This case is about Colbun, Chile's second largest electricity generator, which is facing significant uncertainty regarding the cost and availability of alternative energy sources. Problems with the contracted supply of natural gas and the volatility of oil prices, coupled with regulatory changes made by the government, force Colbun to revise its business strategy and its sourcing mix. New legislation will replace historically regulated electricity prices for certain customers with free market prices and therefore change the conditions under which the company must operate. The case also deals with the pros and cons of various energy sources in view of their perceived environmental impact. As the company's CEO, Bernardo Larrain Matte has to take all these different considerations into account when planning Colbun's future, especially in the light of new opportunities and challenges posed by global climate change. The case analyzes the Chilean electricity sector and the operations of Colbun to illustrate the complexities associated with conducting business under the influence of global energy markets, government regulations, and environmental activism.

Family members knew something was very wrong when Adolf Merckle, who had guided the family holding company, VEM Vermögensverwaltung GmbH, through dozens of successful investments, left the house one afternoon in January 2009 and failed to return. That night their fears were confirmed when a German railway worker located Merckle's body near a commuter train line near his hometown of Blaubeuren, about a hundred miles west of Munich. It was no secret that the recent financial crisis had taken a toll on Merckle's investments. He was known in Germany as a savvy investor, but had lost hundreds of millions of Euros after being caught on the wrong side of a short squeeze of epic proportions involving Volkswagen stock. This was not the only large bet against that company's stock. A number of hedge funds, including Greenlight Capital, SAC Capital, Glenview Capital, Tiger Asia, and Perry Capital, lost billions of Euros in a few hours based on their large short positions in Volkswagen's stock following the news on October 26, 2008, that Porsche AG had obtained a large long synthetic position in Volkswagen stock through cash-settled options. In the next two days, this short squeeze produced a fivefold increase in Volkswagen's share price, as demand for shares from hedge funds exceeded the supply of borrowable shares.

After one year of operations, the new manager of a tennis pro shop and bar lounge must prepare, with the help of the company's accountant, financial statements from notes kept throughout the year. The case is intended to be an introductory exercise in accounting for simple transactions relating to assets, liabilities, revenues and expenses. Adjusting entries such as amortization and cost of goods sold are required. Students are asked to complete the accounting cycle by preparing closing entries and an income statement and balance sheet.

The case describes the history and business model of Cirque du Soleil (CdS). The case allows for a rich discussion and analysis of Cirque du Soleil's business model with an emphasis on how it interacts with that of MGM Mirage. Le Cirque and MGM's business models complement one another: MGM makes important capital investments in theaters tailored to CdS's shows that are located in the middle of MGM casinos, CdS acts as a magnet for traffic for an exclusive clientele that spends large amounts of money at the casino. CdS's partnership with MGM has been tremendously profitable. This raises the question of why hold up and opportunism have not destroyed competitive advantage for both entities: What features in CdS and MGM Mirage's business models have resulted in such a successful partnership? The case is set at a juncture where Daniel Lamarre (CdS's CEO) is looking for new opportunities for growth. Lamarre is pondering the likelihood of success of Cirque's first resident show in Asia at Tokyo Disney Resort, its entry in the Macao market, and a new partnership with two subsidiaries of Dubai World, the sovereign wealth fund of the Emirate. The question is: Can Le Cirque find a new model of complementary relationships that will be as profitable as its relationship with MGM Mirage?

By 2008, over half of Mary Kay Cosmetics' $2.8 billion sales were from outside the USA. Sales from China exceeded $500 million in 2008 through over 450,000 beauty consultants. China was Mary Kay Cosmetics' second most important national market with revenues growing at over 20 percent each year. In contrast, Mary Kay Cosmetics had decided to exit the Japanese market in 2001.

Hedge fund Magnetar Capital had returned 25 percent in 2007 with a strategy that posed significantly lower risk to investors than the S&P 500. Magnetar had made more than $1 billion in profit by noticing that the equity tranche of CDOs and CDO-derivative instruments were relatively mispriced. It took advantage of this anomaly by purchasing CDO equity and buying credit default swap (CDS) protection on tranches that were considered less risky. Now it was the job of Alec Litowitz, chairman and chief investment officer, to provide guidance to his team as they planned next year's strategy, evaluate and prioritize their ideas, and generate new ideas of his own. An ocean away, Ron Beller was contemplating some very different issues. Beller's firm, Peloton Partners LLP, had been one of the top-performing hedge funds in 2007, returning in excess of 80 percent. In late January 2008 Beller accepted two prestigious awards at a black-tie EuroHedge ceremony. A month later, his firm was bankrupt. Beller shorted the U.S. housing market before the subprime crisis hit, and was paid handsomely for his bet. After the crisis began, however, he believed that prices for highly rated mortgage securities were being unfairly punished, so he decided to go long AAA-rated securities backed by Alt-A mortgage loans (between prime and subprime), levered 9x. The trade moved against Peloton in a big way on February 14, 2008, causing $17 billion in losses and closure of the firm.

