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This five-case series, sold as a package, presents an opportunity for students to understand that having the leadership mindset is not about going from crisis to crisis, but anticipating and shaping your organization. Through four case scenarios, students learn the need to recognize when there is a crisis situation, explore problems that often occur when issues are ignored, and take appropriate actions to remedy the situation. In the (A) case, students become a member of the senior executive team at Treading H2O Inc., a water-treatment equipment company located in the Midwestern United States, at a meeting to discuss a recently released World Health Organization (WHO) report. The statement announced that there was indication of human-to-human transmission of the Avian Flu in rural China near Shanghai. The company's regional sales manager sent information stating that the Chinese government had closed off access to the region?a key area for sales. On top of that, there are several Treading H2O employees in the same area. Students must determine what, if anything, needs to be done.

In 1993, Nuria Chinchilla had recently completed her doctoral thesis at IESE Business School in Barcelona, on the topic of organizational turnover, with no particular focus on women, flexible work arrangements, or work-family issues. She chose to remain at IESE, where she had worked since the early 1980s as an assistant professor. By 2003, just over a decade later, she had attained the rank of full professor, had founded the International Center of Work and Family at IESE, and was generally acknowledged to be a leader if not the leader in workplace flexibility and work-family issues internationally, attending conferences all over the globe and being extremely visible in the media. Many observers echoed the comments of Gloria Renom, a deputy in the Catalonia parliament: "for a long time, Nuria has been considered the leading authority in the field of work-life balance." Renom attributed Nuria's success to a good understanding of the themes involved and intense preparation for the challenges she faced. Indeed, how else to explain Chinchilla's remarkable ability to influence others and to use a number of levers of power extremely successfully? It was not clear how Chinchilla had accomplished so much in so short a time, and what else she might do to be even more effective in obtaining changes in workplace flexibility in the future. And there was another interesting aspect to her career. Chinchilla seemed to have largely surmounted the trade-offs faced by so many people in positions of power-the apparent need to choose between having influence and being true to one's values and beliefs, as well as the choice between one's work and the rest of one's life. How had she been able to accomplish this?

This case focuses on the financial difficulties faced in the US from August to December 2006 as well as their roots in subprime lending. After briefly discussing how mortgages were structured and traded in the pre-1990 period, it describes subprime mortgage lending, as well as other innovative mortgages issued in the 1990s. It also discusses how these mortgages were packaged into securities, and who ultimately came to own these claims and their attendant risk. The case then describes the pain inflicted by raising foreclosures, as well as the financial market ramifications of the rise in mortgage delinquencies. It also chronicles the response of the US and European central banks to the unfolding financial difficulties. Lastly, the case lays policies that have been proposed to deal with either the consequences or the causes of the crisis. These include policies for reforming the supervision of the financial system, changing bankruptcy rules and regulating mortgage finance. Some attention is paid to the role of credit rating agencies in the crisis, and in the financial system as a whole.

This note defines the concepts of business model and the value loop. It also introduces business model representations and proposes four tests for evaluating business models in isolation. This is the first note in a series of three written for the HBS elective course "Competing through Business Models."

In 2007, Allstate was the number two property and casualty insurer in the USA, and had enjoyed five years of rapid profit improvement. The question facing CEO Thomas J. Wilson was how to maintain the momentum. This case tracks the evolution of Allstate's strategy over 20 years, examining the logic behind the strategic changes, and the challenges of implementing them. It identifies sources of inertia from within the organization and from without, and summarizes the strategic issues facing Allstate in early 2007.

Juliana Azevedo Schahin, a local marketing director for Procter & Gamble in Sao Paulo, had worked closely with Tarek Fahahat, a regional executive based in Caracas, to solve the growth and profitability problems of P&G Brazil. They did so through the creation of lower-cost versions of two premium products which reached BOP (bottom of the pyramid) consumers--an approach not considered then as a company strategy. The case follows Azevedo and Farahat through their steps in helping to conceive the change, sell it to senior management, and implement it. The true test comes when the subsidiary wants to extend the model to its third and largest category, laundry care, which had also struggled. But Azevedo did not oversee that business in Brazil, and Farahat worked in another category in Caracas. Her country colleagues go to her to learn more about the success of the first two products. Now the question is whether this is a one-time wonder or an innovation that should be diffused to other products and geographies.

"Wal-Mart's Use of Interest Rate Swaps" recounts Wal-Mart's use of interest rate swaps to hedge the fair value of its fixed-rate debt against changing interest rates. This case provides students with a foundation for understanding the use of and accounting for more complex derivatives. Specific issues raised include: (1) the financial statement impact of hedge accounting, (2) motivations for using derivatives, including the potential role of accounting standards, and (3) the degree to which financial statement and MD&A disclosures are sufficiently informative about the risks associated with financial instruments.

