Describes the strategic analysis that went into identifying Compaq as an acquisition target to help HP achieve its objective of becoming the leading technology company in the world. Through in-depth interviews with HP senior executives, including chairman and CEO Carly Fiorina and others, the case describes the planning and execution of the merger and the actual processes created to achieve the strategic, administrative, and cultural integration of the two companies.
A new technology platform conceived in the early 1990s, Linux developed into a force to be reckoned with in the operating system marketplace. At first, Linux was dismissed as a renegade option used only by tech geeks. By 2004, however, Linux had exploded into the mainstream and was being used throughout the enterprise, running everything from Web servers to mission-critical financial operations. Linux was, at the same time, the soul of the open source movement; the bread and butter of specialist companies like Novell and Red Hat; a strategic tool for larger players like IBM and Sun; a credible threat to the market leader, Microsoft; and a tactical alternative for governments around the world. Linux's new and multifaceted roles in the technology landscape makes it a complex case through which to examine a wide variety of business problems.
This case is intended for a broad range of student/executive audiences, and has the ability to be used successfully in a number of courses. It can be used in courses in international economics, international finance, international political economy, financial risk management, and regional courses focusing on the politics or economies of emerging markets/Latin America. Ideally, students/executives would have had macro- and microeconomics; however, I have found that students/executives with neither of these courses have still performed well in the case analysis. It is a challenging case study and is particularly useful in an MBA or executive MBA course, but can be taught successfully in advanced undergraduate courses.
The South Australian Water case study illustrates the management challenges in aligning Information Technology with business objectives in a publicly owned corporation. To achieve the alignment, the new CIO begins by refreshing the IT infrastructure to support the required business applications. When the Government establishes 'Improved water quality' as a major corporate goal, the CIO seeks to add value to the business by developing a quality reporting system that leverages the existing technology. At the same time, he demonstrates to the corporation the IT function's capability to deliver business value through the management of multiple outsourcing vendors.
Amway is a large manufacturer of household products that uses the direct selling approach. The company was established in the late 1940s and over the years, still using direct selling, branched into the United Kingdom, Europe, and Japan. With this global success, it expanded further, into the Chinese market. However, the company must look at its strategy after the Chinese government implements regulations on the direct marketing business model.
Traditional financial-ratio analysis is a popular after-the-fact look at financial and managerial performance. This case introduces a means for incorporating rates of improvement, growth, or change into traditional financial-ratio analysis. Indeed, the Delta Factor tables presented in the case easily transform financial-ratio analysis into a forward-looking planning tool.
Examines the strategic opportunities available to Samsung Electronics in 2004 and beyond as the company attempts to penetrate the digital home. Key issues include the role of horizontal industry models versus vertical industry models in consumer electronics, and how a global conglomerate like Samsung can best participate in the fast-changing, digital-based consumer electronics industry.
In November 2000, Kohlberg, Kravis, and Roberts (KKR) purchased Rockwood Specialties, Inc., a specialty chemicals company, in a $1.2 billion buyout. Spurred by the favorable market conditions in the first half of 2003, KKR was contemplating refinancing its buyout debt in June 2003. Merrill Lynch, its underwriter, proposed to refinance the earlier funding, in part, with a $375 million issue of senior subordinated notes. Although there had been a favorable interest-rate environment and a strong volume of debt issuance in the first half of 2003, the Rockwood offering still posed some significant challenges. First, it was a first-time issue by a privately held company. Second, KKR's motivation for the offering and the complex financial structure surrounding it had resulted in a preliminary credit rating of Caa from Moody's. Students are asked to evaluate and price the high-yield issue. The case discusses how credit ratings, market conditions, and organizational structure affect bond yields. There is a brief history of how the high-yield market evolved from the mid-1980s through 2003.
A Hispanic executive is considering whether to join the board of directors of a company and receives advice from several more experienced directors. Teaching Purpose: To focus on the issues related to joining a board of directors.
Explores the experience of work-related stress and examines various coping tactics. Pays particular attention to stress related to the job-search process. Teaching Purpose: To help students recognize sources of stress and develop more effective coping skills.
