Ivey Publishing

Cost Management – A Strategic Emphasis

Blocher, E.J., Stout, D.E., Juras, P.E., Cokins, G. ,6/e (Canada, McGraw-Hill, 2013)
Prepared By Eunika Sot,
Chapter and Title Chapter Matches: Case Information
Chapter 1:
Cost Management and Strategy

Debashis Sanyal, Smita Mazumdar

Product Number: 9B14N009
Publication Date: 4/17/2014
Revision Date: 4/17/2014
Length: 11 pages

Valjibhai Stones, a supplier of quality stone chips in India, has been approached by a multinational company that needs a reliable supplier of quality stone chips for the next eight years. Accepting the order would require a capacity expansion to produce high-quality aggregate solely for the multinational company and at the cost of foregoing all of its existing business. If the offer is accepted, the company would earn substantial revenue for eight years, but would then need to seek fresh business in a highly competitive market.

Teaching Note: 8B14N009 (14 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Strategic cost management; cost of capital; investment decision; return on investment; economic value added; India
Difficulty: 5 - MBA/Postgraduate

Mridula Anand, Anand Nandkumar, Charles Dhanaraj

Product Number: 9B13M004
Publication Date: 4/16/2013
Revision Date: 4/16/2013
Length: 7 pages

AWARD WINNING CASE - Indian Management Issues and Opportunities Award, 2013 European Foundation for Management Development (EFMD) Case Writing Competition.The Embrace case series provides an engaging context to understand social innovation, by taking students through a sequence of critical decisions from opportunity analysis and market feasibility study to formulating a competitive strategy and developing business models for growth. The focus of the case is on an innovative idea to solve the problem of a high number of fatalities in premature births in rural India, and the potential for an affordable product.

The case is structured as a four-part series:

  • Part A: Opportunity Identification. The setting is an MBA classroom where five teams have been given five ideas and the students are asked to match each idea to each team. The focus is on how to identify and evaluate an appropriate opportunity given a unique entrepreneurial team, its composition, and its prior experience. Often, entrepreneurs discount the critical role that team-task fit plays in subsequent success.

  • Part B: Market Feasibility Analysis (9B13M005). The social problem associated with neonatal care in rural India is presented and the economics of providing reasonable care for premature babies is discussed. Is it possible to find an affordable and profitable price point, and make the project sustainable?

  • Part C: Competitive Strategy (9B13M006). The students are taken through an external analysis of the potential competition. This calls for a close analysis of what the competitive advantage of the venture is and whether it is sustainable. It forces the students to consider other available neonatal care options in the market, as well as to think about the IP issues they could face.

  • Part D: Building the Business Model (9B13M007). The team must decide between manufacturing the product in-house or outsourcing to vendors. Also, issues of distribution and sales require consideration.

Teaching Note: 8B13M004 (16 pages)
Industry: Health Care Services
Issues: Emerging markets; affordable innovation; business plan; social entrepreneurship; India
Difficulty: 5 - MBA/Postgraduate

Claude P. Lanfranconi, Michael Wang

Product Number: 9B01B037
Publication Date: 1/8/2002
Revision Date: 12/7/2009
Length: 10 pages

Tricon Logistics China is the logistics department of Tricon Restaurants International (China) and is responsible for supervising the operations and cost management of supplies to Kentucky Fried Chicken and Pizza Hut restaurants from 12 distribution centres in China. The market manager of one of the regional companies is concerned about the performance of his company's affiliated distribution centre in Suzhou. The director of Tricon Logistics China must determine why the actual cost of the distribution centre have exceeded the targets by analysing performance, cost variance and internal price negotiation.

Teaching Note: 8B01B37 (8 pages)
Industry: Retail Trade
Issues: China; Cost Systems; Cost Control; Control Systems
Difficulty: 4 - Undergraduate/MBA

Chapter 2:
Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Glenn Brophey, Cristobal Sanchez-Rodriguez , Derek Stacey, David Hemsworth

Product Number: 9B11E010
Publication Date: 10/25/2011
Revision Date: 12/10/2012
Length: 14 pages

In market-leading firms, software development is often undertaken by in-house teams to address specific information systems (IS) needs — in part because nothing that fits specific needs is commercially available. These projects often end up taking longer than planned and exceeding ever-growing budgets.

In this case, in-house software development of an information system for Canadian Shield Insurance was finally nearing completion (over budget and behind schedule), and the beta-testing phase and some initial training sessions had begun. Not all the first impressions were positive, so when the director became aware of a recently introduced commercial offering that seemed like a very attractive alternative, he faced a dilemma: should he abandon the developed project, which amounted to five years of work and over $1 million, for a different system that might be a better option? The protagonist in the case had done a preliminary functional comparison of the in-house information system and the commercial offering, and he recognized that the new alternative might hold some significant advantages for the firm. The potential negative implications for his career and the careers of the people he worked alongside during the development project caused him to think about whether or not he should be informing others within the firm about the commercial alternative and, if he did, what position he should take.

Teaching Note: 8B11E010 (11 pages)
Industry: Finance and Insurance
Issues: Information Technology Strategy; Business Process Re-engineering; Balanced Scorecard; Software Development
Difficulty: 4 - Undergraduate/MBA

Bo Bernhard Nielsen, Torben Pedersen, Jacob Pyndt

Product Number: 9B08M014
Publication Date: 5/29/2008
Revision Date: 5/10/2017
Length: 21 pages

ECCO A/S (ECCO) had been very successful in the footwear industry by focusing on production technology and assuring quality by maintaining full control of the entire value chain from cow to shoe. As ECCO grew and faced increased international competition, various value chain activities, primarily production and tanning, were offshored to low-cost countries. The fully integrated value chain tied up significant capital and management attention in tanneries and production facilities, which could have been used to strengthen the branding and marketing of ECCO's shoes. Moreover, an increasingly complex and dispersed global value chain configuration posed organizational and managerial challenges regarding coordination, communication and logistics. This case examines the financial, organizational and managerial challenges of maintaining a highly integrated global value chain and asks students to determine the appropriateness of this set-up in the context of an increasingly market-oriented industry. It is suitable for use in both undergraduate and graduate courses in international corporate strategy, international management, international marketing, supply-chain management, cross-border strategic management and international business studies in general.