Whether it's a basic Mr. Coffee or a gadget that sports a snazzy device for grinding beans on demand, the office coffee machine offers a place for serendipitous encounters that can improve the social aspect of work and generate new ideas. What's more, a steaming cup of joe may be as good for your health as it is for the bottom line, says Lee, a professor of medicine at Harvard Medical School and the CEO of Partners Community HealthCare. Fears of coffee's carcinogenic effects now appear to be unfounded, and, in fact, the brew might even protect against some types of cancer. What's more, coffee may guard against Alzheimer's disease and other forms of dementia and somehow soften the blow of a heart attack. Of course, its role as a pick-me-up is well known. So there's no need to take your coffee with a dollop of guilt, especially if you ease up on the sugar, cream, double chocolate, and whipped-cream topping.

ReliantShare Bank is about to receive $5 billion in U.S. federal assistance. After all the negative publicity, CEO Ben Marshall knows he needs to deliver a positive message to customers and the market. His chief customer officer, Ammon Rodriguez, proposes an ad campaign thanking the taxpayers for their "investment." CFO Vernon Scott argues instead for focusing investors' and opinion makers' attention on the bank's recapitalized balance sheet and future growth prospects. What message should ReliantShare send to restore the public's confidence? Three experts comment on this fictional case study R0906B and R0906Z. An effective thank-you campaign, says University of Miami professor Michael McCullough, would need to include a clear statement of the bank's intention to translate the $5 billion into increased capacity to serve the public. But, he adds, if Ben isn't willing to eat a little crow, then Vernon is right - they'd be better off keeping their gratitude to themselves and quietly rebuilding their business. Brunswick Group chair Alan Parker asserts that ReliantShare must show contrition and acknowledge its role in creating the mess it's in - though that won't be enough. The bank will probably also need new leadership. Parker suggests that Ben get ahead of events and orchestrate a clean, orderly departure by publicly expressing his regret for shareholders' losses, ensuring that ReliantShare executives aren't walking off with extravagant bonuses, and tendering his resignation. C. William Pollard, former chair and CEO of ServiceMaster, says that Ben would make things worse if he resigned, because a new leadership team would take too much time to get up to speed. But Pollard does think that some heavy-duty PR is in order - not a campaign simply expressing gratitude, but one that emphasizes stewardship, transparency, and a restoration of trust.

In this article, the author of The First 90 Days assesses Barack Obama's attempts to build momentum for change. Creating substantive early wins is critical for transitioning leaders, and Obama's moves to close the U.S. military detention facility at Guantanamo Bay and reverse longstanding policies on stem-cell research have won him broad support. Laying the foundation for longer-term changes is also important, and Obama scores well here in part because of the strong team he has appointed. Surprisingly, however, Obama's efforts to articulate an inspiring vision so far haven't been compelling enough to reach a public frightened by the financial collapse.

In 1971, when Alice Waters founded Chez Panisse in Berkeley, California, chefs at even the highest-end restaurants were still using frozen meat and produce. Waters chose to focus on fresh, simply prepared food using organic ingredients. She invented what is now known as California cuisine and went on to launch a sociopolitical movement based on her ideas about food and community. Her unwavering commitment to quality has produced some steep business challenges in the past, but Chez Panisse has survived for nearly 40 years and is now regarded as one of the best restaurants in the world. What does the recession mean for its future? In this conversation with HBR editors, Waters shares her thoughts. She believes more than ever in the importance of buying "real" food from people who are taking care of the land, but the restaurant kitchen is becoming thriftier and is recycling with even greater energy and enthusiasm than before. Waters keeps her staff motivated and loyal in part through an unorthodox form of job sharing: The two chefs in the main restaurant are paid for a full year but work only six months each, spending the rest of the time developing their skills in France. The cafe chefs are paid for five days a week but come to work only three, using the other two to visit the markets and create their menus. Waters couples her passion for sustainability with a readiness to adapt. She has traveled around the country presenting dinners in collaboration with local people and believes that her restaurant can change with the times. "We could transform ourselves into a soup kitchen or move to a farm," Waters says. "There's a lot of flexibility in the big vision of what Chez Panisse is."

