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Supplements the (A) case.

Peter Kelly became CEO of Med-Mart, a home health supply company, shortly after his search fund acquired it in 1993. Unfortunately, at the time of purchase, Med-Mart's sales growth, inventories, and receivables had been grossly overstated, leading to a precarious financial situation once these errors were discovered after the acquisition was completed. During the summer of 1995, Kelly hired Tim Martin as Med-Mart's vice-president of sales to boost sales and help rescue Med-Mart from financial peril. However, Martin's proposal to increase sales involved refocusing Med-Mart from thousands of products down to just a few high-margin products, eliminating over 80% of current revenues. Kelly was wary of implementing such a drastic plan and knew that success was wholly dependent on the ability of the sales force to increase sales of the few remaining products dramatically. Kelly thought they could reorient the sales force to implement Med-Mart's proposed change in strategy effectively by changing the commission scheme. Kelly's next step was to design this new commission plan, considering the dollar value and timing of commission payments, as well as any thresholds, caps, or ramping of commissions. He wondered how the sales force would react to a compensation revamp and handle selling only one primary product.

CARE USA is spearheading a rebranding process for the organization. Examines the process and components of the rebranding strategy and its impact on CARE USA's direct mail strategy. Includes color exhibits.

XM Satellite Radio is a radically new way to listen to radio. Management must develop a marketing strategy to launch the firm and the category. A crucial aspect of the strategy is to determine which of two business models the company will pursue. Should it focus predominantly on charging customers a monthly subscription fee or on selling advertising time to advertisers? This decision is closely related to target market selection and to the choice of optimal price points for subscription fees and radio receivers. Market research commissioned by XM provides rich insights into these issues. In addition, XM management needs to figure out how to establish partnerships with the leading electronics manufacturers. A consideration of its market share and channel presence are essential to XM's ultimate success in integrating satellite radio into home and car audio systems. As it formulates its plan, XM needs to take into account the competitive landscape, primarily comprised of broadcast radio (AM and FM) that has been in existence for many years and is offered for free, as well as a second satellite radio provider (Sirius). Includes color exhibits.

Spreadsheet supplement for case 504-009.

Used in conjunction with UV0697 and UV0698. Three couples, all good friends, rent a beach house for the week. They all have different financial circumstances and different beliefs about what's fair. They need to find a way to decide who sleeps where, and how to divide the costs of the beach house.

Focuses on how Deutsche Borse's (the German stock exchange based in Frankfurt) acquisition of a 50% stake in Clearstream International, a company specialized in clearing, settlement, and custody of securities across borders, may or may not confirm its position as the world's largest securities trading and related technologies powerhouse. Deutsche Borse had become a "transaction engine" and operates as an exchange, offering a wide range of financial services and products (cash market operations, derivatives, information products, clearing, settlement custody). The company uses technology to support and fuel innovation.

Supplements the (A) case.

A credit-card company must value portfolios of customers based on their future earnings. The payment characteristics of customers serve to classify them into states. This case can be the basis for discussing state dynamics over time in a Markov process.

Set in 2003, this case presents the relative merits and demerits of direct and indirect methods of international property investment from the perspective of an Australian property company, LandLease (Asia) Property Ltd. (LL). It wished to gain exposure to the Hong Kong property sector and had the option of investing directly by acquiring real property assets or indirectly by acquiring interests in investment vehicles whose underlying investment performance was linked to the property sectors. LL was particularly interested in creating an investment portfolio and listing it as a REIT in Hong Kong. Compares and contrasts the most common forms and strategies of real estate investment. The relative attractiveness of direct and indirect international property investments will depend on the requirements, objectives, and financial strength of the investors. Despite differences in the underlying asset base and quality, direct and indirect investments are not mutually exclusive.

Examines how the "old economy" of the traditional postal service has changed over time and how Australia Post is adapting to the many pressures that threaten its existence. With increasing adoption of e-mail as a means of communication, increased competition as a result of deregulation, and the strain of servicing a country with huge distances between inhabited locations and low population density, Australia Post needed to find a solution that would ensure the long-term viability of its business. The retail sector, with its 4,000-plus post office outlets, processed many different types of across-the-counter financial transactions, including banking transactions and utility payments. A project team was established to address the fundamental issue of how to structure the IT infrastructure to enable retail outlets to generate future revenue flows for Post. However, having established the Internet-based infrastructure to connect the extensive chain of retail outlets, the question was whether this new infrastructure would successfully entice third parties to buy into the model.

Beth West is in the midst of hiring staff for the summer and would very much like to rehire Jennifer Smith who has worked for Clean Pools the past five summers. West fears that the wage scale within which she must work may discourage Smith from accepting the job. Although the negotiation can focus exclusively on the wage rate for lifeguarding, there are more fruitful areas of discussion that can be of benefit to both parties: extra lifeguarding hours, swim instruction, and extended work season. The case illustrates the opportunities afforded by information sharing and the relaxation of constraints. See also UV3994, which presents Jennifer Smith's perspective.

Jennifer Smith has worked the past five summers for Clean Pools and would like to do so again this summer. Unfortunately, the anticipated compensation does not meet her needs, but she will be meeting with Beth West, Clean Pools' head pool supervisor, to discuss the matter. Although the negotiation can focus exclusively on the wage rate for lifeguarding, there are more fruitful areas of discussion that can be of benefit to both parties-extra lifeguarding hours, swim instruction, and extended work season. The case illustrates the opportunities afforded by information sharing and the relaxation of constraints. See also UV3859, which presents Beth West's perspective.

