company car, and an increase in profit sharing. He had also threatened to delay product shipment to the United States if his conditions were left unmet. Qian Kai Nam (Qian) and Shea Kai Young (Thomas), who ran Shenzhen Filtroil and were in on the zinc partnership, believed that Liu’s behavior put the entire business relationship at risk. The case reveals options Leahman could take to manage the situation.
THE CENTER MORICHES SCHOOL BOARD (A) & (B)
This case shows the frustration on the part of a dedicated group of operations and human resource professionals who feel that despite their best efforts that they risk not successfully filling upcoming vacancies. Sodexo has attempted to position itself as an employer of choice, has used a variety of recruitment channels and offer benefits and career development potential. The key issue involves how Sodexo can overcome several key barriers in order to successfully recruit. The case was written for business school undergraduate or MBA courses in recruitment and selection.
Resources department for assistance with the recruitment and selection of hourly personnel for their food service operations within the Ontario Power Generation (OPG) plant facilities. Greg knew that his team was anxious about the prospect of hiring more food service workers in order to deal with the anticipated increase in the number of customers served. Such a recruitment initiative would be challenging given the perception that all possible recruitment channels had already been explored.
The frustration experienced by Greg’s team centers on the perception that despite performing an admirable job of trying to fill the position that there are key barriers outside the control of the team. First and foremost is the daunting security screening process. Because the positions are located in a nuclear power plant, there is a multi-stepped Federal security clearance required. The length of time required to get the clearance (i.e. 6-8 weeks) often results in candidates being hired by Sodexo and then subsequently quitting before their first shift in order to seek employment elsewhere. Other challenges include the remote location of the facility and the lack of public transportation options, the amount of subsequent training required by OPG and the perception that all current recruitment channels have been attempted and exhausted. The pressure is on to fill the positions because the OPG plants are about to experience a large increase in the number of contractors who perform yearly maintenance on the plants. The extra people in the plant will result in more foot traffic at Sodexo’s food service facilities at OPG and therefore, Sodexo must hire additional staff without compromising the integrity of the client’s strict security process.
The case enables students to study the evolution of a school board during a period of crisis as well as in the period after the crisis has passed. With this evolution, the organization dynamics of the personalities on the board come into focus, allowing students to analyze the sources of power of the board president and the leadership role that he has employed. The case was developed for undergraduate courses in Organization Behavior as a means to apply many of the theories associated within that field of study.
This case follows the development of the Center Moriches School Board, based on the events that shaped that development. The (A) case traces the events leading up to May 2004, when the residents of this Long Island community discovered that the school budget that they were voting on would result in a significant increase in property tax rates. The increase in property taxes was necessary due in large part to the mismanagement of the school district by its superintendent of schools, who, by the time that the fiscal crisis became widely known, had disappeared from public view. As a consequence, it was left to the school board, and its charismatic president, Joe McHeffey, to determine how to proceed with the school budget in the face of a hostile community.
The (B) case is set in November 2006. In the two and a half years that elapsed since the (A) case, the Center Moriches School Board had succeeded in restoring the faith of the community in its management of the school district. The board went ahead with the 2004 school budget vote (which was approved), and the community voted in favor of both the 2005 and 2006 school budgets, reaffirming its belief in the school board. A new superintendent of schools had been hired and the academic performance within the school district showed progress. The school board, however, still functioned for the most part as it had in the past, with McHeffey wielding a tremendous amount of power. Some of the new board members began to question whether this style of leadership on the school board continued to be in the best interests of the community.
CISCO SYSTEMS: BRIDGING A GATEWAY BETWEEN EUROPE AND INDIA
ETRAFFIC PRESS: TEXTS FOR THE 21ST CENTURY
This is a case about strategic management of innovation within a technological firm, CISCO Systems. The case focuses on: (1) how to make sense, assess and develop a project based on the new paradigm of “cloud computing”; (2) the change in CISCO strategy and, as a consequence, (3) how to design its globalization strategy. The case describes a story focused on Europe and India. This “living case” describes an ongoing effort within the firm. At the time of writing, management at CISCO was completely dedicated to defining the company’s strategic change. The instructor’s strategy should be to help students situate “ideas” and “imagination” within the realm of realistic commitments and the realistic mobilization of resources, seeing innovation as a bridge between imagination and reality. We also feel that studying CISCO is a good metaphor for this bridge. The case objectives also aim to foment critical thinking in students, but above all, they ask students to see creativity not as daydreaming, but as a methodological exercise to understand the limits of reality and to manage a company so that it takes actions and makes realistic commitments.
The case asks students to put themselves in Jordi Botifoll’s shoes (Vice President of CISCO Europe, Mediterranean Area) to decide on the key priorities and questions to consider when developing a specific plan for a Digital or Smart City based on the new Internet parading (or the Internet of things), in this case Barcelona. For this, Botifoll must work with Syed Hoda (Director of Operations in India) and Wim Elfrink Chief Globalization Officer (CGO) and Senior Vice President. The case describes how CISCO is shifting from a “product centric” company towards a solution-focused one. The case also centers on the Mediterranean division, created in 2009, and its relationship with India from initial off-shoring projects to 2007 when CISCO created its Globalization Center East, in practical terms, a second Headquarters in Bangalore, India. The case describes how the company's aim was to “capture” both the GDP shift moving towards the East and new sources in the Asia Pacific, including the development of business models. However, it also questions if we are currently experiencing a major shift towards a non-USA centric future for Information Technology firms. In consequence, the case focuses on Smart City initiatives. Starting in the Gulf Region, this initiative is capturing a lot of attention due to the phenomenal opportunity it represents to discuss the future of Internet as seen in traffic control; smart electric grids to gain efficiency and reduce CO2 emissions; and harbor management; and Unified Communications, among others. The case describes the opportunity to apply this concept to Barcelona, leveraging (1) European Union (EU) development policies and (2) how to manage resources to manage the project “from India to the world.” Finally, the case links this project with the company’s Globalization Strategy or how to leverage innovation sources, as well as design units, R&D Lab locations, divisions and resources in order to align a firm in which 50% of its current volume is due to recent acquisitions.
LEADERSHIP TESTED BY FIRE: FROM HOT ASHES TO A COOL RECOVERY
This case illustrates the challenges for a small publishing company that wants to introduce disruptive new approaches into the K-12 textbook market. Etraffic Press competes against three large, well-known publishers in an environment dominated by traditional practice and government decision-making. The inclination is to promote the eco-friendly elements of its digital content, on-demand printing and alternative delivery media. Student analysis will reveal that decision-makers aren’t really walking the walk when it comes to carbon reduction targets in education. How, then, can Etraffic Press penetrate the very lucrative textbook market? The case was written for MBA level courses, where it could be used in e-business, strategy or marketing courses.
In spring 2008, learning and teaching methods were changing in Canada, opening up opportunities for companies that could respond to those changes. The three major Canadian publishing firms had thus far been unsuccessful in creating quality online resources, but they were eager to gain a share of the market.
In addition to interest in changing education, the public expected suppliers to be more eco-friendly. The upcoming 2010 “Green Olympics” in Vancouver, the public’s rising environmental consciousness, and national attention to climate change all contributed to a sense of urgency among businesses and public organizations – with the notable exception of educational publishing. Despite consuming 20 million trees and transporting over a million tons of books each year, textbook suppliers had demonstrated little if any innovation in the past century. Victoria B.C.-based Etraffic Press seemed poised to revamp educational publishing with its low-priced and cutting edge online and flash-drive learning resources, as well as its print-on-demand textbooks. There was no shortage of arguments in favor of Etraffic’s innovative new models, but schools seemed slow to respond. Etraffic had a head start on the online learning world and needed a strategy to distinguish them and grow their current market share. Michelle Jeske, VP of Business Management, knew that it would take more than visionary ideas to bring real change to traditional K-12 educational resources. Her problem was to determine which of many options would move Etraffic forward.
This case shows the importance and need of a well thought out and documented enterprise disaster recovery and contingency plan. The case provides an opportunity to utilize the NIST 800-34 Contingency planning guide to help students understand the importance of a contingency plan and how to create a contingency plan. The case was written for business school undergraduate and graduate courses in computer systems, information technology, business leadership and strategy, healthcare management, and information assurance.
Robert Carpenter, the CEO of VNA, must quickly determine what steps to take in the immediate aftermath of the fire. The VNA does not have an enterprise wide business contingency plan or IT contingency plan to address this crisis situation. The VNA organization supports 8,000 employees, home bound patients and individuals in need of “meals on wheels”. The VNA has a headquarters location and four branch locations that need IT systems and communications.
The CEO knows it is his responsibility to call the leadership team together and devise a plan that will enable the VNA to continue to support their many stakeholders. Carpenter also knows that the plan is not on the shelf and it must be created immediately by Carpenter and his leadership team. At a high level he knows the VNA will needs a temporary work site, a communications plan for the stakeholders, and IT systems and communications back in order.
3M: SPECIFIC MARKET DEVELOPMENT
Not for Profit
CEJA VINEYARDS: MARKETING TO THE HISPANIC WINE CONSUMER?
This case may be addressed in different ways, contingent upon students’ profile and experience, number of sessions available and teaching objectives. The case is divided into three parts: Case A poses the complexity of accessing the market with a sector-based product vision. Case B deals with the wine sector and a more standardized vision of B2B analysis, while Case C presents the mining sector with its highly complex structure.
This case may be used in advanced marketing courses for MBA programs as well as in specific executive education programs addressing key account management (KAM), global account management (GAM) and/or industrial marketing or business to business marketing issues.
In 2007, 3M Argentina’s management team was evaluating growth alternatives. Specific market development posed challenging questions for a company with a commercial scheme based on products. The team knew they should align the company’s organizational structure to the commercial strategy of choice, but how could they build an action plan that contemplated this alignment? Was it possible to grow through specific market development or should they consider other options?
After analyzing each market’s core features and growth opportunities, and determining their complexities and how much knowledge the company actually had on each of them, two markets were selected: the wine business and the mining business. The former featured a local market with multiple actors engaged in complex relationships, while the latter exhibited a higher concentration at the international level. Each project displayed particular complexities at the domestic and international level. Therefore, they called for different management schemes. This case encourages class participants to discuss, in the first place, complexities arousing from the decision to implement specific market development and, second, to formulate an action plan for each market selected in order to achieve greater penetration and growth. This will require a deep analysis of each market’s structure, its specific customers and account management systems.
