In July 2004, Shiv, Nand, and Uday Khemka are discussing their holdings in SUN Interbrew, a leading Russian beer producer that is part of the family's global portfolio of businesses. SUN Interbrew has been operating as a joint venture since 1998, when the Khemka family, who founded its predecessor company SUN Brewing in the early 1990s, decided to partner with Belgian beer giant Interbrew to survive the Russian financial and economic crises. Since then, the family has used Interbrew's capital and beer industry know-how to successfully grow the business. Now several developments prompt the Khemka family to consider a liquidity event. The family's five-year lock-up arrangement with Interbrew has just expired. In March 2004, Interbrew has announced its plans to take a controlling stake in Brazilian giant AmBev, a deal that will create the world's largest brewer. In addition, the Alfa Group, a Russian conglomerate that has become the third largest shareholder in SUN Interbrew, has announced its intention to take part in the company's management and attain a leading position in the Russian beer market. Is there a role for the Khemka family in the future of this company? Should they maintain some stake in the company and continue to participate in its management? Should they auction off their shares to the highest bidder and exit? Or should they play a role in the global beer industry through a stock-for-stock sale to InBev, and if so, at what price?
In the spring of 1977, Goodyear CEO Charles J. Pilliod Jr. was looking at an internal report on government and legal events relevant to the tire industry. Two items caught his attention. First, he noticed that an industry suit to block the government's proposed system to rate tires on tread wear, traction, and temperature resistance had been rebuffed by a U.S. appeals court. Although the court found fault with the government's proposals, the ruling could mean that the tire grading system was close to becoming a reality. Second, Joan Claybrook, a former Nader consumer interest group lobbyist, had just become head of the National Highway Traffic Safety Administration, the agency within the government that was in charge of producing the rating system. Pilliod wondered if the regulatory events might affect Goodyear's ability to maintain its world leadership in the tire industry.
Presents the background of the Spanish courier and urgent parcel service company MRW and its financial situation in the first quarter of 2004. At that time, the urgent delivery service sector was immersed in a process of growth. There was strong competition within the sector and MRW occupied one of the leading positions. Places special emphasis on the social initiatives of MRW and its franchising system, which was used as an expansion strategy. But this system entailed important coordination issues, which led to the creation of a Committee of Ethics and Arbitration. Begins when MRW's central office interviewed a prospective candidate interested in buying a franchise which was left free due to early retirement. The candidate appeared to be a very competent manager who would get results for the franchise in an industrial zone, benefiting the entire network. Nevertheless, he expressed his doubts about the usefulness of MRW's social plans. Javier Marza (assistant general manager of MRW) and Paco Sosa (director of external relations) considered whether they should be concerned about convincing a franchise holder in particular as to the social enterprise of the company. This raised the question of the place social enterprise had in MRW's strategy and of the need to re-evaluate its impact in detail, especially during a phase of growth and renovation in the franchise network, and in the mid-term, with a view to the eventual retirement and replacement of the company's founder, who had always shown clear leadership. All of this could present difficulties for the continuity of the company's culture.
In 2006 Wal-Mart, the second largest firm in the world by sales, was looking to improve its already efficient supply chain. The company's supply chain was closely integrated with its retail and information systems strategies and has been developed incrementally over the past 40 years. However, rivals were copying every aspect, from the way Wal-Mart cross-docks product in warehouses to Wal-Mart's use of a sophisticated database to capture, store, and disseminate store-level information to suppliers. Wal-Mart's new executive vice president, logistics, Johnnie Dobbs, was overseeing a handful of initiatives designed to improve the firm's supply chain. However, it was not certain that these initiatives were going to have a significant impact on Wal-Mart costs, and he needed to consider what the company should do to stay ahead of the competition.
Describes a set of decisions confronting the management team of a rapidly growing online psychological testing and social networking company. They can either sell the company to a large public company, raise another round of capital from a preeminent venture capital fund, or continue to grow using existing positive cash flow.
The global pharmaceutical industry has gone through substantial changes in the last few decade and pharmaceutical firms face major challenges, including headline-grabbing litigation, imminent patent expirations, new technologies, rising drug development costs, generic drug substitution, international competitors, and complex public policy issues. Describes the pharmaceutical industry in 2006, including: the drug development process; threats from biotech and generics competitors; pharmaceutical manufacturing, selling, and marketing; and pharmaceutical consumption in Europe, the third world, and the U.S. Merck and Pfizer are analyzed in-depth and a contrast between Merck, as a research-based firm opposed to mergers, and Pfizer, as a marketing powerhouse growing through acquisitions, is developed. Thirteen exhibits give concrete focus to the issues of the case.
