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The case explores the methodologies for valuing an early stage, IP based business. Endomagnetics is a university spin-off based on technology from University college London. By the time of the case the business has raised (and largely spent) a seed round and is about to raise 'Series A'. The new CEO, Eric Mayes, is in discussion with investors. There is some interest and he knows that he'll soon need to propose - and justify - a pre-money valuation. He has the usual set of base assumptions on market size and penetration along with information on similar businesses. The question is how he can assemble this information to produce a valuation. The case uses a series of spreadsheets (created by a MBA intern as it happens) that take us through all the alternatives from detailed bottom-up 'decision -tree' methods through to more sweeping market comparables, examining the strengths, practicalities and limitations of each approach.

For decades, the business world has been fixated on achieving sustainable competitive advantage, a position within an industry that allows a company to best its rivals over the long term. Though we can all point to organizations that have succeeded with this approach--think GE and Unilever--in today's world, the edge of most companies doesn't last long. The forces at work here are familiar: the digital revolution, disappearing barriers to entry, globalization. In a turbulent environment, businesses can't afford to spend months crafting a single long-term strategy. They need a portfolio of multiple transient advantages that can be built quickly and abandoned just as rapidly. Transient advantages call for a whole new playbook, says Columbia Business School's McGrath. It involves a view of strategy that is less industry-bound and more customer-centric. Executives who grasp this shift don't rely solely on analysis to develop strategy; they use tools like advanced pattern recognition and observation to set broad strategic themes and then let people experiment within them. They also adopt decision metrics that support entrepreneurship, replacing the net present value rule, for instance, with the logic of real options. And, knowing that product features can be copied instantly, they focus on providing experiences and solutions to problems to customers, and turn relationships into competitive barriers.

Asked to define strategy, most executives would probably come up with something like this: Strategy involves discovering and targeting attractive markets and then crafting positions that deliver sustained competitive advantage there. This view of strategy as position remains central in business school curricula around the globe. Unfortunately, writes the author, investors don't reward senior managers for simply occupying and defending market positions. Equity markets are full of companies with powerful positions and sluggish stock prices. Merely sustaining prior financial returns, even if they are outstanding, does not significantly increase a share price; tomorrow's positive surprises must be worth more than yesterday's. Zenger argues that managers' most vexing strategic challenge is not how to win or sustain competitive advantage but, rather, how to keep creating value. He offers what he calls the corporate theory, which reveals how a given company can do just that. Drawing on the history of Disney and Apple, he describes what makes a corporate theory strong, shows how it informs strategic choices, and warns what can happen when a company loses sight of its theory.

In 1979 Michael Porter's five forces model transformed the field of strategy. But the 1996 article "Value-Based Business Strategy," by Adam Brandenburger and Harborne Stuart Jr., may prove to be even more significant, as it applied mathematics to the evaluation of strategic decisions. Ryall, of the University of Toronto's Rotman School of Management, now introduces a model of competitive strategy that is built on Brandenburger and Stuart's mathematical work. The value capture model (VCM) has an explanatory, predictive power that no other theory of competitive strategy can claim. It defines competition in an industry as a tension between the value generated from transactions that a firm undertakes with a given set of agents and the forgone value it could have generated from transactions with other agents. An important implication is that strategists must shift from looking at how a firm competes with other players to examining how players compete for a firm. Work on the VCM is already revealing important insights to leaders who chart the strategic direction of their firms. A streamlined version with a reasonably full complement of input variables, bolstered by empirical research and further refinements, could illuminate the way to better business practices.

From humble beginnings as a Levi jeans store, by 2000 Gap, Inc. had grown to become the world's leading specialist clothing retailer. Its CEO, Millard S. Drexler, the "merchant prince," was credited with transforming Gap into a global empire, leading the company through eighteen years of 21% p.a. growth to reach sales of $13.6 billion in 2000. Gap had expanded to 2,848 stores under its three brands: Gap, Banana Republic, and Old Navy, and controlled 6% of U.S. apparel sales. Drexel had also pushed Gap through a global expansion program, and international accounted for 12.5% of total sales in 2000. But as Gap entered the new millennium, dark clouds were building on the horizon. While sales in 2000 were up nearly 18% over the previous year, operating profits fell by 20%, only the second profit fall since 1984. Gap found itself plagued with concerns about fashion misses, logistics failures, the departure of senior managers, and increased foreign competition. New fast-fashion competition in the form of Inditex, H&M, and Club Monaco threatened Gap's market share both domestically and abroad. Drexler remained confident of recovery and promised to fix infrastructure problems and recent fashion misses while expanding the high-growth GapBody and BabyGap concepts. Would these changes be enough to keep Gap competitive in a new retail era?

