Case studies

The cases describe the demise of Arthur Andersen, a firm that had long set the industry standard for professionalism in accounting and auditing. Once an example of strong corporate culture with a commitment to public service and independent integrity, Andersen saw its culture and standards weaken as it grew explosively and changed its mode of governance. The (A) case describes a crisis precipitated by the admission of Waste Management, a major Andersen client, that it overstated its pretax earnings by $1.43 billion from 1992 to 1996. The resulting Securities and Exchange Commission (SEC) investigation ended with Andersen paying a $7 million fine, the largest ever levied against an accounting firm, and agreeing to an injunction that effectively placed the accounting giant on probation. Students analyze the causes of Andersen's problems and advise Andersen leadership. The (B) case covers Arthur Andersen's relationship with Enron, one of the great success stories of the “new economy” boom. When Enron's aggressive use of off-balance sheet partnerships became impossible to hide in autumn 2001, news reports stated that Andersen auditors had engaged in extensive shredding of draft documents and associated communications with Enron. Students are asked to act as crisis management consultants to Andersen CEO Joe Berardino. The (C) case details Andersen's collapse following its indictment and conviction on criminal charges of obstructing justice in the Enron case. Its conviction was later overturned by the U.S. Supreme Court on narrow technical grounds, but by then Andersen had ceased to exist, eighty-nine years after Arthur E. Andersen had taken over a small accounting firm in Chicago. Students can focus on the impact of media on a reputational crisis.

Students will: Identify the teachable moment in a crisis that leaders can leverage as an opportunity to improve a firm's reputation or core identity, to reinforce values, and to drive change, Understand the impact on crisis management of the media landscape and regulatory decision-making, Realize the fragility of corporate cultures and the need to actively maintain them, especially during difficult times,

Tom McKillop, CEO of AstraZeneca, faced the classic quandary of large pharmaceutical firms. The firm's patent for Prilosec (active ingredient omeprazole) was expiring. Severe cost-based competition from generic drug manufacturers was inevitable. Patent expirations were nothing new for the US$15.8 billion in revenues drug firm, but Prilosec was the firm's most successful drug franchise, with global sales of US$6.2 billion. How could the company innovate its way around the generic cost-based competition and avoid the drop in revenues associated with generic drug market entry? AstraZeneca had other follow-on drugs in the pipeline—namely Nexium, an improvement on the original Prilosec molecule. Additionally, the company had the opportunity to introduce its own version of generic omeprazole, hence becoming the first mover in the generic segment, and/or introduce an OTC version of omeprazole that might tap into other markets. Ideally, AstraZeneca would like to move brand-loyal Prilosec customers to Nexium. In this market, direct-to-consumer advertising has remarkable efficacy. Classical marketing challenges of pricing and promotion need to be resolved for the Nexium launch as well as possible product and place challenges for the generic or OTC opportunity. Which combination of marketing options will allow the firm to best sustain the value of the original omeprazole innovation?

The central objective of the case is to teach students how marketing variables can be used by first movers with diverse product portfolios to fend off severe price competition. These variables include pricing, promotion, product, and place (distribution) options as considered in the context of branded, generic, and OTC pharmaceutical market segments.

Atari, a maker of video games, went through several owners over the years winding up controlled by Infogrames, a French publisher of video games. Infogrames later sold Atari shares in a secondary public offering, eventually reducing the parent’s share to 51.6 percent by September 2005 creating a complicated two-tier ownership structure. Two levels of management made it difficult to get things done. The financial structure was a problem for Infogrames because the French company had to consolidate 100 percent of Atari’s results even though it only owned 51 percent of the company. Atari was generating substantial losses, had defaulted on its debt, and was faced with the possibility of filing for bankruptcy without more working capital. The independent directors of Atari, when confronted with an unsolicited Infogrames buyout offer, had several options: (1) agree to the $1.68 offer (take the money and run); (2) pursue a white knight (a buyout from another investor of company that would be willing to pay a higher price and invest working capital); (3) file a lawsuit to stop the takeover to buy time or perhaps force Infogrames to increase its offer.