Teaching Note: 8B08M14 (15 pages)
Industry: Manufacturing
Issues: Marketing Management; Operations Management; Global Strategy; Vertical Integration; Value Chain; Competitor Analysis
Difficulty: 4 - Undergraduate/MBA

Vaughan S. Radcliffe, Ian Nichol

Product Number: 9B07B005
Publication Date: 5/6/2008
Length: 14 pages

The chief executive officer (CEO) of the London Public Library (LPL) had developed and had begun to implement a strategic plan to improve the LPL. The strategic plan was based on a balanced scorecard. The four perspectives measured by the balanced scorecard were: the community perspective, the internal processes perspective, the organizational readiness perspective and the financial perspective. With two years before the deadline to achieve the plan, the CEO had to decide on what she would focus next.

Teaching Note: 8B07B05 (3 pages)
Industry: Public Administration, Social Advocacy Organizations
Issues: Development of Balanced Scorecard; Financial and Nonfinancial Performance Measures; Performance Assessment; Management Control; Performance Measurement; Accountability in the Public Service; Performance Evaluation; Management Accounting; Accounting Methods
Difficulty: 4 - Undergraduate/MBA

Chapter 3:
Basic Cost Management Concepts

Sumedha Chauhan, Sangeeta Shah Bharadwaj

Product Number: 9B13E018
Publication Date: 8/7/2013
Revision Date: 1/6/2014
Length: 9 pages

The managing director of a small- to medium-sized electrical firm faces a major challenge: he realizes that the firm he founded has grown so significantly that information management has become very difficult. For solving issues of data integrity, redundancy, incompleteness and backup, he obtains quotations for implementation of enterprise resource planning from different vendors. Meanwhile, he discusses the issue of implementing the new system with his management team, who respond in different tones, leaving him confused. He also has to ensure that the initiative does not put strain on the firm’s finances. He ponders various options such as whether to adopt enterprise resource planning on premise or on cloud and whether to go with the safe but costly option of engaging a well-established firm or to risk dealing with a start-up.

Teaching Note: 8B13E018 (11 pages)
Industry: Professional, Scientific, and Technical Services
Issues: ERP; cloud computing; software as a service; information management; India
Difficulty: 5 - MBA/Postgraduate

David M. Currie, Kyle S. Meyer

Product Number: 9B11B018
Publication Date: 11/23/2011
Length: 5 pages

The owner of a goat herd in Tennessee must decide whether to rent out his herd for a land-clearing project at a nearby resort. Goats are better suited to clearing the land than humans and machines, but the owner has never rented out his goats for such a purpose. The owner must identify costs associated with the project, then determine a price to charge for the service. Since the owner has no prior experience renting out livestock, he must come up with estimates of the incremental costs associated with the rental operation and prepare a bid with little knowledge of rates charged by competitors for goat rentals. This case provides a realistic example of the thought processes that business owners go through when evaluating whether to expand into complementary lines of business, as well as the considerations of entrepreneurs contemplating starting new businesses. See also Goats: The Green Alternative (B) 9B11B025 and Goats: The Green Alternative (C) 9B15D001.

Teaching Note: 8B11B018 (12 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Managerial Accounting; Modeling; Economics; Spreadsheet Application; Fixed and Variable Costs; Environmental Sustainability; Farms; United States
Difficulty: 4 - Undergraduate/MBA

David M. Currie, Lorena Mosnja Skare

Product Number: 9B10B004
Publication Date: 5/25/2010
Revision Date: 5/3/2010
Length: 7 pages

The owner of a cow-calf operation must determine the appropriate weight for cows in the herd. The national trend for decades has been for cow weights to increase because they produce larger calves, but evidence indicates that cow weights may have reached the point where the cost of maintaining a larger cow has become greater than the return from producing a larger calf. Analyzing this issue introduces marginal principles from economics. The case can be extended to a discussion of drivers and allocation of expenses, which are managerial accounting principles. The case is appropriate for a managerial cost accounting course and for managerial or microeconomics courses. The case uses concepts such as direct costs, cost drivers, allocation and marginal analysis to examine the issue of appropriate cow weight.

Teaching Note: 8B10B04 (14 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Cost Allocations; Tradeoff Analysis; Economic Analysis; Cost Accounting
Difficulty: 5 - MBA/Postgraduate

Chapter 4:
Job Costing

Vaughan S. Radcliffe, Mitchell Stein, Michael Lickver

Product Number: 9B11B005
Publication Date: 4/8/2011
Revision Date: 1/18/2012
Length: 16 pages

This case examines AT&T’s wireless business with a focus on its text messaging services. The industry features a high proportion of fixed costs in relation to acquiring spectrum and building a network. Variable costs are relatively low, especially in the case of SMS text messages. Pricing and margins in text messaging have attracted regulatory scrutiny in the Unites States, Canada, and elsewhere. The case requires the use of key concepts in cost behaviour, cost volume profit analysis, and product costing to understand the nature of the business and the profit margins involved. Many service or high-tech businesses exhibit similar cost behaviours, and so the case gives students insight into the management of such enterprises.

Teaching Note: 8B11B005 (4 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: Pricing; Cost Volume Profit Analysis; Variable and Fixed Costs; Telecommunications
Difficulty: 4 - Undergraduate/MBA

Owen Hall, Charles McPeak, Samuel Seaman

Product Number: 9B10B011
Publication Date: 10/15/2010
Length: 4 pages

This case summarizes some of the challenges - managerial and technical - associated with transitioning to an activity-based costing (ABC) model. The primary objective of this case is to introduce the student to the rationale and mechanics behind the ABC accounting approach and to explore the untoward consequences of using traditional accounting methods.

Teaching Note: 8B10B11 (5 pages)
Industry: Manufacturing
Issues: Activity-based Accounting; Pricing; Overhead Cost Drivers; Capital Resources
Difficulty: 4 - Undergraduate/MBA

Chapter 5:
Activity-Based Costing and Customer Profitability Analysis

Sean Cleary, Stephen R. Foerster

Product Number: 9B14N024
Publication Date: 8/28/2014
Revision Date: 6/5/2015
Length: 2 pages

A recent MBA graduate had been renting a condominium, and a similar unit next door had just been listed for sale. Now facing the classic buy-versus-rent decision, the young grad decided it was time for her to apply some of the analytical tools she had acquired in business school — including “time value of money” concepts — to her personal life.

