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Instructor Spreadsheet to accompany product 8B19N002.

Instructor Spreadsheet to accompany product 8B19N003.

Student Spreadsheet to accompany product 9B19N002.

Student Spreadsheet to accompany product 9B19N003.

Leading up to 2013, Réseau de Transport d’Électricité (RTE), a French transmission operator (TSO), was the largest TSO in Europe’s electricity network. Like all European TSOs, RTE was subject to regulatory regimes. At the end of 2013, RTE was operating under a revenue cap, which required that it seek the regulator’s approval before making capital investments. The company was poised to undertake an ambitious investment program in 2014 to replace aging assets. However, the potential for regulatory changes, the need for the regulator’s approval, and the long depreciation life of the assets made planning difficult. RTE needed to develop a financial planning model that would help it decide whether to make the investment and how to prepare for possible regulatory uncertainties.

In 2014, Eandis System Operator CVBA (Eandis), a low- and medium-voltage power distribution system operator (DSO) in Belgium, had an ambitious plan for investing in a smart metering infrastructure, but the regulatory context was uncertain. The company had been operating in a regulated monopoly characterized by a cost-plus pricing regime. The regime allowed the company to recover its costs through the tariffs it charged grid users for access to the electricity distribution network. In recent years, the regime had motivated the company to invest in infrastructure; however, the cost-plus regime was about to be replaced by a new type of regulation based on incentives and the DSO’s performance. Under the new regulation, DSOs could propose investments to the regulator, who then approved the investments based on a cost-benefit analysis. In this context, Eandis must decide whether to continue with its plan to invest in smart metering and, if so, how to structure the investment to appeal to the equity investors.

Spreadsheet to accompany product 8B18E020.

Spreadsheet for product 9B18N027.

In 2017, wait times for kidney transplants in Ontario were getting out of hand. While patients from London Health Sciences Centre’s kidney transplant program in London, Ontario, had a reasonable wait of approximately one year, patients in Toronto's kidney transplant program waited almost four years. In an attempt to improve the overall wait times for all Ontario patients, the provincial Ministry of Health intended to merge the two currently independent programs and create a unified wait-list. Two doctors at London Health Sciences Centre were concerned about the effects of the merger for their patients in London, and asked an analytics specialist to determine the effects of the merger. Would the merger have the adverse outcome they expected for their patients’ wait times?

In January 2018, an investment portfolio manager learned of a safety recall for Ford Motor Company (Ford) involving faulty airbags that failed to deploy upon collision. An investigation by U.S. regulators found that the company had been aware of these faulty airbags but had not taken proactive measures to mitigate the potential damage. As a result, in just one day, the share price for Ford dropped from $13.10 to $12.18 per share. The portfolio manager needed to anticipate the future of Ford and come up with a plan to protect his investors' wealth.

Drums Food International Pvt. Ltd. (Drums Food) launched India’s first Greek yogurt brand, Epigamia, in 2015. Experiencing initial success with Greek yogurt, Drums Food went on to add another unique offering, lactose-free artisanal curd, targeting consumers with lactose intolerance. With these launches, Drums Food was building a well-differentiated, healthy brand to successfully tap the value-added dairy products market. However, in 2018, the road ahead was not without hurdles. To succeed, Drums Food needed to change the consumer mindset to ensure constant patronage of Epigamia. It also needed to defend itself against competitors who could launch similar products at competitive price points, leveraging the scale of their existing dairy businesses. Could Drums Food sustain the brand and build strong brand equity, enough that it could extend the Epigamia brand to more categories?

Most board meetings don’t start with a chairperson screaming, “Let’s get ready to rumble.” But it’s not a bad idea. After all, proxy advisory firms and executive development experts say managers and directors need to be ready to defend themselves like never before as the Age of Disruption threatens to stretch shareholder patience to the limits. Thanks to regulatory advantages, Canada has long been considered the land of milk and honey for activist investors. As a result, the annual number of proxy contests has jumped significantly since the turn of the century. However, existing securities laws do not adequately address the fact that control of public companies, along with their cash and assets, can be won by storytellers willing to mislead shareholders and foster discontent. Today’s boards must understand the power of gossip and myth in order to prepare for the kind of populist revolutions they can ignite. The go-to source of information for mom and pop investors is online opinion—not court rulings, corporate documents, balanced media reports, or independent expert advice. Thus, getting the retail crowd onside and prepared to defend you requires a comprehensive retail investor relations program that actively counters misinformation while effectively helping all shareholders understand how the company is working to serve their interests. Communicating the firm’s story needs to be a priority year-round, not just an initiative tied to annual meetings.

America’s Business Roundtable (BRT)—currently comprised of nearly 200 CEOs, ranging from General Motors’ Mary Barra to Apple’s Tim Cook—recently issued a statement that says making money for shareholders is not the only responsibility of management. For decades, a shareholders-first model was widely considered corporate orthodoxy in the United States, where boardroom focus has long been influenced by University of Chicago economist Milton Friedman’s 1970 essay “The Social Responsibility of Business Is to Increase Its Profits.” In August 2019, the group of CEOs updated its thinking on the matter in a 300-word statement that doesn’t mention shareholders until the end of a list of commitments that starts with “delivering value to our customers” and “investing in our employees,” then moves on to “dealing fairly and ethically with our suppliers” and “supporting the communities in which we work,” before finishing with “generating long-term value for shareholders.” The BRT’s shift in thinking comes at a time when corporate America faces distress due to global discontent over income inequality, harmful products, and poor working conditions. The BRT has diplomatically signaled that corporations should be more careful than they were in the past when the short-term financial interests of shareholders conflict with the interests of other stakeholders. This could have significant implications for dividend and share-buyback programs.