"In 2000, Benetton was one of the leading mass fashion competitors in the world with approximately $1.9 billion in sales across 5,500 stores in 120 countries. But the company's fortunes seemed to be on the wane. Operating profits had fallen 9% from the prior year to $299 million. Having almost matched global leader, Gap Inc.'s revenues in 1985, Benetton was now only one seventh of Gap's size. Moreover, Hennes & Mauritz (H&M) of Sweden had passed Benetton in 1996 and now claimed more than double the sales of Benetton. Inditex of Spain and Fast Retailing of Japan had also passed Benetton in revenues by 2000. To make things worse, Inditex and H&M had announced in 2000 that they intended to enter Italy, Benetton's heartland.<br> Chairman and co-founder Luciano Benetton was determined to fight back and toward this end had just launched a major new retail strategy to expand the size of Benetton's current stores, invest in large superstores and build greater control of the supply chain. The company also had high hopes for its new drive into sports equipment and apparel. Would this be enough to halt the rise of its mass fashion competitors?"

"Between 2000 and 2012, Gap, Inc. (Gap) ceded its world leadership position in specialty fashion retailing to Inditex of Spain and H&M of Sweden. These two companies, each less than a quarter of Gap's size in 2000, were now setting the pace in the global mass fashion market, and Gap appeared to be falling ever further behind. In the intervening twelve years, three CEOs had struggled to turn around the fading brand. While several temporary profit boosts appeared to herald a recovery, a sustained rally remained elusive.<br> Mickey Drexler, Gap's CEO since 1983, who had been responsible for Gap's rise to global prominence, was fired in 2002 after two years of double digit, same-store sales declines and a 75% drop in the stock price. His successor, Paul Pressler, appeared to have engineered a remarkable recovery, but was fired in 2007 after disappointing sales and another slump in profits. His replacement, Glenn Murphy, fresh from a successful turnaround at a Canadian drug-store chain, promised tighter price controls, lower administrative costs, and a leaner, more aggressive Gap, but sales continued to decline over his tenure. After four years of troubles, Murphy brought in former J. Crew President, Tracy Gardner, to consult with the Gap brand and Murphy began a bold program to close one fifth of Gap's North American store base. In 2012, sales had lifted 8%, same-store sales were strongly positive for all of Gap's domestic sub-brands, and the company's share price had lifted nearly 50% from the prior year. After 12 years of poor performance, had Glenn Murphy finally discovered the answers to Gap's problems?"

"On May 31, 2012, after 36 years on the Milan Stock Exchange, Benetton was officially delisted and taken private by Edizione, the Benetton family's holding company. Since 2000, Benetton shareholders had seen its market value fall from $4.3 billion to $720 million at the end of 2011. At $2.6 billion, Benetton's sales in 2011 were virtually the same as they were in 2000, but Inditex from Spain, Hennes & Mauritz (H&M) from Sweden and Fast Retailing from Japan had all grown several times larger over the same period. What happened to this global retail giant?<br> Under the direction of four different CEOs since 2000, Benetton had attempted to move from being an Italian supplier of knitwear with licensed small retailers throughout the world to a vertically integrated global player by tightening management over its supply chain and rolling out directly operated superstores. These moves helped Benetton gain more control over its operations, but they also ate into its profitability. In 2012, Benetton found itself competing with fashion giants who could respond faster to market trends and deliver comparable clothes at half the cost. With Benetton under private ownership, would Harvard Business School graduate Alessandro Benetton be able to make the changes required to return the company to its former strength?"

This short case presents a series of brief accounts, observations, and quotations that challenge students to think about the role of the CEO - and of the CEO's (possibly strong) beliefs and convictions - in strategy. It focuses in particular on three issues and their practical implications: 1) when and why it is important that the strategy publicly reflects the (possibly strong) beliefs of the CEO and management; 2) whether and when you want the strategist (CEO or management) to have strong beliefs; and 3) why people tend to develop strategies in line with their background and past successes, and what the implications are.

The case illustrates how seeming good strategy (in terms of content) can fail in the process of implementation. A brilliant CEO strategist failed to convince his employees to buy into his strategic vision by trying to implement it too quickly.

The incoming vice-president in situ of Suncor Energy is faced with problems of underperformance at a new facility that uses the innovative in situ technology. This technology accesses bitumen in reservoirs too deep for traditional mining practices to recover. Although it is deemed less harmful to the environment than surface mining, in situ technology does create more greenhouse gas and sulphur dioxide emissions, but these can be controlled with new equipment. Recently, the site has come under investigation for two environmental compliance charges related to a missing piece of pollution control equipment. The new vice-president needs to analyze the root causes of the facility's operational challenges and develop a plan to deliver on the parent company's operational excellence strategy.