Teaching Note: 8B14N024 (9 pages)
Industry: Finance and Insurance
Issues: Time value; buy versus rent; present value; Canada
Difficulty: 4 - Undergraduate/MBA

David J. Sharp, Murray J. Bryant, Yasheng Chen

Product Number: 9B02B005
Publication Date: 5/23/2002
Revision Date: 10/29/2009
Length: 2 pages

A village leader must reallocate farmland and decides to hold a competition among the three most capable farmers in the village. The contract to the farmland will be awarded to the farmer with the best performance in the growing season. The growing season is over and the village leader must review the farmers' capital structure, capacity, and leasing costs, and make his decision.

Teaching Note: 8B02B05 (19 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: China; Performance Measurement; Accounting Principles; Profitability Analysis
Difficulty: 4 - Undergraduate/MBA

Chapter 6:
Process Costing

Vaughan S. Radcliffe, Derrick Wong, Ulzhan Salimbayeva

Product Number: 9B12B026
Publication Date: 9/24/2012
Revision Date: 3/6/2019
Length: 4 pages

The case is focused on Royal Collection, a maker of Royal memorabilia. The company subcontracts manufacture of its merchandise and markets the products on cable TV and through other means of addressing a broad public. Students create a basic set of financial statements based on production, sales, cost and other data. A series of accounting policy issues emerge as the case unfolds, including consideration of revenue recognition, returns, accounting for inventory and other matters. Students develop a simple balance sheet, income statement and review cash. Students are encouraged to discuss the merits of the business and its strategy in light of its financial results.

Teaching Note: 8B12B026 (7 pages)
Industry: Manufacturing
Issues: Financial Accounting; Revenue Recognition; LIFO FIFO Average Cost; Related Party Transaction; Canada
Difficulty: 4 - Undergraduate/MBA

Chapter 7:
Cost Allocation: Departments, Joint Products, and By-Products

Robert W. Sexty

Product Number: 9B11M026
Publication Date: 5/20/2011
Length: 11 pages

Fortis Inc., a company with interests in various North American electric utilities, is proposing to build the Chalillo dam on the Macal River in Belize, Central America. The dam would contribute to the economic development of the country by meeting the increasing demand from industry and consumers for electricity. The company believes that the dam is the most feasible, reliable, and cheap supply of electricity. Environmental non-governmental organizations (ENGOs) oppose the project because of the destruction of wild animal and plant life and the adverse downstream impact, and allege that there are more viable and cost-effective sources. The case reviews the company’s presence in Belize, the environmental impact studies, and the activities of the ENGOs during 2001. At the beginning of 2002, management is faced with a decision of whether or not to go ahead with the project.

Teaching Note: 8B11M026 (13 pages)
Industry: Utilities
Issues: Corporate Strategy; Business and Society; Corporate Social Responsibility; Globalization; Ethics; Utilities; Central America; Canada
Difficulty: 4 - Undergraduate/MBA

Gayathri Sivaraman, Vasant Sivaraman

Product Number: 9B10B010
Publication Date: 9/9/2010
Length: 14 pages

This case deals with a rural charitable homeopathic hospital in the state of Maharashtra, India, set in the year 2008. The hospital, Dr. M. L. Dhawale Memorial Trust's Rural Homeopathic Hospital, is one among many clinics and hospitals run by the Dr. M. L. Dhawale Memorial Trust (MLDT). Dr. Navin Pawaskar, the head of the hospital, has to make recommendations to the management team to improve the profitability of the hospital and be financially sustainable. He has findings and data from a field study done by management students of S. P. Jain Institute of Management and Research, Mumbai, India. The study involved a preliminary costing exercise of the various services offered in the hospital. The data from the costing exercise must now be analyzed to arrive at actionable conclusions.

Teaching Note: 8B10B10 (12 pages)
Industry: Health Care Services, Social Advocacy Organizations
Issues: Contribution Analysis; Break-Even Analysis; Sustainability; Management Accounting; Financial Strategy
Difficulty: 4 - Undergraduate/MBA

Mary Gillett, Nicole Shomair

Product Number: 9B08B002
Publication Date: 6/30/2008
Revision Date: 6/16/2009
Length: 10 pages

The administrator of the Westmount Retirement Residence is concerned about the current cost accounting system. The administrator is not clear on how much each service offered was truly costing, and therefore charged each resident the same price per month regardless of their needs. In the past, the majority of patients demanded similar services, and therefore this pricing and costing system was appropriate. However, with demographic changes to the population, some residents required intense medical care, while others were healthy and fit and required less care. A new pricing model had to be developed that reflected both the size of suite inhabited and the level of medical care and service required by each individual patient.

Teaching Note: 8B08B02 (8 pages)
Industry: Other Services
Issues: Cost Systems; Pricing; Cost Allocations
Difficulty: 4 - Undergraduate/MBA

Chapter 8:
Cost Estimation

Neeraj Pandey, Gaganpreet Singh

Product Number: 9B14A057
Publication Date: 9/26/2014
Revision Date: 9/26/2014
Length: 13 pages

Founded in 2011 in Mumbai, India, Ekohealth Management Consultants Private Limited helped its subscribing members by negotiating bulk discounts with hospitals for all planned surgeries and reducing their monthly bills by suggesting low-cost generic drugs rather than expensive brand names. It ensured ethical health care practices by removing the referral fees doctors routinely demanded from hospitals, pathology clinics, pharmaceutical companies and other medical professionals in exchange for directing patients to them. The company had entered fiscal year 2013/14 with a high momentum and envisioned recording revenue of INR28.3 million by the end of the year. The existing price metric involved a single price point: the annual membership fee of INR1,500 for up to five members of a family. The company has plans to move into other Indian cities by mid-2014. Is the single price metric appropriate for these new markets?

Teaching Note: 8B14A057 (8 pages)
Industry: Health Care Services
Issues: Pricing; price structure; healthcare; segmentation; India
Difficulty: 4 - Undergraduate/MBA

S.K. Mitra

Product Number: 9B11N011
Publication Date: 9/12/2011
Length: 7 pages

A final-year student at a business school estimated the net present value (NPV) of his proposed business plan — a tourism and transport business in India — using three different methods and encountered different valuation results. He approached the professor who had taught him valuation concepts in a finance course and wanted to know the reasons for the difference.

