When Jonathan Bush and his partner, Todd Park, realized that their revolutionary approach to delivering clinical care was being stymied by the inefficiencies in the healthcare system and insurance red tape, they turned their proprietary technology, athenaNet, to a new business, athenaHealth, that would help physicians manage their practice, billing and revenue cycles and maintain electronic patient records more efficiently and cost effectively using the service delivered via the Internet. Despite the success of his innovative venture, Bush faced several challenges: the company's brand awareness among physicians was still low; the company had launched a new product, athenaClinicals, while its core flagship product, athenaCollector, was still growing -- and was planning a pricing innovation, athenaCommunity, over and above that. The HITECH Act passed by the Obama administration was giving a boost to the entire industry, including athenaHealth's much larger competitors, which heightened Bush's strategic dilemma: should he focus on the core and capture greater share and enhance brand awareness or should he branch out into new innovative directions?
Dr. Cameron Powell and his partner, Trey Moore, co-founders of the innovative company, AirStrip Technologies, have developed a series of apps for the iPhone and other smartphones that can help doctors monitor the vital signs of their patients anytime, anywhere. They have presented their technology at one of the highest profile tech conferences and now face a choice of focusing on the first -- and only FDA approved -- product targeted at obstetricians and driving its penetration or following through on the promise of their presentation and spreading their resources to build out the entire platform aimed at multiple specialties. As one of the early pioneers in delivering medical applications over the iPhone, AirStrip Technologies must contend with a major dilemma: the fast-cycle tech world's expectations must inevitably collide with the more deliberate and slower pace of product development and approval that is typical in healthcare.
In June 2009, Sichuan Tengzhong Heavy Industrial Machinery Company Limited ("Tengzhong"), a little-known manufacturer of construction machinery and special-use vehicles in south-western China, took the global auto industry by surprise when it announced its plan to acquire the money-losing Hummer division of General Motors Corp. Hummer's premium sport-utility vehicles and sport-utility trucks had relatively low fuel efficiency of 9−16 miles per gallon. Since 2006, Hummer's sales volume had declined sharply due to escalating oil prices, its negative image as a "gas-guzzler" and a shift in customer preferences towards smaller sedans. Tengzhong had no prior experience in the light vehicle industry or in managing a major auto brand. Because this was Tengzhong's first attempt at foreign direct investment, it was imperative for its management to figure out the major obstacles in managing its new Hummer subsidiary in the US. They also had to formulate a sound business plan to get the Chinese government's approval for this acquisition, and to make the investment a big success. (Note: This acquisition was called off in February 2010 because Tengzhong was not able to get the Chinese government's approval. The details are included in Appendix 1 of the teaching note for reference.)
On 28 July 2009, the board of directors of Geox approved the footwear and apparel company's half-year results, which showed consolidated sales of US$653 million. This was a remarkable achievement and recognition for a company that had only been in the business since 1995. In the early 1990s, inventor, entrepreneur and erstwhile winemaker Mario Moretti Polegato, suffering from hot and sweaty feet, used a pocketknife to cut holes in the soles of his sneakers, thereby creating the first pair of "shoes that breathe". Convinced that his creative solution could be transformed into a commercially successful product, Polegato spent several years developing a breathable membrane for shoes that allow the feet to breathe while remaining watertight. When he succeeded in producing the prototype of such a technology in the laboratory, he immediately patented it and began marketing it to existing shoe manufacturers. However, none showed any interest in his product. He thus decided to embark on his own, and commenced manufacturing these "breathing" shoes under the Geox brand name. Since then, Geox's innovative products have continued to carve out a niche for themselves in the global footwear market. By 2002, the company had extended its "breathability" technology to fabric and entered the apparel market. By 2009, after a mere 14 years, Geox had become a global name and was ranked the world's second-largest casual lifestyle footwear sector operator. The company conducted its business in 68 countries around the world through over 10,000 multi-brand points of sale and 997 single-brand Geox shops. By introducing yet another product to the established and intensely competitive shoe industry, Geox had successfully demonstrated the power of innovation. But like any other innovative company, Geox has to fret about sustainability of its competitive advantage.
Georgie Yam arrived in Shanghai in the heat of summer in 2001. He was there on a mission: to develop the market and establish a distribution network for a German hair-care products manufacturer. Soon after he arrived in Shanghai, he discovered that this city, which had been described by an international guidebook as "a playground for foreign adventurers and socialites", fell short of hopes in meeting the demand for a modern indulgence: spa and massage services. Pondering a market that seemed chaotic but thriving, Yam wondered what would be his best bet to capture the opportunity.
