Describes the emergence and subsequent decline of the political risk analysis industry. Discusses what political risk means for multinational firms and various ways in which firms have tried to analyze and grapple with these risks.
This case details the sexual harassment case brought against Mitsubishi Motor Manufacturing of America by nearly 300 female employees in April 1996. The recommendations developed for the company by former U.S. Labor Secretary Lynn Marten are presented. In response to the harassment controversy, Marten was asked to review the plant's policies and to formulate a plan for a "model workplace."
Marvel Entertainment Group is the leading comic book publisher in the United States, with superheros like Spider-Man, the Incredible Hulk, the X-Men, and Captain America. It is also one of the leading manufacturers of sports and entertainment trading cards under the Fleer and Sky Box brand names. In the mid-1990s, it experienced sharp declines in both businesses, causing it to file for bankruptcy in December 1996. This case is set in late January 1997, shortly after Marvel filed its reorganization plan with the bankruptcy court and approximately one month before creditors will have to vote on the plan at the confirmation hearing. Two of the most prominent corporate raiders of the 1980s are pitted against each other for control of the company. On one side is Ronald Perelman, who controls Marvel through his MacAndrews & Forbes holding company. On the other side is Carl Icahn, who controls 25% of Marvel's public debt. Icahn and the other bondholders must decide whether to accept Perelman's plan, to reject it in favor of their own plan, or to sell their bonds before the confirmation hearing. Perelman must decide whether to change the plan in response to the debtholders' threats or to wait and see what happens at the hearing. A rewritten version of another case.
In mid-1995, Mr. Melchor Orosa, general manager of Qualibrands (QB), a Philippine company with interests in the auto components industry, must decide what to recommend to Mr. Toby Gan, the owner of QB, regarding a proposed four-way joint venture between QB, Autobelt (Malaysia), Autoliv (Sweden), and SMACA (Philippines) to produce seat belts in the Philippines. The financial projections look good, but Mr. Orosa is concerned that other aspects of the proposed joint venture might lead to the failure of the joint venture either in total or in reaching its financial and operational goals.
Celestica's memory products group is considering relocating and/or reconfiguring its production facilities. The Memory Products' general manager, has asked the process control engineer, to investigate the possibilities. One option being considered is moving from a process to a cellular layout. Both moving and reorganizing have attractive benefits as well as significant risks and costs.
Tom Roberts, director of audit operations, is responsible for assigning individual accountants to projects. Describes the current scheduling and assignment system, and the specific concerns of two staff members. Are any changes required in the system?
Management is considering its options for future international expansion. Koc is the dominant supplier of white goods (kitchen appliances) in Turkey and has been increasing its export efforts. As lower import tariffs invite foreign competitors to enter Turkey, Koc must decide how to balance defense of its domestic market share against further foreign expansion.
Precision Controls is a Minnesota-based manufacturer of electronic control devices. To enhance its product line, Precision would like to establish an artificial intelligence research group, either through internal development or, preferably, by merging with or acquiring a firm that has strong artificial intelligence capabilities. Automated Intelligence Corp. (AIC), a New York-based research and development firm specializing in artificial intelligence, is an attractive candidate for a merger. For accounting reasons, a merger--if it is to take place--must be accomplished through an exchange of shares. It is up to representatives of both companies to negotiate a mutually agreeable ratio at which all of the shares of AIC can be exchanged for shares of Precision. A rewritten version of an earlier case.
Precision Controls is a Minnesota-based manufacturer of electronic control devices. To enhance its product line, Precision would like to establish an artificial intelligence research group, either through internal development or, preferably, by merging with or acquiring a firm that has strong artificial intelligence capabilities. Automated Intelligence Corp. (AIC), a New York-based research and development firm specializing in artificial intelligence, is an attractive candidate for a merger. For accounting reasons, a merger--if it is to take place--must be accomplished through an exchange of shares. It is up to representatives of both companies to negotiate a mutually agreeable ratio at which all of the shares of AIC can be exchanged for shares of Precision. A rewritten version of an earlier case.
Focuses on David Dodson's efforts to purchase Auto Palace (ADAP), an auto parts retailer. His negotiations with the seller and investment bankers are examined. Students are asked to recommend how he should proceed in the final negotiation meeting.
Founded in 1992, Grand Junction produced a very competitive product in the emerging ethernet desktop switching market. Howard Charney, CEO and a founder of Grand Junction, had spent the summer of 1995 in meetings and negotiations with his senior management team, his investment bankers, and representatives of Cisco to discuss whether Grand Junction should be acquired by Cisco or issue stock in an initial public offering (IPO). Prior to being solicited by Cisco, Charney had not really given any thought to being acquired. Grand Junction was on a fast growth curve, the IPO market was hot, and he and the other founders had planned from the beginning to take the company public. Yet Cisco was very interested, and although it had required a lot of work to get Cisco to a reasonable price, it was possible that the two companies would reach an agreement. Charney, however, was torn between the two options--he wondered which was financially more attractive, how his employees would react, and whether going public was really so important.
