Forbes Magazine criticized the revenue recognition policy of Patten Corp. As a result, the company's stock price dropped by a significant amount. The students are asked to discuss if the criticism by Forbes is justified, and if not, what the company should do.
Pizza Hut, Inc. is a franchisor of eat-in pizza restaurants. It has decided to enter the home delivery market and is in the process of implementing that strategy. The case traces the development of the home delivery concept at Pizza Hut and the interaction between the franchisor and its powerful franchisees as it attempts to achieve system-wide rollout. Focuses on the management of significant change in a franchise system and on the strategy decision regarding home delivery.
Describes elements of the job of the general manager that are addressed in the Management Policy and Practice course at the Harvard Business School. These include: 1) establishing strategic direction, 2) setting goals and managing standards of performance, 3) marshalling and allocating resources, 4) selecting and developing people, 5) organizing effort, 6) maintaining an understanding of day-to-day operations, and 7) building a positive working environment.
Faster and more flexible information technology can be converted into positive programs to help get and keep customers. It can revitalize the traditional corporate control functions. While the new technology offers managers new options for gathering, organizing, and using data, it opens new horizons for new results. Companies can get constant updates on field operations. Organizations confined by historic accounting or reporting formats can now arrange information however best suits their purposes. Technology has the power to transform the information and control function.
Inside companies and beyond them, business and ethics still demand managers to make tough decisions. Concerns about doing business in South Africa, how to handle plant closures, issues involving personnel matters--none is new. What is new is the interest the public takes in business decisions and the pressure it applies--pressure that tempts boards and managers to sidestep hard choices. Managers must be open to the role ethics plays in decision making. Know where you stand on issues as an individual. Weigh all the competing interests carefully. Then simply get on with doing business and let your actions speak for themselves. This article won HBR's 1986 Ethics in Business Prize.
The performance measurement system in many decentralized companies actually works against good management. It encourages profit center managers to cover up bad news, take short-term actions that may hurt the real interests of their organizations, and accept responsibility for things over which they have little or no control. The solution is to measure the performance of profit centers and their managers with different yardsticks. Measure profit centers with profit center financial statements that follow traditional accounting systems. To measure the managers, use separate profit budget reports.
More than eight million workers now participate in employee stock ownership plans (ESOPs) in approximately 8,100 companies. The tax incentives designed by Congress since 1974 partly explain the growth in the number of ESOP companies, but most ESOPs reflect the view that worker ownership and participation have real advantages. Over 73% of the ESOP companies significantly improved their performance after setting up their plans. Moreover, there is a strong correlation between corporate performance and worker participation: ESOP companies do best when they set up programs that permit workers to have a say in corporate policy. With ESOPs performing so well more American managers should consider adopting this approach.
Many companies have found that high sales volume does not automatically mean high profits. Among the factors that do affect customer profitability are geography, order size, and extra attention to keep the account. Some customers simply cost more to serve. Others will pay any price to get a certain product. If companies want profits and not just sales, they should start by understanding the differences among their customers. Careful analysis of customers and products will steer sellers into more profitable markets. Sellers should: know the exact amount and origin of costs; understand their profitability dispersion and set prices according to the value customers place on each product; focus strategy according to their knowledge of customers and their own strengths; install information and other systems to support a chosen strategy; and analyze profit dispersion and rethink strategy continually.
Turnaround management is not just for troubled companies. Today's managers must earn the right to compete every day. The basics that will help them do that are the same ones that turnaround managers use to bring failing companies back to life. The rapidly changing environment can dump an otherwise untroubled company into new bankruptcy. Relying on summary reports from distant department heads to learn about the company's cash position can therefore be dangerous. It is better to scrutinize each line item in a cash projection and to use spreadsheet programs to design a number of possible scenarios.
Describes a company that had traditionally followed a strategy quite distinct from its major competitors', its eventual decision to imitate them, and its subsequent performance.
Describes the issues involved in designing and evaluating financial contracts between users and suppliers of capital and between companies and employees. A simple conceptual framework is introduced and some critical issues addressed: 1) How is cash allocated? 2) How is risk allocated? and 3) What are the incentives for all parties in the deal? The emphasis in the note is on providing the reader with a set of questions that must be addressed when designing and evaluating any deals. Created for use in Entrepreneurial Finance. Can be used to provide general background reading or as an assignment for a day devoted to the discussion of deals.
Focuses attention on a phenomenon we call capital market myopia, a situation in which participants in the capital markets ignore the logical implications of their individual investment decisions. Viewed in isolation, each decision seems to make sense. When taken together, however, they are a prescription for disaster. Capital market myopia leads to over-funding of industries and unsustainable levels of valuation in the stock market. Uses the Winchester Disk industry to elucidate the phenomenon. Argues that capital market participants should have seen the problem coming. They should have known that valuation levels were absurd, based in large part on the greater fool theory. The data necessary to anticipate the problem were readily available before the industry shakeout began and stock prices collapsed. Offers some simple lessons to help investors and entrepreneurs avoid charter membership in the greater fool club.
Reviews several key areas in the marketing manager's legal environment and is organized around the marketing mix variables. In the pricing section it covers price fixing, resale price maintenance, discriminatory pricing, and predatory pricing. In the distribution section it covers tying; exclusive dealing; and territory, location, and customer restrictions. In the promotion section it covers unfair acts and practices and deceptive acts and practices. In the product section it covers patents, trademarks, copyrights, warranties, product liability, and product safety regulation. This note is not a complete survey of the law on the subjects covered, but is rather an introduction to the complexities of the marketing manager's legal environment.
Describes a method for valuing high-risk, long-term investments such as those confronting venture capitalists. The method entails forecasting a future value (e.g., five years from the present) and discounting that terminal value back to the present by applying a high discount rate (e.g., 50%). Provides an explanation of this method, including a detailed discussion of the determinants of the key factors ranging from the discount rate to the terminal value. The pedagogic objective is to make students aware of the issues involved in valuing such "futures" investments. A model is provided that further elucidates the determinants of value.
Designed to introduce students in Entrepreneurial Finance to the subject matter and modus operandi of the course. Also included is an annotated bibliography.
Atlas Copco, a Swedish company, holds the highest market share for air compressors worldwide. However, its attempts to enter U.S. markets have been unsuccessful. The case describes a series of strategic distribution maneuvers implemented by the company which enable it to improve market share from about 1% to 10% in ten years. The objective is to gain an understanding of what is involved in building distribution strength.
A professional firm cannot exist without its specialists - accountants, lawyers, consultants, bankers, and so on - who generate client services. But how can they be managed? One solution is the producing manager: a person responsible for both management activities and generation of client services. With producing managers heading small, autonomous business units, the organization can stay nonbureaucratic and non-hierarchical and still grow, change, and retain its competitive edge.