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American Express (TRS) Co. is considering a proposal to securitize a portion of their consumer charge-card receivables portfolio. In the past, they have relied exclusively on a captive finance subsidiary, Credco, to perform this function. The proposed securitization structure has been put forth by Lehman Brothers and relies heavily on the existing structure of credit-card receivables' securitizations. The growing asset-backed securities market presents TRS an opportunity to diversify its sources of funds--however, there are reasons to be cautious. Due to recent downgrades of American Express and Credco debt, the perceived financial weakness of credit-card receivable backed securities issuers, and the proposal's sophisticated securitization structure, TRS is concerned that 1) The market may perceive securitization as a sign of weakness; 2) The securitization may not be cost effective. Therefore, TRS has to decide whether or not to proceed with securitization at this time.

Designed to generate discussion on the issues of outsourcing from the perspective of a firm thinking about turning over its IS activities to a third-party vendor.

Richard Munro, Time Inc.'s chairman and CEO, must respond to a hostile tender offer from Paramount Communications. Paramount conditioned its bid on cancellation of Time's plans to merge with Warner Communications. Several months before the hostile Paramount bid, Time had announced its plans to merge with Warner after careful consideration of a comprehensive list of possible partners, including Paramount. The Board endorsed Munro's decision to merge with Warner because the two firms held a wide range of complementary assets. If Time continued with its plans to merge with Warner, Time's shareholders would forgo at least $175 per share in cash, and possibly more. On the other hand, a merger with Paramount was not part of Time's long-term strategy. Munro must recommend a specific course of action to the Board at its emergency session. The case is written from the viewpoint of Time's managers. Should Time's managers resist the Paramount bid?

Managing the risk of changing prices of gold is central to the business strategy of American Barrick Resources Corp., one of North America's largest and most successful gold-mining firms. The case contrasts this firm's hedging policies with those of its rivals that do not hedge and details the wide range of hedging products (gold loans, forwards, options, spot deferred contracts) used to manage price risk. In 1992 the management of American Barrick is pleasantly surprised by unexpected new gold finds, but this new production places demands on the firm's hedging program and tests the firm's commitment to hedging when prices of gold and of many hedging vehicles are unattractive.

Discusses the Lukens board's involvement in strategic planning.

Top executives of Prodigy Services Co. must decide how to respond when publicly accused of allowing anti-Semitic messages to be posted on the electronic bulletin boards of the company's interactive computer service. Can they defend free expression while at the same time opposing expressions of hatred and bigotry?

Genzyme Corp., one of the largest biotechnology companies, has succeeded in developing, manufacturing, and commercializing its first therapeutic, a treatment for a rare genetic disease. Analysis of the case requires students to identify and understand how Genzyme has designed its strategy to effectively manage, mitigate, or exploit the uncertainties it had faced in the past. In 1993, the company faces challenges in managing future uncertainties involving the product's market, manufacturing, and pricing.

To develop the next generation of risky products, ALZA, a mature and profitable biotechnology firm specializing in drug delivery systems, must raise $40 million. Organizational constraints and competitive concerns demand that the work be done inside the firm. However, accounting considerations and concerns about shareholders' reactions to the introduction of new risks to the firm lead the CEO to consider off-balance-sheet means to finance the new venture. To finance the new venture, the firm creates a new financing vehicle: a unit consisting of callable common stock plus warrants. This case examines the CEO's decision leading up to the issue of the units and the establishment of a new research and development subsidiary.

In 1992, BMW attempts to revive its position in the United States market. In 1991, unit sales had fallen to 53,000 from 88,000 in 1987. The new CEO of North America considers a multifaceted plan to turn around the situation.

Starting as a modest 20-bed hospital, Aravind had grown into a 1,400-bed hospital complex by 1992. It had by then screened 3.65 million patients and performed 335,000 cataract surgeries, nearly 70% of them free of cost for the poorest of India's blind population. Aravind's founder, Dr. Venkataswamy, now 74 years old, had a goal to spread the Aravind model to every nook and corner of India, Asia, and Africa. The case sets the stage for developing such a plan of action.

Describes a decision that SMD management made to implement an MRP II system in its 38 plants. Raises the issues that needed to be addressed to enable the implementation, and is positioned so the students can develop a detailed implementation plan.

