This case explores TecSalud's response to COVID-19 between March 2020 and January 2021. TecSalud was the Healthcare System of the Instituto Tecnologico de Monterrey. The case focuses on hospital management, but it can also be used to teach crisis management, with potential applications in other industries. The narrative highlights the leaders' challenges, critical decisions, and actions to address the pandemic, emphasizing the importance of considering key stakeholders to manage a crisis effectively. At the onset, TecSalud established a response team (the bunker) to address the pandemic. The team identified four priorities: minimize disease transmission; protect patients, healthcare staff, employees, and students; keep the healthcare system functioning; and reduce morbidity and mortality. San Jose Hospital (HSJ) was designated as TecSalud's exclusive COVID-19 treatment hospital. The case focuses on two pivotal moments when difficult decisions had to be made. In May 2020, HSJ had been operating for eight weeks with an occupancy rate of 14%, resulting in significant financial losses. The bunker leader and TecSalud's president, Guillermo Torre, decided with his team not to change course despite the risks and resistance from key stakeholders. In January 2021, at the peak of the second wave of infections in the state of Nuevo Leon, Torre, and the bunker members considered closing HSJ's doors to new COVID-19 patients because demand had exceeded the hospital's operational capacity; staffing was inadequate, personnel were exhausted and dissatisfied, and many resigned. Representatives from intensive care, medical management, nursing, and HSJ operations argued that quality of care couldn't be guaranteed, putting patients at risk. However, others argued that closing admissions to HSJ would deny care to patients with no other healthcare alternative. The case concluded on January 25, 2021, when Torre and the response team met to decide the course of action for COVID-19 patients.
In the seaside town of La Jolla, a community conflict revolves around a coastal cove known as the Children's Pool. A colony of seals took up residence in the pool, which previously was enjoyed by children. The feud escalated from public outrage to death threats and arrests. In a narrow sense, Children's Pool is a binary conflict between those who want the cove to remain a sanctuary for seals and those who do not. In a larger sense, it is a multiparty conflict among numerous stakeholders. For some, the conflict impacts their livelihoods, property values, and quality of life. Others fight to defend the rights of the wildlife. There are also those looking for a hybrid solution. A native La Jollan, Jim Thomas, grew increasingly concerned about the ongoing conflict among neighbors. The parties to the conflict attempted to solve it through litigations and other adversarial approaches, but none stuck for long. Jim believed it would prove more productive to initiate a mediation. But in what format? The case guides the students through two parallel mediation simulations, a two-party one and a multiparty one, that explore the pros and cons of each approach helping Jim to make an informed decision.
The case is about a sustainable investor firm, Nia Impact Capital (Nia) (Oakland, California), and its founder and CEO, Kristin Hull. Hull aims to invest in gender and racial justice and to make money with meaning and purpose. She brings the logic of impact investing to public markets, exercising active ownership, and engaging with portfolio companies, including Tesla, IBM, and Apple. Hull has a crusade for social justice and against mandatory arbitration. For that purpose, she filled shareholders resolutions and has had proxy votes in the 2020 and 2021 proxy seasons. The case focuses on Nia's engagement with Tesla and the 2021 proxy season. Tesla is a leader across the renewable energy sector but is in the news for sexual harassment and racial discrimination. In 2020, Nia submitted a shareholder resolution on Tesla's mandatory employee arbitration to the US Securities and Exchange Commission (SEC). In her speech during the Tesla's shareholders in September 2020, Hull made her case against the company's forced arbitration for employee sexual harassment and racial discrimination claims. Tesla disputed the proposal, and Nia didn't get a shareholder's winning vote. Hull's crusade in 2020 towards Tesla received extensive media coverage and showed her strategy as an activist investor. In her words, "it was a win because it was an important move in a much larger and longer campaign." As part of her battle, Hull decided to raise her voice and fill again in October 2021. She thought that Nia's advocacy at Tesla was advocacy for the entire US. Nia's resolution on Tesla's proxy ballot was crucial to her strategy for "connecting the dots about forced arbitration." At the end of the case, Hull must prepare a proposal to the SEC and a speech to Tesla's Board. She thought about the impact on Nia's future strategy if they didn't get 50% of the shareholders' vote in Tesla's board meeting on 7 October 2021.
