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Picks up the negotiation between Thermo-Impact and Medallion Capital where the (A1) and A2) cases leave off. The companies began talks in 1995 when Medallion offered to buy Thermo-Impact. This case brings the negotiation through May 1996. Students view developments from the perspective of Thermo-Impact's owners and must make decisions about how to proceed in the negotiation with Medallion. of class.

Carries the negotiation between Thermo-Impact and Medallion Capital through October 1996. The companies began talks in 1995 when Medallion offered to buy Thermo-Impact. Students view developments from the perspective of Thermo-Impact's owners and must make decisions about how to proceed in the negotiation with Medallion. Can be taught over a span of two or three class periods.

A Vermont solid-waste company seeks mezzanine financing to finance its strategy of acquiring and consolidating local competitors. The mezzanine private equity group must decide whether this investment offers an attractive risk-return tradeoff.

Supplements BCI Growth III: May 1993.

Empresas CAP began as a private-sector steel company in 1946. Over the next 40 years, CAP's ownership structure moved from nationalization to reprivatization. Unrestricted by state ownership, CAP began to diversify its holdings. The case considers the viability of CAP's diversification into forestry, and the course of action that CEO Roberto de Andraca should take.

Tyco, a diversified U.S. conglomerate, has grown rapidly for more than 20 years. This case examines Tyco's acquisition strategy as well as its internal control systems.

Scandinavia Translations (Scantran) provides translation services between English and the three Scandinavian languages (Danish, Swedish, and Norwegian), as well as Finnish. The business is operated primarily by one person, Heidi Wade, assisted by her husband Mike. The unique thing about Scantran is that it is a purely virtual business: Heidi and Mike never meet with, see, and rarely even speak with any of their clients, nor with any of their individual translators. Almost all the business is done over the Internet, supplemented by faxes and occasionally the telephone. Documents are mainly transferred as file attachments to Internet electronic mail messages. There are no other permanent employees, and all the work is done out of the couple's apartment, with no need for expensive overhead such as office premises or fixed salaries. Scantran's business has grown rapidly since its inception. The Wades are faced with a number of decisions, including whether to try to stay the size they are or "go for growth," which implies adopting a new business model. If the decision is to grow, what should the new business model be? Can the company maintain the great flexibility provided by the Internet and still expand? This case nicely illustrates both pros and cons of virtual small businesses, typical of a great many Internet-dependent startup companies created in recent years.

Executives at Pepsico are considering a possible redesign of the Pepsi carbonated beverage packages worldwide to give the brand a modern, up-to-date image and "ownership" of the color blue against Coca-Cola's "ownership" of the color red.

Dell started online commerce for its PCs in 1996, and by 1997 had achieved a sales rate of $3 million a day. The case describes the internal process that led to these dramatic results and poses the question of how the firm should leverage this activity to meet Michael Dell's goal of achieving 50% of the company's anticipated $20 billion in sales by the year 2000 via Internet channels.

Presents a series of problems that face a newspaper publisher, including inventory level, effort level, subsidy for unsold inventory, and commission for sales. Students must make various operational decisions.

Most companies change in reaction to events such as moves by the competition, shifts in technology, or new customer demands. In fairly stable markets, "event pacing" is an effective way to deal with change. But successful companies in rapidly changing, intensely competitive industries take a different approach. They change proactively, through regular deadlines. Kathy Eisenhardt of Stanford and Shona Brown of McKinsey have studied this alternative approach, which they call time pacing. Like a metronome, time pacing creates a rhythm to which managers can synchronize the speed and intensity of their efforts. For example, 3M dictates that 25% of its revenues every year will come from new products, Netscape introduces a new product about every six months, and Intel adds a new fabrication facility to its operations approximately every nine months. Time pacing creates a relentless sense of urgency around meeting deadlines and concentrates people on a common set of goals. Its predictability also provides people with a sense of control in otherwise chaotic markets. The authors show how companies such as Banc One, Cisco Systems, Dell Computer, Emerson Electric, Gillette, Intel, Netscape, Shiseido, and Sony implement the two essentials of time pacing. The first is managing transitions--the shift, for example, from one new-product-development project to the next. The second is setting the right rhythm for change. Companies that march to the rhythm of time pacing build momentum, and companies that effectively manage transitions sustain that momentum without missing important beats. This piece presents important new thinking on one of the most demanding challenges managers face today.

