In mid-2012, after successful years in large public companies and obtaining an MBA, middle daughter Jen, 32, is trying to decide whether the time is right for her to enter her mother and sister's small family business to grow it further. Destira, Inc. was a designer/manufacturer of gymnastics wear for girls, headquartered in California. Donna Levy founded the company in 1990, after years of making leotards for her three daughters, who were competitive youth gymnasts, and getting requests from other parents to make the garments for their own children. In 2005, when Donna's oldest daughter, Jodi, joined Destira, Donna gave her a 50 percent equity stake. Between then and year-end 2011, the pair grew the revenues from $550,000 to $1.06 million, increased the number of outlets carrying the brand, upgraded the internal accounting/operations software, and added an online direct-to-customer retail business. The case shows realistic considerations for the individual, family, and business when evaluating whether or not to commit to join the family enterprise.
This case is set in 2017, when Co Gia Tho, Chairman of the Board at Thien Long Group Corporation ("TLG"), a Vietnam-based manufacturer and supplier of writing instruments and stationery products, is considering further international expansion. While Vietnam already had over 65,000 points of sale across the country, the company is looking to grow stronger by developing overseas markets. Founded in 1981 as a small family business manufacturing ball-point pens, TLG had grown to become the top stationery manufacturer in Vietnam and a market leader in the region. By end-2016, the company had a market capitalisation of approximately VND 4,000 billion (US$176 million), and total revenue of VND 2,162 billion (US$95 million). Its products were being distributed to more than 50 countries across six continents. Export revenues accounted for nearly 15% of the group's total revenue, and had been growing at over 30% year-on-year for the past three years. And yet, it continued to be a challenging proposition. What could Co do to enhance TLG's reach overseas? Moreover, given the global megatrend of rapid digitisation which was causing headwinds for the growth of physical office supplies in the more developed countries, how best could it adapt its strategy in the face of the changing dynamics of this almost commoditised and highly fragmented stationery industry?
Written using public sources, this case uses Hewlett-Packard's (HP) purchase of Autonomy Corporation (Autonomy) to analyze the accounting treatment for the acquisition and subsequent goodwill impairment. While the case focuses on the accounting for mergers and acquisitions, it also provides for a variety of other discussion topics such as the effect of managerial incentives and CEO succession on accounting outcomes, managerial "spin" on disclosure of bad news, strategy in changing institutional environments, and financial reporting limitations of new economy firms with heavy investments in intangible assets. The case opens during the fall of 2011 (when HP purchased Autonomy). Some analysts applauded the shift in strategy that the Autonomy purchase signaled for HP. Others were unsure how Autonomy's cloud computing software fit HP's businesses. From there, events at HP suggested a sense of division and frustration between HP leadership, the board, and Autonomy executives. The board replaced HP CEO Leo Apotheker with Meg Whitman. For the next few quarters, Autonomy missed expected results, and by May 2012, HP removed Autonomy's CEO Michael Lynch. Shortly after, HP announced an impairment charge of $8.8 billion related to the Autonomy acquisition, driving the company to report a loss for the year, the first in 10 years. The HP disclosure emphasized the Autonomy acquisition (which occurred prior to Whitman's tenure as CEO) and accused Lynch and Autonomy executives of cooking the books to inflate the purchase price. However, analysis of the financial statements and related footnote disclosures reveal that this $8.8 billion was less than half the $18 billion total impairment that HP recorded in 2012.
The case describes how 30-year old Freddy Macnamara (CEO) launched Cuvva, a start-up in the UK car insurance industry in 2014, which pioneered mobile-only car insurance via a pay-as-you-ride application. Initially targeted at drivers who wanted to drive someone else's car (Cuvva for Sharers), it then developed mobile-only insurance for owners willing to buy insurance only for the rare occasions that they used their cars (Cuvva for Owners). As the Cuvva model gains traction with customers, its impact is tracked by incumbents such as Admiral, that begin developing rival products. The case chronicles Cuvva's origins, milestones, and competitors in the UK car insurance industry up to early 2017, as well as explaining the economics of car insurance.
The case discusses different steps which Mastercard has followed in its digital transformation journey. They involve opportunity framing, creating innovation pathways, finding digital transformation opportunities, and innovation with partners within adaptive ecosystems. With the objective to stop competing with other payment processing firms (like Visa or Amex) and start competing with cash, Mastercard has moved from an undifferentiated processor of payments to a builder of unique technological platforms.
The case presents the "leapfrogging" opportunities for Latin America brought by the digital revolution and innovation. It examines the region's economic and commercial achievements made possible by the huge penetration of mobile vs fixed broadband. In addition, digital transformation is helping to address social issues such as financial exclusion, unemployment and healthcare. Also, by improving transparency in the system, digital has the potential to reduce corruption, one of the biggest obstacles to doing business in Latin America.