HOW SWEET IT ISN’T: THE SUGARLESS BAKERY INSTRUCTOR’S MANUAL
The case presents the growth and development of a small, family owned winery. It is designed to be a culminating case in a marketing management course in which all aspects of marketing management and strategy are pulled together to analyze the case and develop recommendations. This case can be used in either an undergraduate capstone marketing management course or a graduate marketing management course. By analyzing and discussing the case, students should be able to: (1) develop a greater understanding of the wine industry and the challenges facing small wineries in an extremely competitive environment, (2) effectively use a SWOT analysis to analyze the company’s resources, customers, competitors, and external market factors, (3) effectively develop screening criteria to evaluate opportunities, (4) know what market segmentation is and how to segment product markets into submarkets, (5) know the relationship between differentiation, positioning, and targeting, and (6) be able to develop strategic recommendations that are supported with sound theory and market information.
After celebrating their nineteenth harvest and seventh year as California producers and marketers of premium wine in September 2007, the Mexican-born owners of Ceja Vineyards were considering whether or not to make a concerted effort to target U.S. Hispanic consumers. Doing so would enable Ceja to capitalize on its heritage as one of the first Hispanic-owned and operated wine businesses in America, but this was no easy decision. Targeting the emerging and potentially vast U.S. Hispanic consumer segment might require extensive repositioning of Ceja’s premium varietal wine brands, result in a diminution of effort to sustain its rapidly growing wine club, pose additional future expenses for promotion of wine consumption to U.S. Hispanic consumers, and erode the high-end premium wine brand. In addition, the Hispanic wine consumer living outside the U.S. represented another high potential market and was of serious interest to Amelia Ceja, co-founder of the winery, and her partners.
The case includes detail on the history and business operations of the winery, background data on the U.S. Wine Industry, demographics of U.S. Wine Consumers, and U.S. demographic forecasts through 2025. The case also provides a detailed description of the family’s business philosophy and their vision for the growth and sustainability of Ceja Vineyards.
KINDLE-DX: RETHINKING AMAZON.COM’S STRATEGY TO TARGET COLLEGE STUDENTS
The case and teaching notes were written to be used in marketing classes – principles, new product development, strategy or product/brand. The case could also be appropriate for a small business class.
As a marketing case, it could be used at several points in a Principles class. The student faces decisions about target marketing and segmentation which leads into distribution, pricing and promotion strategies. The case writers offer some suggestion for further research and more in-depth analysis. The student has the opportunities to work with breakeven analysis, segmentation criteria, target market potential and types of segmenting strategies.
After a diagnosis of heart disease and a high risk for diabetes, Sandra Bryant is forced to make a number of lifestyle changes. These changes lead her to consider starting her own business, an idea that becomes more interesting once she hears of a successful sugarless bakery in another part of the state. Fred, the owner is willing to franchise his concept and Bryant begins to do her research for starting her own bakery. Her research and advice she gets from the Donald E. Kelley Small Business Institute at Francis Marion University causes to her reconsider some of her plans.
This case is based on consultations of an actual client of the Donald E. Kelley Small Business Institute at Francis Marion University. Details about Fred and his bakery are somewhat disguised.
OFFICENET: DECIDING WHETHER TO CONTINUE DELEGATING THE PRICING AUTHORITY
The case describes the launch and marketing of a new generation model of an e-reader, a product category that has still not diffused into the main stream marketplace. The product potentially offers a lot of benefits, but carries a high upfront price. The new model is targeted at a segment is large but price sensitive and which may not be convinced of its value. The main objective of the case is to help students critically examine the marketing issues that accelerate or inhibit the adoption of a product in its early stages. This allows for the case to be discussed from several angles and to tie in various aspects of a marketing strategy such as the 4Ps (Product, Price, Place & Promotion) and the 5Cs (Company, Customers, Competitors, Collaborators, Context). The case can also be used to focus on specific issues in a consumer behavior class (such as on disruptive consumer behavior) or in a new product development course to talk about early adoption phase of a product. These can be related to discussion on pricing strategies such as skim versus penetration. The case was written for a graduate level course in marketing.
This case concerns Amazon.com’s marketing strategy for the e-reader, the Kindle-DX. This model, which has a larger screen than its predecessor, was launched in early May 2009 and targeted at the college student market. E-readers potentially offer a lot of benefits to students as they combine the experience of reading actual print with the benefits of digitization and portability. Although e-readers has been available since 2006, it is still in the early adopter phase and not yet popular in the mainstream market. Amazon has partnered with some universities and textbook publishers to offer a pilot program in the coming academic year to test the responsiveness of this market. However, a high price tag of $489, alternate ways to access digital texts and intensified competition from other electronic readers all pose major threats to Kindle-DX. Is Amazon.com targeting the right segment for this brand? If it aims to capture the higher education market, is the marketing strategy appropriate?
ONLINE ADVERTISING AT STOCKWEB- A SMALL BUSINESS DILEMMA
“Officenet: Deciding whether to continue delegating the pricing authority” may be used in initial marketing courses included in MBA curricula, executive education programs, as well as specific pricing courses.
This case may be used to help students to advance their knowledge on price policies and delegation of pricing decision and to learn more about the challenges faced by companies implementing pricing strategy changes and their repercussions on: Sales force, organizational culture, customer relationships, competitors’ prices and profitability.
After six years of negative net profitability, Officenet (ON), Argentina’s leading office supply vendor, started to show signs of positive results. However, its performance still lagged far behind STAPLES’ net profits. This U.S.-based global industry leader owned ON since the end of 2004. In mid 2005, Leo Piccioli took over as ON’s General Manager, knowing full well that his key challenge lay in driving ON to reach Staples’ profitability levels. He was also aware of the fact that one of the reasons for ON’s low profitability rested with the company’s sales force. Free to set prices for specific quotes, sales agents used to grant significant discounts (40 percent of the items in an order were priced below their regular prices) to their customers. Piccioli needed to revise the company’s pricing policy. Should ON change the pricing delegation practices that were so embedded in its organizational culture? Or could it raise its prices and maintain its current policies? How would its competitors react? The case describes this scenario, inviting class participants to delve into topics associated with pricing delegation and price policies.
PROJECT ‘ZERO-D’: MANAGING SALES FORCE ATTRITION AT KARNAVATI HEALTHCARE LTD.
This case unveils a situation where a small business faces competitive headwinds and must decide upon a new direction at the firm. This case asks the question “Is it time to sell the firm to a larger company that can use what we’ve built in their long term strategy, or do we go it alone and bolster our product offering, with the knowledge we might be alienating our current customer base?” This is both a marketing and entrepreneurship question. Using keyword cost data provided by two major search engines, StockWeb employees can see the costs of acquiring accounts will soon outstrip the lifetime value of the customers they are acquiring. This is the marketing question. The firm weighs choices about future directions. Some initial marketing research data shows only lackluster support for the new product offerings that StockWeb wants to roll out to their customer base. Deciding which direction to proceed will prove crucial for the existence of the firm. This is the entrepreneurial question. This case was written for an MBA elective marketing course called ‘e-Marketing’ with the course objective being to help students learn to design and deploy effective marketing strategies for a digital networked, global, and mobile economy. The case can also be used in an entrepreneurial class which emphasizes weighing strategic options in small businesses.
Jeff Simpson was appointed CEO of StockWeb in 1998. The company’s business model was modified in 1999 to create an online investment brokerage that catered to small- and medium-sized investors. The firm strategy was one that encouraged its investors to buy-and-hold quality investments for the long-term. The company believed that through proper education it could help less financially-educated individuals take a disciplined-themed retirement planning approach.
Due to the nature of StockWeb’s business model, customer lifetime value amounts was much lower than other competing online brokerages. StockWeb’s management team saw three key options to helping the company make the adjustments to their advertising costs dilemma. Possible solutions included adding a new business-to-business unit; integrating new product lines to enhance the retail customer experience; or to sell the business to a larger player where an acquisition in the financial services sector made long-term success. Deciding which path to take would prove to be a hard choice.
TEAM COMPUTERS 2008
This case on severe attrition faced by a Pharma Company in India provides a realistic context for students to understand and vicariously experience the competitive, high pressure nature of sales jobs. It enables them to conceptualize sales force attrition, analyse it in an organizational context, and to come up with pragmatic solutions. It exposes them to related issues, like, organization design for sales management; theories/ approaches of motivating sales force; role of top management in building employee commitment; ‘Head Office–Field’ relations; the critical role of immediate boss; and so on. Crucially, it can draw attention of Marketing Students/ Managers to the importance of HR function and the need and challenge of effective people management for marketing success. A discerning reader may also find opportunity to introspect on the not so brighter side of sales and marketing caused due to high sales pressure/ unrealistic targets. This case can be considered for use in the MBA basic Marketing Course with Sales Force Management as a theme or in a specialized elective on Sales/ Distribution Management. It could also be used in similarly oriented Training Programs for Marketing Executives.
Karnavati Healthcare Ltd. (KHL), a large Pharma Company near Ahmedabad in western India, was facing severe sales force turnover in its Human Branded Formulations SBU (B-SBU). All three divisions B-SBU: Le Sante, Pharma and IRM Pharma were adversely affected. It had become the issue of highest concern to KHL Top Management that they appointed a team of Consultants from a top notch marketing and advertising school in the city to study and recommend solutions. Over a period of six months, the Consultants conducted extensive research: studying internal records, analyzing the industry and environment, interviewing KHL employees and executing a division wide survey named ‘Manpower Mood Meter.’ With trends like megabrands, product patenting and internet savvy patients rapidly transforming the face of Indian Pharma Industry, there was high immense pressure on KHL Top Management for swift but well crafted responses to the attrition issue. The case details Consultants’ engagement with KHL, presents data gathered by them, and gives some indicative analysis. It ends with the Consultants being ready with the final report for presentation to KHL.
THE MARCH OF DIMES: MARKETING IN THE NOT-FOR-PROFIT SECTOR
The case shows how the CEO of Team Computers, an entrepreneurial venture, was coping with the problem of creating a unique identity for the organization. It tracked the evolution of an embryonic organization to an Indian Rupees (INR) 2.3 Billion organization with 1500 employees. It also highlights that an organization could become quite big without a very well defined positioning in the mind of its consumers and even its employees, simply because of the owners personal skills and insights which worked in the market. It highlights the key challenges for Team computers with respect to its transition to a more professional, system driven and a market oriented company. The case provides enough evidence to evaluate the positioning options of the company, the criteria to finalize the positioning options. It also opens up the possibility to discuss changes in organizational structure required to implement the positioning. The case also opens up the debate about conditions under which democratic process might not be the best way to decide on positioning. And when the CEO should take the ownership to define the positioning platform for the organization and cascade to the rest of the organization, and the limitation of such a process.
