How do you blow a $1.7 billion merger? You buy a company with a popular brand name, dilute the brand, and sell it for a fifth of what you paid for it. This case explores the merger between Snapple Beverages and Quaker Oats, considered "one of the worst mergers of all time". Using this case, students will learn about the importance of a brand name. Snapple Beverages is also included in Module 3: Sources of Business Stress of the course Business Thought & Action.
This case focuses on an opportunity that American Electric Power (AEP) has to invest, with The Nature Conservancy (TNC), in one of the world's first projects for Reducing Emissions from Deforestation and Forest Degradation (REDD). The proposed plan was to protect 812,000 hectares of rich, biologically diverse forest land, known as Bosque Rojo, in central Peru. This project would address the two issues targeted by REDD by ending both deforestation from the local communities' conversion of land from forest to farmland and forest degradation from commercial logging. REDD projects offered a substantial opportunity to mitigate climate change, as deforestation and forest degradation contributed approximately 15-20 percent of global greenhouse gas (GHG) emissions. Protecting Bosque Rojo could prevent the release of millions of tons of carbon dioxide (CO2). The project partners and investors would obtain certified offset credits equivalent to the reduction in emissions over the 30-year project lifetime. Among U.S. power companies, AEP had one of the highest levels of CO2 emissions. It estimated its 2009 emissions would reach 150M metric tonnes. With climate change legislation on the horizon, it wanted to set an example for Congress to show that REDD offsets could lead to cost-effective reduction in GHG emissions, and also gain experience in the international REDD scene. AEP expected to have to substantially reduce its own emissions (e.g. by substituting wind power for coal in electricity generation) or obtain offset credits either on the open market or through direct participation in external emission reduction projects. AEP believed that REDD projects would be much cheaper than any of its other options to obtain offset credits. To confirm this belief, the company needed to calculate a net present value (NPV) for the project, understand the project's risks, and determine if Bosque Rojo was, indeed, the best use of company funds.
This case focuses on an opportunity that American Electric Power (AEP) has to invest, with The Nature Conservancy (TNC), in one of the world's first projects for Reducing Emissions from Deforestation and Forest Degradation (REDD). The proposed plan was to protect 812,000 hectares of rich, biologically diverse forest land, known as Bosque Rojo, in central Peru. This project would address the two issues targeted by REDD by ending both deforestation from the local communities' conversion of land from forest to farmland and forest degradation from commercial logging. REDD projects offered a substantial opportunity to mitigate climate change, as deforestation and forest degradation contributed approximately 15-20 percent of global greenhouse gas (GHG) emissions. Protecting Bosque Rojo could prevent the release of millions of tons of carbon dioxide (CO2). The project partners and investors would obtain certified offset credits equivalent to the reduction in emissions over the 30-year project lifetime. Among U.S. power companies, AEP had one of the highest levels of CO2 emissions. It estimated its 2009 emissions would reach 150M metric tonnes. With climate change legislation on the horizon, it wanted to set an example for Congress to show that REDD offsets could lead to cost-effective reduction in GHG emissions, and also gain experience in the international REDD scene. AEP expected to have to substantially reduce its own emissions (e.g. by substituting wind power for coal in electricity generation) or obtain offset credits either on the open market or through direct participation in external emission reduction projects. AEP believed that REDD projects would be much cheaper than any of its other options to obtain offset credits. To confirm this belief, the company needed to calculate a net present value (NPV) for the project, understand the project's risks, and determine if Bosque Rojo was, indeed, the best use of company funds.
In the wake of the 9/11 terrorist attacks, Robert Mueller, the Director of the Federal Bureau of Investigation (FBI), sought to transform the storied Bureau. The FBI had long served as both the chief law enforcement agency and the main domestic intelligence wing of the U.S. government. In practice, though, law enforcement had overshadowed intelligence at the FBI. The terrorist attacks made it tragically clear that the United States required a much stronger domestic intelligence service, and Mueller believed that that service should reside within the FBI. Critics, however, called for the Bureau to narrow its scope, focus on law enforcement, and cede domestic intelligence to a new, specialized agency. Should the FBI retain both the law enforcement mission and the domestic intelligence mission? If so, how should it change itself to succeed in both missions? This case, a supplement to the "Federal Bureau of Investigation, 2001 (Abridged)" case (710-450), reviews the FBI's progress from 2001 to 2007.
