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Bed Bath & Beyond
by Amy P. Hutton James WeberThis case examines how accurately investors have incorporated information about the growth strategy of Bed Bath & Beyond (BBBY) into share price, especially given the changing competitive environment in the housewares industry and the recent Barron's article pointing to several negative indicators at BBBY. The red flags highlighted in the article include BBBY's request for extended payment terms with its suppliers, inventory buildups, insider sales of stock, and growing short interest in the company's stock. In the days following Barron's article, BBBY's share price falls by more than 10%.
Chadwick, Inc.: The Balanced Scorecard (Abridged)
by Robert S. KaplanThe pharmaceutical division of a diversified company has been asked to develop a Balanced Scorecard. Research and development projects take about ten years to bring a new product to the marketplace and the division depends on good relations and active feedback from its customers for continued success. But currently, the division is evaluated by meeting monthly financial objectives. This case describes an early and less-than-successful attempt to develop a Balanced Scorecard encompassing financial, customer, internal process, and innovation perspectives.
America Online, Inc.
by Krishna G. Palepu Amy P. HuttonAmerica Online's (AOL) stock price has soared nearly 2,000% since its IPO. However, there is considerable disagreement among analysts regarding the future prospects of AOL. Although many analysts are bullish on the stock, short sellers have sold around 7 million shares.
Activity-Based Management at Stream International
by Robert S. Kaplan Norman KleinStream International's Crawfordsville, Indiana facilities undertake the design and implementation of an activity-based costing project. After analyzing the costs assigned to 161 work activities, Crawfordsville managers present five proposals for change based on ABM results, then meet to decide which to implement.
Boston Beer Co., Inc.
by Christopher Charron Amy P. HuttonCapital markets may have overcapitalized the craft brewing industry during a flurry of new IPOs. In the context of this "hot" IPO market each individual company's valuation may seem reasonable. However, after careful analysis of each company's financial statement and upon consideration of analysts' forecasts of the industry's growth prospects, it is unclear whether the craft brewing industry is overcapitalized. This could be another "hot" then "crash" IPO industry, like biotech or the computer disk drive industry.
First Investments, Inc.: Analysis of Financial Statements
by David F. HawkinsA summer intern is asked to perform a financial value analysis of a company's financial report for the period 1987-1994.
Becton Dickinson: Designing the New Strategic, Operational, and Financial Planning Process
by Afroze Mohammed Robert L. Simons Antonio DavilaDescribes management's attempts to design and install a sophisticated planning and control system in an international company as it changes its strategy. Issues of strategy implementation, accountability, and performance measurement are at the core of the analysis, as managers confront difficulty and resistance in using the system for "strategic, operational, and financial" control.
J Boats, Inc.
by Robert L. SimonsDuring the 20-year evolution of a family-owned, entrepreneurial sailboat company, two founders leverage their design and marketing skills to build one of the most recognized brands in the recreational boating industry. The founder then considers management succession and the need to improve financial planning and control systems to capitalize on brand value.
Monterrey Manufacturing Co.
by William J. Bruns Jr.A small manufacturing company plans and budgets sales and expenses to ensure that its strategy is feasible. It must trace costs of manufacturing through work-in-process to finished goods and cost of goods sold, and project cash flows and income.
Bishay Industries
by Norman J. Bartczak David F. HawkinsA bankrupt company has a turnaround plan. Students are asked to predict whether it will be successful.
Mobil USM&R (A): Linking the Balanced Scorecard
by Robert S. KaplanThe CEO of the marketing and refining division of a major oil company is in the midst of implementing a profit turnaround. He transforms the strongly centralized, functionally-organized division into 17 independent business units and 14 internal service companies. The division also launches a new, market-segmented strategy aimed at high-end buyers. The CEO recognizes, however, that the new organization and strategy require a new measurement system. He turns to the Balanced Scorecard (BSC) because of its ability to link measurement to strategy, and to help the new profit-center managers develop customized strategies for their local responsibilities. The case describes the development of the initial divisional BSC, the linkage of the divisional BSC to independent business unit and internal service company BSCs, and linkage of the BSC to managers' compensation. Concludes with the senior executives reflecting on how they are using the BSC in their management processes.
Mobil USM&R (B): New England Sales and Distribution
by Robert S. KaplanThe general manager of a local gasoline/distillate sales and distribution business unit must communicate a new strategy to the unit's 300 employees. An initial strategic planning exercise identified a high-priority list of opportunities that blended the parent division's national strategy with a customized, local strategy. But for the new strategy to be effective, the old measurement system, which stressed only sales volume and cost reduction, had to be replaced. The manager led the development of a local Balanced Scorecard (BSC), derived from the division scorecard (described in the (A) case). To communicate the critical features of the local BSC, the unit's senior managers established a Super Bowl competition in which all employees were challenged to achieve stretch targets on five BSC measures. This case describes the communication and management processes for the Super Bowl measures.
