Petrolink's business plan looks like a winner. At present, the only available pipeline for operators in the Baltic Sea's newly developed Helmark gas field is owned and operated by the Russian oil and gas company Gazprom. Petrolink's founders believe that the company that opens a new pipeline should find ready customers among the field's numerous independent producers. The Petrolink team has been talking with two potential investors. After six weeks of due diligence, London Development Partners--a large, well-established venture capital firm with no experience in the gas business--offers a relatively small early round of investment without any tangible commitments to future rounds, far from what the team had hoped for. Polish venture capital firm BRX Capital has been in business fewer than five years, but it has already made investments in the Eastern European oil and gas industry. BRX agrees to the capital structure that Petrolink proposes, and to invest both the first- and second-round equity amounts. One of the start-up's main objectives has been to ensure that no one investor has too much clout, so the BRX arrangement suits them. But now that a four million eurodollar check is on the table, there's been an apparent breach of trust by the Polish VC. Petrolink's founders discover that an agreed-upon provision covering ownership dilution has been changed. Should they take BRX's money or go elsewhere? Commenting on this fictional case study in R0411A and R0411Z are George Brenkert of Georgetown University; Sonia Lo of Chalsys Partners; William Sahlman of Harvard Business School; and Charalambos Vlachoutsicos, adviser to 7L Capital Partners Emerging Europe.
Petrolink's business plan looks like a winner. At present, the only available pipeline for operators in the Baltic Sea's newly developed Helmark gas field is owned and operated by the Russian oil and gas company Gazprom. Petrolink's founders believe that the company that opens a new pipeline should find ready customers among the field's numerous independent producers. The Petrolink team has been talking with two potential investors. After six weeks of due diligence, London Development Partners--a large, well-established venture capital firm with no experience in the gas business--offers a relatively small early round of investment without any tangible commitments to future rounds, far from what the team had hoped for. Polish venture capital firm BRX Capital has been in business fewer than five years, but it has already made investments in the Eastern European oil and gas industry. BRX agrees to the capital structure that Petrolink proposes, and to invest both the first- and second-round equity amounts. One of the start-up's main objectives has been to ensure that no one investor has too much clout, so the BRX arrangement suits them. But now that a four million eurodollar check is on the table, there's been an apparent breach of trust by the Polish VC. Petrolink's founders discover that an agreed-upon provision covering ownership dilution has been changed. Should they take BRX's money or go elsewhere? Commenting on this fictional case study in R0411A and R0411Z are George Brenkert of Georgetown University; Sonia Lo of Chalsys Partners; William Sahlman of Harvard Business School; and Charalambos Vlachoutsicos, adviser to 7L Capital Partners Emerging Europe.
Petrolink's business plan looks like a winner. At present, the only available pipeline for operators in the Baltic Sea's newly developed Helmark gas field is owned and operated by the Russian oil and gas company Gazprom. Petrolink's founders believe that the company that opens a new pipeline should find ready customers among the field's numerous independent producers. The Petrolink team has been talking with two potential investors. After six weeks of due diligence, London Development Partners--a large, well-established venture capital firm with no experience in the gas business--offers a relatively small early round of investment without any tangible commitments to future rounds, far from what the team had hoped for. Polish venture capital firm BRX Capital has been in business fewer than five years, but it has already made investments in the Eastern European oil and gas industry. BRX agrees to the capital structure that Petrolink proposes, and to invest both the first- and second-round equity amounts. One of the start-up's main objectives has been to ensure that no one investor has too much clout, so the BRX arrangement suits them. But now that a four million eurodollar check is on the table, there's been an apparent breach of trust by the Polish VC. Petrolink's founders discover that an agreed-upon provision covering ownership dilution has been changed. Should they take BRX's money or go elsewhere? In R0411A and R0411Z, George Brenkert of Georgetown University; Sonia Lo of Chalsys Partners; William Sahlman of Harvard Business School; and Charalambos Vlachoutsicos, adviser to 7L Capital Partners Emerging Europe, comment on this fictional case.
