In the early 2000s, crisis management is a growth industry. Scarcely a month passes without news of organizational crises. Instantaneous media exposure worldwide raises the stakes for even modest size domestic businesses. Once-local ventures, when faced with crisis, may confront worldwide exposure. Whether challenged by hostile takeovers, plant explosions, equipment sabotage, product contamination, violence or some other threat to the viability of an organization, we work in a world where the need for crisis management skills and knowledge is on the rise. This note provides a basic background on organizational crisis management including how to determine what to prepare for and who can help.
In its first two years as a direct response retail bank in Canada, ING Bank of Canada attracted more than 160,000 customers and assets of Cdn$1.6 billion. Several other direct banks have entered the marketplace with similar services and the management team needs to consider the company's next strategic move. The team must decide whether to recommend an alliance that would place ING automated banking machines in Canadian Tire stores nationwide. This case is a supplement to ING Bank of Canada (A), product 9A99A010.
Fast Learning Inc. was a private firm that developed software and learning materials largely for preschool-aged children. It is considering moving into two new ventures: opening an early childhood education center and purchasing an existing day-care center. Fast Learning has approached a strategy consulting firm for advice on these ventures. One of the team members evaluating the proposals must determine the appropriate costs of capital (or hurdle rates). He considers whether to base the calculations on the cost of new sources of financing or an average of the costs of existing sources, and whether required returns should reflect actual past costs or current market costs.
In the early 2000s, crisis management is a growth industry. Scarcely a month passes without news of organizational crises. Instantaneous media exposure worldwide raises the stakes for even modest size domestic businesses. Once-local ventures, when faced with crisis, may confront worldwide exposure. Whether challenged by hostile takeovers, plant explosions, equipment sabotage, product contamination, violence or some other threat to the viability of an organization, we work in a world where the need for crisis management skills and knowledge is on the rise. This note provides a basic background on organizational crisis management including how to determine what to prepare for and who can help.
Pharmex Industries is a high-growth pharmaceutical company that has aggressively expanded through acquisitions of financially sound firms. The chief financial officer must decide if their latest potential acquisition, the privately owned Formulex Group of Companies, is strategically attractive, and he must also determine the value of the company and how to finance the acquisition.
Two large oil and gas companies agree to merge to form Husky Energy Incorporated. An individual investor has received the information circular with respect to the transaction and has gathered some other information about the merger. She must decide whether the offer is attractive enough for her to vote her proxy in favour of the transaction and tender her shares. The case provides an opportunity for students to evaluate the acquisition from the unique perspective of an individual investor holding shares of the target company. Extensive data is provided on comparable firms and transactions allowing for ratio-based valuation of the transaction. This valuation is complicated by the fact that payment to shareholders consists of both cash and shares. Information is also provided that allows for a general discussion of the takeover process as well as the pros and cons of using a takeover as a means of going public (a reverse takeover).
The project manager for the Liquor Control Board of Ontario faces store network decisions in southeast Toronto. The Liquor Control Board of Ontario has developed a new five-year strategy in which all of their stores will be revamped into one of the four new formats, which has led to a review of every one of their nearly 600 retail locations. With a store within five minutes of 86% of the population of Ontario, the project manager's task is not about expanding coverage but rather improving the performance of the retail network. The (A) case focuses on what to do about a particular store in the area. The Liquor Control Board of Ontario (B): Market Segmentation, product 9B00A021 is a short follow-up about further decisions on store layout and merchandising. (A higher price applies to this case due to color exhibits.)
This note describes the use of the OptQuest tool (updated July 2009) for optimal decision variable searches based on Crystal Ball Monte Carlo simulations. Setup of the objectives and constraints, selecting run options, saving results, and a simple example are all included.
The rise and fall of central planning rank among the most significant events in the 20th century. For much of the century, central planning, which had catapulted Russia from a backward country in 1921 to a world-class superpower in the 1960s, was looked upon as a viable model of economic development for many developing countries. By the 1980s, however, the limitations of central planning had become apparent. Countries in the Soviet bloc were stagnant and appeared to be falling further behind Western countries in economic and technological development. In contrast, countries in Asia and South America that undertook market-oriented reforms had experienced rapid economic growth. Since the fall of the Berlin Wall in 1989, most formerly communist economies have engaged in a historical transition process to market economies. Despite its initial success, central planning as a system of organizing and directing a national economy had proven to be less efficient than the market system. Why this is so is the focus of this note. After a brief historical account of the rise of central planning, this note offers a conceptual framework for understanding how the centrally planned economy is organized and how central planning works, or rather how it doesn't work.
This case documents the many unusual features and puzzles of Chinese financial markets (e.g., foreigners' receiving large discounts in buying Chinese shares relative to Chinese investors). The case illustrates how government policies can have a profound impact on the development of financial markets. Students analyze how policies work and why policies are imposed in China and generally not elsewhere. It also illustrates the perils and added risks from government regulation in financial markets.
