Case studies

Hedge fund Magnetar Capital had returned 25 percent in 2007 with a strategy that posed significantly lower risk to investors than the S&P 500. Magnetar had made more than $1 billion in profit by noticing that the equity tranche of CDOs and CDO-derivative instruments were relatively mispriced. It took advantage of this anomaly by purchasing CDO equity and buying credit default swap (CDS) protection on tranches that were considered less risky. Now it was the job of Alec Litowitz, chairman and chief investment officer, to provide guidance to his team as they planned next year's strategy, evaluate and prioritize their ideas, and generate new ideas of his own. An ocean away, Ron Beller was contemplating some very different issues. Beller's firm, Peloton Partners LLP, had been one of the top-performing hedge funds in 2007, returning in excess of 80 percent. In late January 2008 Beller accepted two prestigious awards at a black-tie EuroHedge ceremony. A month later, his firm was bankrupt. Beller shorted the U.S. housing market before the subprime crisis hit, and was paid handsomely for his bet. After the crisis began, however, he believed that prices for highly rated mortgage securities were being unfairly punished, so he decided to go long AAA-rated securities backed by Alt-A mortgage loans (between prime and subprime), levered 9x. The trade moved against Peloton in a big way on February 14, 2008, causing $17 billion in losses and closure of the firm.

This case analyzes the strategies of the two hedge funds, focusing on how money can be made and lost during a financial crisis. The role of investment banks as lenders to hedge funds such as Peloton is explored, as well as characteristics of the CDO market and an array of both mortgage-related and credit protection-related instruments that were actively used (for better or worse) by hedge funds during the credit crisis of 2007 and 2008.

Examines the lease vs. buy decision for investments in technology. Addresses pivotal investment decision issues such as varying the length of the lease, the useful life of the equipment, and alignment with the company's overall financial strategy. The scenario is for a real financial services firm that has been disguised for confidentiality reasons. Presents an investment decision: should a company buy or lease technology with a relatively short useful life? The new controller at AMG, a Fortune 500 financial services firm, has been tasked with determining how to finance the acquisition of 7,542 new PCs to be rolled out over the next 12 months. This is a $6.7 million investment decision and the rollout schedule adds significant complexity to the solution. The controller must choose between buying or leasing the computers over 24- or 36-month time frames. Provides a framework for analyzing similar investment decisions. The key learning point is that leasing information technology can be cheaper than buying. This is contradictory to a car lease, which may be familiar from everyday experience. A new car has a potentially long useful life and can retain significant value after several years, hence, intuition is that buying should always be cheaper than leasing. Shows that this is not the case for information technology. Teaches the correct application of the mid-quarter convention within MACRS depreciation for technology, and the implications of operating vs. capital leases and off-balance-sheet financing. In the process, introduces the four tests for a capital lease. Finally, shows how creative analysis techniques can be used to simplify complex decisions. These techniques aid in arriving at a conclusion faster and with less effort.

To illustrate the fundamentals of lease vs. buy decisions in technology and how they differ from the typical capital equipment lease vs. buy decision. Topics covered include MACRS depreciation and off-balance-sheet financing for a complex leasing scenario staggered in time across multiple business units.

In late 2012 Adeline Herzog Memorial Hospital in Castle Rock, Colorado, was facing a problem with patient satisfaction. The Press-Ganey scores for the third-floor nursing unit–the primary destination (70 percent) for patients admitted through the emergency department–were at the 15th percentile, and the key HCAHPS score for inpatients was well below the Colorado average. Over the past six months Jeri Tinsley, director of medical, surgical, and intensive care services, had made various changes to try to improve the patient satisfaction scores for her 32-bed unit, but the scores seemed stuck at an unacceptably low level.

Tinsley worried that if improvements were not made soon, patients would start “voting with their feet” and take their business to competing hospitals. As a registered nurse, Tinsley's expertise was helping people heal; it was not analyzing data. In particular, she was overwhelmed by the patient comments included in the surveys; she had no idea how to analyze them and could not decide which issues to address first.

After analyzing the case, students should be able to:

• Organize and analyze qualitative data using affinity diagrams

• Identify priorities using Pareto diagrams

• Identify which aspects of a problem are (1) within their control to solve, (2) within their influence to solve, or (3) outside their control to solve

Organize and analyze qualitative data using affinity diagrams

Identify priorities using Pareto diagrams

Identify which aspects of a problem are (1) within their control to solve, (2) within their influence to solve, or (3) outside their control to solve

The Arbor City Community Foundation (ACCF) was a medium-sized endowment established in Illinois in the late 1970s through the hard work of several local families. The vision of the ACCF was to be a comprehensive center for philanthropy in the greater Arbor City region. ACCF had a fund balance (known collectively as “the fund”) of just under $240 million. The ACCF board of trustees had appointed a committee to oversee investment decisions relating to the foundation assets. The investment committee, under the guidance of the board, pursued an active risk-management policy for the fund. The committee members were primarily concerned with the volatility and distribution of portfolio returns. They relied on the value-at-risk (VaR) methodology as a measurement of the risk of both short- and mid-term investment losses. The questions in Part (A) of the case direct the students to analyze the risk inherent in both one particular asset and the entire ACCF portfolio. For this analysis the students need to calculate daily VaR and monthly VaR values and interpret these figures in the context of ACCF's risk management. In Part (B) the foundation receives a major donation. As a result, the risk inherent in its portfolio changes considerably. The students are asked to evaluate the risk of the fund's new portfolio and to perform a portfolio rebalancing analysis.

Understanding the concept of value at risk (VaR); Calculating daily and monthly VaR by two different methods, the historical and the parametric approach; Interpreting the results of VaR calculations; Understanding the role of diversification for managing risk; Evaluating the impact of portfolio rebalancing on the overall risk of a portfolio.

