Explores the tax policy choices made by Slovakia and the impact of reforms. Set in 2006, looks at the decision facing new Prime Minister Robert Fico as he faces the public's "reform fatigue." Traces the development of tax and fiscal policies since Slovakia's independence in 1993, focusing on the 2004 implementation of the rovna dan, or "equal tax," a drastic simplification of the tax system. A major theme is the impact of labor market and welfare reform, as well as the effective tax rates of both investors and workers. Another important theme relates to Slovakia's desire to join the EU and adopt the Euro.
The Antamina Mining Company (Compania Minera Antamina, or CMA) is the world's 3rd largest producer of zinc, 7th of copper, and the largest combined operation for both minerals. This Peruvian company, whose operations are located between 4,200 and 4,700 m.a.s.l., is a leader in environmental and social responsibility. Although CMA was a fairly new company (the exploration and construction phases of the mining operations took place between 1997 and 2001, the year in which the production phase began), it had to face a series of complex challenges in order to become an economically viable organization that was both socially and environmentally responsible. Meeting these objectives has implied developing institutional capacities (conflict resolution, management of adverse social contexts, multiculturalism, self-learning, and innovation) that normally appear much later in a company's evolution. Shows some of the typical challenges that managers must face when engaging in large-scale initiatives. CMA's executives worked with tight deadlines and in a high-risk context to make quick decisions whose consequences would have long-term implications, since they would determine the type of relations the company would maintain with diverse stakeholders. In order to make these decisions, they had to establish priorities among at least three distinct logics: i) that of construction and production, where tight time limits, engineers' technical criteria, and cost reduction predominate; ii) the environmental logic, where caution predominates along with impact assessment and an active international community of stakeholders; and iii) the community-based logic, where to co-exist with the primarily indigenous and poor peasant families directly affected by the project it is necessary to obtain a so-called "social license". This phase took place in a context in which CMA had the pressing need to secure financing from international banks.
In November 1997, Richard D. Fairbank, Chairman and CEO of Capital One Financial Corporation, was reflecting on the success of his company since its initial public offering (IPO) in 1994. The success had come primarily from one business: credit cards. Despite the phenomenal success of the company in this one market, Fairbank's vision for the company was not limited to credit cards. He wanted to diversify to reduce Capital One's vulnerability to consumer credit market saturation and downturns. Fairbank also saw an opportunity to extend Capital One's capabilities into other markets. He saw Capital One as not just a credit card or financial services company but rather as an information-based marketing company. Because Capital One's strategy would work well in other information-driven industries, Fairbank's idea was to concentrate on growing, data-rich industries--large enough to contribute significantly to the company's growth trajectory--and focus on products and marketing channels where Capital One could leverage its capabilities in scientific testing and mass customization. Despite having investigated over 50 diversification opportunities, Capital One was not pursuing any, largely because they were a poor fit or failed to capitalize on Capital One's core competencies. A recent hire, Mike Rowen, and his team, however, had just finished a four-month long investigation into the auto financing industry. It was up to Rowen and his team to decide whether to present auto financing as the right opportunity for leveraging Capital One's information-based strategic capabilities. The team knew that if it recommended going ahead, it would have to put forth a plan that would address any concerns or objections raised by Fairbank.
McDonald's seeks to learn from a successful response to Greenpeace's Amazon deforestation campaign in order to make its supply chain more socially and environmentally responsible.
In 2007 Grupo Bimbo, a leading global player in the baking industry, expands into China, while at the same time undertaking initiatives to make its U.S. and South American operations more profitable. Allows students to analyze the company's entire global strategy. Places particular attention on how a multinational firm should best adapt to differences in the basic institutions of capitalism and consumer preferences across countries as well as within them.
Rapid growth is pushing Burt's Bees' natural personal care products into mass distribution channels, with products and brand elements that are less quirky, more commercial than they used to be. Indeed, CEO John Replogle believes that by focusing on efficacious, natural, and unique ingredients, and also by promoting earth-friendly production processes, Burt's Bees will impose superior product expectations and win over the mainstream personal care category. Can Burt's Bees become the "Starbucks of personal care" without distancing itself too much from the people, values, and narratives that have made the brand successful thus far?
Aurolab is the in-house producer of IOLs (required in cataract surgery) for the Aravind Eye Care System, a group of charity hospitals with the largest volume of eye surgery in the world. Aurolab's manufacturing capability and capacity had long exceeded the requirements of Aravind. With its impending move to a new, world-class facility, fundamental questions of strategic direction and mission fulfillment gained renewed attention among the organization's senior leaders.
