Although the Internet is an essential conduit for many business activities, it isn't rendering the physical world any less important, as the failures of many Web merchants demonstrate. People need social and sensual contact. The companies that succeed will be those best able to integrate the physical and the virtual. But that requires a new kind of business architecture--a new approach to designing stores, offices, factories, and other spaces where business is conducted. The author, a faculty member at Harvard Graduate School of Design, provides practical guidelines to help managers and entrepreneurs think creatively about the structures in which their businesses operate. He outlines four challenges facing designers of such "convergent" structures, so-called because they function in both physical and virtual space: matching form to function, allowing visitors to visualize the presence of others, personalizing spaces, and choreographing connectivity. Using numerous examples, from a fashion retailer that wants to sell in stores as well as through a Web site to a radically new kind of consulate, the author shows how businesses can meet each challenge. For instance, allowing customers to visualize the presence of others means that visitors to a Web site should be given a sense of other site visitors. Personalizing physical and virtual spaces involves using databases to enable those spaces to adapt quickly to user preferences. The success of companies attempting to merge on-line and traditional operations will depend on many factors. But without a well-designed convergent architecture, no company will fully reap the synergies of physical space and Internet technology.
For as long as can be remembered, BestBaby Corp., a manufacturer of baby equipment and furniture, has enjoyed a solid reputation with retailers, a good track record with consumers, and a supportive relationship with stockholders. But then the child of a celebrity is injured when her stroller tips over because its brakes failed. The media go wild, and CEO Greg James finds himself in uncharted territory. The morning after the accident, Greg calls an emergency meeting of his executive staff. As he searches his memory to prepare for it, he thinks about Arzep Enterprises, BestBaby's main provider of parts and materials. He remembers his COO, Keith Sigismund, telling him that Arzep had switched suppliers at some point in order to cut its own costs. Nevertheless, Keith had assured Greg that the new material, although not quite as sturdy, hadn't affected the quality of Arzep's components. Then in the meeting, Keith drops a bombshell: he reads from a year-old memo sent to him by an employee in manufacturing stating that the new brake fittings delivered by Arzep don't grab the front brakes as well as the ones previously supplied. In R0104A and R014Z, John R. Hall, Ian Mitroff, Robin Cohn, and Alan H. Schoem offer advice to Greg on how BestBaby should respond to the victim's family, the media, the public, and the company's own employees during this PR crisis.
For as long as can be remembered, BestBaby Corp., a manufacturer of baby equipment and furniture, has enjoyed a solid reputation with retailers, a good track record with consumers, and a supportive relationship with stockholders. But then the child of a celebrity is injured when her stroller tips over because its brakes failed. The media go wild, and CEO Greg James finds himself in uncharted territory. The morning after the accident, Greg calls an emergency meeting of his executive staff. As he searches his memory to prepare for it, he thinks about Arzep Enterprises, BestBaby's main provider of parts and materials. He remembers his COO, Keith Sigismund, telling him that Arzep had switched suppliers at some point in order to cut its own costs. Nevertheless, Keith had assured Greg that the new material, although not quite as sturdy, hadn't affected the quality of Arzep's components. Then in the meeting, Keith drops a bombshell: he reads from a year-old memo sent to him by an employee in manufacturing stating that the new brake fittings delivered by Arzep don't grab the front brakes as well as the ones previously supplied. In R0104A and R0104Z, John R. Hall, Ian Mitroff, Robin Cohn, and Alan H. Schoem offer advice to Greg on how BestBaby should respond to the victim's family, the media, the public, and the company's own employees during this PR crisis.
The case describes an international agreement to phase out child labor in soccer-ball manufacturing. This high-profile agreement, which resolves major brand manufacturers, has been hailed as an example of socially responsible corporate policy.
Details the career of Katharine Graham of the Washington Post Co., a pioneer in her field and one of the first high-profile women to lead a major public company. Her story is a unique example of how power and expertise are built over time, and differs from those of other business leaders in that she was unexpectedly thrust into a leadership position. Though Graham could have been a figurehead leader of the Washington Post Co., she gradually became a powerful national player: a publisher and CEO in more than title. Graham's strong values impel many of her decisions throughout the course of her career and help her through times of uncertainty. Her values are a stark contrast to strictly data-based decision making. Explores Graham's ability to master the newspaper business and succeed in a man's world. Additionally, Graham's unique ability to adapt her influence style in different social and career networks is also explored, as the distinction between Graham's employees, mentors, and friends is often blurred.
Two-year-old start-up Color Kinetics has developed unique colored lighting technology using digitally controlled LEDs, and has developed that technology into a successful line of products for its first targeted market of "retailtainment." Now in November 1999, the management team is evaluating how to best extend this success into other markets and/or strategic initiatives and achieve the growth it has targeted internally and with investors.
