In March 2009, the U.S. economy was in a severe recession not seen since the Great Depression after the subprime mortgage crisis had spiraled out of control. The situation had dramatically changed in one year since the Federal Reserve Board had helped to bailout investment bank Bear Stearns. Deflation, not inflation, had become a top concern. Interest rates were near zero percent. Five million jobs had been lost. The new Barack Obama administration had pushed forward with a $787 billion stimulus package, coupled with various programs to address the frozen credit markets and depressed investors' confidence. Yet the burning question in every policymakers' mind was--how effective would the various plans work to revive the U.S. economy?
The global economy was expected to suffer from negative growth for the full year in 2009, a phenomenon not seen since World War II. While the U.S. subprime mortgage disaster was blamed as the original instigator, it was noted that the "global imbalances" of the U.S. current account deficit funded for many years by other nations such as China was also a chief culprit of the crisis as well. Policymakers around the world recognized that the scope and scale of the financial crisis required a coordinated global response. Yet there were conflicting views on what kind of action was needed to address the first global financial crisis of the 21st century.
Biovail Corporation, a major Canadian pharmaceutical company listed on the New York Stock Exchange, announces that it will miss its quarterly earnings target by $25 to $45 million, blaming $10 to $15 million of the shortfall on a truck accident involving a shipment that left its facility on the last day of the quarter. The case was ultimately prosecuted by the U.S. Securities and Exchange Commission (SEC). The case is centered on the question of revenue recognition and how the company should have accounted for the sales (FOB company or FOB destination). However, it also provides a rich setting permitting exploration of peripheral topics around the ethics of earnings management. For example, the case discusses stock analysts' reactions to the announcement; questions how much product was actually in the truck; questions how aggressively the company responds against the analysts who downgrade the stock; and highlights the role of the SEC in enforcement.
Ted Morgan, the founder of Skyhook Wireless just received a call from Steve Jobs of Apple asking for a meeting. Ted must decide how to prepare for a meeting that could finally give Skyhook an anchor customer. Ted and his team have worked for three years to build a new approach to location based services that uses WiFi rather than the well-established satellite based GPS technology. Skyhook's approach is more accurate than GPS in urban areas and, unlike GPS, it works indoors. Yet, large device manufacturers are reluctant to be the first ones to use it. Skyhook has no customers. The board and investors are getting restless. Should Ted offer Steve Jobs a free license, or pay him for Apple's user base - or should he insist on a substantial license fee? The case examines the challenges faced by entrepreneurs in creating a technology-based company and in getting market traction against an established standard.
A retired scientist and her partner want to start a company near London, Ontario, specializing in training horses for dressage competitions. The partners must ascertain whether the $100,000 they plan to invest will be sufficient to cover cash requirements, or whether a loan is required. Neither partner has had any business training, and they are unsure how to prepare proper financial statements. The partners wondered whether any further information was needed and what steps they would take to start the venture.
Padraic Kelly became Managing Director (MD) of the engineering services firm Buro Happold in 1996. One of his first initiatives was "Aim for Growth," which was intended to help the firm grow beyond its current size where it was constrained by a structure of having each of the firm's founding partners responsible for a group of 25-30 engineers. This initiative was very successful, but the firm then found itself with a lack of leadership skills at all levels of the organization to manage a company of a much larger size, growing by a factor of 10 over 10 years. In response, Buro Happold developed its first formal internal training programs under the name of "Archimedes Academy." The first two programs were (1) the Job Leader Program, targeted for senior engineers and designed to help them be more effective in working with clients, and (2) the Project Leader Program, targeted for project leaders and designed to help them develop the "softer" management skills to complement their technical ones. A distinctive aspect of Archimedes Academy is that these first programs were developed and delivered by the cohors who first attended them. Rather than partner with a university to develop an accredited program, the firm decided it would be better off developing the program itself, with the help of an outside consultant who had done something similar at his previous employer, in order to make sure the programs were specific enough to Buro Happold's needs and relevant to the firm's culture. The first two programs were a big success and the firm expanded the training offerings under the Archimedes Banner. The case ends with a client, a Middle Eastern city authority, asking Buro Happold Consulting, a new unit created by Padraic Kelly after stepping down as MD in 2006, to develop a training program for them. This request raises the question of whether this internal training capability should become the basis of an external service offering.
Less than a week before Barack Obama was due to be sworn in as the 44th president of the United States, Obama for America (OFA), the president-elect's official campaign organization, announced the formation of a post-election organization, Organizing for America. The new organization would keep the campaign field team offices open after Obama took charge of the country for the express purpose of influencing supporters to back his administration's agenda. The case describes the activities of the Obama for America campaign and asks whether the new president should use social media tools to activate the grassroots, or whether he should abandon these unconventional tools in order not to upset politicians in Washington.
Thomas McDonald, senior vice president of Equity International, is weighing an investment in the Brazilian homebuilder Gafisa. Was this the right country? The right company? The right co-investor? The right time? McDonald would be investing alongside a Brazilian private equity firm, GP Investments, and must decide how to structure the investment. Especially, he must decide how to align his interests with those of GP. GP has recruited EI due to its prior experience with the Mexican homebuilder Homex. McDonald must also consider: Is that experience transferable to this investment?
A leading low income housing builder in Mexico decides which prospective new local partner best extends its advantages in managing twin production lines of homes and clients. URBI has built substantial competitive advantage in the technology and culture that matches the outputs of these two production systems. The company has also built extensive expertise in accessing the many mortgage and funding sources in Mexico. To grow, the company is interested in entering other Mexican geographies but faces a choice of doing this with its own staff and buying land for cash, or partnering with local entrepreneurs and local land owners. In evaluating the choices, students must think more deeply about what makes the two production lines work and how to balance the two lines. The discussion can end with comparisons of the Mexican political and government circumstances that encourage this method of producing workforce housing as compared with the U.S., China, India, and other markets.