When Jim Weddle took over as Managing Partner of Edward Jones in January 2006, the brokerage firm was at a critical juncture. The firm's distinctive strategy had enabled it to grow from its roots in small-town America to become the 4th largest broker in the U.S. Weddle was concerned, however, that the firm's success, and the changing landscape of the financial services industry, were challenging the core aspects of the strategy that had brought the firm so far. He knew that the impending strategic decisions would determine whether Edward Jones could sustain its extraordinary performance and achieve its goal of growing to 20,000 financial advisors by 2017.
In 2007, Wal-Mart faced challenges to its historically high growth rate. Lagging same-store sales and setbacks overseas led the company to consider strategic shifts. Wal-Mart was the world's largest retailer, but competition had become particularly acute as the company expanded from rural markets, which it had long dominated, into urban and suburban areas. Covers developments in Wal-Mart's merchandising strategy and its approach to store formats; its sometimes controversial human resources practices; its efforts to improve its image through a public relations campaign; its aggressive, though occasionally problematic, move into international markets; and its leading competitors, especially Target. Exhibits provide data (current as of February 2007) on Wal-Mart's financial performance, its stock-price performance, its international operations, and its store formats, as well as on Target's financial performance.
There are two cases. Both concern the six-month battle in 2006 to create the steel group, Arcelor Mittal, by far the largest steel company in the world, combining as it did the two largest companies. The takeover was of interest because it was the focus of three bitter debates: shareholder interests versus stakeholder interests, European champions versus global champions and the merits of either, and financial strategy versus industrial strategy The first case concentrates essentially on the political, financial and environmental issues (all in the wide sense) of the takeover. The second case looks more deeply at the specifically steel (and hence industrial) issues.
There are two cases. Both concern the six-month battle in 2006 to create the steel group, Arcelor Mittal, by far the largest steel company in the world, combining as it did the two largest companies. The takeover was of interest because it was the focus of three bitter debates: shareholder interests versus stakeholder interests, European champions versus global champions and the merits of either, and financial strategy versus industrial strategy The first case concentrates essentially on the political, financial and environmental issues (all in the wide sense) of the takeover. The second case looks more deeply at the specifically steel (and hence industrial) issues.
Christian Harbinson, a young associate at the venture capital firm Scharfstein Weekes, has a difficult decision to make before the next investment committee meeting. He's been watching over SW's investment in Seven Peaks Technologies, and sales of its single product have been disappointing. Now the company's head, Jack Brandon, wants another $400,000 to pursue a new product. Harbinson believes in Brandon and in his proprietary technology--a titanium alloy that prevents surgical instruments from sticking to tissue. Three years ago, Brandon quit his job and put $65,000 of his savings into developing a nonstick cauterizing device. Two distributors offered to carry it after they saw his demonstration at a trade show, and a couple of surgeons, quickly becoming enthusiastic, promised testimonials. But if Brandon's cauterizer is to take off, surgeons will have to abandon the forceps they've traditionally used and switch to the Seven Peaks device--a change in behavior that will come slowly if at all. So, Brandon thinks, why not adapt his alloy to a line of forceps? Now Harbinson wonders if he himself has become emotionally overinvested in Seven Peaks and if this decision is as much a test of his VC potential as of the actual deal. Should Scharfstein Weekes back Brandon's company with a second round of funding, or would it be a case of throwing good money after bad? Commenting on this fictional case study in R0703A and R0703Z are Ivan Farneti, a partner with Doughty Hanson Technology Ventures; Fred Hassan, the chairman and CEO of Schering-Plough; Robert M. Johnson, a venture partner with Delta Partners and a visiting professor at the University of Navarro's IESE Business School; and Christoph Zott, an associate professor of entrepreneurship at Insead.
