This technical note compares two methods of treating debt usage in discounted-cash-flow valuation of investment projects or companies. The note demonstrates that the approach using weighted average cost of capital (WACC) and the approach using equity residual (ER) yield equivalent results if consistent assumptions are used. General features are illustrated with specific examples, including a spreadsheet.
Set in a German automotive company, this case traces the dynamics of a consulting project team doing a high-profile strategic project as part of a company-specific international management program. With weeks to go, the team is in a shambles, the project presentation a disaster, and the team dynamics terrible. A decision about what to do with the team must be made immediately by the project director. The case focuses on how to make a tough management call with serious implications as well as on how to intervene constructively in a cross-functional, international team. See also the B case (UVA-OB-0706).
This case reports the actions taken and personal reflections of team members described in Case A, "Making the Tough Team Call (A)" (UVA-OB-0705). Set in a German automotive company. In the A case, a decision had to be made immediately by the project director about what to do with this team. The B case focuses on making a tough management call with serious implications as well as on how to intervene constructively in such a cross-functional, international team.
Presents a synopsis of High Flyers, by Morgan McCall. Offers a method for identifying and training managers with potential--to build management bench strength.
An online resource for independent professionals must create a marketing plan to build brand awareness. Along with the tone and message of the ads, the executives must choose from several different treatments and media, keeping within their budget.
Links two very useful pieces of management research--resource allocation processes as studied by Bowen and Burgelman and the aggregate project plan expounded by Wheelwright and Clark.
This case focuses on a fictional company's satellite launch vehicle decision. The basis analysis requires the student to construct a decision tree using discrete probabilities. Further analysis can include the value of information and the value of control. The scope of the decision can include Monte Carlo simulation once continuous probabilities are added to the base case. This case has been used as a quiz.
How can manufacturers of styled products analyze and predict consumers' style preferences more effectively? Based on insights from a decade of desk and field research, the authors outline a model for facilitating style decisions that balance extreme innovation with the least market risk. The core concept in the model is adoption propensity (AP): the quantifiable willingness of an individual consumer to adopt new and different styles. By relating style appeal to consumers' AP over time, one can construct a model of the style acceptance cycle that fits the research data and provides predictive power in the development phase of a style. The model suggests the importance of separating a style's total sample appeal into that of consumers with high and low APs. Otherwise, there is no way to tell the difference between a promising cycle marked by steadily increasing style acceptance and the opposite one of a premature "has-been." There is no such thing as a universal category of early adopters, and they can be identified for a specific product category only by interview or similar methods. Early adopters alone tell us nothing about a style's potential; more important is the absolute difference in acceptance between high and low APs--if both early and late adopters like a style, then it's fine for today, but has no future. Wherever styled products are targeted to the mass market, this type of pre-market testing should become a normal function of product development.
Sarah Simons, an investment analyst for the retail industry, has just received the Sears, Roebuck and Co. 1999 annual report. Sears has had trouble in the past with the collectibility of receivables from customer credit purchases using the Sears card. These problems have led to past write-offs, as well as legal problems, which have depressed the stock. Sarah must evaluate the provisions that the company has made for possible problems in collecting the receivables. This case provides background information on Sears' business and past problems, an introduction to accounting for contingencies, and financial information from public sources on Sears and the industry.
As it entered the 21st century, the Polish government faced the dilemma of how to develop an optimal telecom structure and related services. For decades, the government owned and operated a national telecom monopoly, but in the late 1990s they gradually allowed the entry of some competitors, many of whom brought new technologies. The government had undertaken a major privatization program, and it faced the question of whether, and how, it should privatize; yet privatization would have to be accompanied by ongoing regulation in order to ensure that managerial decisions were made in the interests of the nation, as a whole. This challenge of continual government intervention could reduce the attractiveness of acquiring the government-owned agency, in spite of its market dominance. Students will have the opportunity to: analyze the telecommunications industry in Poland; determine the technological changes that will impact the future of telecommunications throughout the world and the Polish telecom industry; examine the current regulatory environment in the Polish telecommunication market; evaluate the current state of, and the opportunities in, e-business in Poland and the rest of Europe; and, develop a comprehensive action plan for a joint venture partner.
Presents results of a consumer survey used to guide selection of a new corporate brand name. Four alternative names are tested for their ability to communicate desired company attributes to consumers. The pros and cons of developing brand names at corporate versus subunit levels are also considered. Strategic recommendations for the company's brand architecture and its unifying corporate values provide background for the naming decision at hand.
Kana is a young Internet software company wondering how it should react to the rapid emergence of Application Service Providers (ASPs), firms that host software applications for customers who can reach those via the Internet. ASPs may be a new channel of distribution for software vendors. Issues of channel design, channel conflict, and resource allocation are all addressed.
This case contains common-size balance sheets and financial ratios for 10 companies, each representative of a different industry. Students are asked to identify the industries from the structure of the financial statements.
Introduces students to the concepts of inventory valuation (LIFO and FIFO) using a simple example. They then get the chance to apply this knowledge to help understand the inventory footnote for California Steel Industries.