The literature on CEO succession planning is nearly unanimous in its advice: Begin early, look first inside your company for exceptional talent, see that candidates gain experience in all aspects of the business, and help candidates develop the skills they will need in the top job. It all makes sense and sounds pretty straightforward. Nevertheless, the list of CEOs who last no more than a few years on the job continues to grow. Implicit in many, if not all, of these unceremonious departures is the absence of an effective CEO succession plan. The problem is, most boards simply don't want to talk about CEO succession: Why rock the boat when things are going well? Why risk offending the current CEO? Meanwhile, most CEOs can't imagine that anyone could adequately replace them. In this article, Kenneth W. Freeman, the retired CEO of Quest Diagnostics, discusses his own recent handoff experience (Surya N. Mohapatra became chief executive in May 2004) and offers his approach to succession planning. He says it falls squarely on the incumbent CEO to put ego aside and initiate and actively manage the process of selecting and grooming a successor. Aggressive succession planning is one of the best ways for CEOs to ensure the long-term health of the company, he says. Plus, thinking early and often about a successor will likely improve the chief executive's performance during his tenure. Freeman advocates the textbook rules for succession planning but adds to that list a few more that apply specifically to the incumbent CEO: Insist that the board become engaged in succession planning, look for a successor who is different from you, and make the successor's success your own. After all, Freeman argues, the CEO's true legacy is determined by what happens after he leaves the corner office.
Many deals that look good on paper never materialize into value-creating endeavors. Often, the problem begins at the negotiating table. In fact, the very person everyone thinks is pivotal to a deal's success--the negotiator--is often the one who undermines it. That's because most negotiators have a deal maker mind-set: They see the signed contract as the final destination rather than the start of a cooperative venture. What's worse, most companies reward negotiators on the basis of the number and size of the deals they're signing, giving them no incentive to change. The author asserts that organizations and negotiators must transition from a deal maker mentality--which involves squeezing your counterpart for everything you can get--to an implementation mind-set--which sets the stage for a healthy working relationship long after the ink has dried. Achieving an implementation mind-set demands five new approaches. First, start with the end in mind: Negotiation teams should carry out a "benefit of hindsight" exercise to imagine what sorts of problems they'll encounter 12 months down the road. Second, help your counterpart prepare. If they agree to something they can't deliver, it will affect you both. Third, treat alignment as a shared responsibility. Fourth, send one unified message. Negotiators should brief implementation teams on both sides together so everyone has the same information. And fifth, manage the negotiation like a business exercise: Combine disciplined negotiation preparation with post-negotiation reviews. Above all, companies must remember that the best deals don't end at the negotiating table--they begin there.
Describes Salomon Brothers' recovery from the August 1991 Treasury auction scandal. Details the impact of the firm's disclosure of bidding improprieties and describes how the new management team, led by Warren Buffett and Deryck Maughan, guided the company through the ensuing crisis. The impact of the crisis is followed through the end of 1992. A rewritten version of an earlier case.
The (A) and (B) cases describe the evolution of HP supply chain for its PC business in Europe between years 1992 and 1999 and the different initiatives: build-to-order, vendor-managed inventory, supply hubs, top value, channel assembly program, etc. What should be the next step in this highly competitive environment?. Case (C) deals with HP strategy of outsourcing production to SCI, a contract manufacturer.
In November 2004, Larry Fish, chairman of Citizens Bank, is wondering about the challenges posed by the latest and largest acquisition in the history of the bank. Fish has always believed that the success of Citizens thus far was facilitated by the credo he introduced in 2002. With an ever-growing organization, and more acquisitions in the future, he needs to know what changes need to be made to continue the effectiveness of the credo and his commitment to customers, employees, and communities.
