In 2002, a joint venture, Hess LNG, proposed a liquid natural gas import terminal in the city of Fall River, Massachusetts. The community led by the city’s mayor, who built a coalition comprising concerned citizens, non-governmental organizations, and politicians at multiple levels opposed the project. From early 2002 to June 2004, multiple issues emerged, and the opponents used various tactics to challenge their adversaries. Hess LNG's chief executive officer needed to deal with the community opposition, which was further complicated by the need for regulatory approval from the U.S. Federal Energy Regulatory Commission.
In July 2015, the owner of the Anandam Company approached a bank for additional funding to meet the growing requirements of his garment manufacturing firm. The owner was confident about the financial prospects of his firm, with its fourfold increase in revenue and phenomenal increase in profit after taxes over the last three years. In a lengthy discussion with the bank manager, the owner shared the development of his company and the dynamics and growth opportunities of the garment and textile market in India. He believed his firm was performing strongly in a highly competitive industry environment. The bank manager instructed the loan officer to process the loan application as soon as possible and make a decision. Determining the health of the company would involve preparing a trend analysis and a common size statement, interpreting selected ratios, and preparing a basic statement of cash flows. Was the Anandam Company a good candidate for receiving a loan?
Transformation is a preoccupation of corporate leaders like never before, creating a wave of multi-million-dollar organizational change programs. But as more companies decide to radically rewrite their business and operating models, as well as inject critical change into their underlying business, technology, and people strategies, the results are less inspiring. While many factors are at play, the essential elements of impactful transformation are effective leadership, vision and implementation. This article describes these principles in terms of the author’s recent change engagement with McCarthy Tétrault LLP, a 160-year-old law firm known as an industry poster child for modern customer service. <br><br> During the change initiative, the key components of leadership were quiet leadership, strong and supportive leadership, leadership that’s set up for success, and leadership that’s united as a team. Effectively establishing and communicating a new vision was broken down into balancing data and human insights; driving vision down to the details; and creating a new vision-supporting culture. Finally, the following best practices were key to implementing the change initiative: defining accountability and responsibility; introducing project management discipline; and planning to communicate and celebrate. Besides a communication plan, successful corporate transformations require a detailed celebration and recognition program to ensure that significant individual and team efforts are acknowledged. The principles of effective transformation ask three questions: What exactly do you want to accomplish? Who will lead the change program and how will they do it? How will you keep everything on track?
The Great Recession didn’t only harm financially troubled companies. After all, every time a bankruptcy is filed, shock waves travel along supply chains and often take healthy companies by surprise. In other words, when companies share suppliers, especially with major global corporations like General Motors, they share operational risks. Businesses can simply accept this risk. But with the global economy still struggling, it makes more sense for managers to consider using a group purchasing organization, or GPO, to insulate their operations from the ongoing business failures that are a natural result of any financial crisis or economic downturn. And let’s not forget the risk posed by black swan events like Japan’s earthquake/tsunami disaster in 2011. <br><br> Partnering with a GPO isn’t for everyone. Indeed, managing one’s own supply chain feels in line with the entrepreneurial spirit and enables flexible, one-on-one relationships with supplier partners. However, GPOs insulate companies against downturns and disasters and mitigate the risks associated with independent supply chain management. Other advantages include: 1) Better pricing: GPOs use the collective buying power of their members to negotiate better prices. 2) More advantageous payment terms: GPOs can negotiate better payment terms with sellers so that members can save money. 3) Greater reliability: When a supplier goes bankrupt, it can devastate a supply chain if there are no backup suppliers available. 4) Improved selection: Product development must continue even in a recession, so it’s essential that businesses can obtain the resources needed for new products and services. While GPOs have existed for a long time, they are growing in number in the post-Great Recession world because supply chain management is now more about guarding against market uncertainties than ever before.
On January 1, 2011, the Valle del Lili Foundation, a university hospital in Cali, Colombia, went from using paper for medical records and all associated clinical and administrative processes to managing everything electronically. This was a significant deviation from the industry norm since it was unusual for a hospital to simultaneously implement electronic medical records, computerized physician order entry, and enterprise resource planning. If they are implemented at all, they are generally done so independently. Also, hospitals that rise to the challenge of adopting information technology face a high failure rate, mainly for staff-related reasons, especially when medical staff resist its use. VLF's management team knew it had to achieve the buy-in of doctors as well as of clinical and clerical staff if it was to successfully implement SAP, a system that would reformulate workflows throughout the hospital. This case documents how the hospital achieved this ambitious goal. In doing so, it illustrates how organizations can manage large-scale change processes.