Mobil USM&R (C): Lubricants Business Unit
by Robert S. KaplanThe general manager of a Lubricants Business Unit in Mobil's U.S. Marketing and Refining division launched a project to develop a Balanced Scorecard (BSC) for his unit. The purpose was to provide focus for all employees of the unit, enabling it to operate on an integrated basis. After the unit's scorecard had been developed, the general manager challenged the project team to extend the effort out to every employee in the business unit. The team started by constructing a cause-and-effect tree that linked high-level business unit objectives down to positions or tasks for every individual. The team then visited all locations, using the cause-and-effect tree to link the unit's strategy and scorecard to individuals' responsibilities. This case describes the construction of individual BSCs and their impact on employee behavior.
Toyota Motor Corp.: Target Costing System
by Takao Tanaka Robin CooperExplores Toyota's target costing system, considered to be the most advanced such system of any major Japanese manufacturer. Specifically, describes Toyota's process of setting rigorous cost-reduction goals and the steps taken to achieve them.
Upjohn Co.: The Upjohn - Pharmacia Merger
by Krishna G. Palepu Amy P. HuttonIn August 1995, the Upjohn Co. and Pharmacia AB announced a "merger of equals." This case provides background information on the industry, the position of Upjohn, and Upjohn's rationale for the proposed merger.
Kidder, Peabody & Co.: Creating Elusive Profits
by Robert L. Simons Antonio DavilaOn April 17, 1994, Kidder, Peabody & Co. announced a $350 million charge against earnings resulting from the discovery of false trading profits. That same day, the termination of Joseph Jett's employment with the company was made public. By illustrating the mechanics of bond accounting, this case describes the trading strategy that led to the creation of false profits. Failures of internal control are also discussed. The case ends by asking who was to blame.
Colorscope, Inc.
by Joseph Cha V. G. NarayananA small company in the graphic arts business faces severe price competition. The company must respond by cutting costs and making process improvements.
Arch Communications Group, Inc.
by Sarayu Srinivasan Krishna G. PalepuThe market values Arch differently from analysts' values.
Introduction to Activity-Based Costing
by Robert S. KaplanIntroduces the fundamental notions of activity-based costing (ABC). Motivates ABC by means of a simple example, a single and a diversified pen factory. Proceeds to show how ABC assigns costs more accurately to products and customers by: 1) identifying the activities being performed by organizational resources; 2) assigning resource costs to the activities; 3) identifying all the products, services, and customers of the organization; and 4) assigning activity costs to these outputs via activity cost drivers. Also covers activity attributes, such as the cost hierarchy, value and non-value added, and business processes, as well as different types of activity cost drivers: transaction, duration, and intensity. Closes with the admonition to balance the benefits from more accurate cost estimates with the cost of developing an appropriate activity-based cost system.
Purity Steel Corporation, 2012
by Robert L. Simons Antonio DavilaManagers introduce a new performance evaluation system based on sales growth and return-on-investment (ROI). A branch manager wonders whether his new warehouse should be leased to mitigate the impact on ROI. Formulas and performance calculations are provided. A rewritten version of an earlier case.
Using Activity-Based Costing with Budgeted Expenses and Practical Capacity
by Robert S. KaplanDescribes how activity-based costing (ABC) should be applied with: 1) budgeted, not historical, expenses and 2) assigning the costs of capacity resources.
Using ABC to Manage Customer Mix and Relationships
by Robert S. KaplanDescribes applying activity-based costing to manage customer relationships. Links cost-to-serve to net margins earned with individual customers.
Prestige Telephone Co.
by William J. Bruns Jr.An independent regulated telephone company has established a computer services subsidiary that seems to remain unprofitable. Managers must determine whether it is profitable or not and consider changes in pricing or promotion that might improve profitability. A rewritten version of an earlier case.
Romeo Engine Plant (Abridged)
by Robert S. Kaplan Amy P. HuttonA newly reopened automobile engine plant has been organized along total quality and teamwork principles. Employees now solve problems and ensure quality, rather than watch parts being produced. New operating and financial systems have been installed to promote continuous improvement, waste elimination, and cost reduction activities.
Reto S.A.
by William J. Bruns Jr.A company must decide whether to acquire new equipment to offer a new product line. The question is whether equipment will meet return on investment targets considering depreciation and taxation of profits. The equipment is acquired, but one year later better equipment becomes available. A rewritten version of an earlier case.