In 2008, more than 750 million cell phones were produced in China. A significant portion (20 percent, or about 150 million units) of these phones were produced by Shanzhai companies. These companies had rapidly taken a significant share (about 10 percent) of the worldwide market. This phenomenal growth was primarily due to nonconventional approaches to the global market in market positioning, rapid product development, and tightly coupled, responsive and efficient supply chain management. Though Shanzhai often has been perceived as a term for counterfeiting, in reality it is more than just copying. Modern cell phones contain sophisticated hardware, software and systems technology, yet Shanzhai companies of only 10 people could leverage a sophisticated (though informal) network of product designers, manufacturers, and distributors to make a successful business. This case describes the Shanzhai phenomenon, and how these companies operate. It also provides an example of one company that successfully transitioned from a Shanzhai culture to become a major mainstream force in the Chinese mobile phone industry. The case also discusses forces that challenge the future of the Shanzhai model.
In July 2009, General Motors Company (GM),the world's second largest automotive enterprise, has come out of a bankruptcy orchestrated by the U.S. federal government. Leaner and focused after a 40-day exercise, GM is still a long way from a full-fledged financial recovery. The company is under a mandate to concentrate first on its U.S. market. Its European subsidiary, which manufactures the Opel cars, has been struggling for nearly a decade. The business seems fundamentally sound. Opel requires capital infusion and managerial skills for which GM has been talking to potential investors, such as Fiat of Italy, BAIC of China, Magna of Canada and RHJI of Belgium. The board of GM has to decide whether GM should liquidate Opel, retain it within its fold or go for partial divestiture. In the event of a sale of stake, the board has to decide whom, from among those short-listed by the chief executive officer and his team, it should bring aboard. The case provides an opportunity for students to use available data and their judgment to choose a bidder who can drive shareholder value. It helps them deal with issues such as timing and biases in a typical retain/liquidate/divest decision and also whether a company should have, on the lines of a more common M&A strategy, an ongoing divestiture strategy.
Iqbal Quadir, a former New York investment banker, set about to bring universal telecommunications to his native Bangladesh. He was convinced that, GSM, the same advanced wireless technology that penetrated developed countries in Europe was also the right solution for Bangladesh. He assembled a critical group of partners in a venture, GrameenPhone, that included Scandinavian telecom operators, Grameen Bank, the microfinance pioneer, Bangladesh Railways as well as a Japanese investment firm. Each partner brought a different capability to the venture, but the coalition was fundamentally unstable. Quadir was facing roadblocks no matter which way he turned in his quest to assemble the venture. He came to a point where the rational decision seemed to be to abandon the venture and return to his secure investment banking job. This case highlights the role of bottlenecks and constraints in sparking innovations in business models by the creative entrepreneur.
The collapse of central authority in the Soviet Union in 1991 ushered in a period of revolutionary transformations for the states that emerged in its wake. The leaders of Russia, the USSR's successor, since then have struggled to reestablish central authority while also seeking to avoid further disintegration, establish a democratic polity, and institute a market economy. The case contrasts different approaches adopted by Presidents Boris Yeltsin and Vladimir Putin and concludes with a vision outlined by Russia's third post-Soviet president, Dmitry Medvedev. The case focuses on problems of state authority; fiscal capacity; institutionalization of political parties; relations between the federal center and provincial governments; relations between the state and big business; economic policy; and models of economic development.
