Discusses the differences between private and social returns and describes an economic framework for assessing a project's social return [known as the economic rate of return (ERR)]. The framework begins by analyzing the impact of a new project on private financiers [the private return known as the financial rate of return (FRR)]. The framework then identifies other stakeholders who might be affected, directly or indirectly, by the project and examines the project's impact on each group. Assumes readers have a working knowledge of cost-benefit analysis, microeconomics, and basic valuation mechanics.
In September 1998, Paul Cooper, Tate & Lyle's finance director for international investments, asked the International Finance Corp. (IFC) to consider lending up to $45 million to finance a $90 million sugar mill in northern Vietnam. Ewen Cobban, an IFC agricultural specialist, was in charge of reviewing the proposal and making a loan recommendation to senior management. Cobban's main concerns were whether the plant was commercially viable and whether it had support from the government. He also feared that world sugar prices were falling and that sugar was a protected commodity. Before he could recommend approval, he had to determine whether they were temporary or permanent problems. Cobban also knew he would have to assess the project's developmental impact. The IFC only supported projects that contributed to sustainable development, and one of the key determinants of sustainability was the degree to which the project was "fair" to all parties involved. Thus, Cobban would need to assess not only the private returns, but also the social returns as measured by the project's economic rate of return (ERR). To do so, he would have to consider the various groups affected by the project and, where possible, quantify the impact on them.
On September 1, 1998, the government of Malaysia imposed currency and capital controls in response to the financial crisis that had swept Asia. The controls sparked an enormous controversy in the world of international finance. Some celebrated the controls for insulating the Malaysian economy from the unstable international financial system. Others criticized the controls for trapping investors and allowing the government to protect the interests of "cronies." This debate also raised the central question about the future of the international financial architecture: What is the appropriate balance between financial market freedom and government discretion in the management of the global economy?
Accellion sought to position itself as a service provider in the Distributed File Storage, Management and Delivery market space. Its major targeted customers are Global2000 entreprises and Internet-based providers of premium content who need to supply their organizations and clients with reliable and fast access to their Internet-linked servers. As more and more companies move their applications and data from isolated desktops and local area networks (LAN's) to more globally accessible Internet-based applications, Accellion promises the instant infrastructure to provide the required availability and download and upload times, improving their revenues and reducing their costs. Still new to the industry, Accellion developed its service guarantee as a part of its value proposition to potential customers. The guarantee was designed to credibly promise high service standards to potential clients.
The case documents the strategic options open to Quiñenco, the quoted holding company 82% owned by the Luksic family, in its ambition to become a major multilatina. Their successful strategy has been to acquire under-valued companies, enhance their assets and sell them for a gain. However, the stock price of Quiñenco has languished since the initial IPO in July 1997.
This case discusses the potential benefits and costs of issuing floating-priced convertibles, also referred to as ""death spirals"". These are convertibles where the conversion price is a discount from the market price in a look-back period. The management of Log on America is blaming investment banks and convertible investors for the stock price collapse after the convertible was issued.
Pallotta Team Works is a for-profit, privately owned company that produces multiday fundraising events for nonprofit organizations. Dan Pallotta, the 40-year-old CEO, founded the enterprise in 1992. The company has grown rapidly, having raised over $200 million for charities. As the boundaries between the for-profit and nonprofit sectors blur, this case provides an example of how a for-profit entrepreneurial approach and the market test where the lines between the two sectors are drawn. Pallotta and the company's aggressive style, plus the basic business model, generate a significant amount of controversy among nonprofit organizations and the press. Pallotta is outspoken about the merits of his business model, the appropriateness of his salary, and his company's marketing approach. He wants to increase total philanthropy in the United States. "How many ads for charity did you see on the Super Bowl this year," exclaims Pallotta.
Wil Cardon is the third-generation steward of his family's real estate land development business. He grapples with issues of business structure, intergenerational business, compensation, and family values. This case includes in-depth discussion of the land development business in the Southwest.
In this case, Maverick Lodging, a hotel-management company, assesses the initial effectiveness of its recently implemented balanced scorecard system. The case gives students exposure to (1) determining an appropriate management-control and performance-measurement system for an organization once its strategy and structure have been established, (2) evaluating the design and implementation of a comprehensive balanced scorecard framework, (3) analyzing the usefulness of flexible budgeting as part of a balanced scorecard, and (4) assessing the performance of operating managers.
