Method's environmentally friendly cleaning products were rapidly gaining market share, both domestically and overseas. Due to its 2012 acquisition by Belgian cleaning brand Ecover, Method now had access to Ecover's expertise in building eco-friendly factories, as well as the capital necessary to build Method's first manufacturing plant. Method can either build a factory on previously undeveloped land, known as a greenfield, or they could redevelop and recover an existing industrial site, known as a brownfield. The case highlights Method's founders' interest in the revitalization of inner cities, as well as the brand's commitment to environmental and social responsibility. It also explores the challenges and benefits of brownfield vs. greenfield development.
Through the challenges facing Target, the case examines ways in which corporations can become involved in political and legislative debates and processes, ranging from campaign contributions to lobbying to political activism. In 2016, Target CEO Brian Cornell must determine how to respond to the debate over North Carolina's recently signed law, commonly known as "HB2," that invalidated LGBT non-discrimination ordinances at the local level. In contrast to other organizations, Target did not threaten to leave the state. However, its public statement in support of LGBT rights prompted a boycott against its stores. Adding to the difficulty was the fact that Target was caught on the other side of the debate in 2010 in one of the earliest high-profile controversies resulting from the Supreme Court Citizens United ruling. Target had contributed to a super PAC supporting business friendly candidates. As one of the candidate's opposition to same-sex marriage became well publicized, Target faced a consumer boycott as well as a shareholder proposal to change its policies on political contributions. The case covers current campaign finance regulations as they relate to business as well as Target's lobbying activities regarding online sales tax legislation.
In 2016, the deputy general manager of operations at DVMS Power Electronics Private Limited (DVMS) in Gujarat, India, was faced with a problem at the company’s transformer plant. In recent years, amidst growing demand, the company had experienced low manufacturing capacity and was often unable to fill customer orders. Various stakeholders expressed their concerns about failing service levels. The deputy general manager was considering additional capacity as an option, but simply adding such capacity might negatively affect DVMS’ cost structure. He needed to consider the various short- and long-term options that would best benefit the company. He assigned the company’s summer intern the task of collecting the required data regarding the manufacturing of transformers at DVMS: the specified number of machines and workers, the processing time, and the monthly demand data for transformers. He needed to prepare a report that identified weak areas and suggested possible ways to expand capacity.
This is the second in a set of two Readings on Modern Portfolio Theory. It presumes readers have already read "Risk and Return 1: Stock Returns and Diversification" (#5220). This Reading starts by examining the effect of diversification on portfolio volatility, graphically and mathematically, for different levels of correlation among portfolio assets. Next, it compares portfolios and defines the concepts of efficiency and the efficient frontier. It introduces a riskless asset and uses it to identify the tangency portfolio and to define the Sharpe Ratio as a way to compare excess returns to risk. The discussion demonstrates how borrowing and lending can create any portfolio along the line between the risk-free rate and a portfolio in mu-sigma space, and it presents the two-fund separation theorem. Finally, the Reading considers the problem of whether to add a small amount of a risky asset to an existing portfolio as a way to derive the Portfolio Improvement Rule, before concluding with general equilibrium and the Capital Asset Pricing Model (CAPM). Topics covered in the Supplemental Reading section include estimation of betas, the equity market risk premium, and real-world application of CAPM, and criticisms of CAPM, both theoretical and practical. The Reading contains six web-based interactive illustrations. The first shows the decline in the volatility of a portfolio's returns as the number of stocks in the portfolio increases from two to 30. The second is the same as the first but allows the reader to specify the correlation among the 30 stocks. The third shows the region in mu-sigma space that includes all possible portfolios for five risky assets, the "broken eggshell" shape. The fourth shows possible portfolios composed of two assets when one of the assets is risk-free. The fifth illustrates how the tangency portfolio and Sharpe ratio are determined. The sixth illustrates the Portfolio Improvement Rule.
Read any news report on the housing market, and inevitably it will include facts or figures from the real estate data giant Zillow.com. The company initially set out to solve two key economic frictions in the real estate industry-information asymmetry and the principal-agent problem-by empowering users to access real-time housing data and eliminating the need for realtors. The company soon realized, however, that American homeowners and buyers were not willing to give up the traditional real estate agent model and changed course. In the end, Zillow decided to join-rather than replace-the middlemen in the real estate industry.
This Reading helps readers understand that financial ratios-one financial statement item divided by another-are used to create useful metrics. In other words, the inputs or financial items are derived from the financial statements. The reading also shows how ROE is calculated using three ratios: profit margin, operation efficiency, and financial leverage.
This is the first in a set of two Readings on risk and return. It introduces the ideas of financial risk and return, at first intuitively, with a discussion of investor risk aversion and tradeoffs, and then formally, with a basic explanation of pertinent statistics. It introduces probability distributions and their parameters-mean and standard deviation-as measures of expected return and risk. Using sample statistics from historical returns as coordinate pairs, it plots asset classes in mu-sigma space to give a graphical representation of risk and return, and defines dominance. To cement understanding, the text steps through calculations of risk and return statistics from historical price data for Microsoft to mu-sigma space. The second half of the reading covers the co-movement of stock returns using sample covariance, beta, and correlation computed for pairs of risky assets. Scatter plots and linear regression are introduced to calculate beta. The Reading introduces essential portfolio math, with portfolio weights and correlation coefficients. It shows that a portfolio's risk is lower than the weighted average risk of its component assets if the assets are not perfectly positively correlated. This fundamental statistical property gives rise to the economics of diversification. The Reading contains 7 web-based Interactive Illustrations. The first demonstrates the Central Limit Theorem. The second ensures a solid understanding of how returns are calculated from prices and dividends. The third shows how to create a histogram.