The SAP Design Thinking case follows the path of Sam Yen, Chief Design Officer at SAP, on his quest to infuse design thinking into the SAP organization. Through a series of programs and events, Yen discovered that while employees of the multinational conglomerate expressed interest in leveraging design thinking in their work, they never seemed to follow through with it. Yen and his design team experimented with a plethora of tactics-ranging from grassroots campaigns meant to engage the employee base, to top-down approaches intended to excite the company's executives, with the hopes that this enthusiasm would trickle down throughout the rest of the organization. On a trail rife with challenges, Yen and his team struggled to continuously develop new approaches until suddenly the metaphorical storm cleared, and he could clearly see a path to scale design thinking throughout SAP.
Supplement to case SM250B. The SAP Design Thinking case follows the path of Sam Yen, Chief Design Officer at SAP, on his quest to infuse design thinking into the SAP organization. Through a series of programs and events, Yen discovered that while employees of the multinational conglomerate expressed interest in leveraging design thinking in their work, they never seemed to follow through with it. Yen and his design team experimented with a plethora of tactics-ranging from grassroots campaigns meant to engage the employee base, to top-down approaches intended to excite the company's executives, with the hopes that this enthusiasm would trickle down throughout the rest of the organization. On a trail rife with challenges, Yen and his team struggled to continuously develop new approaches until suddenly the metaphorical storm cleared, and he could clearly see a path to scale design thinking throughout SAP.
When Margaret A. Cargill passed away in 2006, her 17.5 per cent stake in Cargill went to Margaret A. Cargill Philanthropies (MAC). MAC lobbied for her stake to be liquidated. Cargill proceeded to shed its 64 per cent stake in Mosaic, North America's second-largest fertilizer company, in exchange for Margaret Cargill's stake in the company, in order to maintain control over the company. Like many second- and third-generation family businesses, Cargill's current family owners were not actively involved in the day-to-day running of the company. Was spinning off Mosaic in the best long-term interests of Cargill? Were there other feasible ways in which Cargill could have better facilitated the liquidation of Margaret Cargill's stake?
In 2011, the chief executive officer of Singh Security Systems Limited, an Indian company that designed and manufactured security systems, wanted to expand the scale of operations. He located a partner, the business leader of a construction company that specialized in security systems, in Doha, Qatar. Together, they drew a lucrative plan to execute turnkey projects in security systems in Qatar. However, the best candidate to lead the partnership in Qatar was a woman, who was keen to pursue the position, but would be the only woman in a position of authority in a 180-member organization, in a male-dominated country. The business leader of the Qatari firm was hesitant to hire a woman to run the project. Should the company reconsider assigning a woman project manager to Qatar?
In 2014, China's leading domestic Internet-based ride-hailing company, Didi, claimed more than 50 per cent of the Chinese ride-hailing market, followed closely by a major local competitor, Kuaidi. As Didi and Kuaidi actively competed against each other, U.S.-based Uber entered the battle with a different strategy. In the face of the increasingly complex and constantly changing landscape of China's ride-hailing market, Didi's founders wondered what their next steps should be. What should the company do to sustain and strengthen its leadership in the nascent ride-hailing market?
In 2015, Didi and Kuaidi, the two leading players in China's Internet-based ride-hailing industry, merged to form Didi Kuaidi. The combined firm represented one of the world's largest Internet- and smartphone-based transport service companies, valued at about $6 billion. In its home market of China, Didi Kuaidi left its biggest competitor, Uber, a distant second. Meanwhile, Didi Kuaidi actively pursued global growth. For example, it invested in and partnered with Lyft, Uber's major competitor in the United States. However, the business and policy environment of the Internet transport service market was constantly evolving. The merged Didi Kuaidi needed to carefully create a portfolio of strategies to sustainably compete in both local and global markets.
This case is used in a Darden second-year elective in corporate finance, "Corporate Financial Policies." It asks students to analyze the cash flows estimated for a production sharing agreement (PSA) between BP and the Azerbaijan government targeted for signing by year-end 2014. The primary relationship is a joint venture (JV) between BP and the State Oil Company of the Azerbaijan Republic (SOCAR). The JV is entitled to recover operating costs and capital costs from the proceeds of sales of the early production of the project and share profits earned from production, called the profit petroleum (PP), with Azerbaijan after the cost recoveries. Students are provided a detailed cash flow model for the project and for BP's equity investment and are asked to explain how the value estimates correlate with the risks assumed by the respective parties. This case is appropriate for students who have studied the principles of discounted cash flow and cost of capital. It is best positioned as part of a first-year MBA finance course as the last case in a module related to cash flow analysis. The case can also be taught in an MBA elective containing advanced corporate finance topics. It would be of special interest to students planning for a career related to energy, banking, or consulting, and also relevant for students interested in international business.
