Explains variance analysis. Concepts of price variance and quantity variance are introduced to analyze prime cost variances. Spending variance and capacity variance are used to analyze overhead variance. Consistent with conducting variance analysis in an activity-based costing setting. All concepts are illustrated graphically.
Growing fiscal deficits, persistent economic recession, and underinvestment in the nation's telecommunications infrastructure lead the Argentine government to privatize its state-owned monopoly provider of telecommunications services, ENTel, in late 1990. The privatization process and the resulting ownership structure is complex, and the new regulatory framework appears to offer both significant opportunities and risks for investors.
The case visits the catastrophe insurance business at an interesting time in the history of the insurance markets. A major reinsurer, National Insurance, is taking a look at the new insurance derivatives being traded on the Chicago Board of Trade with a view to using them for risk management and as a portfolio option.
Mike Ennis, general manager of Northern Telecom's Business Products Division, recommends a new solution for replacing Vantage, an unsuccessful product for Northern Telecom. The case documents in detail the voice of the customer. Students are required to discuss the merits of Ennis's proposal.
Matt Dorman, owner of this custom bunk-bed manufacturer, is considering a move to a new location. Students must perform a process-and-bottleneck analysis to evaluate the viability of the move. Economic justification involves calculation of the increased capacity available at the new location. See also the video UVA-OM-0818V.
Offers the opportunity to examine two important challenges in starting a company: selecting partners and finding capital. Presents a candid view into the struggle of a young entrepreneur, Dan Stilton, and his two newly acquired partners, Scott Bettor and Henry Tellsworth, as they look for capital to launch their venture, Florida Air, a regional airline.
Real estate escapes the thoughtful attention of most senior managers. It often falls within the realm of their responsibilities, but many do not appreciate its potential impact on company performance. So they delegate real estate to specialists, who operate on a deal-by-deal basis and consider their decisions as administrative and technical tasks. Recently, however, some companies--IBM, AT&T, Chemical Bank, Dun & Bradstreet, and Sun Microsystems, for example--have recognized that by managing real estate as a business function, they can cut costs significantly and, at the same time, increase productivity.
New reports announcing that yet another business has stumbled into a crisis--often without warning and through no direct fault of its management--seem as regular as the tide. And the spectrum of business crises is so wide that it is impossible to list each type. On a single day this year, the Washington Post reported a series of crashes suffered by American Eagle Airlines, the bankruptcy of Orange County, and Intel's travails with its Pentium microprocessor. Fortunately, almost every crisis contains within itself the seeds of success as well as the roots of failure. Finding, cultivating, and harvesting that potential success is the essence of crisis management.
A decade of process improvements has transformed the way most corporations operate and, at the same time, the job of the senior executive. Top-down autocrats are out and bottom-up teams are in. The message seems to be: Get the processes right, and the company will manage itself. But this message belies a simple truth: Managers, not processes, run companies. In fact, process-focused companies need more top-down management, not less. However, given the complexities of modern business competition, no single individual can do all that it takes to achieve success for a company. Success depends on the willingness and ability of the entire senior executive group to address not just their individual functional or divisional responsibilities but also their collective responsibility for the company as a whole.
Most managers rejoice if the majority of customers that respond to customer-satisfaction surveys say they are satisfied. But some of those managers may have a big problem. When most customers are saying they are satisfied but not completely satisfied, they are saying that they are unhappy with some aspect of the product or service. If they have the opportunity, they will defect. Companies that excel in satisfying customers excel both in listening to customers and in interpreting what customers with different levels of satisfaction are telling them.
Just because the competition is tough, that's no reason to be tough on customers, says Sir Colin Marshall, chairman of British Airways. Even in a cutthroat, mass-market business such as air travel, he argues, many people will pay a premium for good service--even those who travel economy. Marshall's views may be unconventional, but so is his company's performance: While the world airline industry has racked up billions of dollars in losses, British Airways has remained solidly profitable.
For large corporations that are refocusing their portfolios, the problem of how best to dispose of basically sound but underperforming businesses remains. Putting a business up for sale can be its kiss of death, with employee morale plummeting and prospective buyers unaware of the business's true potential value. The solution may be a restructuring joint venture, an arrangement that allows the buyer to learn about the business's untapped possibilities before buying it outright, and that often results in higher returns to the seller than a straight sale would. The authors contrast the successful joint venture involving Whirlpool and Philips with the disastrous results of Maytag's purchase of the Chicago Pacific Corp.
Wherever you look in business, there's a new level of interest in entrepreneurship. As attention at corporations swings away from retrenchment and toward growth, more and more people are wondering why some companies are able to stimulate creativity and initiative among their employees more effectively than others. What do those organizations do to convert intriguing ideas into commercial ventures?
Every business today competes in two worlds; a physical world of resources that managers can see and touch and a virtual world made of information. Executives must pay attention to how their companies create value in both arenas--the marketplace and the marketspace. But the processes for accomplishing this are not the same in the two worlds. Managers who understand how to master both can create and extract value in the most efficient and effective manner. Creating value in any stage of a virtual value chain involves a sequence of five activities: gathering, organizing, selecting, synthesizing, and distributing information. Just as someone takes raw material and refines it into someting useful, so a manager today collects raw information and adds value through these five steps.
When Jim Merrick left a well-known computer graphics company for California Vision Tools, he was excited about creating a dynamic marketing department of his own. But he failed to ascertain how much financial support his new company was likely to provide for dynamic product campaigns. Founder and CEO Mark Felton had seen his first product take off like a rocket. But now, when there are imitators all around, will Felton understand the importance of a big marketing push for his second product? Some on the executive staff like Merrick's ideas for a marketing campaign but don't see why he needs an extra $100,000 over his budget. Is Merrick just trying to keep his department's new hires happy? Should he try to implement his intro without incremental funds? Or are the other members of the executive staff being myopic? Five experts try their hands at setting California Vision Tools on the right course.
ABN-AMRO, the largest bank in the Netherlands, must decide whether to take any action in regard to the poor performance of Smit Transformatoren, a Dutch transformer manufacturer. ABN-AMRO acted as lead underwriter for the IPO of Smit, and also released a favorable equity research report around the time of the IPO. Smit's stock price initially performed favorably, but then fell significantly in conjunction with poor earnings announcements and other bad news.
Students assess the performance of the Magellan fund, consider the sources of that success, and to decide on its sustainability. Designed for beginning finance courses, the case requires no numerical calculations to perform the analysis; but the absorption of capital market background and the implications of finance concepts in the case will fully occupy the novice. Set in fall 1995, the case describes the investment styles of three of the fund's managers-Peter Lynch, Morris Smith, and the current manager, Jeffrey Vinik.