The U.S. Supreme Court reconsiders two basically inconsistent prior Supreme Court decisions, overrules one and states that illegally acquired income must be reported.
MCI Communications Corp. is faced with a large need for external financing to support rapid growth and substantial uncertainty due to the AT&T antitrust settlement. The case illustrates the value of convertible debt as a financing instrument in these circumstances.
Describes the U.S. experience with floating exchange rates between 1973 and 1978, focusing on the rapid decline of the dollar in the summer of 1978. Illustrates the major determinants of the exchange rates and the role of government intervention in the foreign exchange market.
Most companies are able to forge a marketing strategy, but have difficulty implementing it. Marketing practice has two components: structural and human. There are four levels in the structural hierarchy--functions, programs, systems, and policy directives--and each has its pitfalls. Of 32 companies sampled, those best at marketing practice have a strong sense of identity and direction, appeal to customers (including distributors) in unusual ways, have marketing managers who are willing to substitute skills for the formal structure, and see the executives as more important than the execution structure.
An appropriations committee's job is often complicated by the conflict between managers who favor hard quantitative techniques and those who prefer a softer qualitative analysis when evaluating investment opportunities. Reliance on quantitative analysis--usually involving discounted cash flow--can lead an organization to invest in projects that have little risk but that are also unexciting to strategists. The answer does not lie in favoring either side over the other. Instead, executives need to adopt a new way of thinking that gives a hard analytic edge to the soft side of the argument. They need to think of investment opportunities as future growth options for the company.
Involves the introduction of a technology which almost completely eliminates direct labor for a major segment of the product line. The technology is unproven though, and requires managing the learning process. The teaching objective is to review the differences in managing change between fixed and variable cost-intensive technologies and additions of manufacturing capacity.
Disequilibrium in the $350 million TiO2 market has prompted Du Pont's Pigments Department to develop two strategies for competing in this market in the future. The growth strategy has a smaller internal rate of return than the alternative strategy due to large capital outlays in early years and positive cash flows arising only in later years. However, it is the more valuable project on a net present value basis for all discount rates less than 21%. Students are faced with the task of converting strategic plans and objectives into free cash flow projections and determining a breakeven discount rate between these mutually exclusive projects. A decision about which strategy to pursue must then be made. Rewritten version of an earlier case by the same author.
Describes the financing problems facing AT&T in 1983 prior to divestiture of the local telephone operating companies on Jan. 1, 1984. Leads up to the decision to issue equity, which AT&T did in early 1983 and which reduced AT&T's market value by $2 billion. The case is intended to illustrate the signalling process involved.
Reviews changes in Du Pont's debt policy from 1965 to 1982. This period ended with a dramatic increase in Du Pont's debt level attendant upon the merger with Conoco. Students are asked to develop a new debt policy for Du Pont in the 1980s.
Faced with large losses in Alcan Aluminum (Europe), Patrick Rich takes the position of area general manager and slashes capital budgets, introduces new financial controls, and sets up mechanisms for increasing cooperation among the national subsidiaries. The focus is on the tactics of implementing rapid change in a cyclical industry that is capital intensive. Two videotapes are available from the Audio-Visual Department for HBS instructors' use with this case.