Gives an overview of accounting for equity investments less than 20%. Uses this accounting to introduce the issue of amounts included in the statement of comprehensive income during a different time period from its inclusion in net income (sometimes called "recycled earnings").
In 2005, Marilyn Carlson Nelson, CEO and chairman of the Carlson Companies, must decide whether to outsource jobs at the risk of destroying the culture centered on the values of integrity, trustworthiness, and caring that she had painstakingly created since becoming CEO of the family-owned company. Profiles the leadership development of the protagonist, tracing her career in business and civic associations, her youth and education, her leadership education, and her values and aspirations. Provides information on the business and history of Carlson Companies, including its company culture and management. Raises questions about the consequences of leadership decisions and the durability of company cultures.
Faced with the need to hire a new president, The Walt Disney Co. pursued Michael Ovitz, a founder of the Creative Artist Agency. Although initially disinterested, Ovitz engaged in negotiations with Michael Eisner, CEO of The Walt Disney Co., in the summer of 1995 before accepting an offer. Ovitz officially began as president on October 1 of that year. While the hiring of Ovitz was at first heralded as a coup for Disney, Eisner and senior executives began to have doubts about Ovitz's fit with the company culture. By the summer of 1996, Eisner decided Ovitz had to be fired. He began conversations with members of the board of directors, who agreed Ovitz's contract should be terminated. Ovitz left the company at the end of the year with a sizable severance package.
Describes the general principles of crafting financial deals around the provision of capital to entrepreneurial ventures. Discusses in more detail some of the specific aspects of venture capital term sheets.
Introduces students to a group of investors and stakeholders who evaluate firms at least partially on factors other than eventual investment payoff. Focuses on investors who evaluate and attempt to impact firms' ethical, corporate governance, or other "societal" practices. Such investors vary from large institutions that use this as one component of investing to "ethical" funds that invest solely on these criteria to individual gadfly's who use this forum for their personal initiatives. These nontraditional investors are becoming an increasingly important portion of the financial markets. Thus, managers and investor relations experts must consider their alternative desires when designing disclosure/communication strategies. Considers noninvestor groups that use a firm's financial market information and connections as a lever to impact the firm's behavior.
China National Petroleum Corporation (CNPC) is one of the largest state owned enterprises in China and needs to separate the exploration, refining and marketing resources from the oil field services and supply resources as well as the company's resources devoted to social services. The case describes the issues surrounding the initial public offering of PetroChina, a subsidiary of CNPC, including the international, national and competitive context in which CNPC found itself prior to the IPO, and the strategy needed to ensure that the subsidiary will be viable in an increasingly competitive international oil industry.
In September 2004, four months after Hungary joined the European Union, the strategy group of Matav - Hungary's largest communications company - is working on its mid-term strategic plan. Since being privatized from state ownership in 1993, the company has seen several changes in its strategy, structure and culture. Nearly 15 years later, the company is a fully integrated telecommunications company involved in a broad range of services including fixed line telephony, mobile communications, Internet services, data transmission and outsourcing. The company's latest acquisition of a formerly state run telecommunications company is considered a success, and management believes that international expansion is necessary to realize dynamic growth as its domestic fixed line business is declining. As well, Hungary's mobile market is highly competitive and saturated with 80 per cent of the country having a mobile phone. The management team feels that Matav is at a crossroads with three main options: expansion in Hungary, regional expansion or focusing on organic growth in existing product lines. The team has to consider all of the lines of business in forming a strategy and whether Matav's resources and organization are suitable for a healthy future.
The publisher of an 18-month old, controlled-circulation weekly newspaper, The Londoner, is contemplating the addition of a web-based searchable data base of classified ads for used cars. It would seem to add value to the readership but it does appeal to readers well beyond the original trading area for the weekly, and it also offers some new timing issues for a weekly paper to create a feature with large weekend readership. The issue is whether or not the publisher should add this auto classified feature section and if so, how to market it to the greatest advantage. This case may be used with The Londoner (A), product 9B05A007).
The newly hired head of Strategic Resources Planning and Management at Royal Bank of Canada Investments (RBCI) must develop a dashboard mechanism for strategically assessing and managing RBCI's non-interest expenses, excluding brokerage fees associated with providing value-added service to clients. After a week of analysis, two things became apparent; first, the four major business units within RBCI were operating independently, neither collaborating on projects nor sharing information. Second, most of the non-interest expenses spent was related to information technology projects. Consider that RBCI was spending nearly $700,000 per day on service delivery, the senior management team was extremely eager to see what the head of Strategic Resources Planning and Management would propose. This case presents information technology portfolio management challenges facing large organizations, and challenges students to develop performance metrics that will be useful at the most senior levels of the organization.
Majestica Hotels Inc., a leading European operator of luxury hotels, was trying to reach an agreement with Commercial Properties of Shanghai regarding the management contract for a new hotel in Shanghai. A series of issues require resolution for the deal to proceed, including length of contract term, name, staffing and many other control issues. Majestica was reluctant to make further concessions for fear that doing so might jeopardize its service culture, arguably the key success factor in this industry. At issue was whether Majestica should adopt a contingency approach and relax its operating philosophy, or stick to its principles, even if it meant not entering a lucrative market.
