In 1991, Warner-Lambert Company, a firm involved in three core businesses-ethical pharmaceuticals, nonprescription health care products, and confectionery-has just completed its most successful year ever. However, Mel Goodes, the new CEO, is worried that the current organizational structure is inconsistent with an increasingly global business environment. The key issue in the case is how to shift a classic multidomestic, country-oriented firm to a more responsive, tighter-linked global structure. This should lead to a discussion of the pros and cons of running a business on a global versus local basis. The issue becomes quite complex with Warner-Lambert because of the differences between its three core businesses.
This case concerns the devising of a financial strategy for a small, rapidly growing European document reproduction service firm. As of March 1996, the entrepreneurs have proved the viability of their store concept in Lisbon, Portugal, and seek to raise capital in order to expand across Europe. Ultimately, the founders seek to take the firm public by the year 2000. The task for the student is to assess the capital requirements necessary to support the ambitious growth plan, to value the firm, and to map a program of financings. Specifically, the founders anticipate selling common equity in a private offering in the near future. The student must propose a price and the number of shares for the private offering. The question of voting control becomes a key consideration in the structuring of next-round financing and subsequent rounds.
Describes Mexico's political and economic system in the 1960s and 1970s. Focuses on: 1) the causes of the debt crisis in 1982; 2) elements of President de la Madrid's restructuring efforts between 1982-88; President Salinas's attempts to complete restructuring and bring the macroeconomy into a period of high growth with low inflation; NAFTA; and the events leading up to Mexico's 1995 currency crisis.
Viacom reached a powerful position in the global entertainment industry through skillful and very bold acquisitions. Now its further expansion is challenged by the moves of Rupert Murdoch's News Corp. Different businesses within Viacom have contradictory positions on how to deal with major opportunities and how Viacom top management should manage the decision-making process.
Describes the United Kingdom credit card industry in the late 1980s, which was really three businesses: a cashless transaction business for merchants, a cashless transaction business for card holders, and a credit business for card holders. At the time of the case, overall profitability has dropped significantly. Added value analysis is used to identify that one of the three businesses is unlikely to remain profitable (cashless transactions for merchants). With this loss of profitability, the case then considers how to limit the losses in the one business that had already been unprofitable (cashless transactions for card holders). This latter step is a problem in interactive decision theory in which players have different perceptions about the game, and these perceptions, in turn, may be influenced by each other.
In February 1994, the senior management team at Continental Cablevision received the final joint-venture agreement from Fintelco, a potential partner in Argentina. The tasks for the student are to review the terms of the agreement, the outlook for the Argentine economy, and the corporate cultures at both companies to decide whether Continental should sign the agreement.
Metalco is a large Australian mining company. It has a rocky history in terms of its effective use of information systems (IS), and there is widespread dissatisfaction in the company concerning IS and the IS department. The recent resignation of the chief information officer led to the decentralization of the IS function, to move closer to the operating departments. At the same time, one of the division heads has proposed that the company buy the SAP enterprise-wide system, to replace an earlier internal system that had been poorly received. The price tag for SAP is very high, $23 million. Implementing it would also require substantial changes in company processes. In light of its history, recent IS decentralization, and the high SAP price tag, the company is faced with making the decision of whether to go ahead with SAP. An appendix in the case provides extensive information on the procedure used to evaluate SAP and results thereof.
A U.S.-based manufacturer of imitation Navajo rugs is about to initiate manufacturing operations offshore for the first time-in this case-in the United Kingdom. In the financial planning stages, the firm's principals discuss tradeoffs in parent earnings and subsidiary earnings/expenses, focusing on the various intra-firm cash flows common between sub and parent (material transfers, royalties and license fees, intra-firm debt, etc.). The focus of the case is to determine the preferred combination and form of rates and charges between parent and subsidiary to achieve the firm's financial goals.
Display Technologies, Inc. (DTI) is a new joint venture between Toshiba and IBM Japan that is manufacturing the most advanced form of flat panel displays. With success in achieving significant production volumes, DTI has been asked to double its output as quickly as possible. Mr. Shima, DTI's president, must decide among three options, each of which has immediate and long-term strategic consequences.
Presents a framework for analyzing strategic decisions. Takes as given the practice of value-based management whereby managers use value as a primary criterion when making financial, strategic, or investment decisions. Through a simple valuation model, it shows how equity value is related to three value drivers profitability, advantage horizon, and reinvestment. Also presents a numerical example to illustrate the model as well as empirical evidence to support the relation between value creation and the value drivers.
Examines the prospects for private management in U.S. public schools. Focuses on the education and business strategies of firms seeking to expand as a result of charter school legislation that allowed for-profit entities to enter and compete for students with access to public funding. Focuses on the business and education strategies of three leaders in for-profit education, the Edison Project, Sabis International, and Education Alternatives, Inc. (EAI). Asks whether any of these firms have devised a sustainable strategy for the opportunities and challenges that lay ahead. Uses the education sector to suggest the business imperative not only to devise a strategy to create value, but to establish an overall structure that allows firms to claim a predictable portion of the value they create. Focuses on the opportunities presented by charter school legislation.
In late 1994, James Down, member of Mercer's Executive Committee, has to decide whether or not he should push ahead with the writing and publication of a book on growth--at a time when the more successful business publications focus on reengineering and cost cutting. He sees this as an opportunity to position Mercer in the consulting market and align the organization--itself a result of several mergers--around a common platform. He is facing resistance within the firm, however, especially from the firm's European offices, which see little need for this knowledge product. Proceeding without Europe could result in an incomplete product and a divided firm. If he waits, though, he may miss a critical market window. The case provides early versions of the growth framework. The product in this case is built from the firm's knowledge assets, and is very different from manufactured hardware or software.