In October 2014, the chief operating officer of ABC Shipyard was trying to decide how to respond to a request from a renowned marine logistics company for five large naval bulk carriers. The shipyard could manufacture the ships, but with its current layout and throughput, the ships could not be completed within the requested two-year delivery time. A modular approach was necessary to build large and complex products such as ships, complicating the required flow of material between the shops and affecting the spatial resources needed. Could ABC Shipyard's existing facility layout be improved, and would the change increase throughput, allowing the new ships to be built within the required two years?
In the spring of 2012, a U.S. Internet, cable television, and telephone service provider-owned by a private equity group-approached a bank holding company to participate as a co-manager in a highly leveraged transaction in the cable industry. The transaction was the buyout of a smaller publicly traded cable company. The deal would require additional equity investment from the private equity group and a restructuring of the debt of both companies. Although the involved companies' management teams were excited about the opportunity, they knew that executing the deal would not be easy; the level of leverage would be the highest of any deal in the cable industry-or any industry-since before the 2007 economic downturn.
This module reading provides an overview of the business conduct boundaries, strategic boundaries, and internal control systems used to manage risk. Boundary systems - linked to clear, enforceable sanctions - are essential whenever demanding performance goals are set and rewards are linked to performance outcomes. A framework is introduced for designing internal control systems to safeguard information and assets. These internal controls provide the checks and balances to ensure that errors of omission and commission cannot slip undetected into the transaction processing stream. The behavioral and motivational assumptions that underlie these systems is analyzed. Finally, the module describes how managers can impose strategic boundaries to limit where employees look for opportunities and commit scarce resources. While this module is designed to be used alone, it is part of the Strategy Execution series. Taken together, the series forms a complete course that teaches the latest techniques for using performance measurement and control systems to implement strategy. Modules 1 - 4 set out the foundations for strategy implementation. Modules 5 - 10 teach quantitative tools for performance measurement and control. Modules 11 - 15 illustrate the use of these techniques by managers to achieve profit goals and strategies. View the full Strategy Execution series at: hbsp.harvard.edu/strategy-execution.
BrightStar Care was a rapidly growing franchise of home health care agencies. Founded by husband and wife team JD and Shelly Sun as a single agency near Chicago in 2002, by 2016 nearly 300 BrightStar franchises were open across the United States, generating over $300 million in revenue. BrightStar was now a very different company from the one Shelly and JD had started up during their first year of marriage. Shelly Sun, CEO, had decided to franchise the business in 2004, believing that the franchise model presented a relatively low-risk and high-return approach to growing BrightStar. As franchises began to sell, Sun quickly set about building scalable operations and infrastructure, including a centralized technology function and custom software for franchisees. As more and more locations opened around the United States, she focused on growing BrightStar's national marketing profile and putting measures in place to distinguish BrightStar's services as higher-quality than that of its competitors. A shifting regulatory landscape and labor shortages posed challenge, but BrightStar continued to grow swiftly. As the company evolved and Sun attempted to spend more time away from headquarters, surveying the field and building relationships, she knew she needed a strong senior management team. Some members of her senior team had been with BrightStar for years, expanding their responsibilities as the company expanded, while others she recruited from outside. In the early 2010s, Sun was close to filling all BrightStar's crucial executive roles, but had to consider whether some longtime leaders were the right fit for the company's current needs. As she thought through the composition of her senior team, she also revamped her board of advisors and pursued international franchising opportunities and a debt recapitalization. By early 2016, Shelly was looking to the company's next phase of growth while handing management of her executive team to BrightStar's President and COO.
Magnus Wanberg is the creator of reMarkable, a breakthrough e-writer device set apart from similar products on the market by having solved the frustrating "slow ink" problem typically experienced on pen-based electronic devices, thus providing a "pen and paper" like experience. Moreover, the device allowed for the convenient and non-eye-straining reading of typical documents. Though enthusiastically received by several investors, there was still a long way to go before the prototype could reach a final commercial product. Wanberg and his team narrowed down the relevant market to three main segments: creative professionals, working professionals and students. However, these segments were seemingly at odds with each other in terms of which product attributes would most appeal to each. The young company therefore had to choose which group to target as this would dictate future product development efforts. With the planned launch date quickly approaching, the target market selected also impacted communication, channels, and pricing decisions. reMarkable had to resolve these matters while juggling limited time, effort and funds.
In 2007, the founders of Airbnb were looking to solve a problem and ended up transforming their idea into a $10 billion company. What started as a quick website to advertise an overnight stay on their apartment airbeds along with breakfast in the morning eventually grew into an online accommodation booking business that spanned the world. Airbnb used its business model to carve out an extremely important space in an already crowded industry. However, along with success came challenges in terms of the scalability of its business model. In 2014, Airbnb was also facing legal challenges by state attorneys general that could make its business model suspect. The founders had to decide whether to defend their business model in a court of law and in the court of public opinion, or change it.
In 2015, the managers for a major car manufacturer in the United States, American Automobiles Limited, were faced with a pressing problem in their press shop. The press shop made body panels for the company's 10 different car models using a stamping process. In all, 137 different body panel parts were produced by six press machines. Each press had a distinct stroke rate that decided the time per stamping operation. Time was lost in changing dies, and there were limits on the lot sizes in which the panels could be stamped. Also, some panels could be stamped only on certain presses. The press shop's managers were seeking to allocate the parts to panels in such a way that total costs could be minimized. How could they accomplish this?