Bill Hambrecht faces a dilemma: should he accept a high profile client for his online Dutch auction IPO? Though it would be viewed as a real coup, what would accepting the business mean to WR Hambrecht? Should he seek other high profile clients like this, or should he try to work with those companies on lower profile financing activities like secondary offerings? Or perhaps he should work with companies that are too small to attract the attention of the big investment banks, who really don't like the whole Dutch auction idea. The case offers a very different setting to apply the theory of disruptive innovation, yet one in an industry that might be quite familiar to many students.
The case briefly describes the history of Electronic Data Systems (EDS) under Ross Perot and GM before turning to the beginning of a tumultuous decade in the late 1990s. As the turn of the century approached, EDS made critical strategic missteps such as missing opportunities in the Internet space, overlooking the onset of client-server computing, and failing to obtain major Y2K-related projects. The company attempted a turnaround by replacing the CEO with Dick Brown, whose leadership helped streamline the sprawling company. Despite initial successes, Brown's tenure ultimately ended in failure, due largely to his failure to recognize the growing Indian market and his willingness to buy business at the expense of the company's margin. The disastrous multibillion-dollar Navy & Marine Corp Intranet contract typified the type of high-profile transactions that Brown pursued, often boosting EDS's stock price in the short term while eroding its cash flow short term and its profitability over the long term. EDS management went through several stages of the turnaround process: the blinded phase, the inactive phase, and the faulty action phase, until Michael Jordan replaced Brown as CEO and enacted a three-tiered operational, strategic, and financial turnaround.
The case briefly describes the history of Electronic Data Systems (EDS) under Ross Perot and GM before turning to the beginning of a tumultuous decade in the late 1990s. As the turn of the century approached, EDS made critical strategic missteps such as missing opportunities in the Internet space, overlooking the onset of client-server computing, and failing to obtain major Y2K-related projects. The company attempted a turnaround by replacing the CEO with Dick Brown, whose leadership helped streamline the sprawling company. Despite initial successes, Brown's tenure ultimately ended in failure, due largely to his failure to recognize the growing Indian market and his willingness to buy business at the expense of the company's margin. The disastrous multibillion-dollar Navy & Marine Corp Intranet contract typified the type of high-profile transactions that Brown pursued, often boosting EDS's stock price in the short term while eroding its cash flow short term and its profitability over the long term. EDS management went through several stages of the turnaround process: the blinded phase, the inactive phase, and the faulty action phase, until Michael Jordan replaced Brown as CEO and enacted a three-tiered operational, strategic, and financial turnaround.
The case highlights Mike Gilliland, who built a single organic foods store in 1987 in Boulder, Colorado, into Wild Oats Markets, a chain of natural foods stores that by 2001 had annual sales of $1 billion and stores in 38 states. The case includes a history of the natural foods business and explores why Gilliland's timing was so favorable. By the 1980s, when Gilliland got started, the natural foods business had grown and matured, consisting mostly of small specialty stores selling locally grown natural foods. Although the industry was created by the California counter-culturists, it was built into a national phenomenon by the second generation of leaders, including Gilliland and Whole Foods founder John Mackey. The natural foods industry was clubby and congenial until Gilliland sought to grow his business beyond Boulder, Colorado, expanding into four states, including California. Mackey responded by moving into Boulder. Whole Foods became the nation's number one natural foods seller by the early 1990s. Whole Foods went public in 1992, and Wild Oats, in 1996. Whole Foods's success had begun to erode Wild Oats's market share, hurt sales growth, and depress the stock price. Gilliland favored taking Wild Oats in a new direction, modeled after Henry's Marketplace, a San Diego chain that Wild Oats had purchased in 2000. Henry's approach was to offer a product mix that appealed to a broader range of people than did the natural foods stores. Henry's competed effectively with Whole Foods because it had a different customer base; the stores were cheap to build if the company wanted to expand; and the company had showed sustained growth since its founding in 1943. But the Wild Oats board of directors disagreed, opting instead for continuing on the same path. The board also expressed an interest in replacing Gilliland. He now had to weigh his options and contemplate leaving the company he had nurtured for the past twenty years.
