Presents a conceptual framework for thinking about markets characterized by asymmetric information. Presents the standard economic analysis of "the lemons problem," and demonstrates how asymmetric information may lead to market inefficiencies and alter the distribution of surplus. Then discusses the potential to overcome these problems through credible signals of quality, illustrated by the example of education as a signal in labor markets. Concludes by briefly discussing the incentives of firms to screen consumers in order to price discriminate or to target particularly profitable consumer groups.
Examines the decision to go public. BioTransplant is an early stage biotechnology company that must decide how to finance its research and development. The pros and cons of public offerings are analyzed versus alternative financing sources.
Sensormatic is a leading provider of security systems to the retail industry. The company relies on customer financing as a key component of its strategy. The company's growth strategy and accounting is attacked by short-sellers and the financial press.
Describes how activity-based costing (ABC) should be applied with: 1) budgeted, not historical, expenses and 2) assigning the costs of capacity resources.
Management is faced with a broad range of opposition and criticism after closing the telemarketing operation. Labor organizations force legal proceedings, the primary telecommunications workers union in Mexico demands action under the Labor Side Agreement of the North American Free Trade Agreement and, ultimately, a court ruling demands that the company rehire and compensate employees displaced by the closure of the operation. This case was written to accompany Sprint - La Conexion Familiar (A), case 9A97C001.
Procter & Gamble has been in Eastern Europe for 2 1/2 years. The case outlines the problems, missed opportunities and difficulties Procter & Gamble has had in transplanting their corporate culture onto the newly liberalized economies of Eastern Europe. The case requires students to generate alternatives for Procter & Gamble's future strategy in Eastern Europe given the political, economic, societal, and technological (PEST) environment.
Management must decide what action to take with a small telemarketing operation that is about to vote on union representation. If employees vote in favor of a union, the operation would become the first business unit to be represented by a union. Closure of the plant is an option to be considered. The mostly Hispanic workforce becomes an additional consideration in the (B) case, 9A97C002.
Procter & Gamble must determine an entry strategy for Eastern Europe. The case examines the former Soviet Bloc countries, the opportunity they provide for a business endeavor like Procter & Gamble, and the product choices Procter & Gamble has available to them. Students must examine the political, economic, societal, and technological (PEST) environment and determine if the newly liberalized economies of Eastern Europe provide appropriate investment opportunities for Procter & Gamble. Students must also determine the scope of the necessary investment, the time profile and the difficulties it may face. A follow-up case (9A97H002) is available.
Presents seven examples (i.e., incidents) of conflict concerning foreign direct investment. The incidents lay the framework for discussion of issues such as the jurisdiction of the WTO and the U.S. position, the Helms-Burton Act of 1996 and its political implications, and campaign contributions from foreign corporations backing U.S. Democrats--and the controversy therein.
Jeff Bezos, the founder and CEO of Amazon.com, an Internet-based bookseller, has created one of the most successful ventures for electronic commerce on the Web. With revenue growing at a pace of 30% per month, Bezos attributes the success of Amazon.com to its value proposition--selectivity, availability, price, and service. Even so, Bezos is faced with new challenges in early 1997--competition from the mainstream bookstores Borders, Inc. and Barnes & Noble.
The director of purchasing and financial systems at The University of Western Ontario notices that paper pulp prices are rising and realizes that both of the University's paper suppliers would like to pass along increasing costs. Moore is forced into a precarious situation when one of the suppliers unilaterally raises prices despite a fixed contract. Moore faces a range of options, from placidly accepting this increase to taking legal action. The case demonstrates issues of bargaining (including strategic signaling) and control.
S1 is a fast growing subsidiary of the Samsung Group in South Korea that sells business security products. S1 has implemented a number of marketing initiatives that the company president would like to have evaluated.
The owner of an ice cream company must evaluate the performance of three regional businesses. To do the analysis, students must flex the budget by seasonal temperature; calculate revenue, volume, price, and efficiency variances; analyze the effects of transfer prices; and calculate return-on-investment. In addition, the owner considers how to set strategic boundaries and how to compensate his managers.
The European organization of Alden Products, Inc. is contemplating a doubling of unit sales over the next ten years. Their largest plant, located in Holland, was set up 25 years earlier to supply all demands of the EEC countries on the continent. It has since expanded six times. Should it expand again? Should it build a new plant in Southern Europe? Or should it increase subcontracting?