The continued spread of AI has stoked fears of catastrophic job losses in which machines and algorithms run the world, but research by Accenture paints a more encouraging picture. Many old jobs are changing and new ones are emerging in the “missing middle,” where humans and machines work together. The authors see evidence of at least eight novel skills that draw on the fusion of human and machine talent within a business process to create better outcomes than could be achieved when working independently: 1) taking back your time and doing something positive with it (with AI systems taking over many rote tasks, workers must redirect their time to more distinctly human tasks like interpersonal interactions, creativity, and decision-making; 2) anticipating unintended consequences and normalizing the use of technology and AI; 3) utilizing human judgment (AI can get many things right, but it still doesn’t know how to read situations and people well enough); 4) asking the right questions of AI; 5) helping bots help workers extend their human capabilities, business processes, and even careers; 6) understanding how machines work and learn and adapting accordingly (i.e., melding); 7) being a willing learner from AI and teacher to AI; and 8) reimagining just about everything. For years, the dream was to create an AI that could rival the intelligence of people. Today, we’re seeing that practical AI is becoming a tool to extend our own human capabilities at work.

Future annual growth prospects for the Canadian economy remain under two per cent, which is a far cry from the over three per cent growth during much of Canada’s history. But it doesn’t have to be this way. All roads to productivity growth go through workers having the best, most innovative facilities and tools—that is, business investment. In Canada, consumer spending, at about 60 per cent of GDP, swamps business investment, at about 12 per cent. But it is business investment that shapes the economy for the longer term. Unfortunately, Canada’s record on business investment borders on serious neglect. The lamentable business investment situation has multiple causes. First, the economy has struggled since the 2008 financial crisis. Second, household credit is near a record 175 per cent of disposable income. Third, Canadian business investment is biased towards resource sectors like oil and gas. Fourth, when the Trump Administration cut the U.S. corporate tax rate, this ended a significant Canadian economic advantage. Fifth, Trump has gotten rid of many government regulations. Finally, Canada’s federal deficit is unfavourable to business investment. Government rhetoric on business investment must be backed up by monetary and non-financial incentives that will significantly change corporate behavior, such as a much bigger tax package. Unfortunately, business investment isn’t a headline story, which is why executives need to press the business investment agenda with the government at every opportunity.

In the business world, the word “debrief” frequently has a negative connotation, probably because it is used only after a mistake or negative outcome. But such a fear-based approach is the opposite of how Blue Angels pilots structure their training, practice, and subsequent success. On the contrary, their goal is to drive fear out of the organization. When the author was a member of the U.S. Navy Blue Angels, they used the debrief tool at the end of each day. Based on the Blue Angels model, a successful debrief consists of two main parts: the general-safe statements (providing a general overview and a safety note) and the specific details that each member contributes. Each day’s debrief was defined by ensuring five specific interpersonal dynamics: providing a safe environment so everyone feels free to share essential information; checking your ego at the door; laying everything on the table and suspending hierarchical thinking in the interest of getting results; owning and fixing problems by assuming responsibility; and adopting a “glad to be here” mindset. Various studies have confirmed a correlation between gratitude and positive results. Gratitude is a social emotion; it binds us together and strengthens our bonds, regardless of the nature of our relationships. With this mindset, teams can more easily process negative feedback and turn it into positive results.

In February 2018, the owner of Jump Gymnastics Inc. was preparing for her company’s upcoming strategic planning cycle. The privately owned children's recreational sport business located in Vancouver, British Columbia, delivered gymnastics programs designed to prepare children for lifelong sport participation and healthy living. In 10 years, the owner had successfully grown the company based on her passion for helping children reach their full physical potential. Now operating in two locations, the company had expanded into hosting birthday parties and other special events. An expert in her field, the owner had also started to engage in outside consulting work. She wondered what additional opportunities laid ahead. Should she pursue growth through new locations or new programs, expand her consulting and public speaking practice, launch a coaching certification program, or focus on the company’s core operations? She wanted to consider not only the best use of her time and energy but also the option that would provide the most financial security.

When finalizing M&A transactions, it pays for dealmakers to understand that not all non-compete agreements are created equal—or equally enforceable

Scanteak Corporation was a furniture retailer founded in Singapore in the 1970s. By 2010, it had established more than 100 stores around the world. It had also become the first furniture company to be listed on the Taiwan OTC (Over-the-Counter) Exchange. The two founders had invested a great deal in developing the business and preparing their children to become their successors. In 2003, the two founders’ daughter joined the company to help grow the family business, achieving great success in brand promotion and market expansion. In 2010, the two founders’ son was asked to help with the business in Singapore or Taiwan but rejected their offer, stating that he would only agree if he could independently run the Japan division of the business, which was in deficit. The two founders questioned whether their recently graduated son could handle the business in Japan, and wondered how to respond to his bold request.

This part (B) of the case follows Scanteak: The Making of Successors in a Family Firm (A) to disclose how the founders of Scanteak Corporation responded to the proposal put forward from their second child, as described in part A of the case. While part A focuses on the issue of succession at the company, part B follows the business developments and discusses the transfer of management rights and family wealth to the next generation.