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Miracle Life is a firm with a unique setup and organizational structure. Specifically, it is a network marketing firm (also known as multi-level marketing (MLM) firm), which utilizes a large distributor base, and depends on this individual distributor base to sell its products, giving explicit incentives for these individual distributors to both sell its products and sign up other distributors. The case gives students the opportunity to take the basic framework of Discounted Cash Flow (DCF) Analysis, and apply it to two unique perspectives of an identical problem. The students will then use this DCF approach to rationalize observed stock prices, connecting the two, and further reconciling how a company's future plan for growth, and the plausibility of this plan, has implications jointly for DCF and stock prices.
Describes some of the classic conflicts managers face in trying to live and work by their personal values and uses Hirschman's "exit, loyalty, and voice" framework to suggest ways for resolving these conflicts.
One of the distinguishing qualities of successful leaders is the emphasis they place on personal relationships. This is especially true in the political arena, where creating and nurturing networks of people is the key to success. This chapter discusses six essential aspects of thinking politically in the exercise of leadership, from finding valued partners to keeping your adversaries close. This chapter was originally published as Chapter 4 of "Leadership on the Line."
Balancing work and a personal life is a time management issue that people have always struggled to manage. Often, eliminating time-wasting activities in one's personal life (grocery shopping multiple times a week, etc.) makes time for the real value-added activities that are sometimes put on hold. This chapter discusses how time management at home leads to a more effective and fulfilling life.
Starbucks, the dominant specialty-coffee brand in North America, must respond to recent market research indicating that the company is not meeting customer expectations in terms of service. To increase customer satisfaction, the company is debating a plan that would increase the amount of labor in the stores and theoretically increase speed-of-service. However, the impact of the plan (which would cost $40 million annually) on the company's bottom line is unclear.
The two entrepreneurial founders of a Medicaid managed-care firm are considering how and where to expand and whether they should manage risk for hospitals that want to enter the managed-care sector or own it.
Several top surgeons at NewYork-Presbyterian hospital (NYP) are receiving financial and administrative support to advance their surgical device inventions through the earliest stages of commercialization.
The fiduciary duties of loyalty and care, the corporate opportunity doctrine and the business judgment rule are introduced in the context of three vignettes drawn from decided cases that explore: a classic test of loyalty when one partner elects to take advantage of an opportunity the partnership may also be able to pursue (Meinhard v. Salmon); the care and procedure directors should employ when approving a merger or sale of the company (Smith v. Van Gorkum); and the board's role and process in hiring, firing and severance decisions (Ovitz at Disney).
In June 2015 William A. Ackman, the CEO and Founder of New York Hedge Fund Pershing Square Capital, reflects on the success of the fund he has spent over a decade building. Since its inception in 2004, Pershing Square's assets under management had grown from $500 million to well over $18 billion. Ackman is now considering a sizable new portfolio position and must decide how he should raise capital to undertake this new investment. This choice is affected by the recent launch of his new, $6 billion closed-end vehicle, Pershing Square Holdings, as well as the firm's lengthening investment horizon. Although always activist in nature, Ackman and his fund had in recent years become substantively involved in the management of portfolio companies, often working to drive shareholder value by improving operating performance.
Industry and Background Note
After highlighting some key developments in the banking history of the United States, the case illustrates the Banking Panic of 1933 and the way in which Franklin D. Roosevelt dealt with it at the beginning of his presidency. Describes the main components of banking reform bills that members of Congress proposed in April 1933. Deposit insurance figured prominently in these bills, and the case summarizes the contemporary debate surrounding this proposed insurance.
Minnetonka Corp. which was founded in 1964, began as a niche player in the gift soap and novelty toiletries markets. In 1980, it entered--and managed to capture a piece of--the mass bar-soap market with pump-dispensed Softsoap liquid soap. In 1984, the company took on the toothpaste market with plaque-fighting, pump-dispensed Check-Up. This time, success was more fleeting. Minnetonka launched the hugely successful Obsession fragrance in 1985, following up with Eternity in 1988. Minnetonka's various businesses were sold over the period 1987 to 1989. Analysis suggests that the key is the use of scope--starting a new game linked to an existing game in which rival players are already established. Analysis indicates that rivals may then deliberately choose to delay imitating the innovator if they view the innovation as: 1) sufficiently unlikely to succeed in the marketplace, and 2) sufficiently close a substitute to their existing products. A rewritten version of an earlier case.
Supplements the (A) case.