Teaching Note: 8B11N011 (10 pages)
Industry: Other Services
Issues: Business Valuation; Capital Budgeting; Cost of Capital; Net Present Value Method; Entrepreneurial Finance; India
Difficulty: 5 - MBA/Postgraduate

Stephen R. Foerster, James E. Hatch, David C. Shaw

Product Number: 9B01N019
Publication Date: 2/12/2002
Revision Date: 1/6/2010
Length: 8 pages

Two managers attending an executive education course attempt to develop a cost of capital estimate for a leading telecommunications company. The two managers are confused about the costs of various sources of capital, the calculation of the overall corporate cost of capital, and the appropriate use of the hurdle rate. They must investigate the concept of cost of capital, review historical data on risk premiums, develop a process for estimating the various components of the cost of capital, and determine the corporate cost of capital.

Teaching Note: 8B01N19 (9 pages)
Industry: Information, Media & Telecommunications
Issues: Cost of Capital; Valuation
Difficulty: 4 - Undergraduate/MBA

Chapter 9:
Short-Term Profit Planning: Cost-Volume-Profit (CVP) Analysis

S.K. Mitra, Shubhra Hajela

Product Number: 9B13B022
Publication Date: 12/20/2013
Revision Date: 12/19/2013
Length: 6 pages

A budding entrepreneur in India is planning to set up a fly ash brick manufacturing plant near a thermal power plant. Not only does making bricks out of the residue of coal power generation reduce the amount of fly ash waste dumped on the ground, but the government is actively supporting the fly ash brick industry as a way to meet the increasing demands for construction materials that are environmentally sustainable. On the basis of preliminary analysis, the entrepreneur decides to set up a plant that will have the capacity to manufacture four million bricks. Though actual production will depend on market demand, he and his potential partner estimate that 2.4 million bricks can be sold per year at an average Rs 7,000 per 1,000 bricks. He wants to ascertain the feasibility of the project using a cost-volume-profit analysis.

Teaching Note: 8B13B022 (10 pages)
Industry: Construction
Issues: CVP Analysis; Feasibility analysis; breakeven point; cost analysis; India
Difficulty: 4 - Undergraduate/MBA

Claude P. Lanfranconi, Peter Yuan

Product Number: 9B00B021
Publication Date: 9/25/2000
Revision Date: 1/7/2010
Length: 7 pages

The Hong Kong Convention and Exhibition Centre (HKCEC), a trade infrastructure owned by the Hong Kong Development Council and operated by the New World Group, was the most prestigious convention and exhibition venue in Hong Kong. After hosting several musical events in Hall Three of HKCEC, the management of HKCEC decided to actively market Hall Three to concert organizers during the off-season. These events could bring in substantial rental income per day. Seat-risers had been leased and temporarily installed for these events, but the cost was prohibitively expensive for concerts booked for short durations, such as concerts by visiting international performing artists, a segment that HKCEC intended to target. The director of operations of HKCEC had been trying to find the most cost effective solution to provide a seat-riser for Hall Three. There were three options: to purchase a seat-riser, to rent a seat-riser for the duration of booked events, or to rent a seat-riser for the entire off-season period. He must analyse the options and find the solution that would be attractive to concert organizers, the most cost effective with the least risk to HKCEC, and consistent with HKCEC's current operations.

Teaching Note: 8B00B21 (8 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: China; Contribution Analysis; Management Accounting; Cost/Benefit Analysis; Cost Accounting
Difficulty: 4 - Undergraduate/MBA

Claude P. Lanfranconi, Darroch A. Robertson

Product Number: 9B00B024
Publication Date: 7/11/2001
Revision Date: 1/7/2010
Length: 1 pages

Sailing Voyages, Inc. is a tour boat company offering day cruises on a sailing schooner. In this exercise, the owner of the company needs to determine the amount and nature of costs and revenues with varying number of sailing voyages and a limited season of operation.

Teaching Note: 8B00B24 (2 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: Costs; Profitability Analysis
Difficulty: 3 - Undergraduate

Chapter 10:
Strategy and the Master Budget

Nicole R.D. Haggerty, Charles Lagat, Loice Maru, Daniel Korman, Ivan Liu, Sherry Xie

Product Number: 9B14M043
Publication Date: 4/2/2014
Revision Date: 8/8/2018
Length: 5 pages

In 2013, a successful entrepreneur in Eldoret, Kenya was considering her options. In 2007, after a history of operating several small businesses, only one of which failed, she founded Lilgaa Property Management Ltd., a real estate and property management business. She had focused her energies on the real estate industry in spite of its many challenges, which included corruption and lack of regulation, enforcement and trust. In 2013 she needed to decide how to grow her business, specifically, whether she could buy a building in Eldoret and rent it out or buy a plot of land on the outskirts of town and build a hotel; if the latter, would it cater to the middle or upper class? She had to assess the various elements of the business, political and social environments and consider the potential risks that could affect the outcome of her investment.

Teaching Note: 8B14M043 (5 pages)
Industry: Real Estate and Rental and Leasing
Issues: real estate; capital budgeting; emerging markets; Kenya
Difficulty: 4 - Undergraduate/MBA

Muntazar Bashir Ahmed

Product Number: 9B13B025
Publication Date: 1/10/2014
Revision Date: 4/7/2014
Length: 8 pages

In May 2011, the managing partner of the Modern Agricultural Farm in rural Pakistan was reviewing the set of performance reports for the previous month sent by the farm accountant. These reports had been designed by a management analysis and research consultant to convert the farm system to that used by the head office of the Alamgir Group of businesses, of which the farm was a part. There were two concerns: how to handle the fluctuations in the farm’s monthly cash flow and how to plan the right combination of plantings and crops to ensure a profit. A computer-based accounting software program had been purchased to help expedite accounting and reporting, and an annual master budget plan had been established to control operations. Given the special risks faced in agriculture where the portfolio of crops was dependent on uncontrollable factors, such as the weather, the managing director wondered how he could develop a workable budget for the coming year.

Student spreadsheet 7B13B025 with data is available.