Established in 1857, the Birla Group has developed into one of the largest conglomerates in India. The firm has invested in a wide range of industries, including textiles, cement, tea, sponge iron and aluminum, and in dozens of small companies. The death of Birla's president in 1995 shook the company. His son, Kumar Mangalam Birla, took over at the age of 28 and, through the period of India's economic reforms, redirected the focus of the group's investments. Along with increased investment in holdover industries such as cement, sponge iron and carbon black, the group has pursued investment in new industries, including viscose staple fibre, non-ferrous metals, branded apparel and financial services. The reformed Birlafiber Group could be seen as following the model of General Electric circa mid-1980s, with a mixture of the old and the new, unsure of its future direction. Rival Indian conglomerates such as Tata and Reliance have also changed since the beginning of the economic reform period. They have shed moribund low-margin firms and industries and have concentrated on new high-margin, high-growth investments. Still claiming to be "Birla #1"-its rallying cry for several generations-is the group actually still number one, or is it being left behind by its more aggressive rivals?
After booming for more than five years, the global shipping (maritime) industry experienced a dramatic crash in late 2008 as the global financial system froze and the global economy slid into recession. Ship charter rates (revenue) fell by as much as 90% causing prices of used ships to fall by as much as 80%. As ship prices (values?) fell, ship owners began to default on loans and new purchase contracts while banks holding loans secured by ships faced the possibility of increasing defaults (violations of loan-to-value covenants), foreclosures, and write-offs. In the midst of this crisis, VHSS, the German Shipbroker's Association, introduced a proposal to value ships using discounted cash flow analysis (to determine a long-term asset value, LTAV) rather than market prices from comparable transactions. Thomas Rehder, the Chairman of VHSS, argued this approach was necessary because market prices did not reflect fundamental values in the current environment. After announcing the alternative valuation methodology in September 2009, he must convince industry participants--ship owners, appraisers, and bankers--to adopt the new valuation methodology and bank regulators and auditing firms to approve its use.
The chief executive (CEO) of Cequel Energy, Inc. (Cequel) is trying to choose between three options: continue operating Cequel as is, selling it, or converting part of the company into an income trust (in combination with another similarly sized firm). The CEO's key concern is the relative valuation of the three options. Other key issues include the management team's preferences and an impending tax horizon. This case can be used as an introduction to corporate finance and valuation using multiples. It also allows for consideration of the impact of taxes on valuation and could provide a useful tool to discuss tax policy given changes in the tax treatment of income trusts that occurred subsequent to the case.
Atlantis Paradise Island adopted a new vision and mission to provide its guests and employees an enhanced brand experience. The dilemma Atlantis faced was how to integrate the new vision and mission into all the brand touch points in order to improve customer satisfaction and employee engagement.
In 2008, Blue Man Group's three co-founders are facing the prospect of losing not just a business but a way of life they have built together. The case follows the story of Chris Wink, Matt Goldman and Phil Stanton as they pursue their creative passion, and build the Blue Man Group from street performers to a performance arts empire with a global brand. The story has a personal as well as professional dimension to it, including the launch of the Blue School, to provide their and other people's children with the kind of education they wish they'd had. The immediate challenge is to find a way to survive a major economic downturn. The case is complemented by a video (HBS. No. 810-704) with co-founder commentary, and extensive live footage of Blue Man performances and the Blue School.
Chinese home electronics manufacturer TCL has identified the need to internationalize. However, because the global home electronics industry is a rapidly changing industry and the key to success lies in product innovation, TCL must now evaluate its innovation strategies to remain competitive. Traditionally, TCL's product development strategy has focused on modular innovation. By looking at the different product innovation strategies pursued by such global market leaders as Samsung and Sony, TCL has an opportunity to evaluate the differences between modular innovation and architectural innovation strategies and assess the risks involved.
