The Newell Company, a multi-billion dollar company dealing in hardware and home furnishings, office products and housewares, was contemplating a merger with Rubbermaid, a renowned manufacturer of plastic products. Newell had a remarkable record of success in growth by acquisition. Rubbermaid would mark a quantum step in this program, but equally, would pose a formidable challenge to Newell's capacity to integrate and strengthen acquisitions. Corporate strategy and advantage is studied, particularly through the Collis and Montgomery framework, to determine if the proposed merger is a step too far.
The chief executive officer of the venture capitalist Portal Investments had to decide whether to invest in eHarvest.com, a company with a vision to become the worldwide Internet portal for production agriculture. To do so, he needed to examine Portal Investment's strategic objectives; eHarvest.com's business model and the challenges and opportunities it faced in carrying it out; and issues related to valuation and deal structuring.
After nine years of leading First Community Bank (FCB), BankBoston's unique venture targeting low- to moderate-income communities, and finally gaining recognition and respect for her efforts, Gail Snowden must once again faces the challenge of justifying FCB's value, this time, as part of the umbrella group, Community Banking Group (CBG), formed in 1996 due to a merge with BayBank, she must justify it to a new parent company, Fleet Bank. To successfully integrate CBG/FCB into the mainstream organization, Snowden faces many organizational and cultural hurdles.
Describes two aspiring entrepreneurs who have just received offering documents for venture funding (known as term sheets) from two venture capital firms. Neither of the entrepreneurs have experience in raising capital and they are wondering how to compare the two proposals and which one to choose. They need to make a decision fast. The documents contain two complete term sheets which are similar in structure but different in important ways. Both term sheets have advantages and disadvantages for the entrepreneurs. Choosing one over the other requires a careful analysis as well as a certain set of assumptions about the growth of Trendsetter, Inc.
This technical note addresses the taxation of employment-related income and benefits (including salary deferrals, allowances, reimbursements, automobiles, employee loans, stock options, and other taxable and non-taxable benefits) from both an employee's and an employer's point of view. A section is also included on deductions (including salesperson's expenses, travelling expenses) and other related items (moving expenses, death benefits). Several questions are included to allow students to apply the theoretical information presented in the case.
This note explains how federal taxes payable are computed for an individual taxpayer. The mechanics underlying Canada's progressive tax structure are reviewed in order to determine taxes payable and how marginal tax rates vary with income. The main tax credits available to an individual are considered as well as associated tax planning opportunities. Several short problems are provided at the end of the note.
In March 2000, plans for the initial public offering of shares in PetroChina were proceeding on schedule, and institutional investors were evaluating the deal. PetroChina was China's largest oil and gas company and an attractive play on China's continued economic growth. The imminent listing on the Hong Kong and New York stock exchanges was designed to raise revenue and produce discipline for the firm. Disclosure policies and a new management compensation system with management rewards based on stock prices suggested a focus on investor interests. At the same time, the AFL-CIO drew attention both to corporate governance concerns with PetroChina and to human and labor rights issues linked to PetroChina's parent company. Was PetroChina an investment to avoid or a risk worth taking? Also raises broader questions about the roles of the state and the private sector.
Describes Russia's troubled economic transition since 1991, highlights the problem of institutional development, and surveys the challenges President Vladimir Putin faced in 2000. The first section provides a brief synopsis of liberalization, stabilization, and privatization under President Boris Yeltsin. The second section describes the economic difficulties Russia experienced during the 1990s involving demonetization, federalism, taxes, contract enforcement, the legal system, the 1998 financial crisis, and public health. Concludes with President Putin's political and economic plans.
Surveys approaches to understanding the state; highlights the relationships between the state, order, and property; and offers an analytical framework for how states vary from place to place and over time.
The eSupplyChain group has been recently formed with Quantum Corp.'s Hard Disk Drive Group to evaluate Internet/IT-based approaches to improving supply chain performance. The Hard Disk Drive Group has endured several quarters of poor financial performance and has already embarked on a number of supply chain initiatives. The eSupplyChain group has been tasked with extending these and with understanding how to take advantage of eHITEX, a Web-based exchange just founded by a group of high-tech manufacturers, including Quantum. Quantum and the eSupplyChain group must decide which initiatives to pursue, and how to work with all involved stakeholders, both internal and external, to execute them successfully. The case also highlights the role of IT platforms both within and outside the firm.
In June 2000, Novartis reorganized its pharmaceutical business to form global business units in oncology, transplantation, ophthalmology, and mature products. The remaining primary care products continued to be managed within global functions (e.g., R&D and marketing). The new organization created a matrix structure and new roles and responsibilities for heads of business functions, CEOs of new business units, and country managers operating in over 100 countries.