Mavens & Moguls is a "virtual" marketing-consulting firm of approximately 40 professionals. Examines the processes by which its founder, Paige Arnof-Fenn, learns the business, builds a power network of industry experts and potential customers, and uses this expertise to build a new company that fulfills her career and life goals and also provides a wide range of work options to the consultants. Drawing on her experience and her network, she creates a high-quality marketing consulting operation that offers her and her stable of consultants challenging work, rewarding income, personal autonomy, and flexibility. Because Arnof-Fenn is at the nexus of almost all the deals, rapid growth has the potential to challenge the business model and threaten the fundamental values of the organization.
Bright Dairy has been growing rapidly since becoming a public company. The Chinese market for milk products is still wide open. What should it be doing to make sure it captures a significant share of the potential market?
The research and development improvement manager at Shanghai Bell has just gotten out of a meeting with top management on strategic initiatives suggested in the corporate information systems plan report. One project that was suggested in the report--implementing a collaborative product commerce system--was about to begin. The manager must review the project planning process and examine the extent to which the company was ready to undertake the project.
Ecuador's main industry is petroleum, which generates half of export earning, finances much of the government budget, and employs directly more than 12,000 people in a country of 14 million people. The oil was discovered by foreign oil companies, produced and distributed largely by them until a national company was created in 1974, and is exported to them by the government-owned company and by the remaining companies operating in Ecuador. Relations between the companies and the government have been quite turbulent, with the government taking partial ownership of the main company in 1974, buying out Gulf Oil a year later, and finally taking Texaco's share in 1992. Only medium-sized and small foreign oil companies remain, since the opportunities in Ecuador are limited, and the government has proven unreliable in its regulation of the firms. This case describes the process through which a second oil pipeline was built in 2001 to transport oil from the jungle to the coast, and the dealing between the companies and the government during that process. Even in 2004 there were several major unresolved issues that left government-company relations on very conflictive terms.
What impact could information technology have on the problems affecting health care in the United States? It seemed that IT would have a fast impact on improving transaction processing (reducing costs), improving the accuracy of diagnoses and treatment (improving quality), and improving the availability of care in some instances. But what had to happen for IT to play a more significant role in health care today and in the future? What forces had to come to bear, what structural and cultural changes were necessary for this? Were there examples of a successful implementation of IT systems in health care today? If so, what was the impact of their investments?
Charley Turner, the owner of four Charley's Family Steak Houses located in a rapidly growing cosmopolitan city in eastern Texas, is about to meet with Alex Pearson, the new manager of Charley's Family Steak House No. 2, in mid-December 2007. The primary purpose of this meeting is to finalize the 2008 operating plan for the restaurant, and similar meetings are scheduled with the other restaurant managers. Turner has decided that, due to the growth of his business, he can no longer continue to manage the operation as he did when there were only one or two restaurants. Therefore, he is in the process of implementing a more formal and rigorous planning and budgeting process. The case describes the process through which Charley Turner and Alex Pearson reach agreement regarding the final operating plan for the restaurant for 2008. The description contained in the case is both detailed and thorough, and includes the basis on which annual revenues are projected as well as the basis on which each expense is forecast for the year. Students are asked to verify all the amounts shown in the 2008 operating plan and then to prepare a revised operating plan based on a more pessimistic sales forecast.
In this, the second of a three-case series, Charley's Family Steak House No. 2 manager Alex Pearson prepares to meet with the restaurant's owner to assess Pearson's 2008 performance against the 2008 operating plan the two developed in December 2007. As he reviews the numbers, he asks himself: "How did actual sales compare with planned sales?" and "How well were costs and expenses controlled?"
Elixir Technology is a small software development company based in Singapore that develops data analysis and report generation software and provides technical training and consulting services. By May 2003, it had successfully sold this software to corporate clients in Singapore, China, and Japan, following a very adaptive marketing strategy in each market. Now the managing director is contemplating entering the Middle East, but must choose an entry strategy quickly to capitalize on the current window of opportunity. Available entry choices include direct entry and several partnership options.
Discusses the compensation of professionals--partners and nonpartners--in a professional services firm. Discusses the considerations that determine the choice of compensation systems and the interrelationship between compensation and other human resources management systems in professional services firms.