Petro Refinery LLC, a crude oil refinery, faces an issue common in many production and service industries: finding the optimal product mix or input mix. A central difficulty is that each product consumes different amounts of the firm's shared resources, but contributes different revenues toward the firm's fixed costs. Managers do not necessarily want to sacrifice the production of one product for another just because one has a higher contribution. Even so, the best utilization of the firm's resources toward a good product mix should drive the firm's marketing strategy-what mix of products will result in the most profit? Petro Refinery is a simple but realistic exercise to illustrate product mix decisions.
Jones Electrical Distribution is faced with a need for increased bank financing due to its rapid sales growth. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed and assess the attractiveness of the loan to the bank. Allows students to practice ration analysis, financial forecasting and evaluating financing alternatives.
The case opens in July of 2009 with Becky Splitt, CEO of StudyBlue, facing a series of difficult decisions. These include: determining the appropriate business model to monetize the StudyBlue site, which customer segment to target, and how much new capital to raise (and from whom). The case tells the story of how StudyBlue was begun as a side project of Chris Klündt and Steve Wallman in 2006 and how it evolved into a full-fledge start-up with seven employees. Over the course of three years, StudyBlue develops a healthy following of college users and adds significant new features and functionality. However, by the close of the case, there is still uncertainly around how quickly it can grow revenue in the future. Given new competitors on the horizon and the window for Series A funding round closing, Splitt must make her decisions quickly.
Part A of the case opens in July of 2009 with Becky Splitt, CEO of StudyBlue, facing a series of difficult decisions. These include: determining the appropriate business model to monetize the StudyBlue site, which customer segment to target, and how much new capital to raise (and from whom). The case tells the story of how StudyBlue was begun as a side project of Chris Klündt and Steve Wallman in 2006 and how it evolved into a full-fledge start-up with seven employees. Over the course of three years, StudyBlue develops a healthy following of college users and adds significant new features and functionality. However, by the close of the case, there is still uncertainly around how quickly it can grow revenue in the future. Given new competitors on the horizon and the window for Series A funding round closing, Splitt must make her decisions quickly. Part B of the case describes Splitt's decision of choosing a financing partner for StudyBlue's Series A funding round. She must weigh the benefits and disadvantages of partnering with a mature angel investor group where she would face less restrictive terms than partnering with a venture capital firm but also less money and consequently a shorter operating runway. Her other option is to partner with a venture capital partner which will guarantee savvy advisors, recruiting help and more dollars but also more restrictive terms and a potential requirement to relocate the company from Wisconsin to the west coast. Finally, Part B of the case highlights the many changes in the competitive landscape between 2009 and 2010, including the introduction of two new players and the acquisition of several others by large corporate entities.
In late September 2009, the CEO of the Nasdaq-traded solar cell and module manufacturer, Canadian Solar, was at an inflection point in the formation of its international strategy. The company had experienced dynamic growth during the past five years buoyed largely by aggressive incentive schemes to install solar photovoltaic (PV) technology in Germany and Spain. The credit crunch, coupled with changes in government incentive programs, caused a major decline in the demand for solar PV technology and analysts were predicting that full year 2009 sales would decline. Furthermore, competition in the industry was fierce with diverse players ranging from Japanese electronic giants to low-cost Chinese producers. Canadian Solar had decided to focus on 10 major markets in the next two to three years where strong renewable policies existed. Students are challenged with deciding if any changes to the company's global strategy are necessary.
This case study explores the factors that are important in analyzing the health and soundness of a project in a growing nonprofit housing company with multiple program areas. A new loan officer at a community development financial institution must decide whether to recommend approval of an application by Greater Miami Neighborhoods (GMN) for financing the construction of a mixed-income condo building in downtown Miami. GMN recently has become the largest nonprofit developer and owner of low-income housing in Florida, with fifty-eight affiliates and subsidiary legal entities responsible for the development, preservation, and management of more than 6,000 units of low-cost rental and for-sale homes. It has grown by taking on new and far-flung real estate projects-including Lighthouse Bay, a 1,100-unit apartment complex in Jacksonville, Florida-and acquiring its own property management and construction companies. But the organization has also experienced a few setbacks-including a rejection in the final round of a large loan from the MacArthur Foundation. It is up to the inexperienced loan officer-and readers of the case study-to find ways to assess the situation and decide whether GMN has been experiencing mere growing pains or a more serious organizational illness. HKS Case Number 1922.0
This case describes the history and activities of the A-Team, a major alliance of bicycle assembly firms and parts suppliers in Taiwan, which was created in 2003. A strategic alliance with competitors posed challenges. For the A-Team, it was more complicated because the alliance was between both competing bicycle assembly firms and between parts suppliers. By 2006, progress had been made in making the alliance work but the senior executives were wondering what they could do to ensure future progress. The case can be used in a strategy module or course on alliances/joint ventures in a section examining the competition versus cooperation challenge.
