When Robert Labatt took over ezBoard's helm in 2004, he faced a quandary: How to turn the company's essentially free information product into a paid product that would earn enough revenue to satisfy ezBoard's increasingly impatient investors. At the time, the largest hosted online discussion board company in the United States barely broke even. Among other things, Labatt had to develop a new revenue strategy for the company. Explores Labatt's options, focusing in particular on issues surrounding the introduction of an effective subscription model and pricing strategy. After providing the necessary background, asks readers to determine what they would do if they were in Labatt's shoes.
Examines the paradox of bringing in a charismatic leader to spearhead organizational change in a company renowned for its strong legacy and culture. On the one hand, in the face of a rapidly changing competitive environment, HP, a Silicon Valley icon, was looking to initiate an organizational transformation. On the other hand, it was a company embedded in tradition--with the charismatic Carly Fiorina having to struggle with the tensions between various organizational components, including company loyalists who opposed a change in the traditional systems, processes, structure, and culture. Also allows discussion of the strategic options available to Mark Hurd, HP's new CEO.
Although catering to our biological interests, food companies have been recently accused of contributing to the growing problem of obesity. As a result, managers are torn between trying to satisfy consumers and trying to satisfy concerned public policy officials who bring threats of taxes, fines, restrictions, and legislation. Although the situation appears perplexing, there are profitable "win-win" solutions. Describes two hard-wired principles that influence food acquisition and consumption and identifies four reversible drivers of food consumption that marketers could use to help consumers better control what and how much they eat.
As many nonprofits have grown larger, they are adopting concepts and tools from the private sector to improve their own operations and effectiveness. For such growth and adaptation to continue, it is important to understand how knowledge is transferred across sectors. Describes a pioneering study of marketing knowledge transfer based on the experiences of executives in relatively large nonprofit organizations who migrated across sectors. Reveals that the use of marketing concepts and tools in the nonprofit sector is much lower and offers explanations rooted in cultural and organizational differences. Recommends more cross-sector transfer of marketing knowledge.
User design is a particular form of product customization that allows the customer to specify the properties of a product. User design has emerged as a mechanism to build brand loyalty, to fit products to the heterogeneous needs of a market, and to differentiate the offerings of a manufacturer. However, many consumers face daunting challenges in designing a product that fits their personal needs. This makes it essential for producers of customized goods and services to create user interfaces that are effective in supporting consumers in the user design process. Defines the fundamental information-processing problem associated with user design of customized products and articulates five principles of user design. Also outlines actions that can be taken to improve user design systems.
Business-to-business information technology systems are becoming increasingly important in firm supply chains. Uses the concept of modularity to clarify the strategic implications of B2B technology. There are two generic B2B strategies: modularization, which allows a firm to rent out its internal capabilities to others in its industry, and architectural entrepreneurship, which alters the supply chain by allowing a central coordinating firm to facilitate arrangements that trust issues and information asymmetries had previously made impossible. Which modular strategy is appropriate depends on the role the focal firm plays in the supply chain and its supply chain indispensability. Only firms with deep architectural knowledge can take full advantage of these modular strategies.
Although alliances often create valuable learning opportunities, the exploitation of the opportunities is a difficult, frustrating, and often misunderstood process. More often than not, firms learn little from their alliance partners. Examines General Motors (GM) and its exploitation of the learning opportunity created by NUMMI, its California-based alliance with Toyota. Over the past few decades, GM has steadily and significantly improved its quality and productivity relative to its main rivals. A key factor in this improvement has been knowledge transferred from Toyota to NUMMI and NUMMI to GM. Describes how GM transferred the "sticky" knowledge of NUMMI to the initially skeptical GM manufacturing community. The learning mechanisms employed included managerial assignments to NUMMI, visits and tours to NUMMI, a technical liaison office for managing learning activities, leadership commitment and involvement in the learning process, and a learning network to articulate and spread the knowledge.
The CEO of EFL (India), a direct sales organization, must decide which changes to the sales compensation systems would better motivate his sales reps and improve their sales performance.
The acquisition of Torrington, Inc., from Ingersoll-Rand, Inc., required a strategy that met both the investment and financing objectives of the Timken Company. The case provides an excellent example of the principle that investment and financing decisions can be considered independently. Because of Timken's need to have a sequential financing strategy, the case illustrates the complexities of managing large investment decisions that affect a firm's capital structure. The case is best suited as a firm-valuation exercise in a first-year MBA finance course and is also suitable for executive and undergraduate audiences. Case exhibits are provided in a spreadsheet and the DCF valuation in the teaching note is provided in a spreadsheet for instructor use.
This case poses the seemingly simple and straightforward question, "How much does it cost Wendy's to make a bowl of chili?" Because most of the meat used in making chili comes from overcooked hamburgers, however, a question of cost allocation arises. Wendy's is considering adding a salad bar to its "limited menu" and is wondering whether it should then drop an existing product. Such a decision leads to an evaluation of present-product profitability.
Describes Ireland's transformation from one of Europe's poorest countries to one of its richest in just 10 years, earning it the title Celtic Tiger. The spectacular story of growth and recovery is attributed, in large part, to foreign direct investment (FDI), particularly from the United Sates. The government of Ireland has continually nurtured the climate for investment and through its investment promotion arm, Ireland Development Authority (IDA), has aggressively sought investment projects. Despite the apparent miracle, some question the FDI-focused policy and special incentives given. Their skepticism stems largely from the fact that Ireland's indigenous industry has remained on the periphery of this transformation, with limited linkages to the foreign sector. Offers an opportunity to examine the debate surrounding FDI. Was FDI the key ingredient in Ireland's success? What does it take for a country to attract FDI? Did government agencies, specifically IDA, play a role in the Irish success story? Also, analyzes other causes of growth--namely, Ireland's entry into the European Union and subsequent larger market access, as well as a sound macroeconomic policy.
