In late February, 1791, Treasury Secretary Alexander Hamilton submitted a report to President Washington defending his recent proposal for a national bank, which he hoped would bolster the American economy and assist the federal government in managing its finances. Congress had approved the plan, but some of the President's advisers warned that the federal government lacked the authority to establish a bank because the Constitution did not grant it the power to charter corporations. In his rebuttal, Hamilton argued that Congress had "implied powers," not specifically listed in the Constitution, which lawmakers could use when necessary to achieve legitimate goals. Because the proposed bank would assist Congress in executing its fiscal responsibilities, Hamilton believed that incorporating the bank fell well within Congress's constitutional authority. As President Washington considered these arguments, he knew that his decision to sign or veto Hamilton's bank bill would extend far beyond the issue of the bank itself. If he approved, his assent would potentially encourage the broad exercise of implied powers in the future. A veto, on the other hand, would send the message that Congress had no authority beyond the powers explicitly listed in the Constitution. Either way, President Washington would be lending his considerable weight and prestige to one side of this seminal constitutional debate, and he was well aware that much was riding on his decision.
On June 8th, 1787, at the Constitutional Convention in Philadelphia, delegates from across the United States began discussing a curious proposal to expand federal power over the states. James Madison of Virginia had suggested that the new constitution include a "federal negative," which would give Congress the authority to veto any law passed by a state legislature. He viewed this as a critical safeguard against unchecked power at the state level. In late May, Madison's Virginia delegation had presented a plan for the constitution that included a watered-down version of the negative. Now, in June, Charles Pinckney of South Carolina revived the original version, calling it "the corner stone of an efficient national Government." Not everyone agreed with Pinckney's assessment, however. Opponents charged that Madison's federal negative would allow Congress to "enslave the states" and let "large States crush the small ones." Indeed, the question of how much power - and what types of power - to vest in the federal government went to the very heart of the debate that unfolded that summer. Whether Madison could persuade his fellow delegates at the Constitutional Convention was far from clear, but there could be little doubt how much was at stake as the new nation struggled to find its footing in Philadelphia.
In early 1891, California lawmakers were considering a plan to reform the state's elections through the introduction of an "Australian" ballot. Under this new system, candidates from all qualifying parties would appear on official ballots, which would be printed by county and municipal governments and which voters would ultimately fill out in secret. This would mark a substantial departure from the existing way in which votes were cast in California, or for that matter in most of the United States. Traditionally, political groups prepared and distributed party-line ballots, called "tickets," for voters to submit at the polls. Because each party ticket was visually distinctive (in most cases, distinguished by a particular color), it was easy for observers to determine how individual citizens had voted as they handed in their ballots. Closely monitoring the ballot boxes, representatives of the party "political machines" frequently paid supporters who voted for the machine ticket and sought to punish those who did not. Supporters of the Australian ballot promised it would end these abuses, bring greater secrecy and honesty to California's elections, and loosen the grip of party machines on the state and municipal governments. Despite some opposition in Republican circles, the Republican-dominated Assembly and Senate both passed the ballot bill by large margins in early March and sent it on to the Republican governor, Henry Markham, for his signature. If Markham signed the bill into law, California would join a growing roster of U.S. states using the new, secret ballot, and reformers would claim another victory in their battle against political machines.
In late October 1902, President Theodore Roosevelt felt relieved after months of anxiety and uncertainty. Workers in Pennsylvania's anthracite coal industry had been on strike for five months, threatening to leave eastern cities in the cold without enough heating fuel for the winter. Anthracite workers and business owners had finally reached an agreement after months of stalemate, and anthracite production resumed on October 23. The agreement - the first of its kind - put decision-making power in the hands of a federal commission, appointed by the president and empowered to determine terms of employment and various operational questions in the anthracite region. After a week-long investigation in the mines, the commission began hearing testimony from hundreds of representatives of the workers and their employers, the mine operators. The hearings finally closed in February 1903, after which the commission began formulating its final judgments. Members of the commission knew that their work would set an important precedent for industrial governance in the years ahead. Past U.S. presidents had helped put down strikes that threatened federal property or public safety, but the anthracite strike of 1902 marked the first time the government acted to resolve a strike both without force and without such a clear legal justification. The decisions of the commission would therefore have important ramifications not only for the anthracite industry, but potentially for American business-labor relations more generally. With copious amounts of data, testimony, and research to inform them, the commission members began the process of deciding how an American industry should, and would, operate.
