Northern Telecom Canada is launching its new payphone system, Millennium. The marketing director for the new line of pay telephones is considering how to price the terminal part of the system. There are many considerations, including an extensive evaluation of the economic value of the system to the telephone company's customers, pay telephone agents, users and, of course, Northern Telecom itself. A complete marketing plan is required to sell to telcos, agents, and end users. This case requires much greater than usual preparation time.
First Fidelity Bancorporation, a holding company for eight independent banks in the New Jersey and Pennsylvania areas, was going through a major restructuring and rationalization in response to serious financial problems, threats of regulatory control and changing market demands. In this reorganization, the head of corporate operations and systems was considering ways to facilitate the restructuring. He was seriously considering outsourcing as an alternative way to manage the internal information systems. The case explores the simple economics behind an outsourcing strategy and the complicated technical, political and cultural rationalization of a hierarchical, independent organization into a centrally-managed operation. Follow-up cases First Fidelity Bancorporation (B): Selecting an Outsourcing Vendor and First Fidelity Bancorporation (C): Managing an Outsourcing Relationship With EDS are available.
The finance director of the Texas High-Speed Rail Corp. (THSRC) is considering modifications to the financing program designed to support the development, construction, and operations of THSRC's planned high-speed rail system. The current plan achieves many objectives, including raising $6.5 billion from private sources, but a few problems remain to be addressed. These include temporary overfunding, unutilized tax losses, and certain important contingencies. Designed to highlight the shortcomings of simple valuation tools in a static analysis when applied to a dynamic project. The class discussion should isolate specific analytical issues, which may then be addressed in subsequent class sessions.
Information is a critical resource in the information economy and Information Technology (IT) enables information to be managed as a strategic resource. However, IT is extremely complex and fast-changing. As a result, the general manager cannot leave IT decisions strictly to IT technologists and cannot hope to be technically competent to make the "right" IT decisions for the firm. This dilemma is resolved by the construction of an "IT architecture"--the bridge between strategy and technology.
Mark Ain is the founder and manager of Kronos, which has grown to a $33 million dollar company in 13 years. The case focuses on Ain's rrole in the company. Presents data from a personality assessment of Ain and his senior management team as input to this decision. .
The marketing director of Warner-Lambert's Irish subsidiary is completing the marketing plan for the launch of Niconil, a transdermal skin patch to facilitate smoking cessation.
A new company producing computer games must begin to capitalize computer software development cost. To do so requires a cost accounting system, decisions about which costs to capitalize, and how to match costs to future revenues. Teaches accounting standards for computer software development costs.
Planning is underway for the launch of Pert Plus shampoo in Canada following two successful product launches in the U.S. A number of launch decisions have already been made. Major decisions remain to be made on pricing and on response to probable trade pressure for compensation on inventory of the original product. The teaching objectives include the development of pricing decision-making skills through analyses of consumer behaviour, trade behaviour, and forecast financial outcomes.
Richard Romano, a principal of a small real estate appraisal firm, faced an interesting ethical dilemma. A client had just stated that if the firm did not increase its appraised value of the client's commercial property by $4.5 million (15%), he would take his business elsewhere. Potentially, the client had a large volume of business which the young appraisal firm could certainly use. Richard must consider the firm's economic health in both the short and long terms, his personal values, and the ethical guidelines of the Appraisal Institute of Canada in making this decision.
This note introduces students to some of the options that managers consider when financing is needed. Internal financing options such as improving operating cashflow, adjusting working capital and disposing fixed assets are examined. The advantages and disadvantages of external financing options (i.e., debt or equity) are also briefly covered.
Doug Mason wished to create a new product that would cater to the interests of a new age generation, and he chose the development of a beverage that would have a healthy lifestyle image. His entrepreneurial start-up led to very rapid expansion and ultimately to sales in other countries. Clearly Canadian relies upon other companies to provide equipment for transportation and distribution, enabling it to operate with relatively few employees and a small base of physical capital. The case poses an interesting question, Is the company a small service sector enterprise or a large manufacturing business?
Allied, Benevolent, and Caring Services are three nonprofit social service providers competing for state social service funding. The state funding agency has decided to increase its annual budget but will provide additional funds only to a consortium of two or more providers. Each provider must decide whether to cooperate with the other providers in order to pursue state funds, and if so, how these funds should be divided among the cooperating providers.
The setting is a food manufacturing company that has stumbled in terms of its historic growth and profit achievements. In trying to recapture its momentum, the president has used information technology as one element in his program of transition. The case focuses on the strategic problem and setting, the use of information technology for organizational change, and the associated implementation problems.
Describes the "adjusted present value" (APV) approach to discounted cash flow analysis. Much of the note is devoted to a critical comparison of APV and an approach based on the wrighted average cost of capital (WACC). Argues that APV is usually, if not always, simpler, more accurate, and/or more informative than using the WACC. Designed to be distributed in conjunction with a case on valuation and captial budgeting. Assumes students are familiar with the WACC but not with APV.
Documents a pricing anomaly in the large and liquid treasury bond market. The prices of callable treasury bonds seem to be inconsistent with the prices of noncallable treasuries and an arbitrage opportunity appears to exist. Permits instructors to introduce the treasury market, the concept of creating synthetic instruments, principles of arbitrage, and institutional frictions in the bond markets.
Details a thinly disguised situation faced by a recent Harvard MBA graduate who was forced by a prospective employer to place a dollar value on a grant of stock options. There are two objectives: 1) Serves as an introduction to option valuation, in which students have an opportunity to use market data to value an option in a realistic setting. 2) The setting permits a broader discussion of the wisdom of option-based incentive plans and the popular misconceptions of the value of option grants based on a widespread misunderstanding of how options work and how they are valued.