Teaching Note: 8B13B025 (6 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Budget; farm risks; portfolio of crops; control; Pakistan
Difficulty: 4 - Undergraduate/MBA

Chapter 11:
Decision Making with a Strategic Emphasis

Michael A. Roberto

Product Number: 9B11C035
Publication Date: 10/18/2011
Length: 19 pages

On the night of April 20, 2010, a series of explosions rocked the Deepwater Horizon oil rig in the Gulf of Mexico. Gas in the Macondo well had surged upward unexpectedly, causing a mix of drilling mud and seawater to spew uncontrollably into the air, much like a volcanic eruption. Eleven crew members died during the explosion. The nation mourned their loss, and people watched as BP struggled to contain the environmental damage. Millions of barrels of oil spilled into the Gulf of Mexico in the weeks that followed. The federal government relied on BP to manage the accident’s aftermath, in part because government officials lacked the expertise required to stop the spill. Meanwhile, BP downplayed its responsibility for the failure. As the firm failed repeatedly to stop the spill, the public became angry. This industrial disaster became the largest offshore oil spill in U.S. history.

The case provides a detailed description of the events leading up to this catastrophe. Readers examine the key decisions that BP and its partners made as they drilled this well. They discover the alternative choices that could have been made and learn about the disagreements that took place (as well as those that failed to surface). Moreover, the case provides an opportunity to examine how BP’s history and organizational culture shaped the way those decisions were made. The case describes how Tony Hayward and his predecessor, John Browne, led the firm and shaped the culture during the past two decades. In addition, the case explains how the regulatory environment and political forces shaped decision-making in the oil industry. The case concludes by examining the aftermath of the accident, particularly BP’s public relations miscues as it tried to manage the crisis.

Teaching Note: 8B11C035 (18 pages)
Industry: Manufacturing
Issues: Decision Making; Safety; Organizational Change; Risk Analysis; Ethics; Oil Industry; United States
Difficulty: 3 - Undergraduate

Jitendra R. Sharma

Product Number: 9B11D011
Publication Date: 9/19/2011
Length: 5 pages

The case describes the situation faced by the vice president of A-CAT Corp. The company was a mid-sized manufacturer and distributor of domestic electrical appliances, largely catering to the price-sensitive rural population. The firm operated two medium-sized facilities in a remote district in Vidarbha, India. A-CAT manufactured a wide range of electrical appliances including TV signal boosters, transformers, FM radio kits, electronic ballasts, battery chargers, and voltage regulators. The focus was on its flagship product, the VR500 voltage regulator. The team planned to identify potential suppliers/vendors with their attendant strengths and weaknesses and to do so in a well-documented and structured manner. Analytical hierarchy process was a technique that could be used to meet this challenge.

Teaching Note: 8B11D011 (11 pages)
Industry: Manufacturing
Issues: Analytical Hierarchy Process (AHP); Cost-benefit Analysis; Decision Making; India
Difficulty: 4 - Undergraduate/MBA

Peter C. Bell, Sang-Won Kim

Product Number: 9B06E011
Publication Date: 6/21/2006
Revision Date: 9/17/2009
Length: 5 pages

A research institute has a concern with the reliability requirements of a military vehicle. Reliability is the probability that a system will accomplish its designated mission in a satisfactory manner or in more specific terms, the probability that it will perform in a satisfactory manner for a given period when used under specified operating conditions. Reliability of a weapon system is often expressed in terms of mean time between failure (MTBF). Two military vehicles were tested to obtain reliability life data for reliability evaluation. The objective of this case is to introduce reliability concept, MTBF, life data analysis and objective procedure for a decision making.

Teaching Note: 8B06E11 (6 pages)
Industry: Administrative, Support, Waste Management and Remediation Services
Issues: Decision Making; Life Data Analysis and Estimation; Reliability
Difficulty: 4 - Undergraduate/MBA

Chapter 12:
Strategy and the Analysis of Capital Investments

Sandeep Goel

Product Number: 9B14N006
Publication Date: 4/11/2014
Revision Date: 4/7/2014
Length: 5 pages

Sound financial management is the most important element in the viability of any business undertaking, and capital investment decisions are the foundation stone of this process. A company can pursue either an internal, organic approach to its financing options or an external, inorganic approach that uses borrowed funds to make acquisitions it hopes will increase its business. This is the route taken by Bharti Airtel Limited, India’s leading telecommunications giant. Beginning in 2010, it has borrowed heavily on the international market to invest in acquisitions of a 3G licence in India, in Zain Africa and in the broadband wireless access branch of Qualcomm Inc. However, due to many causes — including the effects of the global recession on the industry; the highly competitive Indian telecommunications market; restructuring and disorganization in the firm’s top management; and lack of innovation in offering and delivering new services in India — the company has experienced not the growth it expected from its expansion strategy, but a steady decline in profits. How can the management turn this situation around and regain the company’s position as a leader in the telecommunications market in India and globally?

Teaching Note: 8B14N006 (9 pages)
Industry: Information, Media & Telecommunications
Issues: Capital budgeting; profitability; telecom; financial viability; India
Difficulty: 5 - MBA/Postgraduate

Chris Sturby, Melissa Jean

Product Number: 9B11B012
Publication Date: 8/19/2011
Length: 15 pages

A publicly traded mining company has an opportunity to develop a mine containing gold, cobalt, and bismuth in Canada’s Northwest Territories and must determine the financial viability of doing so. In order to gauge the attractiveness of the project, the company needs to evaluate the net present value of the opportunity, given volatile and uncertain variables, such as commodity prices and foreign exchange rates. The company must also consider a number of qualitative considerations that may affect the project, such as relations with First Nations communities.

Teaching Note: 8B11B012 (10 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Capital Budgeting; Net Present Value; Valuation; Mining; First Nations Communities; Aboriginal Peoples; Canada; Indigenous Peoples
Difficulty: 4 - Undergraduate/MBA

James E. Hatch, Tim Tattersall

Product Number: 9B04N006
Publication Date: 4/16/2004
Revision Date: 10/15/2009
Length: 14 pages

Two experienced venture capitalists have decided to create a new venture capital fund. They have requested $70 million as a lead order from National Bank Financial Inc. and are looking to raise $110 million in capital to form the fund. However, there were several unresolved issues: a main issue was the strategy for deployment of the fund, as well as type of investment, average size of investment, number of concurrent investments, geographic and industry focus, timing and fund management issues such as staffing and governance structure. The partners must develop the investment strategy in order to prepare the equity fund offer memorandum to present to potential investors.

