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Spreadsheet Supplement for case 103007.

Provides a framework for understanding the role of financial reporting and various intermediaries as mechanisms for reducing both adverse selection and moral hazard problems in capital markets. Financial reports reduce adverse selection by providing basic information for investors and their agents before they make initial capital resource allocation decisions. Subsequently, after capital is allocated to particular business ventures, financial reports reduce moral hazard between managers and investors by supplying information used in contracting between investors and managers to reduce conflicts of interests. Various institutional mechanisms and information intermediaries monitor and limit the manipulation of reported information by managers and constrain managers' ability to act in their own self-interest, rather than investors' interests. They also improve information production, reduce incentive conflicts, and enable capital markets to function effectively and efficiently, channeling the economy's savings to the most productive opportunities.

Supplements Amazon.com in the Year 2000.

After nearly two decades of spectacular performance, Home Depot reported a disappointing performance in the year 2000. The company began expanding its business scope as a result of saturating its growth in the core business. This case explores whether the disappointing performance is just a temporary slip or if the company is reaching the limits of sustainability of its competitive advantage.

Set in the context of the rise and fall of the Internet stocks in the United States.

Spreadsheet Supplement for case 101110.

An analyst's critique of Amazon's prospectus from the perspective of its bond holders.

Spreadsheet Supplement for case 101045.

The president and CEO of Russell Reynolds examined the company's expansion strategy, especially in emerging markets. He evalulates how quickly the company should open new offices abroad and in which countries.

This case examines analysts' claim that Maxwell's stock was undervalued.

Financial experts in the West suggest that diversified business groups--or affiliated companies under one parent--in emerging markets should break up. Dismantling these mammoth conglomerates could reduce the debt and inefficiencies that some of them incur; that logic is based on the success that companies in advanced economies had when they unbundled their assets in the 1980s. But the authors argue that breaking up business groups such as the Korean chaebol and India's Tata Group is premature. Emerging economies lack a soft infrastructure--the banks, business schools, corporate governance processes, and so on that are the foundation of economic growth. And building such an infrastructure takes time. Many business groups in emerging markets make up for the absence or weakness of market intermediaries by filling in themselves. For instance, they're venture capitalists when they use funds from one business group affiliate to fund a new one. They're labor market substitutes when business-group headquarters creates management training programs based on the knowledge and experience of managers across several business affiliates. Instead of breaking up the conglomerates now, governments should start the long-term development of market institutions for finance, labor, and goods and services. In the meantime, business groups should strive to improve the way they substitute for those market institutions. The authors suggest several Western business tools and models that business groups can use to boost their role as market intermediaries and to prepare for the eventual development of those institutions.

Following a major financial crisis, the South Korean government attempted to revive the Korea Stock Exchange to spur equity investment in Korean companies. This case describes the reforms undertaken so far and the challenges that lay ahead.

Spreadsheet Supplement for case 199033

The Tata Group began the 1990s as a confederation of loosely coupled firms. This case considers the rise to prominence of the new CEO of Tata Group, Ratan Tata, and his attempts to strengthen the inter-relationships among the group companies at a time when critics claim he should be dismantling the alliance completely. Provides an opportunity to address the benefits and costs of conglomerates in emerging markets. In particular, it demonstrates the ways in which well-run conglomerates might ameliorate the costs that poorly functioning institutions impose through their effects on market efficiency.

Core competencies and focus are now the mantras of corporate strategists in Western economies. But while managers in the West have dismantled many conglomerates assembled in the 1960s and 1970s, the large, diversified business group remains the dominant form of enterprise throughout many emerging markets. As those markets open up to global competition, consultants and foreign investors are increasingly pressuring groups to conform to Western practice by scaling back the scope of their business activities. Already a number of executives have decided to break up their groups in order to show that they are focusing on only a few core businesses. There are reasons to worry about this trend, say the authors. Focus is good advice in New York or London, but something important gets lost in translation when that advice is given to groups in emerging markets.

CompUSA was performing poorly until new management reorganized and redirected the business. Consequently, CompUSA became the top retailer in its industry. Management outlines its future plans.

Sensormatic is a leading provider of security systems to the retail industry. The company relies on customer financing as a key component of its strategy. The company's growth strategy and accounting is attacked by short-sellers and the financial press.

Spreadsheet Supplement for case 197041

The market values Arch differently from analysts' values.

Spreadsheet Supplement for case 197047