Students conduct game-theoretic analyses as they examine the situation of Germania Fluggesellschaft MBH at the launch of its first scheduled flight service on the Frankfurt-Berlin route in the fall of 2001. Entry into this market will bring Germania into direct competition with Deutsche Lufthansa AG, which currently holds a monopoly on the route. Students perform strategic analyses from the viewpoints of both competitors, to explore the strategic implications of repeating the same game several times (i.e., explore the difference between games and supergames), to discover the strategic role of reputation in repeated interactions between players, to understand the value of deterrence and evaluate the threat of predatory pricing, and to create a successful business model for entry into a market that is dominated by a large, monopolistic incumbent. See also the B case (UVA-QA-0621).
Major Steckleson is facing his toughest challenge yet. As an experienced observer-controller at the U.S. Army's National Training Center, Steckleson is responsible for helping leaders of the 3rd Armored Cavalry Squadron learn from a deadly mistake in simulated combat by facilitating the unit's After Action Review (AAR). AARs are structured conversations about recent experience designed to help units learn from both mistakes and successes.
In May 2003, the president and CEO of Kikkoman Corp. sat in his Tokyo office weighing various options for strengthening the company's long-term growth. Kikkoman was the world's largest producer of soy sauce, largely due to its pioneering role since the 1950s as the leading promoter of the product, particularly in non-Asian markets. But times had changed. The domestic Japanese market was saturated, competition had increased, and Kikkoman needed to think of innovative ways to increase revenue.
Paul Kennedy, executive director of Fleet's Managed Asset Division, must decide whether to extend further credit to Polaroid Corp. in the fall of 2001. Polaroid's credit rating had been declining rapidly, but it was a major employer in the Boston area with many employees who were Fleet Bank customers.
To the surprise of many, it's back! We're talking about GROWTH, the intoxicating - and in many cases, company destroying -- strategy that had fallen out of favour these past five years or so. But look, along with a stock market revival, the pace of M&A's and other growth strategies has also picked up. But still, it's caveat emptor. This strategist and author has sound advice for today's hungry, growth-oriented CEOs.
The market is up, and the CEO is rewarded with a huge compensation package. The market is down, and the CEO is rewarded with a huge compensation package. There's plenty wrong with this picture, not the least of which is the lack of any link between pay and performance, and the absence of any long-term performance measures. This author, a recognized expert in executive compensation, has several excellent suggestions for changing the picture.
Case B: This case picks up after the ousting of the former CEO of Bertelsmann, following his attempts to push the company forward in its exposure to the capital markets and the extent of corporate synergies. It shows how unforgiving the New Economy could be to dreams of internet driven synergies. It also shows how business unit profitability remains a key concern, and especially as economic conditions change, although ideas for greater cooperation are not lost but re-sized.
That the terrain of decision making is mined with moral hazards has never been much in doubt. But the real question for executives is this: Just how can you make your conscience your guide? This author has suggestions and strong advice that, when taken, can help restore public confidence in business leaders.
The largely privately funded $3.7 billion Chad-Cameroon Petroleum Development and Pipeline Project represented the single largest foreign direct investment ever made in Sub-Saharan Africa at the time of its approval by the World Bank in June 2000. This case provides descriptive data about the project, its sponsors, the countries involved (particularly Chad), and the views of some of the project's critics. It is designed to allow the student to gain a modest, but balanced, view of the process of dealing with large natural resource projects in emerging economies.
Home Store, Inc. is a retail chain of home improvement stores catering primarily to middle income female homemakers interested in undertaking do-it-yourself (DIY) and do-it-for-me (DIFM) projects. The company grew rapidly from a single store with sales revenue of $8.8 million in 2001 to 20 stores with total sales of $11.334 million in 2003. Yet, the company's rapid growth in revenues has been accompanied by declining profits and a substantial increase in receivables, inventories, and capital investments in new stores. The resulting cash outflows have been financed by increased borrowing from Bank of America as well as stretching the company's payables, i.e., taking longer to pay suppliers. Bank of America reluctantly increased the maximum amount available to the company under its term loan to $5 million from $2.6 million. In early January 2004, Hermione Granger, President and Chief Executive Officer of Home Store, Inc., and Ron Weasley, the company's chief financial officer, completed a review of the company's financial situation. The company's executives are unsure whether the new credit limit will permit the company to implement its growth strategy since there is only $1.464 million remaining under the term loan at the beginning of 2004.