How many projects in your organization have come in on time and on budget? If you're like most senior managers, the answer is likely to be none, no matter how many data-management systems, team-training programs, project-management software packages, or best practices you've been using. Are the project delays and cost overruns inescapable? One business thinker who says no is Eliyahu M. Goldratt. In his widely read novel The Goal, Goldratt pioneered the theory of constraints as a solution for factories struggling with production delays. Now, in Critical Chain, he extends the theory to the realm of project management. Whether a production process or a new-product-development project is at issue, the theory tells managers not to improve each step in the process but instead to focus on the bottlenecks, or constraints, that keep the process from increasing its output. Reviewers Jeffrey Elton and Justin Roe, consultants at Integral Inc., believe the theory works well for project managers dealing with individual projects. But they argue that senior managers need to take a broader perspective into account in order to manage a portfolio of all but the most innovative projects. And they question whether even properly focused managers can easily overcome the many balkanizing pressures that projects, in all their uncertainty, often fall prey to. To handle such pressures, companies also need talented leaders--a "constraint" that many will have difficulty overcoming.

This fictitious case outlines the dilemma faced by Luke Robinson, the new head of human resources at Loft Securities, a financial services firm. Robinson took the job because he thought it would be a rewarding challenge: Loft Securities needed someone to expand the role of the human resources department from being purely administrative to having significant input in recruiting, development, and strategic planning. The problem is, despite his best efforts, the firm's senior management team just won't let HR break out of its administrative mold. Robinson must decide: Should he hang up his hat, or is there a way to help the company understand just how--and how much--HR can contribute? Five commentators on this fictional case study explain why he should avoid quitting and how he can help his department earn new respect. The author, Robert Galford, consults with senior managers on performance, organizational, and career issues and teaches executive education at Columbia University's Graduate School of Business in New York City and at Northwestern University's J.L. Kellogg Graduate School of Management in Evanston, Illinois.

For managers in large, well-established businesses, the Internet is a tough nut to crack. It is very simple to set up a Web presence and very difficult to create a Web-based business model. Established businesses that over decades have carefully built brands and physical distribution relationships risk damaging all they have created when they pursue commerce through the Net. Still, managers can't avoid the impact of electronic commerce on their businesses. They need to understand the opportunities available to them and recognize how their companies may be vulnerable if rivals seize those opportunities first. Shikhar Ghosh, founder and CEO of Open Market, says the Internet presents four distinct types of opportunities: 1) it links companies directly to customers, suppliers, and other interested parties; 2) it lets companies bypass other players in an industry's value chain; 3) it is a tool for developing and delivering new products and services to new customers; and 4) it will enable certain companies to dominate the electronic channel of an entire industry or segment, control access to customers, and set business rules. As he elaborates on these four points, the author gives established companies a systematic way to sort through the risks and rewards of doing business in cyberspace.

This article offers insight to any decision maker struggling with a hard choice. Making wise trade-offs is one of the most important and difficult challenges in decision making. The sheer volume of trade-offs, however, is not what makes decision making so hard. It's the fact that each objective has its own basis of comparison, from precise numbers (34% versus 38%) to relationships (high versus low) to descriptive terms (red versus blue). You're not just trading off apples and oranges; you're trading off apples and oranges and elephants. How do you make trade-offs when comparing widely disparate things? In the past, decision makers have relied mostly on instinct, common sense, and guesswork. They've lacked a clear, rational, and easy-to-use trade-off methodology. To help fill that gap, Howard Raiffa, a professor emeritus at Harvard University, John Hammond, a Boston-area consultant, and Ralph Keeney, a professor of systems management at the University of Southern California have developed a system--which they call even swaps--that provides a practical way of making trade-offs among a range of objectives across a range of alternatives. The even-swap method will not make complex decisions easy; you'll still have to make hard choices about the values you set and the trades you make. What it does provide is a reliable mechanism for making trades and a coherent framework in which to make them.

Managers today are struggling to cope with highly unpredictable markets. For any manager facing uncertainty, this article provides a new model for thinking and acting. The past two decades have seen a dramatic acceleration in the pace of marketplace change. Companies have abandoned the old hierarchical model, with its clean functional divisions and clear lines of authority, and adopted flatter, less bureaucratic structures. But if most organizations have begun to adapt to the uncertainty of rapid change, most managers have not. They remain locked into the mechanical mind-set of the industrial age--that is, they assume that any management challenge can be translated into a clearly defined problem for which an optimal solution can be found. That approach works in stable markets and even in markets that change in predictable ways. Today's markets, however, are increasingly unstable and unpredictable. Managers can never know precisely what they're trying to achieve or how best to achieve it. They can't even define the problem, much less engineer a solution. For guidance, they can look to the managers of product design, a function that has always been fraught with uncertainty. Richard K. Lester, director of the Massachusetts Institute of Technology's Industrial Performance Center, Michael J. Piore, the David W. Skinner Professor of Political Economy at MIT, and Kamal M. Malek, a research staff member of MIT's Industrial Performance Center describe an approach to management developed by design leaders that is very different from the traditional analytical approach. This new approach encourages open-ended conversations among designers, technicians, and customers as a way to interpret and respond creatively to ambiguous situations.