This note describes the TSX Venture Exchange in the early 2000s, which is dedicated to the listing and trading of share in junior companies. It also includes a discussion on the advantages and disadvantages of such listing.
The merger of the Caribbean holdings of Barclays Bank Plc. and the Canadian Imperial Bank of Commerce (CIBC) is going ahead, and the reality of integration of very diverse systems and procedures has to be faced. The case deals with understanding the current situation in terms of existing policies and designing policies that would be acceptable to employees from both banks in the organization - FirstCaribbean International Bank - which would be created by the merger. A critical aspect of the merger is the harmonization of compensation and benefits that must be resolved as a matter of priority. This case may be taught on a stand alone basis, or in combination with any of four additional cases that deal with various functional issues: 1) General Management - CIBC and Barclays: Should Their Operations be Merged, product 9B04M067. 2) Information Systems - Information Systems at FirstCaribbean: Choosing a Standard Operating Environment, product 9B04E032. 3) Accounting and Finance: CIBC Barclays: Accounting for Their Merger, product 9B04B022 4) Technical note: Note on Banking in the Caribbean, product 9B05M015.
In November 1999, 11 of Goldman Sachs' finest gathered to put the final touches on a revolutionary leadership development plan. Following Goldman's explosive growth during the 1990s and its eventual IPO in 1999, a diverse group of leaders from across the firm were selected to "assess the future training and development needs of Goldman Sachs, with a particular focus on the need for a more systematic and effective approach to developing managing directors." After six months of brainstorming, holding discussions with Goldman Sachs colleagues, interviewing experts, and benchmarking best practices, it was finally time to present their findings to the management committee. The briefing contained an integrated leader development plan with concrete recommendations on how to resolve several critical design issues, including: location, faculty, content, format, method, target audience, governance, and sponsorship. No one sitting on the management committee had relied on a formal leadership program to reach the top. How skeptical might they be? How do you convince hard-nosed bankers to leave their desks and invest precious time focusing on what many perceived as "soft" issues?
Explores the challenge of managing large-scale organizational change at Simmons, an old and established company that manufactures and distributes mattresses. The new CEO, Charlie Eitel, hired to turn the organization's performance around, considers whether to implement an untraditional training program that includes outdoor experiential team-building activities as a central element of his change strategy. Asks participants to consider the decision of investing in the expensive training program following the loss of the three largest customers--retailers that together had contributed a third of Simmons' revenues. One central theme is the role of leadership in engaging and motivating employees to implement changes that improve product quality and operational efficiency and cost.
Jeanette Clough, the CEO of Mt. Auburn Hospital, successfully leads a turnaround for the struggling local hospital. When she assumed leadership of Mt. Auburn in 1998, the hospital had recently suffered a $10 million loss. During her first six months, several members of the senior leadership team quit. Clough successfully led this change effort through a transparent, collaborative approach that focused first and foremost on patient care. She was skilled at building trust and credibility with key constituents: the trustees, medical staff, and employees. After the first year, they reduced the losses to $5 million. In 2000, the hospital broke even. In 2004, the hospital earned a $7 million profit. The hospital is currently in the midst of a capital campaign to update the facilities and expand. Community groups are resisting the hospital expansion in Cambridge, posing a new set of challenges. Clough must also be clear about the strategic positioning of the hospital--a mixture of a community and teaching hospital. How can Mt. Auburn maintain this unique positioning without attempting to expand beyond its reach in competing with the other Boston-based teaching hospitals?
KaBOOM!, a successful playground-building social enterprise funded through corporate partnerships, wants to develop a performance measurement system that will enable the organization to expand its impact substantially. The board of directors and management are trying to develop a performance-oriented approach that will inform their strategy and allow them to manage operations efficiently and effectively as they grow--and, possibly, shift their emphasis to growth. What operational and impact data should they collect? How should they design a system of measures that will inform them without either drowning them in data or constraining their opportunities for growth? Can they develop a single system that will be useful to the board of directors and management--and support strategy development without inviting micromanagement?
An upscale ecolodge in southern Nicaragua hopes to achieve a 53% occupancy rate within three years of opening and has hired a management company to prepare a marketing strategy. Despite its proximity to Costa Rica and its focus on providing a unique luxury vacation retreat for one of the fastest growing segments in the travel industry--the ecotourist--the hotel faces numerous hurdles. The greatest challenge is to overcome Nicaragua's negative reputation, based on its recent history of political and social unrest, still fresh in the minds of tourists. The hotel must also operate within the country's rural infrastructure, characterized by interruptions in the power supply, poorly maintained roads, and below-standard sanitation. Additionally, Nicaragua does not have a pool of skilled employees to work in the high-end service industry. Preparation of the marketing strategy addresses the effects of these factors on the hotel's market positioning and market penetration rate.