Ranjan Chopra, Director of Team Computers Pvt. Limited, a Delhi based systems integrator and solution provider, was planning the next leap for the company. Team Computers had emerged as a large IT Infrastructure Solution provider supporting more than 600 mid market customers across India and some overseas clients. He felt that his company had potential to have the best in class global processes and had kept in pace with the evolving needs of its clients & the ever changing strides of the IT industry. Ranjan knew that the growth and financials of the company in the last few years had been good and qualitatively he had been able to make Team Computers a force to reckon with in the market and achieve industry recognition. However, he felt that the future growth of the company would depend on his being able to steer Team Computers from a sales oriented to a marketing oriented organization. With increasingly competitive market place, a distinct image of the company was almost a prerequisite to the vision of sustainable, profitable growth for the company. The problem was inherent in the market condition of intense competition among the firms and high degree of employee turnover which plagued the industry. The biggest challenge was to arrive at such a positioning. The case focuses on the challenge of deciding on a positioning platform for the company, considering its checkered evolution and in the context of difficult to predict future trajectory of fast changing IT business landscape.
This case study is designed so that students can evaluate the relevance of the March of Dimes’ market position and to provide possible solutions to rejuvenate an established brand. This case is intended to help students recognize factors that suggest re-evaluation of a brand. Here, students are given information to evaluate a positioning strategy, to analyze data, and to identify major marketing concerns. Furthermore, this case is designed so students can evaluate the relationship between strategic mission, brand image and associations, and perceptions of the target market. The case can be used in either a structured or unstructured format. With the structured approach, the instructor can select questions relating to the specific topic of interest (e.g. branding) and assign those questions, followed by class discussion. The questions can be assigned as homework to individual students with classroom discussion on the assignment due date, or the questions can be addressed in small groups in class. Alternately, the case could be used in a less structured approach. In this approach, the students should not be prompted on specific issues, but rather allow them to develop a SWOT or environmental analysis to discover for themselves the critical issues affecting the firm.
The case involves the March of Dimes Birth Defects Foundation (MOD), “the leading nonprofit organization for pregnancy and baby health.” MOD supports research and provides community services and education to save babies’ lives (www.marchofdimes.com). The strategy issue in the case involves how to re-position and market a not-for-profit brand in a changed environment. The main protagonists are Dr. Jennifer Howse, president of the March of Dimes; Doug Staples, senior vice-president for marketing and communications; and an employee of Barkley Agency, hired to assist in the rebranding of MOD. A quantitative study among adults 18+ revealed that March of Dimes ranked fifth in unaided awareness among charities in 2006. However, there was a significant drop in unaided recognition of March of Dimes from 22% in 1993 to 9%. The results of this research were the catalyst for the organization to re-evaluate how the services offered by March of Dimes were perceived by consumers. While Americans surveyed were aware of its signature fundraising event, WalkAmerica, recall of other aspects of MOD were fairly generic and in many ways conflicted with the stated mission of this not-for-profit organization. A related concern for MOD was that consumer perceptions about the seriousness and frequency of prematurity and low birth weight were shifting. Research showed the number of Americans who thought prematurity was a serious issue and a common occurrence declined in 2006 from the previous year. MOD was particularly alarmed that prematurity and low birth weights were not being considered as important as they had been in the past.
CORPORATE GOVERNANCE AT ROCKY MOUNTAIN MUTUAL HOUSING ASSOCIATION
Production & Operations
INTERNSHIPS AT VIRTUOSI CONCERTS
In 2003, Rocky Mountain Mutual Housing Association (“the Mutual”) was in dire financial straits. Falling property values and negative cash flows forced Board members to decide about its future. The case deals with corporate governance issues surrounding growth at the Mutual in the 1990s and the strategic decision the Board faced. The primary case objective is to enable students to evaluate the Mutual’s future and decide whether the Board should pull the plug or continue with its commitment to provide affordable housing and other social programs for its low income members.This case is suitable for use in undergraduate and graduate courses in Non-Profit Management, Public Policy, and Business Strategy & Policy.
Rocky Mountain Mutual Housing Association (“the Mutual”) was a not-for-profit affordable housing organization incorporated in Denver, Colorado, in April 1992. The Mutual was founded for the purpose of acquiring, developing and managing affordable multi-family housing to meet a growing social need for low cost affordable housing. The idea of “mutual housing” was based on a European residential model which provided permanent housing to anyone who was motivated to meet the obligations and challenges associated with homeownership. A fundamental feature of the Mutual’s mission was to provide services to its residents in a variety of areas, including job training, after-school programs and homeownership programs. The overall goal of these programs was to provide the residents with the tools for gaining equity and equality in the housing market. A unique attribute of these “mutual” communities was direct resident involvement in the management and decisions that affected the communities. The case describes the aggressive expansion undertaken in the 1990s, and the operational and financial challenges faced by the Mutual when the housing market and local economy took a nosedive, adversely affecting property values and cash flows since the dotcom bust. While lien holders and experts in the field, such as HUD, mortgage holders, and industry accountants, urged the Mutual to file for bankruptcy, the Mutual’s Chairman was unyielding. Despite the high number of board resignations on the Board and among Mutual’s executive staff, Dr. Gordman, the Mutual’s Chair, was adamant about the Association’s ability to recover and its potential future. The case focuses on the strategic decision of whether the Mutual should file for bankruptcy and sell the properties or to stay committed to its mission and continue operations.
THE WOMEN’S BEAN PROJECT (2008)
This case is suitable for use at the undergraduate or MBA level in Not-for-Profit Management courses, as well as executive education classes for boards of directors and arts managers. Although the case deals with an idiosyncratic organization – a not-for-profit subsidiary of a university, executive-directed by a tenured psychology professor – and an idiosyncratic decision – whether or not to build student interns into a restructured organization – a good discussion will surface some generalizable issues in not-for-profit management. These include: how a decision should be framed for a board’s consideration, how malleable an organization’s mandate should be, managing a relationship with a major funder, business challenges for short-staffed small organizations, and organizational structure in relation to business performance.
Virtuosi Concerts (MB) Inc. (VCI) was a small arts organization, incorporated as a not-for-profit subsidiary of The University of Winnipeg, in Winnipeg, Manitoba CANADA. It was founded in 1991 by Harry Strub, a psychology professor who served as its Executive Director. Under his direction VCI became a leading chamber music and recital series of the Winnipeg arts scene. Under the terms of the then current university collective agreement with the university faculty association, Harry had to retire by September 2009 and VCI Manager Gail Bauer, who had worked very closely with Harry for several years, indicated she would retire in June 2009.
In response to these upcoming transitions the board initiated a strategic planning exercise that decided the organization would be restructured into a “two-headed” model with an Artistic Director responsible for programming and a General Manager responsible for the business operations both reporting to the board. Furthermore, the plan called for a feasibility study of the possibility of involving student interns in an integral way in the ongoing administration of VCI.
That feasibility study led to a two-stage internship pilot project to gain experience with accounting, human resources (volunteer coordination) and fundraising interns. Results were mixed, but in November 2008 the board had to decide if the new general manager should be hired under the assumption that student interns would be part of the VCI organizational structure.
THINK HUMANITY AND THE KYANGWALI REFUGEES
The Women’s Bean Project is a unique social enterprise located in Denver, Colorado. Established in 1989 as a non-profit organization by Jossy Eyre, the Women’s Bean Project (WBP) is dedicated to assisting women break the cycle of poverty and alleviate the problem chronic unemployment among the underprivileged and underserved women in the community. The fact that the founder was interviewed by PBS is a testament to its success in creating exceptional value to the disadvantaged women it serves. The objectives of this case are to raise awareness of this highly successful non-profit organization, and to allow students to evaluate WBP’s decision of diversifying into a new jewelry-making venture.
Using business to create social change is difficult. The social enterprise sector as a whole needs more relevant support from the public sector in order to flourish. However, previous experience with public sector support has demonstrated challenges for the Women’s Bean Project (WBP). Past funding opportunities proved to be unsuccessful; funding sources were withdrawn, unorganized, and ineffective. Further, the women did not have positive experiences with various agencies which lead to wary participation of potential programs.
The Women’s Bean Project is a place where women can go when other options have failed. Working with organizations to help women transition back into society is a primary goal of the Women’s Bean Project. However, its ability to help employ women is driven by its sales, donations, and grants. Sales are reliant on public awareness of the organization and its mission. Faced with the possibility of declining sales in 2009 in a crisis-ridden economy, WBP’s executive members proactively consider adding jewelry items to its core product line and work with retailers in the local art districts to sell its new product line. The central focus of this case is to evaluate this new diversification move from a strategic and operational perspective.
This case tells the story of Beth Heckel and her discovery of the suffering and survival endured at the Kyangwali Refugee camp in Uganda. Beth Heckel began developing relationships with key individuals at Kyangwali through her daughter Aimee and soon began to realize what huge impacts she could make for these refugees with little as $5.00. This $5.00 would provide a mosquito net to prevent the number one cause of death at the camp, malaria. Beth has built lasting relationships with individuals at Kyangwali by allowing them the dignity they deserve in the value of their life by caring for what happens to them. However, Beth is not just caring, she is taking action. In addition to raising and sending money, Beth is mentoring these refugees and raising awareness through her website of the dire needs at Kyangwali. The objectives of this case are: i) to understand how one individual, Beth Heckel, took on this cause with the help of her family and has made such an impact in so many ways in a short period of time, ii) observe the process of empowering a community with projects that benefit the community as a whole, and iii) evaluate the struggles a non-profit faces in raising funds, and iv) recommend strategies for Think Humanity to become sustainable long term. The case was written for undergraduate and graduate courses in global social entrepreneurship, and non-profit management.
Kyangwali is a refugee camp located approximately 30 miles outside of Hoima, Uganda. Beth began to raise funds through selling books on e-Bay, grants and personal donations and developed the non-profit Think Humanity in 2007. Her communications led to managers on the ground for TH in Kyangwali relaying the immediate needs and then TH meeting or collaborating to meet those needs. Beth is not giving a hand out to the people, she is giving a hand up empowering them to make key decisions as well as raise money for projects in collaboration with Think Humanity. Beth’s dream of helping provide nets and medications to Kyangwali has evolved to many more projects such as building an orphanage and preschool on land donated by the commandant of the camp, helping young women in a hostel with their room, board food, medications which allows them to further their education off-site from the camp, build a sustainable garden and livestock project which also helps sustain the orphanage and women’s hostel and provides jobs for the locals. One of the major problems Beth faces is how to sustain and raise the money needed so desperately in order to provide the needs and care the refugees deserve. Faced with an economic crisis at home, Beth was forced to reduce her budget in 2009 to accommodate the down turn; however, the needs in the camp are growing as ever before.
