The case describes the situation facing the vice-president of A-CAT Corp. (A-CAT), Vidarbha Region, Maharashtra. A-CAT manufactured a relatively wide range of electrical appliances for household use. Typical products from its product line included TV signal boosters, transformers, FM radio kits, electronic ballasts, battery chargers and voltage regulators. The voltage regulators manufactured by A-CAT were used for many different purposes; however, the focus was on its flag-ship product, VR500 - a voltage regulator of 500 VA. Over the last few months, this model had faced stiff competition and was not able to meet the rising expectations of the market. The management was concerned that a significant number of A-CAT's customers were opting for competitors' products. The case intends to 1) make students aware of the relationship between customer requirements and the technical characteristics of a product 2 ) make students grasp the basics of value analysis 3) teach the students to use value analysis in assessing the scope for cost reduction.
On the evening of 20 October 2008, Citic Pacific, the Hong Kong arm of the CITIC Group, China's largest state-owned investment company, stunned the stock markets by announcing that it would lose as much as HK$15.5 billion (approximately US$2 billion). The company stated that these losses were due to foreign exchange exposures that it had been aware of for six weeks, but had failed to tell the investors about. In an apologetic statement to the public, Larry Yung Chi-kin, the chairman of Citic Pacific, acknowledged the losses and admitted that the contracts had not been properly authorized. Investors and analysts subsequently attacked Citic Pacific for its corporate governance and internal control practices. They expressed shock that the company would make such risky transactions and that it would delay the disclosure of these large potential losses for six weeks. What does this incident say about Citic Pacific's internal risk management and its board of directors, particularly the independent directors? Has the company demonstrated effective corporate governance standards and mechanisms through alignment of its top-level managers' decisions with the interests of the shareholders?
By 2007, China's Ping An Insurance Co. ("Ping An") had grown into the second-largest life insurer in China. Its goal was to become a universal financial services provider by expanding into asset management and banking. These three businesses were the foundation of Ping An's "three-pillar strategy". It had already made two domestic banking acquisitions, but none in asset management. In November 2007, Ping An acquired a 4.2% stake in Fortis, the Belgo-Dutch financial conglomerate, and planned to buy half of Fortis's asset management business, which would be a big step towards reaching its goal. Yet this ambitious overseas expansion plan was crushed by the adverse effects of the US subprime problem and the global financial crisis. The company needs to address important lessons, re-evaluate its overseas investment strategy and learn how to implement risk management in the future.
Structurally speaking, we are on the cusp of a new competitive era. The old era, in which one independent company wrestled with its horizontal market rivals for a bigger slice of the pie, is giving way to a game that is more nuanced, more challenging-but also bigger. In this new game, the smartest, most successful players will be those who build more unified end-to-end systems that deliver tangible value and improved experiences to customers. This technical note focuses on how to manage and orchestrate vital, differentiated-and profitable-customer experiences on a recurrent basis across inter-organizational value chains and routes-to-market systems.
This public leadership case puts students in the shoes of King County Executive Ron Sims, the top elected official in Washington State's largest and most diverse county. The year is 2005, and Sims wishes to take a high profile leadership role on the climate change issue-locally and on the national stage-by tackling the nearly uncharted realm of "adaptation," preparing at the local level for impacts of climate change considered inevitable. In addition to addressing certain generic leadership challenges-how to navigate the difficult intersection of politics and science, how to think about uncertainty, how to make an argument for long term investments, how to prove effective on both local and national stage-the case has the advantage of introducing readers to a compelling contemporary public issue, sure to grow in urgency worldwide. The case details the array of considerations that went into Sims' decision to take on the adaptation issue, including a brief summary of a concurrent local debate about designing a new wastewater treatment plant to deliver reclaimed water to customers in the future, if needed. HKS Case Number 1906.0
This sequel reveals which actions the County took, and describes the outcome of each in brief. It also includes two exhibits: a summary of the "goals and actions" outlined in the adaptation section of the 2007 King County Climate Plan and a list of executive orders intended to reduce the county's contribution to global warming. In addition to addressing certain generic leadership challenges-how to navigate the difficult intersection of politics and science, how to think about uncertainty, how to plan for the long term, how to prove effective on both local and national stage-the case has the advantage of introducing readers to a compelling contemporary public issue, sure to grow in urgency worldwide. HKS Case Number 1906.1
An Indian wind energy company with global ambitions of being among the top three in its business worldwide, Suzlon Energy Ltd. (Suzlon) manufactures and markets turbines, which harness wind to product electricity. Several of its customers are going global and increasingly expect global service (including pricing) consistent across geographies. Suzlon could consider the rapidly increasing business practice of global account management (GAM) to meet these needs. However, it would be a new trend in the wind energy industry and Suzlon would have to pioneer it. That presents several challenges, including persuading top management to approve a pilot exercise with a key customer, and managing incentives and morale within the organization and across country borders.
