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Having installed an activity-based system, the division is now exploring the insight provided by that system. In particular, it is studying the economics of lot-size process planning and product mix management.

Spreadsheet Supplement for case 187108.

Describes the potential acquisition of a downtown office building in Boston through a sealed bid auction. The prospective buyer analyzes in detail all elements of the income and expense statements, calculates the effect of all improvements, and imputes a purchase price on the property.

American Bank is developing a new system to compute product costs. The deregulated, more competitive environment for commercial banks has created both problems and opportunities for banking operations. In order to price existing products and assess the desirability of new product introduction, a system is needed to estimate the demands that each banking product places on the organization's resources.

Defines and describes the major categories of influence tactics and indicates some of the conditions under which they are effective.

Describes Manufacturing Resource Planning (MRP II), a production technique designed to couple business and financial plans with manufacturing plans. It is an important tool for aligning manufacturing with a company's overall strategy and goals. Describes MRPII, distinguishing it from its predecessor, Material Requirements Planning (MRP); discusses the technique's basic elements; and reports survey results that show the factors distinguishing the most successful adopters of the technique.

Caruso's Pizza is a small, entrepreneurial restaurant chain. The case considers expansion of an experimental pizza delivery system ("express delivery") that involves a major process innovation--producing pizzas to inventory rather than to order. The system promises faster delivery of higher quality pizza, but as yet is an unproven technology. By the end of the case, students will realize that delivery-only units and high order volume are required to make express delivery viable. One way of achieving this high order volume may be a one-phone-number system--a new computerized technology.

The division has recognized the inadequacies of its existing, traditional cost system for estimating product costs. Describes the innovative activity-based system that was developed to more accurately trace overhead costs to individual products. Provides students with the opportunity to critique a standard cost system and to assess the characteristics of the proposed system that traces costs to production activities.

After a record year in 1983, Murray Ohio's earnings declined in 1984. The company was faced with competition from cheap imports and was experiencing declining margins. Students are asked to analyze the company's 1984 financial statements and predict whether there is likely to be a change in the company's dividend policy.

Spreadsheet Supplement for case 187178

Spreadsheet supplement for case number 187107.

Spreadsheet Supplement for case 187081.

Detailed description of the planning and control systems in use at Johnson & Johnson. Focuses on the actions of managers in one subsidiary in revising budget targets. Illustrates intensive strategic planning and financial planning process in a large, decentralized company. Includes interviews with the president and senior executives concerning benefits of the system. Raises issue of the role of formal control systems in decentralized organizations.

Manufacturers of packaged goods no longer can entice consumers through traditional "pull" marketing techniques - huge TV and other advertising campaigns and alluring packaging. So the trade has moved in to grab customers through "push" marketing techniques - especially coupons and trade deals. Unless manufacturers reverse this trend, they will risk crippling their own marketing productivity. Manufacturers have to understand the recent changes in society and consumer tastes that have caused the shift from pull to push marketing. They then can return to pull marketing by directing their attention to the small, varied segments that now make up the U.S. market.

A major reason why Japanese corporations succeed in global markets is the informed, hands-on market research they practice. When Japanese managers want information on customer needs or market response to a new product, they don't depend on market research professionals and the so-called scientific methods favored in the United States and Europe. Instead, they meet and talk directly with retailers, wholesalers, distributors, and brokers so that they can gain deep knowledge of their channels.

Two arguments against low trade barriers - that U.S. manufacturing is bound to lose out to places like Korea and Taiwan because they pay rock-bottom wages, and to Japan and other aggressive foreign competitors because they help favored industries with subsidies - don't stand up to the facts. The United States imports less from low-wage countries now than it did in 1960; protection levels haven't changed much since 1981, the year the United States last had a surplus in manufactured goods. What is at the bottom of our massive trade deficit? The huge gap between our production and our spending, fueled largely by the enormous federal budget deficit.

A study of the diversification records of 33 large U.S. companies from 1950 to 1986 shows that diversification--whether through acquisition, joint venture, or start-up--generally has not brought the competitive advantages or profitability expected. Portfolio management, restructuring, transferring skills, and sharing activities are four concepts of corporate strategy that companies most commonly use. Portfolio management no longer works very well in the United States because of its highly developed capital market. Restructuring is merely a stopgap measure that will not build shareholder value over the long term because it usually produces an unwieldy conglomerate. Companies have the best chance of being successful at diversification if they capitalize on the existing relationships between business units by having them transfer skills and share activities. McKinsey Award Winner.

Two stories illustrate the American way of thinking about entrepreneurship. The first is the story of the entrepreneurial hero--found in every story by Horatio Alger--who uses energy, effort, daring, and good luck to rise in the world. But the story has an unhappy ending. The second story holds more promise, focusing not on the individual but on the team, as in Tracy Kidder's description of how a group of engineers pooled their talents to design a new computer. The differences between these two versions are profound. The first celebrates the individual and the second celebrates the group--even the organization.

One key to a successful retail business is friendly, knowledgeable, motivated salespeople. But, even in some of America's best-known stores, one encounters indifferent clerks or must search for a clerk willing to take one's money. An effective technique - used for years by J.B. Robinson Jewelers - for teaching salespeople a natural and friendly sales manner is role playing. Employees like role playing. It's dramatic, and they retain more through these sessions than they would from manuals or lectures.

A mezzanine financing package may be the right thing for a small business that is having trouble finding long-term capital to finance its growth. Mezzanine loans are flexible. In most cases the lender provides from $500,000 to $5 million in subordinated debt over a five- to seven-year term at an interest rate costing no more, sometimes less, than senior debt. In exchange the borrower gives the investor warrants to purchase a small amount of the company's common stock--usually 5% to 15%--at a later stage. For lenders, mezzanine loans provide a higher total rate of return than most conventional loans because of the equity feature. For businesses, they provide affordable long-term debt without diluting the owners' equity.