Craig Knight, Asia Pacific Digital Business and Customer Services Manager of Eastman Chemical Company, was given a mandate to sell Eastman's philosophy for an integrated electronic supply chain, otherwise known as the Integrated System Solution (ISS), to its business partners in the region, and to encourage adoption. Having invested in a state-of-the-art technical architecture that would support interconnectivity with all parties along the supply chain, Eastman was keen to realise the full benefits to be gained from an integrated e-supply chain on a global scale. Following numerous rounds of discussion with key business partners in the Asia Pacific region, some progress had been made. Nagase & Co., Ltd. of Japan had agreed to adopt ISS connections with Eastman, but had some reservations regarding the extent of integration. Although the benefits of integration were proven, suppliers, customers, distributors and other interested parties were faced with numerous limitations and considerations that would have significant implications on their established business processes and even the shaping of their corporate strategy. Adoption was not a simple choice. Craig understood these shortcomings and was making every effort to ease the adoption process by identifying the longer-term benefits to Nagase and other business partners of applying XML technology to their businesses.
The case narrates the first year of the Moving the World Program, a public-private CSR-driven partnership between TPG and the UN World Food Program. It describes the five joint initiatives, where the organizations would merger their experience and capabilities in the pursuit of enhanced performance in humanitarian operations worldwide.
Hundreds of books on business growth are published each year, but which ones are really worth reading? Harvard Business School professor Pankaj Ghemawat takes a close look at three recent offerings: Chris Zook's Beyond the Core, Ram Charan's Profitable Growth Is Everyone's Business, and Adrian Slywotzky and Richard Wise's How to Grow When Markets Don't. He finds that all three are likely to succeed at prompting readers to take action. Zook defines the various adjacencies along which a business might extend its scope. Charan presents 10 tools that can be put to use immediately. And Slywotzky and Wise advise executives to inventory their companies' "hidden assets" and conduct an analysis of ways to solve customer problems. But Ghemawat wonders if the current crop of books harbors a subtle pro-growth bias. Ghemawat makes a sobering case for the dangers of setting growth targets too high. Ryanair and Coca-Cola, for instance, stumbled badly when they set unreachable growth targets. Even companies that are considered efficient growth machines run into constraints related to their size. Wal-Mart, for example, has had to accept declining growth rates as it has grown ever larger. Yet none of the three books discusses this dynamic. According to Ghemawat, readers interested in growth would be well advised to revisit a classic: Alfred Chandler's The Visible Hand. Chandler's propositions about growth and the managerial enterprise have withstood years of scrutiny, and his central idea--that technological changes, broadly defined, can affect the relative efficiency of different modes of organizing economic activity--still provides a frame for rich debate.
Software maker TopTek has acquired a consulting and systems-integration firm, mainly to profit from the software sales that are a natural by-product of consulting engagements. But in many ways the two companies worked better when they were separate. Before the acquisition, the same people who delivered services to clients made the consulting firm's sales. By contrast, TopTek's professional salespeople, all of them highly skilled at selling product, handled sales. Now the consultants and the salespeople are trying to work together, but they're making a hash of it. For instance, the CIO of a TopTek customer--a retailer--is complaining that consultants from the acquired firm are driving him nuts. They've got his boss's ear, and they're selling additional projects left and right, stimulating demand for a pace of change that the CIO says the retailer can't handle. The consultants in the newly constituted TopTek aren't happy either. They get no commissions on products they sell, because commissions for all sales to an account--forever--go to the salesperson who snagged it in the first place. The sales force has its own gripes. The consultants aren't much help in winning new business, according to Ron Murphy, TopTek's sales VP. What will it take for cross selling to succeed at TopTek? Commenting on this fictional case study in R0407B and R0407Z are Ram Charan, an author and adviser to CEOs; Caroline A. Kovac, the general manager of IBM Healthcare and Life Sciences; Jerome A. Colletti, an author and consultant; and Federico Turegano, the managing director of SG Corporate and Investment Banking, an arm of Societe Generale Group.
