Case studies

In this return on investment (ROI) for customer relationship management (CRM) case scenario, students must calculate the ROI for analytic CRM enabled by an enterprise data warehouse. The case is based upon a real-life consulting engagement with a major Fortune 100 telecommunications company. In this case the executive management team's strategic objective is to grow the customer base by 5 percent annually by customer acquisition. The internal rate of return calculated from the data given in the case is more than 800 percent for one year, and sensitivity analysis shows this is a robust projection, suggesting it should be funded without question. However, the strategy of the firm is customer acquisition in an environment of high customer churn. As a result of these dynamics, the revenues and net income of the firm are actually decreasing by hundreds of millions of dollars each year. A better solution would realize that the executive team has the incorrect strategic objective. Customer acquisition is the wrong approach in an environment of high customer churn and executives should focus on customer retention and cross-sell and up-sell to high-value customers. The case discussion therefore takes students beyond CRM ROI to focuses on the key strategic concepts of customer relationship management.

Students learn how to calculate return on investment (ROI) for analytic customer relationship management (CRM) initiatives. The case also discusses in detail the difference between operational CRM and analytic CRM. The case solution is relatively straightforward with a very good ROI. However, the true learning of the case is for students to understand the strategic context of analytic CRM and to question assumptions in any ROI model.

In 2008 San Francisco International Airport (known by its three-letter airport code, SFO) had announced a $383 million plan to renovate and reopen Terminal 2. Assistant deputy director of aviation security Kim Dickie and her team had selected Quantum Secure's SAFE software suite as the new Terminal 2 credentialing system, but she needed to develop a business case quickly that would convince senior management to give the green light to fund the purchase. The case describes a scenario that occurs frequently in the real world, in which a decision offers some real but qualitative value in ways that are difficult or impossible to quantify. The discussion and analysis gives students the opportunity to consider the factors that will drive the internal rate of return (IRR), net present value (NPV), and discounted payback period calculations without constructing comprehensive spreadsheet models. Analyzing the case suggests the limits of such approaches in cases where perceived value is difficult to quantify. The case prepares students to evaluate and justify purchasing requests when interacting with financial gatekeepers such as CFOs and CEOs by introducing a framework to analyze the quantifiable benefits of a capital expenditure while keeping in mind important intangible benefits.

After analyzing the case, students should be able to: Understand how return on investment (ROI) calculations work, with an emphasis on identifying incremental effects Decide how to use results from similar entities making similar purchases to estimate the incremental benefit of a proposed solution Identify and use the best data available in making assumptions Justify the validity of benefits that are difficult to quantify in conjunction with the presentation of a traditional ROI analysis

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

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

This case focuses on the challenge of quantifying the return on investment (ROI) of a large technology project, enterprise resource planning (ERP), in the nonprofit environment of the San Diego City Schools. The school district does not generate a profit, so traditional revenue enhancement arguments do not work. Instead, the case discusses the internal processes re-design and system consolidation enabled by the new ERP system. The system ROI is composed of two major components: cost savings from removal of legacy applications and productivity improvements. The cost containment benefits are relatively straightforward to quantify, but do not justify the system. The productivity improvements are harder to quantify, and many can be categorized as soft benefits. Furthermore, many of the productivity and cost-saving benefits will not be realized without personnel reductions, which are especially difficult in school districts and government agencies. The case debrief therefore discusses the tradeoffs quantifying soft benefits and productivity improvements, best practices for management decision making, and the organizational change necessary to realize the ROI.

The case teaches students how to analyze ROI for a large enterprise IT system in nonprofit or government organizations. Financial ROI is applicable for the hard cost benefits but some benefits are more difficult to quantify, and students learn how to factor these into the decision making as well. In addition, organizational change can be particularly challenging in the government or nonprofit context; the case enables a discussion of strategies for workforce re-deployment in these settings.

An industry adage held that “there are two types of rental car companies: those that lose money and Enterprise.” The company that would become Enterprise Rent-A-Car was started in 1957 in St. Louis, Missouri, by Jack Taylor. Taylor set up Enterprise offices in neighborhoods rather than at airports because he believed that Americans would welcome a local option for renting cars when their own vehicles were being repaired. In 2010 Enterprise had more than 6,000 rental locations in the United States and a fleet of 850,000 cars in service. Its parent, Enterprise Holdings (comprising Enterprise, National, and Alamo brands) accounted for nearly half of the car rental market and was more than twice the size of Hertz, the number two competitor. Enterprise's competitive advantage was the result of the combination of its practices in hiring, training, compensation, organization, customer service, IT, and fleet management, among others.

Change is hard for all but perhaps more difficult for school leaders and other nonprofit organizations. The role that culture plays in a mission-driven organization can often be an impediment to change. This case uses a unique education institution, St. Martin dePorres School of the Cristo Rey Network, to illustrate the importance of culture in implementing change. It demonstrates how leaders can articulate a vision and create a strategy to change an organization and move toward success. The case focuses on the leadership team of Principal Mike Odiotti and Assistant Principal Judy Seiberlich and how they used cultural change as the key driver to school success. That success was defined by improved academic performance, greater accountability for students, teachers and staff and stronger empowerment of constituents. It includes an overview of how the school's leadership team used data to drive decision making. This case is ideal for MBA students, executives in nonprofit management or school leadership and can be used to illustrate change management, nonprofit leadership, culture change, mission-driven strategy or school leadership. It addresses critical issues that organizations face and provides tools and tactics that can be applied to mission-driven enterprises.