When Blindstogo.com, the online project of Blinds To Go (BTG), was first proposed in mid-1999 its board of directors was lukewarm to the idea. However, after six months of operation and seeing other retailers go online and the tremendous valuation being given to dot-coms, the board was encouraging BTG to devote more resources to the project. Plans were already in place to further expand their retail store network. Senior management at BTG had received sales, spending and survey results from their retail e-commerce venture. Data obtained from the web site indicated that the people who visited the site were the same people who visited the stores. The vice-chairman of BTG wanted to evaluate the results of this online venture by examining the fit of the e-commerce project within the overall business strategy, to determine where resources should be focused.
An offspring of French catalog marketer 3 Suisses, and a popular sponsor of Tour de France, Cofidis sells consumer credit over the phone, defying conventional banking with a product policy and a communication strategy that perfectly fits the company's comparative (dis)advantages. This case describes: Cofidis' product and value proposition; the evolving competitive context and cultural complexity of the European credit market; the adaptive marketing strategy of the company, which evolved from bundling with the 3 Suisse catalog, to direct mail, to print advertising in TV guides, to bicycling sponsorship, the results of the strategy; and the challenge and opportunities posed by the Internet. Based on the lessons of the past, can we advise Michel Guillois, CEO of Cofidis, on the best way for him to preserve Cofidis' competitive edge?
In April 2000, Ford Motor Co. announced a shareholder Value Enhancement Plan (VEP) to significantly recapitalize the firm's ownership structure. Ford had accumulated $23 billion in cash reserves and under the VEP would return as much as $10 billion of this cash to shareholders. In exchange for each share currently held, the plan would give stockholders one new share plus the choice of receiving $20 in either cash or additional new Ford common shares. Shareholders electing to receive cash would be taxed on these distributions at capital gain rates. Among other things, the plan provided a means for the Ford family to obtain liquidity without having to dilute their 40% voting interest (even though they own only 5% of the shares outstanding). Students must wrestle with the following questions: Why was Ford proposing this transaction instead of a traditional share repurchase or a cash dividend? How did the interests of the Ford family factor into this decision, and what did the transaction imply about the future involvement of the family in the company? Why was Ford distributing such a significant amount of cash at this particular point in time? Did the distribution signal a change in the company's appetite for making acquisitions or future capital expenditures? If shareholders collectively elected to receive less than $10 billion in cash, how would Ford distribute the remaining cash?
Rick Melnick oversees the Student Educational Loan Fund (SELF), which provides loans to Harvard Business School students. SELF is changing the terms of student loans from variable-rate with semiannual payments to fixed-rate loans with equal monthly payments. Melnick must decide how to finance SELF in light of the new loan mix. SELF can use a wide range of interest rate derivative products to modify the terms of its existing financing.
Follows three graduating HBS students as they build a business-to-business Internet venture and highlights the challenges they confront in structuring financing terms with venture capitalists. Requires students to carefully read a six-page term sheet to identify which provisions should and should not be accepted.
Highlights how multiple rounds of financing work in practice and illustrates how terms agreed to in early-stage financing deals have an impact in later financing rounds. Also illustrates ethical issues that entrepreneurs confront as they build "dot-com" ventures.
Spin Master Toys was a Canadian manufacturer of toys ready to produce its latest product, E-Charger, an electrically powered model airplane. The operations manager had to decide which supplier should design and manufacture this new product. The timeframe from design to delivery was very short, requiring an accelerated development schedule. The company had a short list of two potential companies, both located in the major toy manufacturing district of southern China, near Hong Kong. The operations manager had to develop the appropriate criteria for this decision and evaluate the two suppliers. With relatively little information and already behind schedule, the company must make its decision in the face of considerable uncertainty. The supplemental cases Spin Master Toys (B): A New E-Chargers Supplier? (product 901D02) and Spin Master (C): Keeping the E-Chargers' Wings On (product 901D03) follow the progress and the challenges of the production of the E-Charger.
A manufacturer had been selected to produce Spin Master Toys' new product, E-Charger. Two weeks into the product design process, the operations manager was concerned because the manufacturer's progress was unsatisfactory and that, as a result, Spin Master Toys would likely miss its shipping date for the product launch. His options were to push ahead with the current supplier, try to negotiate with the other company that quoted on the contract, or look for yet another supplier. He had to evaluate the options and the impact each would have on meeting the shipping date. This is the second in a three case series that follows the selection of a manufacturer and the progress of the production of a new product. The accompanying cases are Spin Master Toys (A):Finding a Manufacturer (product 901D01) and Spin Master Toys (C): Keeping the E-Chargers' Wings On (product 901D03).