The U.S. Patent and Trademark Office (USPTO) is the federal government agency responsible for evaluating and granting patent and trademark applications. In 2015, the USPTO employed approximately 8,000 patent examiners who granted nearly 300,000 patents to inventors. As of April 2016, it took roughly 26 months for a patent application to move through the evaluation process, which exceeded the office's processing goal of 20 months. In August 2016, Andrew Hirshfeld, the commissioner for patents at the USPTO, considered the current state of patent examination and future possibilities. In recent years, a number of new and exciting tools enabled by advances in telework, machine learning, and other approaches had emerged. Hirshfeld hoped to maximize these tools' utility in order to enhance patent examiners' work and productivity. Helping examiners become more productive could in turn help the USPTO achieve its joint goals of processing patent applications more quickly and granting better quality patents. But the new tools and organizational changes would bring challenges too. Any changes would have to be implemented at the grassroots of the USPTO organization, and ongoing pilots would not be successful without the buy-in and cooperation of both individual examiners as well as the union.
The Indian Space Research Organization (ISRO) achieved global acclaim by launching successful missions to the moon and Mars at a fraction of the cost of prior Western missions. It is now faced with an important strategic dilemma-whether to continue exploring deep space in collaboration with NASA and other leading agencies, whether to leverage its infrastructure for societal uses, or whether to exploit a commercial opportunity related to launching small, handheld cubesats. The case explores the basis for ISRO's cost advantage vis-Ã -vis western entities, as well as its resource constraints and human capital considerations as it makes this important strategic choice for the future.
Seventh Generation, a sustainable cleaning and personal care products company, has received a purchase offer from Unilever. Seventh Generation's CEO is deciding whether to accept the offer and, if so, under what terms. The deal would open many new avenues for growth and expansion for Seventh Generation, but would they be able to continue to pursue their mission "to inspire a consumer revolution that nurtures the health of the next seven generations" under the ownership of Unilever? Could Seventh Generation impact the values of Unilever to make both organizations more sustainable?
This technical notes answers the questions: What does the competitive landscape look like to a given competitor? Which firms does the competitor regard as its chief rivals? Critically, what actions is the competitor likely to take?
In 2016, the respective heads of The Humane Society of the United States (HSUS) and SeaWorld Parks & Entertainment, Inc. (SeaWorld) were trying to reach a mutually beneficial resolution to their dispute over orca whale breeding. The HSUS opposed SeaWorld's practice of breeding captive orcas and each leader was facing challenges. SeaWorld was experiencing growing negative publicity and a decline in park attendance and revenues, while the HSUS was in the process of publishing a book encouraging business leaders to join the animal protection movement and incorporate HSUS values into their strategic plans. After a decades-long antagonistic relationship, how could SeaWorld and the HSUS find common ground? Could SeaWorld continue operating in a way that was financially beneficial for the parks and entertaining to guests, while also being respectful of the welfare of the orca whales in their care? Could they meet the HSUS’s goals of animal protection?
In 2016, the chief executive officer of the ibibo Group, one of the largest players in India’s online travel sector, faced a major decision. MakeMyTrip, India’s market leader in online travel, had expressed interest in acquiring the ibibo Group. Should the ibibo Group’s chief executive officer accept the offer and give up partial or total control of the company, in return for growing with the market leader? Or should he continue with the business he had launched in 2007, and rely on outside investment or the parent company to fund his efforts at growing the business? It was time to evaluate his strategic options.
In 2016, LinkedIn was the largest online platform connecting people to job opportunities and training. The company’s goal was to innovate and co-create with stakeholders a stable, yet emergent online platform that could serve a global business community undergoing rapid transformation in technology, job requirements, and the structure of work itself. <br><br>LinkedIn had a leadership role in this transformation; the company vision, market penetration, and expertise promised to help address major problems of global unemployment and underemployment. The company’s Economic Graph, a massive data set of employment information, was part of the response, but LinkedIn had some challenges to address. How could LinkedIn co-create with stakeholders a stable, increasingly scaled online platform that could serve a global business community, while the structures of those stakeholders inhibited interconnectivity, the skill sets for workers were evolving, and the requirements for and nature of work itself was going through rapid, uncertain transformation? How could it expand to include less educated adults and connect people in regions with different business cultures, values, and practices? How could it better coordinate open-source information among stakeholders? How could it define “soft skills” and connect people with good soft skills with hiring managers?
In February 2017, disruption in the carbonated soft drink value chain in the fictional city of Utopia has raised opportunities for prospective entrants to explore new business-to-business (B2B) partnerships at all levels in the value chain. This in-class, action-oriented strategic B2B partnership exercise has been designed to give learners experience in deciphering how B2B partnerships are built. In teams, participants assume the roles of the key value chain players in the soft drink industry (i.e., strategy heads of beverage companies, bottlers, big retailers, and small retail store owners). Teams are provided with an industry description and specific role information highlighting relevant constraints and opportunities. The teams then work to negotiate contracts during this in-class exercise.