Marlene Baer, the controller of Breeden Security USA, recognizes that grouping all manufacturing overhead costs together and allocating them to Breeden's two products is not very accurate. She groups overhead costs by activity and then allocates them to the two products. The system resembles a simple activity-based costing system. It introduces the definition of activities, costing those activities, and computing product cost based on their use of the activities. The revised product costs are considerably different, and analyzing what causes the differences is important for discovering where ABC can provide valuable information. In addition, at the end of the year, profits have been reduced by the need to take care of a growing and increasingly complex packing and shipping activity. Baer defines a new activity (order handling), computes the cost per order, and begins to revise the data on product profitability and to develop data on customer profitability. Having discovered the high cost of handling each order, she now has good reason to work on activity-based management and the notion of customer profitability making that process more efficient, and perhaps more customer friendly. This is the second in a series of two cases that can be used to explore the evolution of cost systems. The main issues of the two cases are as follows: In the A case (UV1778), the company uses a traditional costing system. The main questions relate to breakeven analysis and the effect of inventory buildup on profit. The B case introduces the use of an activity-based costing system to allocate costs so that the company can assess both product and customer profitability. The two cases can be used in two classes or together in one class.
In April 2009, Rashonda Williams, responsible for global asset allocation at a large pension fund, had to decide whether the increase the allocation to foreign securities. A primary factor influencing her decision was her view on the likely path of the U.S. dollar over the next 5 to 10 years. Were we on the verge of a massive repatriation of U.S. investors' foreign portfolios? Would foreign central banks begin to diversify away from dollars? Was the dollar (and other major currencies) so undervalued that the Group of Seven (G7) might contemplate coordinated currency intervention? Williams's assessment of these issues would be a large factor in her overall assessment: Should she recommend to the board that it increase the allocation to foreign securities, or should it take this opportunity to repatriate profits and increase the weight on U.S. securities?
NFC was a state-owned company listed on the China stock exchange. It had operations in Zambia, Iran and Kazakhstan before entering into Mongolia. Most of the prior projects were turn-key operations. Mongolia was the first country in which it had an international joint venture (IJV). The joint venture (JV) agreement was signed in 1998. Due to many delays, it was not until 2005 that it finally started operating. In mid-2007, the Mongolian parliament notified the JV that its 5-year 0 per cent and 5-year 50 per cent of income tax term (starting from 2005) had been cancelled. Not only would it need to pay full tax starting from 2007, it had to pay the exempted tax amount from 2005 and 2006. Inside the JV, the union desired another pay raise despite the fact that salaries had been increased 10 per cent just six months ago. Outside the JV, local shipping companies threatened to block the factory gate if the JV did not sign a shipping contract with them on their terms.
This case provides students with an opportunity to become familiar with some major strategic issues that firms face when formulating and implementing a sales promotion, including: cannibalization, brand equity erosion, forward-buying, pass-through, and consumer stockpiling. It also provides them an opportunity to utilize retail scanner purchase data in order to evaluate the historical performance of sales promotions. Based on calculating top-line revenue, marketing margin, and return on marketing investment (ROMI) for prior promotions, students can recommend the most financially and strategically defensible initiative from a choice of several competing sales promotions. The setting is the frozen foods category in the consumer packaged goods industry.