When markets turn hostile, it's no surprise that managers are tempted to extend their brands vertically--that is, to take their brands into a seemingly attractive market above or below their current positions. And for companies chasing growth, the urge to move into booming premium or value segments also can be hard to resist. The draw is indeed strong; and in some instances, a vertical move is not merely justified but actually essential to survival--even for top brands, which have the advantages of economies of scale, brand equity, and retail clout. But beware: leveraging a brand to access upscale or downscale markets is more dangerous than it first appears. Before making a move, then, managers should ascertain whether the rewards will be worth the risks. In general, David Aaker recommends that managers avoid vertical extensions whenever possible. There is an inherent contradiction in the very concept because brand equity is built in large part on image and perceived worth, and a vertical move can easily distort those qualities. Still, certain situations demand vertical extensions, and Aaker examines both the winners and the losers in the game.
Modularity is a familiar principle in the computer industry. Different companies can independently design and produce components, such as disk drives or operating software, and those modules will fit together into a complex and smoothly functioning product because makers obey a given set of design rules. As businesses as diverse as auto manufacturing and financial services move toward modular designs, the authors say, competitive dynamics will change enormously. Leaders in a modular industry will control less, so they will have to watch the competitive environment closely for opportunities to link up with other module makers. They will also need to know more: engineering details that seemed trivial at the corporate level may now play a large part in strategic decisions. Leaders will also become knowledge managers internally because they will need to coordinate the efforts of development groups in order to keep them focused on the modular strategies the company is pursuing.
On its 75th anniversary, HBR asked five of the business world's most insightful thinkers to comment on the challenges taking shape for executives as they move into the next century. 1) In "The Future That Has Already Happened," Peter Drucker examines the effects of the increasing underpopulation of the world's developed countries. 2) Esther Dyson's article "Mirror, Mirror on the Wall" reveals the mind shift executives will need to make in a networked world, where companies will be known for what they do rather than for what they say. 3) The old language of property and ownership no longer serves executives, writes Charles Handy in "The Citizen Corporation." 4) Technology has given executives more information than today's machines can help them understand, explains Paul Saffo in "Are You Machine Wise?" 5) Peter Senge's article "Communities of Leaders and Learners" urges executives to reject the myth of leaders as isolated heroes and instead to build a community of leaders.
Millions of people are communicating at home and at work in an explosion of connectivity that threatens to undermine the established value chains for businesses in many sectors of the economy. What will happen, for instance, to dominant retailers such as Toys "R" Us and Home Depot when a search through the Internet gives consumers more choice than any store? What will be the point of cultivating a long-standing supplier relationship with General Electric when it posts its purchasing requirements on an Internet bulletin board and entertains bids from anybody inclined to respond? The authors present a conceptual framework for approaching such questions--for understanding the relationship of information to the physical components of the value chain and how the Internet's ability to separate the two will lead to the reconfiguration of the value proposition in many industries.
The rise of the World Wide Web provided one of the most challenging environments for product development in recent history. The market needs that a product is meant to satisfy and the technologies required to satisfy them can change radically--even as the product is under development. In response to such factors, companies have had to modify the traditional product-development process, in which design implementation begins only once a product's concept has been determined in its entirety. In place of that traditional approach, they have pioneered a flexible product-development process that allows designers to continue to define and shape products even after implementation has begun. This innovation enables Internet companies to incorporate rapidly evolving customer requirements and changing technologies into their designs until the last possible moment before a product is introduced to the market.
In our personal life, experience is often the best teacher. Not so in corporate life. After a major event--a product failure, a downsizing crisis, or a merger--many companies stumble along, oblivious to the lessons of the past. Mistakes get repeated, but smart decisions do not. Most important, the old ways of thinking are never discussed, so they are still in place to spawn new mishaps. In an effort to solve this problem, a group of social scientists, business managers, and journalists at MIT have developed and tested a tool called the learning history. It is a written narrative of a company's recent critical event, nearly all of it presented in two columns. In one column, relevant episodes are described by the people who took part in them, were affected by them, or observed them. In the other, learning historians--trained outsiders and knowledgeable insiders--identify recurrent themes in the narrative, pose questions, and raise "undiscussable" issues. The learning history forms the basis for group discussions, both for those involved in the event and for others who also might learn from it.