This case details the implementation of the e-business initiative--the last of Jack Welch's four company-wide strategic thrusts. First, it summarizes the 20-year change process that Welch led, detailing the initiatives he put in place. It then traces how Gerry Podesta, the e-business head in GE Plastics, implemented the new initiative. In doing so, highlights how the "social architecture" (culture and values) and "operating systems" (systems and processes) help the company drive through changes that have it named Internet Week's top e-business of 2000. Ends with questions about the effectiveness of successive pushes on "e-sell," "e-buy," and "e-make" and whether the e-business teams should be broken up and rolled back into the company.
Biogen is a successful biotech company facing a critical juncture. CEO John Mullen ponders how technological changes introduced into the research function will shape larger corporate decisions. This world in which biotechnology companies operated had changed dramatically over the past few years. Parts of biology were rapidly evolving from being an individualistic, wet lab, bench-science driven field toward one where scientists manipulated huge amounts of data and divided up research steps into a factorylike production process. At the same time, the cost of developing a drug and bringing it to market had ballooned, from an estimated $231 million in 1991 to $802 million in 2000. Biogen was conservative in adopting new genomics tools. This case describes how the company decided to bring in house the latest genomics in silico tools and applied them to the discovery and research phase for drug development. The company also then restructured its research strategy. As the new tools and early-phase research began to bear fruit, Mullen realized that they implied significant changes down the road for other parts of Biogen.
Details the rationale for and design of a unique organizational response by Motorola to the challenges of contingent staffing at its semiconductor facility in Austin, Texas. The new outsourcing strategy is built on principles of supply chain management and business webbing to deliver flexibility in staffing, cost controls, and high-quality workers. Through a detailed description of the company's existing methods for hiring contingent workers, it brings to light the organizational costs borne by firms that fail to develop an integrated strategic approach and provides an opportunity to examine the incentives of the different players (both internal and external) to participate in a new staffing model based on interfirm alliances with staffing companies. Also, sets up a discussion of the potential difficulties the company is likely to run into in implementing the new staffing model and broader issues, such as the evolving nature of the employment contract, employee trust and loyalty, and strategic issues that arise when multiple firms compete for the same workforce.
Dozier Industries was a U.S. manufacturer of electronic security systems. In 1994, it received a large order from the United Kingdom, which stipulated payment in British pounds. The company received a deposit, with the balance expected to be paid in 90 days. The contract provided a slim profit margin, which could be easily eliminated by an unfavorable change in exchange rates. The chief financial officer had to decide whether to accept the foreign exchange risk or to hedge the exposure.
Discusses the macroeconomic and political situation in the United Kingdom from the end of World War II through 2001. Focuses on the interactions among macroeconomic performance, labor relations, the corporate governance system, and social services. In particular, compares and contrasts the policies (and their implications) adopted by successive government administrations, from the postwar Clement Attlee Labour government to the administration of Conservative Margaret Thatcher and finally to Tony Blair and "New Labour."
Explores how location affects a firm's strategy and identifies the different ways location affects industry structure, choice of a firm's position, and the sustainability of that position. The intellectual foundations lie in an appreciation of institutional economics. Specifically, the starting premise is that specialized intermediaries resolve transaction costs between potential buyers and sellers and help make mutually advantageous deals occur. The absence of such specialized intermediaries gives rise to the institutional voids. Specifies how such voids constrain companies' choices. Specific questions addressed are (1) What are global industries? (2) What constitutes a global strategy? (3) When and how should strategy be tailored to particular locations? and, (4) How sustainable are strategies predicated on the existence of institutional voids?
In 2001, News Corp. is the smallest of the major media and entertainment conglomerates, but it has the broadest global presence. In an effort to establish a major distribution presence in the United States, News Corp. had looked to acquire DirecTV, the largest U.S. direct broadcast satellite provider, in what many observers had considered would be a "transforming acquisition." After 20 months of trying to do so, and the recent competitive offer from Echostar, Rupert Murdoch, chairman and CEO of News Corp., withdrew the company's bid for DirecTV. This case describes how Murdoch has created a global empire from a single newspaper in Australia. News' major assets include its newspaper businesses, film and television production, satellite broadcasting, television channels, and book and magazine publishing. Also describes News' distinctive operating style and Murdoch's role in shaping the corporate culture. News Corp. must now confront three sets of questions. First, how important is it for News Corp. to establish a distribution presence in the United States, and should it pursue a different approach? Second, how should it tackle the deteriorating economics of two of its core businesses: newspapers and network television? Third, what will be the impact of recent repeals of cross-ownership restrictions in the media industry on News Corp.'s competitive position vis-a-vis other major conglomerates?