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Conventional finance theory demonstrates that, under simplistic assumptions, firms cannot add to shareholder value through the use of risk management activities. Modern finance theory has begun to carefully consider and examine those circumstances under which firms can add to shareholder value. This note briefly reviews the major ideas prevalent in both conventional and modern finance literature regarding the potential benefits of risk management.

Jonathan Potter is considering an investment in the newly formed McArthur/Glen Real Estate Investment Trust. The case gives some background on real estate investment trusts and their history. Also discusses manufacturers' outlet shopping centers, the type of real estate that McArthur/Glen Realty owns and develops. The REIT industry is experiencing explosive growth, and it is important to assess its role and viability both as part of the real estate industry and as part of the overall market for public securities.

Designed to serve as background reading for the "Managing Your Career" module of the second-year MBA elective Power and Influence. Describes the way in which managers learn and develop through on-the-job experience. Outlines a model for launching a "success syndrome" by building power and influence over the course of one's career. Also identifies some of the special challenges of: 1) managing one's early career, 2) developing power as a minority in the organization and the "glass ceiling" phenomenon, and 3) developing ethical judgment. Focusing special attention on the importance of self-assessment and introspection in building a successful career, the note concludes with a list of questions individuals should ask themselves periodically to take stock of their career and personal development.

Lisa Benton is in her fourth month as an assistant product manager at Houseworld, a leading consumer products company. She has been on the job since graduating from the Harvard Business School, and she has been frustrated from the start by a lack of responsibility, by her poor relationship with her boss and a colleague, and recently, by the negative performance review she received. Concerned about her future at Houseworld, Benton is considering calling her former boss from her summer job to inquire about a position. An updated version of an earlier case.

Provides a follow-up to Lisa Benton (A).

Komatsu, a leading manufacturer of construction equipment, seeks to expand aggressively through the 1990s. Key to its competitiveness is a strict adherence to target costs throughout the product development process. Komatsu conducts several design-for-manufacturability cost studies to ensure a product's profitability, sets target costs for suppliers, and uses cost reduction techniques when necessary. Because it is a crucial element of the design and manufacturing processes, Komatsu's target costing system is central to the firm's plans for growth, globalization, and diversification.

Describes Nissan's sophisticated target costing system in the context of new product introduction. On the basis of consumer analysis and a life cycle contribution study, Nissan conducts an exhaustive analysis of component costs to determine whether a new model can be profitably manufactured. Cost reduction measures are then pursued both internally and with suppliers to ensure that the model can be produced to the target cost. The target costing system is central to Nissan's continued competitiveness in the fiercely contested Japanese automobile market.

Emphasizes the connection between a firm's activities and its prices, costs, and volumes. A firm obtains a competitive advantage when it adopts a system of interrelated activities that generate superior profitabiltiy. Briefly describes differentiation and low-cost strategies.

Supplements the (A) case.

Riding the crest of recent artistic and organizational successes, this self-governing symphony orchestra now confronts the challenge of engendering a culture in which, in the words of the managing director, "everyone in the orchestra is constantly thinking, how can we make this better?"

Traces the history of Intel from its earliest days as a technology-driven memory company to its emergence as an increasingly market-focused microprocessor company with emerging systems capabilities. The focus is on the strategic, organizational, and management adaptation that was required to ensure the company's survival in a highly volatile industry. Under the leadership of Andy Grove and Gordon Moore, Intel is able to overlay its R&D base with manufacturing and marketing capabilities that allow it to continually adapt to changes and renew itself.

Intensifying competition and change in the U.S. health care industry force a large integrated health-care provider to reassess its strategy of operating both hospitals and health insurance plans (HMOs). In an attempt to increase its stock price and operating performance, the company considers a number of alternative restructuring strategies for separating the two businesses, including a corporate spinoff.

Bose Corp. is evaluating an unusual plan to manage relationships with vendors that supply components for Bose speakers. The company must decide: 1) which planning and ordering activities should be performed by Bose and which can be performed by vendors, 2) how much access vendors should have to Bose computer systems and facilities, and 3) how to adapt vendor relations as the company grows or as markets change. Students are asked to consider both the buyer's and the vendor's perspective on the buyer-seller relationship.

Supplements the (A) case.

Supplements the (A) case.

Supplements the (A) case.

The competition between Coke and Pepsi is a classic corporate battle that began in America at the turn of the century and has expanded into worldwide competitive warfare in the 1990s. This case examines the economics of the soft drink and bottling industries, and describes the history and internationalization of the cola wars.

Spreadsheet Supplement for case 294062

Reading Energy builds facilities that produce energy from nontraditional fuels. A privately held, entrepreneurial organization, it has spent six years developing a plan to build a waste-to-energy plant in the town of Robbins, Illinois. The plant would burn municipal solid waste, producing electricity for sale to the local utility. Its economics are driven by the cost of alternative waste disposal technologies (mostly landfills) and by the Public Regulatory Policy Act of 1978, which ensures a market for the power. Reading's project has been delayed by political opposition at both the local and state levels. Robbins is a poor community, and some of Reading's antagonists have invoked environmental justice as a reason to oppose the project. Tom Cassel, the engineer who founded Reading, is negotiating contracts for waste with nearby municipalities. He needs to consider price, risk allocation, and other economic factors, in addition to political and social issues, in designing his firm's strategy and tactics.

Designed as an overview note for the Managing Your Team module of the MBA second year elective course Power and Influence. Identifies some criteria for evaluating team effectiveness and outlines in detail the key areas of responsibility of team managers: managing the team's boundary, and managing the team itself (including designing the team and facilitating the team's process). Also contains a brief appendix on managing transnational teams as well as substantial bibliographic references for further reading.