In early 2014, the family leadership of Bush Brothers & Company, a leading player in canned vegetables (its Bush's Best line dominated the canned-beans market), faced questions about the family's vision for the future in light of an imminent leadership transition: third-generation member, longtime board chair, and, until recently, CEO Jim Ethier planned to leave his role as early as 2015. The family was into its sixth generation, with nearly sixty family shareholders spread across four branches. On the business side, the first non-family CEO was overseeing development of a growth strategy, including ongoing ventures into competitive new markets such as Hispanic foods. Its fourth-generation leaders-including Drew Everett (vice president of human resources and shareholder relations, and likely board chair successor), Sarah (chair of the family senate), and Tony (chair of the family's private trust company)-faced questions about whom to involve in developing a future vision, how to formulate the vision effectively, and what vision would best serve business and family interests. These questions represented underlying strategic dilemmas, such as whether to have a select group of leaders craft the vision or to solicit input from a wider range of shareholders, and how much to allow the business vision to drive the "people" vision-all framed by recent unsuccessful attempts to develop a shared vision. Resolving these dilemmas successfully would help the family frame and advance its established traditions of leadership, governance, and culture within a truly shared vision that boosted unity and long-term commitment. Students working on the case will gain insights into the framework, process, and challenges associated with developing a shared vision for a complex, multigeneration family enterprise.
In January 2013, Irish authorities were the first to uncover the year's first food sourcing scandal: horsemeat sold as beef on supermarket shelves. It was not long before regulators and retailers realized the problem was truly a continental one. The incident involved French exporters, Luxembourger production facilities, Cypriot and Dutch meat traders, British and Swedish retailers, and Romanian horsemeat. Food service providers and retailers were forced to test beef products to ensure they were horse-free, pulling products that contained traces of equine meat. British supermarkets alone disposed of an estimated 10 million "beef" burgers in the wake of the scandal. This case is an example of the challenges of managing the complex global supply chains that make up the modern food industry. In this class discussion, students will use concepts from management, economics, and public policy to assess the damage of this event and to analyze strategies for preventing similar incidents in the future.
In the summer of 2016, PepsiCo Beverages Canada faced a choice: whether to launch its new product, organic Gatorade, in Canada. Only a few months previously, PepsiCo North America Beverages’ chief executive officer had announced a company-wide initiative that was designed to offer consumers a greater variety of healthier products. Would such a product ultimately make PepsiCo more competitive in the Canadian market in light of recent trends that emphasized healthy options? Did Canadian consumers want organic Gatorade? PepsiCo also had to keep in mind its long-standing competition with The Coca-Cola Company, and decide how that would affect its strategic choices.
AWARD WINNING CASE - This case won the Best Teaching Case Studies Award at the Decision Sciences Institute (DSI), 2015. In 2014, as one of the most well-known Taiwanese cuisine brands, Din Tai Fung operated more than 100 restaurants around the world. Attracted by its signature xialongbao (soup dumpling), long queues of customers at Din Tai Fung's storefront were a common sight. Requests for partnerships for global expansion were constantly arriving. Customer feedback from overseas, however, suggested a notable gap in service quality between the overseas and Taiwanese branches. The demand for support by overseas branches had also surged significantly due to the fast pace of growth in recent years. The company's chief executive officer had deferred his plan to open the 10th branch in Taiwan. Nevertheless, plans to open new branches in overseas markets were enthusiastically evaluated by existing partners. Two new potential partnership offers from Dubai and the Philippines were being aggressively pursued. What was the best way to cope with the increasing number of requests for support from overseas branches and to ensure high quality? Should Din Tai Fung approve the two overseas offers for partnership that seemed promising? What was the best overseas expansion strategy?
Founded in 2006, Pacific Drilling was a fast-growing offshore drilling company. From the beginning, the company's chief executive officer was determined to create a unique drilling company by focusing exclusively on ultra-deepwater drilling and technological innovation. By the end of 2014, the company had more than 1,600 employees and was generating US$1 billion in annual revenues. However, the company also faced several challenges, such as being overly reliant on one key customer (Chevron) and the high costs of differentiation. With oil prices plummeting, the company was struggling to acquire new customers. To what extent could the company rely on what it had successfully accomplished in the past, and to what extent would it need to create and adapt to a new strategy?