Describes the pharmaceutical industry in the 1990s, with particular emphasis on the mergers between American manufacturers and prescription-benefits managers (PBMs). PBMs are distributors with unprecedented access to information on patient and physician characteristics. Students have an opportunity to analyze the mergers using transactions-cost techniques.
Describes the challenges confronting a recent HBS graduate who has started a direct-mail toy company. The entrepreneur must evaluate industry conditions in both toys and direct mail, and determine whether he has developed a viable business concept. Presents detailed financial projections associated with each of three major repositioning options.
In early 1994, Dow Corning Corp. debates whether to participate in a proposed $4.2 billion product liability settlement. Specifically, the firm must decide whether to contribute $2 billion to end a class action suit filed by women suffering from connective tissue diseases, autoimmune disorders, and other medical conditions, allegedly as a result of defective silicone breast implants. Although denying any impropriety, Dow Corning stands accused of intentionally withholding information on health risks associated with its implants over several decades.
Saturn was General Motors' (GM) response to Japanese companies' dominance of the small car market during the mid-1980s. In the three-and-a-half years since its first sedan rolled off the assembly line, the Saturn Corp. had accumulated an impressive list of achievements. In April, 1994 Saturn's top management team met with GM's leadership to discuss the subsidiary's business plan. As Saturn's president reflected on the company's future and on his experience at GM, he felt confident that the executive committee would approve expansion if the Saturn team showed that it had achieved a sustainable position. Illustrates strategic analysis of sustainable competitive advantage.
In the Spring of 1994, Saturn Corp. was setting sales records by attracting more than 25,000 buyers per month. Saturn officials believed there was a long-term opportunity to sell 400,000 to 500,000 cars per year in the United States and selected international markets. Saturn managers had been reviewing options for a second assembly plant (known as "Module II") with General Motors (GM) since the beginning of the year. One possibility was to expand capacity at Saturn's existing production facility in Spring Hill, Tennessee. A second set of options involved refitting one of several plants that had been mothballed or was scheduled to close shortly.