BJR WOOD MANUFACTURING: AN EQUIPMENT REPLACEMENT DECISION
CAPITAL VEHICLE SYSTEMS: AN EXPLORATION OF LEAN MANUFACTURING
This case focuses on the detection of a quality problem as a symptom of the need for equipment maintenance, refurbishment, or replacement – areas that are often overlooked in studies of operations management. It deals, therefore, with the impact that nonconforming parts can have on a manufacturing process, and allows students to explore its possible remedies, using detailed text and supplemental exhibits for analysis. Specific case objectives include: (1) Illustrate issues and challenges associated with miterfold construction, including core competency strategic fit analysis; (2) Compare and contrast existing and potential miterfold capabilities; (3) Evaluate various manufacturing equipment replacement options for miterfold construction; and (4) Develop potential implementation options for an equipment replacement decision.
The case would be useful in upper-level undergraduate courses in Operations Management, or those focusing on quality management, manufacturing process selection and design, or operations strategy.
BJR is an office furniture manufacturing company that has been in operation for nearly 100 years. Quality is a key component of its business model and how the company purports to distinguish itself in the marketplace. However, in 2008, 100 percent of miter edge customer complaints from its high performance products were related to manufacturing. Additionally, 100 percent of the miterfold edges were being touched up manually within the plant before being shipped to customers. How can BJR product higher quality products? Do they need a new machine or does the firm simply need to refurbish the old one? Which vendor should they use? If they are purchase a machine, should they use a new miterfold equipment option or stay with the current equipment option? How should all these options be evaluated and prioritized?
By using the information within the case and the exhibits, the students have an opportunity to evaluate a firm’s equipment maintenance procedures and an equipment replacement decision.
ESTONIAN AIR’S BIG BUY
Students often gain instruction in Lean Manufacturing, but do not have an opportunity to see its implementation in practice. This case is designed to provoke questions regarding: (a) the philosophical underpinnings of lean; (b) the practical implications of how the values of those implementing lean affects the tools selected, and (c) the impact of lean implementation on an organization. The case places a particular focus on the Toyota Production System (TPS) and Scanlon Management System. Specific case objectives include:
1. Understand the requirements for Lean Manufacturing, and that its implementation will evolve over time.
2. Identify the obstacles to implementing Lean Manufacturing.
3. Identify Organizational Philosophy and Values as reflected in production documents, attitudes, organizational structure, and role definition, and determine what the best and worst outcome can result from the underlying philosophy.
4. Make recommendations regarding changes in Operations, and anticipate the consequences of those changes.
This case is designed for use in classes that explore the operations, business strategy, business ethics, or organizational dynamics. The intent is to explore how organizational philosophy determines the implementation and efficacy of business tools. This case would be suitable for graduate courses or upper-level undergraduate courses where students have already been exposed to a breadth of operations management topics.
Capital Vehicles Systems is a supplier of vehicle instrumentation systems, including gauges, system controllers, sensors, and display products. In 2008, the firm faced several challenges as the economy weakened and the cost of plant returns and warranties remained high. What can the firm do to meet the strategic goals in the most cost effective manner? The case examines various ways in which Lean Manufacturing has been implemented. In analyzing the case, examine a variety of production-related documents, applying the principles of lean manufacturing to determine which aspects of lean have been applied well and which have not.
LEAN OPERATIONS AT GRAND RAPIDS PUBLIC LIBRARY
The case gives students a chance to build a decision model, either manually or using basic Excel formulas, to weigh the advantages and disadvantages of four possible alternatives involving an aircraft acquisition. Following the guidelines in the case, students will be able to calculate fuel efficiency, fuel costs, and industry specific metrics, such as available seat kilometers, load distances, and number of flights needed to meet demand. The case also illustrates issues of external environmental analysis. It was designed for undergraduate courses in Production and Operations Management, but is also well suited for a senior business strategy course that includes quantitative and qualitative decision making.
It was mid-March 2007 and Rait Kalda, VP for Estonian Air Operations, faced a tough decision. Jet fuel prices had increased more than 50% in the last year, resulting in fuel costs accounting for almost 44% of passenger revenues, an increase from around 30% of passenger revenues. Meanwhile, market forecasts were predicting a significant increase in the demand for intra-European regional flights. In this time of high fuel prices, should Estonian Air respond to the projected increase in demand by expanding its fleet of planes? And, if so, should Estonian purchase regional jets or new model turboprops?
Major benefits of using turboprops for short-leg flights were increased seat utilization (62% to 90%) and increased route coverage. Turboprops would be able to service at least 90% of Estonian Air’s existing routes. Rait considered Bombardier’s new Q400 turboprop to be on his short list. A main concern was whether Estonian Air’s passengers would look upon turboprops as a step backwards for the airline. He had to consider all foreseeable impacts of purchasing any new aircraft on Estonian Air’s cost structure and bottom line.
The next board meeting was scheduled for Friday afternoon, and the board expected a recommendation on how Kalda planned to address the expected increase in intra-European regional flight demand in light of both high fuel prices and last year’s net loss.
THE GREEN CHALLENGE COMES TO GUILDCRAFT FURNITURE
The case illustrates the improvements achieved through the implementation of Lean Administrative Methods by the Grand Rapids Public Library. The library was viewed as obese in comparison to other public libraries – there was a lot of duplication of efforts. Additionally, it experienced a high number of customer complaints and lack of effective internal and external communication prior to the lean implementation. The library’s main goals were to eliminate customer complaints and communicate more effectively thereby, offering unique, excellent services to their customers. They accomplished some key objectives and goals, but now the effort and motivation to continue with applying the lean process is waning with the continuing shrinking budget. The director needs to develop a strategy on “What type of strategy or process should she employ to rejuvenate the effort and thereby the level of motivation for the process? This is the leadership issue. The case also examines how the lean training was conducted and the tools as well as the associated outcomes of using that process. “Should the library continue with the consultant training or should they try a different type of training program to sustain the new process?” This is the operations management issue. The case was written for business school undergraduate and graduate level courses in operations management and leadership.
Marcia Warner became the Grand Rapids Public Library (GRPL) Director in 2005. The library is the second largest public library system in Michigan and is located on the western side of the state. It operates seven branches in addition to its main facility. The main library is a depository for federal and state documents. Library holdings consist of 660,000 books, tapes, films, maps, and compact discs, periodicals, and special collections. The library includes a service area of 197,000 patrons and employs 175 full and part-time employees. Marcia expressed interest in lean soon after her arrival. In December of 2005, the GRPL contracted with a consultant to train Marcia and two assistant directors in the lean methodology. Shortly, thereafter, the GRPL implemented and applied the lean methods successfully to the GRPL processes and system. The excitement for applying lean to continuously improve the existing processes has decreased substantially in the last two years. However, Marcia has increased obligations to her patrons and board. As Marcia reviewed her challenges of the increase in the circulation rates as well as the budget and staff decreases, she thought, “How can we sustain the current level of customer service and motivate the staff to continue with the lean efforts?”
TRELLEBORG AUTOMOTIVE: A GROWTH INITIATIVE DECISION
This case describes how the management of Guildcraft Furniture, a manufacturing company, is confronted by the immediate challenge of having its principal disposal method discontinued thereby forcing the choice of changing product design or finding alternative means for scrap disposition. Pursuit of the second option required substantial rethinking of the nature of the scrap and with additional investment in processing equipment, hiring direct labor, and incurring administrative overhead for sales and marketing. As a result Guildcraft developed multiple new products whose demand for scrap exceeded supply. Guildcraft now thinks of itself as a green manufacturer, but the question remains if such a moniker is appropriate vis-à-vis U.S. Environmental Protection Agency definitions. As business school curricula increasingly introduce sustainability and environmental responsibility themes in both undergraduate as well as graduate programs, this case has applicability to several disciplines, but especially operations management and managerial accounting. This case can be used as the basis for class discussion and/or for a written assignment. It is suggested that it be limited to courses that are upper division (junior and senior levels) only and where students have been exposed to the use of cases.
Spero Dephtereos, CEO and principal stockholder of Guildcraft Furniture faced a critical problem of either 1) switching away from the use of polystyrene frames for his furniture in order to comply with an order from the local solid waste management authority to cease disposal of styrene scrap at its landfill, or 2) finding an alternative way to handle the disposition of the material which was seen as environmentally unfriendly. Through some research with his suppliers and trusted associates, Dephtereos discovered that scrap styrene foam could be turned into a range of alternative products ranging from concrete forms, packaging components, toy filling, and potting soil additive. Ultimately, a hierarchy of uses was determined whereby large scrap pieces could be reworked into packaging components custom cut for a range of applications. Anything remaining would be further converted into other salable products. While successful in avoiding disposal, the case questions whether Guildcraft is as green or environmentally responsible as its CEO both believes and touts. While the firm has been able to reduce the quantity of material that it is required to dispose of, some may question that all they have done is transfer the disposal problem to others.
An automotive subcontractor is considering a major global growth initiative to restore profitability in the highly competitive rubber market, using microcellular polyurethane (MCU), a new material that was equivalent or superior to rubber and available at a lower price. The case is written to provide the framework for evaluating the decision within the context of business and operations strategy. Students gain an overview of the automotive industry, the company’s business model and strategies, and the Anti-vibration Solutions (AVS) segment, in which the growth initiative originated.
Specific case objectives include: (1) Conduct a financial analysis of Trelleborg Automotive, and compare and contrast its profitability with other business areas; (2) Examine the business model and the supply chain supporting the MCU growth initiative. Formulate recommendations with regard to the management of MCU raw material supplier and productions units; (3) Evaluate the company’s competitive position, the ability for the MCU technology and the needs in term of development of Trelleborg Automotive within its primary markets (Americas, Europe and Asia); and (4) Appraise crucial competitive advantage through its MCU growth initiative.
The case would be useful in upper-level undergraduate or graduate-level courses in Operations Management and Supply Chain Management courses, particularly those with an engineering, manufacturing, or logistics emphasis, or International Business/Business Strategy.
In 2008, Trelleborg Automotive (TA) was the largest rubber non-tire manufacturer in the world, and its automotive business segment represented 30 percent of its net sales. However, strong global competition in the automotive market resulted in low margins, and restoring sustainable profitability became a strategic priority for the firm. By using material alternatives to rubber and focusing on more profitable segments, the case explores whether the proposed growth initiative could support the long-term competitiveness of the firm.
