Describes the work environment, systems, and processes that allow International Profit Associates (IPA) to follow a systematic four-step approach to providing advisory service to small business owners.
In late 1999, the Walt Disney Co. and the Hong Kong government agreed to develop Hong Kong Disneyland, a HK$28 (U.S.$3.6) billion theme park and resort complex planned to open in late 2005. As part of the total financing package, the sponsors decided to raise HK$3.3 billion of non-recourse bank loans for construction and working capital, and selected Chase Manhattan Bank to underwrite and syndicate these facilities. This case concerns the process by which Chase successfully competed to lead this transaction. The key questions facing Chase were whether to bid at all, how to bid, and how to structure the syndication to meet the borrower's needs, its own profit objectives, and the market's expectation for an attractively priced credit. Includes a generic section about the process, participants, and economics of syndicated lending for students who are unfamiliar with syndicated lending. This is part of a module on Financing Projects in the Elective Curriculum (EC) course Large-Scale Investment (LSI). Although written for a course on project finance, it can easily be modified for courses on capital markets or financial institutions.
A revolution in pricing is occurring, courtesy of the Internet. Scott McNealy, CEO of Sun Microsystems, discusses how new pricing models are making the supply chain more efficient by providing rich information and driving down costs. Get ready for the demise of the price list.
Since Blockbuster began sharing rental revenues with its suppliers, both parties have seen increased profits. The authors say revenue sharing will work for many products and services.
With distributed computing, companies can save money by allocating tasks among all computers on their networks. New business applications may emerge, too. Intel's CTO discusses the opportunities and challenges.
Competence is more than a list of skills; it encompasses how employees define their work. How people understand their jobs affects how they carry them out.
The San Francisco Symphony (SFS) is a major U.S. orchestra that took on ancillary activities as part of its mission to bring the best in music to the Bay Area. Despite increasing costs, SFS posted surpluses for 15 consecutive years. However, by the end of 1993, SFS faced a shift in its financial fortunes: forecasts indicated annual budget shortfalls of $25 million in total deficits by the end of the 1999-2000 season. In 1994, SFS had just signed a "superstar" music director to lead SFS into the 21st century whose ambitions for the orchestra were boundless. Students will step into the role of an executive committee member attending a strategy retreat to develop a strategy for SFS that balances its financial needs and its artistic commitments and aspirations. Key issues for a financial plan and supporting operations are: 1) relationships with orchestra musicians and their union contract, 2) buyers' capacity for accepting continued increases in ticket prices, 3) the likelihood of substantial increases in annual contributions, 4) local responses to changes in the orchestra's community activities, and 5) the new music director's expectations for support of his artistic aspirations.
Examines the strategic position of Rambus, Inc. The company designs, develops, and licenses high-speed chip connection technology to enhance the performance and cost-effectiveness of computers, consumer electronics, and communication systems. The company's technology is integrated into dynamic random access memory (DRAM) chips and the logic devices that control them. Because Rambus did not manufacture chips, it was directly influenced by chip suppliers (such as Intel), who controlled the price and supply of DRAM chips and stood between Rambus and the OEMs that used these chips. A further complication for Rambus stemmed from the company's involvement in several costly legal battles with much larger competitors over the ownership of prevailing DRAM standards. Looks at the challenges facing Rambus in 2001 as it seeks to balance its interests with those of its business partners (including an increasingly strained relationship with its major partner, Intel) while maintaining a technological lead over its competitors and defending its intellectual property from legal attacks.
The fictional case of SpiffyTerm, Inc., is meant to teach students about the term sheets commonly used in venture capital deals. At the time of the case, the three company founders concentrate on understanding the term sheet just received from a Silicon Valley venture capital firm (included in the case) and, considering the current and anticipated future financing rounds, collaborate to determine what valuation and other terms they should bargain for. The case consists of six sections: 1) basic valuation, 2) valuation with alternative scenarios, 3) vesting and founder replacement, 4) preferred stock, 5) pricing of follow-up rounds and the right of first refusal, and 6) anti-dilution. The teaching note to this case is a spreadsheet that contains all the formulas used to solve the problems.
In 1999 Renault acquired 36.8% of Nissan, the Japanese troubled car manufacturer. This case describes the successful integration process that leads to the recovery of Nissan.
"Please don't tell me that I need to have a baby to have this time off." Those words were still ringing in the ears of Jessica Gonon an hour after a tense meeting with Jana Rowe, one of her key account managers. Jessica, the vice president of sales and customer support at ClarityBase, considered Jana's request for a four-day workweek, for which she was willing to take a corresponding 20% cut in pay. Although the facts seemed simple, the situation was anything but. Just last week, Davis Bennett, another account manager, had made a similar request. Both Jana and Davis were well aware that Megan Flood, another account manager, had been working a reduced schedule for nearly two years in order to spend more time with her children. The eight account managers were in charge of helping the company's largest clients install and maintain database applications, which often required hand-holding and coddling. Because Megan had an abbreviated schedule, the other account managers were assigned the more difficult clients. But if Jessica agreed to a shorter workweek for Jana and Davis, who would take on the toughest customers? And what would happen if the other account managers started asking for similar deals? How can Jessica maintain the productivity of her department and meet her staff's needs for flexible work schedules while striking an equitable solution for both parents and nonparents? In R0103A and R0103Z, Michele S. Darlin, Chris Dineen, Elinor Burkett, and Steward D. Friedman advise Jessica on her next move in this fictional case study.
