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Details a thinly disguised situation faced by a recent Harvard MBA graduate who was forced by a prospective employer to place a dollar value on a grant of stock options. There are two objectives: 1) Serves as an introduction to option valuation, in which students have an opportunity to use market data to value an option in a realistic setting. 2) The setting permits a broader discussion of the wisdom of option-based incentive plans and the popular misconceptions of the value of option grants based on a widespread misunderstanding of how options work and how they are valued.

The pharmaceutical division of a diversified company has been asked to develop a Balanced Scorecard. Research and development projects take about ten years to bring a new product to the marketplace and the division depends on good relations and active feedback from its customers for continued success. But currently, the division is evaluated by meeting monthly financial objectives. The case describes an early and less-than-successful attempt to develop a Balanced Scorecard encompassing financial, customer, internal process, and innovation perspectives.

Defines commitment, describes the psychological and organizational factors that underly it, and provides a comprehensive discussion of the policies and practices managers can employ to enhance commitment. Identifies control and commitment as two critical strategies managers must learn to manage and mix.

Five-party, four-issue internal negotiation among employees of a major engine manufacturer to agree on procurement guidelines in preparation for external negotiations with suppliers. Eagle Aircraft Engines, a manufacturer of engines for military and commercial aircraft, is preparing to negotiate a major five-year procurement for over 1000 parts from its suppliers. Its Airfoils and Casting Division (A&C) is responsible for purchasing roughly 100 of these parts. In preparation for the negotiations with suppliers, the five key personnel within A&C need to generate a "Business-Managed Procurement" policy in which A&C personnel must unanimously agree on four schedule and quality programs. The key personnel involved in the internal negotiation include three engineers, a buyer, and a financial analyst. They have all been sent a memo from the Purchasing Director outlining the overall procurement strategy. The Purchasing Director is putting pressure on them for consensus, emphasizing the importance of certain issues over others in preparation for his/her own negotiations with suppliers.

Five-party, four-issue internal negotiation among employees of a major engine manufacturer to agree on procurement guidelines in preparation for external negotiations with suppliers. Eagle Aircraft Engines, a manufacturer of engines for military and commercial aircraft, is preparing to negotiate a major five-year procurement for over 1000 parts from its suppliers. Its Airfoils and Casting Division (A&C) is responsible for purchasing roughly 100 of these parts. In preparation for the negotiations with suppliers, the five key personnel within A&C need to generate a "Business-Managed Procurement" policy in which A&C personnel must unanimously agree on four schedule and quality programs. The key personnel involved in the internal negotiation include three engineers, a buyer, and a financial analyst. They have all been sent a memo from the Purchasing Director outlining the overall procurement strategy. The Purchasing Director is putting pressure on them for consensus, emphasizing the importance of certain issues over others in preparation for his/her own negotiations with suppliers.

Five-party, four-issue internal negotiation among employees of a major engine manufacturer to agree on procurement guidelines in preparation for external negotiations with suppliers. Eagle Aircraft Engines, a manufacturer of engines for military and commercial aircraft, is preparing to negotiate a major five-year procurement for over 1000 parts from its suppliers. Its Airfoils and Casting Division (A&C) is responsible for purchasing roughly 100 of these parts. In preparation for the negotiations with suppliers, the five key personnel within A&C need to generate a "Business-Managed Procurement" policy in which A&C personnel must unanimously agree on four schedule and quality programs. The key personnel involved in the internal negotiation include three engineers, a buyer, and a financial analyst. They have all been sent a memo from the Purchasing Director outlining the overall procurement strategy. The Purchasing Director is putting pressure on them for consensus, emphasizing the importance of certain issues over others in preparation for his/her own negotiations with suppliers.

Five-party, four-issue internal negotiation among employees of a major engine manufacturer to agree on procurement guidelines in preparation for external negotiations with suppliers. Eagle Aircraft Engines, a manufacturer of engines for military and commercial aircraft, is preparing to negotiate a major five-year procurement for over 1000 parts from its suppliers. Its Airfoils and Casting Division (A&C) is responsible for purchasing roughly 100 of these parts. In preparation for the negotiations with suppliers, the five key personnel within A&C need to generate a "Business-Managed Procurement" policy in which A&C personnel must unanimously agree on four schedule and quality programs. The key personnel involved in the internal negotiation include three engineers, a buyer, and a financial analyst. They have all been sent a memo from the Purchasing Director outlining the overall procurement strategy. The Purchasing Director is putting pressure on them for consensus, emphasizing the importance of certain issues over others in preparation for his/her own negotiations with suppliers.

