Case studies

The COO for Suape Container Terminal, the largest deep–water port in Brazil's Northeast must consider a proposal presented by the users' council that calls for the establishment of a reservation scheme that minimizes the risk of docking delays. Under this proposal, ocean carriers, on the one hand, agree to pay a reservation fee that significantly increases revenue for Tecon Suape. On the other hand, they expect Tecon Suape to compensate them financially when a berth is not available upon vessel arrival. Tecon Suape's management team must evaluate that suggestion, as the team prepares to enter contractual negotiations with the users.

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.

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

This exercise is one in a series intended to help students learn how to perform financial calculations in marketing contexts.

Helmut Schmidt, product manager for Hohner Musikinstrumente GmbH & Co. KG, the world's foremost manufacturer of harmonicas, accordions, melodicas, and ukuleles, was sitting at his desk reviewing his first assignment from the company's senior executive team. Schmidt had been asked to calculate the break-even point for the company's flagship product, the Marine Band harmonica, under a number of different scenarios.

After completing the exercise, students should be able to:

• Calculate unit contribution and margin

• Calculate break-even units and market share

Calculate unit contribution and margin

Calculate break-even units and market share

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.

This exercise is one in a series intended to help students learn how to perform financial calculations in marketing contexts.

Kookaburra, a maker of cricket equipment popular in Australia, New Zealand, the United Kingdom, South Africa, and India, was considering two strategies for positioning a new cricket bat in India. Both strategies would cannibalize current sales, and Lulu Popplewell, category manager responsible for the Indian market, needed to calculate the financial impact of both to determine which one she would recommend.

This exercise poses a fictional problem about branding strategy on a new product, and asks students to consider the financial impact of different branding strategies and cannibalization rates.

After completing the exercise, students should be able to:

• Calculate the impact of cannibalization on units and profit for a new product launch

• Determine break-even cannibalization rates

• Understand how different branding decisions may impact the degree of cannibalization they should expect from a new product launch

Calculate the impact of cannibalization on units and profit for a new product launch

Determine break-even cannibalization rates

Understand how different branding decisions may impact the degree of cannibalization they should expect from a new product launch

A business analyst at Mead Corporation had just begun the process of estimating Mead's cost of capital for the fourth quarter of 1990. As part of her analysis, she hoped to explain why the cost of equity had increased and recommend whether the company should consider the increase a problem.

Supplements the (A) case.

The Penfolds case is designed to help students think through brand positioning and brand portfolio questions. Penfolds, one of the world's best known brands of wine, is performing poorly and a new management team needs to quickly reverse the business trends. To do so, the new management team needs to answer key questions, such as: What is Penfolds' positioning? Has the brand extended too far? Can Penfolds successfully play in all price segments of the wine industry? What is the best way to grow the brand going forward?

Students will learn about brand portfolio issues and brand positioning. The case is designed to prompt a discussion about how far a brand can extend without losing meaning, and the use of different branding elements such as sub-brands and endorsers.

Quality Wireless has received customer complaints about long hold times at its call center. To address these complaints, it put into place certain process changes at its call center. After one month, the company will now decide whether improvement has taken place.

To develop an understanding of process capability and how an improvement can be statistically validated. To understand the “check” phase of the plan-do-check-act cycle of Deming, using basic statistical principles.

Quality Wireless has received customer complaints about long hold times at its call center. To address these complaints, it put into place certain process changes at its call center. After one month, the company will now decide whether improvement has taken place.

To develop an understanding of process capability and how an improvement can be statistically validated. To understand the “check” phase of the plan-do-check-act cycle of Deming, using basic statistical principles.

This case (an abridged version of UVA-M-0663) describes the history of the Red Bull brand and how the company stimulated and harnessed word of mouth to build a new product category (functional energy drinks) and brand franchise. The case concludes by asking the reader to consider where Red Bull will take its brand, product line, and marketing next, in light of many competitive challenges in the United States. The case was written to foster discussion of nontraditional brand-building strategies and the growing globalization of brands and products targeted toward younger consumers.

Supplements the (A) case.

Since 1981, the U.S. federal government has operated a price support program to help sugar beet and sugar cane producers and processors. This complex program works through a combination of loans, import quotas, and duties. As a result, sugar prices in the United States are significantly higher than world prices. For example, in December 2001, U.S. consumers paid 22.9 cents per pound, while the world price was just 9 cents per pound. The General Accounting Office estimates that the total cost to consumers is $1.9 billion a year. Uses a simple demand-and-supply framework with real-world data to assess the economic and political consequences of the U.S. sugar program.

To illustrate welfare concepts such as consumer surplus, producer surplus, and dead-weight loss in a concrete, real-world market context.

This exercise asks students to develop criteria that Target Stores should use in evaluating strategic brand alliances to support its positioning as a store where you can “Expect More. Pay Less.” Students are then charged with proposing a new strategic partner for Target that meets the criteria they identify. Background information about the Target “guest” and past strategic alliance is provided.

The case is designed to help students appreciate how brand positioning both guides and is affected by a firm's strategic partners.

In 2005, a wine snob in the critically acclaimed movie Sideways denounced merlot. Subsequently, sales of merlot, including sales for Terlato's Rutherford Hill merlot, declined significantly. Students are asked to evaluate three strategies---rebranding, cutting price, and launching television advertising---that Terlato is considering to reverse this decline. The case should be used with “Student Supplement: Terlato Wines International: Background Note on the U.S. Wine Market and Terlato Wines International,” Case #KEL359.

Students explore the challenge of managing a brand when external factors cause a decline in category demand. They also explore the role of pricing and advertising in managing a small, luxury brand.

This case presents common-sized financials for two companies, each of which is in a number of industries. The companies have different market niches, and students are asked to identify the companies from details provided. The case also allows for financial comparisons among industries.

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

This case examines the public controversy that erupted over the increasingly high price of EpiPens. Mylan Inc. (Mylan), a generic drug maker, bought the EpiPen product line from Merck in 2007. Since that time, the company both invested in marketing to raise awareness for the drug and dramatically increased the price, lifting it from $100 to $600 per two pack in the U.S. In 2016, simmering consumer anger about the high prices of pharmaceutical drugs finally reached a boiling point and a media firestorm ensued. The case challenges students to think about the role of fairness in pricing. How can Mylan justify the dramatic price increases? How can it justify the variation in prices across countries, as an EpiPen is priced at an equivalent of $85 in France? The case challenges students to think about how they would handle a public controversy. The EpiPen case is well suited for students in MBA, MBA for Executives, and executive education programs. For MBA students, it can be placed in first-year marketing, pricing, or marketing communications courses. For executives, it can serve as a vehicle to discuss both ethical issues of pricing and how to handle a public controversy.

In 2013, Under Armour had $2.3 billion in sales yet only $500 million came from its women’s apparel, and the company was ready to expand into the female market segment. The “I Will What I Want” global women’s marketing campaign was the largest Under Armour had ever run. Founder Keven Plank and his team launched the campaign on a multichannel platform, with social media at its core. The campaign’s success surpassed what Plank had imagined, and he is left wondering where to take Under Armour’s advertising and marketing next. This case has been used successfully in a marketing course and would be suited for any class with a focus on interactive media, technology, and multichannel marketing.