Social & Environmental Entrepreneurship
The case covers Adnexus Therapeutics’ transition period after acquisition by Bristol-Meyers Squibb (BMS). Less than two years earlier in 2007, it had been acquired for $430 million by BMS, which gave it greater financial strength to pursue clinical development of its products. The case centers around Eric Furfine, Senior Vice President of R&D. Furfine was confident that the acquisition had been the best option for Adnexus, but the reality of the drug development process presents many challenges. The company could not rush its clinical trials, nor could it take regulatory shortcuts. He also knew that, as a subsidiary company, Adnexus had significant financial advantages over other independent biotechnology firms, but he also knew that additional resources would only come after positive clinical results. The challenge he and his colleagues faced was managing the clinical process, and ensuring that, from one phase to the next, milestones were consistently hit, with the ultimate goal being a product reaching the market. The case is suitable for a business strategy course or a new products, small business and/or entrepreneurship course at the undergraduate, MBA or executive MBA level. Its importance lies in its emphasis on evaluating the elements needed to create and manage a biotechnology new product development process and pipeline. It may be used in conjunction with the ‘Agiltron, Inc.’ and ‘Attivio: Deciding on an Enterprise Search Platform or Product’ cases as a unit in new product development across several different technology-based industries. The case requires that students: Understand the pharmaceutical development process, both within Adnexus /BMS and through the FDA approval process; and evaluate the resources needed to create an on-going development pipeline.
Adnexus Therapeutics (www.adnexustx.com) is a small biotechnology company, which has been recently acquired by BMS. Using its proprietary protein engineering technology PROfusion to isolate likely protein candidates among a class of proteins called Adnectins™, the company sought to identify new drug therapies for specific diseases. Currently, the disease target was cancer and its lead drug Angiocept™ (CT-322) was in clinical trials with the FDA. While Angiocept™ has made progress toward FDA approval; in order to continue to develop other Adnectin™-based drug therapies, they would have to add structure and process to the research, otherwise $30 million in recent investments would not go very far. In addition, the company had to effectively advocate for new therapies during the regulatory review process in order to get new therapies through to full commercialization. Furfine asks: “What’s next? How can we accomplish all these tasks?
The case illustrates the R&D development process for an SBIR funded technology business. It highlights the lack of market facing resources in the development process and asks the students to recommend strategies to improve the process and business strategy. The case is suitable for a business strategy course or a small business and/or entrepreneurship course at the undergraduate, MBA, or executive MBA level. Its importance lies in its discussion of the technology product development process, and the process of selecting what would be the best commercial market for a proven product or technology. The case may be used in conjunction with the ‘Adnexus Theraputics’ and ‘Attivio: Deciding on an Enterprise Search Platform or Product’ cases as a unit in new product development across several different technology-based industries. The case requires that students:• Gain an understanding of the technology development process in firms that are not market facing, and how these types of firms differ from traditional firms where voice of the customer and marketing occur up-front during development.• Develop the skills/expertise required to look at the organization and determine what strategies might be employed to reduce the number of project on hiatus.
Agiltron Incorporated (www.agiltron.com) is a leading producer and developer of innovative photonic components and systems. Agiltron leads the market in optical switches, variable optical attenuators, high power optical components, optical polarization and time controls, and molded infrared detectors and lenses. Headquartered north of Boston, the company comprises a world-class team of serial entrepreneurs and veteran engineers including over 30 PhDs, making innovations for high-growth markets and serving customers worldwide. They have been perfecting optical devices for over 20 years, regrouped in 2001 from NZ Applied, JDSU, and Corning. There 2008 revenue was approximately $13 Million, with half of the revenue coming from SBIR-based research grants. This case describes the development of a new type of nano material for moisture reduction on clear surfaces (primarily anti-fog). The technology was funded via Phase I and II grants for a proposed NASA application. The technology developed met all expectations for the desired specification and application. However, after Phase II NASA decided to not move forward with the project due to other priorities. At this point, with no potential or active customer, the project was put on hiatus. With no active marketing or business development resources for the project, the founder and CEO of the company was deciding on options for the product as it ‘sat on the shelf.
CARSON’S DEPARTMENT STORE
The case details the software development process at Attivio Inc. Attivio is an enterprise search company that had developed a core technology, the Active Intelligence Engine (AIE), which combined enterprise search and business intelligence capabilities to integrate unstructured and structured business data easily and intelligently. The technology enables customers to make better business decisions by offering a more comprehensive look at all of the information available to the company. Attivio had already developed a customizable platform using AIE as its base (Embedded AIE), which focused on the OEM market, and now they had to decide what their next steps should be. The case is suitable for a business strategy course or a small business and/or entrepreneurship course at the undergraduate, MBA, or executive MBA level. Its importance lies in its discussion of the product development process, and the process of selecting what would be the best commercial market for a proven technology. It may be used in conjunction with the Agiltron and Adnexus cases as a unit in new product development across several different technology-based industries. The case requires that students:
• Gain an understanding of the software development process and necessary resources;
• Develop the skills/expertise required to create plausible market share projections from available information to clarify management options.
Attivio Incorporated (www.attivio.com), a Newton, MA based enterprise search software development company, was in the process of deciding how to best commercialize their core technology, the Active Intelligence Engine (AIE). To this point, the company had received $6.2 million in venture capital funding with commitments for more investments, and already had three clients. They also had created a development platform using AIE as its base (Embedded AIE), which focused on the innovative user and OEM markets.
The technology was proven to have worked very effectively, but now the decision was which direction the company should pursue: continuing to sell a customizable and extendable platform or creating a finished product for a particular customer segment. The management knew that developing a finished product was their best high-growth strategy, but it would involve directly competing with giants like Microsoft and IBM, which is something they wanted to avoid. The customizable and extendable platform would involve hiring more employees as they expanded, but it would also give them the opportunity for steady growth.
CRISIS MANAGEMENT AT CIRCLE 6
The case shows some of the challenges of running a family business such as entrepreneurial decision making, succession issues, and potential exit strategies. Specifically, the objectives include requiring students to identify the major issues facing Carson’s Department Store and the key considerations that the owners should examine when deciding their next steps. The case also explores the working relationship between a husband - wife ownership team and addresses issues of succession inside and outside of the family. The final objective is to encourage students to devise a potential exit strategy for the company.
This case is designed for use in undergraduate courses with a focus on entrepreneurship, such as Small Business Management and Family Business Management.
This field researched case focused on a small town long-standing department store. Chuck and Pam Carson are a husband and wife entrepreneurial team that has owned and operated a retail clothing store in Northeast Mississippi for over thirty years. Chuck has found success in another business venture and is pressing Pam to make some very difficult decisions regarding the future of the business. These decisions are complicated by the fact that there is no available family successor to take over the business. Another important issue is that these long-time marriage and business partners have different levels of emotional connection to the business and are not united on what should be the store’s future.
DON WALTERS AND NEXTBOK: CHANGING THE WAY HOUSES ARE BUILT
This case demonstrates how a major position in a market niche can easily erode due to inattention of management and evolve into a crisis that threatens the viability of a small business. Management faced multiple, interrelated challenges in each stage of the emerging crisis. Circle 6 started as a small entrepreneurial firm with computer telephony integration (CTI) software in the call center space and experienced the full life cycle between 1988 and 2004. In addition to investigating the effect of life cycles on Circle 6, students are asked to examine the external/ internal forces on the firm and how/why the crisis developed in order to prevent its demise. Management was the primary decision focus prior to April 2004; however, non-management employees became the primary decision-makers as the board members and management resigned en mass. Students are encouraged to use several levels of critical thinking skills and theoretical frameworks to develop and evaluate alternatives and recommend the best course of action.This case was designed for upper division undergraduate and MBA level courses in Small Business, Entrepreneurship and Strategy. The multifaceted nature of the crisis requires students to draw on their prior knowledge of theories across areas such as entrepreneurship, strategy, leadership, organizational change and management style to address the crisis at Circle 6. Therefore, the case may be appealing to a wide range of courses where handling a crisis is the central focus. Students are expected to recommend how Circle 6 should proceed from this crisis situation in May 2004 based on the appropriate theories, models and their own experiences.
Laird Pfizer was a senior software engineer at Circle 6 in January 2004 who wrestled with the development of a memo to all company employees about the crisis involving the entire board and management expressing their intention to resign from the company. Circle 6 was a small entrepreneurial company that had pioneered mainframe call center software but allowed their product line to become antiquated. This resulted in a downward spiral following a series of strategic failures that led to the current crisis threatening the company’s viability. Pfizer’s role at Circle 6 suddenly grew as he was asked to take on some management tasks in this leadership vacuum because of his action-oriented style. While uncomfortable with his emerging leadership role, he was more concerned about the company’s downward spiral and his possible unemployment. It was clear that the Circle 6 board and management team had been dysfunctional but none of the remaining Circle 6 employees had experience running a company. Pfizer discussed his innermost concerns with another individual contributor as they discussed their new responsibilities: “No more excuses, no one to hide behind, and the company’s destiny will be in our hands. Now, what should we do?”
JEAN’S BRIDAL SHOP
The case can be used to provide a broad overview of the challenges of entrepreneurship – even given a great product idea in an attractive market. Through the discussion of the innovative product features to the potential substitution of current building materials, the case underscores several challenging areas of entrepreneurship, none more so than funding a start-up and designing a business that will be attractive to investors. The learning objectives of the case focus primarily on: the scaling and financing of start-ups; the strategic positioning of innovative products in a very large market space; and the management of operations – from product and process design to supply chain management. The case is appropriate for the early part of undergraduate or graduate courses in Entrepreneurship/Small Business Management or Operations Management.
With the deteriorating environment and declining natural resources, many green alternative materials have been proposed to meet the increasing demand for sustainable housing. NextBlok, a patented insulated concrete form (ICF) and associated building method, was designed to offer builders an easy-to-use framing material and homeowners a better house. NextBlok promised to reduce waste by using recycled Styrofoam, save trees, transform framing from cumbersome to easy, and provide homeowners with an affordable, energy-efficient and earthquake resistant house. Could NextBlok become the next market leader in framing materials, surpassing wood, steel and concrete? Or were inventor Don Walters’ ambitions too grandiose? How could Walters raise the significant capital he claimed to need to get this project off the ground? Why was it proving so difficult to raise funds – was the venture simply too risky for potential investors, or had Walters knocked on the wrong doors? Should Walters (a) continue to seek investors with the current business plan; (b) seek a different source of funding; (c) substantially revise his plan or to make it more attractive to ‘traditional’ investors; or (d) consider revising his entire business model, and sell or license the patent?
QUANTUM LEAP OR QUANTUM FALL?
