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Examines the proposed merger between HP and Compaq and the impact of this merger upon the companies and the industry as a whole. Explores the challenges that a combined HP and Compaq will face in various industry segments.

This case describes the compensation system for portfolio managers at Harvard's portfolio management company, including its formulaic and bonus bank features. Harvard Management Co. President Jack Meyer explains the philosophy behind the incentive pay at his company.

CEO Michael Collins must decide if and how a process he developed to further innovation in the kids' industry could port over to other industries. The process was based on Collins' experiences as an inventor and as a venture capitalist, and it allowed his company to be an intermediary between inventors and innovation-seeking companies. The process seemed to be working quite well in the kids' industry and Collins had to decide what would "travel" to a different vertical.

Joe Pompei, a graduate student at the MIT Media Lab, has invented a breakthrough audio invention. The invention is an "Audio Spotlight" that projects a narrow beam of sound in the same way a laser beam projects a narrow beam of light. He must now decide how to commercialize the technology. He has narrowed down the commercial possibilities to four markets: the autosound market, the professional audio market, the interactive kiosk market, and the home audio market.

Digital Angel is considering the appropriate marketing plan for the launch of its new locator device. The device, a watch and pager worn in combination, provides GPS location information and monitors heart rate and body temperature via body sensors. Parents of young children and caregivers of Alzheimer's patients are the initial target markets for the device, but at least 26 potential markets have been identified for the product. Building a brand and generating positive word of mouth are central to the marketing plan decision. But the technology also raises concerns over privacy issues, and the benefits of the product are complex and challenging to communicate.

French utility, Vivendi, purchased the United States-based entertainment giant Universal in late 2000. In so doing, the rechristened Vivendi Universal became a major force in music, films, and television production, adding to its European-based cable television and telecommunications assets. By the end of 2001, Vivendi Universal was betting on continued convergence of distribution channels to knit together an international entertainment conglomerate. Its plans would put Vivendi Universal in direct competition with established entertainment giants such as Disney, Viacom, and the merged AOL Time Warner.

In January 1998, Peregrine Investments Holdings Ltd., once billed as "Asia's only indigenous investment bank," was forced into liquidation after the revelation of huge losses in its fixed-income business and the withdrawal of potential investors from Europe and the United States. Peregrine became the highest profile corporate failure in the Asian financial crisis to date. A firm that seemed to be on top of its world in early 1997 had collapsed under a pile of bad debts less than a year later. Peregrine's demise raised questions about how the firm might have avoided the debacle. This case can be used to teach corporate governance and strategy development in volatile environments.

Although mortgage securitization was old hat in the United States and Europe, it had not really caught on in Asia. Past experience in Hong Kong suggested that efforts by individual institutions to securitize mortgages had not been entirely successful. In spite of this, the Hong Kong government placed high hopes in Hong Kong Mortgage Corp. (HKMC) to develop the mortgage-backed securities (MBS) market. However, some banks wondered whether it was timely for them to get into the MBS business in Asia. In particular, the banks and the HKMC had very different risks and concerns regarding the development of MBS. Teaching Purpose:

In July 2001, Acer, Taiwan's best-known company, was in the midst of an ambitious reorganization. The goal was to reverse flagging sales in Acer's branded computer and peripherals businesses and to address the concerns of major clients of its contract manufacturing business. The reorganization would involve splitting the company into three parts, massive layoffs, a shift in geographic focus, and a complete change in business philosophy. Acer's chairman and cofounder Stan Shih had personally taken charge of the reorganization, signaling the seriousness of Acer's position and his commitment. However, questions remained as to whether the reorganization would be effective in meeting Acer's challenges and turning the company's fortunes around. This case can be used to teach strategy development in volatile environments, the challenges of creating a successful brand, and the links between company strategy and location advantages and disadvantages.

Electronic Communications Ltd. (ECL) had decided to make China its second home and to seek common prosperity with Chinese people. The company knew that there were major gains to be made, but there were also risks and challenges. One of these was the management of cultural differences. An essential question facing the management was whether it should adapt ECL's management practice to the Chinese culture or instead implement ECL's global management policies in China.