The Arbor City Community Foundation (ACCF) was a medium-sized endowment established in Illinois in the late 1970s through the hard work of several local families. The vision of the ACCF was to be a comprehensive center for philanthropy in the greater Arbor City region. ACCF had a fund balance (known collectively as “the fund”) of just under $240 million. The ACCF board of trustees had appointed a committee to oversee investment decisions relating to the foundation assets. The investment committee, under the guidance of the board, pursued an active risk-management policy for the fund. The committee members were primarily concerned with the volatility and distribution of portfolio returns. They relied on the value-at-risk (VaR) methodology as a measurement of the risk of both short- and mid-term investment losses. The questions in Part (A) of the case direct the students to analyze the risk inherent in both one particular asset and the entire ACCF portfolio. For this analysis the students need to calculate daily VaR and monthly VaR values and interpret these figures in the context of ACCF's risk management. In Part (B) the foundation receives a major donation. As a result, the risk inherent in its portfolio changes considerably. The students are asked to evaluate the risk of the fund's new portfolio and to perform a portfolio rebalancing analysis.

Understanding the concept of value at risk (VaR); Calculating daily and monthly VaR by two different methods, the historical and the parametric approach; Interpreting the results of VaR calculations; Understanding the role of diversification for managing risk; Evaluating the impact of portfolio rebalancing on the overall risk of a portfolio.

The Arbor City Community Foundation (ACCF) was a medium-sized endowment established in Illinois in the late 1970s through the hard work of several local families. The vision of the ACCF was to be a comprehensive center for philanthropy in the greater Arbor City region. ACCF had a fund balance (known collectively as “the fund”) of just under $240 million. The ACCF board of trustees had appointed a committee to oversee investment decisions relating to the foundation assets. The investment committee, under the guidance of the board, pursued an active risk-management policy for the fund. The committee members were primarily concerned with the volatility and distribution of portfolio returns. They relied on the value-at-risk (VaR) methodology as a measurement of the risk of both short- and mid-term investment losses. In its report for the investment committee, the ACCF risk analytics team recommended the daily VaR at 95% confidence as a measure for short-term risk and reported the corresponding numbers. It is now the task of the investment committee to interpret these figures. The case questions guide the executive students to a critical evaluation of both the reported VaR figures as well as of the VaR methodology.

Understanding the concept of value at risk (VaR); Interpreting the results of VaR calculations; Evaluating the appropriateness of VaR calculations; Critical discussion of the VaR methodology.

Case (A) starts by reviewing several attempts made by three consecutive Argentine governments between 1973 and 1989 to fight the three-digit inflation rates that had troubled the country since the end of World War II. Next, the implementation of the currency peg under the broad umbrella called the “convertibility plan” is discussed and its rationale is explained in connection with the Central Bank's role in controlling inflation and market expectations. The case then outlines the fiscal reforms introduced in the early 1990s concerning public finance, market regulation, and social security. Finally, the outcomes of these policies are briefly summarized.

Argentina's currency collapse provides a vivid illustration of the perils of government control on exchange rates in an export-dependent economy. Students will learn and understand (1) the role of herding and expectations in currency collapse; (2) the interdependence of fiscal and monetary policies; (3) monetary base management and its effects on inflation; (4) the advantages and drawbacks of currency pegs; (5) the story of the late 1990s financial and currency crises.

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.

Should B&K Distributors implement a Web-based customer portal with an integrated marketing campaign? Asks readers to assist Jim Anfield, business development director for JDA Consulting, and Nancy O'Neil, B&K Distributor's sales VP, in determining the feasibility of this project. They must build the final ROI projections and develop recommendations for B&K's senior management team. Emphasizes the importance of assumptions and the range of possible outcomes. Based on a real-life management decision for a mid-size firm.

To teach ROI analysis best practices for technology project investments, requiring the analysis of several factors to conduct a thorough review of the investment's feasibility.

Christopher Lenard and his longtime friend, Kimberly Slater, are exploring the idea of developing a student-housing complex near the University of Wisconsin, Madison, by replicating Slater's highly successful, similar development near the University of Florida. Madison seemed to present attractive market and demographic conditions for investment in student housing in the summer of 2012. But before committing a large share of his personal wealth to the project, Lenard needs to conduct a more careful analysis of its potential risks and returns. By putting themselves into the shoes of a budding real estate entrepreneur, students will evaluate both the merits and pitfalls of various approaches to the financial analysis of real estate development projects.

After reading and analyzing the case, students will be able to:

• Evaluate the fundamental economic determinants driving the potential gains to real estate development

• Explain the merits and deficiencies of tools that can be applied to the financial analysis of real estate development projects, including financial feasibility; developing to a yield on cost; net present value analysis; and real options.

Evaluate the fundamental economic determinants driving the potential gains to real estate development

Explain the merits and deficiencies of tools that can be applied to the financial analysis of real estate development projects, including financial feasibility; developing to a yield on cost; net present value analysis; and real options.

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.

Bed Bath & Beyond (BBBY) had no long-term debt on its balance sheet. Although many analysts considered BBBY's balance sheet a strength that permitted greater flexibility, some commented on the risks of its growing cash balance. These concerns raised questions about BBBY's capital structure. In early 2004, interest rates were at an all-time low, making it an attractive time to consider issuing debt and executing either a share repurchase or a one-time special dividend. Provides a few capital structure proposals for students to analyze.

In October 2008, in the midst of a financial crisis, Anthony Keating, investment manager at the Boston private bank Billingsley, Blaylock, and Montgomery, was searching for an investment strategy to recommend to his high-net-worth clients. Traditional investments in the equity markets were being decimated, and Keating’s clients would be looking to him for ideas. Inspired by the success of Paulson and Co., Keating began to explore the possibility of entering a trade that would profit as homeowners defaulted on their mortgages. The more Keating learned about the trade, the more he realized that he needed to know about mortgage-backed securities and credit default swaps. The case provides instructors with a chance to introduce these financial instruments, while at the same time providing lessons applicable to students interested in value investing or real estate finance.