Teaching Note: 8B04N06 (14 pages)
Industry: Finance and Insurance
Issues: Private Equity; Venture Capital; Investments; Funds Management
Difficulty: 4 - Undergraduate/MBA

Chapter 13:
Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Michael Taylor, Ramasastry Chandrasekhar

Product Number: 9B14A044
Publication Date: 1/6/2015
Revision Date: 11/10/2014
Length: 15 pages

After several years of near steady state, the market share of Colgate Palmolive Canada Inc. in the toothpaste category has gathered momentum in 2012. In a bid to extend the gap between the company and its primary competitors in the category in 2013, the vice-president of customer development is discussing the options with his team at company headquarters in Toronto. Market share is an important performance metric at the company. One suggestion is to increase the marketing budget. There is a general consensus that marketing dollars should not be diffused across activities during the year, but there are differences of opinion about what to focus on — trade promotions, consumer promotions or advertising — in order to sustain the momentum in market share in 2013.

Teaching Note: 8B14A044 (25 pages)
Industry: Retail Trade
Issues: Market share; retailing; consumer promotions; trade; advertising; growth strategy; Canada
Difficulty: 4 - Undergraduate/MBA

Jaydeep Mukherjee, Sanket Kawde

Product Number: 9B14A016
Publication Date: 5/30/2014
Revision Date: 5/22/2014
Length: 17 pages

The target market of Citibank cards in India was aligned with the profitability objectives of the company. However, if it continued with its current strategy, it faced the risk of being a niche player in a growing market and losing the profit potential from other segments and geographies in the near future. The CEO needed to reconsider the target market and finalize a marketing strategy in the face of the changing composition of the marketplace, the competition and the commercial imperatives of the credit card business. This was a critical decision that would have a long-term impact on resource deployment and budgeting.

Teaching Note: 8B14A016 (10 pages)
Industry: Finance and Insurance
Issues: Target market selection; strategy; credit card marketing; customer lifetime value; India
Difficulty: 5 - MBA/Postgraduate

Randle Raggio

Product Number: 9B09A010
Publication Date: 6/10/2009
Length: 20 pages

In March of 2001, the president of Sy.Med Development, Inc. (Sy.Med), a small health-care software firm, was concerned about his company's sales performance in the year-to-date. Nine units were projected, but only three had been sold. As a result, Sy.Med was 66 per cent below the president's unit forecast, 210 per cent below his net income forecast, and had lost $40,000. The president wondered whether a change to the base price of the software was necessary to boost sales. The case introduces the concept of value pricing, that is, pricing on the basis of value received by customers, not pricing on the basis of the cost of providing the product or service. The concept of value pricing at Sy.Med requires the simultaneous consideration of customer segments and sales force allocation in a high-tech setting. With careful calculation, students can determine the benefit to a particular customer of using the OneApp software. Some sensitivity analysis is required because not all practice sizes are equivalent, nor do they face the same labour costs. Although the pricing decision is the focus of the case, strategy (e.g. relating to customer selection, strategic focus) and sales force issues are inextricably linked to this decision. After the class discussion is complete, students should understand that pricing decisions cannot be made in isolation; the strategy and structure of the market must be considered. The case works well in the core MBA marketing course to introduce the concept of value pricing, and equally well in a course focused on pricing to emphasize the interrelations among organizational issues, the competitive market and the pricing decision. The case can also be used in an orientation program or as an introductory case to help train students in the art of preparing a quantitative case analysis.

Teaching Note: 8B09A10 (8 pages)
Industry: Health Care Services
Issues: Value Analysis; Pricing Strategy; Sales Organization; Sales Strategy
Difficulty: 4 - Undergraduate/MBA

Jim Kayalar

Product Number: 9B08M070
Publication Date: 10/20/2008
Length: 13 pages

In the spring of 2007, a vacationer is upset by the poor hotel experience he has had on the island of Guam. At the onset, the reasons for the bad experience seem to point to seemingly minor issues: bad management, poor service and old rooms. The value of the case lies in the analysis of the symptoms and arriving at the root causes of the problem, particularly the profit maximization strategy of the hotel's owners in a mature industry. The case uses a different method of analysis, starting with micro indicators and moving to macro indicators: the analysis of symptoms, arriving at root causes, determining company strategy and finally assessing the company's position using the Product Life Cycle Model.

Teaching Note: 8B08M70 (14 pages)
Industry: Accommodation & Food Services
Issues: Human Resources Management; Marketing Management; Operations Management; Organizational Behaviour; Market Strategy; Strategy Development; Product Life Cycle; Strategic Positioning
Difficulty: 4 - Undergraduate/MBA

Chapter 14:
Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Ryan Orchard

Product Number: 9B14M116
Publication Date: 10/3/2014
Revision Date: 7/27/2017
Length: 9 pages

Alliance Design Concepts provided audio system solutions, which involved installing high-quality sound systems in customer facilities (such as large churches). A major cost component (60–80 per cent) for these systems was the equipment (speakers, amplifiers, etc.), which was sourced from the United States and paid for in U.S. dollars (USD). Alliance quoted prices to customers in Canadian dollars (CAD) by converting equipment costs from USD to CAD based on the exchange rate on the day of the quotation. Since it was often months later that Alliance actually converted cash and paid the supplier in USD, it found that a change in the exchange rate during that time could directly reduce the margin on the sale. The operations manager had to devise a risk mitigation strategy and/or business process change.

Teaching Note: 8B14M116 (6 pages)
Issues: Foreign exchange; business process; small business; cash; Canada
Difficulty: 3 - Undergraduate

Asmita Chitnis, Omkarprasad S. Vaidya, Darroch A. Robertson

Product Number: 9B14D004
Publication Date: 6/6/2014
Revision Date: 6/6/2014
Length: 7 pages

In January 2013, the general manager of the Planning Division of the Bank of Maharashtra in Pune, India, is considering how best to analyze the performance of the bank’s 1,728 branches in 28 states and two union territories and its staff of nearly 14,000 people. Such a process would help develop a comprehensive yearly plan by setting realistic targets for each of the bank branches, which have a wide variety of operating conditions. With its market share falling and increasing competition from major players in both the private and public sectors, the bank must take proactive steps to develop a strategy for expansion. The general manager meets a business school graduate who suggests using performance evaluation and benchmarking tools that will not only help evaluate performance in terms of an efficiency score but also indicate possible potential improvements. Should the general manager trust that the young analyst can pinpoint why some branches are not meeting their targets and suggest how their performance can be improved, or should he hire a more experienced consultant?