Even in times of economic growth, it's challenging to be a good boss. Research shows that people placed in positions of authority often become less mindful of others' feelings and needs. Meanwhile, those in subordinate roles devote immense energy to watching and interpreting the actions of leaders. These tendencies make for a toxic tandem, which is only exacerbated during a crisis. Sutton, a Stanford professor, provides a useful framework to get bosses focused on what their people need from them most. In a situation where people feel threatened, a good boss finds ways to provide more predictability, understanding, control, and compassion. Predictability. Give people as much information as you can about what will happen to them and when. Preparation will reduce their suffering, and they can relax in the meantime - as Londoners during the blitz were able to do when the air-raid sirens were silent. Understanding. Accompany any major change with an explanation of why it's necessary and how it will affect routines. Internal communication should be simple, concrete, and repetitive. Control. Don't frame an obstacle as too big, too complex, or too difficult to overcome; people will be overwhelmed and freeze in their tracks. When it's broken down into less-daunting components, they can tackle it with confidence. Compassion. Tend to the emotional needs of people who are let go, and help them preserve their dignity. This is essential both for them and for their colleagues who survive the cuts. Demeaning those who have left will demoralize those who remain and may drive the best of them to jump ship. A manager who provides all four remedies will be perceived as "having people's backs" and will reap the rewards of employees' deep loyalty for years to come.

If there's one thing that the past decade's business disasters should teach us, it's that we need to stop evaluating corporate leaders simply on the basis of how much wealth they create for investors. A healthier yardstick would be this: the extent to which leaders create firms that are economically, ethically, and socially sustainable. The first step toward accomplishing that task is to create a culture of candor. Companies can't innovate, respond to stakeholder needs, or run efficiently unless the people inside them have access to timely, relevant information, point out professors O'Toole, of the University of Denver's Daniels College of Business, and Bennis, of the University of Southern California. Increasing transparency can be an uphill battle against human nature, however. The obstacles are numerous: macho executives who don't listen to their subordinates or punish them for bringing bad news; leaders who believe that information is power and hoard it; groupthink among team members who don't know how to disagree; boards that fail to question charismatic CEOs. Nevertheless, leaders can take steps to nurture transparency. By being open and candid, admitting their errors, encouraging employees to speak truth to power, and rewarding contrarians, executives can model the kind of conduct they want to see. Training employees to handle unpleasant conversations with grace also will break down barriers to honest communication. To avoid being blinded by biases, leaders can diversify their sources of information - an obvious measure that's rarely taken. Perhaps the biggest lever for cultural change is the executive selection process - choosing leaders for their transparent behavior, not just their ability to compete. And a few companies have even gone so far as to share all relevant information with every employee.

People in America have come to believe that business schools are harmful to society, fostering in their graduates behavior that is self-interested, unethical, and sometimes even illegal. Many are convinced that managers are simply incapable of self-regulation and have called for laws to govern executive compensation and corporate financial reporting. Sure, legislation is cumbersome, but the consequences of self-governance are apparently even worse. How did business schools become part of the problem rather than the solution? It's their own fault, maintains Apple University dean Podolny, who is in a good position to know (he has been a professor at Harvard and Stanford business schools and a dean of Yale's School of Management). Fifty years of efforts to increase rigor have left even the best business schools with a bias against teaching qualitative disciplines like ethics and leadership. What's more, the schools have allowed rankings organizations to drive their admissions policies and curricula, skewing them toward an overweening emphasis on making money. Podolny suggests a multipronged approach to tackling the problem: curriculum changes that emphasize the integration of several disciplines and link analytics with ethics; team teaching that ropes in professors from different fields to give students a holistic approach to business issues; a broader definition of scholarship that can embrace the research practices of less-quantitative academic fields; an end to using rankings to market the effectiveness of schools' MBA programs; and a willingness to rescind the degrees of individuals who act unethically in the workplace. If that sounds like a tall order, it is. Business schools will never become part of the solution, Podolny insists, until they reinvent themselves.

