Case studies

The case opens with Martha Stewart's 2005 release from prison following her conviction for obstructing an insider-trading investigation of her 2001 sale of personal stock. The scandal dealt a crippling blow to the powerful Martha Stewart brand and drove results at her namesake company, Martha Stewart Living Omnimedia (MSO), deep into the red. But as owner of more than 90 percent of MSO's voting shares, Stewart continued to control the company throughout the scandal.

The company faced significant external challenges, including changing consumer preferences and mounting competition in all of its markets. Ad rates were under pressure as advertisers began fragmenting spending across multiple platforms, including the Internet and social media, where MSO was weak. New competitors were luring readers from MSO's flagship publication, Martha Stewart Living. And in its second biggest business, merchandising, retailing juggernauts such as Walmart and Target were crushing MSO's most important sales channel, Kmart. Internal challenges loomed even larger, with numerous failures of governance while the company attempted a turnaround.

This case can be used to teach either corporate governance or turnarounds.

Students will learn:

• How control of shareholder voting rights by a founding executive can undermine corporate governance

• The importance of independent directors and board committees

• How company bylaws affect corporate governance

• How to recognize and respond to early signs of stagnation

• How to avoid management actions that can make a crisis worse

• How weaknesses in executive leadership can push a company into crisis and foster a culture that actively prevents strategic revitalization

How control of shareholder voting rights by a founding executive can undermine corporate governance

The importance of independent directors and board committees

How company bylaws affect corporate governance

How to recognize and respond to early signs of stagnation

How to avoid management actions that can make a crisis worse

How weaknesses in executive leadership can push a company into crisis and foster a culture that actively prevents strategic revitalization

This case examines a company that rents and leases computers. The primary objective of the case is to provide a scenario where students can see the link between operational flow measures such as inventory, throughput, and flow time and financial flows. The case presents a scenario where a firm sees financial performance worsen even though sales increase. A link between the operational measures and financial flows allows students to understand the causes.

To provide a scenario that shows the link between operational flow measures such as inventory, throughput, and flow time and financial flows.

A major barrier for growth of large multi-business unit firms is the inability to resource the critical initiatives to win—both in terms of dollars and people. The underpinning of the challenge involves the conflict between resourcing current cash-generating legacy businesses vs. new initiatives which may not, in the short term, produce positive financial results. Most companies do not have a formal portfolio process to deal with this fundamental issue. Danaka is a fictional company based on real business experiences. The company has strong growth markets as well as markets that are commoditizing. Unfortunately, the latter represent a sizable portion of the company's business. A framework is given that establishes a matrix to analyze the Danaka businesses using their critical financial criteria—cash generation and top-line growth. Projects are divided into four categories based on how they fit into the matrix, and resource allocations are then analyzed. Students discover that the current allocation does not enable Danaka to meet its aggressive growth goals. The case incorporates an interactive spreadsheet model in which students can dynamically change the various resource allocations and see the impact on future top-line growth. The essence of the case is how to manage the resource allocation for a multi-business unit firm when present allocations will not meet future growth goals.

The key learning of this case is that when business leaders set financial goals, they must understand how they are expending their resources. More often than not, significant changes must occur that could be wrenching to the organization. The key learning objectives are: (1) realize the importance of performing a portfolio analysis; (2) discuss the issues involved in making the changes; and (3) understand how to put the decision process in place.

In 1992 Joe Jackson, former manager of DuPont Motorsports for twelve years, was angling to get the paint business at Rick Hendrick's sixty-five automotive dealerships across the United States. In order to win the Hendrick car dealership paint contract, Jackson and Hendrick met to discuss the possibility of sponsoring Hendrick's new team and rookie NASCAR driver—Jeff Gordon. As a result of that meeting, DuPont signed on to be the primary sponsor. By 2006 Gordon was a NASCAR superstar, and the DuPont logo—viewed by millions—was a household brand. While this level of exposure was exciting for the company, executives at DuPont could not help but wonder if they were fully leveraging this tremendous marketing opportunity. Gordon was on fire—but was DuPont maximizing the heat? The DuPont-NASCAR case tasks students and executives with designing a creative marketing campaign to activate the NASCAR sponsorship opportunity and maximize value beyond conventional sponsorship marketing. This open-ended challenge encourages students and executives to think outside of the traditional marketing tactics typically employed by business-to-consumer (B2C) NASCAR sponsors. Additionally, the nature of DuPont creates the need to develop a multi-dimensional plan that caters to a breadth of brands. Beyond designing a new marketing campaign, a key objective of the case is to focus students and executives on designing metrics for measurement of the return on investment (ROI) into a campaign plan. As a first step, it is important to clearly articulate the campaign, business strategy, and key business objectives mapped to the strategy.

Students and executives learn how to design a marketing campaign for measurement. Specifically, they are tasked with designing a new marketing campaign for DuPont to activate the DuPont/NASCAR relationship. Students and executives must define metrics for measurement and learn to use a balanced score card approach. Since the DuPont sponsorship of Hendrick Motorsports is a brand campaign built to reach the DuPont business-to-business (B2B) customer, both non-financial and financial metrics are used. The key to success is to have a clearly defined sponsorship marketing strategy and business objectives. The case teaches students and executives how to define key metrics and articulate a methodology for campaign measurement pre and post to quantify the return on investment (ROI).

