Case studies

This corporate strategy case shows how PepsiCo stopped worrying about competing with Coca-Cola, figured out what its real business was, and decided how to build its future. Redefining itself as a beverage and snack business, PepsiCo sheds its restaurant business and acquires Quaker and Tropicana. By rethinking the synergistic relationship between the complementary, combined strengths of the merged companies, it strategizes to develop innovative products that will compete in a changing demographic, cultural, and geographical world. Will this strategy work in an increasingly competitive environment?

This case presents the “best practices” of a highly successful post-merger integrator that grew from $400 million in 1997, to $1.5 billion in 2000, to $4 billion in 2002. The case focus is on the $4.0 billion IT sector of Northrop Grumman, a company confronting immense change in the rapidly consolidating defense business. This integration is unique in that the product is a complete melding of various companies, systems, leaderships, and cultures of 11 legacy organizations. Not only is the result an organization with a new identity, but also one with new strategic capabilities unavailable to any of the stand-alone legacy companies. A teaching note is available to registered faculty, along with video clips that include footage of weapons systems (e.g., B-2 bomber) and information about the company's PMI process.

This case exposes students to predictive analytics as applied to discrete events with logistic regression. The VP of customer services for a successful start-up wants to proactively identify customers most likely to cancel services or “churn.” He assigns the task to one of his associates and provides him with data on customer behavior and his intuition about what drives churn. The associate must generate a list of the customers most likely to churn and the top three reasons for that likelihood.

This case builds on the case "Merck & Company: Product KL-798" (UVA-QA-0582) by providing market uncertainties for the drug (drug quality, the presence of a competitor, market growth, and the time to the drug's release). Student and faculty spreadsheets are provided for the calculation of net present values for the scenarios. There is an additional challenge of how to treat the several downstream decisions (using OptQuest, for example) and how to value the license opportunity. A teaching note is also available to registered faculty members.

Greg Mills describes his search for the perfect engagement ring which includes an analysis of the prices of 6,000 diamonds. An engineer, Greg hopes to impress Sarah Staggers by using regression to find an underpriced diamond. Students are asked to either select one of the 6,000 diamonds or provide point forecasts for prices of 3,142 diamonds in a hold-out sample. The instructor can use the actual prices of the held-out diamonds to evaluate student pricing models.

An angel/venture capitalist could invest in an Internet sheet-music publishing start-up. The chance of success multiplied by the value, if successful, suggests that this isn't a good investment. Nevertheless, several friends suggest the optionality present in the venture: abort an unsuccessful website and sell the technology; switch the technology if the website is good, expand, buyout. Decision trees and Monte Carlo simulations are used to value these options, which make the opportunity look very attractive.

Filtroil had opened a new factory that was a merger between Shenzhen Filtroil and its supplier, Liu Li—whose own factory was on the verge of bankruptcy. But the supplier had begun making excessive demands and threatening to delay product shipment to the United States if his conditions were left unmet. The case reveals the options that could be taken to manage the situation. The case is suitable for use in organizational behavior, human resource management, and strategy classes at the MBA and executive education levels.

Alan Silko must decide whether to invest in seven statistical-process-control (SPC) stations in order to increase his chances of becoming a “select supplier” for a large computer company. The student must do a discounted-cash-flow/decision-tree analysis of the option. The student is also given the opportunity to construct x-bar and range charts and to do an SPC analysis.

The president of a well-established manufacturer of mattresses has asked his assistant to recommend whether to consolidate plants of three different locations. He must decide not only which criteria are most useful in making such a decision, but also how to weigh the different criteria in coming up with a single decision.

This case details the history of Southwest Airlines from its inception in 1971 until 2004. The case provides details of Southwest's business model and reasons for its success. It ends with a description of the company's competitive pressures in 2004. The case can be used for a course in service operations or strategy.