After reading and analyzing the case, students will be able to:

• Explain how home mortgages are securitized into financial instruments that are traded in public markets

• Describe how credit default swaps can be used to speculate on the value of an underlying financial instrument

• Identify potential mispricing across related financial instruments

• Understand the potential risks and rewards of various financial investment strategies that look to capitalize on defaults on subprime mortgages

Explain how home mortgages are securitized into financial instruments that are traded in public markets

Describe how credit default swaps can be used to speculate on the value of an underlying financial instrument

Identify potential mispricing across related financial instruments

Understand the potential risks and rewards of various financial investment strategies that look to capitalize on defaults on subprime mortgages

In January 2010, Benedict Clarke, general partner of a small real estate private equity venture, faced difficulty with one of his properties. When purchased in early 2007, Tulaberry Plaza was a thriving retail shopping center outside Orlando, Florida. The financial crisis and severe economic downturn forced Tulaberry's anchor tenant into bankruptcy and weakened the other tenants in the plaza. Clarke now faces pressures placed on him by his limited partners, who were shown rosy projections of the returns they would receive, and by his lender, who is presently taking most of the property's cash flow to satisfy required debt service. Clarke must devise a plan that presents the most logical and profitable way forward, while also justifying his actions to elicit the necessary support from the others involved in the transaction. The case asks students to make decisions from the perspective of Clarke, giving them an appreciation not only of the details of strategic decision-making in real estate leasing, but also of the interplay between lenders and equity partners when managing a commercial property in distress.

After reading and analyzing the case, students will be able to:

• Choose the right tenant for a retail establishment, with an understanding that it may not be the one that promises to pay the most rent

• Identify the connections among commercial property performance, mortgage loan covenants, and partnership agreements, all of which can influence optimal decision-making

Choose the right tenant for a retail establishment, with an understanding that it may not be the one that promises to pay the most rent

Identify the connections among commercial property performance, mortgage loan covenants, and partnership agreements, all of which can influence optimal decision-making

This case explores how and why GM became a major user of private equity and hedge fund capital, as well as the risks and rewards of these new relationships. The Cerberus transaction, audacious in both its size and complexity, is explored in detail. What were the alternatives for GM, and what risks and opportunities lay ahead for both parties? This case investigates the benefits, disadvantages, and potential conflicts of interest that evolved as GM's many suppliers increasingly embraced low-cost, nontraditional financing from hedge funds.

To analyze the significant role that private equity and hedge funds play in providing capital to corporations, especially those in distressed industries.

How does a mature business develop new growth markets, assuming it already has new products? That was the challenge facing The Coca-Cola Company and its global system of bottlers in the 2000s when demand for its core line of carbonated soft drinks flattened. The Australian bottler, Amatil, pinned its hopes on energy drinks, a fast-growth, youth-oriented category that was capturing headlines and share away from traditional products. To wrest control from the upstart brands that originated them, Amatil was targeting the retail context where young people congregated and formed their preferences, in pubs, nightclubs, healthclubs, and sporting events. This international case explores the challenges encountered when a mature company with considerable distribution assets, well-honed systems, and entrenched operating procedures attempts to sell into an underserved retail channel with requirements quite unlike those of the company's mainstream buyers. How does it attract market interest? How does it develop new routes-to-market without undercutting the cost efficiencies and delivery value that have earned it dominant position elsewhere? How does it win over what could be its core customers of the future without alienating today's faithful? These are just some of the questions that Amatil management was determined to solve.

Understand issues related to retail channel strategy development in fast-changing international consumer markets, and the challenges of adapting legacy routes-to-market systems to changing consumer demands.

Colfax Corporation was a young, privately held collection of pump-manufacturing companies from the United States and Europe. Intending to go public, it was eager to find a story for investors of how it could grow at rates faster than its subsidiaries had historically grown in their home regions and core-customer industrial markets. This case describes a singular new-growth opportunity: selling Colfax solutions into state-owned petroleum enterprises in the Middle East at a time when these producers were straining to add capacity. Designing the optimal marketing system required Colfax to weigh a complex of issues, including global resource allocation and deployment, a process for customer-relationship building, and estimates for revenue streams versus investment outlays. The design process was, in short, far more than “sticking sales rep pins in the map.” Case readers are asked to think along with the Colfax global management team in deciding, “How much can we afford to risk our current income model in order to build new capacity in a new region in a new way?”

Understanding issues related to global B2B marketing channel strategy development, as well as complexities of entering unfamiliar new international markets such as Middle East oil and gas.

On October 22, 2004, junior trader Mary Lucas was browsing through the recent trading activities of a few convertible bonds the firm held. First Convergence Inc. was a hedge fund specializing in convertible arbitrage founded by three Wall Street traders in 2002. Prior to starting at the firm, she had known little about convertible bonds. Now she stayed late almost every day in order to learn as much about the business as possible. Suddenly, she noticed something unusual about the trading of a convertible bond issued by Countrywide Financial Corporation (NYSE:CFC). Although the average daily trading volume on this bond had been only three thousand during the previous month, it had shot up to fifty thousand in the last three days. Lucas remembered this particular bond. In fact, First Convergence was actually holding a slightly different convertible bond (known as the liquid yield option note or LYON) issued by the same company. On August 20, Countrywide had offered to exchange the new convertible bond for the original LYON. First Convergence had accepted the exchange offer, thus ending up with the new convertible bond. At that time, Lucas was asked to help evaluate the offer, so she was familiar with the features of both bonds. “What's happening?” she asked herself. She quickly checked the recent price movement on Countrywide's stock. The stock had plunged 11.5 percent on Wednesday, October 20, after the company announced earnings below analysts' expectations. On the same day, trading on the convertible shot up. These two events must be related. But how? Is there a potential investment opportunity?

Understanding various features of a convertible bond; identifying and exploiting an arbitrage opportunity

Steven Rogers had always thought that someday he would like to own a business with one or both of his daughters. As his eldest daughter, Akilah, finished her final semester at Harvard Business School, she told Rogers that she would like to create with him a Chicago-based real estate venture that included buying, rehabbing and renting homes in the Englewood and South Shore neighborhoods of Chicago. Rogers quickly realized that his biggest challenge was how to equitably structure the ownership of the business. He gathered advice from family business experts and slowly began to build a plan that would benefit each member of his family. Meanwhile, Akilah assumed responsibilities associated with the business as she finished her final semester at HBS. The case ends with Rogers Family Enterprises owning its first three houses.

