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In 1984, Kaiser's shareholders were asked to approve a complicated leveraged buyout of the company. Students are asked to analyze the proposed transaction and make a recommendation. To do this, they must determine who gets what in the deal, whether and how any value is created, whether the post-buyout firm is solvent and adequately capitalized, and how much the newly issued preferred stock is worth. Examines the bankruptcy of the company and the allegations of fraud that followed the 1984 LBO. May be used with Kaiser Steel Corp.--1987.

Burroughs Wellcome Co., developer of AZT, the first drug approved by the U.S. Food and Drug Administration for the treatment of Acquired Immune Deficiency Syndrome (AIDS), finds itself under siege in September 1989 by AIDS activists and various segments of the U.S. government. In spite of repeated demands over the previous two years to lower the price of AZT (trademarked Retrovie), Burroughs Wellcome and its parent company, London-based Wellcome PLC, have refused, claiming that the $6,300 annual (wholesale) cost of the drug per person is justified, based on high research, development, production, and other costs associated with the drug. The firm's opponents accuse it of using an existing chemical compound, ample government research assistance, and a cooperative regulatory system to gain a monopoly on the only approved treatment available for people with AIDS. The case gives students the opportunity to explore the economics and regulation of the pharmaceutical industry, wrestle with the ethics of drug pricing, and analyze the formulation of public relations strategies on the part of both private companies and activist groups in the age of AIDS.

Presents a follow-up to the (A) case. This product can be used with the free Job Design Optimization Tool (JDOT), available at: hbsp.harvard.edu/jdot

WPP Group acquired J. Walter Thompson and Ogilvy & Mather, paying high premiums in relation to earnings. In each acquisition the goodwill acquired was immediately charged off against owners' equity. Then, WPP Group established a value for the brand names of the two companies. The value totaled $350 million. The case describes the brand valuation process, the differences between U.K. and U.S. accounting methods, and motivation for the transaction.

Spreadsheet Supplement for case 192038.

Spreadsheet Supplement for case 192046

Excerpts from annual reports of Blount, Inc., Penn Central Corp., and Quaker Oats. Shows changes in inventory valuation from FIFO to LIFO and LIFO to FIFO. Intended to promote a discussion of assumed cost flows through inventory accounts, accounting method changes, the role of auditors, and financial reporting strategy.

Examines the economics, technology, customer segments, and competitors of the PC networking software industry.

Deals with performance assessment and improvement of a service operation in the insurance industry, a market that is highly sensitive to response time. Two branch offices in direct competition are described, and the impact of response time on performance is suggested. Management choices that impact response time are explored and the poorer performer of the two branches must decide how to respond.

A Wall Street Journal article states, "At PepsiCo, Inc., cola was king, but it is quietly being dethroned." PepsiCo is composed of three lines of business: soft drinks, restaurants, and snack foods. Using data from comparable pure-play companies, the student is asked to compute divisional costs of capital and see if they can be reconciled with the company's reported cost of capital, 11%.

Spreadsheet supplement for case 692-015.

A road construction company needs a new asphalt plant and must decide between two options: a drum plant with a 10-year life or a batch plant with a 5-year life. In addition, the company must decide which of two offers to accept from local dealerships for heavy equipment to support the new plant. The case provides comparison of net present value, internal rate of return, payback, and profitability index as criteria for making investment decisions.

One of the nation's foremost mini-mills' core competence is the rapid realization of technology into products. This case describes the development of a highly innovative casting technique and features the role of the company's culture in achieving its goals. The company exemplifies a learning organization.

Paul Olsen, a doctoral management student, is considering forming a limited partnership to open a restaurant in a renovated downtown mall in Pittsburgh. He must assess the opportunity, find investors for the anticipated $250,000 start-up costs, and create a workable business plan for the restaurant. He has no prior industry experience.

Updates Paul Olsen (A).

In June 1991, Heileman announced plans to introduce a high-alcohol malt liquor under the name PowerMaster (PM). Although the company claimed PM would be positioned as an upscale product and marketed on the basis of its superior taste, minority advocates and alcohol foes quickly assailed the company for targeting lower-income, inner-city black consumers. In the wake of protests, the Bureau of Alcohol, Tobacco, and Firearms (BATF), which had previously approved the PM product, initiated a review of PM and several other high-alcohol malt liquor products that BATF considered to be in violation of federal law prohibiting brewers from stating or even implying the alcohol content of their products. Shortly after, BATF requested that Heileman remove the word "power" from PM's label. Heileman cancelled plans to launch the product. The case encompasses both target marketing and ethical issues. Illustrates a problem faced by many American brewers: How can these companies increase beer sales in a slow-growing, increasingly saturated market, which is completely dominated by the Anheuser-Busch companies?

Poverty is a business issue because the American poor are part of the American work force. Most poor adults and 90% of poor children live in families where work is the norm, not the exception. Companies cannot create the work force of the future with the poverty policies of the past. There are some simple policy mechanisms, however, that can help the working poor without putting an undue burden on business. Enacting them requires managers to see poverty policy as part of a national human-resource strategy that links corporate strategy to a broad social agenda.

A new term--networks--has entered the vocabulary of corporate renewal. Ten companies (among them, Conrail, Dun & Bradstreet, Du Pont, and Royal Bank of Canada) provide good examples of networks and how they operate. The process of building a network starts at the top, where senior managers work to build a new social architecture. Networks change the frequency, intensity, and honesty of the dialogue among managers on priority tasks.

Blake Memorial Hospital was in poor financial health, due to rising costs and stagnating revenues. The hospital's quality of care was also a major problem, and its clinics were losing over $250,000 a year. As the new CEO worked on the 1992 budget, he saw he would have to cut some services in order to fund others. One service he was considering cutting was the clinic program. Experts from public service and health care comment on the issues.

In this interview, Robert McDermott tells how he has built customer service into the very fiber of the insurance company he heads--USAA. His successful service recipe has three principal ingredients: 1) A niche market (active and former military officers and their families); 2) Progressive employment practices and commitment to continuous development of its work force; and 3) Innovative use of technology, including imaging and expert systems.