This case has been used since 2004 in Darden's first-year Global Economies and Markets MBA course in the module on exchange regimes and financial crises. In the early 1990s, in response to massive foreign capital inflows, the Chilean government restricted the flow of capital into the country in order to achieve a competitive and stable exchange rate and to control inflation. By the late 1990s, with the onset of the financial crises in emerging-market economies, investors began to pull their capital out of Chile and other emerging markets indiscriminately. This sudden reversal of capital flows was threatening to ignite a balance-of-payments crisis in Chile. The government must decide what to do. This is an abridged version of the A case "Chile: A Jungle for the Latin American Tiger (A)" (UV0664). The A case contains more detailed information on the development experience of Chile, in particular, on the legacy of General Augusto Pinochet and the economic policies of the "Chicago boys." This case may also be used with the B case, "Chile: A Jungle for the Latin American Tiger (B)" (UV0920), which gives an update on the policies of the Chilean central bank up to 1999 and discusses of the debate on the economic consequences of the policies. A teaching note (UV0664) is available.
Contains a detailed analysis of Microsoft's financial performance from 1985 to 2001. During this time, Microsoft improved its profitability and cash flow generation--changes that led to a dramatic rise in valuation. Also addresses the issue of determining how much excess profit the company might have earned as a result of its illegal activities, as alleged and proved by the U.S. government.
In May 2000, Sonia Syngal, director of procurement strategy and supplier relations at Sun Microsystems, needed to make a critical decision. Under Syngal's leadership, the company had just completed its first "dynamic bidding" pilot tests and, as a result, cut its sourcing costs by 30%. Given these results, the potential for cost cutting via the implementation of a dynamic bidding system on a widespread scale at Sun was enormous; on an annual basis, the company was currently spending about $9 billion in direct materials procurement. Although the potential to cut costs significantly was clear, Syngal had several other issues to consider, including: 1) Sun's suppliers and the potential impact of a dynamic bidding program on the company's critical relationships; 2) the reaction of Sun's internal constituents, namely, its commodity directors who had spent years trying to identify the most effective way to work with the company's suppliers; and 3) selecting the best software vendor, which would be difficult in a crowded space.
Martin Stein, a recent business school graduate, is the new owner of Quality Imaging Products (QIP), a $10-million-a-year remanufacturer of printer and copier ink cartridges. Within weeks of buying the company, QIP's vp for finance, gives an ultimatum: a raise or he walks, leaving Stein with the burden of straightening out a nonfunctional financial system while customers, suppliers, product managers, and production staff compete for his attention. Presents Stein as an example of a small-company manager who must juggle a far broader range of issues in greater depth than his big-company counterparts to meet the needs of customers profitably.
How does a $2 million software sale happen? This case traces efforts by Siebel Systems to sell lead management software to discount broker Quick & Reilly. The buying process is mapped out over four years. Covers in detail the last six months--from Siebel's initial involvement to a challenge from competitor Oracle to the climax. The structure of Quick & Reilly's buying center is mapped, as is the role of its parent, Fleet Bank. The fortunes of the sale rise and fall as the Siebel account manager faces one obstacle after another. Presented in three parts, with opportunities to debate the account manager's choices and actions at each stage. Part 1 describes the start of the sale from the seller's perspective.
How does a $2 million software sale happen? This case traces efforts by Siebel Systems to sell lead management software to discount broker Quick & Reilly. The buying process is mapped out over four years. Covers in detail the last six months--from Siebel's initial involvement to a challenge from competitor Oracle to the climax. The structure of Quick & Reilly's buying center is mapped, as is the role of its parent, Fleet Bank. The fortunes of the sale rise and fall as the Siebel account manager faces one obstacle after another. Presented in three parts, with opportunities to debate the account manager's choices and actions at each state. Part 2 describes the start of the sale from the buyer's perspective.
How does a $2 million software sale happen? This case traces efforts by Siebel Systems to sell lead management software to discount broker Quick & Reilly. The buying process is mapped out over four years. Covers in detail the last six months--from Siebel's initial involvement to a challenge from competitor Oracle to the climax. The structure of Quick & Reilly's buying center is mapped, as is the role of its parent, Fleet Bank. The fortunes of the sale rise and fall as the Siebel account manager faces one obstacle after another. Presented in three parts, with opportunities to debate the account manager's choices and actions at each state. Part 3 describes the unfolding of the sale over a 4-year period.
Electronic Arts (EA), the world's largest independent game publisher, is preparing to launch an online, subscription-based version of the most popular PC game in history: The Sims. The new game is called "The Sims Online" and it differs from the original game in two key respects: the gaming experience and the payment structure. In this context, EA managers must finalize several decisions that they believe are fundamental to the game's success, including target market selection and pricing/payment structure.
This note provides an overview of fiscal-policy tools and how fiscal policy influences GDP through the income multiplier. The mechanics behind the income multiplier are explained and an algebraic derivation is provided. The note also provides examples of how parameters associated with disposable income (e.g., the tax rate and marginal propensity to consumer) influence the magnitude of the income multiplier.