Supplement to case KS1253. On April 19, 2015, Freddie Gray, a young African American male, died while in the custody of the Baltimore Police. In response to his death, which occurred less than a year after a similar incident in Ferguson, Missouri, protestors mobilized daily in Baltimore to vocalize their frustrations, including what they saw as law enforcement's long-standing mistreatment of the African American community. Then, on April 27, following Gray's funeral, riots and acts of vandalism broke out across the city. Overwhelmed by the unrest, the Baltimore police requested assistance from other police forces. Later that evening, Maryland Governor Larry Hogan declared a state of emergency and activated the Maryland National Guard. At the local level, Baltimore Mayor Stephanie Rawlings-Blake issued a nightly curfew beginning Tuesday evening. "Into Local Streets" focuses on the role of the National Guard in the response to the protests and violence following Gray's death, vividly depicting the actions and decision-making processes of the Guard's senior-most leaders. In particular, it highlights the experience of the state's Adjutant General, Linda Singh, who soon found herself navigating a complicated web of officials and agencies from both state and local government - and their different perspectives on how to bring an end to the crisis. Case number 2116.0
The experience of being an entrepreneur was a childhood dream for Falguni Nayar. The opportunity to build Nykaa.com, a woman centered business, with a multi brand retail format in the beauty and wellness space , and the fact that she was doing it with her daughter Adwaita ( HBS MBA 2013) made it both exciting and meaningful. Still, she was the founder and with that came control over the most important decisions. While she sought advice from many people, Nykaa, like Adwaita, was her baby. How should she structure the organization and the team to best deliver the results she wanted?
The so-called "infrastructure finance gap" was a problem in Nigeria as in many parts of the world. Infrastructure projects like power plants and dams were very large capital investments that could generate long term consistent cash flows, but their financing and delivery involved multiple risks and uncertainties. If funds for infrastructure development came from traditional international sources like the World Bank or African Development Bank, those lenders would worry about foreign exchange, interest rates, and political risk and would almost always seek sovereign guarantees (payment guarantees from the federal government). Such assurances and guarantees were hard to come by, difficult to negotiate, and project inception could take decades. In this context could pension funds or private equity-type structures be viable alternative sources of financing for infrastructure? By 2017 Nigeria had reformed its pension administration system so that pension funds could both accept significant amounts of retirement funds from workers and, manage and invest those funds in a transparent and safe structure. One of the asset classes in addition to government bonds, equities, and corporate bonds that was authorized for investment by pension funds was infrastructure debt securities. Until recently, few Nigerian infrastructure securities had strong enough credit ratings to be investable by cautious pension funds. Infrastructure Credit Guarantee Company (InfraCredit) hoped to break that logjam by supporting infrastructure issues denominated in local currency with credit assurances taking the place of sovereign guarantees. Other entities took different approaches to raising capital for infrastructure in this market. Africa Plus Partners (Africa Plus), for example, proposed a fund structure with features of American private equity. It was not yet clear if this type of fund arrangement would be as attractive as debt for pension fund investors.
The U.S. Intellectual Property (IP) Ecosystem is one of the most robust and dynamic in the world -- and has been for centuries. The bedrock of this system is the "patent," a legal document that allows its holder exclusive commercialization rights of a part of the "idea space" granted through the patent. Strong legal protection of IP has made the U.S. a destination of great thinkers and innovators worldwide in order to enjoy this legal protection of their valuable insights. A new threat, however, looms. The same legal system that has protected IP has been used to create an organizational form known as a "Patent Troll." Patent Trolls amass patents for the sake of opportunistically extracting rents from firms producing and commercializing products. In this Industry Note, we describe the origin, evolution, costs, benefits, and future outlook for Patent Trolling in the United States.
Brand valuation, the art and science of calculating the economic value accruing to a firm from its use on an intangible brand asset, yields frustratingly inconsistent, discrepant, and therefore, controversial results. While it is widely accepted that brands are long-lived assets that can contribute significant value to firms over time, there is no consensus on how to value them. This note outlines several different methods for valuing brands and exposes readers to the commercial methods most used by firms. It discusses the opportunities associated with valuing brands as well as the challenges.
By 2016, Birks Group Inc. (Birks) had largely recovered from the 2008 financial crisis and was posting profits again. Birks was a high-end designer and manufacturer of Birks-branded jewellery and a mono-brand and multi-brand retailer of luxury jewellery and watches. It operated 29 retail outlets across Canada under its Maison Birks and Brinkhaus banners and 17 stores in two U.S. states (Florida and Georgia) under the Mayors banner. After restructuring the company and rehabilitating the brand, Birks’s experienced chief executive officer wondered how to take the iconic Canadian company further in a rapidly changing market. He had to decide what balance Birks should strike in pushing the brand in different markets: Canada, existing U.S. markets, new U.S. markets, and international markets. Although the luxury jewellery industry had not performed well in the digital marketplace to date, he was eager to investigate Birks’s e-commerce options as well. What were the best ways to grow Birks and optimize resources and effort?
In the lead-up to the 2016 Rio Summer Olympics, the coach of the Canadian men’s volleyball team needed to make a final decision about the team’s composition. Although the core eight players had already been selected, the difficult decisions involved choosing the supporting cast of four players from a list of seven players being considered. His decision would directly impact the team's performance at the Olympics but would also leave an imprint on the men’s volleyball program, and would change the lives of the athletes. How could the coach ensure he made the most appropriate selection decision?
Melody McCloskey, founder and CEO of StyleSeat, discusses the earliest stages of her hair-appointment booking platform, from bootstrapping to fundraising, from a potential business model pivot to potential obstacles in the future.