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Supplement to 609-065

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A variety of services offer consumers discounts when dining at participating restaurants. This case examines four such services: Entertainment Book, Restaurant.com, Rewards Network, and Groupon. Despite key functional similarities, each of the services chooses an importantly different approach-different pricing, different benefits to consumers, different benefits to restaurants, and different underlying technologies.

In April 2008, the owners of the Cambridge, Ontario-based Cerny Hospitality Group (CHG) were considering the purchase and implementation of OpenTable's reservation management software in three of their restaurants, including the Blackshop Restaurant. It was thought that the software could aid in more effectively managing customer demand due to its ability to allow on-line reservations and its data-gathering capability, an improvement over its current manual reservation system. CHG was a family-owned and operated business and had achieved considerable success with its personal touch with clients. When considering the purchase of the software, CHG had concerns about the potential cost and return on investment, in addition to the strategic fit for this company that placed much emphasis on the human-touch and personal interaction with customers.

Semiconductor Manufacturing International Corporation (SMIC) is executing a strategy that leverages the desires of municipalities in China to build clusters of high technology companies. By partnering with those cities to build new semiconductor fabs that SMIC would then operate under contract, the company could build scale without necessarily confronting immediate large capital outlays. Unlike the Build-Operate-Transfer model that some municipalities were using to build infrastructure like the new subway in Shenzhen, in the SMIC "Reverse BOT model" a municipality would build a capital intensive fab and SMIC would operate it, sharply lowering its capital costs. This model gave the company a unique level of flexibility in an industry where capital costs were the major driver of product costs.

This is an MIT Sloan Management Review article. Companies have long used teams to solve problems: focus groups to explore customer needs, consumer surveys to understand the market and annual meetings to listen to shareholders. But the words "solve," "explore," "understand" and "listen" have now taken on a whole new meaning. Thanks to recent technologies, including many Web 2.0 applications, companies can now tap into "the collective" on a greater scale than ever before. Indeed, the increasing use of information markets, wikis, crowdsourcing, "the wisdom of crowds" concepts, social networks, collaborative software and other Web-based tools constitutes a paradigm shift in the way that many companies make decisions. Call it the emerging era of "Decisions 2.0." But the proliferation of such technologies necessitates a framework for understanding what type of collective intelligence is possible (or not), desirable (or not) and affordable (or not) -- and under what conditions. At a minimum, managers need to consider the following key issues: loss of control, diversity versus expertise, engagement, policing, intellectual property and mechanism design. By understanding such important issues, companies like Affinnova, Google, InnoCentive, Marketocracy and Threadless have successfully implemented Decisions 2.0 applications for a variety of purposes, including research and development, market research, customer service and knowledge management. The bottom line is this: For many problems that a company faces, there could well be a solution out there somewhere, far outside of the traditional places that managers might search, within or outside the organization. The trick, though, is to develop the right tool for locating that source and then tap into it.

Until recently, SimpleTel had been a star performer in the telecom industry, and the CEO had been a darling of the analyst community. Several years back, SimpleTel's found itself in a situation where customers were migrating to smaller, local telecom providers to avoid the congestion on SimpleTel's network. At that point, SimpleTel's leadership had decided to invest heavily in expanding network capacity. But now the company was left with a huge amount of unutilized capacity. That, along with debt obligations related to the massive investments in capacity, and lack of demand was threatening to push SimpleTel to the verge of bankruptcy. The previously celebrated CEO had fallen out of favor and shareholders were baying for his blood. He was forced to make an unceremonious departure, and the search for a savior had begun. Today, the compensation committee was due to deliberate on the compensation package for SimpleTel's new chief executive.

Whole Foods and Wild Oats were both natural- and organic-food stores that competed for similar customers on values such as high-quality and healthy products, excellent customer service, knowledge of products, and an enjoyable shopping experience. In February 2007, Whole Foods announced that it would purchase a smaller, yet formidable competitor, Wild Oats. There was tremendous geographic complementarity involved: The merger would give Whole Foods the largest footprint within the natural- and organic-grocery industry in North America.

This technical note requires students to define and describe a practical application deploying the 5S process steps of lean thinking methodology: Sort, Set in Order, Shine to help future business managers organize, create new habits, and visually control a personal area or workplace setting in order to eliminate waste in the activities undertaken by one or more individuals. The note provides guidance for students to document their 5S journey, reflect their on their learning, and then summarize the experience.

Business entities must continually respond to shifts in the competitive landscape. When internal or external pressures cause a company to undertake an operational improvement process such as Six Sigma or Lean, managing the human aspects of implementation is critical. Change management in an operational-improvement setting can be challenging; however, it is well worth understanding and utilizing the appropriate tools and the FEEL-SEE-DO-PRACTICE-OBSERVE iteration. Ultimately, the robustness of an organization may be due in large part to its ability to build a continuous-improvement cycle solidly into the infrastructure of its culture and operations.

A summer intern in the Supplier Development department at XS Inc. is participating in a two-day Value Stream Mapping (VSM) event at SysInteg. This is his first chance to put his knowledge of lean principles and tools into practice working with a key supplier. As this is XS's first time sponsoring an improvement initiative led by a third party, it was under tight scrutiny by the XS corporate-level senior management. XS saw this as an opportunity to deploy external lean experts as some members of senior management were skeptical about the lack of oversight on milestones, performance management, or (supplier) resource allocation; however the intern is concerned that a poor performance at SysInteg would affect his chances for future employment at XS. After today's event at SysInteg, he is expected to establish a communication plan and identify stakeholders for each future VSM event.