The Jean’s Bridal Shop case encourages students to determine a business’s current position by identifying the Key Success Factors of an industry and then determining whether an individual business possesses those factors. It challenges students to analyze a small business’s financial standing based upon the reality that it is common for a small business to not keep or use extensive or comprehensive financial statements. In addition, students are required to conduct a SWOT analysis of the business and, based upon their analysis, make recommendations on how the business should position itself in the future.
This case would be most appropriate for undergraduate students in small business management, entrepreneurship and strategic management courses.
REALIZING VALUE FROM MULTIPLE TECHNOLOGY PLATFORMS: OXIGENE, INC.
This case presents the thought process of a Wall Street executive considering moving to a traditional corporate treasury position or establishing an entrepreneurial chocolate manufacturing/retailing enterprise. His goal is to spend more time with his growing family and pursue numerous outside interests while still meeting his financial obligations to his family. The case provides a summary of the executive’s Wall Street position, a description of the chocolate industry, and a detailed business plan for the new venture. An opportunity for financial and non-financial analyses of the options is provided. The case was written for upper-level undergraduate or MBA students.
Peter, an executive at a major Wall Street firm, was the manager of product development and marketing of public, equity-linked corporate securities. He had a relatively secure position with competitive annual compensation, a large part of which was a bonus tied to his direct financial contribution and the overall performance of his firm. After 20 years of product development, travel, and security prospectus reviews, Peter realized that something was missing from his life. He wanted to spend more time with his family, outside interests were beckoning, and he was interested in being more involved with his community. In addition to these personal and family needs was a concern that his firm’s underwriting business was eroding and his bonus was at risk. Peter decided to talk with others about possibly leaving his Wall Street position. He was considering either a treasury position with a corporation or unleashing his entrepreneurial instincts and starting a new business. Unfortunately, he could not find anyone to speak with who had left Wall Street for a small business venture. Unfamiliar with the requirements of starting a new business, Peter turned to his brother, who had the knowledge and industry expertise as a result of starting a successful manufacturing/ retailing chocolate enterprise nearly twenty years earlier. Peter studied the trends in the chocolate industry and the local competition. He then created a detailed business plan outlining the initial capital needs as well as five year forecasted sales and expenses for an innovative chocolate manufacturing/retailing enterprise. It was Peter’s hope that this venture would allow him to take his life in a new direction and still meet the financial needs of his growing family. Peter weighed the financial costs of leaving his lucrative position versus the non-financial return of spending more time with his family and pursuing outside interests. The setting is Manhattan and northern New Jersey during the late 1990s.
REARDON PALLET COMPANY – SUSTAINING GROWTH
This case is set in the biopharmaceutical industry, which is fundamentally about creating innovative medicines and exploiting the finite period of intellectual property exclusivity. Key industry pressures include the rate of patent expirations on current product portfolios, a decline in research & development productivity, generic substitution, and decreasing effective exclusivity periods. This case illustrates the promise and perils of managing an early, development stage biotechnology company that seeks to advance novel technologies, obtain financing, and alliances with larger multinational biopharmaceutical companies.
Oxigene is a development stage, biopharmaceutical company developing novel therapeutics to treat cancer and eye diseases. This case follows Dr. Richard Chin, CEO of Oxigene, as he faces the key strategic challenge of positioning the firm’s technology platform and products, while seeking additional investment capital and external alliances. At issue was that Oxigene developed a technology platform with multiple product applications, each of which required significant resources. “Wall Street,” however, solely valued the company on its lead oncology product, Zybrestat, and seemingly did not impute any value to its other ophthalmology pipeline candidates. The case frames Chin and Oxigene’s strategic options — continue to diversify from oncology to ophthalmology, spin off their ophthalmology product candidates into a new company, or license their ophthalmology another company (e.g., small biotech, large multinational biopharmaceutical).
REINVENTING COFFEE GROUNDS
This case is useful for demonstrating how financial investments decisions are often decisions about strategic changes or signal strategy changes to competitors and customers. The case can be used in Strategic Management, Entrepreneurship, and Small Business classes. The Instructor’s Manual has been primarily targeted for Strategic Management Classes. The product technology for the company is reasonably simple and, at the graduate level especially, the case could be used for an introductory class in which students are led to focus more broadly than “on the numbers”. However, to utilize the case to its maximum potential, the authors recommend it be used later in the course. Concepts that can be used in the analysis include: SWOTs, Value Chain, PEST (+G), Cost-Benefit analysis, and Force Field analysis.
The “Reardon Pallet Company – Building Success” case focuses on this fast growth firm in 2008 after a consultant’s presentation regarding two potential investments --- an automatic nailer machine and options for heat treating the lumber and/or manufactured pallets. The case the two options for investment along with dimensions of the company (company history and personnel and culture) and industry (structure, technology, consolidation, and government regulations and tariffs).
Dan, Sr. and 29-year-old son Daniel will have to make decisions regarding the investments. Although the decisions can be delayed, the company’s growth is likely to ceiling shortly. Dan has been positioning the company for growth since inception and both father and son are committed to growth. Dan’s strategic and organizational choices since he founded the company have been witness to his drive. The decisions about the nailer and the heat treatment systems relate not only financial risk for the company, but more importantly long term how the company should position itself strategically. Making the investments soon will signal to competitors and customers that Reardon intends to be an even more aggressive player in the market. The firm has enjoyed fast-paced profitable growth. Dan expects the firm to be debt-free by the end of the year except for normal short-term payables. Should Dan make the investments? And, if so, in what time frame?
RIVER BEND TRADING: TURN IT AROUND OR GO DOWN
The case focuses on the outcomes of a decision made by Pete Wilson to purchase a coffee bistro which has been experiencing a downturn in business under the leadership of its current owner George Shumay. Like many entrepreneurs, Pete Wilson is challenged with developing and implementing a number of changes in order to restore the customer base of Coffee Grounds. The case demonstrates how Pete uses his business acumen and leadership competencies to carefully integrate internal changes while sustaining the culture and ambience that separates Coffee Grounds from many of its competitors including gourmet coffee chains. The case shows how Pete grows and sustains Coffee Grounds via the use of innovative customer service, a continual assessment of his value chain, a careful analysis of local and nation demographics relative to gourmet coffee drinkers, and a creative use of promotional tactics such as social networking. Pete successfully survives new competition for his first 20 months but finally is faced with a threat from Starbucks which will open a bistro about one block away. Is this “too close for comfort”? Should he harvest or remain in place and use his entrepreneurial prowess to compete? This case was written for business school undergraduates is small business management, family business, and/or entrepreneurship.
Pete Wilson, a regional manager for a large corporation, decides to leave the corporate world and purchase a fledgling coffee bistro in hopes of restoring its customer base and image within a Midwestern college community. Pete uses his leadership ingenuity to develop and implement changes at Coffee Grounds without destroying its artsy culture and special ambience of comfort and tranquility. Pete uses strategic planning and demographic analysis to renew and sustain his customer base. In this interim Pete faces new competition and a changing national landscape regarding the gourmet coffee industry. Like many entrepreneurs, Pete must work long hours and use his creativity to meet the evolving competition from other independent bistros and renowned coffee chains. For the first twenty months Pete successfully navigates the whirlpool of the retail gourmet coffee industry via the use of customer relationship management and innovation promotional strategies. Although Pete believes in the free enterprise system and fair competition, he eventually faces a big decision after he learns that Starbucks will be locating within one block of his bistro. Should he harvest his business or stay and fight?
SHARPLIN HOSPITALITY, INC.
The case should enable students to: (1) Learn how to manage a turnaround strategy – retrenchment and recovery. (2) Think holistically and creatively in a failing business situation. (3) Realize the importance of being able to understand the financial statements and to use them to manage the business daily. (4) Appreciate the risks and personal sacrifices inherent in owning a small business, and (5) Understand the risks associated with having a major supplier who retrenches. The case writers developed the case for undergraduate Business Strategy or Small Business Management and Entrepreneurship courses.
The case features River Bend Trading, a small retail gift and apparel business in Columbus, Montana, population 2,000. Lois and Mary (M&L) started the business in 1997. In 2000, they moved to a more attractive location. They also agreed to manage the adjacent Montana Silversmiths Outlet, which sold silver jewelry, rodeo trophy buckles, and other western products. The outlet’s sales doubled M&L’s sales, and both businesses prospered. In 2007, Montana Silversmiths decided to manage the outlet and revoked M&L’s right to sell its products. With the onset of the recession in 2007, both firms found themselves struggling to survive. With the loss of the Montana Silversmiths business, River Bend Trading became a one-owner business. In November 2008, Mary exited the business taking her share of the debt. By then, local firms were closing, and River Bend Trading’s sales were declining. By February 2009, Lois was desperate. However, she had cost and asset reduction options and friends who were supportive and gave her advice. The Small Business Administration was unfolding President Obama’s ARC Loan Program, which appeared to offer some welcome financial assistance. A friend told her to develop a turnaround strategy, including a retrenchment plan (i.e., cost and asset reductions) and a recovery plan (i.e., a strategy for recovery). The case challenges students to develop a retrenchment strategy, a common business experience.
TERAHERTZ SOLUTIONS INC.
The case describes a Louisiana family’s highly profitable motel business which appeared to be at a crossroads. Jerry Sharplin and his family needed urgently to decide whether to keep the firm together, to sell one or more of its three motels to outsiders, or to sell them to one or more of the three siblings who, with their father and mother, were owner-executives and directors of the firm. If the properties were to be sold, what might be appropriate prices and terms? If the company were to be kept together, how might the behavioral conflicts be managed, especially in terms of fair pay and work demands? The case is applicable to strategic management, entrepreneurship, hospitality, and small business classes but contains financial and behavioral data sufficient to provoke lively debate in finance or behavior classes. It is designed for analysis by upper division and graduate students, or in executive development programs.
Irascible Louisiana blacksmith artist/man of many functions Jerry Sharplin wanted to retire from the lodging business he had built from scratch. But his plan to turn the hotels over to his volatile offspring kept going awry. The elder son, 35 in 2009, had worked himself into a position of ascendancy over a younger brother and sister, earning almost twice their salary while reaping large financial benefits otherwise and claiming to have sacrificed to keep the family together. Angry because he could not acquire one of the motels and strike out on his own, the younger brother made plans to attend law school, while expecting to keep his stock ownership and salary and admitting that his already weak motivation might suffer yet further. Meanwhile, their sister, with the titles of Controller and Secretary, was taking a lackadaisical attitude toward the financial control system which it was her supposed duty to administer. A 2008 restructuring, which brought the three closer to parity, was viewed as unfair by all three, who claimed to think that they had given their parents undeserved share ownership. As the business benefited from a huge upsurge in patronage due to development of a large natural gas field in the area, profits escalated and the conflicts worsened. Jerry’s frustration with the situation was evident as he threw an expensive theodolite against a tree, destroying the device. The Godfather of the younger son, was seen at times as a meddling uncle.