After completing her MBA in 2007, Toby Johnson, a former army pilot with the 18th Airborne Corps Rapid Deployment Force, joined PepsiCo's Leadership Development Program (LDP). For her first assignment with PepsiCo, Johnson accepted a position as a manufacturing-manager at a Frito-Lay plant in Williamsport, PA. The Williamsport plant had 200 employees and 54 million pounds of production per year. The case describes how Johnson took charge of the plant, and her action plan for implementing a new set of changes. During Johnson's tenure at Williamsport, the plant was nominated as a potential site for a company-wide transformative initiative. This initiative would entail major changes in the current team structure and incentive program within Frito-Lay. Johnson needed to think carefully about this change implementation.
This case focuses on the growth dilemmas facing Manish Sabharwal, Co-founder, TeamLease Services Pvt. Ltd. TeamLease is a Human Resource Outsourcing and Temp Staffing company located in India, which has grown rapidly over 2002 to 2009. Set in the context of the highly regulated Indian labour market, the case raises the questions of how entrepreneurial leadership and strategy formulation can leverage the opportunities represented by the gaps between what the law says and what the market needs. It provides an opportunity to examine the concepts of power and influence and how they can be created and wielded to catalyze change and build a new industry that is technically illegal.
Key State Blue Cross and Blue Shield Plan (a disguised case of an actual BCBS Plan) is the merged product of three state plans. Initially burdened with a reputation of poor customer service, Key State's executives decided to invest heavily in service improvement, eventually achieving superior levels. Key State's high-quality customer service emerged as a true competitive advantage for its customers, who were primarily businesses and health benefits consultants who influenced corporate purchasers of health insurance. The Key State brand came to be synonymous with personal service, security, choice, and dependability. But the health care insurance market was changing under Key State's feet. Spiraling costs meant that high-quality service became less of a competitive advantage as employers were lured by low-cost, low-service providers. Many employers cut or dropped health care benefits entirely, swelling the ranks of the under- and uninsured, who in turn were extremely price-sensitive when shopping for health insurance on their own. Finally, the health care insurance market was being revolutionized by financial institutions willing to hold health benefit accounts and pay providers directly, thereby eliminating the need for Key State as a mediator. Key State executives were aware of these changes but were challenged by the mindset, culture, and organizational design custom-fit to their business accounts. The case asks the reader to consider whether Key State has the right number of target markets, whether it should have one brand or several for its different target markets, what it should do for the uninsured, and how it should improve its brand experience in light of the industry's changing landscape. All of these decisions will have significant implications for the organizational design of Key State.
The Institute for Healthcare Improvement's (IHI) 100,000 Lives Campaign ended in June 2006. This 18-month campaign sought to save 100,000 people from unnecessary death in U.S. hospitals, and is the subject of case L-13. To successfully accomplish its goals, IHI enlisted a wide range of organizations, including hospitals, regulatory agencies, insurance companies, medical associations, and other Healthcare-related groups to work together toward the common objective of increasing patient safety. In December, IHI launched a follow-up campaign intended to prevent 5 million instances of medical harm over the next two years. This case describes the 5 Million Lives Campaign, how it built upon the previous campaign, and issues faced by IHI at the end of the effort.
Knowledge management has been a high priority for Cognizant Technology Solutions since its inception since its global delivery model requires the global sharing of knowledge. Its first major tool was called the Knowledge Management Appliance but as Web 2.0 tools came into wider use, this evolved into what the company called "Cognizant 2.0" (C2) which was designed to ensure that the KM Appliance capabilities for storing documents and participative tools such as blogs and wikis were directed towards supporting business goals. This required the development of a set of structured work process guidelines and tasks for each major type of work performed internally and for clients. Increasing awareness amongst its clients about C2 has led the company into considering whether it should turn this into a client-facing service offering itself. As its clients become more interested in knowledge management within their own companies, the interest in a C2-based offering could grow.