Since winning independence in 1965, Singapore achieved some of the world's highest rates of economic growth. A large part of GDP and employment came from direct investment by multinational companies in low-cost assembly work, but in the 1990s Singapore's rising wage rates increasingly priced it out of these industries. Could Singapore change itself from an assembler and fabricator of Western-designed parts to a designer and marketer of desirable products? Lee Kuan Yew, "the father of Singapore," repeatedly had shown an ability to guide the nation through such transitions. Not only did his successor have no such track record, but the next transition might be the hardest yet.

Prior to the 1980s, automakers purchased individual seat components and built the seats alongside their auto assembly lines. This case describes how Johnson Controls, Automotive Systems Group, blossomed when automakers turned to outsourcing the complete seat set. The case closely examines one plant, in Georgetown, Kentucky, that switched from just-in-time (JIT) delivery of seat sets to JIT assembly to serve a nearby Toyota Camry assembly operation. Exposes the challenge of dealing with growing seat variation and an opportunity of doubling the plant floor space at a separate site. The specific case question is how the plant should use this new space.

Details the evolution of a value-creating supplier-buyer partnership. Describes the buyer's (Liz Claiborne) manufacturing and marketing strategy, and details the workings of the firm's relationship with an important Taiwanese supplier of piece goods (Ruentex Industries Ltd.).

In May 1992, Intel Corp., the leading supplier of microprocessors for IBM-compatible personal computers, announced the retail availability of OverDrive processors, a new line of performance upgrades for the Intel 486 series of microprocessors. The case chronicles the evolution of Intel microprocessors and math coprocessors. Next, it describes the genesis of the "speed-doubling" technique that is employed in the OverDrive Processor and it details the important implementation issues. The central questions are the following: How does a firm manage a product line in the context of rapid technological change? What are the consequences--for the end users, and hence the system and component manufacturers--of rapid product change? How does product upgradability help mitigate some of these consequences? How should Intel develop the OverDrive business? And how will this affect the company's mainline microprocessor business?

Senior management of Hydro-Quebec were faced with the problem of how to avoid the possible cancellation of its multibillion dollar hydroelectric development project due to highly publicized opposition from aboriginal rights groups and environmental activists. This opposition was jeopardizing a major export contract by the New York Power Authority. Hydro-Quebec's financial performance, in particular its ability to continue servicing its large U.S.-denominated debt, was an important factor in the economic health and potential sovereignty of the Province of Quebec. The focus on stakeholder analysis is an excellent review of the complexity of decision-making in a highly volatile setting.

Sierra On-Line, a fast growing software developer, is criticized by a Forbes journalist for excessively capitalizing software development costs. In contrast to most other software developers that typically capitalize about 20% of R&D costs, Sierra capitalizes 80%. Questions investors must address in valuing Sierra include: Does Sierra's account reflect economic reality? Is their accounting too aggressive or are their competitors too conservative? Is Sierra's business sufficiently different from its competitors to invalidate the comparison?

An analyst at General Motors charged with managing the structure of the automaker's debt must decide whether and how to modify the interest rate exposure of the firm's most recent debt offering. The analyst must take into consideration GM's liability management policy guidelines, the firm's existing interest rate exposure, his expectations of interest rates, and the wide range of interest rate products available. He must decide whether to leave the fixed-rate instrument unchanged or to enter into a swap, cap, interest rate option, or swap option transaction.

In February 1991, the managers of this multinational specialty publishing company proposed to take the company private in a leveraged buyout (LBO). In addition to the ordinarily interesting features of the typical LBO, this transaction was the first to be denominated in ECUs and one of the few in which the managers provided all the equity financing. The tasks for the student are to value the company and evaluate the attractiveness of the transaction from the standpoints of seller, senior lender, mezzanine lender, and equity investor/manager. The case can be used to (1) exercise students' skills in valuing a highly leveraged company, (2) illustrate how deal structuring can mitigate potential agency problems, and (3) explore the problems and possible solutions associated with financing a global firm.

The chairman and CEO of Imasco Limited was reviewing an acquisition proposal from one of its operating units, Hardee's Food Systems, to purchase the Roy Rogers Restaurant chain. While he was inclined to support the proposal, he wanted to carefully weigh its broader impact for Imasco as a whole. The probable price of $390 million represented a substantial commitment of funds, at a time of slowing growth in the U.S. fast food business.