By July 2015, 20% of Starbucks' payments in the United States came through its mobile app. The company had created a tool to both drive loyalty and grow its customer base. No stranger to innovation, Starbucks was partnering with iTunes as early as 2007, earned its first mobile marketer of the year award by 2010, introduced its mobile app in 2011, and by 2015, 94% of Facebook users were either fans of Starbucks or friends with someone who was. This case explores the company's commitment to mobile and its social media prowess, and considers just what it takes to drive loyalty in a customer base.
In May 2012, a young employee at Google's London office, Markus Berger, was thinking whether he should quit his job and go after his dream of becoming an entrepreneur. Berger's idea was to create Dinr, a company that would offer an upscale food ingredient delivery service in London. A customer would choose a recipe on Dinr's website and would receive all premeasured ingredients the same evening at their doorstep. Contrary to many existing similar companies, Dinr would not require a weekly subscription, but would provide one-off orders like other traditional food delivery services. Berger had already carried out an alpha-test of the service and completed an in-depth survey of potential customers to explore the market. Most of the feedback was positive, which confirmed Berger's intuition about this market opportunity. Berger had found a more experienced co-founder with technical expertise who was willing to join Dinr part time and gathered £40,000 of initial capital. Yet, making the decision to leave his corporate job and become an entrepreneur was not easy: was Dinr a good business opportunity? Would it be attractive to outside investors? What were the risks involved?
Three divisions seek to form a two- or three-way conglomerate of maximum economic value. Individual and shared interests are in conflict. While similar in economic structure, this case, unlike "Four Way Organization" (894-015), has only a single round, not two rounds, and no "manager."
In this case, a senior business analyst at the online travel agency Trek-ation struggles with the decision of whether to pursue a potentially lucrative idea. Her innovation team had proposed revising the online pricing algorithm in order to use the cookies and other information from customers' web browser to customize pricing for flights and hotels. Although she wanted to increase revenue for the company and meet her targets, she was also concerned not only about the backlash if this tactic was revealed to the public but also, more importantly, about both the fairness of this practice and the violation of customer privacy norms.
A small chain of retail stores selling outdoors equipment, Blue Ridge Bike and Hike (Blue Ridge) was expanding rapidly. The finance manager had to develop a financial plan for accommodating this growth and the investment it required. Clearly, the business was growing faster than could be financed from internal sources--it had been increasing a long-term loan and had just ended the year with a higher-than-usual balance on its bank line of credit.
A small manufacturer of camping gear is considering a new product that would expand its market. The product is a portable "hoophouse" that would allow people to begin planting gardens earlier in the season by trapping heat and keeping frost at bay. It would use existing technology but would be a very different product line. The required analyses are simple net present value (NPV) and internal rate of return (IRR) calculations. However, through the lens of managers in the business, this case can generate a rich discussion of the role of NPV analysis, the differences between NPV and IRR decision rules, and the economic meaning of analysis. The case is intentionally simplified to focus student attention on the basic methods of calculating cash flow and the essential meaning of an NPV. It can also be easily expanded to include other topics. For example, by providing information on a potential salvage value, one can explore salvage value impacts.
On July 28, 2014, the eRecon technical team at Physician Services Group in Hospital Corporation of America, gathered in the main conference room just as it did every Monday morning. The goal of the meeting was to review the project plan and update task completion for the team's two-year undertaking - a six-phase, in-house development of a custom, web-based accounting software called eRecon. As the team members worked through each task and updated the percentage that they had completed to date, they grew increasingly concerned about obtaining the critical source data that they required from the human resources department. They were approaching their deadline, and it was unclear what the consequences would be if they did not obtain the data on time, and what impact the delay would have on the completion deadline of December 8, 2014, for the next phase. With 125 end users patiently waiting on eRecon's completion, could the technical team ensure the success of the project?