In the highly competitive information technology outsourcing industry, Cognizant Technology Solutions has developed a strategy to differentiate itself by emphasizing building very close client relationships through its "Two-in-a-box" (TIB) model. This model is based on having two people share complete responsibility for the client. In the U.S. or Europe, the "on-site" person, along with his or her relationship management team, is responsible for understanding the client's needs, obtaining projects and properly scoping out the work. The "offshore" person in India or elsewhere, along with his or her delivery team, is responsible for completing the project in a high quality and timely way. The same top- and bottom-line metrics are used to evaluate the performance of both the on-site and offshore managers. This strategy (as opposed to ones based on things like low cost and innovation used by Cognizant's competitors) is intended to build deep and strong client relationships that will maximize Cognizant's "share of wallet." One interesting aspect of TIB is Cognizant Business Consulting, a 1,700-person group which advises clients in the context of helping them develop IT solutions for their business challenges. More recently, and as the next evolution of the TIB model, Cognizant is developing what it calls "Cognizant 2.0" or C2. C2 is a delivery platform based on Web 2.0 technology that enables Cognizant to subdivide work into tasks that can be allocated wherever in the world the best resources within Cognizant exist based on cost, expertise and availability while at the same time maintaining collaboration and integration to ensure timely and high quality delivery.

The alcohol cooler (refreshment) market in Canada was already crowded, but the marketing manager at Vincor believed there was still room for a new entrant, provided it was sufficiently differentiated. The case provides market research information on which the decision-maker relies to develop a product positioning. Trade-offs need to be made between various positioning options and costs. The case deals with marketing issues from the perspective of the brand manager launching a new product.

The diamond industry has been subject to significant change. There is increased competition from low-wage countries such as India and China, the concern about blood diamonds, and policy issues affecting the viability of trading diamonds. In this case, we study how Antwerp's dominant position in the diamond trade is being challenged and eroded. The case offers a good opportunity to introduce and discuss comparative advantage and relate it to Heckscher-Ohlin type of trade.

The owners of Aquarius Ales, a popular Sixth Street pub in Austin, Texas, received an offer to sell their business to a pair of University of Texas business school graduates for $450,000. Was this a fair offer? If not, what would be an appropriate counter offer? The case looks at the prospect for revenues for the pub in light of declining alcohol consumption among the general population. Aquarius Ales' niche was appealing to those who liked 60s and 70s music, with its name coming from a song in the hit sixties musical "Hair." Although the pub's main product - alcoholic beverages - was a commodity, the pub had the advantage of a desirable location, decrease in the number of competitors and a population of college students who enjoyed "oldies."

Richard Bennett was faced with a serious ethical dilemma that would impact his career, family, and co-workers. Bennett, a regional vice president in the Cable Division of Centurion Media, believed that a contract executed by the new president of his division, Joseph Fowler, would cause significant financial losses for Bennett's own division and the company. Bennett suspected that Fowler might have a serious conflict of interest, since he owned stock and options in Northpark-the company with which he had negotiated the contract. Bennett was only two years from retirement. If he chose to protest the contract, it would likely have very unpleasant consequences -- including jeopardizing his own financial security. He would probably be fired. Additionally, his actions might endanger the careers of other employees and co-workers. The personal relationship between the CEO of Centurion Media, Chuck Reilly, and Fowler made Bennett's decision more difficult. When Bennett contacted the general counsel and controller in the corporate office of Centurion Media, they suggested he back off. He was surprised by their stance that the contract, which Bennett thought would be financially disastrous, was in the best interest of the company. The Controller went so far as to remind Bennett how near he was to retirement, emphasizing that he should be concerned about protecting his job. What should Bennett do about the situation he faced?

The J&J Electrical Contractors case is an example of a small regional family business that has found a way to compete against the larger and more comprehensive electrical contractors in the industry and be successful. The company is currently run by a husband-and-wife team, John and Jean Abernathy, with John serving as CEO and Jean as CFO. The Abernathys took the company to 2005 revenues of $5.22 million, a growth of 75.2% over revenues of $2.98 million in 2001. However, despite increasing revenues, profit margins have eroded over the past four years. The case describes the electrical-contracting industry, the type of work done by the firms in the industry and the forces acting in the industry such as the high cost of homes, especially in Southern California, increasing the demand for remodeling and the continued increases in energy costs and metal prices, many of which are critical in performing electrical contracting work. The case ends with the need for the Abernathys to improve the company's deteriorating profitability and a number of possible future directions the company could take to accomplish that. The case has benefited from extensive interviews and complete access to the company and its principals. Several excerpts from interviews with them give a good account of what it's like managing a small growing company. The case will challenge students to integrate industry and competitive dynamics with regulatory and market demands to devise a set of worthy strategic alternatives to help revive J&J's flagging profitability.