This interview offers a deeper look inside Dell's highly publicized success and offers managers a model of how traditional relationships in a value chain can be reconceived in the Information Age. The individual pieces of Dell Computer's strategy--customer focus, supplier partnerships, mass customization, just-in-time manufacturing--may all be familiar. But Michael Dell's business insight about how to combine them is highly innovative: Technology is enabling coordination across company boundaries to achieve new levels of efficiency and productivity, as well as extraordinary returns to investors. In this HBR interview, Michael Dell describes to HBR editor-at-large, Joan Magretta, how his company is achieving "virtual integration" with its customers and suppliers. Direct relationships with customers create valuable information, which in turn allows the company to coordinate its entire value chain back through manufacturing to product design. Dell describes how his company has come to achieve this tight coordination without the "drag effect" of ownership.

Why do some employees perform poorly? Most managers would answer this question by ticking off a list that includes weak skills, insufficient experience, inability to prioritize assignments, or sometimes even a lack of motivation. In other words, most managers would contend that poor performance is the employee's fault. But is it? Not always, according to Jean-Francois Manzoni, assistant professor at INSEAD, and Jean-Louis Barsoux, research fellow at INSEAD. Their research with hundreds of executives strongly suggests that it is bosses themselves--albeit accidentally and with the best intentions--who are often responsible for an employee's sub-par achievement. They call this dynamic "The Set-Up-to-Fail Syndrome," and in this provocative look at what makes--and sustains--dysfunctional work relationships, the authors conclude with a detailed description of how to break out of the negative spiral that can drain both individuals and organizations of valuable productive energy.

Shrinking R&D budgets and shorter product life cycles mean investment dollars must be invested with precision if companies are going to stay on the cutting edge in their industries. For a pharmaceuticals company like SmithKline Beecham (SB), the problem is this: How do you make good decisions in a high-risk, technically complex business when the information you need to make those decisions comes largely from the project champions who are competing against one another for resources? Tom Keelin from Strategic Decisions Group and Paul Sharpe from SmithKline Beecham explain how they overhauled the resource allocation processes within the pharmaceutical development function at SB. In 1993, the company experimented with ways of depoliticizing the process and improving the quality of decision making. In most resource-allocation processes, project advocates develop a single plan of action and present it as the only viable approach. In SB's new process, the company found an effective way to get around the all-or-nothing thinking that only reinforces the project-champion culture. In another important departure from common practice, SB separated the discussion of project alternatives from their financial evaluations. The new process at SB has allowed the organization to spend less time arguing about how to value its R&D projects and more time figuring out how to make them more valuable. In the end, the company learned that by tackling the soft issues around resource allocation--such as information quality, credibility, and trust--it had also addressed the hard ones: how much to invest and where to invest it.

What is the difference between an ethical decision and what the author, Harvard Business School Professor Joseph Badaracco, Jr., calls a defining moment? An ethical decision typically involves choosing between two options: one we know to be right and another we know to be wrong. A defining moment challenges us in a deeper way by asking us to choose between two or more ideals in which we deeply believe. Such decisions rarely have one "correct" response. Taken cumulatively over many years, they form the basis of an individual's character. Defining moments ask executives to dig below the busy surface of their lives and refocus on their core values and principles. Once uncovered, those values and principles renew their sense of purpose at the workplace and act as a springboard for shrewd, pragmatic, politically astute action. Three types of defining moments are particularly common in today's workplace. The first type is largely an issue of personal identity. The second type concerns groups as well as individuals. The third kind involves defining a company's role within society. By learning to identify each of those three situations, managers can learn to navigate right-versus-right decisions successfully. The author asks a series of practical questions that will help managers take time out to examine their values and then transform their beliefs into action. By engaging in this process of self-inquiry, managers will be gaining the tools to tackle their most elusive, challenging, and essential business dilemmas.