The manager of the West Coast Division plant of The Universal Pulp and Paper Co. Ltd. had just been informed that the head office had received several complaints from customers concerning product quality and late deliveries. He had two weeks to determine the cause of these problems and decide what to do.
In the wake of major competitive moves, CEO Tim Koogle and his senior team at Yahoo!, an Internet portal, must decide whether and how to adjust their strategy. Following deals between AOL and Netscape, Excite and @Home, Infoseek and Disney, and Snap and NBS, Yahoo! faces the prospect of being the last portal without a significant partner. Students must grapple with the benefits and costs of integration in the rapidly changing world of the Internet. Special emphasis is given to the interactions among Yahoo!'s functions and the effects of those interactions on firm flexibility.
A group of Trojan Technologies Inc. employees grappled with the issue of how to structure the business to effectively interact with their customers and manage the company's dramatic growth. The London, Ontario manufacturer of ultraviolet water disinfecting systems believed that strong customer service was key to its recent and projected growth, and had come to the realization that changes would have to be made to continue to achieve both simultaneously. The group hoped to develop a structure to address these issues. The executive vice-president was to lead the development and implementation of the new structure. The transition to the new structure was to coincide with the new fiscal year.
Two managers attending a financial management course are attempting to compute the cost of capital for Sun Hung Kai Properties Limited, a well-known local Hong Kong firm. The two managers are somewhat confused about the costs of various sources of capital, the calculation of the overall corporate cost of capital, and the appropriate use of the hurdle rate.
The plant manager at Birmingham Megatron's manufacturing operation was looking to modify an existing production unit in order to expand output for an additional contract. This new contract was still at the bidding stage, and cost accounting had proposed a bid of $64.00/block for the required 1,400 blocks/week. She wondered if she could afford to offer a more competitive price in order to win this contract.
During the 1990s, CEMEX went from being a purely domestic producer of cement and ready mix in Mexico to the third largest firm in the rapidly globalizing cement industry, with operations in North and South America, Western Europe, and Southeast Asia, as well as a large trading operation. CEMEX's first moves to internationalize itself, by exporting to the United States, fell afoul of an antidumping ruling. It then began a series of acquisitions, first in Spain and then in Central and South America. This case describes the acquisitions and the process of post-merger acquisition. It raises the issue of whether the economic crisis in Southeast Asia presents opportunities for further expansion. Can be used to examine the logic and process of internationalization in a commodity business and the selection of markets to enter. Can also be used to examine the basis for globalization of what many would think of as a very local business. Finally, it presents an opportunity to examine the logic of global competitive moves, as CEMEX's entry into Spain, which was intended explicitly to counter a European rival's aggressive expansion in Mexico.
Designed to expose potential case writers to the process of framing a case, interviewing a case protagonist, and actually writing the case. This case is the introduction to the case site and is designed to be paired with a video in which the faculty customer for the case discussed his views on the case with the casewriter.
Explores the development of the Chinese auto industry and of Shanghai Volkswagen (SVW), a successful joint venture in China. Established in 1984, SVW is a joint venture between Volkswagen of Germany and the Shanghai Automobile Industry Corp. (SAIC). One key element of SVW's strategy to date has been to work closely with local suppliers, many of which are controlled by SAIC. SVW is the leading auto producer in China, but the competitive landscape is changing rapidly, and SVW's traditional strengths could prove to be impediments in the future.
Stock Research Group (SRG) is an information broker. SRG's primary business is serving as a collection point for information useful to investors seeking to invest in small-cap mining companies. SRG, in effect, pulls potential investors to its site, then channels them to the specific sites of companies in which the investors may have an investment interest. SRG's revenue comes from the mining companies, who generally pay on an impression basis (for "eyeballs" delivered to their web pages). The resource companies are willing to pay for this, since on their own they are much less likely to attract much investor traffic. SRG is also in the business of developing web pages for these small-cap resource firms, since generally the companies do not have in-house expertise to create and maintain their web presence. SRG thus represents a new kind of business--the specialized infomediary, or information broker. SRG is doing quite well financially, something that cannot be said of many web-based companies. SRG's main challenges involve managing growth, deciding on appropriate future directions, and determining how best to lever the "virtual community" they have created.
Tom Barnes, executive director of Asiasports Ltd., was evaluating several options for growth for the sports management company. Asiasports' principal sports properties were the South China Ice Hockey League and the World Ice Hockey 5's tournament, both based in Hong Kong. Among the alternatives available: Barnes could develop hockey in other countries in Southeast Asia, he could acquire new sports properties, or he could expand into in-line hockey promotion in Hong Kong.
In 1992-93, British Petroleum plc, Britain's fourth-largest of the great international integrated oil companies, faced a major crisis. The company was experiencing its first losses in its eighty-year history, while morale was battered by downsizing and organizational upheaval.
An assistant account manager is evaluating a loan request from a small trucking company that is planning to expand its fleet in order to bid for a large trucking contract. The decision is centered on the firm's past performance and growth record. Particular attention is paid to the firm's chances of winning the trucking contract and its ability to service the increased debt. New highway safety regulations for trucking companies also play a role in the case.