Will we ever learn? We'd barely recovered from Enron and WorldCom before we faced the subprime mortgage meltdown and more scandals that shook our trust in businesspeople. Which raises the question: Do we trust too much? In this article, Stanford professor and social psychologist Kramer explores the reasons we trust so easily - and, often, so unwisely. He explains that genetics and childhood learning make us predisposed to trust and that it's been a good survival mechanism. That said, our willingness to trust makes us vulnerable. Our sense of trust kicks in on remarkably simple cues, such as when people look like us or are part of our social group. We also rely on third parties to verify the character of others, sometimes to our detriment (as the victims of Bernard Madoff learned). Add in our illusions of invulnerability and our tendencies to see what we want to see and to overestimate our own judgment, and the bottom line is that we're often easily fooled. We need to develop tempered trust. For those who trust too much, that means reading cues better; for the distrustful, it means developing more receptive behaviors. Everyone should start with small acts of trust that encourage reciprocity and build up. Having a hedge against potential abuses also helps. Hollywood scriptwriters, for instance, register their treatments with the Writers Guild of America to prevent their ideas from being stolen by the executives they pitch. To attract the right relationships, people must strongly signal their own honesty, proactively allay concerns, and, if their trust is abused, retaliate. Trusting individuals in certain roles, which essentially means trusting the system that selects and trains them, also works but isn't foolproof. And don't count on due diligence alone for protection; constant vigilance is needed to make sure the landscape hasn't changed.

During a recession, when many companies face declining revenues and earnings, executives often conclude that innovation isn't so important after all. According to the authors, that's because it isn't integral to the workings of most organizations, so the creativity that leads to game-changing ideas is missing or stifled. Rigby, Gruver, and Allen, all partners at Bain & Company, point to the fashion industry as a model. Every season, successful fashion companies must reinvent their product lines - and thus their brands - or face certain death. They manage this constant challenge by creating unusual partnerships at the top that consist of an imaginative, right-brain creative director and a commercially minded, left-brain brand CEO. The authors call these alliances "both-brain" teams. Some famous examples exist outside the fashion industry: Steve Jobs and his COO at Apple, Tim Cook; the creative Bill Hewlett and the savvy David Packard; Bill Bowerman, the former track coach who developed Nike running shoes, and his business partner, Phil Knight. But fashion has gone the furthest to incorporate both-brain partnerships in its organizational model. Gucci Group and others have learned to establish and maintain effective partnerships between creative people and numbers-oriented people; to structure the business so that the partners can run it effectively and are clear about which decisions they own; and to foster left-brain-right-brain collaboration at every level in order to continue attracting talent. What makes these partnerships work? The authors have identified seven characteristics of successful partners: They are aware of their own strengths and weaknesses, have complementary cognitive skills, trust each other, possess raw intelligence, bring relevant knowledge to the team, speak to each other frequently and directly, and are highly committed to the business and each other.

Who would want to join the audit committee of a board of directors? Wouldn't that just mean slogging through the minutiae of Sarbanes-Oxley compliance? Not anymore. Audit teams have pretty much mastered SOX compliance; they're now turning their attention to the meaty problems of increasing business value. To do that, say Northeastern University professor Sherman, Korn/Ferry's Carey, and Sprint CFO Brust, audit teams need a broader range of expertise. Four areas in particular cry out for new blood. Someone, the authors argue, needs to decipher financial guesstimates. GM reported a $3 billion loss in the second quarter of 2006, which it adjusted to a $1 billion profit. Why was that? Things might have gone differently last winter if the company's audit committee had explored the assumptions that GM's managers had used to come up with those kinds of disparate figures. Second, someone needs to keep an eye on M&A performance. Managers today have unprecedented discretion in determining estimates of an acquisition's fair market value, but such calculations clearly warrant greater scrutiny, since fully half of all mergers and acquisitions consistently fail to live up to expectations. Third, someone has to objectively analyze the myriad new risks facing businesses today. Imagine how altered the current economic climate might be if audit committees at Merrill Lynch or Lehman Brothers had recommended limiting their investments in mortgage-backed securities. Last, someone has to make sense of the difference between accounting standards used in Europe and those used in the United States and understand how those standards cloud companies' abilities to reward executives and accurately assess their own performance relative to rivals'.

Promotions to the C-suite are governed by unwritten rules. If you don't know what they are, you'll be left to your own devices interpreting vague feedback and finding a way to achieve your career goals. Beeson has created a framework to help you identify and address any issues that may be getting in your way. Executive placement decisions hinge on three categories of skills: nonnegotiables, without which you will not be considered for a promotion; deselection factors, which eliminate you as a candidate even if you're otherwise qualified; and core selection factors, which ultimately determine who gets the position. Leadership competency models typically fail to make these distinctions, and most don't spell out how skills should be demonstrated at different levels. In middle management, for instance, teamwork is a vital competency. At more senior levels, the imperatives are to think strategically and to acquire and develop talent. Many unwritten rules are especially elusive because they don't pertain to technical or business knowledge. Rather, they relate to the soft skills that give decision makers an intuitive sense of your potential for success. Complicating matters further, managers and HR professionals often give intentionally vague feedback - not direct constructive criticism - for fear of losing good employees. You'll need to dig deep to get useful input from executives and other colleagues: Project a sincere desire to understand what's holding you back. Ask questions, but don't lobby or argue. Avoid comments or gestures that convey defensiveness, which could cause the other person to clam up or move the conversation to safer territory. And be alert to code words and phrases - such as general observations about the need for "increased leadership ability" or "better communication" - that may mask fundamental issues.