A vice president of the U.S. Bank of Washington, a subsidiary of U.S. Bancorp, is asked to review a $6.5 million loan request from the Redhook Ale Brewery, a Seattle-based microbrewery. The case provides an understanding of the U.S. commercial banking industry and the role of a loan officer, and asks the student to assess a proposed loan. Provides an opportunity for financial statement and cash flow analysis.
Describes a company's changing of its compensation and incentive plan. In particular, it shows how a change from hourly pay to piece rate pay (for windshield installers) affected productivity, pay, and turnover.
Starbucks Coffee Company: Transformation and Renewal analyzes the turnaround and reconstruction of Starbucks Coffee Company from 2008 to 2014 as led by CEO and co-founder Howard Schultz. The case offers executives and students an opportunity to examine in depth how Schultz and his team saved Starbucks from near-collapse, by both executing a deep, comprehensive return to its core values and, at the same time, investing in a range of new products, customer experiences and organizational capabilities designed to make the company fit for enduring success in a turbulent global economy. Set against the backdrop of the Great Recession, the case also considers the impact of unprecedented important shifts in consumer spending and confidence as well as new competitive forces on Starbucks' transformation. The case concludes by examining Schultz's own leadership journey, the lessons he learned personally during Starbucks transformation, and how he is using these lessons-within Starbucks and on the national stage-to redefine the roles and responsibilities of a public corporation in the 21st century.
Selling an intangible like advertising services is a difficult task. The first step is to understand how brands buy these services. What are they looking for? What do they need to learn? How do they go about assessing things like creativity, trust, and loyalty? This set of cases puts the students into the roles of the seller (an advertising agency named Butler, Shine, Stern and partners) and the buyer (MINI USA) and asks them to develop a sales strategy for advertising services. As outlined in the (B) case, the agency developed an intriguing and original approach to assessing the intangibles and students are asked to react to it from a sales perspective and to attempt to generalize the approach to other sales domains.
Throughout the history of biotech, expectations have been high. The promise of the industry was that the through different (and superior) technology, the process of drug R&D would be transformed, and this transformation would lead to an avalanche of new drugs, and, of course, fuel profitability. In addition, it has been widely expected and perceived that smaller biotech firms are more productive at R&D than established pharmaceutical giants. This chapter explores these assumptions, examining the performance of the biotech industry over thirty years and presenting data on financial returns, profitability, and R&D productivity. This chapter is excerpted from "Science Business: The Promise, the Reality, and the Future of Biotech."
George Hatsopoulos, CEO at Thermo Electron Corp., is considering whether to issue shares in a subsidiary via an initial public offering (IPO). The company has developed an unusual corporate structure in which subsidiaries fund new ventures by raising debt and equity in the capital markets, rather than through the parent company.
Describes the economic logic leading to the deregulation of the U.S. airline industry in 1978 and subsequent competitive developments. The roles of computerized reservation systems, airport hubs, route strategies, and fleet management are raised as unanticipated tactical responses. The decision focus of the case emphasizes the prospect of regulation. A rewritten version of an earlier case.
MindTree is a mid-sized Indian IT services company known for its knowledge management practices, its collaborative communities, and its strong culture and values. The CEO has set a goal of becoming a $1 billion company by 2014; to reach that goal, employees must create several new businesses. The head of knowledge management must decide how his function should change in order to become more supportive of innovation and new business development.
The case explores the opportunities and challenges confronting Starbucks in the early 21st century. For more than 15 years, Starbucks has grown swiftly and successfully, helping create a large, dynamic market for specialty coffee, building one of the world's most powerful brands, and forging a new business model based on industry disrepair and responsible global citizenship. In 2008, Starbucks leadership faces a range of issues--inside and out of the company--related to that success. This case examines these issues in the context of a changing economy, increased competition, evolving consumer priorities, and the organization's place on the larger global stage.
Hollinswood Associates, a joint venture partnership, has developed and operated a Marriott Hotel in Tysons Corner, Virginia. The partnership has been very successful in the past but it is now facing a significant cash flow deficit. Designed to examine how a partnership evolves to deal with changing circumstances. Also exposes students to both the hotel industry and hotel development. The complex operating environment of the hotel industry provides a natural setting in which to explore partnership conflicts.
Intermountain Healthcare is a 21-hospital integrated delivery system serving Utah and southern Idaho that is nationally recognized for its highly structured approach to managing the quality of clinical care. This case describes Intermountain's system for improving clinical performance that makes use of the organization's extensive set of standardized clinical protocols and associated clinical process and outcome measures. The measures underpin a sophisticated set of financial incentives that are applied to both administrative and clinical staff. The case allows students to evaluate the strengths and weaknesses of financial incentives in clinical medicine.
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