Jill Hoover was looking skyward, marveling at the heart-stopping beauty of Paradise Park-Seattle's newest attraction, its tallest and scariest roller coaster to date: the Anaconda. "Quite impressive," Jill thought. But a scuffle in the ride queue quickly brought the CEO of Paradise Parks back to earth. The company's 19 seasonal and year-round amusement parks had always been popular--ever since Jill's father founded the original Paradise Park just after the Second World War--but they hadn't been very profitable of late. Operating costs had been spiraling, and every dollar of extra revenue had been hard won. At the company's annual management off-site meeting, held that morning at the Seattle park, CFO Nathan Cortland proposed that Paradise offer its customers the option of a "preferred guest" card. Cardholders would pay more, but they would get first crack at the rides--entering through separate lines--and would get seated immediately at any of the parks' restaurants. According to Nathan, the plan would bolster Paradise's sagging finances because it would target the "mass affluents"--a rising demographic of moneyed but time-pressed people who might visit the park more often and spend more if it weren't for long lines at the rides. Jill respects Nathan's idea--but hasn't her plan to upgrade some of the parks' souvenir shops to gift boutiques already shown some promise? And doesn't Nathan's plan smack of elitism, as Jill's longtime friend and park manager Adam Goodwin suggests? The CEO has resolved to get back to Nathan with a decision about "Operation Upmarket" by the time she leaves Seattle and returns to headquarters. Should Paradise Parks offer guests different levels of service? In R0110A and R0110Z, John Harrington, Edward Goldman, Alexander Labak, and Robert Crandall offer their advice on this fictional case study.
Reveals the interesting and unusual story behind Ford's selection of "Edsel" as the new brand name for its ill-fated 1957 new product launch. Noteworthy as perhaps the most extensive, creative, and politically charged naming stories on record. Although both nontraditional approaches to name generation (i.e., correspondence with a popular poet of the time) and more traditional research tools (e.g., consumer surveys exploring top-of-mind brand-name associations and opposites, advertising agency brainstorming) provide input to the naming decision, this is all put aside by the company's chairman of the board, who makes a unilateral decision to use "Edsel" in the final hour. This name choice goes against both consumer research, which suggests problems with the name, and the beliefs of Edsel's sons, who feel that their father may not want his name so utilized, thus revealing the aesthetic quality of the naming decision.
BigEast is considering adopting a relationship-centric view in its credit card approval process. This would shift the bank's current practice of analyzing applications based on the merits of a single product to one where the customer's existing relationship is considered in the approval process.
This case presents a capital budgeting problem. Whirlpool Europe is evaluating an investment in an enterprise resource planning (ERP) system that would reorganize the information flow throughout the company. Students derive the cash flows from working capital, sales, and other improvements along with the cost of the investment.
The Singapore Public Library system was transformed from being mediocre at best to world class using information technology, progressive human resources management, and marketing approaches unusual for governmental agencies.
Corporate budgeting is a joke, and everyone knows it. It consumes a huge amount of executives' time, forcing them into endless rounds of dull meetings and tense negotiations. It encourages line managers to lie and cheat, lowballing targets and inflating results. And it turns business decisions into elaborate exercises in gaming. The sad thing is, budget shenanigans have become so embedded in corporate life that they're accepted as business as usual--no matter how destructive they are. The source of the problem is using budget targets to drive managers' compensation. In a traditional pay-for-performance compensation program, a manager earns a hurdle bonus when performance reaches a certain level. The bonus increases with performance until it hits a maximum cap. These "kinks" in the pay-for-performance line create incentives to game the system. When performance approaches the hurdle target, a manager will try to accelerate the realization of revenue and profit. When performance hits the cap, the manager has a strong incentive to push revenue and profit into the next year. To eliminate inducements to game the system, companies should adopt a purely linear pay-for-performance scheme that rewards actual performance, independent of budget targets. A manager receives the same bonus for a given level of performance whether the budget goal happens to be set beneath that level or above it. Severing the link between budgets and bonuses eliminates managers' motivation to lowball targets, and it takes away incentives to move revenues and expenses around when the end of a budget period approaches. Not only does this remove the costs of gaming, it also frees managers from all the time they traditionally had to devote to it.
The (A) case describes the situation of Cadbury Schweppes (CS) and its sugar confectionery business, in a state of 'satisfactory underperformance' in which past strategies and practices make it hard for new management to initiate change in this widely respected company. The (B) case shows how from 1997 to 1999 John Sunderland, the new CEO and a new divisional manager used value based management (VBM) as a vehicle for transforming respectively the company and the sugar confectionery division with strong emphasis on people and leadership practices. The (C) case describes how CS' performance management system was redesigned in line with the Managing for Value (MfV) philosophy. It illustrates the new management performance process in action in the beverages business in Spain, where the country manager is faced with major competitive challenges.