Business leadership has become synonymous in the public eye with unethical behavior. Widespread scandals, massive layoffs, and inflated executive pay packages have led many to believe that corporate wrongdoing is the status quo. That's why it's more important than ever that those at the top mend relationships with customers, employees, and other stakeholders. Professor Gardner has spent many years studying the relationship between psychology and ethics at Harvard's Graduate School of Education. In this interview with HBR senior editor Bronwyn Fryer, Gardner talks about what he calls the ethical mind, which helps individuals aspire to do good work that matters to their colleagues, companies, and society in general. In an era when workers are overwhelmed by too much information and feel pressured to win at all costs, Gardner believes, it's easy to lose one's way. What's more, employees look to leaders for cues as to what's appropriate and what's not. So if you're a leader, what's the best way to stand up to ethical pressures and set a good example? First and foremost, says Gardner, you must believe that retaining an ethical compass is essential to the health of your organization. Then you must state your ethical beliefs and stick to them. You should also test yourself rigorously to make sure you're adhering to your values, take time to reflect on your beliefs, find multiple mentors who aren't afraid to speak truth to your power, and confront others' egregious behavior as soon as it arises. In the end, Gardner believes, the world hangs in the balance between right and wrong, good and bad, success and disaster. "You need to decide which side you're on," he concludes, "and do the right thing."
The main goal of any international strategy should be to manage the large differences that arise at the borders of markets. Yet executives often fail to exploit market and production discrepancies, focusing instead on the tensions between standardization and localization. In this article, Pankaj Ghemawat presents a new framework that encompasses all three effective responses to the challenges of globalization. He calls it the AAA Triangle. The As stand for the three distinct types of international strategy. Through Adaptation, companies seek to boost revenues and market share by maximizing their local relevance. Through Aggregation, they attempt to deliver economies of scale by creating regional, or sometimes global, operations. And through Arbitrage, they exploit disparities between national or regional markets, often by locating different parts of the supply chain in different places--for instance, call centers in India, factories in China, and retail shops in Western Europe. Ghemawat draws on several examples that illustrate how organizations use and balance these strategies and describes the trade-offs they make as they do so. Because most enterprises should draw from all three As to some extent, the framework can be used to develop a summary scorecard indicating how well the company is globalizing. However, given the tensions among the strategies, it's not enough simply to tick off the corresponding boxes. Strategic choice requires some degree of prioritization--and the framework can help with that as well. While it is possible to make progress on all three strategies, companies usually must focus on one or two when trying to build competitive advantage.
In an economy driven by ideas and intellectual know-how, top executives recognize the importance of employing smart, highly creative people. But if clever people have one defining characteristic, it's that they do not want to be led. So what is a leader to do? The authors conducted more than 100 interviews with leaders and their clever people at major organizations such as PricewaterhouseCoopers, Cisco Systems, Novartis, the BBC, and Roche. What they learned is that the psychological relationships effective leaders have with their clever people are very different from the ones they have with traditional followers. Those relationships can be shaped by seven characteristics that clever people share: They know their worth--and they know you have to employ them if you want their tacit skills. They are organizationally savvy and will seek the company context in which their interests are most generously funded. They ignore corporate hierarchy; although intellectual status is important to them, you can't lure them with promotions. They expect instant access to top management, and if they don't get it, they may think the organization doesn't take their work seriously. They are plugged into highly developed knowledge networks, which both increases their value and makes them more of a flight risk. They have a low boredom threshold, so you have to keep them challenged and committed. They won't thank you--even when you're leading them well. The trick is to act like a benevolent guardian: to grant them the respect and recognition they demand, protect them from organizational rules and politics, and give them room to pursue private efforts and even to fail. The payoff will be a flourishing crop of creative minds that will enrich your whole organization.
An unrecognized affliction is striking certain gifted performers at the top of their game. Its cause, paradoxically, is success itself. These stars, who thrive on conquering new challenges, can lose their bearings and question their purpose once a job has been mastered. A vague dissatisfaction gives way to confusion and then to inner turmoil. Left unattended, this summit syndrome can derail promising careers. The syndrome has three phases. In the approach phase, when most of the challenges of a current job have been met, sufferers tend to push harder in a vain attempt to recapture the adrenaline rush of the climb. Then, in the plateauing phase, when virtually all the challenges have been conquered, these individuals, who are incapable of coasting, bear down to try to produce ever more stellar results, but to less effect and greater dissatisfaction. This leads to the terminal descending phase, when performance slips noticeably. As their superstar status fades, they jump ship, accept demotions, or take lateral transfers. It's a terrible waste, for if the syndrome is recognized, steps can be taken before performance slips to dispel the confusion and set the stage for productive growth to the next assignment. There are four parts to this process: First, understand your "winning formula"--the characteristic way you approach a situation--and the vital part it plays in feeling stale or losing your edge. Second, reconnect with your core purpose in life. Third, recast your current, or future, job to better align your inner aspirations with the external requirements of your work. And fourth, create a developmental path by honing a handful of core leadership competencies. None of this is easy, but for talented individuals--and the organizations that rely on them--the vaccine of preventive awareness is far better than gambling on an after-the-fact cure once the crisis is full-blown.