An elementary treatment of all aspects of marketing strategy. Intended as a supplement to case discussions in the early stages of an introductory marketing course. A rewritten version of an earlier note.
Most executives have a big, hairy, audacious goal. They write vision statements, formalize procedures, and develop complicated incentive programs--all in pursuit of that goal. In other words, with the best of intentions, they install layers of stultifying bureaucracy. But it doesn't have to be that way. In this article, Jim Collins introduces the catalytic mechanism, a simple yet powerful managerial tool that helps translate lofty aspirations into concrete reality. Catalytic mechanisms are the crucial link between objectives and performance; they are a galvanizing, nonbureaucractic means to turn one into the other. What's the difference between catalytic mechanisms and most traditional managerial controls? Catalytic mechanisms share five characteristics. First, they produce desired results in unpredictable ways. Second, they distribute power for the benefit of the overall system, often to the discomfort of those who traditionally hold power. Third, catalytic mechanisms have teeth. Fourth, they eject "viruses"--those people who don't share the company's core values. Finally, they produce an ongoing effect. Catalytic mechanisms are just as effective for reaching individual goals as they are for corporate ones. To illustrate how catalytic mechanisms work, the author draws on examples of individuals and organizations that have relied on such mechanisms to achieve their goals. The same catalytic mechanism that works in one organization, however, will not necessarily work in another. Catalytic mechanisms must be tailored to specific goals and situations. To help readers get started, the author offers some general principles that support the process of building catalytic mechanisms effectively.
Despite 30 years of evidence demonstrating that most acquisitions don't create value for the acquiring company, executives continue to make more deals, and bigger deals, every year. There are plenty of reasons why value isn't created, but many times it's simply because the acquiring company paid too much. It's not, however, that acquirers pay too high a price in an absolute sense. Rather, they pay more than the acquisition is worth to them. What is that optimum price? The authors present a systematic way to arrive at it, involving several distinct concepts of value. In today's market, the purchase price of an acquisition will nearly always be higher than the intrinsic value of the company--the price of its stock before any acquisition intentions are announced. The key is to determine how much of that difference is "synergy value"--the value that will result from improvements made when the companies are combined. This value will accrue to the acquirer's shareholders rather than to the target's shareholders. The more synergy value a particular acquisition can generate, the higher the maximum price an acquirer is justified in paying. Just as important as correctly calculating the synergy value is having the discipline to walk away from a deal when the numbers don't add up. If returns to shareholders from acquisitions are no better in the next ten years than they've been in the past 30, the authors warn, it will be because companies have failed to create systematic corporate governance processes that put their simple lessons into practice.
Hiring executives has always been a daunting task--and today's economy makes it tougher than ever. The global scope and breakneck pace of business, the shrinking supply of job candidates, and the constant shift of organizational structures have increased the stakes exponentially; one wrong hire can quickly derail a company. Yet recent studies indicate that between 30% and 50% of executive-level hires end in firings or resignations. What makes hiring go wrong so often? And how can executives substantially improve the outcome of the process? This article provides some surprising answers to those questions. Fernandez-Araoz presents ten common hiring traps and many real-world examples of how those traps have scuttled business plans in a variety of industries worldwide. A large consumer goods company, for instance, slipped into the delegation gaffe trap when it handed over the screening and interviewing process to a mismatched team of managers that had an agenda different from the CEO's. And the ignoring emotional intelligence trap tripped up a U.S. telecommunications company that hired a CEO with a great track record--only to fire him less than a year later when his lack of cross-cultural social skills was discovered. Hiring well is a strategy--perhaps an organization's most important one, the author says. To sidestep the hiring traps, he suggests ways to systematically assess the company's needs and to determine how those needs mesh with the open job description--before candidates walk through the door. Fernandez-Araoz's search strategy incites managers with hiring responsibilities to be creative, determined, and courageous when embarking on a candidate search.
In all economies, financial systems perform a basic set of functions, which include the need to pool resources, to save and borrow, to make payments, and to collect information. And yet, in rich and poor communities, the ways in which those needs are met differ greatly. In part, this is because traditional financial service firms have found it too expensive to serve poor neighborhoods. But it is possible to work with less traditional institutions to meet those needs. According to the authors, inner cities face two core impediments to financial services: lack of economies of scale and lack of good information. An inner-city investor with $500, for instance, does not warrant much attention from financial service firms. But twenty thousand parishioners investing $500 apiece can collectively wield $10 million. By partnering with strong social organizations such as churches, financial institutions can benefit both themselves and investors. A lack of good information concerning credit histories--a common problem in poor communities--also makes low-income customers much less appealing to financial institutions. Churches can help close such information gaps by vouching for parishioners' reliability. There are certainly problems that come with mixing business and religion, as the authors concede. Ethical issues, trust issues, and issues of experience all come to mind. But understanding that functions need to dictate the structure of the financial service sector may be the first step toward achieving inner-city prosperity.