This case provides the opportunity to perform a real, but simplified, ESG research analysis and portfolio investment decision from the perspective of an impact investor. It was designed using Triodos Investment Management (Triodos) and three well-known (possibly controversial) companies, Yamaha Corporation, Tesla and Philip Morris International (PMI). Students, as candidates for a research analyst position at Triodos, are asked to analyze the three companies, focusing on an ESG assessment following Triodos's investment approach. They need to provide a compelling statement about the companies' value propositions, as well as their positive and negative impact on people and the planet. They must build a comprehensive investment case that explains the rationale for (i) investing with no reservations, (ii) investing and engaging on controversies, or (iii) excluding Tesla, Yamaha and/or PMI and describe why the companies are good, potentially good or not good for the planet and for people. Students must weigh the controversial ESG issues resulting in a decision either to invest with engagement or to exclude the companies from Triodos's portfolio against the innovative products and future potential of the companies. Henk Jonker, Head of Research, Impact Equities & Bonds at Triodos, invites IMD MBA students to apply for a research analyst. He wants entrepreneurial and "out-of-the-box" thinkers who push the limits of traditional financial analysis. The case tests students' affinity with Triodos's mission and vision, their analytical and financial skills, and whether they have a results-oriented, well-organized and problem-solving attitude. It examines their ability to integrate ESG criteria in their recommendation to include the companies in Triodos's fund or exclude them. During an interview, Jonker aims to evaluate the students' insights about their role as sustainable investors and the impact of their decisions on people and the planet.
Propais is a non-profit organization founded in 1994 in Bogota by the public and private sectors and supported by 76 partner organizations. In October 2018, Maria Lucia Castrillon, general manager of Propais, was concerned about the future of the micro-franchising project (MFP) that had been active since 2012. The MFP was core to PropaÃs's mission of promoting "the development of micro and small businesses through strategic work, carried out jointly by public and private agents". It promoted the creation of 70 new enterprises that generated 350 direct jobs and produced over USD 1 million in annual sales. The IDB-MIF, a co-financer of the project with a total investment of USD 2,540,150, had recently announced its decision to withdraw in May 2019, generating great uncertainty about future feasibility. Propais had invested time and money to become a reference point in franchise structuring. Without MFP support both franchisers and franchisees could lose the opportunity to do business, and the potential would be lost to create five direct jobs at each franchise. Two options to keep the project going were: 1. PropaÃs could continue to manage the project but would need new financial resources from donors and investors, and 2. Propais could transfer its knowledge and processes to its partners (such as the Ministry of Commerce, Medellin Chamber of Commerce, private foundations or companies) so that they could in turn scale up the micro-franchise model. However, both options implied a long negotiation process and IDB-MIF support would end in just seven months. Moreover, Propais did not have enough resources to support the project alone during a transition.
La Esperanza was a mining unit owned by POFCO, a company with its headquarters in China and with operations in Peru, dedicated to the development of gold and copper projects. On November 19, 2015, Julio Soto, operations manager at La Esperanza, was getting ready to travel to the city of Lima, Peru, to attend a board of directors meeting, where he would present an "autonomous" transportation project. He considered it "an alternative that would boost efficiency, safety, and productivity in the mine." Despite his enthusiasm, he had some concerns; in fact, the decision implied dismissing the workers with the greatest seniority and legitimacy in the company, which could affect the relationship of the company with the workers union and the community. He was aware that his decision might also put his own position at risk. He was worried and knew he had to weigh his concerns before the meeting: What would be the impact of the project on the culture of La Esperanza? Would automation actually be profitable? Soto knew a tense conversation was awaiting him.
Since her appointment as General Manager of The National Symphony Orchestra of Colombia, Claudia Franco focused on its commercial management. She managed to increase the revenue of the Orchestra through an ambitious commercial agenda that involved concerts with famous artists, chamber concerts, recordings and movie soundtracks. Claudia counted on the musician's commitment and disposition to accomplish all the activities aimed at positioning the Orchestra in Colombia and abroad, while acknowledging they did not have an exclusivity contract. In fact, many of them were hired on a temporary basis and the majority had side jobs to complement their earnings. Given the budget cuts announced by the government at the time, Mariana -the Minister of Culture- requested the implementation of a performance management system for the Orchestra. She considered performance information crucial to make decisions regarding musicians' hiring and salary. Cost containment and organizational efficiency were her main priorities. Musicians, on the other hand, were reluctant to commit to key performance indicators, as they believed that difficult auditions, rehearsals, and live concerts were enough evidence of their artistic performance and commitment to the National Symphony Orchestra. Claudia was in the middle of a struggle: she knew that 80% of the Orchestra's budget came from the Ministry, and not complying with the Ministry's demands could imply a significant reduction of the budget allocation. On the other hand, she needed musicians on board to execute her agenda. What alternatives did she have, and how did she deal with the stakeholders' conflicting demands?