1. Students learn how to construct an equitable business ownership plan for a family business. 2. Students learn the agreements that family businesses should have in place. 3. Students learn why successful entrepreneurs tend to be those who control the growth of their company while envisioning an empire.

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.

Doug Cook, an MBA graduate, was wrestling with one of the most important career decisions of his life: Which one of three seemingly promising businesses should he acquire? Each acquisition was a viable opportunity, and each had potential to be a successful business. Cook, however, had heard numerous disconcerting stories about other entrepreneurs going through this process. He realized that until this time the biggest purchase he had made in his life was a $250,000 condominium in downtown Chicago. Acquiring one of these companies would require a financial and personal commitment greater than anything he had ever attempted. He felt a window of opportunity was closing. If he did not act now, he might find himself in the corporate world forever. Cook began by writing up a personal criteria list for his acquisition, then researching online and media sources for businesses for sale. Frustrated with that process, he hired a business broker. With the broker's help, Cook found three promising candidates from which to choose: Luxury Tassels, Inc.; Feldco Windows and Doors, Inc.; and Coyote Consulting Company. The (A) case includes income statements, pro forma forecasts, balance sheets, and organization charts for each company, in addition to Cook's financial analyses and valuation of each company. The (B) case features the letter of intent that Cook gave the owner of the company he selected. Ultimately he did purchase the company, and in the (C) case, Cook examines pathways to growing his newly acquired company.

How to be entrepreneurial through acquiring a business The importance of establishing their own decision criteria regarding the type of company they would like to acquire How to research businesses for sale The issues in working with a business broker How to analyze financial statement in the context of buying the company How to make decisions and use financial analysis to support their decisions

Doug Cook, an MBA graduate, was wrestling with one of the most important career decisions of his life: Which one of three seemingly promising businesses should he acquire? Each acquisition was a viable opportunity, and each had potential to be a successful business. Cook, however, had heard numerous disconcerting stories about other entrepreneurs going through this process. He realized that until this time the biggest purchase he had made in his life was a $250,000 condominium in downtown Chicago. Acquiring one of these companies would require a financial and personal commitment greater than anything he had ever attempted. He felt a window of opportunity was closing. If he did not act now, he might find himself in the corporate world forever. Cook began by writing up a personal criteria list for his acquisition, then researching online and media sources for businesses for sale. Frustrated with that process, he hired a business broker. With the broker's help, Cook found three promising candidates from which to choose: Luxury Tassels, Inc.; Feldco Windows and Doors, Inc.; and Coyote Consulting Company. The (A) case includes income statements, pro forma forecasts, balance sheets, and organization charts for each company, in addition to Cook's financial analyses and valuation of each company. The (B) case features the letter of intent that Cook gave the owner of the company he selected. Ultimately he did purchase the company, and in the (C) case, Cook examines pathways to growing his newly acquired company.

How to be entrepreneurial through acquiring a business The importance of establishing their own decision criteria regarding the type of company they would like to acquire How to research businesses for sale The issues in working with a business broker How to analyze financial statement in the context of buying the company How to make decisions and use financial analysis to support their decisions

In the (A) case, Jason Phillips, Chief Financial Officer of a soup manufacturing business, is given the task of maximizing the value of the firm twelve months after the case is set. Although he does not want to break any legal rules, Jason is interested to see whether accounting and real action choices can be used to enhance the company's financial position and increase its perceived value to investors. The case permits him to select from a menu of options, including decisions on product pricing, inventory levels, accounts receivables, leasing or purchasing a new machine and valuation or sale of securities. These choices are fed into an Excel spreadsheet which adjusts financial projections and accounting disclosures accordingly.

In the (B) case, Ben Kerr, Chief Investment Officer at one of Dragon's main competitors, considers the financial statements produced by Dragon to unravel any earnings management behavior and establish a true value for the company. Although the case can be focused on the accounting consequences of real decisions, a richer discussion is obtained when considering the ethical angles of the decision process. In particular, how much “earnings management” should be pursued and what types of behaviors are simply going to be unraveled by investors?

Students will explore: the concepts of “legal” earnings management as compared to true value optimization; whether sophisticated investors misled by such behaviors; and the management of information flows to investors.

In the (A) case, Jason Phillips, Chief Financial Officer of a soup manufacturing business, is given the task of maximizing the value of the firm twelve months after the case is set. Although he does not want to break any legal rules, Jason is interested to see whether accounting and real action choices can be used to enhance the company's financial position and increase its perceived value to investors. The case permits him to select from a menu of options, including decisions on product pricing, inventory levels, accounts receivables, leasing or purchasing a new machine and valuation or sale of securities. These choices are fed into an Excel spreadsheet which adjusts financial projections and accounting disclosures accordingly.

In the (B) case, Ben Kerr, Chief Investment Officer at one of Dragon's main competitors, considers the financial statements produced by Dragon to unravel any earnings management behavior and establish a true value for the company. Although the case can be focused on the accounting consequences of real decisions, a richer discussion is obtained when considering the ethical angles of the decision process. In particular, how much “earnings management” should be pursued and what types of behaviors are simply going to be unraveled by investors?

Students will explore: the concepts of “legal” earnings management as compared to true value optimization; whether sophisticated investors misled by such behaviors; and the management of information flows to investors.

MBA students Tim Joyce and Brandon Cornuke had what they believed was a great product concept: a body powder that could be delivered in an aerosol spray. Current market-leading powders such as Gold Bond and Johnson's Baby Powder involved messy application, as they were only available in “dump-on” form. Worse, because powders deposited on top of the skin didn't adhere to it, they tended not to last long. Joyce and Cornuke believed an aerosol powder spray would solve these problems. They called their product concept Dry Goods. However, taking Dry Goods from idea to reality presented some serious challenges. How would two students without access to a lab be able to research and develop a complex chemical/physical process like aerosol delivery, let alone manufacture it once they had a proven prototype? To address these problems, the two entrepreneurs sought out a contract manufacturing partner. After identifying a number of options, Joyce and Cornuke had to decide which partner offered them the best chances of success, given their goals and financial constraints.