Looks at the introduction of statistical process control (SPC) into a distribution center servicing a department store chain. Focuses on the receiving process in the distribution center and describes the introduction of SPC methodology. Discusses run charts, pareto diagrams, and control limits.

To introduce statistical process control.

Fiserv, a pioneer in electronic payments, would like to increase the number of consumers who receive bills electronically. Currently, adoption is relatively low. To help guide their efforts, Fiserv managers have done extensive customer research and have segmented the market based on customer perceptions of e-billing. Students must recommend which segments to target and why. To support their recommendations, students must calculate the likely financial costs and benefits of adoption, estimate the likely returns for targeting different segments, and make targeting and positioning recommendations based on these calculations. Because Fiserv's direct customers are billers (such as utilities and credit card companies) and its end users are individual consumers, the case allows a focus on both B2B and B2C issues.

This case gives students the opportunity to estimate the relative profitability of different segments and to make targeting and positioning recommendations based on these calculations. It highlights the importance of assessing segments based on both quantitative and qualitative considerations. It also emphasizes the potential difficulties associated with targeting multiple segments at once.

Flying J was a family-owned company that operated travel plazas, oil refineries, a bank for trucking companies, and other related businesses. In early 2009, Crystal Call Maggelet, the majority shareholder and new CEO of Flying J, was tasked with saving the company founded by her father in 1968. In the intervening forty years Flying J had grown from four gas stations to a vertically integrated $18 billion company. Declining crude oil prices, decreased cash reserves, and multiple internal challenges forced most Flying J subsidiaries to file for bankruptcy protection. This came as a surprise to the company's lenders, suppliers, customers, and employees, who did not know the company was in trouble until it was unable to meet payroll just days before Christmas 2008.

Maggelet was determined not only to return her family's company to profitability but also to repay all of Flying J's debts, retain as many of the firm's 12,000 employees as possible, and avoid compromising employees' savings (e.g., 401K retirement accounts). All of the company's advisors told her it could not be done. They thought a more likely outcome would be paying creditors nine cents on every dollar owed. If that happened, Maggelet's family's holdings would be almost entirely wiped out according to the “priority of claims” rules in bankruptcy, and the family would end up with only 1.2 percent of a restructured Flying J.

However, to the surprise of its advisors and creditors, Flying J paid its debts in full, mostly by cutting operating costs before selling assets. The family was left with a smaller, but still very profitable company.

After students have analyzed the case they will be able to:

• Determine governance issues in family-owned businesses

• Identify the pursuit of growth as a typical cause of bankruptcy

• Understand why cash flow accounting is more important than GAAP accounting

• Grasp how huge variations can occur when calculating enterprise valuations of distressed businesses

• Understand the differences among law, governance, and ethics

Determine governance issues in family-owned businesses

Identify the pursuit of growth as a typical cause of bankruptcy

Understand why cash flow accounting is more important than GAAP accounting

Grasp how huge variations can occur when calculating enterprise valuations of distressed businesses

Understand the differences among law, governance, and ethics

The case focuses on the diamond retailing industry toward the end of 2008, with the United States in an economic downturn. All diamond retailers are hit by the downturn and are facing a critical look at their strategies. Given the basic performance information on Blue Nile, Zales, and Tiffany, students are asked to consider the strengths and weaknesses of each business model with the goal of understanding business models that are better suited to handling a downturn.

The learning objectives of the case are to (1) understand the link between supply chain structure and financial performance, (2) identify key drivers of supply chain performance and how they affect a firm's ability to respond during periods of strong or weak demand, and (3) develop the alignment between supply chain structure and strategic position for a firm.

Executives at biotechnology firm Genzyme are debating funding a clinical trial for a new version of a medical device called Synvisc. The trial is expensive and the odds of success are not high, but the upside is substantial. The case presents a common business question: invest or not? The case forces students to think about customer insights, wrestle with a number of complex issues, and evaluate the financials of the decision.

The case is ideal for teaching financial analysis and decision making. It can also be used to teach marketing, new product strategy, and healthcare industry management.

The case focuses on the career of Gil Mandelzis, a former Wall Street investment banker who recognized and seized an opportunity to build his company, Traiana, into a successful services provider for financial institutions in the foreign exchange prime brokerage market. The case describes Mandelzis's history, beginning with his earliest entrepreneurial effort as a Tel Aviv bar owner and continuing through his decision to start Traiana. Time and again, Traiana achieved success only to be undone by unexpected, uncontrollable events. Each time, Mandelzis rebuilt the company from scratch. In one memorable instance--the one that enabled Traiana's ultimate success--Mandelzis abandoned a business plan that had created a $10 million company, fired 40 percent of his employees, and embarked on a brand-new direction. At the time the case is set, Traiana appears poised to grow into a major force in the foreign exchange prime brokerage business. Then Mandelzis receives an offer to buy the company for $164 million. The management team must either accept the offer or assume the risk that Traiana's growth will continue and its value will escalate in the coming years. For a company that has repeatedly seen unexpected events derail management's plans, taking the risk is not easy. The case posits three choices: accept the offer, reject the offer, or seek out other buyers.

Students must determine Traiana's value and advise Mandelzis how to respond to the offer. In determining its value, students learn to consider factors outside the company. The key insight in analyzing this case is understanding that Traiana's value should be seen in terms of its worth to the potential buyer rather than only using typical valuation measures such as current or projected revenues.