The purpose of this case was to determine whether ACE Private Equity Partners, a mid-size private equity fund, should acquire two physical therapy companies in order to develop them for subsequent sale to a larger private equity firm. This situation represented another opportunity for ACE's general partners to implement their "merger consolidation" investment strategy for their fund investors or limited partners. This investment strategy was to buy several private firms in the same industry, develop them for three to five years with revenue growth and cost saving synergies and, then, sell this larger consolidated company. This investment strategy was summarized by three major tactics: 1) build more valuable companies through growth and consolidation, 2) use arbitrage to buy smaller companies at lower private company EBITDA multiples and, then, sell them as a larger combined enterprise at higher public company EBITDA multiples, and 3) leverage the acquisitions with debt to spread risk and enhance returns.

In 2006, Hewlett-Packard (HP) admitted it had hired outside investigators to spy on members of its board of directors and journalists to uncover the source of several leaks of confidential board deliberations. The investigators used methods, including "pretexting" (using an assumed identity in order to access others' telephone records), which were possibly illegal and almost certainly unethical. This case uses company e-mails, internal reports, meeting minutes, and published memoirs and interviews to present various perspectives on HP's leak investigations, including those of its non-executive chairman, CEO, former CEO, board members, managers, and investigators. What problem was HP attempting to address? Did the board's behavior conform to accepted standards of good corporate governance? Were the investigation's methods ethical? What, if anything, should the company and its chairman, Patricia Dunn, have done differently? How could HP's new CEO, Mark Hurd, best assure effective governance and ethical behavior in the future?

The Reflexite Corporation made plastic films and other products engineered to focus reflected light. The company had recently shifted their strategy to include new applications in broader markets. In March, 2007, the organization structure and compensation systems that had successfully guided the company to this time were under fire. Michael Foley, Chief Executive Officer of the Reflexite Corporation had to decide whether to proceed with a change in company's employee stock ownership plan. The management and employees had held two rounds of "town meetings" to discuss changes in the allocation formula that determined how much stock employees would receive. Their recommendation was to change to allocate stock based on corporate-wide performance. Previously, the company based allocations on business-unit performance, causing wide variance in the amount of stock employees received. While the non-binding "town meeting" vote favored the change by a wide margin, the Chairman of the Board of Directors was adamant in his opposition. Foley, still in his first year as CEO wondered; the employees had spoken, but when the man who had built the company strongly objected, shouldn't one listen?

It looked like founder-CEO Brian Scudamore might not be able to pursue franchising as a growth option for his junk-removal business after all. Over the years, he had overcome many hurdles, including buying out his "too-fiery" co-founder, firing all of his employees so he could start all over again when he became disillusioned with the company's developing culture, and failing at experimenting with student franchising to increase the rate of growth. Now looking to expand within North America, he had turned to a professional franchising model and had developed a new brand to help grow the business. Paul Guy, his first franchisee who was beginning his operations in Toronto, had just called. "Brian, my wife's relative just told me that I'm crazy to open here because the city picks up things for free. It's crazy to charge $300 to pick something up when they can get the same service for free! We had never heard of that in Vancouver, but that's a big problem here!" Was Guy over-reacting, or had Scudamore made a major mistake in his growth strategy?

Studio Moderna is the leading electronic retailer in 20 countries in and around Central and Eastern Europe, and use a multi-channel business strategy, organizational structure, and IT system. When management conflicts arise, Sandi Cesko, CEO and co-founder must decide whether to change his in-sourcing strategy to out-sourcing.

In 2007, corporate governance became a well-discussed topic in the business press. Newspapers produced detailed accounts of corporate fraud, accounting scandals, excessive compensation, and other perceived organizational failures-many of which culminated in lawsuits, resignations, and bankruptcy. Central to these stories was the assumption that somehow corporate governance was to blame. That is, there was a functional failure in the system of checks and balances established to prevent abuse by executives. This case explores the various corporate governance systems that have been adopted in the United States and in various countries in Europe and Asia. The issues of control, director independence, auditor independence, dual-board versus unitary-board structure, comply-or-explain, and legislative versus market-driven solutions are explored. Readers are asked to evaluate what governance systems or elements they consider to be most effective. Plentiful examples--including Johnson & Johnson, BMW Group, Michelin, Heineken, Toyota, Samsung, Posco, PetroChina, Infosys, and many others--are used throughout as illustration.

A search fund is a pool of capital raised to financially support the efforts of an entrepreneur, or a team of entrepreneurs, to locate a privately held company for acquisition. This study, as well as its predecessors in 1996, 1998, 2001,2003, and 2005 portrays the aggregate profile of search funds and the entrepreneurs who formed them, and evaluates the investment returns generated by first-time search funds to their original investors. Together, these studies reflect changes in the characteristics of search fund entrepreneurs and the performance of their funds over time.