Students will learn about the process of hiring a contract manufacturing partner to produce a new packaged good for a startup.

The case begins with newly appointed chairman and interim CEO Garo Armen dwelling on the significant issues that Elan Corporation, an Irish pharmaceutical company, faces. Its share price has plummeted 96% after accusations of accounting fraud and the discontinuation of an important clinical trial due to the drug's severe side effects. As a result, Elan faces insolvency. About $2 billion in debt that could no longer be satisfied in stock will soon mature, and there are questions regarding the company's structure and various operating concerns. Armen is also concerned about the ethical consequences of the company's failing and thus not being able to develop potentially life-saving medicines. Armen must decide what the nature of Elan should be moving forward and what strategy it should adopt. The operational and financial issues discussed in the case are complicated by Elan's status as an Irish company with significant international operations. The case closes with Armen reflecting on the decisions he has made—which students should critique and suggest alternatives to—as well as an open decision on choosing a successor CEO.

1. Crafting a vision and strategy for a newly streamlined organization and implementation 2. Balancing the complexities of an international corporation in a turnaround situation 3. Quantitatively identifying the probability, advantages, and disadvantages of bankruptcy 4. Succession planning decision making 5. Responding to fraud accusations 6. Managing a distressed workforce and retaining key employees

Presents an analysis of the decision regarding a new product introduction. The main issues for discussion are: sunk costs, incremental costs, cannibalization, shared facilities, and the treatment of inflation.

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.

It is January 2014, and the case protagonist, David Milestone (senior advisor at the Center for Accelerating Innovation and Impact at the U.S. Agency for International Development's Global Health Bureau), is preparing for a meeting of global stakeholders and pharmaceutical manufacturers who are interested in reducing mortality caused by childhood pneumonia and are prepared to donate $10 million to support this effort.

Milestone's goal is to propose a strategy to address childhood pneumonia in Uganda, toward which the $10 million donation would go. In addition to effectively and sustainably reducing childhood pneumonia deaths, the plan must align the interests of various stakeholders behind the problem. A successful strategy in Uganda could be a model for interventions elsewhere. The United Nations Commission on Lifesaving Commodities for Women and Children recently identified Uganda as a “pathfinder” country, meaning it could serve as the example for other countries wrestling with the same issues. This is a remarkable opportunity to change the lives of children in Uganda—and all around the world.

After reading and analyzing the case, students will be able to:

• Perform a stakeholder analysis

• Appreciate the challenges involved in improving public health, especially in developing countries

• Create a patient journey and use it to identify potential impact points

Perform a stakeholder analysis

Appreciate the challenges involved in improving public health, especially in developing countries

Create a patient journey and use it to identify potential impact points

The case puts students in the position of a young analyst working for a Chicago-based student housing developer. The premise is that the analyst, Tricia, must prepare a report for the firm's partners detailing her recommendations regarding a variety of green upgrades for a potential value-added acquisition project. The redevelopment project is based on two multifamily student housing redevelopment projects in Denton, Texas (led by Iconic Development). The case focuses solely on the operating expense reduction that took place at the property and does not address potential changes to property revenues.

The objective of the case is to provide a framework for students to evaluate various sustainable retrofitting projects in a multifamily property. Students must analyze the energy impact, cost, financial returns, and environmental impact of each potential property upgrade, and then decide which upgrades to recommend to management.

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.

A family media enterprise with very strong family culture and values is in the third and fourth generations of ownership and governance. They face a crisis when a large number of family shareholders want to cash out their shares. What led to this situation? How could it have been avoided? How should it be resolved?

Lack of succession and liquidity planning can harm the business through generations when it becomes a crisis.

Freeport-McMoRan's acquisition of Phelps Dodge created the world's largest publicly traded copper company. JPMorgan and Merrill Lynch advised the acquirer and arranged $17.5 billion in debt financing and $1.5 billion in credit facilities. In addition, these two firms underwrote $5 billion in equity capital through simultaneous offerings of Freeport-McMoRan common shares and mandatory convertible preferred shares. These financings created an optimal capital structure for the company that resulted in stronger credit ratings. The activities of the equity capital markets and sales groups at the underwriting firms are explored and the structure and benefits of mandatory convertible preferred shares is explained.

To understand the role of investment banks in advising a large corporation regarding an acquisition and related financings in the capital markets. As part of this, the activities of an investment banking firm's equity capital markets group and their underwriting risks are analyzed. Finally, the structure of a mandatory convertible security is reviewed in terms of benefits to both issuers and investors.

During one of the most nerve-wracking football matches of the 2012–2013 Bundesliga season, life-long friends Franz Dully and Max Vogel begin arguing about whether the wealth of a football club determines its success during the season. In order to disprove Vogel's claim that “money scores goals,” Dully must analyze the Bundesliga's current market values, points earned, and mid-season leader data.

After analyzing the case, students will be able to compute prediction intervals, develop regression models, and interpret data. The development of the regression models asks students to choose the relevant set of independent variables, as well as determine an appropriate functional form for the regression equation. The models derived have to be evaluated as well as compared to one another. Further, the students have to interpret the quantitative findings in the context of the application.

Aurelia Dimas had been sent to investigate the various properties being offered by the State of California in the form of a sale-leaseback agreement. The opportunity was perfect for her firm, Orrington Financial Partners, which had recently expanded its fixed-income portfolio to include real estate. The wide range of offerings in the Golden State Portfolio provided both diversification and stability over a period of decades. She had spent the last week walking the halls of each and every building to see the offering first hand. Now the task of valuing the portfolio rested on her shoulders.

By reading and analyzing this case, students will be exposed to real estate valuation and understand the issues with a sale-leaseback investment. The objectives are obtained by requiring students to justify how and why they make adjustments to the cash flow forecasts provided to them by a real estate advisory firm, explain their methodology for arriving at a specific value for a piece (or a portfolio) of commercial property, and debate the pros and cons of a sale-leaseback structure.