The remuneration committee at Shell decided to exercise their discretionary power to award five top executives a bonus for 2008, even though they had not met the necessary performance measures under the compensation plan. Proxy advisors RiskMetrics and the British Association of Insurers advise their clients to vote against the plan at the upcoming 2009 annual meeting. The Shell remuneration committee wonders how the shareholders will react.
At the 2009 Shell annual meeting, the majority of shareholders vote against the exclusive pay package. The B case compares the remuneration committee perspective (and their rationale for using discretion to award the bonuses) as well as the shareholder perspective (and their rationale for reacting so strongly against the pay package).
This case describes the evolution of a liquid petroleum gas (LPG) distributor start-up, incubated by two not-for-profit NGOs to help improve the vaccine cold chain in Northern Mozambique. These NGOs must face the decision whether and how to sell their participation in the start-up. VillageReach and the Mozambican Foundation for Community Development (FDC), both NGOs, got involved in the national immunization program, the Expanded Program on Immunization (EPI), in northern Mozambique. This program's goal was to ensure prompt and universal access to vaccines and other medical supplies. Early on, VillageReach had realized that the program's goals could not be satisfied unless cold storage (and transportation) of the vaccines was guaranteed. Because electricity was scarce and unreliable in the region, VillageReach searched for alternative solutions for supporting cold storage. VillageReach finally decided to use LPG powered refrigerators, and, due to the lack of reliable sources of LPG in the region, FDC and VillageReach went on to fund VidaGas, an LPG distribution company. It soon became evident that an efficient distribution network of LPG could provide benefits to society above and beyond health: at the time, most businesses and households in the region cooked using biomass fuels. Such fuels are a significant health hazard, and also contribute to deforestation in the region. Although VidaGas could be considered a success, it had yet to reach breakeven in its current operations. In addition, new investments would be required to expand operations to neighboring provinces beyond the province used for the pilot, Cabo Delgado. As the Ministry of Health (MoH), FDC and VillageReach are planning to expand the improvements in the national immunization program to these provinces, the presence of a reliable source of LPG would be essential to their goals. At the same time, VillageReach and FDC's resources for further investment are limited.
As the economies of Greater China continued the process of rapid transformation and industrialization, newly industrialized countries (NICs), such as Taiwan and mainland China, experienced dramatic changes in their business settings. Accompanying the industrialization of east Asian economies, business ethics were in a state of flux, as traditional values were often swept aside to justify profit maximization. In this ever-changing business environment, what were the characteristics and benefits of Chinese business ethics? What role did they play? Could an integrity-based business practice serve as a source of competitive advantage? What business settings were supporting business ethics? Few studies have paid attention to these kinds of questions. Sinyi was one of the most successful real estate agent companies in Taiwan and mainland China. From a Confucian perspective, Sinyi's founder cultivated a "people-centered" culture for both its customers and employees. By applying business ethics as a central differentiating strategy, Sinyi established an excellent corporate image and was regarded by many as the role model of responsible business. Sinyi service was regarded as premier in Taiwan. Its customer satisfaction rating was also far above the industry average. Trustworthiness and fair dealing were the company's guiding principles. This was in contrast to the-then chaotic environment of the real estate industry in Taiwan, where basic trust between buyers and sellers was rare and deceit existed everywhere. Focusing on using business ethics as a central differentiating strategy, Sinyi had grown into Sinyi Group, which successfully integrated upstream, midstream and downstream industries and established a highly-acclaimed business model. Over the past two decades, Sinyi Group had expanded its operations to mainland China and forged an alliance with global real estate brokerage Coldwell Banker.
