New United Motors Manufacturing, Inc. (NUMMI) is a joint venture between General Motors (GM) and Toyota. Begun in 1983, NUMMI continues to be one of the most efficient of U.S. manufacturing plants and produces automobiles that are at the top of the quality ratings. The case describes how Jamie Hresko, an experienced GM manager, spent several weeks at NUMMI as an operator working on the assembly line. Uses background data and Jamie's experience to illustrate how the NUMMI system operates. Designed to explore how the alignment of HR practices can produce extraordinary results in a manufacturing facility. Challenges the reader to explain why NUMMI is so successful and whether this approach can be used in other settings.
This case demonstrates how the international capital markets were used to obtain financing for the expansion of limited access highways in Mexico. Structured as a Rule 144A transaction, the offering securitized the future Mexican Peso-denominated toll revenues of two toll roads to support US dollar denominated securities. From the sponsor's point of view, the deal provided a means to remove indebtedness from its balance sheet while retaining control of the assets. Investors purchased high-yield securities supported by two toll roads with an operating history (and no construction risk). The drastic devaluation of the peso in December 1994 more than doubled the liability in US dollars and offers an opportunity to consider the ability of the Trust to continue to support the notes. This case allows students to focus on the financing of private infrastructure investments through the capital markets. It is designed to teach students about the risks that are customary in cross-border project financing arrangements, where lenders have limited or no recourse to the project sponsors. By looking at the financing structure devised for this transaction, students can see how specific provisions trap revenues in the Trust and protect the interests of investors. HKS Case Number 1485.0
As Levi-Strauss implemented its custom-fitted jeans offering, the traditional value chain for clothing manufacturing and retailing was transformed. This case allows students to explore the subtleties of this transformation and the management implications.
The president of Joong-Ang Development Company was concerned with the level of service quality at Yongin Farmland, the company's theme park located just south of Seoul, South Korea. Despite the service quality program he had initiated since he assumed his present position 14 months ago, service quality seemed to be less than that of its competitors. He wondered if he had made the right moves, how Farmland could achieve international service quality standards, whether it would be worth doing, and if it would really provide a sustainable competitive advantage. This case and its companion (B) case, 9A97D017, are intended for use in a service quality module of a service management course.
In July 1999, the Australian Wheat Board (AWB), a statutory national and international grain marketing organization, would become grower-owned. As a private corporation, the AWB would no longer receive government borrowing guarantees and would have to rely on its own capital base for investments. Along with a new structure, the AWB's wheat export monopoly was in jeopardy as domestic and international grain traders called for open competition. The case describes CEO Murray Roger's challenges in navigating the AWB into a new era.
Trilogy is a rapidly growing company that is taking a highly unusual approach to capturing an enterprise software market (the "selling chain") that is also the target of much larger competitors. The case offers students an opportunity to assess the company's methods, which the company sees as necessary to satisfy extremely ambitious goals but that some may consider chaotic and unwise.
This is an MIT Sloan Management Review article. Why has the strategy star begun to dim? Why is strategy no longer a "big idea" in most companies? According to the author, strategy innovation is key to creating new wealth. Only those companies that are constantly able to reinvent themselves will survive in a discontinuous world. Yet, no one seems to know how to develop innovative strategies that create wealth. The author calls for the development of a theory of strategy innovation and offers several propositions: that strategy is emergent, much like life itself; that strategists have been working on the "strategy," rather than on the preconditions that give rise to strategy innovation; that strategy is poised on the border between perfect order and total chaos; and that great strategy is both luck and foresight. The author goes on to offer five preconditions for the emergence of strategy: First, the entire organization, not just top management, should have a voice in creating strategy. Second, conversations about strategy must cut across industries and organizations so that knowledge can be combined in new ways. Third, people will embrace change when they see opportunities for rewards and growth. Fourth, managers must help companies reconceive themselves, customers, competitors, and opportunities. Finally, companies must do some market experimentation to determine which new strategies work.
This is an MIT Sloan Management Review article. Commitment and competence are embedded in how each employee thinks about and does his or her work and in how a company organizes to get work done. It is, according to the author, a firm's only appreciable asset. As the need for intellectual capital increases, companies must find ways to ensure that it develops and grows. There are five tools for increasing competence in a firm, site, business, and plant: hire outside, new talent; invest in employee learning and training; hire consultants and form partnerships with suppliers, customers, and vendors to share knowledge, create new knowledge, and bring in new ways to work; remove employees who fail to change, learn, and adapt; and find ways to keep valuable workers. Companies also need to foster employees who are not only competent but committed. Employees with too many demands and not enough resources to cope with those demands quickly burn out, become depressed, and lack commitment. A company can build commitment in three ways: First, reduce demand on employees by prioritizing work, focusing only on critical activities, and streamlining work processes. Second, increase resources by giving employees control over their own work, establishing a vision for the company that creates excitement about work, compensating workers fairly, sharing information on the company's long-range strategy, and providing new technologies, among other things. Third, turn demands into resources by exploring how company policies may erode commitment, ensuring that new managers and workers are clear about expectations, understanding family commitments, and having employees participate in decision making.
