Teuer Furniture is a privately owned, moderately sized chain of upscale home furnishing showrooms in the United States. By the end of 2012, it had regained its financial footing and a number of long-term investors, including several of Teuer's original non-management investors, now want to sell their shares. At the request of the board, Jennifer Jerabek, the chief financial officer of the company, and her team put together an extensive valuation of Teuer based on a discounted cash flow analysis. When the model was presented to investors, a number of them disagreed with the results. Some investors considered the value too high; others considered it too low. Not surprisingly, some of the differences of opinion were correlated with whether or not the investors wanted to sell their shares of Teuer. Jerabek was instructed to build a valuation of Teuer using a multiples approach instead.
Traditional sources of sustainable competitive advantage are very rare in today's heterogeneous and hypercompetitive global business environment. This article identifies and illustrates three dynamic capabilities-sensing local opportunities, enacting global complementarities, and appropriating local value-by which MNEs are able to operate successfully across emerging and established markets. For MNEs in these markets, strategic agility is a meta-capability that enables them to create and deploy these three capabilities in a dynamic balance over time. Doing so demands embracing the tensions between these capabilities effectively.
Firms struggle to create an agile organizational system since it requires the development of three enabling capacities: to make sense quickly, make decisions nimbly, and redeploy resources rapidly. While the study of strategic agility is of growing interest as a prime means of organizational growth, the ways by which key mechanisms of growth such as mergers and acquisitions (M&As) help in building this capability remain elusive. This article highlights the differences between platform acquisitions and bolt-on acquisitions (most bolt-on acquisitions in high technology industries can further be separated into product acquisitions on the one hand, and educational, technological and/or talent acquisitions on the other hand). These different forms of acquisitions can enhance strategic agility in distinct ways along different time horizons. When properly managed, acquisitions can enhance the gradual accumulation of the capabilities underlying strategic agility. This article presents a more complex picture of a non-linear reinforcing dual path between M&As and strategic agility.
Strategic agility evokes contradictions, such as stability-flexibility, commitment-change, and established routines-novel approaches. These competing demands pose challenges that require paradoxical leadership-practices seeking creative, both/and solutions that can enable fast- paced, adaptable decision making. Why is managing paradox critical to strategic agility? And which practices enable leaders to effectively manage tensions? This article describes the paradoxical nature of strategic agility. Drawing from data from five firms, Astro Studios, Digital Divide Data, IBM Global Services Canada, Lego, and Unilever, it proposes leadership practices to effectively respond to these challenges.
How can one tell which decisions are strategic? This article proposes a framework that helps distinguish strategic decisions from non-strategic ones. Whether a decision is strategic or non- strategic depends on how a decision ranks along two dimensions: its influence on the degree of commitment and its influence on the scope of the firm. Four distinct types of decisions emerge: strategic, neo-strategic, tactical, and operational. This categorization of decisions can help the firm prioritize decisions, allocate resources, and develop capabilities.
Organizations with social missions, such as nonprofits and social enterprises, are under growing pressure to demonstrate their impacts on pressing societal problems such as global poverty. This article draws on several cases to build a performance assessment framework premised on an organization's operational mission, scale, and scope. Not all organizations should measure their long-term impact, defined as lasting changes in the lives of people and their societies. Rather, some organizations would be better off measuring shorter-term outputs or individual outcomes. Funders such as foundations and impact investors are better positioned to measure systemic impacts.
The case describes the launch of a social media platform by the largest container shipping company in the world. Maersk Line garnered over 1 million fans on Facebook, 40,000 followers on Twitter, and 22,000 on Instagram. They also launched and became active on other social media networks such as LinkedIn, Pinterest, and Google+ and created a social media home base for Maersk Line called Maersk Line Social that published articles and stories about the company in a less formal manner. The case discusses the organizational aspects of the program launch, as well as pressure from the marketing department to better integrate the largely independent social media operation into the company's broader marketing efforts.
The target market of Citibank cards in India was aligned with the profitability objectives of the company. However, if it continued with its current strategy, it faced the risk of being a niche player in a growing market and losing the profit potential from other segments and geographies in the near future. The CEO needed to reconsider the target market and finalize a marketing strategy in the face of the changing composition of the marketplace, the competition and the commercial imperatives of the credit card business. This was a critical decision that would have a long-term impact on resource deployment and budgeting.
The target market of Citibank cards in India was aligned with the profitability objectives of the company. However, if it continued with its current strategy, it faced the risk of being a niche player in a growing market and losing the profit potential from other segments and geographies in the near future. The CEO needed to reconsider the target market and finalize a marketing strategy in the face of the changing composition of the marketplace, the competition and the commercial imperatives of the credit card business. This was a critical decision that would have a long-term impact on resource deployment and budgeting.
