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The Uria Menendez C case describes the passing of the firm's founder, Rodrigo Uria, its continued success (including being one of the Top 10 MNA law firms in the world) and its decision to open an office in Warsaw.

Describes the way in which "Big Four" auditor KPMG dealt with an indictment stemming from the firm's sale of tax shelters. In 2005 Tim Flynn has been KPMG Chairman for a matter of days when he learns that the government is preparing to indict the firm on charges of selling illegal tax shelters. Flynn has to decide whether to fight the charges and risk the dissolution of his firm, or cooperate with investigators, effectively keeping the firm safe but sacrificing the tax partners involved in the shelter sales. Further, the case describes the government's prosecution of former KPMG tax partners and asks students to determine whether prosecutorial tactics during the government's investigation were warranted or represented a case of overreaching.

Our annual survey of ideas and trends that will make an impact on business: Duncan J. Watts contends that ordinary people, not "influentials," drive social epidemics. Yoshito Hori predicts that Japan's young entrepreneurs could outshine those in China and India. Frederic Dalsace, Coralie Damay, and David Dubois propose brands that--like Harry Potter--mature with their customers. Michael Schrage reveals the hidden value in long-forgotten equations. Harry Hutson and Barbara Perry put hope back in the executive repertoire. Eric von Hippel spotlights Denmark, where "user-centered innovation" is a national priority. Linda Stone detects a backlash against cell-phone and BlackBerry addiction. Michael C. Mankins suggests where to put all that excess cash. Ap Dijksterhuis reaffirms the value of sleeping on a decision. Robert G. Eccles, Liv Watson, and Mike Willis report on a new software standard that will make business and financial information dramatically easier to generate, aggregate, and analyze. Geoffrey B. West challenges the conventional wisdom that smaller innovation functions are more inventive. Karen Fraser warns of apparently loyal customers who are poised to bolt for ethical reasons. Phillip Longman predicts the return of large patriarchal families and their effects on marketing strategy. Rashi Glazer illustrates the sociocultural and business implications of nanotechnology. Yoko Ishikura urges global firms to "think locally." Klaus Kleinfeld and Erich Reinhardt explore the convergence of imaging technology and biotech and its enormous benefits for medical care. Christopher Meyer advises focusing on what you want from your network before you build the platform. Charles R. Morris asserts that health care costs are falling; it's spending that's on the rise. Clay Shirky shows why open source projects succeed by failing. David Weinberger claims that accountability has morphed into superstitious "accountabalism."

Regulators, industry groups, consultants, and individual companies have developed elaborate guidelines over the years for assessing and managing risks in a wide range of areas, from commodity prices to natural disasters. Yet they have all but ignored reputational risk, mostly because they aren't sure how to define or measure it. That's a big problem, say the authors. Because so much market value comes from hard-to-assess intangible assets like brand equity and intellectual capital, organizations are especially vulnerable to anything that damages their reputations. Moreover, companies with strong positive reputations attract better talent and are perceived as providing more value in their products and services, which often allows them to charge a premium. Their customers are more loyal and buy broader ranges of products and services. Since the market believes that such companies will deliver sustained earnings and future growth, they have higher price-earnings multiples and market values and lower costs of capital. Most companies, however, do an inadequate job of managing their reputations in general and the risks to their reputations in particular. They tend to focus their energies on handling the threats to their reputations that have already surfaced. That is not risk management; it is crisis management--a reactive approach aimed at limiting the damage. The authors provide a framework for actively managing reputational risk. They introduce three factors (the reputation-reality gap, changing beliefs and expectations, and weak internal coordination) that affect the level of such risks and then explore several ways to sufficiently quantify and control those factors. The process outlined in this article will help managers do a better job of assessing existing and potential threats to their companies' reputations and deciding whether to accept a particular risk or take actions to avoid or mitigate it

Despite 30 years of evidence demonstrating that most acquisitions don't create value for the acquiring company, executives continue to make more deals, and bigger deals, every year. There are plenty of reasons why value isn't created, but many times it's simply because the acquiring company paid too much. It's not, however, that acquirers pay too high a price in an absolute sense. Rather, they pay more than the acquisition is worth to them. What is that optimum price? The authors present a systematic way to arrive at it, involving several distinct concepts of value. In today's market, the purchase price of an acquisition will nearly always be higher than the intrinsic value of the company--the price of its stock before any acquisition intentions are announced. The key is to determine how much of that difference is "synergy value"--the value that will result from improvements made when the companies are combined. This value will accrue to the acquirer's shareholders rather than to the target's shareholders. The more synergy value a particular acquisition can generate, the higher the maximum price an acquirer is justified in paying. Just as important as correctly calculating the synergy value is having the discipline to walk away from a deal when the numbers don't add up. If returns to shareholders from acquisitions are no better in the next ten years than they've been in the past 30, the authors warn, it will be because companies have failed to create systematic corporate governance processes that put their simple lessons into practice.

Supplements the (A) case, emphasizing issues of implementation.

Supplements the (A) case. Intended as an in-class handout.

Supplements the (A) case. Intended as an in-class handout.

In early 1991, a spirit of innovation and organizational change was in the air at Mutual Benefit Life, with the success of the new "case manager" program its most concrete manifestation. Using powerful computer workstations, case managers could see insurance applications through from start to finish, and many had been trained to do their own underwriting. The shift from manual bureaucracy to a new era of "Personalized Computing" would however present many new challenges to the company, particularly its human resources function. Objective is to explore the organizational changes necessitated by personal computer technology in the setting of a rapidly changing firm.

KPMG Peat Marwick executives needed to decide whether to fund full development of "The Shadow Partner," the name coined to describe a worldwide information network that would link all KPMG professionals to each other and to a wealth of data bases and information services. Partners, by sharing and gathering information through the network, would be able to use the entire company's knowledge and experience to serve clients. Many partners felt that implementation of the shadow partner was vital, as clients had greater demands and competition in the accounting industry had escalated. Other partners questioned the necessity of the shadow partner. The firm had committed to establishing a technology committee to investigate shadow partner design and cost. Since the firm was a partnership, the partners eventually had to decide whether, and to what extent, to support shadow partner implementation.

More and more managers today are changing their company's performance measurement systems to track nonfinancial metrics like quality, customer satisfaction, innovation, and market share. They believe these measures reflect a company's economic condition and growth prospects better than its reported earnings do. New technologies and more sophisticated databases have made the change to nonfinancial performance measurement systems possible and economically feasible.

Jacobs Suchard, the Swiss-based coffee and chocolate producer, is preparing for the common market and EEC 1992. At the time of the case, the company is still organized toward independent, local country markets, and believes it must move toward a more global organization structure. The case covers actions taken to date and plans for the future.

Interviews with nearly 150 executives in 13 companies show that transfer pricing schemes are a means of generating information and control for implementing corporate, business unit, and product strategy. A company's transfer pricing policy, which includes whether to source inside or out, and the way it is administered depend on the situation and the direction of the organization. Companies can be categorized into four "pure" types: competitive, cooperative, collaborative, and collective. Each type has its own set of problems and characteristics. Problems common to all types include performance problems, interpersonal disputes, power imbalances, demand fluctuations, and product pricing. Regardless of the approach used to set the transfer price, unit managers will agree to it if they feel that top management is treating them fairly.