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In early 2003, WestJet's management was reviewing its plans for growth, specifically considering whether WestJet should move its eastern Canada base of operations from Hamilton's Munro Airport to Toronto Pearson Airport. WestJet had grown rapidly since its launch in 1996 and was now the second largest airline in Canada. WestJet had originally focused on western Canada, but had entered eastern Canada in March 2000, with an eastern base of operations in Hamilton, a secondary airport in the greater Toronto area. Pearson was Canada's largest domestic and international airport, the primary commercial airport for the greater Toronto area and a hub of WestJet's largest competitor, Air Canada. Compared with Pearson, Hamilton was less congested and charged much lower fees. WestJet's operations had been closely modeled on Southwest Airlines'. The use of a secondary airport such as Hamilton as a base of operations was consistent with Southwest's low-cost, high-utilization features. With higher costs and longer turnaround times due to congestion, a base at Pearson was arguably not consistent with the Southwest business model; however, it was hard for WestJet to ignore the growth potential.

Examines investor relations and financial communications in a large company with a diverse group of financial stakeholders. Total is an "energy major" based in Paris, France. The importance of its product and its impact on economies and environments combine with the size of the company to make Total highly visible to investors, governments, environmental groups, and other shareholders. The highly technical nature of Total's many internal activities and the breadth of its complex operations further impacts communication efforts. In addition, as a Continental European firm (in particular, French), Total has strong societal expectations regarding its interactions with employees/citizens vs. shareholders. Examines how Total creates a consistent and clear financial communication that provides information to these diverse stakeholder bases and their different desires for the company. Also asks students to consider how this communication strategy will need adjustment due to a period of high oil prices and a resulting windfall profit during 2005.

The MTR Corporation Limited, the semi-privatised railway company in Hong Kong, was transforming itself from a local transportation company to become a global player. Despite MTR's proven rail-property model in Hong Kong, the company was faced with a new set of economic, cultural, regulatory and operational challenges abroad, particularly in China and Europe where it was expanding into. This case illustrated the growth model of a local company during internationalisation and analysed the trade-offs of different strategic decisions when entering into new markets.

In 1999, the automotive industry was in a difficult situation: overcapacity and customer demand for faster delivery and better service drove executives to explore the potential business value of the internet. The authors provide a teaching case, which is based on an analysis of the DCXNET initiative which bundled all e-business actions taken by DaimlerChrysler to exploit the opportunities of this then new technology. The teaching case describes the strategic planning process for e-business at DaimlerChrysler, resulting organizational structures and an outline of the components of DCXNET. Furthermore, the authors provide results of the initiative, success factors and lessons learned.

Describes the creation of an open source software venture in Norway, Australia, and the United States that lands a strategic OEM deal with a leading Japanese manufacturer of embedded devices (PDAs in this instance). Details the evolution of the two companies' relationship and the differences in mindset and culture--Norwegian/Japanese as well as small venture/big venture and software company/hardware company. There are also conflicts with a U.S. software venture that is serving as the general contractor for the project. The co-founders must decide how to deal with certain requests by the Japanese partner.

While facilitating a complex clinical approval process over the next two to three years for a family of new cancer drugs, Genentech must develop a long-term capacity plan for a major class of new cancer products. Adding to the complexity and uncertainty is the fact that the lead time for planning, building, and certifying a new $600 million plus production-scale facility is five years. In addition, ensuring that the best process technology is incorporated into such a new plant makes the task facing David Ebersman, the senior vice-president of products operations, and his management team a daunting one. Frames the issues Ebersman and his team face and outlines the approach to date.

Examines the growing tensions between strategies of national development and the rules of international business. At issue is how increasing globalization is changing the rules of national development for both developing and developed countries. The comparative focus on aquaculture, and the catfish industry in particular, also offers a window into a growing international industry and its potential as a source of poverty alleviation around the globe. Also discusses the U.S. antidumping policy and its processes of investigation.

In 1995, Sumio Abekawa, Daiwa Bank's president, received a letter on July 18 from Toshihide Iguchi, vice-president of the bank's New York branch. In that letter, Iguchi confessed that over the course of 11 years, he lost nearly $1.1 billion (approximately 123 billion yen) through the unauthorized trading of United States Treasury Bonds and had sold securities the bank had in custody to cover losses. Two months later, Daiwa's senior management reported the loss to the Federal Reserve Board of New York (FRB) and the New York State Banking Department. The bank directors faced several questions: Had the bank taken the appropriate steps to comply with U.S. reporting requirements? What was the potential liability of the directors? Would the Japanese bank directors be held liable for violating the law of a foreign country? How could the Japanese Ministry of Finance help?

In 2003, industrial manufacturer Eaton, the NGO Environmental Defense, and shipping giant Federal Express formed a partnership to develop a hybrid electric delivery truck. While Environmental Defense had experience setting up successful partnerships with corporations, this was the first time that a product with a significant high tech component would be launched in the commercial marketplace. Eaton fulfilled its goal of delivering a working prototype on time and FedEx began a small pilot program with the hybrid truck in 2004. Media coverage of the new truck was positive and the project won the Roy Family Award for Environmental Excellence at the Kennedy School of Government in May 2005. However, the path to full-scale commercialization of the vehicle was both costly and complex. HKS Case Number 1820.0

This case serves as part of an introduction to estimating investors' required rates of return. It should follow one or two class sessions covering the techniques for estimating WACC. The numerical calculations required are light, although some of the subtleties about the use of risk-adjusted hurdle rates will require time for the novice student to absorb. The case is about the CFO of a telecommunications company who must respond to a corporate raider claiming that a major business segment of this company should be sold because it is not earning a satisfactory rate of return. The case examines the use of a single hurdle rate to evaluate all segments of the company versus a risk-adjusted hurdle-rate system. The tasks for the student are to resolve the debate, estimate the weighted-average costs of capital (WACC) for two business segments, and respond to the raider.