Many companies have posted impressive top-line growth over the past two decades in their respective economic regions--for instance, Wal-Mart in North America, BP in Europe, Toyota in Asia, and News Corp. in the Southern Hemisphere. But which were the best at converting all of that revenue growth into shareholder value? Harvard Business Review asked G. Bennett Stewart III, senior partner of the consulting firm Stern Stewart & Co., and his colleagues to come up with the answer. For the period 1983 to 2003, they assembled a list of the top 20 high-growth value adders (and laggards) in each of the four regions cited above. Their calculations gave equal weight to companies' revenue growth and market-value-added scores, revealing the important effect of region on the performance of companies in the same industry. For instance, whereas automakers are positioned high on the Asian list of high-growth value adders, U.S. carmakers GM and Ford--each of which reported revenue growth in excess of $100 billion between 1983 and 2003--are among the value laggards on the North American list, as are DaimlerChrysler and Volkswagen on the European list. The Japanese win through better efficiency, higher quality, and narrower product mixes, the author says. And although there are four telecom companies represented among the European high-growth value adders, there is none on the North American list. That's probably because the European telecoms enjoyed more protective regulation, made fewer high priced acquisitions, and didn't bet as big on the overblown dot-com economy, the author says.
Fast growth is a nice problem to have--but a hard one to manage well. In this interview, Kevin Sharer, the CEO of biotech giant Amgen, talks about the special challenges leaders face when their companies are on a roll. Sharer, who was also head of marketing at pre-WorldCom MCI and a division head and a staff assistant to Jack Welch at GE, offers insights drawn from his own experience--and from his own self-proclaimed blunders: "I learned the hard way that you need to become credible and enlist support inside the company before you start trying to be a change agent. If you think you're going to make change happen simply by force of personality or position or intellect, you'd better think again." And change there was: Under Sharer's leadership, Amgen overhauled its management team, altered its culture, and launched a couple of blockbuster products. How do chief executives survive in that kind of dizzying environment? "A CEO must always be switching between different altitudes--tasks of different levels of abstraction and specificity," Sharer says. "You might need to spend time working on a redesign of your organizational structure and then quickly switch to drafting a memo to all employees aimed at reinforcing one of the company's values." Having a supportive and capable top team is also key.
Everyone knows that corporate growth--true growth, not just agglomeration--springs from innovation. And the common wisdom is that companies must spend lavishly on R&D if they are to innovate at all. But in these fiscally cautious times, where every line item of every budget in every company is under intense scrutiny, many organizations are doing just the opposite. They tighten their belts, subject nascent product development programs to rigorous screening, and train R&D staffers to think in business terms so the researchers will be better able to decide whether an idea for a product or service is worth pursuing in the first place. Such efficiency measures are commendable, say authors Gary Hamel and Gary Getz. But frugality is not a growth strategy, they point out and, in truth, there is very little correlation between corporate performance and the amount spent on innovation. Companies like Southwest, Cemex, and Shell Chemicals have shown that businesses don't have to spend a fortune on R&D to reap the benefits of innovation. To produce more growth per dollar invested, companies must produce more innovation per dollar invested. Hamel and Getz explain how businesses can dramatically improve their innovation yields. They offer these five imperatives: Increase the number of innovators among existing employees (whatever their job titles) by involving them in innovation processes and events. Focus on developing truly radical ideas--ones that change customer expectations and behaviors and industry economics--not just incremental ideas. Look for innovation sources outside the organization, as well as inside. Increase the learning from small, low-risk experiments. And commit to long-term, consistent development efforts.
As commercial processes commoditize in a developed economy, they are outsourced or transferred offshore, leaving onshore companies with unrelenting, Darwinian pressure to come up with the next wave of innovation. But "innovation" is a broad term. There are many types, from the ballyhooed disruptive innovation to more mundane forms such as process and experiential, which might involve, respectively, doing such things as streamlining the supply chain and delighting customers with small product modifications. Many executives find it hard to decide which kind to focus on. The best way to choose is to consider the phases of a market's life span. In a market's earliest phase, a new technology attracts enthusiasts and visionaries. Eventually, the market reaches the Main Street section of its life, when growth slows, flattens, and finally subsides. Different types of innovation produce more bang for the buck at different points in the life cycle. Disruptive innovation, for example, is rewarded most during the earliest phase. Once the life cycle advances to Main Street, however, the marketplace is no longer willing to yield the revenue or margin gains necessary to fund that type of innovation, so other forms, including process and experiential, yield better returns. But attempts to change the company's direction are often thwarted by the inertia that success creates. To overcome the inertia demon, managers must introduce new types of innovation while aggressively extracting resources from legacy processes and organizations. By running the two efforts in parallel, they can defeat the demon and renew the company.