Mahindra & Mahindra Limited was the largest manufacturer of farm equipment in India, with a more than 40 per cent market share. It manufactured five different tractor brands in the domestic market, including a brand of mini-tractor, the Yuvraj 215 NXT. This brand was targeted at small farmers with less than two hectares of land, who were primarily dependent on bullocks or power tillers for farming but aspired to own a tractor to increase productivity at an affordable price. Although such farmers formed over 70 per cent of the farming population, the penetration of tractors in this segment was the lowest. While the situation demonstrated high potential, selling tractors in this segment was challenging due to low product awareness, limited access to information, and low financial resources among target customers. With such a product in its portfolio, how should Mahindra & Mahindra Limited promote the Yuvraj 215 NXT among small and marginal farmers?
Today’s official interest rates are unprecedented, thanks to the spread of negative interest rate policy around the world. Negative interest rate policy is not an academic abstraction to be ignored by the corporate world. Indeed, negative rates come with negative implications for running a business. Until recently, zero was the lower bound on policy rates. But lately, various central banks representing about 25 per cent of global GDP have gone negative. Negative policy interest rates were even discussed in Canada last year by the Bank of Canada’s governor. The goal of negative rates is to make not using money costly for banks and to get them to lend it out, thereby stoking economic growth, job creation, consumption, investment, exports, a lower currency value, and inflation. <br><br> If the Bank of Canada looks like it might be headed negative on its policy rate, this means it is very worried about the macroeconomic conditions that make or break businesses. It also means the Bank of Canada may not be confident that politically motivated fiscal policies involving deficits, government spending and taxation will support economic growth. As a result, executives should be prepared to consider comprehensive reviews of important aspects of their businesses, including working capital, capital spending, financing, acquisitions, product pricing, compensation, and long-term contracting. Negative policy rates are very tough on bank margins and profitability, and weakened banks are no help in a stagnant economy; they encourage people to do unusual things with their money like storing it in a safe or hiding it. Finally, negative policy rates turn time-honoured accounts receivable and accounts payable policies upside down such that you may now want to receive money as late as possible and pay it out as soon as possible.
In June 2013, The Coca-Cola Company (TCCC) launched Coke Life, a naturally sweetened but sugar-reduced carbonated soft drink. Coke Life complemented TCCC's established product line consisting of Coca-Cola Classic, Diet Coke, and Coke Zero. Coke Life substituted a portion of the sugar component with stevia leaf extract and contained 35 per cent less sugar than Coca-Cola Classic. TCCC claimed that “Coke Life is for adults looking for a great tasting Coke but [one with] fewer kilojoules and [that is] sweetened from natural sources.” Affected by governmental interventions, such as the implementation of special taxes and warning labels, the consumption of soft drinks had slowed down significantly, which had caused leading soft drink manufacturers to introduce “green” product modifications of their traditional beverages. When TCCC launched Coke Life, the market for carbonated soft drinks was highly competitive and was shrinking in part due to concerns over soft drinks contributing to obesity and type 2 diabetes. Was Coke Life likely to be successful? Or was it simply a “greenwashed” product in a highly segmented market?
A newcomer to Canada has the opportunity to start a Chinese restaurant in a small Canadian city. The entrepreneur needs to decide whether to invest in the project, and if so, how to finance it: using debt or equity financing. She has to evaluate the impact of the financing options on the viability of the business, her investment returns, and the financial and business risks. The case provides an opportunity for a comprehensive FRICTO analysis of capital structure, and creates tension by putting the students in a small business owner's shoes.
In January 2011, Mohamed Azab, founder and CEO of health care investment firm Seha Capital, made his first health care investment in Hassab Labs, a diagnostic lab in Alexandria, Egypt. Weeks later, a revolution erupted across the country as the Arab Spring swept through the region, and Azab spent the following years active in both the protests and in restructuring and expanding Hassab Labs. From 2011 to 2014, he opened 25 new branches, quadrupled staff, and more than doubled net income. By the end of the revolution in 2014, Hassab Labs was among the top five chains in the country. In October 2014, Seha partially exited Hassab Labs in a sale to an African conglomerate, SAHAM Group. At the same time, Azab learned that foreign investors in a small private hospital in Egypt were looking to exit the market. While Seha's mission was to build diagnostic, hospital, and pharmacy chains in Egypt, Azab had not been planning to enter the hospital market until he further expanded the diagnostic labs. In late 2014, Azab must decide if he should focus on expanding Hassab Labs, either in Egypt or across Africa, or invest in the hospital.