Anticipating the expiration of its Prozac patent, Eli Lilly has to make tough decisions regarding the development of its next-generation antidepressant drug. In particular, the company needs to decide whether to first establish that once-a-day dosing for Cymbalta (Duloxetine) is effective in treating major depressive disorder and only after launch get FDA approval for treating painful physical symptoms, or to first establish efficacy in treating pain and later get FDA approval for once-a-day dosing. The decision needs to take into account how Cymbalta can be differentiated in the marketplace vis-a-vis other antidepressants and the marketing challenges to getting adoption that the new drug will face. Lilly's new antidepressant team making this decision has several market research inputs on physicians and patients at its disposal.
Activist investors Carl Icahn and Barry Rosenstein acquire a stake in Oklahoma-based company Kerr-McGee. They demand two board seats and ask the company to make several operational and financial changes, including the repurchase of equity and divestiture of their chemicals business. The case protagonist, Luke Corbett, CEO, opposes these changes.
Luen Thai is considering adopting a "design-to-store" supply chain strategy to compete in the apparel market as he faces increasing margin pressure, new market entrants, and China's WTO entry. The decision to implement "design-to-store" will depend on the success of partner process integration (between fabric mill, manufacturer, and brand) and mechanisms to enhance "collaborative behavior" between partners. Luen Thai endeavors to fundamentally improve information flow which could lead to change in processes and create multi-company efficiencies.
A professor is shopping for a diamond engagement ring. He finds one with certain specifications for a certain price, and wishes to determine if the price of the diamond is fair. He collects data on the prices and characteristics (cut, color, clarity, and carats) of several hundred diamonds from three Internet wholesalers. Can be used for linear regression analysis with categorical variables as well as other statistical techniques.
In December 2005, the vice-president of global sales and marketing for MedMira Laboratories in Halifax, Nova Scotia, has to decide whether to enter the over-the-counter (OTC) HIV testing market in the United States, if the company receives approval from the U.S. Food and Drug Administration. Entry into this market could potentially open the door to OTC sales of other infectious disease tests that MedMira could develop with its current technology. Not entering the market could result in shareholder disapproval and a significant missed opportunity. With the exception of China, the majority of the company's tests have been sold to hospitals and laboratories, therefore, U.S. OTC sales would require the development of new marketing and distribution expertise. It would also be a very expensive undertaking for such a small company with accumulated losses. If MedMira decides to enter the market, the vice-president of global sales and marketing would need to determine whether to go it alone or partner with Home Access Health Corporation, a Chicago-based company, which has the only FDA-approved at-home test system on market. There are also a number of ethical concerns surrounding at-home testing that would need to be addressed.
The president of The Home Depot Canada (THDC), a subsidiary of U.S.-based The Home Depot Inc., had recently articulated her own vision for THDC: to become Canada's top retailer. To achieve this goal, THDC would have to continue to evolve to meet the changing needs of its customer base. The do-it-yourself segment, which THDC had nurtured, was giving way to the do-it-for-me segment. Attracting the female customer, towards whom The Home Depot Inc. had only recently turned its attention, was critical to future growth. The big-box format was approaching saturation in Canada's urban centers. The company would have to look for growth from secondary, inner city markets, requiring stores with less square footage. Did THDC need a new retailing strategy? The president wondered whether the strategy, which had been tried and tested, should be continued, tweaked or overhauled.
In December 2005, The Home Depot Canada (THDC) rolls out its EcoOptions product line. The market for environment-friendly products has been changing in terms of vendor interest, consumer demand and competitive dynamics. THDC has been pushing that change with EcoOptions, which started off as a pilot project in March 2004. The project was driven by a larger vision of making EcoOptions the leading environmental brand in the global home-improvement market. Translated into measurable goals, it meant that 10 per cent of THDC's assortment of about 50,000 SKUs would be designated as EcoOptions by 2010. This case introduces many of the critical issues in strategic merchandising and assortment decisions, with a focus on the management of a major shift in the retailer's product assortment.
Orchid Chemicals & Pharmaceuticals Limited (Orchid) is an Indian pharmaceutical company, which commenced its operations in 1994. Over a span of 10 years, the turnover of this company has increased from US$11 million to US$153 million. The company's profit after tax registered a five fold increase from US$1.3 million to US$6.8 million in the corresponding period. Early success was a combination of pricing flexibility, lower production cost and business opportunities in unregulated markets. Orchid decided to explore opportunities for the manufacture of generic drugs in the regulated markets and formulations in the domestic market. Diversification to basic research was also considered. Cooperation and joint ventures were the primary route to expand and explore new molecule discovery. By 2005, Orchid was no longer a single-product company, its business had widened to multiple products in bulk, formulations and generics, in both regulated and unregulated markets. Orchid was making its presence felt in its novel drug delivery systems and new drug development processes. In 2005, Orchid faced several challenges related to financial leverage and risks, leadership, managerial challenges associated with joint ventures, balancing the new business model, setting global trends in being a pioneer in the industry, addressing shareholders' concerns and evolving an appropriate organization culture and process.