Five-party, four-issue internal negotiation among employees of a major engine manufacturer to agree on procurement guidelines in preparation for external negotiations with suppliers. Eagle Aircraft Engines, a manufacturer of engines for military and commercial aircraft, is preparing to negotiate a major five-year procurement for over 1000 parts from its suppliers. Its Airfoils and Casting Division (A&C) is responsible for purchasing roughly 100 of these parts. In preparation for the negotiations with suppliers, the five key personnel within A&C need to generate a "Business-Managed Procurement" policy in which A&C personnel must unanimously agree on four schedule and quality programs. The key personnel involved in the internal negotiation include three engineers, a buyer, and a financial analyst. They have all been sent a memo from the Purchasing Director outlining the overall procurement strategy. The Purchasing Director is putting pressure on them for consensus, emphasizing the importance of certain issues over others in preparation for his/her own negotiations with suppliers.

Five-party, four-issue internal negotiation among employees of a major engine manufacturer to agree on procurement guidelines in preparation for external negotiations with suppliers. Eagle Aircraft Engines, a manufacturer of engines for military and commercial aircraft, is preparing to negotiate a major five-year procurement for over 1000 parts from its suppliers. Its Airfoils and Casting Division (A&C) is responsible for purchasing roughly 100 of these parts. In preparation for the negotiations with suppliers, the five key personnel within A&C need to generate a "Business-Managed Procurement" policy in which A&C personnel must unanimously agree on four schedule and quality programs. The key personnel involved in the internal negotiation include three engineers, a buyer, and a financial analyst. They have all been sent a memo from the Purchasing Director outlining the overall procurement strategy. The Purchasing Director is putting pressure on them for consensus, emphasizing the importance of certain issues over others in preparation for his/her own negotiations with suppliers.

Two-party, single-issue distributive negotiation between a publisher and a literary agent over the advance payment for the agent's unpublished but very promising client. Terry Holtz, a senior editor with a highly regarded, independent publishing firm has received a proposed book entitled Entrepreneurial Schools written by a young, up and coming, but never before published author. Terry is extremely interested in the book and is willing to pay an exceptionally high author's advance for the book. Jay McIntyre is a successful literary agent and represents Rachel Leonard, author of Entrepreneurial Schools. Jay has shown Rachel's manuscript to one other publishing firm than Terry's and has since found out that they are not interested. This coupled with Rachel's professional ambitions, which would be helped greatly by the visibility that comes with publication, has made Rachel anxious to close the deal with Terry's firm fast. She has told Jay to settle for what he can get from Terry's firm, but not to leave any money on the table.

Two-party, single-issue distributive negotiation between a publisher and a literary agent over the advance payment for the agent's unpublished but very promising client. Terry Holtz, a senior editor with a highly regarded, independent publishing firm has received a proposed book entitled Entrepreneurial Schools written by a young, up and coming, but never before published author. Terry is extremely interested in the book and is willing to pay an exceptionally high author's advance for the book. Jay McIntyre is a successful literary agent and represents Rachel Leonard, author of Entrepreneurial Schools. Jay has shown Rachel's manuscript to one other publishing firm than Terry's and has since found out that they are not interested. This coupled with Rachel's professional ambitions, which would be helped greatly by the visibility that comes with publication, has made Rachel anxious to close the deal with Terry's firm fast. She has told Jay to settle for what he can get from Terry's firm, but not to leave any money on the table.

Western manufacturers have long believed that standardized work in a hierarchical environment alienates employees, poisons labor relations, stifles initiative, and lowers quality. This belief sets up Frederick W. Taylor's time-and-motion studies as the enemy of manufacturing innovation and excellence. NUMMI, the joint-venture auto assembly plant set up by General Motors and Toyota in 1984, shows that hierarchy and standardization motivate workers and increase job satisfaction. NUMMI has a no-layoff policy and its production system is strongly committed to the social context in which work is performed. Workers rather than engineers analyze jobs, design more efficient procedures, and create a consensus for new standards. Reduced variability in task performance increases safety, quality, productivity, and flexibility, and gives continuous improvement a base. Workers interact with the system by refining it.