At the end of 2011, one of the largest food retailers in Brazil, Grupo Pão de Açúcar, or GPA (a subsidiary of Companhia Brasileira De Distribuição, or CBD), was reviewing its accounts payable terms with suppliers in search of additional value. Manager of analytics Maria Cristina Santos was examining the trade credit terms GPA had with Oalem Ltda, a family-owned melon grower located in northeastern Brazil. Oalem, like most small family businesses, was financed with bank loans and equity that was held predominantly by the family. The case examines how accounts payable (trade credit) terms should be set or negotiated between a large retailer and a small supplier, especially when the bargaining power between the two may not be equal. The case demonstrates that trade credit terms can be as important as the terms of more traditional forms of financing.

After analyzing and discussing the case, students should be able to:

• Determine when it is efficient or value-increasing for one nonfinancial firm to borrow from another nonfinancial firm through trade credit, as opposed to borrowing from financial institutions (e.g., banks) or financial markets

• Understand how competition or relative bargaining power can influence feasible and optimal trade credit terms

• Explain why trade credit can be a cheaper form of financing than the alternative forms of financing available to small family businesses like Oalem Ltda

Determine when it is efficient or value-increasing for one nonfinancial firm to borrow from another nonfinancial firm through trade credit, as opposed to borrowing from financial institutions (e.g., banks) or financial markets

Understand how competition or relative bargaining power can influence feasible and optimal trade credit terms

Explain why trade credit can be a cheaper form of financing than the alternative forms of financing available to small family businesses like Oalem Ltda

During December 2012, Jorge Paulo Lemann, a co-founder and partner at 3G, proposed to Warren Buffett that 3G and Berkshire Hathaway acquire H. J. Heinz Company. Lemann and Buffett, who had known each other for years, jointly decided that the Heinz turnaround had been successful and that there was significant potential for continued global growth. 3G informed Heinz CEO William Johnson that it and Berkshire Hathaway were interested in jointly acquiring his company. Johnson then presented the investors' offer of $70.00 per share of outstanding common stock to the Heinz board.

After much discussion, the Heinz board and its advisors informed 3G that without better financial terms they would not continue to discuss the possibility of an acquisition. Two days later, 3G and Berkshire Hathaway returned with a revised proposal of $72.50 per share, for a total transaction value of $28 billion (including Heinz's outstanding debt).

Following a forty-day “go-shop” period, Heinz, 3G, and Berkshire Hathaway agreed to sign the deal. But was this, in fact, a fair deal? And what might be the future consequences for shareholders, management, employees, and citizens of Pittsburgh, the location of the company's headquarters? Last, what was the role of activist investors in bringing Heinz to this deal stage?

After reading and analyzing the case, students will be able to:

• Understand the influence of investment bankers on M&A transactions

• Consider synergies that drive M&A

• Consider the role of activist investors in corporate strategic decision-making

• Understand the impact of M&A on key corporate stakeholders

• Apply core valuation techniques to support M&A valuation

Understand the influence of investment bankers on M&A transactions

Consider synergies that drive M&A

Consider the role of activist investors in corporate strategic decision-making

Understand the impact of M&A on key corporate stakeholders

Apply core valuation techniques to support M&A valuation

The case puts students in the shoes of Todd Davis, founder and CEO of a boutique brownfield redevelopment firm, Hemisphere Development, in 2010. Davis is wrestling with decisions and processes surrounding the potential acquisition and redevelopment of the former Delphi Automotive plant in Columbus, Ohio. When making the investment decision, Davis (and students) must consider various factors: What is Hemisphere's implicit investment strategy, and what are the firm's core competencies? How should the firm finance this transaction to achieve an acceptable return?

• Practice creatively structuring and financing unique transactions

• Describe the importance of baseline analysis in dealing with contaminated or potentially contaminated properties, and understand that the timing of baseline analysis can be crucial in determining the viability of a transaction

• State the importance of each type of constituent in public-private transactions

• Recognize the benefits of specialized/niche expertise in deal-makin

Practice creatively structuring and financing unique transactions

Describe the importance of baseline analysis in dealing with contaminated or potentially contaminated properties, and understand that the timing of baseline analysis can be crucial in determining the viability of a transaction

State the importance of each type of constituent in public-private transactions

Recognize the benefits of specialized/niche expertise in deal-makin

Rede Alta Velocidade, SA (RAVE), the state-owned company responsible for planning and developing a major high-speed rail project in Portugal, must persuade both public officials and lenders that the project is worth undertaking. It must also make a recommendation on the appropriate organizational form for the enterprise. Specifically, it must determine the role of the Portuguese government in financing and operating the high-speed rail network, with options ranging from full development and management of the project by the public sector to completely private development and management. Lying in between these two polar cases were a variety of hybrid models, often referred to as public-private partnerships (PPPs). Using data in the case, students have the opportunity to perform a benefit-cost analysis of the project. They also must think carefully about the optimal role of the government in a major new infrastructure project.

After analyzing and discussing the case, students will be able to:

• Understand the nature of a global public good

• Perform a back-of-the-envelope benefit-cost analysis of polio eradication

• Discuss the appropriate strategy for eradicating an infectious disease

• Apply game theory to analyzing which countries would be likely to contribute funds toward global polio eradication

• Discuss the role of private organizations in the provision of global public goods

Understand the nature of a global public good

Perform a back-of-the-envelope benefit-cost analysis of polio eradication

Discuss the appropriate strategy for eradicating an infectious disease

Apply game theory to analyzing which countries would be likely to contribute funds toward global polio eradication

Discuss the role of private organizations in the provision of global public goods

Wall Street hedge fund manager Kim Meyer is considering investing in an SFA (slate financing arrangement) in Hollywood. Dave Griffith, a Hollywood producer, is pitching for the investment and has conducted a broad analysis of recent movie data to determine the important drivers of a movie’s success. In order to convince Meyer to invest in an SFA, Griffith must anticipate possible questions to maximize his persuasiveness.

Students will analyze the factors driving a movie’s revenue using various statistical methods, including calculating point estimates, computing confidence intervals, conducting hypothesis tests, and developing regression models (in which they must both choose the relevant set of independent variables as well as determine an appropriate functional form for the regression equation). The case also requires the interpretation of the quantitative findings in the context of the application.