In 2004 CCL Industries Inc. was a leading producer of value-added outsourcing custom products and packages for numerous large consumer packaged goods companies. CCL's chief executive officer and vice-chair faced an important strategic decision. The CEO was contemplating selling the custom manufacturing division of CCL that was the basis for its founding, and still contributed approximately 34 per cent of overall earnings. Although the firm had acquired and divested many business units throughout its history, this divestment was perhaps the most significant in terms of its historical importance. The divestment of this division represented a major change to the essence and strategy of the firm. CCL was fortunate to have a very active, supportive yet independent board of directors. The CEO had to ensure that if he recommended divesting the custom manufacturing division, he would need to be very well prepared for some intense questioning from the board regarding the soundness of his proposal. The board took their role as stewards of the corporation very seriously.
The chief financial officer (CFO) of TELUS Corporation (Telus) has just been informed that Moody's, a bond rating service, has downgraded the firm's credit rating to one notch below investment grade. The CFO's challenge is to determine what specific actions, if any, to recommend to the firm's audit committee. First, this case facilitates a discussion on how changes in capital structure impact a firm's earnings, stock price and flexibility to carry out plan. Second, students learn about how bond ratings are set and how a firm's bond rating affects its bond yield. Last, by focusing on the situation faced by Telus during challenging market conditions in 2002, students learn how to manage relationships with investors while in the midst of change.
Looks at the different business models of two highly successful and profitable airlines: Chilean-based Lan Airlines and U.S.-based Southwest Airlines. Lan Airlines pursues a hub-to-spoke international full-service model where passenger and cargo operations are highly integrated. Southwest, on the other hand, is set up for a point-to-point, low-fare, "no frill's" service with a homogenous fleet. Designed for a course on the design of business models.
The case describes an attempt by Steve Gundrum, the CEO and President of Mattson, to improve the company's innovativeness. Mattson, located in Silicon Valley, California, is an independent developer of new products for the food and beverage industry. Mattson creates, develops, and brings to market new beverages, snacks, frozen meals, and many other food and beverage products as a contractor to the large producers in the industry. Gundrum believes there's an opportunity to improve his innovation system by borrowing from the leading-edge software firms that surround him. To test new methods of developing products, Gundrum creates a contest - to develop a better cookie - and commissions three teams: one using Mattson's traditional hierarchical team structure, one using open source (OS) development, and a third using extreme programming (XP). The Mattson Project Delta (A), (B), and (C) cases explain what happened. Learning objectives: The study and discussion of this case can help students understand more deeply the importance of team composition and structure in the innovation process. It also shows the power of reaching across industry boundaries to find new ideas, not just for products but for business process and structure as well. The key lessons in this case are that: 1) Team structure and management can make a big difference in both creativity and productivity. 2) Problem solving (internal generation of new answers to problems) and solution finding (external exploration for existing solutions to problems) can each be valuable in different situations and at different stages in the innovation life cycle. 3) Managers have many options when choosing a team structure. Further, the case provides a nice language for talking about team structure. 4) Prototyping can be applied not just for new products, but new structures and processes for innovation.
The case describes an attempt by Steve Gundrum, the CEO and President of Mattson, to improve the company's innovativeness. Mattson, located in Silicon Valley, California, is an independent developer of new products for the food and beverage industry. Mattson creates, develops, and brings to market new beverages, snacks, frozen meals, and many other food and beverage products as a contractor to the large producers in the industry. Gundrum believes there's an opportunity to improve his innovation system by borrowing from the leading-edge software firms that surround him. To test new methods of developing products, Gundrum creates a contest - to develop a better cookie - and commissions three teams: one using Mattson's traditional hierarchical team structure, one using open source (OS) development, and a third using extreme programming (XP). The Mattson Project Delta (A), (B), and (C) cases explain what happened. Learning objectives: The study and discussion of this case can help students understand more deeply the importance of team composition and structure in the innovation process. It also shows the power of reaching across industry boundaries to find new ideas, not just for products but for business process and structure as well. The key lessons in this case are that: 1) Team structure and management can make a big difference in both creativity and productivity. 2) Problem solving (internal generation of new answers to problems) and solution finding (external exploration for existing solutions to problems) can each be valuable in different situations and at different stages in the innovation life cycle. 3) Managers have many options when choosing a team structure. Further, the case provides a nice language for talking about team structure. 4) Prototyping can be applied not just for new products, but new structures and processes for innovation.