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Software that "understands" psychology is helping fast-food restaurants capture customers' spare change, explains GE edgelab's Terri C. Albert and marketing professor Russell S. Winer.

International Accounting Standard (IAS) 39, Financial Instruments: Recognition and Measurement, has attracted considerable controversy throughout its development. Major European financial institutions and political agencies lobbied heavily against the development of certain provisions within the standard. Jacques Chirac, the president of France, suggested that the accounting treatment prescribed in IAS 39 threatens the stability of the European economic structure. Despite its efforts to accommodate constituents' concerns, the International Accounting Standards board refused to fully concede to lobby pressure and implemented a compromise standard in March 2004. As a result, the European Union's Accounting Regulatory Committee voted to recommend that the European Commission only partially adopt IAS 39, effectively "carving-out" two provisions that were the focal point of debate. Explores the history of IAS 39, describes the IAS 39 prescribed accounting treatment for fair value and cash flow hedges, outlines heavily debated issues surrounding macro hedge accounting, and illustrates the impact of politics in the accounting standard setting process. Also explores the implications of the European Commission's "carve-out" on the viability of the International Accounting Standards board and the board's overriding goal of global harmonization of financial reporting standards.

Examines how firms find pathways to high performance while simultaneously focusing on their top and bottom lines by aggressively developing and managing their relationships with key stakeholders. Top-performing firms are shrinking their core while expanding their periphery. At the same time that they are contracting their organizational centers and outsourcing increasing portions of their activities, these firms are extending their organizational borders by trying to provide customers with greater sets of products and services. As companies refocus, they have become increasingly dependent on reinforcing mutually beneficial ties to four sets of critical stakeholders: customers, suppliers, alliance partners, and intraorganizational business units. In each of these relationships, successful firms work their way up a ladder in which they intensify their collaborative efforts with that particular constituent. This phenomenon, which is evident across an array of industries, is one of the hallmarks of a new operating model: the relationship-centered organization.

Two companies, Myriad Genetics and OncorMed, competed to develop a genetic test for breast and ovarian cancer susceptibility. Although the two companies had offered genetic testing only to women who participated in their research studies, in 1995, both were considering selling their testing services to physicians generally. Despite the promising market for this testing service, some scientists and patient activist groups believed that it was premature to provide testing outside a carefully controlled research environment, where data could be collected on an ongoing basis to answer significant questions about the health consequences of genetic mutations and the potential benefits and risks of testing. Specifically, they argued that commercialization should wait because knowledge about an inherited predisposition to breast cancer was still emerging, and medical care options for mutation carriers were limited and not proven to be of benefit. In addition, data on the psychological and social effects on women who were tested were still evolving. Those in favor of restricting such testing to the research setting wanted laws in place to protect individuals from irresponsible testing practices, loss of privacy, and genetic discrimination. Details the decisions that Myriad and OncorMed made regarding their testing services and how the two companies addressed the concerns of those outside the company.

Genzyme Tissue Repair (GTR) had just received favorable Phase I clinical trial results, an important first step in gaining approval from the Food and Drug Administration (FDA) for its NeuroCell-PD. The groundbreaking technology behind NeuroCell-PD (developed by Diacrin, Inc.) used fetal pig cell neural transplants to treat Parkinson's disease. GTR was eager to get NeuroCell-PD to market as quickly as possible but knew that the path to obtaining FDA approval would be difficult. Genzyme, an innovative biotechnology company, had often entered uncharted territories in the past and had set precedents in medical research. Controversy would likely center on whether GTR would use what some were calling "sham" surgery as a placebo control in its Phase II trials of NeuroCell-PD in Parkinson's patients--trials intended to demonstrate both the efficacy and safety of the procedure. In sham surgery, a segment of patients in a study undergo the same aspects of the surgery experience as those receiving the experimental treatment, except that it does not involve fetal pig cells. Details the process for testing NeuroCell-PD and discusses the issues concerning sham surgery. Asks students to make a recommendation on whether to conduct sham surgery.

Examines L'Oreal's acquisition of leading U.S. cosmetics brands, including Maybelline, Redken, and Kiehl's, and their subsequent renewal and globalization. Reviews the history of L'Oreal, now the world's largest cosmetics company, from its origins in France in 1907. The company entered the United States in 1953, and from 1990, expanded rapidly with the acquisition of U.S. brands, which were renewed and then taken international. Focuses on Kiehl's--since 1851, a quirky New York luxury brand--which L'Oreal acquired in 2000 and is now expanding globally. Shows how L'Oreal developed a portfolio of U.S. and European brands that are now sold globally. Explores the corporate strategy and marketing challenges facing consumer products firms as they globalize and how acquisitions can facilitate globalization.

In 2005, the University of Chicago Investment office was deciding how much capital to allocate toward timber investing. Explores the challenges associated with optimal portfolio construction when one of the invested assets is illiquid with limited historical price transaction data.

Merrill Lynch (ML) is at a crossroads. Stan O'Neal became its CEO and implemented a radical cost-cutting program. In addition, the company dot-com continues to recover from the fallout from the Enron and dot-com scandals. What are the future prospects for ML? Can the firm compete against its traditional competitors or against the recently merged Goliaths of banking, such as Citigroup?

Spreadsheet Supplement for case 205101

Supplements the (A) case.

Faced with falling share prices and the critical eye of the media focused on Jack Welch's retirement plan, newly appointed CEO Jeff Immelt had the challenge of reassessing GE as a leader of corporate integrity and good governance. Presents the changes Immelt initiated in the board of directors, in Immelt's own compensation scheme, and in the compensation scheme for all GE executives, designed to address GE's corporate governance issues. Examines the use of stock options and alternative stock-based incentive schemes, along with the importance of each tool in a total compensation plan. A rewritten version of an earlier case.

The joint venture between General Motors (GM) and Shanghai Automotive Industry Corp. (SAIC) in 1997 was regarded as the largest single foreign investment ever made in China. The joint venture was considered by many as a high-risk investment for GM at that time. Eight years after signing the joint venture, GM proved to the world that its investment in China was justified, with its growing market shares and successful partnership with SAIC. Attempts to understand the strategic alliance between GM and SAIC and how the relationship contributes to the success and rapid growth of GM in China. Also analyzes the strategies adopted by GM and the potential threats and challenges imposed on foreign automobile companies in China. Sheds light on devising viable strategies for foreign companies to enter emerging markets.

A junior executive is given the task of calculating a benchmark common in the ship building industry - cost per compensated gross ton. Although raw data is available for its components, the executive must formulate relationships between the data to determine the benchmark. The case is designed to provide: 1) an introduction to the construction and use of benchmarks in quality management; 2) practice in conceptualizing a problem and designing a basic spreadsheet model to solve the problem. The modeling procedure uses an influence diagram as the basis for constructing the spreadsheet model, this spreadsheet model is available, product 7B05D011.

Supplements the (A) case.

Boeing dominated the commercial airline manufacturing business since bringing out the first commercial airline jet airliner. But in 2005, it delivered fewer new planes than its fast-moving competitor, Airbus. Boeing responded by transforming its manufacturing business and introducing the first "all-composite" commercial airplane: the 787 (the Dreamliner). In addition to being a revolutionary new commercial airliner, the 787 attempts to change the large "spoke-and-hubs" airport operation to nonstop travel between many new "city-pairs" worldwide.

Spreadsheet supplement to case 305101.