Target Corporation is concerned that the company might be left out of one of its most lucrative and attractive product categories, video games and game players, as these products increasingly migrate to digital distribution models. What steps should the company take to maintain its relevance and build sustainable competitive advantage as these trends play out? What are the implications for the company's multi-channel online and offline format portfolio going forward?
By 2009 Netflix had all but trounced its traditional bricks-and-mortar competitors in the video rental industry. Since its founding in the late 1990s, the company had changed the face of the industry and threatened the existence of such entrenched giants as Blockbuster, in large part because of its easy-to-understand subscription model, policy of no late fees, and use of analytics to leverage customer data to provide a superior customer experience and grow its e-commerce media platform. Netflix's investment in data collection, IT systems, and advanced analytics such as proprietary data mining techniques and algorithms for customer and product matching played a crucial role in both its strategy and success. However, the explosive growth of the digital media market presents a serious challenge for Netflix's business going forward. How will its analytics, customer data, and customer interaction models play a role in the future of the digital media space? Will it be able to stand up to competition from more seasoned players in the digital market, such as Amazon and Apple? What position must Netflix take in order to successfully compete in this digital arena?
Julie Smith, brand manager for dog food manufacturer Pedigree, has to determine how best to jump-start growth in the slumping business. The (A) case centers on the debate over which type of strategy to pursue, brand building versus in-store activity, while the (B) case focuses on the concept of cause marketing as a growth strategy.
The case examines a competitive situation in the market for Scotch whisky in Thailand. Two multinationals fight for market share with a complex portfolio of products under the Chivas Regal, Johnnie Walker, and Ballantine brand names. Students must understand a broad array of branding, consumer behavior, pricing, and regulatory issues in order to arrive at recommendations for Chivas Regal to defend against recent gains of Johnnie Walker. The case can be taught with a focus on the Chivas Regal 12 Year product and recommendations for its growth, but also can be taught as a broader portfolio case, with students aligning a portfolio of Chivas and Ballantine products at different quality levels to maximize sales and profit.
This is an MIT Sloan Management Review article. Business strategy begins with operations, the competitive landscape and markets. But David Bach and David B. Allen of the IE Business School Center for Nonmarket Strategy argue that strategy should not end there. Rather, a robust nonmarket strategy that addresses government regulation, political and social movements, even activist opposition should figure strongly in any strategy. Nonmarket strategy starts with the premise that issues and actors "beyond the market" affect the bottom line. Which nonmarkets are most important? That depends on the key issues a company confronts. By identifying key issues, and then the actors who are shaping them, a company can begin to shape the nonmarket -- a crucial approach when the issue is core to the underlying market as well.
This is an MIT Sloan Management Review article. Nearly every aspiring entrepreneur or innovator has a business plan, and virtually all of these individuals believe that their business plan -- what we call Plan A -- will work. They can probably even imagine how they'll look on the cover of Fortune or Inc. And they are usually wrong. But what separates the ultimate successes from the rest is what they do when their first plan sputters. Do they lick their wounds, get back on their feet and morph their new insights into great businesses, or do they stick to their original plan? If the founders of Google, Starbucks or PayPal had stuck to their original business plans, we'd likely never have heard of them. Instead, they made radical changes to their initial models, became household names and delivered huge returns for themselves and their investors. How did they get from their Plan A to a business model that worked? Why did they succeed when most new ventures crash and burn?