No industry relies more on information than banking does, yet Continental, one of America's largest banks, outsources its information technology (IT). Continental executives, eager to focus on the bank's core mission of serving business customers, decided to outsource one after another in-house service--from cafeteria services to information technology. While conventional wisdom holds that banks must retain complete internal control of IT, Continental bucked this argument when it entered into a ten-year, multimillion-dollar contract with Integrated Systems Solutions Corp. Continental is already reaping benefits from outsourcing IT. Most important, Continental staffers today focus on their true core competencies: intimate knowledge of customers' needs, and relationships with customers.

When Peter Johnson became the administrator of Bonneville Power Administration (BPA) in Portland, Oregon, he realized that BPA had to listen to its harshest critics--the people affected by the agency's decisions. When Johnson arrived in 1981, BPA was reviled for its approach to decision making--the agency first made decisions and then explained them. Despite the warnings of attorneys, and his own apprehensions, Johnson opened up BPA's decision making to the public. The first attempts to involve BPA's critics were filled with confrontation, but success soon followed. Early experiences proved to Johnson that involving the public in BPA's decision making was a practical alternative to litigation. Former adversaries became BPA's partners in making better decisions, and the agency gained authority and legitimacy.

The new vice president of international contracts for Timothy & Thomas North America, Jonathan Stein, faces tough decisions regarding the company's Pakistani contractors. In a plant in Lahore, Stein sees girls who look no older than ten, sweeping the floor. T&T shorts are currently the hottest item in Timothy & Thomas's line of casual clothes. Like the rest of the company's products, the shorts have a wholesome American image. But that image doesn't fit the image of those girls at work - or Timothy & Thomas's reputation for social responsibility. In fact, the company's new Global Guidelines for Business Partners prohibit the use of child labor. The complicated situation puts Jonathan Stein on the cutting-edge of company policy. Six experts on global sourcing and labor in developing nations discuss the agonizing decisions that confront Stein and his company.

The two crucial responsibilities of corporate boards--oversight of long-term company strategy and the selection, evaluation, and compensation of top management--were not well met during the 1980s. There should not be government reform of board practices, but the size of boards should be limited and the number of outside directors on them should be increased. Three insiders belong on a board: the CEO, the COO, and the CFO. There should also be reform in the functioning and responsibilities of audit, compensation, and nominating committees. On a revitalized board, directors have enough confidence in the process to challenge one another, as well as the CEO. A group of experts, including CEOs, consultants, and institutional investors, propose specific strategies to help strengthen corporate boards. Some argue for appointing more independent outside directors. Others focus on improving shareholder/management relations. Suggestions for immediate action include board-member retreats, annual CEO evaluations, regular meetings with institutional shareholders, and the general admonition that directors must start asking more difficult questions.

To today's customers, value can mean any number of things, from convenience of purchase to after-sale service and dependability. But that doesn't mean companies have to excel at everything. A study of over 40 companies found that market leaders like Dell Computer, Home Depot, and NIKE succeed by narrowing their business focus, not by broadening it. They concentrate on one of three value disciplines--operational excellence, customer intimacy, or product leadership--and align their entire operating model to serve that discipline. Companies should choose a value discipline that fits with their existing capabilities and culture and then push themselves relentlessly to sustain it. And they should willingly change their operations to support that value discipline.

Throughout his 35-year football coaching career, at the high school, college, and professional levels, Bill Walsh has produced winners with his structured and businesslike approach to maximizing the potential of players and coaches. It is his highly successful management style in the most intense competitive situations that makes his organizational insights so applicable to today's corporate environment. Taking over as head coach and general manager of a dreadful San Francisco 49ers team in 1979, Walsh immediately began to develop and chart meticulous, long-range strategic and personnel plans for the organization. He defined responsibilities for both players and coaches, with objectives and priorities set for all. His practices focused on being prepared for every possible game situation.

A qualitative shift is taking place in the ways companies compete, managers manage, and business is conducted. The information-technology revolution makes knowledge the new competitive resource. But knowledge only flows through the technology; it actually resides in people--in knowledge workers and the organizations they inhabit. In the new economy, then, the job of the manager is to create an environment that allows knowledge workers to learn.

Linda Metzler, newly appointed production planning manager, is drafting an aggregate production plan for the company's refrigerators, freezers, and air conditioners for the next year. She has considered three plans. Students are asked to devise better plans and to evaluate the quantitative and qualitative factors favoring them. Ultimately, the use of linear programming to construct aggregate plans will be introduced.