THE VITAL SPOT
This case was designed to illustrate the challenges in commercializing a new technology in very difficult economic and financial circumstances. The case would be appropriate for senior undergraduate and graduate courses in Entrepreneurship or Strategy. The case is suited for presentations in the classroom, as the principal character was struggling with the presentation that he should make to the jury in the New Ventures BC competition. The specific learning objectives for the case are: 1) To understand the complexities of transferring research findings from a university laboratory to commercial applications in industry; and 2) To develop skills in making a persuasive presentation on a new business venture to venture capitalists, bankers and CEOs who could potentially provide support.
Dr. Matt Reid was definitely outside of his comfort zone! The professor of Physics was most comfortable in the lab studying the optics of surfaces and discussing the findings with graduate students and fellow researchers across Canada. Tomorrow he would fly to Vancouver to make a presentation to a jury of venture capitalists, bankers and CEOs as a finalist in the New Venture BC Competition on the commercial viability of a new technology. The fledgling company he had founded desperately needed money to move the technology from the laboratory to commercial applications. Reid was one of the leading researchers in the world exploring the potential of terahertz radiation for imaging and measuring the properties of materials. Reid had decided to pursue the possible uses of terahertz technology for increasing efficiency and quality in the processing of forest products, British Columbia’s largest industry. Reid’s challenge was to explain this new technology in a comprehensible fashion and to convince the jury of the economic viability of applying this technology to the forest industry.
about 6,000 residents and is somewhat of a bedroom community from a large city 35 miles away. The college is located in the heart of the town (or village) and has a student population of about 5,600 students, many of whom are residential students. The village has 6 bars, all of which are within walking distance of the college. Recently, the college has begun to attract a type of student who apparently is less inclined to frequent the bars as much as students in the past. Most of the bars have experienced a slight decline in revenues from students over the past two years. One of the bars, the Vital Spot is trying to decide whether should begin to change its appeal from college students to local residents. The owner believes the community is growing and since there is no “sports” bar locally, it could move in that direction. The case is primarily aimed at business undergraduate in small business management/entrepreneurship courses or strategic management.
Paul and Luke DeVelder are the owner/operators of the Vital Spot, a college town bar. The bar is located in a town (or village) of roughly 6000 residents and a college of 5600 mostly residential students. The town is about 35 miles from a large city and many of the residents commute daily to the city for work. In the last several years, the college has been able to attract a quality academic student. In 2008, the average SAT score of entering freshman was 1320. The president of the college is very proud of this and believes that this type of student will be less likely to frequent the bars. It should be noted that the bars are all within walking distance of the college, which means that drunk driving, is generally not an issue. There are 7 establishments in the town itself which serve alcohol. Of these, 4 (including the Vital Spot) are considered to be ‘college’ bars. In the last two years, the Vital (as it’s called)—along with the other college bars, have experienced a decline in revenues from student customers (so, perhaps, the president is correct?) While college bars have tried various tactics to attract more students, which often means pulling students away from competitors, Paul and Luke feel that there may be an opportunity to change the nature of their bar to attract local residents. The case describes their efforts to do so, given the nature of the other two bars in town which consider themselves to be “townie” bars. Paul & Luke also have considered closing the bar. They feel the college has been on the “warpath” against the local bars with all kinds of programs designed to keep students away from the bars, especially during weeknights.
A COST-BENEFIT ANALYSIS OF WATERLESS URINALS TOWARDS AN ECO-STRATEGY
CABARETE AND THE FIGHT FOR SUSTAINABILITY
Decision-making to meet the 21st Century’s challenges in regards to building a sustainable society includes scrutinizing every aspect of human activity. The purpose of this case study is to present students enough information to make a decision on water conservation, more specifically in respect to the question of clean drinking water wasted to flush urinals. The case illustrates the importance of environmental, economic, cultural and political perspectives in the decision making process. It seems that environmental and economical concerns have generated much heated debate on an eco-engineering wonder, the waterless urinal; and the traditional urinal, which has its loyal followers that insist on resisting change and innovation. Certainly the concept of waterless urinals is new, and both cultural and technological barriers will be challenging. The relevance of a cost-benefit analysis is presented as a decision tool. The case was written for business school courses where decision-making processes, cost-benefit analyses and capital budgeting are studied.
It is imperative that water management be analyzed at all levels, not only from its consumption perspective but also from its complete journey after the discharge. Innovative water conservation measures are in demand and last April the Department of Water Resources announced estimates of a record low for 2009 since this is the third consecutive dry year. On February 27, 2009 Governor Schwarzenegger proclaimed a state of emergency due to drought conditions. In a letter to the Governor on March 30, 2009, Lester Snow, director of the department of water resources, declared that strategies have been implemented to provide assistance to those areas in need. Some of these strategies include the amount of $180 million in bond funds this year for drought relief to assist water management projects, legislation to reduce per-capita water usage, public education programs, finalized standards for recycling water, preparation of a contingency plan, and the preparation of status reports. In the case of urinals, the Energy Policy Act of 1992 mandated the use of low flush urinals that use less than 1 gallon to conserve water. However, new technology includes a more efficient option; the waterless urinals which are now in use in many facilities and can save millions of gallons of water annually. The question is not whether there will be discharge or not but whether to flush or not to flush. As a result of that decision, 40,000 gallons of water per unit per year may be conserved, a significant amount considering the current drought. In addition, considering that from all bodies of water left only 2.5 percent is freshwater, which must be shared by 6 billion people, it sounds crazy that we are still flushing down urinals with about a gallon of drinking water. What is the cost of doing nothing? What is the ecological impact? What is the cost-benefit advantage of the waterless urinal? Why are we still using conventional urinals?
DON FRANCIS AND THE QUEST FOR AN AIDS VACCINE
This case recounts the dilemma of business owners of a small tourist town named Cabarete on the northern shore of the Dominican Republic. The business owners were concerned about foreign investors building high-rise condominiums in the village which might impair the wind in the area which supported one of the most popular wind sport destinations in the Caribbean. The material covered in the case is designed to help students explore the concept of sustainability and what it means not only for the businesses in the area, but also for the environment and communities in which they exist. This case could be used in a number of undergraduate-level courses. It would fit most appropriately in a strategic management course during discussions of corporate social responsibility or competitive advantage. The case could also be used in courses in ethics, entrepreneurship, and hospitality management.
The city of Cabarete, a popular tourist destination on the northern coast of the Dominican Republic, was struggling to resist change that might harm local business owners. Foreign investors planned to build high rise condominiums and apartments that would draw tourists away from the local vendors. The high rise buildings that the investors planned to build might also present a threat to the unique wind pattern for which Cabarete was known. As a result, the local business owners had been forced to take action. Their first step was to form a committee called the Federation for a Sustainable Cabarete. Although the committee had been active in meeting with numerous government officials, it had not been successful in preventing investors from building in the city. Keeping in mind the themes of sustainability and ecotourism, the committee had to determine how exactly to go about protecting the local businesses in Cabarete. The Committee for a Sustainable Cabarete had a big task ahead of it and had to decide whether to approach the government again or seek another course of action.
FREE STORE FOOD BANK OF CINCINNATI: LIBERTY PANTRY PRODUCTS
The purpose of this case is three-fold. First, it is to portray the trajectory of Don Francis, a scientist, an advocate, and a social entrepreneur in the meanders of the public, private and non-profit sectors in the quest for the an AIDS Vaccine. Second, it aims at exposing students to scientific, political, and economic complexities in addressing such a controversial but deadly disease like AIDS. Third, this case aims at raising awareness to the students about the role of philanthropy in bringing global social justice and access to healthcare.
This case is about the story of Don Francis, a pioneer and more than 20 years of activist in the field of AIDS, especially in the development of AIDS vaccine. It concentrates on three issues: (1) the personal trajectory of Don Francis as a social entrepreneur in the public, private, and non-profit sectors; (2) influencing factors to discovery of AIDS vaccine, which has a large proportion of beneficiaries in poor countries; and (3) the changing environment for addressing the global health issues. Don Francis is one of most important figures in keeping the hope for finding AIDS vaccine alive in spite of various challenges that have become obstacles in the discovery of the vaccine since his first collaboration with Luc Montagnier of Pasteur Institute in 1984. The challenges come from the scientific/technical aspect of AIDS vaccine research, social value on curative rather preventive measure, lack of a coordinated scientific strategy, competition rather than collaboration among research groups, low interest by industry and the government of rich countries in investing in vaccine research and generally inadequate funding for the enormous task at hand. In addition to his continuing passion for finding AIDS vaccine, among his other legacies are the standard components of AIDS Control Program that are currently applied around the world: (a) Voluntary and Counselling Testing/VCT Center for AIDS, (b) blood screening by blood banks and (c) sex education. The world also owes it to him for elimination of smallpox from the face of the earth in the 1970s, control of ebola epidemic outbreak in 1976 in the border region between Zaire and Sudan; and discovery of hepatitis vaccine in 1980s in the USA.
GLOBAL INNOVATORS: FOUR COMPANIES WHICH WORKING TO IMPROVE SOCIAL CONDITIONS AROUND THE WORLD
This case addresses the concepts of social entrepreneurship in the environment of hunger in America. The Free Store Food Bank of Cincinnati (FSFB) is one of 205 food banks across the United States. Each of these organizations collects food which it then distributes to the needy and hungry. The case demonstrates conflicts in organizational goals and end-user values, in this instance maximizing nutrition versus consumer tastes. The question also arises; is it more appropriate to use a business model based on marketing principles or production efficiencies in a charitable, not-for-profit environment? The case draws upon traditional entrepreneurship theory to examine the opportunity, the team, and the resources as they relate to a new product offering. The role of social enterprise a nonprofit organization is explored, in that FSFB hopes to generate a revenue stream to be applied to other programs. Finally, the balance of escalating commitment and the challenges of terminating entrepreneurial pursuits is considered as the leaders must decide how to position the right product with the right market segment or whether to discontinue the concept altogether. The case is intended for use in undergraduate marketing, entrepreneur-ship or social entrepreneurship courses.
In June, 2009 the leaders of the Free Store Food Bank of Cincinnati (FSFB), were uncertain about future plans for the Liberty Pantry product line. The Liberty Pantry products were freeze-dried foods, high in nutrition, especially protein, and low in cost per serving. The Liberty Pantry concept offered the prospect of balancing uneven food supply, generating additional revenues and feeding more hungry people. Despite the obvious benefits, the products had generated limited demand. Recent market research provided detail regarding unenthusiastic consumer and channel reactions.