In 2007, the founders of Airbnb were looking to solve a problem and ended up transforming their idea into a $10 billion company. What started as a quick website to advertise an overnight stay on their apartment airbeds along with breakfast in the morning eventually grew into an online accommodation booking business that spanned the world. Airbnb used its business model to carve out an extremely important space in an already crowded industry. However, along with success came challenges in terms of the scalability of its business model. In 2014, Airbnb was also facing legal challenges by state attorneys general that could make its business model suspect. The founders had to decide whether to defend their business model in a court of law and in the court of public opinion, or change it.
In September 2013, Sanjit “Bunker” Roy was honoured with an award for his vision and leadership in addressing global problems through his novel organization, Barefoot College (Barefoot). Barefoot’s mission was to improve the lives of impoverished rural residents by upgrading their existing skills with training so the villages and their residents were self-sufficient. When he started the college in the state of Rajasthan, India, in 1972, Roy never dreamed that Barefoot would be able to affect the lives of millions of people in 24 countries. Barefoot’s global footprint was spreading at a rapid pace with requests for even more locations. Roy wondered whether he should freeze the organization in its present state or continue to increase its presence with a centralized headquarters. Alternatively, he could replicate the autonomous model on a smaller scale, still adherent to the beliefs, values, and assumptions that were the foundation of Barefoot College. This case won second prize at the ISB-Ivey Global Case Competition 2016 in the overall category.
In 2015, the managers for a major car manufacturer in the United States, American Automobiles Limited, were faced with a pressing problem in their press shop. The press shop made body panels for the company’s 10 different car models using a stamping process. In all, 137 different body panel parts were produced by six press machines. Each press had a distinct stroke rate that decided the time per stamping operation. Time was lost in changing dies, and there were limits on the lot sizes in which the panels could be stamped. Also, some panels could be stamped only on certain presses. The press shop’s managers were seeking to allocate the parts to panels in such a way that total costs could be minimized. How could they accomplish this?
In mid-2015, a credit analyst with a leading investment company was tasked with assessing the overall credit quality of a chemical company that equity analysts had recommended as a long-term investment for his firm’s insurance equity fund. The analyst set out to use various financial parameters—liquidity, working capital, profitability, efficiency, capital structure, and debt servicing. He believed that a fair assessment of credit quality could help capture a firm’s financial health in its entirety, and had a lot to consider as he began his analysis. The case illustrates best practices for credit analysts in assessing a target company’s overall financial risk profile using the company’s publicly available audited financial statements.
Researchers at the Ontario Veterinary College had formed a company, Immuno-Genetics Inc., to develop new technologies to measure the immune response of dairy cows by using a blood test and skin thickness test on individual cows. Cows who showed a high immune response were unlikely to contract a number of common diseases. The test results thus allowed dairy producers to determine the likelihood of cows having health problems over their lifetimes. This information was valuable in managing a dairy herd to optimize performance and minimize health costs. Immuno-Genetics' early marketing research supported the launch of the technology, but an effective marketing strategy had to be developed. Immuno-Genetics had to determine who should be targeted, what products should be sold to each target, how the products should be priced, and what method of distribution to use. In addition, a promotional strategy needed to be developed for the product launch, and sales and profit projections needed to be made for the first two years of operations.
In the spring of 2015, a marketing professor from Indore City in India was looking for an academic, entrepreneurial opportunity that would allow him to work alongside his wife. The professor came across a franchise proposal for a preschool with Delhi-based Wonder Kidz Education Pvt. Ltd. The total investment in the project would be approximately ?625,000, and cash profits would come in the first year. After discussing the opportunity with the company’s director, the professor was interested in taking on the franchise. However, not being an expert in finance, he was confused about the calculations and decided to seek an opinion on the financial feasibility of the project before making his decision.
In 2012, Germany-based Putzmeister was acquired by China-based SANY, the largest concrete machinery manufacturer in the world. By early 2015, the degree and extent of integration was still incomplete, which put pressure on SANY’s management. SANY focused mainly on the Chinese domestic market, whereas Putzmeister had an established brand and good experience in international markets. Should the acquisition integration focus only on Putzmeister, or should it be tied more closely to SANY’s strategic renewal? SANY and Putzmeister had launched a “double-brand strategy” in specific markets, but was it the appropriate strategy?
In 2014, the Patient Room of the Future (PRoF) was the largest European open innovation consortium in the healthcare sector. Established in 2009 by a group of manufacturers who were suppliers to the health care sector, PRoF brought more than 300 professionals from multiple disciplines and industries together to think about and contribute to the future of the health care industry. The consortium derived its power from a novel interdisciplinary approach, resulting in the successful completion of four projects. Yet its future presented many unanswered questions: How would PRoF continue to provide an innovative and dynamic environment for its members and stakeholders in the healthcare sector? How would PRoF’s projects achieve large-scale adoption, and what resources were needed to do that? What was the next step in the consortium’s development?
In January 2016, the chief executive officer of Apollo Gleneagles Hospitals (AGH) was reflecting on the 12-year journey that had led to the establishment of AGH as the strongest pillar of holistic healthcare in Eastern India. AGH brought together the best infrastructure, equipment, people, and systems to serve the people of Eastern India with end-to-end tertiary healthcare. The institution grew with a continuous drive for expanding knowledge, introducing the latest technologies, and building a culture of compassion and care. However, AGH’s success had led to a shift in focus, drawing the attention of several leading tertiary care hospitals to the untapped healthcare delivery potential in Eastern India. This shift meant increased competition for AGH and higher expectations from its customers. AGH wanted to maintain its leadership position and better understand the organization’s future challenges and focus areas. Which business model would best serve the people of India: expanding the current location or launching a multi-location facility? How could AGH maintain its current high level of recognition, expertise, and availability?