In 1991, AlliedSignal was in poor shape: morale was low, operating margins were lower than 5%, return on equity was only 10.5%, and--most troubling--the operating management team was weak. But by 1999, when AlliedSignal merged with Honeywell, it was a strong and thriving business. How did the company right its course? Larry Bossidy, CEO of AlliedSignal from 1991 through 1999, believes the turnaround was made possible by a dramatic improvement in people processes. And the extraordinary amount of time and emotional energy he put into evaluating, recruiting, and developing great managers--tasks that most CEOs delegate--was the key to this process improvement. In this First Person article, Bossidy explains why he believes the interview "is the most flawed process in American business." He talks candidly about how he assesses candidates and what types of questions he asks references. He also describes the four leadership traits he looks for when evaluating job candidates: first, the ability to execute--that is, being able to turn ideas into reality. The second trait is what Bossidy calls "a career runway." When Bossidy hires someone, he wants to hire him or her for this job and the next job, never for the person's final position. A third quality is a team orientation--good leaders are able to work well with others. And the fourth quality is having a wide range of experience. To build their skill sets, Bossidy tries to ensure that up-and-coming executives sit in many seats en route to leadership roles.
The team that operated the Nut Island sewage treatment plant in Quincy, Massachusetts, was every manager's dream. Members of the group performed difficult, dangerous work without complaint. They needed little supervision. They improvised their way around operational difficulties and budgetary constraints. They were dedicated to the organization's mission. But their hard work led to catastrophic failure. How could such a good team go so wrong? In this article, the author tells the story of the Nut Island plant and identifies a common, yet destructive organizational dynamic that can strike any business. The Nut Island effect begins with a deeply committed team that is isolated from a company's mainstream activities. Pitted against this team is its senior management. Preoccupied with high-visibility problems, management assigns the team a vital but behind-the-scenes task. When trouble strikes and management is unresponsive, team members feel betrayed and develop an us-against-the-world mentality. They stay out of management's line of sight, hiding problems. Management, disinclined in the first place to focus on the team's work, is easily misled by team members' skillful disguising of its performance deficiencies. The resulting stalemate typically can be broken only by an external event. The Nut Island story serves as a warning to managers who concentrate their efforts on their organization's most visible shortcomings: sometimes the most debilitating problems are the ones we can't see.
Many of the pioneers of Internet business, both dot-coms and established companies, have competed in ways that violate nearly every precept of good strategy. Rather than focus on profits, they have chased customers indiscriminately through discounting, channel incentives, and advertising. Rather than concentrate on delivering value that earns an attractive price from customers, they have pursued indirect revenues such as advertising and click-through fees. Rather than make trade-offs, they have rushed to offer every conceivable product or service. It did not have to be this way--and it does not have to be in the future. When it comes to reinforcing a distinctive strategy, Michael Porter argues, the Internet provides a better technological platform than previous generations of IT. Gaining competitive advantage does not require a radically new approach to business; it requires building on the proven principles of effective strategy. Porter argues that, contrary to recent thought, the Internet is not disruptive to most existing industries and established companies. It rarely nullifies important sources of competitive advantage in an industry; it often makes them even more valuable. And as all companies embrace Internet technology, the Internet itself will be neutralized as a source of advantage. Robust competitive advantages will arise instead from traditional strengths such as unique products, proprietary content, and distinctive physical activities. Internet technology may be able to fortify those advantages, but it is unlikely to supplant them.
The management world knows by now that to be effective in the workplace, an individual needs high emotional intelligence. What isn't so well understood is that teams need it, too. Citing such companies as IDEO, Hewlett-Packard, and the Hay Group, the authors show that high emotional intelligence is at the heart of effective teams. These teams behave in ways that build relationships both inside and outside the team and that strengthen their ability to face challenges. High group emotional intelligence may seem like a simple matter of putting a group of emotionally intelligent individuals together. It's not. For a team to have high EI, it needs to create norms that establish mutual trust among members, a sense of group identity, and a sense of group efficacy. These three conditions are essential to a team's effectiveness because they are the foundation of true cooperation and collaboration. Group EI isn't a question of dealing with a necessary evil--catching emotions as they bubble up and promptly suppressing them. It's about bringing emotions deliberately to the surface and understanding how they affect the team's work. Group emotional intelligence is about exploring, embracing, and ultimately relying on the emotions that are at the core of teams.