This is an MIT Sloan Management Review article. Executives today face many difficult, potentially explosive situations in which they must make decisions that can help or harm their firms, themselves, and others. How can they improve the ethical quality of their decisions? How can they ensure that their decisions will not backfire? The authors discuss three types of theories--theories about the world, theories about other people, and theories about ourselves--that help executives understand how they make the judgments on which they base their decisions. By understanding those theories, they can learn how to make better, more ethical decisions.
This is an MIT Sloan Management Review article. Managers and entrepreneurs frequently adhere to the motto of being first to market. But the authors have discovered that many pioneers fail, while most current leaders are not pioneers. Using a historical method, the authors try to determine why pioneers fail and early leaders succeed. They have found that market leaders embody five factors critical to success: vision, persistence, commitment, innovation, and asset leverage.
Symantec includes acquisition of entrepreneurial companies as part of its growth strategy. This case examines the motivation for each party to engage in the transaction and focuses on how Symantec manages the process of the acquisition, from the initial "prospecting" to the final "integration." Examines the specific examples of the acquisitions of Dynamic Microprocessors Associates and Contact Software. Documents the motives of Symantec and the entrepreneurial companies to do the acquisition. Describes the major difficulties in the process. Also documents Symantec's method of valuation.
Rogers Communications, Inc., Canada's largest cable television provider, is deciding how it should respond to developments that appear to portend the convergence of its industry with the computing and telecommunications industries. In particular, it is investigating how it should test the market for high-speed Internet access via cable modem. This case describes decisions that need to be made to bring this service to market in a suburb of Toronto.
The Historical Society of Pennsylvania (HSP) runs one of the nation's most important research libraries and a museum focusing on colonial history. Financial analysis shows that the society has absorbed increased costs of operation over the past decade through slow but steady depletion of its endowment and deferment of capital investments. Now the board is faced with three options: 1) continue to operate both the research library and the museum on a dwindling resource base; 2) continue to operate the research library, but deaccess the museum, using proceeds to fortify the research library; and 3) continue to operate the research library, but turn over the artifact collection to a new Philadelphia-wide museum to be created in collaboration with three other organizations.
On November 16, 1987, the Del Webb board appointed Phil Dion chairman and CEO. This case outlines the development and implementation of a strategy to focus exclusively on real estate development and to liquidate all other assets. Discusses the appointment of two new board members to fill the slots vacated by the directors who followed Swanson out the door. Proceeds to describe the activities of two investors: Ronald Brierly of Industrial Equity Pacific and James Cotter of Webcott Holdings. Independently of one another, these investors had each purchased over 9% of Del Webb stock at a premium just before the stock price plummeted in the fall of 1987. These investors laid low for over a year, waiting to see if the descent in the stock price had been a temporary blip or a sustaining trend. When they concluded it was the latter, each investor approached Dion with the request that he be allowed to put a representative on the Del Webb board.
Dion and the other Del Webb directors were open to having Industrial Equity Pacific (IEP) and Webcott Holdings representation on the board. The IEP representative was perceived as reserved and lacking in sophistication. Cotter of Webcott, however, struck the directors as savvy but antagonistic and disruptive. Cotter's goal was to position the company as a possible takeover target, and he agitated in the boardroom for changes that he felt would open up the company to potential acquirers. He also launched a proxy battle in an attempt to eliminate Dion's golden parachute and the company's poison pill.
In 1996, IKEA's $5 billion in revenues made it the world's largest retailer of home furnishings. This case uses IKEA to analyze how large companies can retain their entrepreneurial roots and innovative capacities through various means, including the management of global networks of alliances, internal systems that encourage innovation, and a strong corporate culture. IKEA has extended its activities as an innovator through its incorporation of the Natural Step framework for assessing the ecological and social sustainability of commercial activity. The case lends itself to class discussions on entrepreneurship and innovation in large firms, environmentally responsible strategies and network ties, leadership, and corporate culture/values.
The Mexico City office of a large U.S. bank is asked by clients to develop currency swaps, a derivative financial product. This case deals with the new product development process in financial services, and the problems and issues that are raised in product development in a volatile environment.
Introduces the concept of national income accounting. This note: 1) defines GDP and provides examples; 2) discusses the differences between GDP and GNP; 3) presents both the expenditure and income decompositions of GDP; and 4) defines the relationships among net savings, net exports, and the fiscal debate.
A regional United Way organization, a nonprofit already active in total quality management, implements a Balanced Scorecard to link its strategic planning objectives with day-to-day operations, and is able to translate its vision and strategy into objectives and measures in four perspectives: financial, customer (donor), internal processes, and learning and growth (employees and system). In addition to the Balanced Scorecard's role in setting objectives and priorities for the nonprofit's employees, the case raises the issue of whether and how the nonprofit's board should be involved with developing and using the Balanced Scorecard.
In May 1996, Henry Bower, an asset manager for a real estate adviser, Medcem, has to negotiate the details of a lease after signing a letter of intent with a high technology company, Defentek, Inc. Defentek, Inc. is a fast-growing company with limited net worth that is dependent on the government as a government contractor. Defentek, Inc. would be taking a large block of space in a recently acquired Class A suburban office building outside of Washington, D.C., which has had a history of problem tenants in a problem market that is now somewhat improving. Henry must determine a negotiating strategy and take a position on the various issues raised by the tenant and the tenant's lawyer.
A framework for assessing new business opportunities and the business plans used to describe them is developed. Useful for aspiring entrepreneurs in MBA programs.
Describes how four companies in the Internet software market approach product development. Drawing upon short case studies of three recent projects, students are invited to synthesize the common attributes of development practice in turbulent environments.
Presents the 7-S framework. This framework offers managers a tool for diagnosing problems in their organizations and for proposing corrective courses of action. May be used with cases that deal with organizational alignment.
Students must estimate the weighted-average cost of capital (WACC) for two business segments and resolve the debate within a company over the use of a single hurdle rate versus a risk-adjusted hurdle rate performance evaluation system. In January 1996, Phon-Tech's CFO must fashion a recommendation regarding the company's use of segment hurdle rates. Phon-Tech had been the target of an active investor who charged that one segment was not paying its way. The case serves as part of an introduction to estimating investors' required rates of return (ROR). It would best following one or two class sessions introducing techniques for estimating WACC. Although the numerical calculations required are light, some of the subtleties about the use of risk-adjusted hurdle rates will require time for the novice to absorb.
Bob Hellman, a partner in a West Coast middle-market buyout firm, is attempting to simultaneously acquire and merge three disparate firms in the rapidly consolidating telemarketing services industry. Hellman must value the individual companies as well as the combined entity, structure a deal that is attractive to each party, and evaluate the prospects for the combined entity while developing a plan of action to more fully develop the deal.
The general manager must determine how to contend with a project overrun. The team had been working on their project for more than two years. In their presentation of the projected budget and schedule to the executives, the team identified a potential $1 million overspend in order to satisfy their contract. Their original budget was $3.5 million, of which $2.5 million was provided by the company. When the general manager questioned team members during the presentation about what had caused the overrun, he was amazed that the team was unable to respond.