Focuses in detail on implementing a corporate restructuring program in ABB's German subsidiary. Special attention is given to Germany's unique form of industrial governance. Two major problem areas--power plants and power transformers--are described in detail, as is a decentralization proposal for the German sales operation. How should the head of ABB Germany proceed? Why did he take this job? What choices did he make? What challenges does he face, particularly as a newcomer? Why are power plants and power transformers in deep trouble and what action can be taken? Does decentralization of the sales force make sense? What are the challenges, opportunities, and risks facing ABB's Germany country head? Will the new international matrix be a help or a hindrance?
Addresses the results and the lessons from the German restructuring effort by focusing in detail on the relationship with the works council and the actions taken for power plants and power transformers, and the sales organization. Closes with a "second wave" of cost cutting and some reflections by the head of ABB Germany, as well as some excerpts from an interview with Percy Barnevik. How did international knowledge transfer help? How much of a constraint were German national and BBC corporate cultures? Can the organization digest a "second wave" of cost cutting? How does the ABB international matrix work, especially for the power transformers business area and for the German power plant operations? How does the domestic matrix work for the sales organization? What leadership and managerial skills are required to succeed in the international matrix? Is ABB the prototype of the global organization of the future?
Describes the history, theory, and practice of high-commitment work systems. The history reviews classical approaches (i.e. Frederick Taylor), the human relations movement, the human resources approach, quality of work life, and empowerment. The theory examines the underlying principles of design. The practice section reviews the experiences to date with these systems, including such innovations as gainsharing and such problems as defining the role of supervisor.
Too often, quality programs fail to improve quality because they concentrate on internal processes that do not affect the customer. This is at least partially due to the alienation of marketing from the quality movement, a situation for which both sides are partially at fault. Ideally, marketing should serve as the eyes and ears of the organization, linking the external customer to managerial processes. One way to do this is to organize the collection of customer satisfaction measures around the managerial processes themselves. This forms a natural bridge from the customer to management and allows management to track the impact of quality improvements all the way from internal process measures to overall customer satisfaction and market share.
This is an MIT Sloan Management Review article. Vertical integration is a risky strategy--complex, expensive, and hard to reverse. Yet, some companies jump into it without an adequate analysis of the risks. The authors developed a framework to help managers decide when it's useful to vertically integrate and when it's not. They examine four common reasons to integrate and warn managers against a number of other, spurious reasons. Their primary advice: Don't vertically integrate unless it is absolutely necessary to create or protect value.
Describes McCaw Cellular Communications, Inc.'s investment decision and strategic plans in 1990, following the situation in the (A) case. Outlines the competitive situation in other types of mobile communications in the United States and the United Kingdom in 1991.
Since winning independence in 1965, Singapore achieved some of the world's highest rates of economic growth. A large part of GDP and employment came from direct investment by multinational companies in low-cost assembly work, but in the 1990s Singapore's rising wage rates increasingly priced it out of these industries. Could Singapore change itself from an assembler and fabricator of Western-designed parts to a designer and marketer of desirable products? Lee Kuan Yew, "the father of Singapore," repeatedly had shown an ability to guide the nation through such transitions. Not only did his successor have no such track record, but the next transition might be the hardest yet.
Prior to the 1980s, automakers purchased individual seat components and built the seats alongside their auto assembly lines. This case describes how Johnson Controls, Automotive Systems Group, blossomed when automakers turned to outsourcing the complete seat set. The case closely examines one plant, in Georgetown, Kentucky, that switched from just-in-time (JIT) delivery of seat sets to JIT assembly to serve a nearby Toyota Camry assembly operation. Exposes the challenge of dealing with growing seat variation and an opportunity of doubling the plant floor space at a separate site. The specific case question is how the plant should use this new space.
Details the evolution of a value-creating supplier-buyer partnership. Describes the buyer's (Liz Claiborne) manufacturing and marketing strategy, and details the workings of the firm's relationship with an important Taiwanese supplier of piece goods (Ruentex Industries Ltd.).
In May 1992, Intel Corp., the leading supplier of microprocessors for IBM-compatible personal computers, announced the retail availability of OverDrive processors, a new line of performance upgrades for the Intel 486 series of microprocessors. The case chronicles the evolution of Intel microprocessors and math coprocessors. Next, it describes the genesis of the "speed-doubling" technique that is employed in the OverDrive Processor and it details the important implementation issues. The central questions are the following: How does a firm manage a product line in the context of rapid technological change? What are the consequences--for the end users, and hence the system and component manufacturers--of rapid product change? How does product upgradability help mitigate some of these consequences? How should Intel develop the OverDrive business? And how will this affect the company's mainline microprocessor business?
Senior management of Hydro-Quebec were faced with the problem of how to avoid the possible cancellation of its multibillion dollar hydroelectric development project due to highly publicized opposition from aboriginal rights groups and environmental activists. This opposition was jeopardizing a major export contract by the New York Power Authority. Hydro-Quebec's financial performance, in particular its ability to continue servicing its large U.S.-denominated debt, was an important factor in the economic health and potential sovereignty of the Province of Quebec. The focus on stakeholder analysis is an excellent review of the complexity of decision-making in a highly volatile setting.
An analyst at General Motors charged with managing the structure of the automaker's debt must decide whether and how to modify the interest rate exposure of the firm's most recent debt offering. The analyst must take into consideration GM's liability management policy guidelines, the firm's existing interest rate exposure, his expectations of interest rates, and the wide range of interest rate products available. He must decide whether to leave the fixed-rate instrument unchanged or to enter into a swap, cap, interest rate option, or swap option transaction.
Sierra On-Line, a fast growing software developer, is criticized by a Forbes journalist for excessively capitalizing software development costs. In contrast to most other software developers that typically capitalize about 20% of R&D costs, Sierra capitalizes 80%. Questions investors must address in valuing Sierra include: Does Sierra's account reflect economic reality? Is their accounting too aggressive or are their competitors too conservative? Is Sierra's business sufficiently different from its competitors to invalidate the comparison?
In February 1991, the managers of this multinational specialty publishing company proposed to take the company private in a leveraged buyout (LBO). In addition to the ordinarily interesting features of the typical LBO, this transaction was the first to be denominated in ECUs and one of the few in which the managers provided all the equity financing. The tasks for the student are to value the company and evaluate the attractiveness of the transaction from the standpoints of seller, senior lender, mezzanine lender, and equity investor/manager. The case can be used to (1) exercise students' skills in valuing a highly leveraged company, (2) illustrate how deal structuring can mitigate potential agency problems, and (3) explore the problems and possible solutions associated with financing a global firm.
The chairman and CEO of Imasco Limited was reviewing an acquisition proposal from one of its operating units, Hardee's Food Systems, to purchase the Roy Rogers Restaurant chain. While he was inclined to support the proposal, he wanted to carefully weigh its broader impact for Imasco as a whole. The probable price of $390 million represented a substantial commitment of funds, at a time of slowing growth in the U.S. fast food business.