Communications in a turnaround How planning and executing a communications strategy is as important as other functional actions Dealing with an international ownership base with a U.S. turnaround of a legacy brand with no hard assets Fiduciary duty and governance issues arising from a takeover offer.

Bruce-Alfred Technologies (BAT) has built a successful business selling packaged software. Its marketing has long promised free technical support to all customers, a key point of differentiation from BAT's competitors. However, the call center providing tech support is now in crisis. Wait times for callers are unacceptably high, leading to low customer satisfaction and negative press. BAT managers are evaluating the Fast Track Proposal, which would create two classes of calls. Fast Track calls would be promised a one-minute wait but pay for service. Standard calls would still be free but be given lower priority and have no wait time guarantee. Considers both the operational impact of this change and the strategic considerations of backing away from free tech support.

To emphasize the impact of priorities and alternative ways of managing capacity, discuss different ways of pricing services--i.e., pay-per-transaction vs. subscription, and demonstrate the basics of the relation between utilization and delay.

BHP, an Australian mining company, threatens to enter the potash mining industry through a hostile takeover of the Potash Corporation of Saskatchewan. Complicating matters is the fact that the Canadian potash industry has operated as a legal cartel in which the provincial government has a stake. This case enables students to assess BHP's strategy in terms of value creation and value capture, how it relates to its existing investments in the industry, and the risks and rewards of alternatives to BHP's strategy

-How cartels help firms capture value in an industry and how the threat of entry can limit the cartel members' ability to do so -How firms outside a cartel can capture value though a competitive threat -The range of strategies available to incumbents and

Considers why Blockbuster has a competitive advantage in video retailing. Details both Blockbuster's use of revenue sharing contracts with movie studios to coordinate the vertical chain and Blockbuster's “Go Home Happy” marketing campaign. Challenges readers to understand how revenue sharing contracts, which are imitable and sometimes used by Blockbuster's competitors, can nevertheless be a key part of Blockbuster's advantage.

Boeing and Airbus are contemplating entry into very-large-aircraft (VLA) markets. Both firms are convinced the market cannot support two players due to the extremely high R&D costs and the limited (and highly uncertain) state of demand. The key strategic issue is the uncertainty surrounding Boeing's development cost: to what extent would Boeing's experience with the 747 help it reduce the R&D cost of a new VLA prototype? The main point is that Boeing's strategic moves signal its private information, and that this eliminates any first-mover advantage Boeing might have had in this market.

To introduce some of the strategic issues arising in natural monopoly industries in which the winner takes all, and focus on the issues of credible preemption and signaling.

Describes how four independent, community-based nonmedical centers that offered professional services and programs to cancer patients on a voluntary non-fee basis in the 1990s came together to form the Cancer Health Alliance in 2003-2004 as a separate nonprofit to help achieve more of their mission and be more sustainable.

To understand why it is so difficult for small independent nonprofits with similar missions, activities, programs, and funding to collaborate to achieve more mission. To examine how less complex nonprofit alliances begin, how they progress along an alliance continuum, and what the options are for future growth.

Describes the career transfer and development system at UPS, showing incentives and policies that move managers across countries and functions, and how this movement develops high quality general managers.

To demonstrate the way in which a cross-functional, cross-cultural career transfer program can break down silo and national barriers and achieve cost effective integration.

Brad Powell, the newly hired senior leader of a Christian church, must lead the organization to reverse a three-decade decline and return to fulfilling its mission. Brad spent the first six months assessing the situation, building relationships, and reiterating the longstanding mission of the organization. Now, with an understanding of its history, an intimate knowledge of the immediate challenges, and a clear vision of what the organization should become, Brad is considering his strategy and next steps. As the leader of a nonprofit organization resourced by members and volunteers, Brad must lead change that produces results without compromising the mission. The B case summarizes Brad's actions and the results.

To allow students to evaluate Brad's situation and advise him on the best plan for leading change at Temple Baptist Church. To demonstrate the impact of a leader on an organization's culture, and the fit between an organization's style and its mission. To allow discussion of the paradoxes a leader must manage in changing a culture, measuring financial versus nonprofit results, leading volunteers versus paid staff, upholding mission versus tradition, and leading change with limited resources.