Describes the evolution of Amazon.com from its inception in 1996 as an online bookseller to its position in 2001 as a globally recognized e-commerce brand. Reviews the evolution of the company's business model through an interview with the founder and CEO, Jeff Bezos. At its founding, Amazon.com mostly brokered book purchases through its Web site. After five years of phenomenal growth, the company expanded into international markets and added many categories, partners, and physical infrastructure. Examines Amazon's growth, fueled by the Internet bubble, and looks at how the company coped with increased scrutiny on profitability.
This case describes how multiple sources of uncertainty can be incorporated into a real-options-based analysis. It works through an example of a two-stage problem where a company has both an option to explore and an option to develop oil reserves.
Discounted cash flow valuation calls for using expected future prices of inputs or outputs. This case describes the relationship between spot prices, forward/future prices, and expected future prices. Knowing current forward and future prices alone is not enough to estimate expected future prices, so the forward or future prices are not in general a good estimate of the expected future price.
The flows-to-equity or equity cash flows valuation method is a discounted cash flow method used to estimate the equity portion of the capital structure. It is closely related to the venture capital/buyout valuation method, which estimates the IRR of the stream of cash flows accruing to equity holders. Both of these methods are likely to result in an estimate of equity value that is too low when the firm's debt is risky (or, equivalently, an IRR that is too high, depending on the method used to estimate terminal value). This case describes a method for estimating the size of this bias, drawing insight from option-pricing.
Several investment firms and mutual funds position themselves as providers or facilitators of opportunities for socially responsible investment. This case addresses the impact of these firms on publicly traded companies. Focuses on managers at ABB, a large multinational based in Switzerland that has tried to be a leader in integrating principles of sustainable development into its business strategies. ABB's managers now need to decide what sorts of relationships they would like to have with the firms in the socially responsible investment community and the extent to which they ought to take the preferences of these firms into account in tailoring their business strategies.
Describes the legal battles faced by Napster, the popular Web site for finding and downloading music files through the Internet. Traces the evolution of copyright law as it has been interpreted in recent cases on digital music. Focuses on the recent suit against Napster by the Recording Industry Association of America (RIAA), and involves the RIAA's arguments alleging that Napster constitutes illegal infringement and Napster's response that it does not.
A large urban medical center implements the Balanced Scorecard management tool. Elaine Brennan, senior VP of operations, has reorganized a highly functional health care organization into decentralized patient care centers and support units. Having recently endured the pain of a major downsizing, she wants the various constituents--senior managers, physicians, nurses, technicians, and the work force--to explore implementing a new strategy focused on growth and patient care. But the existing measurement and management system reports only on costs and financial results. She introduces the Balanced Scorecard as a mechanism to increase attention to and accountability for quality, service, work environment, and employee outcomes, as well as revenues and costs.
Describes the challenges former U.S. Trade Representative Charlene Barshefsky faced while negotiating a trade agreement with China to improve its domestic intellectual property rights enforcement. After briefly describing Barshefsky's past experience with trade negotiations, this case discusses the history of U.S.-China trade relations and analyzes Ambassador Barshefsky's strategy in coalition-building in the United States and abroad.
Explores various aspects of corruption in international business, in two sections. The first section provides a broad discussion of the ethical, business, and legal aspects of corruption. The second section provides a series of "caselets" that are designed to promote discussion of how students would act in particular situations, as well as the potential costs and benefits of these actions.
Since the late 1980s, Progressive Casualty Insurance Company has maintained a strong position in the nonstandard auto-insurance market (auto insurance for high-risk drivers). Progressive's goals in the 1990s are to expand its insurance coverage to include standard and preferred customers (drivers with clean driving records and no accidents). The company never advertised before 1994; as a result, consumer awareness has been very low. Progressive faces strong competition in a varied insurance industry. Companies like Allstate, the nation's largest underwriter of nonstandard auto insurance, and State Farm, with 21.1% total market share, present a challenge to Progressive as the company strives to make its products available to all drivers. The case focuses on building the company's brand through advertising and enhancing product differentiation through technology.
A U.S. automotive supplier follows a major customer to Asia, and forms a joint venture with a Thai company to build and operate a new manufacturing plant. Key parts are also sourced from the Thai partner's existing plant. The Asian currency crisis causes devaluation of the Thai currency as well as problems for the joint venture, requiring the restructuring of the joint venture and the resourcing of parts from another company. Issues in the case include the recovery of tooling and equipment from the joint-venture partner and cost analysis to determine the best sourcing alternative. An optional Excel template is available for use with this case.