Provides an introduction to the fields of project finance and infrastructure finance, and gives a statistical overview of project-financed investments over the years from 2005 to 2009. Examples of project-financed investments include the $1.4 billion Mozal aluminum smelter in Mozambique, $4 billion Chad-Cameroon pipeline, $6 billion Iridium global satellite telecommunications system, €900 million A2 Toll Road in Poland, $20 billion Sakhalin II gas field in Russia, and the $28 billion Dabhol power project. Globally, firms financed $240 billion of capital expenditures using project finance in 2009, down from $409 billion in 2008 as the financial crisis hit the Western markets. The use of project finance has grown at a compound rate of 0% over the last five years, 4% over the past 10 years, and 12% over the past 15 years. This note focuses primarily on private sector investment in industrial and infrastructure projects, and contains four sections. The first section defines project finance and contrasts it with other well-known financing mechanisms. The second section describes the evolution of project finance from its beginnings in the natural resources industry in the 1970s, to the U.S. power industry in the 1980s, to a much wider range of industry applications and geographic locations in the 1990s, and most recently to infrastructure finance in the 2000s. The third section provides a statistical overview of project-financed investment over the last five years (2005 to 2009), and looks at industry, project, and participant specific data. The third section also provides recent data on infrastructure investments and public-private partnerships. The final section discusses current and likely future trends.
This note is an updated synopsis of the more detailed PEL-056: A Problem-Solving Approach to Designing and Implementing a Strategy to Improve Performance. This synopsis helps teams work through a problem-solving process of designing and implementing a strategy for continuous improvement.
Classic Knitwear manufactures and distributes casual apparel, either unbranded or under a private-label brand name. Partly because Classic has no brand recognition with consumers, gross margins are low. To improve margins, the company considers partnering via a licensing agreement with Guardian, a manufacturer of insect repellent that has developed superior repellent technology for clothing. Unlike Classic Knitwear, Guardian is a well-known and well-respected brand in its target market of outdoor enthusiasts, and Classic Knitwear wants to take advantage of this by selling the new clothing line under the Guardian brand. The partnership presents many new opportunities for Classic Knitwear along with many risks. The CEO wants a quick decision in time for the company's upcoming investor call. The case explores challenges in product development, brand management, and consumer marketing. Students are required to complete a breakeven analysis and estimate product demand based on data presented in the case.
Demand for folding and stackable chairs and tables at FoldRite Furniture Co. is unexpectedly strong. The company spent the previous two years improving manufacturing quality and efficiency, dropping poor-performing product lines, developing new products that are stylish and environmentally friendly, and instituting a program that allows customers to customize their orders and still get delivery within two weeks. As a result, sales interest in the new products is higher than forecast, in the U.S. and in Europe, where favorable exchange rates make American products highly competitive. In response to the surge in demand, Martin Kelsey, the production manager, must create a manufacturing plan that controls manufacturing and inventory costs, mitigates risk, and aligns with the strategic goals of the company. Students must complete a quantitative assignment as part of case analysis.
The Salty Snacks case is a data analysis exercise using Excel. The case uses real data from a consumer goods panel. It presents the student with a table of purchase duplications for a set of salty snack brands, and the student's task is to identify the competitive structure of the market, that is, which brands compete more intensely with each other. The task is similar to what brand managers in consumer goods companies face on a regular basis. The case provides excellent skill development in Excel, is instructive about how to analyze competition and informs students about an empirical generalization in marketing: the Duplication of Purchase Law.
The case describes the circumstances surrounding Google's reconsideration of its China strategy. Google officially announced in January 2010 that its Chinese website, Google.cn, experienced cyber attacks from within China. Google further announced that, as a result, it had decided to reconsider its approach to China, including the option of a complete exit from the Chinese market. The case presents Google's performance in China, the details of the cyber attack and the heated public discussion following Google's announcement. Students are asked to consider actions that Google should take and the corresponding, underlying rationale.
For more than a decade, the government of China had sought to develop an automotive industry. The government's initial steps involved the creation of joint ventures in which government-owned firms became partners of foreign privately owned corporations. Most of these joint ventures were extremely successful financially. However, ongoing differences in management preferences created a continual tension within the joint ventures. Of particular concern was a desire of the government of China to ensure that its new automotive industry would adopt the latest advances in technologies. This subject of technology transfer, and how the government of China could best support it, became a central issue in China's automotive industry. From the perspective of the government of China, Geely's acquisition of Volvo would be a major step in achieving technology transfer on an ongoing basis. Geely's China operations would be able to quickly and easily adopt Volvo's cutting-edge safety features and production operations. From Geely's perspective, the Volvo acquisition would provide it with a new set of luxury vehicles for sale in China that would fill a gap in Geely's automotive lineup. Nevertheless, Geely faced the challenge that Ford had continually lost money in Volvo. How to reverse these losses would become a major challenge for Geely.