Right Media considers systems and policies to make sure that ads are only shown on web sites where they are appropriate, and vice versa. Setting standards is particularly challenging given the large and growing marketplace, the numerous participants, their diverse requirements, and the dynamics of policy enforcement when market participants are competing intensely.

General Manager Luke Kolville, of the Los Angeles Spartans, struggles with the best approach to negotiate a long-term contract for his star quarterback. The agent for Washington is relatively new to the industry and has his sights set particularly high. Kolville needs to weigh a number of effects this negotiation will have on the player, his teammates, and the long-term prospects of the team.

Green Dot was a charter management organization (CMO) based in Los Angeles, California (L.A.), a city that housed the second-largest school district in the country. The Los Angeles Unified School District (LAUSD) was known for its largely ethnic student population (75 percent Hispanic and 11 percent African American) and multiple challenges ranging from poor performance to violence to low graduation rates. High school graduation rates in the district were only 45 percent (compared to 68 percent nationally), with Hispanic students graduating at a rate of only 39 percent. Gary Orfield of the Harvard Civil Rights Project called the city's high schools "dropout factories." By 2008, Green Dot had opened 12 charter high schools in some of the highest-need areas of L.A., hoping to demonstrate "that public schools can do a far better job of educating students if schools are operated more effectively." Founder, Steve Barr and his team had their own ideas about the tipping point and its metrics, which were both quantitative (e.g., 10 percent market share of schools within LAUSD) and qualitative, in terms of gains in political influence. As Barr and his Green Dot team worked towards opening of new school, Locke in the fall of 2008, Barr was both nervous and optimistic. He knew the future of Los Angeles students, parents, and their communities depended on the success of his team. He wondered if his new transformation strategy was the optimal strategy. He also wondered if his thinking about the tipping point would give him and his team the best chance for success.

In January 2004, the chairman of the India-based Tata Group, announced that the Tata Group would focus its efforts on international expansion to become globally competitive. This largely domestic vehicle manufacturing firm subsequently acquired a leading established South Korean firm, Daewoo Commercial Vehicle Company (DCVC). This case focuses on the background of the firms and the acquisition, and the bidding and acquisition process. It provides information on the interests of the acquirer and target, and how both came to see the value in the acquisition. The Tata Group acquisition presents an uncommon situation of how an Indian firm acquired a firm in South Korea while overcoming a series of cultural and other barriers. An analysis of this case provides the basis for determining what criteria should be considered to guide a successful acquisition. A companion case to Tata Motors' Integration of Daewoo Commercial Vehicle Company, #908M95.

In January 2004, the chairman of the India-based Tata Group, announced that the Tata Group would focus its efforts on international expansion to become globally competitive. This largely domestic vehicle manufacturing firm subsequently acquired a leading established South Korean firm, Daewoo Commercial Vehicle Company (DCVC). This case complements the case "Tata Motors' Acquisition of Daewoo Commercial Vehicles Company, #9B08M094. Commencing from the successful completion of the acquisition of DCVC, this case details the strategic, organizational and operational changes implemented to integrate the two firms. The value of this case is twofold: 1) it demonstrates how firms can effectively integrate an acquired firm, particularly in terms of the wide range of strategic and tactical actions; and 2) it provides an example of a firm that takes an unorthodox approach to integration. Students have an opportunity to evaluate the factors that determine the success of a post-acquisition integration.

The owner of a carpet cleaning operation in Tennessee is urgently looking for solutions, after his business expansion project has failed. The owner has emulated the business model of a well-established competitor, hoping that what has worked for his competitor would also work for him. The business is churning cash fast as a result of the additional cost of personnel and equipment and could face bankruptcy in the near future.

When car rental companies sign you up for insurance unless you actively decline it, or software vendors recommend you click "next" for a quick install, they're choosing default options for you - covertly or overtly guiding your choices. Well-designed defaults benefit both company and consumer, simplifying decision making, enhancing customer satisfaction, reducing risk, and driving profitable purchases. Ill-conceived defaults can leave money on the table, fuel consumer backlashes, put customers at risk and trigger lawsuits - costing companies dearly. Despite those high stakes, management pays little attention to default policies. Setting defaults requires companies to balance a complex array of interests, including customers' wishes and the company's desire to maximize profits while minimizing risk. At a basic level, defaults can serve as manufacturer recommendations, and more often than not we're happy with what we get. Most companies also strive to set defaults in ways that align with customers' preferences. In its online auto configurator, for example, Audi preselects silver metallic as the default color because it's the most popular. Of course, defaults can be nefarious as well. They have caused many of us to purchase unwanted extended warranties or to inadvertently subscribe to mailing lists, for example. The authors provide a taxonomy of default types and guidance on when - and when not - to use each type. They range from "benign defaults," representing a company's best guess about which single product configuration would be most acceptable to most customers, to "adaptive defaults" that change depending on individual customers' stated preferences.

In essence, this the story of how two INSEAD MBA students had a great idea for an integrated service to take over companies' product return streams and how they turned this idea into a successful business. Cycleon was founded in 2005 to offer original equipment manufacturers an option to manage returns at a lower cost than was offered by express services, and with greater speed than possible by leveraging forward supply chain partners. It describes the reverse logistics market, Cycleon's strategic positioning, and the entrepreneurial challenges it faced.