Scandinavian Airlines (SAS) is an innovator of strategic environmental management in the airline industry. Being a first-mover can have both its advantages and disadvantages. This case looks at the airline's decision of whether they should invest in the best available environmental technology for a fleet of new aircraft that would serve them for the next 25 years. While the technology for these low-emission engines had been around since the 1970s, it had never really been commercialized. SAS was feeling pressure from the regulatory authorities with regards to potential new charges and taxes that could affect the future operating costs of the fleet. Despite these anticipated future costs, at the time of the decision, the director of aircraft and engine analysis for SAS could not make an economic case for the more expensive engines. The challenge was for the fleet development team to try to convince the SAS management team to spend the extra kr5 million (Swedish Kronor) per aircraft for the dual combustor engine. Given that corporations are faced with increasing pressure with regards to greenhouse gas emissions and climate change, this case study presents an opportunity for discussion and analysis of various environmental concepts including strategic environmental management, adoption of best available environmental technologies, the role of internal environmental leadership in a large corporation and the effect of market-based mechanisms to improve a sector's environmental performance. The case illustrates the complexities of environmental decisions in striking a balance between meeting ambitious commitments and dealing with real capabilities of companies and external pressures.
Private entrepreneur, Tony Fernandez took over the debt ridden AirAsia airlines from the Malaysian government in December 2001, months after the terrorist attacks of 9/11. One month later, he relaunched the airline as South-East Asia's first low cost carrier (LCC) and achieved an instant success with increased profitability and rapid route expansion. Under the tagline of "Now Everyone Can Fly", AirAsia was able to keep the lowest cost structure among its competitors and offered low airfare to customers. Being innovative down to the corporate bone, AirAsia pioneered several new services for its operation, including an ambitious plan that many other low cost, short-haul carriers viewed as risky-extending services to include long haul routes. In 2007, AirAsia was ranked as the best LCC in the Asia region. Its success had not only inspired many LCC followers in the Asia Pacific region, but also severely threatened the well-being of full-service operators, especially its major competitor at home, Malaysia Airlines ("MAS"). In May 2008, MAS initiated an unexpected price war by launching the "Everyday Low Fare" campaign, offering zero fare for domestic and short-haul flights, which were largely dominated by AirAsia. Amid surging flight operation costs globally and ever intense competition in the Asia Pacific region, how could AirAsia increase its competitiveness?
On 12 September 2008, Sanlu Group, the biggest producer of milk powder in China, rocked the country when it admitted that its infant formula had been contaminated with the toxic chemical melamine. China's national inspection agency extended its investigation to other dairy manufacturers across the nation. Shockingly, products of 21 other dairies, including some famous Chinese brands, also tested positive for melamine. Due to consumption of melamine-laced milk products, more than 56,000 infants and young children had become sick and four babies had died from kidney failure by the end of September. The melamine scare also resulted in many countries recalling and banning goods using milk products from China. When Sanlu became the key culprit in the milk crisis after its infant formula was revealed to contain as much as four times more melamine than other tainted brands, the company apologized to the public. Sanlu also explained that its unscrupulous raw-milk dealers had illegally added melamine to milk. However, it failed to explain its delay in alerting the public when it first received customer complaints in late 2007. Instead, Sanlu had tried to cover up the news until being prompted by its New Zealand partner, Fonterra, which later alerted the New Zealand government. As a result of the milk crisis, the local government of Shijiazhuang, where Sanlu was headquartered, was accused of holding back the news from the central government. Fonterra wrote off all its investment in Sanlu, and Sanlu finally declared bankruptcy on 24 December 2008. The Sanlu incident has spotlighted the inadequacy of China's entire dairy supply chain and has forced the government and the industry to make a collective effort to restore consumer confidence in Chinese dairy products.
This case discusses the housing registration system that was implemented in China in the late 1950s and categorized individuals into two groups: urban and rural. This was a status that individuals were born with and passed from one generation to the next. It not only defined their place of residence and work, but also the social benefits, housing, healthcare and education they were entitled to. In the period after 1978, with reforms in rural areas and the development of urban coastal areas, cheap labor flocked to the cities. With over 200 million migrants to urban areas in 20 years, the housing registration system prevented many from finding proper jobs, housing, healthcare and education. The Chinese government embarked on a number of reforms with varying degrees of success. This case highlights rural-urban disparities and the resulting migration to urban areas.