Understand the role culture plays in creating change in an organization Gain an appreciation and comprehension for the relevance of shaping culture when implementing a vision Recognize norms guide people's behavior in organizations. Learn to identify the norms that promote positive cultures and those that create toxic environments Learn how to diagnose organizational culture using the “Iceberg Model” Build a repertoire of skills needed to successfully change and shape an organization's culture

The first across-the-table negotiation between Google and China concluded successfully in 2006, when Google received a license to establish a local domain (google.cn) targeted at Chinese Internet users and not subject to the “Great Firewall.” During these negotiations both Google and the Chinese government struggled to reach an outcome that would be acceptable to their constituents. Google was caught between pleasing its shareholders and preserving its reputation for free access to information, while China was balancing the desire for cutting-edge search technology and the concern that liberal access to information would undermine its political-economic model. In the end, the negotiation resulted in Google operating two domains in China: Google.com and Google.cn. In early 2010, Google announced that its corporate infrastructure had been the target of a series of China-based cyber attacks and accused the Chinese government of attempting to further limit free speech on the web. These incidents led to a public conflict and private negotiations between Google and the Chinese government, which culminated in July 2010 when the Chinese government renewed the google.cn license knowing that Google was redirecting all Chinese customers search to its google.hk.com site This case concerns the changes in Google and the Chinese government's environment that led to Google withdrawing services from google.cn and the Chinese government saving face by renewing the google.cn license. The case is based on the publicly reported events surrounding two series of negotiations between the U.S. technology giant Google and the Chinese Government regarding Google's license in China.

Ever since he had heard her speak at a private equity conference, Babatunde Omotoba had wanted to work for Venita Fields, co-founder and senior managing director of private equity firm Smith Whiley & Company. He wrote and asked her for an informational interview, and was excited to receive her invitation to meet with her at the firm's regional office in Evanston, Illinois. After the interview, however, Omotoba came to the grim realization that despite all his preparations—researching private equity firms, studying the types of deals they make, and evaluating the analytical tools used to perform due diligence on companies and make investment decisions—he did not have a full grasp on the actual day-to-day work private equity professionals perform. He spent time reviewing materials from the career management office about private equity, and he meets two Kellogg alumni for informational interviews. He also reviews the investment process. The case ends with Omotoba having a broader perspective on the human aspect of private equity, beyond the analytical and financial aspects, as he anticipates meeting Fields again, hopefully to get the job offer.

Students learn the “tools of the trade” in private equity: managing portfolio company executives, meeting with limited partners to raise funds, managing the fund, selecting investments, and managing their time. Students learn the interpersonal nature of the business, including persuasion and negotiation, and how that is as important as financial skills. Students learn the process of preparing to interview with a private equity professional.

The case focuses on two major challenges in deal making in emerging market economies---deal sourcing and negotiation---by focusing on a real (but disguised) Indian private equity deal. In 2010 Surya Tutoring was a fast-growing tutoring academy for high school students aspiring to gain admission to the prestigious Indian Institute of Technology (IIT). Surya’s CEO, R. K. Sharma, wanted to expand its reach beyond Kota (a city of 1 million people in the northern state of Rajasthan), which had become the center of the IIT prep school industry and home to tens of thousands of students studying for the rigorous IIT entrance exam. Sharma knew there was vast untapped potential in the teeming Indian metropolises of Mumbai, Chennai, Delhi, and Bangalore, as well as in foreign markets such as Dubai and Australia. Sharma had received term sheets from two private equity firms willing to finance Surya’s expansion. By the end of the month he needed to decide which to accept: the offer from big bulge bracket fund Blackgem, or the one from ZenCap, a small Indian firm based in Mumbai with which he had become intimately familiar during the past year.

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

• Identify the differences between the United States and an emerging market such as India when it comes to deal sourcing, negotiation, and financial contracting

• Value a growth equity transaction in an emerging economy, including financial, contractual, and qualitative (social networks, local knowledge, trust) aspects of the deal

Identify the differences between the United States and an emerging market such as India when it comes to deal sourcing, negotiation, and financial contracting

Value a growth equity transaction in an emerging economy, including financial, contractual, and qualitative (social networks, local knowledge, trust) aspects of the deal

Radio broadcasting is characterized by diffused taste for programming and highly fragmented supply of content. Satellite radio is a major technological breakthrough that promises to reshape this industry by, among other things, satisfying a greater diversity in tastes and promoting greater variety in content provision. A major issue is that the economies of scale are such that it is unlikely more than a few (currently, just two) providers can operate in this market due to the considerable infrastructure and content costs.

To study the industry structure (demand and cost analysis), analyze customer acquisition strategies and the resulting lock-in of customers, and the aggressive bidding for content that takes place in this industry.