This is an MIT Sloan Management Review article. Google. Wikipedia. Threadless. All are platinum exemplars of collective intelligence in action. Two of them are famous. The third is getting there. Each of the three helps demonstrate how large, loosely organized groups of people can work together electronically in surprisingly effective ways -- sometimes even without knowing that they are working together, as in the case of Google. In the authors' work at MIT's Center for Collective Intelligence, they have gathered nearly 250 examples of web-enabled collective intelligence. After examining these examples in depth, they identified a relatively small set of building blocks that are combined and recombined in various ways in different collective intelligence systems. This article offers a new framework for understanding those systems -- and more important, for understanding how to build them. It identifies the underlying building blocks -- the "genes" -- that are at the heart of collective intelligence systems. It explores the conditions under which each gene is useful. And it begins to suggest the possibilities for combining and recombining these genes to not only harness crowds in general, but to harness them in just the way that your organization needs.
This is an MIT Sloan Management Review article. When Peter Drucker first proposed his "marketing concept" back in 1954, the notion that meeting customer needs better than your competition as the driver of business success was a radical idea. Today most managers agree that achieving sustainable profit growth requires having a clear, relevant customer promise; delivering on that promise; improving it; innovating; and supporting all of that with an organization that's open to new ideas and market feedback. However, achieving all of this is difficult. Despite management's tendency toward wishful thinking, the authors believe managers can come to terms with their company's weaknesses by posing a set of five questions specifically designed to uncover their vulnerabilities. Drawing on examples from companies including Apple, Google, Procter & Gamble and Toyota, the authors explain the importance of each of these questions. "For those who are prepared to ask the tough questions and willing to hear the answers," they write, "the potential benefits to the business are significant.
This is an MIT Sloan Management Review article. Companies are surprisingly obtuse, the authors say, when it comes to the formation of new alliances. What often happens is that a business unit will form a partnership that serves its own parochial interests. All too often, however, the value that such alliances add at the business-unit level is negated by the resulting harm to the company due to the incompatibility of the new alliance with existing ones. Forming a partnership with a company that is an arch rival of an existing partner, for instance, can create such ill will that it leads to the overall destruction of value in the company. The solution, the authors argue, lies in both structure and process: Companies should create a central "alliance function"-an individual or a department at the corporate level that is charged with overseeing and coordinating the formation of new alliances. And the decision of whether to enter into a proposed alliance should be subject to a rigorous set of analytical steps in which the company examines the costs and benefits of the proposed alliance, not only for the business unit that is directly involved but also for the company as a whole.
This is an MIT Sloan Management Review article. "Dysfunctional momentum" occurs when people continue to work toward an original goal without pausing to recalibrate or reexamine their processes, even in the face of cues that suggest they should change course. In the authors' study of firefighting teams as a metaphor for business organizations, where dysfunctional momentum arises daily, they found that it has at least five possible causes: (1) an overemphasis on action and decisiveness, which often precludes meaningful assessment along the way; (2) evaluating people, processes and outcomes against plans rather than reevaluating the plans themselves; (3) the cumulative effects of small changes that can ripple and grow throughout the organization; (4) the tendency to ignore or co-opt disconfirming evidence; and (5) deference to authority even when leaders are not especially in the know. To overcome dysfunctional momentum, the authors conclude, we have to create interruptions -points at which we can ask: What's the story now? Is it the same story as before? If not, how has it changed? And how, if at all, should we adjust our actions? The people in charge need to stop and reassess what is happening around them. Two interconnected factors tend to be instrumental, say the authors. First, individuals have to recognize their own inability to understand fully and predict the unfolding situation by themselves -they have to develop "situated humility."Second, they must actively create or seek out disruptive information -they have to accept interruptions so that people may reevaluate the story they are maintaining in their minds.
This is an MIT Sloan Management Review article. User-generated content platforms, open source software, crowdsourcing and knowledge markets -these are all possible only because of the "social web," the interlinked virtual universe that to so many executives seems to offer the irresistible promise of providing something -ideas, work, decisions -for (almost) nothing, if only they could manage it right. Managing it right means understanding that even though the new platforms are all about harnessing crowds and communities, in the end those crowds and communities are nothing but a sum of individuals. And your company's social web efforts will succeed only to the extent that you are able to attract good individuals, motivate them to perform good work, and empower them to get to know and trust one another enough to collaborate toward the end goals of the community. The question is, How do you do that? The answer: by capitalizing on the motivational power of in reputation -that is, by designing and building an online reputation system that triggers and nourishes the kind of web community that will serve your company's needs. Using examples such as Amazon, eBay, Epinions and Yelp, the author describes how design choices of a reputation system can profoundly affect a community's culture, making an otherwise collaborative and cordial community into a competitive and even combative space.