Discusses how Grey Worldwide Hong Kong and China (Grey WW-HK/China) is repositioning itself through defined e-marketing and CRM strategies for the Asian market. Examines how integral its customer relationship group is in building a CRM strategy to deliver client value proposition. Grey WW-HK/China has very strong umbrella brand equity, but the brand capital has to be invigorated through a renewed e-marketing focus. Constrained by changing market conditions, particularly industry pressure on commission margins, Grey WW-HK/China needs to differentiate itself and is assessing CRM's value in developing loyal and lifetime customers. However, in a growing Asian market, Grey WW-HK/China is in heated competition with other players, including management consultants, traditional agencies, and pure on-line players who are actively pursuing a CRM business focus. Grey WW-HK/China's CRM team is in the process of developing an Asia-specific CRM blueprint for its internal management, something that is transferable to Grey's clients. Grey WW-HK/China is considering merging technology with traditional marketing philosophy, and the team is expected to deliver a proposal that outlines the CRM tools that Grey WW-HK/China should use to reposition its brand and build customer loyalty.

New World Development Co. Ltd. (NWD) was a leading conglomerate based in Hong Kong. After more than 20 years of operations, the group had expanded its core businesses to include property, infrastructure, services, and telecommunications. From late 1997 to June 2001, the stock price performance of the company had been abysmal. Its efforts at asset disposals to reduce gearing, while making additional investments in new businesses, confused investors. Security analysts also blamed the company for not keeping its promise to focus on its core business of property.

"If you try to use money to motivate behavior, you are in a powerful and dangerous place, especially with engineers and scientists," remarked Tom Furman, CEO of Camp Dresser & McKee, Inc. (CDM), a consulting environmental engineering firm. Historically, CDM had followed an "egalitarian" management bonus program based on qualitative measures. As industry growth decelerated and competition intensified since 1991, management changed the incentive plan to tie it closer to the achievement of business objectives. This case describes the bonus and incentive compensation system and the evaluation process. It ends with Furman reflecting on how to interpret the CDM system to reward four CDM executives suitably.

Scientific knowledge surrounding diabetes mellitus has grown over the last century to include its cause, treatment, and prevention strategies. However, the type and level of care that patients receive is suboptional. This case examines the forces in industry, knowledge, education, public policy, and reimbursement that drive the management of this disease and the potential for innovation in the management of other chronic diseases.

This case presents an ethical choice: How should a prospective buyer respond when a homeowner quotes a price that the buyer knows is significantly below market value? The case describes a private transaction in which the prospective seller is fully competent mentally but is apparently uninformed about current market prices. The buyer could agree to the asking price (or even counter with a lower figure) without taking any financial risk, because he or she could obtain appropriate guarantees of good title, absence of environmental problems, and so forth.

Governor Patton decides how to use settlement funds to develop a long-term plan for Kentucky's tobacco producers and rural communities.

Grupo Elektra is Latin America's largest consumer finance company based on credit sales in its hard goods retail outlets. It has started to internationalize in Latin America but now must to decide whether to enter the U.S. Hispanic market and which of its two core businesses (retail and finance) to emphasize.

In-depth look at the emergence of venture capital (VC) in Israel, tracking not only the industry itself, but also its many drivers, including high technology and its roots in Israel (government sponsorship, etc.). Examines the VC industry in 2001. Professional VC has grown rapidly, with growth driven by internal players capitalizing on local knowledge and experience and by non-Israeli firms, which have come to Israel looking to invest in the next high-tech winner. Asks what role the Israeli VC firms have in the future: Will Israeli VC firms be able to survive or will U.S. firms come in and pluck the best deals away? Should Israeli firms partner with U.S. firms and, if so, how? Should and can Israeli firms venture out of the Middle East and attempt to compete with U.S. firms on U.S. soil?

Solectron Corp. grew rapidly from a small contract manufacturer in the early 1980s to the dominant company in the electronics manufacturing services industry by the late 1990s. In doing so, it evolved from providing peak capacity for its clients to providing services that clients could not provide on their own (low-cost materials and access to expensive capital equipment). Its next phase was to provide its clients with new ways of operating--such as outsourcing all operations except research, product conceptualization, marketing, and sales--allowing clients to outsource those activities that were not part of their core competencies. Describes this evolution and the rapid growth of the company. In 2001, the company's clients suffered severe business downturns, which in turn caused the first contraction in Solectron's history. Describes the company's initial response and raises questions about how the company should proceed.

A new director of this small German brewery must prepare to vote on three issues coming before the board of directors the next day: (1) approval of the financial plan for 2001, (2) declaration of the quarterly dividend, and (3) adoption of an incentive-compensation plan for the marketing manager. The task for students is to evaluate the past and prospective financial performance of the company and to critique its liberal credit and inventory policies.