Whether you're in a traditional smokestack industry or a "clean" business like investment banking, your company will increasingly feel the effects of climate change. Even people skeptical about global warming's dangers are recognizing that, simply because so many others are concerned, the phenomenon has wide-ranging implications. Investors already are discounting share prices of companies poorly positioned to compete in a warming world. Many businesses face higher raw material and energy costs as more and more governments enact policies placing a cost on emissions. Consumers are taking into account a company's environmental record when making purchasing decisions. There's also a burgeoning market in greenhouse gas emission allowances (the carbon market), with annual trading in these assets valued at tens of billions of dollars. Companies that manage and mitigate their exposure to the risks associated with climate change while seeking new opportunities for profit will generate a competitive advantage over rivals in a carbon-constrained future. This article offers a systematic approach to mapping and responding to climate change risks. According to Jonathan Lash and Fred Wellington of the World Resources Institute, an environmental think tank, the risks can be divided into six categories: regulatory (policies such as new emissions standards), products and technology (the development and marketing of climate-friendly products and services), litigation (lawsuits alleging environmental harm), reputational (how a company's environmental policies affect its brand), supply chain (potentially higher raw material and energy costs), and physical (such as an increase in the incidence of hurricanes). The authors propose a four-step process for responding to climate change risk: Quantify your company's carbon footprint; identify the risks and opportunities you face; adapt your business in response; and do it better than your competitors.
What distinguishes a company that has deeply engaged and committed employees from another one that doesn't? It's not a certain compensation scheme or talent-management practice. Instead, it's the ability to express to current and potential employees what makes the organization unique. Companies with highly engaged employees articulate their values and attributes through "signature experiences"--visible, distinctive elements of the work environment that send powerful messages about the organization's aspirations and about the skills, stamina, and commitment employees will need in order to succeed there. Whole Foods Market, for example, uses a team-based hiring and orientation process to convey to new employees the company's emphasis on collaboration and decentralization. At JetBlue, the reservation system is run by agents from their homes, a signature experience that boosts employees' satisfaction and productivity. Companies that successfully create and communicate signature experiences understand that not all workers want the same things. Indeed, employee preferences are an important but often overlooked factor in the war for talent. Firms that have engendered productive and engaged workforces address those preferences by following some general principles: They target potential employees as methodically as they target potential customers; they shape their signature experiences to address business needs; they identify and preserve their histories; they share stories--not just slogans--about life in the firm; they create processes consistent with their signature experiences; and they understand that they shouldn't try to be all things to all people. The best strategy for coming out ahead in the war for talent is not to scoop up everyone in sight but to attract the right people--those who are intrigued and excited by the environment the company offers and who will reward it with their loyalty.
Though most traditional HR performance metrics don't predict organizational performance, alternatives simply have not existed--until now. During the past 10 years, researchers Laurie Bassi and Daniel McMurrer have worked to develop a system that allows executives to assess human capital management (HCM) and to use those metrics both to predict organizational performance and to guide organizations' investments in people. The new framework is based on a core set of HCM drivers that fall into five major categories: leadership practices, employee engagement, knowledge accessibility, workforce optimization, and organizational learning capacity. By employing rigorously designed surveys to score a company on the range of HCM practices across the five categories, it's possible to benchmark organizational HCM capabilities, identify HCM strengths and weaknesses, and link improvements or backsliding in specific HCM practices with improvements or shortcomings in organizational performance. The process requires determining a "maturity" score for each practice, based on a scale of 1 (low) to 5 (high). Over time, evolving maturity scores from multiple surveys can reveal progress in each of the HCM practices and help a company decide where to focus improvement efforts that will have a direct impact on performance. The authors draw from their work with American Standard, South Carolina's Beaufort County School District, and a bevy of financial firms to show how improving HCM scores led to increased sales, safety, academic test scores, and stock returns. Bassi and McMurrer urge HR departments to move beyond the usual metrics and begin using HCM measurement tools to gauge how well people are managed and developed throughout the organization. In this new role, according to the authors, HR can take on strategic responsibility and ensure that superior human capital management becomes central to the organization's culture.