The case presents the student with financial ratios for eight pairs of unidentified companies and asks them to mate the description of the company with the financial profile derived from the ratios. The primary objective of this case is to introduce students to financial ratio analysis-in particular, the range of ratios and the insights each one affords. This case presumes that students have already been introduced to the definitions of various financial ratios through other readings or lectures. The structured exploration of pairs of companies within an industry affords a number of important insights into strategy and financial performance. First, the economics of individual industries account for significant variations in financial ratios because of differences in technologies, product characteristics, or competitive structures. Second, financial performance results from managerial choices: within industries, the wide variation in financial ratios is often a result of the differences in corporate strategy in marketing, operations, and finance. For those reasons, this case is a good springboard into subsequent classes, which deal with the interaction of strategy and financial performance.

In early 2002, an analyst, Tom Baumann, must propose terms for leasing one of his company's advanced factory-automation systems to a major customer. From the lessor's standpoint, the challenge is simply to design an annuity stream that yields a present value equal to, or greater than, the value of the asset being leased. Certain factors, however, serve to complicate the analysis. The tax exposure and debt rating of the customer are uncertain, leaving the analyst to estimate the impact of alternative lease terms under different tax and interest-rate assumptions. Also, the customer is considering leasing competing systems from companies in Germany and Japan; these competing proposals limit Primus's flexibility in tailoring its proposal. In short, the student's task is to design lease terms that exploit the lessee's tax and interest-rate exposure within constraints set by competitive terms.

On May 24, 2005, Warren Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., announced that MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway, would acquire the electric utility PacifiCorp. In Buffett's largest deal since 1998, and the 2nd largest of his entire career, MidAmerican would purchase PacifiCorp from its parent, Scottish Power plc, for $5.1 billion in cash and $4.3 billion in liabilities and preferred stock. The acquisition of PacifiCorp renewed public interest in its sponsor, Warren Buffett. In many ways, he was an anomaly. What were the key principles that guided Buffett? Could these be broadly applied in the 21st century, or were they unique to Buffett and his time? From an understanding of these principles, analysts hoped to illuminate the acquisition of PacifiCorp. What were Buffett's probable motives in the acquisition? What did Buffett's offer say about his valuation of PacifiCorp, and how would it compare with valuations for other regulated utilities? Would Berkshire's acquisition of PacifiCorp prove to be a success? How would Buffett define success?

Set in June 2004, this case invites the student to assess the financial performance of FedEx Corp. and United Parcel Service, Inc (UPS). The two firms have competed intensely for dominance of the overnight express package industry. This case is intended for use in an introductory discussion of corporate value creation and its sources. The case requires no numerical computations from the student; rather, the tasks for the student are to interpret the results and to reflect upon their implications.

Illustrates the underlying forces that erode a company's competitive advantage and are instrumental in converting its success into failure. Focuses on Motorola's strategic evolution in China, and shows how, over time, divergences emerged between the company's competence and basis of competition, and between its strategy and action. Provides an opportunity to examine how Motorola should strategically re-position itself in China to attain sustained competitive advantage.

In March 2005, CEO Michael Eskew has asked the Corporate Strategy Group to recommend changes to the strategic process to ensure it allows United Parcel Service (UPS) to continue to transform itself over the next several years. Describes the evolution of UPS's strategic process, with special attention on the company's use of scenario planning techniques, as well as other critical elements of the process: the development of the company charter, strategic planning, strategic decision making, and strategy implementation. Also discusses the roles of the various players in the process, focusing especially on the CEO and corporate strategy staff.

A young female manager must decide whether to terminate two poorly performing managers who work for her. Shows the practical and ethical issues involved in firing decisions.

Massachusetts General Hospital is considering selling its royalty interest in Enbrel, Amgen's blockbuster drug for the treatment of rheumatoid arthritis. In assessing whether to sell, and at what price, the hospital must determine its value to a potential buyer as well as its own value of the royalty income.

Paul Walsh, CEO of Diageo, must evaluate bids received in an auction of the Burger King restaurant unit. Describes how Diageo came to own Burger King, the attempts to turn the unit around, the strategic reasons for its sale, the auction process, and various bidders' tactics to gain advantage in the auction. Four bids with quite complex terms arrive by the auction deadline. Walsh is facing the task of ranking the bids and determining what enhancements to the inferior bids would make them equivalent to the first-ranked bid.

Bausch & Lomb (B&L) was in a crisis situation when Ron Zarrella took the helm in late November 2001. Following the departure of the COO in 2000 and the CEO earlier in 2001, Bausch & Lomb had undergone six quarters of restructuring and had laid off 10% of its workforce. A company known for cutting-edge innovation and the ability to evolve to stay relevant to customer needs, B&L had become a company in turmoil. Revenue had been flat for the past several quarters, with margins slowly eroding due to lack of disciplined cost management. The company carried excess overhead from duplicate departments that remained as a result of two large acquisitions made in 1997. A patent infringement lawsuit against B&L's key contact lens product threatened the future revenue stream and B&L's stock had already dropped more than 50%. It was in this environment that the Americas sales region had begun a major reorganization. Zarrella felt that he had no choice but to be cautiously optimistic. The 'Stronger as One: One vision, One goal, One team' reorganization had been underway for several months, merging the region's four sales forces into one. Even though lackluster financial performance indicated the need for change, Zarrella wondered whether 'Stronger as One' would return B&L to its rightful position in the market, or whether such a large reorganization would create more problems than it solved.