A privately held U.S. plumbing parts manufacturer is negotiating the purchase of a Brazilian plumbing manufacturer specializing in water conservation. The case provides sufficient information to value this cross-border acquisition and includes a brief summary of valuation techniques in this context. A particularly rich discussion arises from two points: A forecast of exchange rates from a forecasting company differs from forecasts based on inflation, and two methods are suggested for dealing with country risk (sovereign spread and scenario analysis).
Designed to teach conjoint analysis, this case challenges students to make tactical decisions based on marketing research. It should be paired with the technical note "Conjoint Analysis: A Do it Yourself Guide" (515024). A National Basketball Association franchise is struggling to increase attendance. It contracts a marketing research firm to conduct a conjoint analysis focusing on several aspects of its season ticket offerings with the hope that it can profitably improve their attractiveness.
This case focuses on the application of Value Stream Mapping as a means of identifying waste in a supplier's logistics- services activities. Students are given the information needed to construct a Value Steam Map, identify value-added and non-value-added activities, and develop opportunities for reaching 50% improvement in throughput time. It is based on the case Supplier Development at SysInteg (A), about a summer intern in the Supplier Development department at XS Inc. who is participating in a two-day Value Stream Mapping (VSM) event at a key supplier's facility--SysInteg.
In 2007, Hong Kong MTR Corporation Limited (MTRC) was offered a 20% stake in Metronet Rail (Metronet), one of the two private sector engineering consortia contracted to run and maintain the London Underground rail network, under a 30-year public private partnership (PPP) agreement with London Underground Limited (LUL). This investment had the potential to transform MTRC from a local rail operator into an international player, giving the Company a major foothold in operating urban rail systems in Europe. However, the LUL PPP was widely regarded as one of the most complex private finance arrangements in the UK public sector, and there were a host of uncertainties for Hong Kong MTRC to contend with about its ability to make a success of the project. This case would allow students to explore the motives behind the PPP agreements to operate government assets and the implications of PPP for management's operating and financial strategy. At the same time, students can also evaluate the offer made to the MTRC and the appropriateness of the Company's acceptance.
The high-speed internet industry was one of the fastest growing and fastest evolving industries in the Republic of Korea. From the first telephone line-based high-speed internet service in 1996 to hybrid fiber coaxial to asymmetric DSL in late 1999, access speeds made available to end users jumped from 128 kilobits per second to 10 megabits per second. By 2008, services offered had also evolved from pure internet access to triple-play service, which bundled IPTV, high-speed internet and telephone services. Likewise, players in the industry included telecommunications companies from the early days as well as new players, such as system operators ("SOs") and multiple system operators ("MSOs"). With new technologies and services appearing at a breakneck speed, the face of competition was constantly evolving.      
In the negotiated year 2005/2006, Brazilian iron ore giant Vale, negotiated a 71% price increase with its Chinese customers. For the same period, Australian BHP asked for a premium reflecting the freight cost differentials between shipping iron ore to China from Australia versus Brazil. This demand was later dropped due to strong opposition from Chinese steelmakers. In the negotiated year 2007/2008, following price increases of 65-71% negotiated by Vale, the other Australian Iron ore giant, Rio Tinto, demanded and obtained a premium that saw the total increase in prices reach 200% from the previous year. This case analyses the motivations behind these price negotiations in the light of BHP's intended hostile takeover of Rio Tinto, which would result not only in a combined market share of almost 40% in the production of traded iron ore but a monopoly in the supply of Australian iron ores. This case can be used in business classes, negotiation and strategy as will provide students with different aspects of the negotiation process. Issues such as hostile takeovers, pricing, market share and business relations are discussed in this case.
This case study provides a discussion of how Virgin Mobile, an innovative virtual mobile network operator, has developed a unique position in the UK market through unique positioning and strong business system fit. The first section of the case discussion focuses on the rather innovative Virgin Mobile's business model and strategy and the firm's underlying business activities that provided a uniquely differentiated positioning in the UK mobile telecommunications sector up until mid 2005. The second section explores how Virgin Mobile was able to achieve sustainable competitive advantage over the period from 1999 to 2005, but then turns to an analysis of how the firm's competitive advantage has been eroded by changes in regulation and a shift in the competitive environment.
This case examines Lehman Brothers in the months preceding its collapse. Following the announcement of a huge and unexpected second quarter loss, the CFO was removed from her post after only seven months in the job. This case explores the challenges faced by a firm leader as she attempts to manage a situation that threatens the firm's survival. In particular, the case allows for an examination of how changes in a firm's performance and position are communicated to key external stakeholders in an effort to retain their confidence, while market conditions worsen, the balance sheet deteriorates, and the firm's credibility is challenged by a short selling hedge fund.
On October 18, 2007, Ecuador's President Rafael Correa announced his intention to migrate Petrobras' existing participation contracts to exploit oil reserves in Ecuador's Blocks 18 and 31 to servicing agreements under which Petrobras would be paid a production fee and reimbursed for investment costs but all recovered oil would belong to the government. Correa also announced a dramatic increase in corporate taxes and changes to other contracts to which Petrobras was a party. All foreign oil companies operating In Ecuador would be similarly affected and any company refusing to "renegotiate" its contracts would face a 100% tax on profits. How should Petrobras respond to Ecuador's riding roughshod over its contracts? Should Petrobras take the Ecuadorian government to arbitration? Or would it be better to pursue a negotiated solution similar to that reached in Bolivia a year earlier? How should Petrobras balance its fiduciary duties to and the best Interests of its shareholders with the interests of the Brazilian government? How should it communicate with its various constituencies?