In 2020, Triodos Investment Management (Triodos) was a globally active impact investor. It believed the true purpose of investing was to generate social and environmental impact alongside a healthy financial return. Triodos viewed sustainable finance as a driving force in the transition to a more sustainable world. Yamaha Music was a candidate that Triodos was evaluating for inclusion in its investment universe. Henk Jonker, Triodos Investment Management's head of research, decided to pose the challenge to Clarissa Diaz, a Triodos researcher. Yamaha had a positive impact on people (made music, produced musical instruments and provided musical education), but Diaz had to evaluate the company´s supply chain against Triodos's approach to establish if the company's production process was sustainable and contributed to the environment. Diaz had to weigh the controversial ESG issues that merited the exclusion of Yamaha with the company's financial valuation, innovative products and future potential. Students must decide whether Triodos should exclude or invest in Yamaha. If the decision is to invest, they must decide if active engagement is needed on the controversial ESG issues. Students will conduct real ESG research and a portfolio investment analysis. They will also have the opportunity to reflect on the values and leadership implications of a proactive financial sector that drives corporate transformations toward a greener and prosperous society. Investors integrating ESG criteria into their portfolios will find this case useful because they would have to determine whether to exclude or engage with companies that do not fully meet their ESG standards. The case focuses on the nuances of sustainable finance's decision making.
By March 2020, Philip Morris International (PMI) had defined its purpose, "[to] create a smoke-free future and ultimately replace cigarettes with smoke-free products" and had validated PMI's materiality matrix. PMI's statement of purpose (SoP) was first published in the form of a letter from the board of directors to the company's shareholders and was published in its proxy statement of March 2020. PMI's sustainability leadership team (Huub Savelkouls, Chief Sustainability Officer and Jennifer Motles Svigilsky, Director of Social Impact & Sustainability) were working on the company's first ever integrated report (IR) due for publication by June 2020. Connecting a sound sustainability materiality assessment, a concrete SoP and a detailed IR would, they thought, bring together actions and words, and convey exactly how the company's strategy would create value for society and shareholders. They had the difficult task of setting realistic but ambitious targets, with a timeline to achieve them. They knew that targets - or a timeline - that were too ambitious and that the company could not deliver on could cause blowback for the team. At the same time, targets that were too conservative could lead to disengagement and exacerbate stakeholders' mistrust and undo all their hard work since 2015. The case is about a company in one of the so-called sin industries that has committed to phase out cigarettes in favor of a smoke-free future based on reduced-risk products.
In 2020, Triodos Investment Management had approximately EUR 4.9 billion in assets under its management (impact investment). Triodos motto was "Financing for change. Change Finance" and understood sustainable finance as a driving force in the transition to a more inclusive and sustainable world. Triodos took a comprehensive view of the companies following the "4P" approach: Product, People, Process, and Planet. Tesla, a clean energy company that produced electric cars, batteries and renewable energy generation, could be part of Triodos's investment. Henk Jonker, Triodos´s Senior Investment Analyst needed to evaluate Tesla's inclusion in the investment universe. He decided to pose the challenge to Clarissa Diaz, a high potential Triodos' researcher. Having in mind Tesla´s mission, "to accelerate the world's transition to sustainable energy," Diaz had to evaluate Tesla´s impact on people and planet. She must review the ESG data along with a financial analysis of the company. Diaz was aware that Elon Musk was a visionary promising to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy. Still, she was aware that Tesla and Musk were publicly involved in governance, labour, and human rights controversies. Diaz had to weigh the ESG controversial issues that merited the exclusion of Tesla. The case challenges the students to evaluate a company that do not fully meet all ESG standards and to reflect on the responsible leadership role of financial institutions.