Hewlett-Packard (HP) had a long history of engaging in corporate citizenship, dating back to its founding. By 2009, however, under the leadership of its latest CEO, Mark Hurd, the company had lost its focus on corporate social responsibility (CSR). Hurd instead focused on undertaking a financial turnaround and overcoming other reputational challenges; he viewed CSR and philanthropic efforts as costs rather than as strategic levers. He instituted widespread cost-cutting measures to get HP back on track, including reducing CSR expenditure. The HP board, however, did not want to let CSR go by the wayside; in fact, it wanted HP to reorganize and restrategize its approach to corporate citizenship.

The case focuses on this strategic transformation from traditional, cost-center CSR to business-aligned social innovation. It outlines the details of the board's approval of the new strategy, and then discusses how HP employees worked to reorganize their CSR activity. The new team, the Office of Global Social Innovation (OGSI), had to devise a pilot project to demonstrate the new approach. The project under consideration was an engagement that would improve the early infant diagnosis process for testing infants for HIV in Kenya—an area virtually unknown to HP. The case asks students to assess the work of the OGSI team thus far, and to put themselves in the shoes of one team member who had to justify the project to HP's leadership.

The case is especially important for demonstrating the most recent shifts across some leading companies regarding how they position CSR, as well as how for-profit leaders can structure partnerships for impact.

After reading and analyzing the case, students will be able to: understand current shifts from traditional corporate social responsibility work to social innovation; understand the challenges facing leading companies as they seek to do well (enhance the company's bottom-line performance) by doing good (making social impact); identify best practices for developing partnerships for impact; articulate a project's social impact and how it aligns with a desirable business impact.

Roger Osayende, a former management consultant, must advise the Ministry of Health of Ektu, a fictional country in Central Africa, on how to implement a new point-of-care diagnostic test for infants with HIV. In Ektu, mothers often transmitted HIV infection to infants during pregnancy, delivery, or breastfeeding due to inadequate resources to invest in prevention efforts. The existing procedure to diagnose infants with HIV required collecting dried blood samples at more than two hundred healthcare facilities around the country and transporting them to a central laboratory in the capital for testing. This process was characterized by significant delays due to long transportation times, batching of samples in transportation and processing in the lab, and concomitant congestion in the lab. This delay resulted in loss to follow-up, that is, lost patients due to mothers not collecting their infants' results. A new point-of-care device was about to be introduced, which would obviate the need for this centralized processing and the resulting diagnostic delay. The key decision under consideration is where to place the devices to maximize their effectiveness.

Understand the importance of making public health decisions based on a data-driven, logical framework   Uncover the link between operational performance of the healthcare system and health outcomes at the population level   Appreciate the relevance of operational decisions in enhancing or diminishing the effectiveness of a medical technology   Use process analysis concepts to characterize various components of delays

One Acre Fund (1AF) is a nonprofit organization in rural western Kenya that helps farmers lift themselves out of poverty by providing a bundle of products and services that support farmers with quality inputs, training on farming techniques, access to credit, and assistance in achieving optimal prices. Since the organization's founding nearly a decade ago, it has grown to serve over 180,000 farm families annually as of July 2014. This high level of penetration into rural Kenya, Rwanda, Burundi, and Tanzania makes 1AF a potential distribution channel for rolling out new products and technologies that could benefit farmers and their families. The organization prides itself on its innovative culture, and always strives to offer new products and methods to its farmers. In 2011 1AF realized that it needed to formalize its innovation process to ensure it was confident in new products before rolling them out across its entire farmer network. It therefore created a robust, multistep evaluation framework to assess new innovations on four criteria: impact, adoptability, simplicity, and operability.

After reading and analyzing the case, students will be able to:

• Articulate the importance of understanding the user's needs and perspective throughout the innovation process

• Identify key factors for a successful product launch into an existing channel

• Employ an assessment framework to analyze the viability of a potential innovation

• Design a test pilot for evaluating the launch of new innovations within an organization

Articulate the importance of understanding the user's needs and perspective throughout the innovation process

Identify key factors for a successful product launch into an existing channel

Employ an assessment framework to analyze the viability of a potential innovation

Design a test pilot for evaluating the launch of new innovations within an organization

Gary Parr, deputy chairman of Lazard Freres & Co. and Kellogg class of 1980, could not believe his ears. “You can't mean that,” he said, reacting to the lowered bid given by Doug Braunstein, JP Morgan head of investment banking, for Parr's client, legendary investment bank Bear Stearns. Less than eighteen months after trading at an all-time high of $172.61 a share, Bear now had little choice but to accept Morgan's humiliating $2-per-share, Federal Reserve-sanctioned bailout offer. “I'll have to get back to you.” Hanging up the phone, Parr leaned back and gave an exhausted sigh. Rumors had swirled around Bear ever since two of its hedge funds imploded as a result of the subprime housing crisis, but time and again, the scrappy Bear appeared to have weathered the storm. Parr's efforts to find a capital infusion for the bank had resulted in lengthy discussions and marathon due diligence sessions, but one after another, potential investors had backed away, scared off in part by Bear's sizable mortgage holdings at a time when every bank on Wall Street was reducing its positions and taking massive write-downs in the asset class. In the past week, those rumors had reached a fever pitch, with financial analysts openly questioning Bear's ability to continue operations and its clients running for the exits. Now Sunday afternoon, it had already been a long weekend, and it would almost certainly be a long night, as the Fed-backed bailout of Bear would require onerous negotiations before Monday's market open. By morning, the eighty-five-year-old investment bank, which had survived the Great Depression, the savings and loan crisis, and the dot-com implosion, would cease to exist as an independent firm. Pausing briefly before calling CEO Alan Schwartz and the rest of Bear's board, Parr allowed himself a moment of reflection. How had it all happened?

