Recounts the financial difficulties and management changes experienced by American Red Cross Blood Services: Northeast Region (NER) during the 1980s. After summarizing industry-wide changes in the collection, testing, and distribution of blood and blood products, the case describes the way in which NER management responded to those changes. The types of changes highlighted include: the transition from non-financial to financial planning and monitoring systems; organizational restructuring; increased dissemination of financial information among line management; and conversion to a cost accounting system based on cost center accountability. The primary teaching objective is to illustrate both the need for and the challenges of changing management control systems in response to changes in an organization's marketplace and strategy. The case reveals various factors that must be considered to implement major control changes including management training, differing management styles, information systems capabilities, corporate culture, and a continually changing market.
Contains a general description of a large international retailer. Focus is on the major financial risks facing the company: exchange rate risk and commodity price risk. This case is an introduction to financial risk management. It poses some of the major problem areas.
Describes the Mexican subsidiary of Colgate-Palmolive as it sets its strategy for coping with hyperinflation and the November 1987 devaluation of the peso.
Provides a brief analysis of issues in the design of an effective compensation system, with particular emphasis on incentives. Provides an analytic framework for thinking about compensation. Topics covered include the composition of the pay package, fringe benefits, and training. The analysis of incentives discusses the trade off between incentives and risk, the problem of performance measurement, and the use of promotions as incentive compensation. Designed for use with a teaching module on compensation.
Examines the pricing policy for a firm that is a monopoly supplier of a durable good. Lowering price over time in an attempt to increase market penetration seems desirable. But doing so may also cause some buyers to postpone their purchases. Describes these considerations in the context of a specific example that can be analyzed numerically.
All forms of Alternative Dispute Resolution (ADR) are designed to save time and money and to soften the sharp edges of the adversarial system. Variations and hybrids of ADR are limitless. In picking the method best suited to your circumstances, consider: the extent to which both disputants are committed to ADR, the closeness of the business relationship between the two parties, the need for privacy, the urgency of reaching a settlement, the absolute and relative financial health of both parties, the importance of the principles involved, the complexity of the case, the size of the stakes, and the ability and willingness of company executives to get involved.
Four truths apply to every business situation: 1) it is essential to be a lower-cost supplier; 2) to stay competitive, the inflation-adjusted cost of producing and supplying products and services must trend downward; 3) the true cost and profit pictures for each product/market segment must always be known; and 4) a business must concentrate as much on cash flow and balance sheet strengths as it does on profits. Various costs must be carefully isolated and assigned; expense categories such as R&D, sales, general, and administrative costs must not be ignored. Also gross margins should usually not be less than 40% and assets should not be over 60% of annual sales.
From the head of market research at GM comes a guide, in the form of a series of foldout tables, to help managers determine the dimensions of the task, resources needed, data required, and other key elements. The research effort comprises five major stages: assess the market information needs; measure the market place; store, retrieve, and display the data; describe and analyze market information; and evaluate the research and assess its usefulness. Augmenting the tables are a glossary of technical terms and a list of references.
Managerial hierarchy is the most natural and effective organization form that a big company can employ. As organizational tasks range from simple to complex, there are jumps in the level of responsibility. As the time span of the longest task assigned to each managerial role increases, so does the level of experience, knowledge, and mental stamina required.
Accuracy in manufacturers' advertising budgeting is hampered by reliance on the case rate system. A better measure is a brand's market share compared with its share of voice (its share of the total value of the main media exposure in that product category). The interrelationship between market share and share of voice is not usually considered when determining ad budgets.
The publicly held corporation has not outlived its usefulness. Though LBOs release much of the untapped value and correct many of the inefficiencies of large public companies, they also have a limited demand and a limited life. The public corporation is inherently flexible and self-renewing. A four-point plan to maximize shareholder value will help public companies to: 1) find the highest valued use for all assets; 2) limit investment to opportunities with credible potential to create value; 3) return cash to shareholders when such investments are not available; and 4) establish incentives for managers and employees to focus on the critical drives that create value.
Because of globalization, the U.S.-owned corporation headquartered in the United States is no longer the vehicle for achieving U.S. competitiveness. Foreign-owned corporations that invest heavily in U.S.-based production facilities and their workers may actually contribute more. U.S. government policy should open the borders to foreign investment and promote human capital rather than assuming that corporations will lead the way. This is true for a number of reasons: corporate ownership is less important today; control is less important; work force skills are critical; and foreign-owned corporations help U.S. workers add value.
Describes the relative share of voice effect in advertising. In most markets, consumer goods markets are in a state of equilibrium--advertising expenditures are relatively stable and changes in market share are small. To gain ground in market share, a competitor has to launch a huge ad campaign for a sustained period that outspends the biggest rival by at least 100%.
Product "robustness" is a function of good design. Still, most traditional quality programs concentrate on the factory. Zero Defects says that when parts come in within tolerances, the product will be fine. But parts just within tolerances have no advantage over those that just miss; it is better to miss a target consistently than to hit it haphazardly. Robust products maximize "signal-to-noise" ratios of component parts. Product designers can maximize these ratios by running experiments according to orthogonal arrays, which reckon the average effect of each variation on all other variations.
In this interview, Gary Wilson, executive vice president and CFO of the Walt Disney Co., discusses combining financial sophistication with an imaginative, strategic approach to business. Interviewer: Geraldine E. Willigan.
In ever more turbulent environments, executive leadership matters as never before. Organization speed, flexibility, and the need to execute discontinuous change require sharpened leadership skills. Charismatic leaders are important. These relatively rare leaders provide vision, direction, and energy for their firms. However, charisma is never enough to build competitive, agile organizations. Charismatic leadership must be bolstered by institutional leadership through attention to details on roles, structures, and rewards. Further, as most organizations are too large and complex for any one executive or senior team to manage directly, responsibility for managing in turbulent environments must be institutionalized throughout the management system.
Examines the entire product development process at a premier German company, focusing on the role of design as a key player in interdisciplinary teams. Braun is embarking on a strategic shift from exclusively high-end products to products suitable for the upper end of the mass market. At an early stage in this process, the company must decide what kind of plastic material is appropriate for a new coffeemaker by analyzing the myriad of implications surrounding this decision. At stake is its reputation and corporate image as represented by its kitchen appliances.
The new vice-president for Kentucky Fried Chicken in southeast Asia, must weigh the growth benefits of investing in China with alternative opportunities in the region. He is at the exploratory stage of market research and is focusing his attention on four possible locations in China. He must also balance his own personal ambitions with the possibilities for failure, not only in China, but the rest of southeast Asia.
The VP's efforts to determine whether and how to proceed with an emerging three-way partnership in China are described. Kentucky Fried Chicken has selected local partners and has been issued a license to operate a restaurant in Beijing. If he is to proceed, the VP must decide how fast he should advance the negotiations and which of three location sites in the city is most desirable.