What makes a leader the most? This author argues that it is a compassionate approach, a leaderful practice that exhibits humility and seeks to serve others rather than power for its own sake. As a result, people learn to count on others because they have learned that each member, even the weakest, will be kept in mind when decisions are made.
This case chronicles the evolution of Adam Aircraft, a highly innovative, entrepreneurial, start-up company that flew in the face of conventional wisdom in the general aviation market. Its founder, Rick Adam, had orchestrated the fabrication of two flying prototypes--the A500 twin piston and the A700 jet--at a speed of design and production that turned heads in all sectors of the aviation industry. Certification on both models was expected in the coming year--two years ahead of a number of well-funded competitors. With its third product--the A600 twin turboprop--nearly ready to fly, Adam Aircraft had become the one to watch in 2004.
Velky Potraviny is a discount grocery store chain in the Czech Republic. The firm strives to be the market leader in providing a wide assortment of grocery products at the lowest possible price. The move toward a market economy has prompted rapid expansion, and the Velky distribution center is nearing capacity for the 37 outlets it presently serves in the greater Prague area. Velky has realized the need for efficiency in its warehouse operations. Velky further recognizes that the distribution center employees are an integral part of the company and critical for efficient warehouse operations, hence the need to address the performance measurement system of the workers. Velky cannot independently address the issue of worker performance measurement without addressing the inter-related issues of the warehouse, namely, the layout of the warehouse, flows within the warehouse, capacity expansion, managing deliveries to the outlets, and its overall link to the corporate goal.
Neverfail Computing, a high-potential start-up, links 4F (founders, family, friends, and foolhardy) funding and formal venture capital. Neverfail Computing has a proven team with a proven lead entrepreneur. The company is in an exciting market niche in a rapidly growing technology--RAID (Redundant Arrays of Independent Disks) hot-pluggable, fault-tolerant, SCSI (Small Computer System Interface) hard-drive disk arrays. It is the kind of high-potential venture that attracts venture capitalists.
DayOne opened for business in January 2001. The first store, located in San Francisco, provides products and services to prenatal and postnatal parents and their babies; it was an immediate success with customers. Now Andrew Zenoff, founder and CEO, wants to grow his venture into a national chain of DayOne centers, providing essential services, products, and community to first-time parents, but has not yet raised the needed money. This is Zenoff's second startup.
Montgomery Watson Harza (MWH) was striving to become a global leader in water/environment, energy, and infrastructure sectors through an expanding set of services, products, and construction capabilities by leveraging its global position and knowledge management concepts. MWH executives wanted to continue to expand knowledge management usage across geographic and business divisions. The protagonist, Vic Gulas, had recently expanded his responsibilities to include leading the human resources and information technology groups. By leading the IT, HR, and knowledge management groups, it was possible to devise strategies that addressed both the technology and social aspects of knowledge management. However, limited resources and time pressure to continue to show results presented Gulas with several potentially competing strategies to pursue. His decision on which course of action to take would determine the future role of knowledge management at MWH.
Chronicles the experience of Lucchetti, a Quinenco subsidiary, as it expanded from its historically strong domestic stronghold into Peru. Lucchetti, a pasta company, had grown to the point where there was no room to expand in the Chilean market. The Peruvian market, however, looked extremely promising. Thus, in 1996, Lucchetti Peru was born. By late 2003, however, the new state-of-the-art pasta plant was being liquidated. The management of the company was considering whether Lucchetti should leave the Peruvian market altogether and absorb a $150 million write-off or, alternatively, to continue and build a new plant to take advantage of what was left of the Lucchetti market share, despite the considerable additional investment required. Had this been a case of a good strategy plagued by Murphy's Law? Was there something they should have known or some point where the team members had made the wrong decision? The lesson to be gleaned from this failed Peruvian venture remained unclear, but they wanted to apply those lessons to future domestic and international expansion ventures.
This case focuses on broad-gauge strategic positioning and implementation in the global financial services sector. Allianz AG, as summarized in the case, is a major German insurance company with its strongest footprint in the domestic property and casualty business, but also occupying market positions in life and health insurance, and in insurance-likes savings products such as variable and fixed annuities as well as reinsurance. This case focuses on strategic options facing management across clients, products and geographies at German, European and global levels.