Breedlove Foods, Inc. produced the line of products in freeze-dried form, packaged in sealed plastic pouches. Their market had been international relief programs. FSFB had obtained the rights to distribute the products in the eastern half of the United States. The idea was to provide low cost, high nutrition products to their member agencies, other food banks across the country and potentially retail stores. The overriding question that FSFB leaders faced involved three fundamental options – reconfigure the end user product line, focus on the on-site feeding channel segment, or discontinue the Liberty Pantry product line.
GOOD WATER: STANDING ON HOLY GROUND
Around the world innovative enterprises are emerging daily to combine the energies of social concern with the logic of the marketplace to meet the needs of millions worldwide and to meet the failure of the market to solve growing social problems—such as health care, urban decay and poverty. For example, lifesaving drugs to treat malaria, tuberculosis and Aids were created by for-profit pharmaceutical companies. But while they generate benefits to individuals, investors and society at large, a large subset of the world’s population in need of their healing benefits cannot afford them. These four cases treat global social and ethical issues and concerns. As a result of globalization, the actions of companies and organizations reach around the world to distant and remote parts of the globe.
What makes Indigenous Designs different from other clothing producers is their commitment to social justice and environmental stewardship. From the beginning what distinguished Indigenous Designs was that the company’s social commitment to lift a group of Andean women out of poverty. But the relationship was riddled with challenges. Aravind Eye Care is one of the most successful and admired enterprising nonprofits in the world. It is a world class eye care system of clinics, institutes and manufacturing centers such as a center for manufacturing lenses in order to reduce the cost one of the main sources of expense. While the majority of surgeries are free, Aravind is financially self-supporting. Roots of Peace aim is to rid the world of landmines transforming treacherously toxic minefields into thriving farmland. It works in partnership with government agencies, private companies like Robert Mondavi winery, and universities such as UC-Davis. Benetech was founded as a “low-profit” company using a market approach to ensuring the development of technology. Benetech’s focus is on high social value despite low potential for generating a typical market rate of return on investment. What makes these companies different and distinct? Are consumers sufficiently concerned about the working conditions under which goods are produced to support these companies? How do our decisions and the decisions of companies which we work for or where we shop impact others all around the globe? Can companies produce needed products and survive financially? What are the implications of these social enterprises for our teaching of business ethics?
NOVICA: THE ARTS AND CRAFTS OF SOCIAL VENTURING
The case has been specifically designed to foster discussion on the role of business in achieving wider social and environmental objectives (Hart & Milstein, 2003; Hawken, 1993; Milne, Kearins & Walton, 2006). It raises the possibility of sharing intellectual property and working with competitors, to promote catalytic innovation. It also raises fundamental issues about local sourcing, promoting consumption and managing resultant waste, as well as debate about how to effectively close the loop (McDonough & Braungart, 2002). This case has been written for use in undergraduate and postgraduate classes in strategic management, social and environmental entrepreneurship, and environmental management and sustainability. The case has been class-room tested with a business and sustainability class using similar questions to those offered here. It has also been used in an undergraduate case competition. The case is primarily based on videoed class visits and tape-recorded interviews with Grant Hall in 2008 and 2009, and on an analysis of documentation provided by Grant.
By May 2009, New Zealand businessman and Good Water CEO, Grant Hall, was one year into his five year plan to achieve his nirvana vision of a closed loop system. He wanted to sell water in bottles made from local biomass, with the used bottle waste separated, up-cycled and allowed to biodegrade and support new plant-life and sources of biomass. To make his plan a reality, Good Water and competitors who took up the Good Water project challenge of producing in PLA bottles, needed to ramp up volume considerably. Doing so would create demand for a local biomass supply. Meanwhile, there were issues around bottled water creating a lot of plastic drink bottles that would generally be better being refilled at the tap, and waste separation in terms of its political acceptance and functional viability. The project was not without its problems or detractors. How should Grant develop his business, Good Water, and the wider Good Water project?
SONOMA WINE COMPANY: IDEAS FOR GENERATIONS
This case allows students to explore (1) the power of a mission statement when enacted as a true guide to organizational decision-making, and (2) the centrality of sound business fundamentals in the context of “doing good.” It also motivates consideration of the prerequisites for and possible paths to organizational growth – asking what sorts of growth strategies are appropriate and what criteria should be considered in making growth decisions. A key issue in the case concerns the business effectiveness derived through the alignment of organizational mission, business model, and operational infrastructure. This alignment facilitated the case company’s success to date and will arguably be essential to continued growth and success. A secondary issue concerns the role played by a capable team. The case is designed for use in undergraduate or graduate courses in entrepreneurship, social entrepreneurship, and growth management.
This case is about the emergence of an innovative for-profit social venture that connects talented artisans in developing nations with customers in the US and elsewhere. Though raised in the US, co-founders and lifelong friends Roberto Milk, Andy Milk, and Charles Hachtmann have always been exposed to global influences. All three grew up with parents or grandparents who hailed from other countries. All three traveled a great deal in their youth. All three were multilingual. Similarly, all three were surrounded by people who made it their lives’ mission to make a positive social contribution. When Roberto meets his future mother-in-law, Armenia Nercessian de Oliveira, a professor and United Nations employee who has dedicated her life to helping others across the globe, the stage is set for the introduction of a new business idea: NOVICA.While Roberto has an entrepreneurial vision about which he is passionate, he is also a thoughtful and patient leader. NOVICA’s story is thus one of slow and steady emergence – in which Roberto first builds, over the course of a decade, an executive team comprised of his family and friends; then develops the most critical operational components of the organization; and finally scales the business to profit. The case ends with Roberto and his team facing a critical decision about how to at last propel the company from slow to rapid and substantial growth. By 2009, NOVICA has achieved significant success – reaching $15 million in annual revenue, helping better artisans’ lives worldwide, and retaining the tight-knit founding team of its earliest days. The founders, however, want NOVICA to be much more: a truly global presence, offering help in new parts of the world, in new ways, and earning $100 million annually.
SOUTHWEST CREATIONS COLLABORATIVE CASE A (1994-2005) & CASE B (2005-2008)
This case is used to showcase the greening methods of not only the California wine industry as a whole, but also of a specific winery, Sonoma Wine Company, who have been industry leaders in sustainability.
Started in the late 1980’s, a local activist group in the small town of Graton, (population 1,815) named Graton Association to Stop Pollution (GASP) came to the management team of Sonoma Wine Company with major concerns about the wastewater pond the winery was using. Under GASP’s watch, Sonoma Wine Company took action to ensure that its wastewater pond, was, in short, cleaned up. Not only did Sonoma Wine Company accomplish this cleaning by rejuvenating its water pumps and aerators, but also put practices in place to ensure that the water flowing to the pond is as clean as possible.
With its arrival in Graton, Sonoma Wine Company began to make major changes to its facilities and operations. The equipment was out of date, the layout was not very efficient, and the building constructed in 1947, was rather archaic. Proprietor Derek Benham knew that in order to increase market share, and provide better quality of service to his clients, changes would need to be made quickly.
The Sonoma Wine Company management team of president Dennis Carroll, general manager Ed Silva, director of business development Natasha Granoff, and facility manager Jim Feely, decided that environmentally sound practices would need to be built into the facility plans. Sonoma Wine Company looked to many organizations and consultants to accomplish its long-term goals of increasing market share and capacity, while also reducing its energy costs and waste.
THE MATA DE PALMA PROJECT: SOCIAL ENTREPRENEURSHIP IN THE DOMINICAN REPUBLIC
This case describes a successful social enterprise that combines a profit-making perspective with a social mission to help immigrant women achieve steady and dignified employment. Southwest Creations Collaborative (SCC) addresses the many social issues of low-income immigrants by creating employment and personal growth programs into one very successful non-profit model. In the context of its profit-making orientation, SCC raises questions about the theory of the firm and to whom an organization should be responsible. SCC’s social entrepreneur, Susan Matteucci, has taken the position that an organization can exist to further the welfare of its employees. By improving employee welfare, SCC is also contributing to the larger community by alleviating poverty and by strengthening families. This case is designed for use in upper-level business school courses (either undergraduate or graduate) in social entrepreneurship, nonprofit management, business and society and strategic management.
Southwest Creations Collaborative (SCC) is a non-profit social enterprise organized to promote employability and enable the financial independence of immigrant Spanish-speaking women in Albuquerque, New Mexico. The mission is achieved through a combination of employment and personal growth opportunities. SCC is organized as a non-profit contract manufacturing business and provides full-time sewing and handwork jobs. SCC also provides numerous program activities for employees and for the community, including English lessons, childcare (employees only), and computer classes. Income is generated through a combination of contract work and grant funding.
As a leading example of a successful social enterprise in the Albuquerque metropolitan area, SCC has become a pivotal member both the non-profit and manufacturing community. The two cases stretch through the life of SCC, from its inception in 1994 through mid-2008, when the case was written. Case A covers the initial formation of the organization in 1994 and culminates in a decision point regarding a possible relationship with a social venture consulting group in early 2005. Case B begins where Case A ends and concludes with a decision point to expand the business and become more economically self-sufficient and less reliant on grants and donations in mid-2008.
This case reveals the story of Omar Bros, a native of the Dominican Republic, and his desire to use a portion of his profits on a new semi-mobile ethanol mill to improve the standard of living of the impoverished Haitian immigrants who live in the Mata de Palma region of the Dominican Republic. Bros had earlier developed the new technology employed in the mobile mill in order to move the mill closer to the fields of sugar cane where the processing into ethanol would begin. Although he had decided to use 30 percent of his profits to improve the citizens’ standard of living, he did not have a clear strategy for accomplishing this goal. The case deals with the challenges that he faced in accomplishing this goal and the development of a clear strategy for carrying out his purposes. The case was written for business school undergraduate courses in entrepreneurship, business strategy, and business and society.
Omar Bros, a native Dominican, had a dream of using 30 percent of the profits from his new semi-mobile mill to improve the standard of living of the Haitian immigrants who lived in the slum areas known as “bateyes” in the Mata de Palma region of the Dominican Republic. The semi-mobile mill was developed to move the processing of sugar cane into ethanol closer to the fields where the sugar cane was grown. In so doing, Bros sought to revolutionize the sugar cane cultivation process using the latest technology. It was his desire to improve the lives of these people economically, environmentally, and socially. The problem lay in how best to allocate the profits to create economic stability and improve the quality of life in the region. The end result of the Mata de Palma project was to create a self-sustaining economy supported by the demand for agricultural products and technological innovations of the mill.