Teaching Note: 8B14D004 (15 pages)
Industry: Finance and Insurance
Issues: Performance evaluation; banks; data envelopment analysis; India
Difficulty: 5 - MBA/Postgraduate

John S. Haywood-Farmer, Megan McNevitts, Meg Vito

Product Number: 9B12D016
Publication Date: 8/17/2012
Revision Date: 1/31/2014
Length: 14 pages

A senior manager at the Toronto office of accounting firm Davis, Ellis & Thurn (DE&T) reflected on last year's Upper Canada Bank (UCB) audit and wondered how he should plan for the upcoming 2012 audit. The senior manager was responsible for overseeing the audit of UCB's retail segment (UCBR). Specifically, he was concerned about the test-of-controls portion of the UCBR audit, since the team had faced some challenges the previous summer. For years, UCB had been a client of DE&T, but it was only in 2011 that the firm had bid on and was granted the test-of-controls portion, which had formerly been completed on behalf of DE&T by UCB's internal auditors. Now, reflecting on the previous year's engagement, the senior manager wondered what changes he would make with respect to budgeting, staffing, and training, and to the client relationship in order to ensure that the client was satisfied and the UCBR audit remained profitable.

Teaching Note: 8B12D016 (8 pages)
Industry: Professional, Scientific, and Technical Services
Issues: Auditing; Budgeting; Control Systems; Cost Control; Professional Firms; Customer Service; Canada
Difficulty: 4 - Undergraduate/MBA

Chapter 15:
Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Xinghao Yan, Mathew MacFayden, Matthew Morden

Product Number: 9B14E015
Publication Date: 7/16/2014
Revision Date: 7/23/2014
Length: 4 pages

GetClarity Inc. is a start-up firm that specializes in the accumulation, analysis and sale of various types of data, including the firm’s own data, which has been attained through an exclusive contract. The company’s current job involves working for an auto-manufacturing client to identify a potential location for a new dealership. Two young analysts conduct data analysis on the age of the area and the market size, based on the customer demographic data. An Excel spreadsheet for students is available (see 7B14E015).

Teaching Note: 8B14E015 (6 pages)
Industry: Information, Media & Telecommunications
Issues: Data analysis; customer information; demographic data; hypothesis test; Canada
Difficulty: 4 - Undergraduate/MBA

Ho-Young Lee, Sangil Kim, Won-Wook Choi

Product Number: 9B09B014
Publication Date: 11/20/2009
Revision Date: 8/24/2016
Length: 8 pages

Korea Auto Insurance Co. Inc. (Korea Auto Insurance) incurred both direct and indirect costs. Direct costs were incurred at branches as they performed sales and operating activities, while indirect costs were incurred at headquarters as it supported branches through the activities of the information technology, operating support, investment, marketing and general administrative teams. Indirect costs accounted for a significant part (41 per cent) of the total costs incurred. However, they could be neither directly traceable nor logically related to specific sales activities. Korea Auto Insurance currently allocated indirect costs incurred by headquarters to branches based on sales revenue. Using the amount of sales revenue as an allocation base for overhead was not regarded as a reasonable method by the Taejon City branch manager. Branch managers had complained that the current allocation base was not related to the level of actual benefits they received from the headquarters. They argued that the allocation process distorted the operating performances of branches as reflected in the books. The manager of the Taejon branch suggested that the ABC (activity-based cost) method be applied to solve the problems related to the current overhead allocation process.

Teaching Note: 8B09B14 (9 pages)
Industry: Finance and Insurance
Issues: Management Decisions; Cost Allocations; Cost Accounting; Management Accounting; Ivey/Yonsei
Difficulty: 4 - Undergraduate/MBA

Chapter 16:
Operational Performance Measurement: Further Analysis of Productivity and Sales

Owen Hall, Kenneth Ko

Product Number: 9B11D006
Publication Date: 5/20/2011
Length: 3 pages

The director of operations at Avalanche Corporation was faced with some major decisions. The firm was experiencing considerable difficulties in matching supply with demand. As a result, the company was overproducing and had to sell the excess at a loss. At a recent board meeting, the vice president of marketing reported on a new snowboard product, the Avalanche Racer. She presented her rationale for introducing a new ski product at this time by highlighting the growth of the ski equipment sales over the past five years. The board meeting concluded with the general manager tasking the director of operations with developing an analysis and reporting back his findings to the board the following week.

Teaching Note: 8B11D006 (6 pages)
Issues: Risk Analysis; Manufacturing; Break-even Analysis; Decision Making; Skiing
Difficulty: 4 - Undergraduate/MBA

Thomas Funk

Product Number: 9B04A023
Publication Date: 11/23/2004
Revision Date: 10/7/2009
Length: 15 pages

The general manager of Ontario Machinery Ring is looking at expansion opportunities but limited funding requires him to obtain financial assistance from the Ministry of Agriculture and Food. The ministry requires an assessment of the demand for this marketing concept before they will provide any funding. He had developed a questionnaire and now must analyze the data that has been collected to prepare the marketing research proposal. This is a supplement to Ontario Machinery Ring (A) - Problem Definition, product 9B04A021. Data file is available, product 7B04A023.

Teaching Note: 8B04A21 (7 pages)
Industry: Agriculture, Forestry, Fishing and Hunting
Issues: Marketing Planning; Marketing Research; Data Analysis; Sales Forecasting
Difficulty: 4 - Undergraduate/MBA

Chapter 17:
The Management and Control of Quality

Ronald Kleer, Singfat Chu

Product Number: 9B14E022
Publication Date: 11/21/2014
Revision Date: 11/20/2014
Length: 4 pages

End-of-month account closure at many firms often requires long work hours, which may lead to staff fatigue and attrition that will affect productivity and quality of work. This is true for GlaxoSmithKline’s Record to Report Finance team in Kuala Lumpur, Malaysia in August 2014. The company is a science-led global business that researches and develops a broad range of innovative products in three primary areas: pharmaceuticals, vaccines and consumer health care. The team in Malaysia has 40 employees who provide services including month-end accounts closure, financial reporting and analytics to business units operating in the Philippines, Malaysia, Brunei, Singapore, Australia, New Zealand, Indonesia, Thailand and Vietnam. At the end of every month, the team must perform within five days a sequence of 17 activities requiring varying man-hours. The activities must follow a specific flow according to information availability and must, for internal efficiency and quality control reasons, start and end on the same day. Is there a method by which management can help the team achieve work balance or minimize the number of work hours per day?

