Case studies

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.

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.

“After creating a market for his “new to the world” product and a significant partnership with the German-based SAP, Sridhar Tayur had an opportunity to take the partnership with SAP to another level by establishing a reseller arrangement, available to only a dozen or so of SAP's elite partners—widely considered in the enterprise software industry as a dream come true for technology entrepreneurs.

Suitable for use in MBA, EMBA, and GEMBA programs, this case offers the opportunity to focus decision making on several key marketing and sales issues. Should Tayur sign a deal with SAP, thereby handing significant control of the messaging and positioning of SmartOps to a global giant? How reliant on SAP did he really want to get? Would signing the deal make losing control of his company more likely and alienate prospects who were not fans of SAP? What would not doing the deal mean for the relationship with SAP? Would SAP go down the reseller route with a competitor? What exactly was a good reseller contract, and was it possible for a company as small as SmartOps to make the agreement a win-win?”

Sparta Glass Products has been losing significant market share over the last several quarters in the non-glare-glass market, with a price 10% above the competition. Lowering the price is under consideration. Unfortunately, fully allocated costs are such that the lower price results in a loss. Issues to be discussed and analyses to be conducted include the relevant costs for the decision and the reactions from competitors.

“Suitable for MBA, Executive MBA, GEMBA, and executive education programs, this case uses CEMEX, a global cement producer based in Mexico, to set the stage for unfolding an analysis of a growth through acquisition strategy. It offers a discussion about the firm's overall strategy to acquire on a global scale instead of growing organically and provides an opportunity to introduce basic financial, marketing, and operational terms that can be explored in subsequent classes. The material includes a PMI process that further allows discussion on that technique.

The case opens with a conference call and another barrage of questions for CEO Lorenzo Zambrano about his bid to buy the Australia-based Rinker Group in October 2006. Until this point, CEMEX has had a long-standing habit of buying businesses in emerging markets; this acquisition would be a departure from that strategy. If the deal goes through, it would be the single largest acquisition in CEMEX's history, and it would be among its few forays into a developed market other than the neighboring United States. The company has grown exponentially and successfully. Why would this effort be any different? Was the acquisition a good idea or not? And if it was, how would Zambrano and his leadership team convince Wall Street and others of that?”

Crutchfield, a large U.S. mail-order firm specializing in consumer electronics and personal computers, must evaluate the results of a recent "prospecting" mailing to a rented list of names. A determination of the mailing requires the calculation of the lifetime value of the new customers acquired. Case data on repurchase probabilities (broken out by recency and frequency) support such a calculation. The case can also be used to introduce the RFM (recency, frequency, monetary value) framework for valuing customers.

In the spring of 2004, Google was one of the most-talked-about IPO ideas since Netscape had gone public in 1995. Bullish investors believed Google could set off a string of successful IPOs following a lull in tech-offering activity since 2000. Executives at Google faced several questions in the following months: Should Google go public? What options did Google have for taking its shares to market? Was the traditional form of book-building necessarily the best course of action? Could a sealed-bid auction (e.g., W.R. Hambrecht's OpenIPO) yield superior results?

The director of marketing and operations for a financial newsletter must deal with a host of issues that surround the practice of renting mailing lists and soliciting new subscribers by direct mail. The case can be used to introduce the concept and calculation of customer lifetime value.