The (A) case describes the situation of Cadbury Schweppes (CS) and its sugar confectionery business, in a state of 'satisfactory underperformance' in which past strategies and practices make it hard for new management to initiate change in this widely respected company. The (B) case shows how from 1997 to 1999 John Sunderland, the new CEO and a new divisional manager used value based management (VBM) as a vehicle for transforming respectively the company and the sugar confectionery division with strong emphasis on people and leadership practices. The (C) case describes how CS' performance management system was redesigned in line with the Managing for Value (MfV) philosophy. It illustrates the new management performance process in action in the beverages business in Spain, where the country manager is faced with major competitive challenges.
When the fast-growing Museum of Science and Industry in Tampa, Florida finds out that a key, privately-owned parcel of land adjoining its "campus" is up for sale, it moves quickly-but unsuccessfully-to convince the owner to sell the land through an arrangement combining a long-term payout and select tax advantages. The owners' rejection of this approach forces the museum to consider a variety of other options, ranging from partnership with a for-profit firm to a request for financial assistance from local county government, that already owned the land on which the formerly-public museum was located. This case uses the "Fowler Avenue land parcel question" as a window into the ways in which sudden, individual decisions faced by nonprofit boards of trustees are linked to larger strategic and financial issues for institutions. The MOSI board must consider the long-term prospects for its endowment, the question of admission fees, even the question of the propriety and efficacy of using board members to lobby public officials. The case was developed with the support of the Museum Trustee Association. Author: Howard Husock Sponsor: Christine Letts HKS Case Number 1629.0
When the fast-growing Museum of Science and Industry in Tampa, Florida finds out that a key, privately-owned parcel of land adjoining its "campus" is up for sale, it moves quickly-but unsuccessfully-to convince the owner to sell the land through an arrangement combining a long-term payout and select tax advantages. The owners' rejection of this approach forces the museum to consider a variety of other options, ranging from partnership with a for-profit firm to a request for financial assistance from local county government, that already owned the land on which the formerly-public museum was located. This case uses the "Fowler Avenue land parcel question" as a window into the ways in which sudden, individual decisions faced by nonprofit boards of trustees are linked to larger strategic and financial issues for institutions. The MOSI board must consider the long-term prospects for its endowment, the question of admission fees, even the question of the propriety and efficacy of using board members to lobby public officials. The case was developed with the support of the Museum Trustee Association. HKS Case Number 1629.1
On June 6, 2000, the World Bank's and IFC's board of directors was scheduled to vote on whether to approve funding for the $4 billion Chad-Cameroon Petroleum Development and Pipeline project. Although the project presented a unique opportunity to alleviate poverty in Chad, one of the poorest countries in the world, Chad had a president who had been labeled "warlord" and a history of civil war and oppression. This case describes the project, the setting, and the World Bank's reasons for participating in the deal--mainly an opportunity to alleviate poverty, enforce environmental standards, and minimize the impact on indigenous people. It also describes the very public and very ardent opposition to the project's environmental, social, and revenue management policies. Faced with a high-risk, but potentially high-return opportunity to improve conditions in Chad, students, as the directors, must decide whether to approve funding for the deal.
Nintendo Co. Ltd. is a worldwide leader in the retail video game industry. In 1998, the color version of Nintendo Game Boy would be launched simultaneously in North America and Europe and would be one of Nintendo's most important launches. The president of Nintendo, Canada must develop a marketing plan that would generate the most profit.
This case presents the history and current position of Russia's second-largest oil company, YUKOS, as it seeks listing on the NYSE as an ADR and attempts to rid itself from a punishing "governance discount" by the capital markets. This is a company with a history of significant corporate governance abuses that is, more recently, attempting to reform its ways. Although the market value of the company has risen dramatically over the past year (2000), it is still selling at a whopping discount from the imputed market value of its gigantic oil and gas reserves. What more should YUKOS be doing to eliminate its governance discount? How can any program be implemented successfully given the current ownership structure of the company?
This case describes the differebt approaches the United States and Japan have taken to extend the jurisdiction of their antitrust laws to foreign companies. The section on the United States, in particular, focuses on the evolving logic of the Supreme Court in dealing with these issues. It presents the case of United States vs. Nippon Paper Industries Co. Ltd. and demonstrates the difficulties of applying somewhat abstract principles of jurisdiction to a real-life situation.