This is an MIT Sloan Management Review article. Why do companies frequently make bad investment decisions and continue to blunder, even after the weaknesses in their capital budgeting analyses are evident? Because, according to the authors, they don't integrate capital budgeting into their overall strategy. The authors' capital budgeting framework has six key features: it is dynamic, it is integral to the firm's strategy, it recognizes sequences of options, it is cross-functional, it aligns employee compensation with capital allocation, and it emphasizes performance-based training. The three steps of this framework should take place simultaneously: First, identify a status quo strategy and how it must perform to maximize shareholder value. The strategy helps the company determine the trade-off in capital budgeting between cycle time and risk. Second, establish a system for evaluating projects and preparing capital allocation requests that is consistent with the strategy. Finally, develop a culture consistent with the strategy and the evaluation system.
This is an MIT Sloan Management Review article. As companies continue to downsize, they need to consider how to maintain their employees' morale to realize gains such as higher productivity and more flexibility. Those who survive layoffs and the managers who must implement those layoffs frequently exhibit reduced commitment. Their trust in the company may be destroyed and they may feel powerless in the wake of top management's actions. The authors propose a four-stage approach to downsizing, gleaned from interviews and surveys, that will retain workers' trust and sense of empowerment. First, consider downsizing only as a last resort. Also downsizing should be part of a clearly defined, long-term vision that fits into the company's overall strategic plan. Second, consider all stakeholders' needs--survivors, laid-off employees, the community, local and national press, and any affected government agencies. The company should form a cross-functional team to represent all stakeholders' interests. Third, at the announcement stage, senior managers should explain the necessity of the downsizing and how it helps the firm in the long term. The fourth stage, implementation, is the most important. Management should communicate frequently and be open and honest. The company should do its best to ensure that laid-off employees are employed elsewhere and offer them generous benefits packages. It should seek remaining employees' ideas about restructuring work processes and provide any necessary training.
Five years short of retirement, Alvarez is an experienced but uneducated mechanic working for a Venezuelan manufacturer of aluminum building products. In the A case, new North American management is concerned about Alvarez's grumbling and egocentric behavior and is pondering the impact of firing him. In the B case (UVA-OB-0661), management decides to fire Alvarez at a high cost. In the C case (UVA-OB-0662), Alvarez dies of a heart attack soon after being fired, adding poignancy to the decision to fire him. This case series provides an excellent opportunity to explore self-concepts, methods of personal mastery, cross-cultural management, and issues of managing personal change.
Shanghai Jahwa is the largest domestically owned Chinese manufacturer of cosmetics and personal care products. In recent years, it has been part of a booming market with growth rates of 35 per cent per year. This spectacular growth rate has attracted and been fuelled by the entry of major multinationals, including Unilever, Procter & Gamble, Shiseido, Kao, and others. The marketing challenge for Shanghai Jahwa is to carve out viable and defensible positions in the marketplace, in the face of competition from some of the most powerful global players in the industry. The case illustrates management issues with respect to extending a very successful brand of Chinese eau-de-toilette named into the shower cream product category. Unilever already has a strong and established shower cream on the market under its well-known Lux brand. In addition, other international players are entering in the market. The case calls for the development of a brand strategy, taking into consideration market position, brand extension, and competitive issues. A follow-up case (9A98A024) is available.
Shanghai Jahwa is the largest domestically-owned Chinese manufacturer of cosmetics and personal care products. The (A) case, 9A98A023, illustrates management issues with respect to extending a very successful brand of Chinese eau-de-toilette named into the shower cream product category. This case provides an update of the market; specifically, the new competitive situation faced by Jahwa in the shower cream market in 1996.
Shanghai Jahwa is the largest domestically owned Chinese manufacturer of cosmetics and personal care products. In recent years, it has been part of a booming market with growth rates of 35 per cent per year. This spectacular growth rate has attracted and been fuelled by the entry of major multinationals, including Unilever, Procter & Gamble, Shiseido, Kao, and others. The marketing challenge for Shanghai Jahwa is to carve out viable and defensible positions in the marketplace, in the face of competition from some of the most powerful global players in the industry. This case illustrates management issues relating to a successful brand of cream. The two main flagship products, the Maxam Tremella Pearl Cream and the Maxam Hand Cream, have evolved in very different directions. The Tremella Pearl Cream is still popular in rural areas and is considered a mainstay of rural cosmetic use. The Maxam Hand Cream, on the other hand, is primarily an urban brand which meets the need of urban women looking to soften their hands after they have been exposed to the cold and to detergents. However, in urban areas the brand is losing its appeal, as foreign competitors roll out their international brands and products. The challenge is to renew the Maxam brand without losing the loyal customers of Tremella Pearl Cream.
The owner of Jeffries Hardwood Flooring is examining whether his current production set-up can handle an increase in output. He will have to evaluate his operation: examine the production process and identify it appropriately; given data, calculate the capacities of each workstation; identify the capacity/production constraints and bottlenecks; and make recommendations. This exercise should be used after an introduction to process identification and process analysis.
Beijing Mirror Corporation owned the patent for a newly invented rearview mirror which eliminated the usual blind spot. At issue for the company was how to introduce the product to both the domestic and international markets. More specifically, should the company try to commercialize the technology independently, or via joint venture? Should they do so with a local or foreign company? What pricing, promotional and distribution approaches made sense? What is their resource position relative to these decisions?
A diversified global interests company, which is financed through medium and long-term loans, is preparing a US$1 billion bond offering. Students will have to figure the individual bond price, including the possible cost of the issue, while considering the receptiveness of the market, given the change in sovereignty over Hong Kong.