In spring 2012, Yammer was on track to become a highly successful standalone company. Yammer was a leading Enterprise Social Network (ESN), providing companies a private social network in which employees could collaborate securely and efficiently. However, later that year, Microsoft executives unexpectedly reached out with an offer to acquire Yammer for $1.2 billion and integrate Yammer into the Microsoft Office division. An integration with Microsoft would have a profound effect on Yammer's scalability, software development, and organizational culture. David Sacks, CEO of Yammer, debated the challenges and opportunities related to competition, product, and culture as he thought about the offer on the table.

Supplement to Yammer (A), case 712-494.

Yanzhou Coal Mining Company Limited (Yanzhou Coal) is a listed company controlled by Yankuang Group Co., Ltd. (Yankuang Group) which is affiliated to the State-owned Assets Supervision and Administration Commission (SASAC) of Shandong Provincial Government, China. Yanzhou Coal have been listed in Hong Kong, New York and Shanghai respectively. It is mainly engaged in coal, coal chemical industry and power generation. In addition to the connotative development, Yanzhou Coal started to implement a strategy of denotative development after listing and seek coal projects in other cities outside Shandong Province or China. This case mainly introduces the process of Yanzhou Coal's acquisition of Austar Coal Mine, Felix Company, as well as Gloucester Coal Ltd. by exchanging shares, thus achieving listing in Australia.

Yanzhou Coal Mining Company Limited (Yanzhou Coal) is a listed company controlled by Yankuang Group Co., Ltd. (Yankuang Group) which is affiliated to the State-owned Assets Supervision and Administration Commission (SASAC) of Shandong Provincial Government, China. Yanzhou Coal have been listed in Hong Kong, New York and Shanghai respectively. It is mainly engaged in coal, coal chemical industry and power generation. In addition to the connotative development, Yanzhou Coal started to implement a strategy of denotative development after listing and seek coal projects in other cities outside Shandong Province or China. This case mainly introduces the process of Yanzhou Coal's acquisition of Austar Coal Mine, Felix Company, as well as Gloucester Coal Ltd. by exchanging shares, thus achieving listing in Australia.

Krohne Inc. separately established a joint venture, a wholly owned sales company and a manufacturer in China. Unfortunately, although the sales channels were different, the product lines of the joint venture and the wholly owned manufacturer overlapped. The two companies were therefore competing and unsure about which company rightfully represented the parent enterprise. In addition, the two investment parties were battling for control of the joint venture.

A social enterprise organization, whose mission is to battle poverty and gender discrimination through providing access to technology, is faced with the prospect of losing some or all of its government funding in a time of global recession. Under the legal structure of a non-governmental organization, Digital Opportunity Trust has partnered with large corporations and other organizations and established a local presence in disadvantaged areas. It has worked in a partnership setting to mobilize the information technology knowledge of young people and train them to become leaders of change in their local communities, which in turn will give them the relevant skills and experience to support their own career paths. The organization's striking success has been driven by its innovativeness and, more particularly, its noticeable efforts to reconcile the corporate and non-profit aspects of doing business, along with the challenges that come with it, without compromising the quality of the social enterprise brand that it is bringing forward.

This case describes the founding and growth of a commercial real estate business by a father-son partnership up to the point of deciding whether to stay private or take the company public (IPO) in light of an economic downturn. It focuses attention on the analysis of the two alternatives through their effect on financial and non-financial risks and rewards. Consideration of how to address the possible changes in ownership, leadership, and management in light of the decision is brought into play. Descriptions of the evolution of a father-son relationship are used to foster a conversation about the "uniqueness" of this relationship as it pertains to the company's value and the value of the company to its investors.

Over the next two decades, one of the fiercest battles in business will be for the billions of people joining the middle class in emerging markets-a group that will make up 30 per cent of the global population by 2020. Yet even many multinational companies who are already active in emerging markets are not prepared to tap into this new stream of revenue growth because, the authors argue, their business models were not designed to reach the new middle. They describe four steps to business model innovation that can help a company capture this critical emerging market.

David Rock, founder of the NeuroLeadership Institute, believes that the secrets to high performance lie in our ability to master humankind's greatest asset: the brain. In this interview, he argues that the brain requires three things to function optimally: moderate stress, positive affect (i.e. emotion) and a good night's sleep. He also shows that workplace engagement and productivity are closely related to the brain's primal 'threat and reward' function, which has repercussions for manaaqgers.