ReliantShare Bank is about to receive $5 billion in U.S. federal assistance. After all the negative publicity, CEO Ben Marshall knows he needs to deliver a positive message to customers and the market. His chief customer officer, Ammon Rodriguez, proposes an ad campaign thanking the taxpayers for their "investment." CFO Vernon Scott argues instead for focusing investors' and opinion makers' attention on the bank's recapitalized balance sheet and future growth prospects. What message should ReliantShare send to restore the public's confidence? Three experts comment on this fictional case study R0906B and R0906Z. An effective thank-you campaign, says University of Miami professor Michael McCullough, would need to include a clear statement of the bank's intention to translate the $5 billion into increased capacity to serve the public. But, he adds, if Ben isn't willing to eat a little crow, then Vernon is right - they'd be better off keeping their gratitude to themselves and quietly rebuilding their business. Brunswick Group chair Alan Parker asserts that ReliantShare must show contrition and acknowledge its role in creating the mess it's in - though that won't be enough. The bank will probably also need new leadership. Parker suggests that Ben get ahead of events and orchestrate a clean, orderly departure by publicly expressing his regret for shareholders' losses, ensuring that ReliantShare executives aren't walking off with extravagant bonuses, and tendering his resignation. C. William Pollard, former chair and CEO of ServiceMaster, says that Ben would make things worse if he resigned, because a new leadership team would take too much time to get up to speed. But Pollard does think that some heavy-duty PR is in order - not a campaign simply expressing gratitude, but one that emphasizes stewardship, transparency, and a restoration of trust.

ReliantShare Bank is about to receive $5 billion in U.S. federal assistance. After all the negative publicity, CEO Ben Marshall knows he needs to deliver a positive message to customers and the market. His chief customer officer, Ammon Rodriguez, proposes an ad campaign thanking the taxpayers for their "investment." CFO Vernon Scott argues instead for focusing investors' and opinion makers' attention on the bank's recapitalized balance sheet and future growth prospects. What message should ReliantShare send to restore the public's confidence? Three experts comment on this fictional case study R0906B and R0906Z. An effective thank-you campaign, says University of Miami professor Michael McCullough, would need to include a clear statement of the bank's intention to translate the $5 billion into increased capacity to serve the public. But, he adds, if Ben isn't willing to eat a little crow, then Vernon is right - they'd be better off keeping their gratitude to themselves and quietly rebuilding their business. Brunswick Group chair Alan Parker asserts that ReliantShare must show contrition and acknowledge its role in creating the mess it's in - though that won't be enough. The bank will probably also need new leadership. Parker suggests that Ben get ahead of events and orchestrate a clean, orderly departure by publicly expressing his regret for shareholders' losses, ensuring that ReliantShare executives aren't walking off with extravagant bonuses, and tendering his resignation. C. William Pollard, former chair and CEO of ServiceMaster, says that Ben would make things worse if he resigned, because a new leadership team would take too much time to get up to speed. But Pollard does think that some heavy-duty PR is in order - not a campaign simply expressing gratitude, but one that emphasizes stewardship, transparency, and a restoration of trust.

On May 16, 2007, India-based Hindalco Industries, a subsidiary of AV Birla Group of companies acquired the US-Canadian aluminum giant Novelis. The acquisition was the result of an agreement arrived at between Hindalco and Novelis on February 10, 2007. Hindalco was to buy Novelis for US $6 billion in cash, making it the second biggest acquisition by an Indian company till then. The acquisition resulted in formation of a Fortune 500 company -- the world's largest producer of aluminum -- and expected to be the industry cost leader with a presence over the entire aluminum value chain from mining to final aluminum products. The case provides a general introduction to the aluminum industry including different products, players, and processes. Also there is indirect analysis of the industry and a mentioning of the critical success factors for the industry. The case covers the growth strategies of Hindalco and Novelis and briefly covers their competition as well. It also talks in detail about the various synergies of the deal and ends with the description of the situation post-deal, with Novelis turning black owing to a variety of reasons.