A manager, preparing for an interview with Visa Inc., seeks to understand the nature of the global payments industry and Visa Inc.'s position within it. The case outlines the industry's history and current practice through extensive use of publicly reported information. The public information allows answers to some important questions. What does Visa Inc. do? How competitive is the industry? And what is the source of Visa Inc.'s competitive advantage? Student spreadsheet is available, see 7B14A018.
Mistral Energy is looking to build a $40 million power plant in close proximity to both the Alberta and Saskatchewan power markets. The Alberta market is deregulated and the price fluctuates hourly with supply and demand. The Saskatchewan market, on the other hand, is a regulated monopoly. Mistral Energy needs to understand into which market they should sell their power. Because the prices available in Saskatchewan are unknown, Mistral is particularly interested in what power price would make the company indifferent between markets. Additionally, because the power plant is roughly equidistant between Alberta and Saskatchewan transmission lines, it might be possible to choose between markets on an hourly basis. Mistral is interested in investigating the value of this inter-market connection. Unfortunately, for technical reasons, this switch is not instantaneous, and the plant must be shut down for 30 minutes before supplying power into the other market. Another challenge is predicting when the power price in Alberta will be greater than the contract price available in Saskatchewan. Because the future Alberta price is unknown and highly variable, the risk exists that high prices might not be sustained long enough for Mistral to realize any value.
A manager, preparing for an interview with Visa Inc., seeks to understand the nature of the global payments industry and Visa Inc.'s position within it. The case outlines the industry's history and current practice through extensive use of publicly reported information. The public information allows answers to some important questions. What does Visa Inc. do? How competitive is the industry? And what is the source of Visa Inc.'s competitive advantage? Student spreadsheet is available, see <a href=https://www.iveycases.com/ProductView.aspx?id=66756>7B14A018</a>.
Mistral Energy is looking to build a $40 million power plant in close proximity to both the Alberta and Saskatchewan power markets. The Alberta market is deregulated and the price fluctuates hourly with supply and demand. The Saskatchewan market, on the other hand, is a regulated monopoly. Mistral Energy needs to understand into which market they should sell their power. Because the prices available in Saskatchewan are unknown, Mistral is particularly interested in what power price would make the company indifferent between markets. Additionally, because the power plant is roughly equidistant between Alberta and Saskatchewan transmission lines, it might be possible to choose between markets on an hourly basis. Mistral is interested in investigating the value of this inter-market connection. Unfortunately, for technical reasons, this switch is not instantaneous, and the plant must be shut down for 30 minutes before supplying power into the other market. Another challenge is predicting when the power price in Alberta will be greater than the contract price available in Saskatchewan. Because the future Alberta price is unknown and highly variable, the risk exists that high prices might not be sustained long enough for Mistral to realize any value.
It was 2005 and David Steiner, CEO of Waste Management (WM), had just received a report from an internal advisory panel created some months before to assess the future of the waste management industry and propose how the company's strategy should be adapted. The core of this report was the recommendation to create a special unit within the company, chartered with the central purpose of identifying ways to extract value from waste through new and innovative waste technologies.
Gaston Acurio, star chef and restaurateur from Peru, must decide whether and how to adapt his signature Peruvian cuisine to local tastes as he opens restaurants in new countries.
Sasol, the world's largest producer of synthetic oil from coal and gas, has announced plans to build a huge Catalytic cracker and gas-to-liquids plant in Lake Charles, Louisiana. This $21 billion venture will be the single largest foreign direct investment in US manufacturing history. The plants, on 1,600 acres adjacent to the company's existing cracker, will liquefy 98,000 barrels daily, converting ethane to ethylene and then into various specialty chemicals. The entire project depends on low gas prices engendered by the shale revolution and relatively high oil prices. The risks are copious, as is the promise.
In early 2013, the 23-year-old owner and designer of Korra Dancewear was brainstorming ideas to garner more attention for her new dancewear collection. Her business sold dance apparel online, and the company needed a comprehensive marketing plan to improve sales. With limited funds, this would be a challenge, but the young owner was keen to examine three pieces of her marketing plan: distribution options; launching a new children's line; and pricing challenges and promotional options.
Regional and corporate managers at Johansen's, a large high-end department store, are preparing to attend the company's annual performance summit, at which the performance of each of the company's store managers is reviewed and rated. The company has just completed its first year under a new scorecard system for evaluation of manager performance. The manager of Store 51 has traditionally been one of the company's top-performing managers from a financial standpoint, but his overall performance rating has declined due to performance along nonfinancial dimensions. The managers at the performance summit must discuss his performance in the context of a new performance evaluation system, measurement issues around the nonfinancial metrics, and retention concerns. Students engage in a role-playing exercise. They are assigned specific management roles and debate the evaluation of the performance of Store 51's manager while at the performance summit.