Spreadsheet Supplement for case 204018

The Investment Committee of New England Healthcare must decide how to invest three long-term investment pools: a long-term, endowment-type fund and two pension plans. In particular, the committee is evaluating whether the two pension funds--one is a "final salary" pension plan, the other a "cash balance" pension plan--should have special investment considerations due to the unique characteristics of these plans' liabilities.

The case focuses on a joint venture between Honda Motor Company (HMC) of Japan and the Hero Group, a conglomerate of Indian companies held by the Munjal family. Hero is the largest manufacturer of bicycles in the world, and at that time had already dabbled in the motorized two-wheeler market with its mopeds. HMC entered into a 50/50 alliance with Hero to manufacture motorcycles for the Indian market. It assumed product design and technology transfer responsibilities while Hero was in charge of manufacturing and marketing. The venture performed very well until the contract renewal period, when Hero felt that HMC was slowing down its technology transfers. The agreement was extended for another ten years after protracted negotiations. Just as the relationship appeared to get better, HMC announced the setting up of a subsidiary in India to manufacture scooters. It said that the subsidiary would enter the motorcycle market in 2004. This grew from a split between Honda and its Indian partner in a venture that was manufacturing scooters. Having exited the venture, HMC wanted to go it alone. This caused serious concerns for Hero, since HMC's entry into the motorcycle market would threaten its very survival. The case closes with a set of issues that face Hero and sets the stage for exploring alternative paths that Hero could take in managing it future. .

Lynne Tabor, an IT manager at manufacturing giant MMI, has a great team. Everyone works hard and gets along, except Max Dyer, a talented programmer who is terrible in the interpersonal skills department. Three years ago Tabor reworked his job after employees complained that he was unengaged and even belligerent. Since then, he's been a solid worker, putting in extra hours and meriting good performance evaluations. But recently, Dyer's coworkers have noticed a change for the worse in him. Everyone at MMI is on edge after a round of layoffs. Reports of a workplace shooting in Seattle are all over the news. One coworker finds Max pinning up a certificate from a shooting range in his cubicle, and another worries that they will all end up as statistics of office violence. They want to know how Tabor plans to ensure their safety. Dyer thinks his coworkers are out to get him. They believe he fits the profile of a man on the edge. But what can Tabor do about an employee who has never made so much as a veiled threat to anyone? In R0307A and R0307Z, commentators James Alan Fox, a professor of criminal justice at Northeastern University; Steve Kaufer, a cofounder of the Workplace Violence Research Institute; Christine Pearson, a management professor at Thunderbird; Christine Porath, a professor of management and organizational behavior at the University of Southern California's Marshall School of Business; and Ronald Schouten, the director of the Law and Psychiatry Service at Massachusetts General Hospital, offer advice on this fictional case study.

For much of the 20th century, labor and capital fought bitterly for control of the industrialized economy. The titans of industry ultimately won a resounding victory over the unions, but the story doesn't end there. In today's economy, value is largely the product of knowledge and information. Companies cannot generate profits without the ideas, skills, and leadership capabilities of knowledge workers. It's these factors--not technologies, not factories, and certainly not capital--that give the most successful companies their unique advantages. As knowledge workers come to realize this, and see that the demand for their talent outstrips the supply, they are steadily wresting more and more of the profits from shareholders. This time the battle is between the sources of capital and the producers of value, and how it will end is far from clear. With this new battle, we're also witnessing a fundamental change in the political alignment of capital. The Left is now siding with "the common shareholder" against the well-compensated top tier of the labor pool. Shareholders seeing an unprecedented proportion of the return on their investments siphoned off to employees may well ask, Is there no end to it? The growing tensions between shareholders and managers cannot be ignored, and capitalism is at a crossroads--again.

When it comes to improving business performance, managers have no shortage of tools and techniques from which to choose. But what really works? What's critical, and what's optional? Two business professors and a former McKinsey consultant set out to answer those questions. In a groundbreaking, five-year study that involved more than 50 academics and consultants, the authors analyzed 200 management techniques employed by 160 companies over 10 years. Their findings at a high level? Business basics really matter. In this article, the authors outline the management practices that are imperative for sustained superior financial performance--their "4+2 formula" for business success. They provide examples of companies that achieved varying degrees of success depending on whether they applied the formula, and they suggest ways that other companies can achieve excellence. Without exception, the companies that outperformed their industry peers excelled in what the authors call the four primary management practices: strategy, execution, culture, and structure. And they supplemented their great skill in those areas with a mastery of any two of four secondary management practices: talent, leadership, innovation, and mergers and partnerships. A company that consistently follows this 4+2 formula has a better than 90% chance of sustaining superior performance, according to the authors.

The evidence is disturbingly clear: Most major business initiatives--mergers and acquisitions, capital investments, market entries--fail to pay off. Economists would argue that the low success rate reflects a rational assessment of risk, with the returns from a few successes outweighing the losses of many failures. But two distinguished scholars of decision making, Dan Lovallo of the University of New South Wales and Nobel laureate Daniel Kahneman of Princeton University, provide a very different explanation. They show that a combination of cognitive biases (including anchoring and competitor neglect) and organizational pressures lead managers to make overly optimistic forecasts in analyzing proposals for major investments. By exaggerating the likely benefits of a project and ignoring the potential pitfalls, they lead their organizations into initiatives that are doomed to fall well short of expectations. The biases and pressures cannot be escaped, the authors argue, but they can be tempered by applying a very different method of forecasting--one that takes a much more objective "outside view" of an initiative's likely outcome. This outside view, also known as reference-class forecasting, completely ignores the details of the project at hand; instead, it encourages managers to examine the experiences of a class of similar projects, to lay out a rough distribution of outcomes for this reference class, and then to position the current project in that distribution.