An analysis of the fall of Bear Stearns facilitates an understanding of the difficulties affecting the entire investment banking industry: high leverage, overreliance on short-term financing, excessive risk taking on proprietary trading and asset management desks, and myopic senior management all contributed to the massive losses and loss of confidence. The impact on the global economy was of epic proportions.

In recent years Lehman Brothers, one of the five largest investment banks in the United States, had grown increasingly reliant on its fixed income trading and underwriting division, which served as the primary engine for its strong profit growth. The bank had also significantly increased its leverage over the same timeframe, going from a debt-to-equity ratio of 23.7x in 2003 to 35.2x in 2007. As leverage increased, the ongoing erosion of the mortgage-backed industry began to impact Lehman significantly and its stock price plummeted. Unfortunately, public outcry over taxpayer assumption of $29 billion in potential Bear losses made repeating such a move politically untenable. The surreal scene of potential buyers traipsing into an investment bank's headquarters over the weekend to consider various merger or spin-out scenarios repeated itself once again. This time, the Fed refused to back the failing bank's liabilities, attempting instead to play last-minute suitors Bank of America, HSBC, Nomura Securities, and Barclay's off each other, jawboning them by arguing that failing to step up to save Lehman would cause devastating counterparty runs on their own capital positions. The Fed's desperate attempts to arrange its second rescue of a major U.S. investment bank in six months failed when it refused to backstop losses from Lehman's toxic mortgage holdings. Complicating matters was Lehman's reliance on short-term repo loans to finance its balance sheet. Unfortunately, such loans required constant renewal by counterparties, who had grown increasingly nervous that Lehman would lose the ability to make good on its trades. With this sentiment swirling around Wall Street, Lehman was forced to announce the largest Chapter 11 filing in U.S. history, listing assets of $639 billion and liabilities of $768 billion. The second domino had fallen. It would not be the last.

This case covers the period from the sale of Bear Stearns to JP Morgan to the conversion into bank holding companies by Goldman Sachs and Morgan Stanley, including the Lehman Brothers bankruptcy and the sale of Merrill Lynch to Bank of America. The case explains the new global paradigm for the investment banking industry, including increased regulation, fewer competitors, lower leverage, reduced proprietary trading, and-potentially-reduced profits.

The Joyoung brand was launched in 1994 when a group of recent college graduates invented the world's first automatic hot soymilk-maker home appliance. After some ups and downs, the Joyoung manufacturer founded the Shandong Joyoung Electric Appliances Co., Ltd. in 2002. It was further reorganized to the current Joyoung Company Limited in September 2007. Joyoung's sales grew rapidly from RMB 6 million in 1994 to 120 million in 1999, and this trend has continued into the new century. By the first quarter in 2006, the signature product of Joyoung—the soymilk makers—alone have already surpassed the sales by Philips Home Appliances in the Chinese market. Contrary to its current success, however, Joyoung Soymilk Maker's launch did not go smoothly. When the first model of the automatic soymilk maker was introducted in 1994, people had no idea what this new creature was supposed to do. The first 2,000 units of Joyoung products remaintroducedined stacked in storage for months. Joyoung then decided to conduct some marketing research. Joyoung's repositioning strategies and new product developments based on their marketing research have been evidently successful, and they have defined a new product category in China and in the world.

A married couple who have a successful industrial B2B business evaluate whether or not to sell the business to two of their offspring, who are both entrepreneurial MBA graduates. Complicating factors include the fact that the sale price and structure need to finance the couple's retirement and give fair inheritance treatment to the remaining siblings. In addition, the father has had some health issues and the business is doing well, so there is a lot of forward momentum to sell to the next generation

Evaluate whether or not, and how, to keep a business founded and run by entrepreneurs as a family business into the sibling generation. Explore “escalation of commitment” and how it influences decisions to keep the business in the family or not.

Within 18 months of exiting bankruptcy, Kmart's position was sufficiently strong to launch an acquisition of Sears, once the nation's largest retailer and also a core holding of ESL. Looks at a number of compelling issues related to Kmart's bankruptcy, restructuring, and rebirth under the control of ESL, a large hedge fund. Presents some of the key metrics that Eddie Lampert, head of ESL, had available to him as he made two decisions: first, in 2002, to amass a controlling stake in Kmart's defaulted debt during the restructuring; and second, in 2004, to launch a takeover of Sears. The first deal illustrates the decision-making process for a financial buyer, including the downside protection of Kmart's real estate holdings, whereas the second deal represents a traditional strategic acquisition. Illustrates the innovative use of real estate as a “hedge” for ESL in the event that the retail combination does not produce the required financial results. Also focuses on the role of investment bankers and the increasingly important position that hedge funds and LBO funds have carved out in the M&A market.

To outline the explosive growth in assets and influence of alternative investment managers, particularly LBO funds and hedge funds, and the transition of some larger hedge funds from shorter term trading strategies to longer term plays on distressed debt, restructurings, and turnarounds.

Global Connect, a major telecommunications service provider, partners with national cable providers to bundle media and telecom services offered through voice over Internet protocol (VoIP). Global Connect provides the VoIP physical infrastructure that enables cable providers to offer VoIP phone service to their end customers. VoIP cable services are growing at a faster rate than anticipated, leaving Global Connect incapable of meeting contractual agreements with the cable partners and preventing them from capturing substantial VoIP market opportunities. Students are asked to improve the configuration of work at this service organization by identifying the types of waste in the current process. Process improvements use lean tools and their impact is quantified using time and capacity analysis.

To view a service business as a process and to understand where to find the constraints regarding customer responsiveness (flow time) and sales (throughput). This requires a rather subtle capacity analysis.

Describes the events leading up to the imposition of the London congestion charge. Views about the congestion charge, both pro and con, are presented. Also discusses, in general terms, the economics of traffic congestion, pointing out that an unregulated market for driving will not reach the social optimum. Contains sufficient data to estimate the deadweight loss in an unregulated market and the reduction of the deadweight loss due to the imposition of the congestion charge in 2003.

To provide a good illustration of how an unregulated market with negative externalities can lead to an overprovision of a good (in this case driving). Also, to show how an externality tax (in this case, London's congestion charge) can lead to an improvement in social welfare.