Two castings plants produce ductile iron return as a byproduct of the manufacturing process. The two plants, Lynchburg and Archer Creek, can use all of their byproduct in the production of subsequent castings. A third plant, Radford, makes cast-iron pipe. It produces only about 12% iron return (versus 40% to 50% for the other two plants) and also could use more. Since iron return used in the pipe plant substitutes for high-cost pig iron, it appears that a transfer could be worthwhile, because in the castings plants, the iron return substitutes for a lower-cost mix of pig iron and steel scrap. The central issue in the case then is this: Should ductile iron return be transferred from the Lynchburg and Archer Creek castings plants to the Radford pipe plant? The economic analysis shows there is a substantial savings to the company if the iron return is transferred. The question then becomes, at what price? This is really a question of how to divide the company's savings between the three plants, each of which is a cost center. Related to this question are a number of other issues: (1) the effect on plant performance, (2) the effect on decisions to discontinue, modernize, or expand the plants, (3) the effect on castings and pipe price, and (4) the effect on plant management morale and performance. At present, 3,500 tons of ductile iron return are being transferred from Lynchburg to Radford because the pieces are too large to be economically remelted at Lynchburg. The only cost Radford pays is freight. This is over half the potential 6,000 tons of iron return that it is feasible to transfer. An issue to consider is whether this iron return, which cannot be used at Lynchburg, should have the same transfer price as the iron return Lynchburg can use.
In 2003, Banyan Tree Hotels and Resorts was at a decision-making juncture as it considered how to maintain its differentiated position, strengthen its international presence, and deliver more value to customers. A fundamental issue facing the company at this stage was where and how fast it should move to develop a stronger market presence without jeopardising its carefully cultivated brand equity.
Outlines the history of the Asociacion Chilena de Seguridad (ACHS), a nonprofit organization dedicated to the prevention, treatment, and rehabilitation of work-related accidents and illnesses. ACHS is part of the Chilean system of "workers insurance organizations," known generically as "mutuales." By law, these organizations may not be administered directly or indirectly by any for-profit company. At the end of 2003, ACHS administered seven hospitals, 27 clinics, and 70 medical centers throughout Chile. However, due to efficiency in accident prevention and advancements in medical treatment, hospital infrastructure far exceeded demand. To deal with this problem, ACHS is reviewing a possible alliance with one of its competitors. Focuses on this dilemma, along with the pending succession of the organization's president, who has led for 45 years. Illustrates the delicate balance between pursuing financial goals and remaining loyal to the organization's mission.
This note introduces simulation as a tool to analyze uncertainty in business decisions. It first observes the limitations of single point or simple range estimates of key uncertainties, thereby motivating the need to create a risk profile for any alternative that characterizes the full range of possible outcomes and their relative likelihoods. A simple example involving both a discrete and a continuous (triangle) distribution is used. The note is simulation software independent, although output from Crystal Ball is displayed.
The Charlotte Cougars are in the midst of discussions regarding the sponsorship by Burger Bell of the Cougars Cub Club. Negotiations are nearly complete, but eight issues remain before the contract can be signed. This case, together with its companion case, "Cougars Cub Club: Burger Bell" (UV0701), offers the opportunity for a one-on-one negotiation experience in which differences in priorities provide the basis for creating mutual value. In addition, there are issues that can be classified as congruent as well as those that are unavoidably distributive. As a result, debriefings can focus on both the creation and the claiming of value.
Burger Bell is in the midst of discussions regarding the sponsorship by Burger Bell of the Cougars Cub Club. Negotiations are nearly complete, but eight issues remain before the contract can be signed. This case, together with its companion case, "Cougars Cub Club: Charlotte Cougars" (UV0700), offers the opportunity for a one-on-one negotiation experience in which differences in priorities provide the basis for creating mutual value. In addition, there are issues that can be classified as congruent as well as those that are unavoidably distributive. As a result, debriefings can focus on both the creation and the claiming of value.
Andrew Amphlett's first assignment as a recently hired MBA at Sequim Investments was to evaluate NIKE Inc. for possible addition to the company's high-growth equity portfolio. NIKE's revenues had grown substantially during 2003 and 2004, in large part because of growth in global sales. Although the company's share price had climbed to over $70 per share, JPMorgan reported $88 per share as their newly established target price. A Value Line report on NIKE, however, noted that there was little upside stock price potential to NIKE's shares because much of the anticipated growth was already impounded in the current price. Amphlett must prepare a financial and valuation analysis of NIKE and make a portfolio recommendation to his boss.
By 2005, Japan's debt had risen to 163% of GDP. For more than a decade, the government had run huge deficits, trying unsuccessfully to stimulate economic growth. Interest rates, meanwhile, had been zero for years. But with slow growth and banks in crisis, nothing had worked very well until some recovery in 2004. Now, the government is trying to repair its fiscal damage in the face of continuing slow growth and huge pension and health care obligations to a population that is aging fast. Hezio Takenaka, the minister for economy and postal privatization, faces a imposing agenda--to restart the economy while lowering the deficits and reforming social security.