The case is about a company in one of the so-called sin industries that has committed to phase out cigarettes - the origin of its sins - in favor of a smoke-free future based on reduced-risk products. In early 2020, Huub Savelkouls, Chief Sustainability Officer at Philip Morris International (PMI) and Jennifer Motles Svigilsky, PMI's Director of Social Impact & Sustainability, were working on the company's first ever integrated report due for publication in June 2020. Motles, perceived skepticism and mistrust about PMI's strategy and, specifically, serious doubts about the health effects of IQOS. In 2017, the UN Environment Programme Finance Initiative, in conjunction with Tobacco Free Portfolios, had called for a Tobacco-Free Finance Pledge. By 2020, the pledge had 141 signatories and 41 supporters. Some environmental, social and governance (ESG) investors still seemed interested in PMI's strategy, but not many were ready to engage publicly. In January 2020, they met with Professor Robert G. Eccles (PMI's advisor on matters regarding sustainability, social impact and investor engagement since May 2019). They were ready to build and validate PMI's materiality matrix and try to align stakeholders' demands with PMI's priorities. They needed to look at PMI's value proposition in more depth in light of the feedback received from stakeholders and the significance of PMI's impact on society and the environment. And they needed to do this in the context of a blanket exclusion of the tobacco industry by ESG investors, mistrust from stakeholders and reputational liabilities. Motles stressed the importance of validating the sustainability materiality matrix because she thought that materiality was a foundational concept in integrated reporting. The case ends with Motles feeling the challenge (a make-or-break moment for her career) and how much was at stake; the sustainability team could not let their stakeholders down and destroy the rapport they were trying to build.
Founded in 2009 by Tyler Gage and Dan MacCombie, Runa was the result of their experience living with local communities. After six years of operation, Runa had built new markets for teas and energy drinks based on guayusa. Their marketing efforts in the United States had put their products in over 5,800 stores and had doubled their revenues between 2014 and 2015. Tyler and Dan decided to shape their start-up on the principles of fair trade and sustainable business models, with the aim of improving the livelihoods of the Kichwa and contributing to the development and sustainability of the guayusa value chain. Their business had a commercial for-profit branch led by Runa LLC in the United States and Runatarpuna Exportadora S.A. in Ecuador. Fundación Runa in Ecuador and the Runa Foundation in the United States constituted Runa's nonprofit branch. The RG supported the development of local economic capacity by offering producers a 15% premium on all purchased guayusa. This premium was placed in a Fair Trade Social Premium Fund to be administered by the farmer associations. RG increased the incomes and favored the inclusion of small indigenous producers in the guayusa value chain. The foundations focused on research, improvement in the farmers' productive activities and community development, and on the promotion of fair public policies, while the for-profit companies focused on the production, marketing, and sales of the final products for the United States market. From the perspective of RG founders, 2017 would be critical to demonstrate that their business model could be sustainable, and that they could keep on growing as a business while benefiting the farmers and protecting the environment. This teaching case focuses on the challenges and dilemmas of modeling a sustainable business that is founded not only on the pursuit of the entrepreneurial venture's economic consolidation and growth, but also on a multiple stakeholders' view of value creation.
James Reid, the newly appointed GM of Troubled Spain, has been given a mandate by the CEO of Troubled Inc. to turn the subsidiary around within six months. Troubled Spain has experienced several years of poor performance that cannot be explained by either sluggish demand or lagging technology. The case provides information about interviews that James had with several employees, describing the role of the employee and giving insights into the issues that they see the company facing. These interviews are complemented by three charts prepared by consultants that James hired to conduct an internal audit of collaboration, communication and informal leadership in the organization. James needs to transform the organization within six months; however, this implies changing relationships that have been developed over decades and clarifying roles and boundaries that have been blurred over many years. The case challenges students to take James' position and identify the issues of Troubled Spain to develop an action plan in order to address the challenges facing the company. James needs to address: 1) issues concerning Troubled Spain's formal structure, 2) issues regarding its informal structure, including leadership issues, and 3) issues stemming from the combination of both formal and informal features. Case B provides information about what happened next and may be distributed at the end of the session.
James Reid, the newly appointed GM of Troubled Spain, has been given a mandate by the CEO of Troubled Inc. to turn the subsidiary around within six months. Troubled Spain has experienced several years of poor performance that cannot be explained by either sluggish demand or lagging technology. The case provides information about interviews that James had with several employees, describing the role of the employee and giving insights into the issues that they see the company facing. These interviews are complemented by three charts prepared by consultants that James hired to conduct an internal audit of collaboration, communication and informal leadership in the organization. James needs to transform the organization within six months; however, this implies changing relationships that have been developed over decades and clarifying roles and boundaries that have been blurred over many years. The case challenges students to take James' position and identify the issues of Troubled Spain to develop an action plan in order to address the challenges facing the company. James needs to address: 1) issues concerning Troubled Spain's formal structure, 2) issues regarding its informal structure, including leadership issues, and 3) issues stemming from the combination of both formal and informal features. Case B provides information about what happened next and may be distributed at the end of the session.