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The vice president, finance must quickly address several choices concerning a proposed office relocation. His analysis will likely include discounted cash flow analysis (DCF) and the topics of capital asset pooling and tax benefits. The case compares and contrasts the concepts of DCF and net present value analysis with Seagram's version of EVA (Economic Value Added). The case also provides a unique Asian focus for this type of decision. Office space location and the rent vs. buy option are extremely important decisions faced by a multitude of managers in Hong Kong. The traditional wisdom in Hong Kong has been that buying property was more efficient - especially given the phenomenal appreciation of property values. However, it can serve to distract a firm from its' core competencies and tie up working capital in non-producing assets. Finally, the case also provides a brief overview of capital asset pooling and depreciation tax law in Hong Kong. While the discussion is brief, it nevertheless provides an adequate first step towards further study in this area. Students from other areas of the world will also be interested in examining the differences between their country's tax laws and Hong Kong's.

Kent Van Dyk and Ian Kennard are celebrating their third year anniversary as the owners of Willie's Cafe. Their restaurant has achieved impressive growth but the partners want to grow the business even further. They are contemplating renovating the basement of the restaurant and using the area to expand their catering operations.

A small manufacturer of car wash facilities has been unable to develop management systems because of rapid growth. Now size dictates the need for such systems because the current personal management style is proving inadequate.

The vice president of an innovative community hospital is proposing a plan focusing upon family practitioners to deliver an integrated health delivery system. A key issue is how to alter the incentive/compensation plan from fee-for-service (i.e., piece rates) to a schedule based on capitation (i.e., guaranteed income based on serving all the health needs of a defined population). The teaching purpose is to examine change management issues in a very complex, political environment involving professionals and develop appropriate metrics of physician accountability.

Several large Canadian public companies announced their intent to merge and use the pooling of interests method rather than the traditional purchase method. Pooling had been rarely used to account for business combinations in Canada. The case focus is on an analyst who wanted to ensure that she understood the differential impact of both methods so that she could more fully represent her clients' interests. She decided to use an analysis of the recent merger of TransCanada Pipelines and NOVA Corporation to help her better understand and evaluate the two alternative accounting methods and their impact on the financial statements.

Several large Canadian public companies announced their intent to merge and use the "pooling of interests" method rather than the traditional "purchase method". Pooling had been rarely used to account for business combinations in Canada. The case focus is on an analyst who wanted to ensure that she understood the differential impact of both methods so that she could more fully represent her clients' interests. She decided to use an analysis of the recent merger of TransCanada Pipelines and NOVA Corporation to help her better understand and evaluate the two alternative accounting methods and their impact on the financial statements.

This case shows how two operating departments-transportation and police-translate the high-level corporate scorecard for the city into departmental balanced scorecards. The transportation department follows a highly structured approach designed to link initiatives taken at the departmental and local levels to the accomplishment of high-level strategic objectives. The police department uses the scorecard to enact a complete change in culture, focusing the police department on crime prevention and community building and away from its previous emphasis on dealing with crimes after they occur. This demonstrates the two very different approaches for refining the scorecard accommodate to local operating departments.

A new MBA graduate joins a privately held family business and sets ambitious growth goals for the next five years. To enhance motivation, he proposes a new incentive plan that will grant him a share of the wealth he creates. However, the family owners have a more conservative view regarding executive compensation.

Spreadsheet Supplement for case 1999044

Up-In-Smoke is an inventory valuation exercise using the periodic method. Completed in two steps, students are first required to value the total goods available for sale by considering items such as duty, taxes, returns, discount terms, FOB, and purchase prices. Once completed, various methods to value the inventory ending balance can be applied and compared, namely FIFO, LIFO and the weighted-average-cost method.

Up-In-Smoke is an inventory valuation exercise using the periodic method. Completed in two steps, students are first required to value the total goods available for sale by considering items such as duty, taxes, returns, discount terms, FOB, and purchase prices. Once completed, various methods to value the inventory ending balance can be applied and compared, namely FIFO, LIFO and the weighted-average-cost method.

Supplements the (A) case.

Supplements the (A) case.

The accounting construct known as Economic Value Added (EVA) has met with growing interest, and is described by some as the real key to creating wealth. The main argument proposed in favor of EVA over ROA is that the former will encourage managers to undertake desirable investments that the latter would discourage. But EVA, like any numbers derived from a firm's accounting system, can be affected by the methods used in determining operating income and asset values. A series of examples illustrate how accounting method choice can heavily influence reported EVA, and that alleged distortions caused by a particular accounting procedure may make matters worse rather than better.

Spreadsheet Supplement for case 199036

The city manager's office in Charlotte, North Carolina, is attempting to align and focus the city's programs and operating departments. City managers, working collaboratively with the elected mayor and city council, have identified five strategic themes to make Charlotte the number one city in which to live and work. The themes are community safety, transportation, strong neighborhoods, economic development, and cost-effective government. The city managers, however, find it difficult to get the individual city operating departments to orient their efforts to these five strategic themes. They use the four perspectives of the Balanced Scorecard to develop objectives for the five strategic themes. Once developed, each operating department then has been asked to develop departmental balanced scorecards to communicate and focus their local objectives toward accomplishing the city's strategic priorities. The case describes the development and use of the balanced scorecard as a strategic management system.

The managing partner of a relatively new consulting firm is concerned because training costs at the firm's new training center are higher than expected. Analysis of actual costs compared to those expected is required. In addition, he is considering capitalizing some training costs for later amortization. A management control system for the center is also a priority.

Spreadsheet Supplement for case 199033

The merger of Asea AB and BBC Brown Boveri required a restructuring of operations and a change in organizational cultures. Competitive success also necessitated the benefits of scale while remaining "local" for political and customer-responsiveness reasons. The case describes these competitive pressures, which resulted in the decision to adopt a matrix organization. To be used with Asea Brown Boveri: The ABACUS System.