Teaching Note: 8B14E022 (7 pages)
Industry: Health Care Services
Issues: Work balance; project management; optimization; operations; Malaysia
Difficulty: 4 - Undergraduate/MBA

Anne Snowdon, Hannah Standing Rasmussen, David Maslach

Product Number: 9B12D018
Publication Date: 10/29/2012
Revision Date: 10/26/2012
Length: 11 pages

This case chronicles the challenges of establishing an innovative tissue bank service to accelerate the research and development processes of biotechnology and pharmaceutical companies worldwide. Asterand’s two major challenges involved achieving a standardized approach to collecting tissue samples in hospitals all over the world and achieving the highest possible quality of tissue samples shipped to their primary customer, Amgen. Despite the identified need for high-quality tissue samples, Asterand was experiencing multiple quality control problems in their processes and procedures. Tissue samples were being packaged poorly, labeled incorrectly or delivered at the wrong time or to the wrong place. Additionally, there were quality issues with the RNA analysis of the samples, which was a critical factor in the usability of the tissue sample for research and development of new therapies and drugs.

The head of pathology at Amgen’s California facility was threatening to terminate their existing order and communicate the failure of Asterand to all company employees, which would have a devastating ripple effect across the industry and likely destroy opportunities for any future orders with Asterand. If this happened, Asterand would not be able to secure contracts with customers and was at risk of losing investors and going bankrupt.

Teaching Note: 8B12D018 (11 pages)
Industry: Health Care Services
Issues: Health sector; medical products; product quality; customer relationship; United States
Difficulty: 4 - Undergraduate/MBA

Martin Lockstrom, Shen Li, Shengrong (Linda) Zhang

Product Number: 9B12D006
Publication Date: 3/28/2012
Revision Date: 3/28/2012
Length: 9 pages

In the winter of 2010 in Shanghai, Dr. Zeb Feng, procurement director for Asia at British Petroleum (BP), was acutely aware of the growing burden that quality control imposed over his company’s global operations. Chinese suppliers were masters of cost-cutting, but quality often suffered as a result, which led in turn to an increased need for inspection and development efforts. Almost five years ago, Feng’s company had established an international procurement office (IPO) in Shanghai, which served as a shared service centre for internal customers throughout BP worldwide. Since that time, the IPO had been mainly sourcing non-hydrocarbon goods and services.

After a corporate board meeting with Christina De Luca, the vice president of procurement and supply chain management for BP’s downstream operations, it had been decided that the company would start to enhance its global competitive sourcing. As the number-one supplier market in the world, China was a high priority for further oil exploration. The pressing point that concerned Feng was whether Chinese suppliers were sufficiently ready to supply mission-critical supplies for oil drilling, extraction, and refining. During a recent conference call, De Luca had reiterated, “Zeb, our competitors are way ahead of us in their sourcing operations, and they have achieved much lower costs. We’ve got to do something!” Feng had to gather his team for a planning meeting. He knew that supply quality was the key issue, but how could it be resolved?

Teaching Note: 8B12D006 (6 pages)
Industry: Other Services
Issues: International Procurement Office (IPO); Quality Management; China; CEIBS
Difficulty: 5 - MBA/Postgraduate

Chapter 18:
Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Ralph W. Adler, Jing Song

Product Number: 9B10B007
Publication Date: 7/29/2010
Length: 12 pages

In existence since 1868, the non-profit Otago Museum in New Zealand had undergone several changes and expansions during its history and was regarded as curator of a broad-based collection of Maori and South Pacific artifacts. In January 2010, the Otago Museum's chief financial officer (CFO) was instructed by the museum's chief executive officer (CEO) to create a balanced scorecard (BSC) for the museum. The current CEO had brought a sense of customer orientation and financial acumen to the general running of the museum, evidenced through examination of customer satisfaction via surveys and focus groups, and various efforts to diversify income streams. The development of a BSC was seen as a practical way to reinforce and further motivate employee behaviour congruent with the focus on customer service and financial acumen. The resulting BSC needed to clearly articulate the museum's objectives, and the cause-and-effect relationships linking BSC dimensions with the museum's strategic vision and mission.

Teaching Note: 8B10B07 (6 pages)
Industry: Arts, Entertainment, Sports and Recreation
Issues: Strategy; Balanced Scorecard; Organizational Culture; Strategic Planning; Non-Profit Organization; Management Accounting; Corporate Strategy
Difficulty: 4 - Undergraduate/MBA

David J. Sharp, Anne Wu

Product Number: 9B08M060
Publication Date: 8/14/2008
Length: 5 pages

The chief executive officer (CEO) of Fortune Motors, the largest Mitsubishi dealership in Taiwan, has to consider his vision for the survival of the company. Fortune Motors' sales in 2003 had fallen below 50,000 units for the first time in 10 years, and market share had been falling for several years. The CEO had a plan to enter the business of financing used-car purchases. He thought that the balanced scorecard would be a useful tool to help him implement this change. The first step was to construct a corporate scorecard.

Teaching Note: 8B08M060 (4 pages)
Industry: Retail Trade
Issues: Strategy Implementation; Balanced Scorecard; Performance Management; CNCCU/Ivey
Difficulty: 4 - Undergraduate/MBA

Chapter 19:
Strategic Performance Measurement: Investment Centers

Walid Busaba, Nourhene Ben Youssef, Saqib A. Khan

Product Number: 9B14B011
Publication Date: 8/14/2014
Revision Date: 11/5/2020
Length: 8 pages

Transfer pricing used by multinational corporations to lower its tax burden, thereby increasing its consolidated income, can have far-reaching implications for the stakeholders, as a fund manager for Saskhedge fund found out the hard way. A stock investment the manager had made in Cameco Corporation has dropped its value by 20 per cent. In addition, Canada Revenue Agency has initiated a law suit against the firm for alleged tax avoidance in relation to the company's transfer pricing practices with its Swiss subsidiary. The suit could result in an additional tax liability of $800 million to $850 million. The manager needs to explain to the investment board the implications of the lawsuit on the stock price and advise the board on whether the projected $800 to $850 million is a fair estimate.

Teaching Note: 8B14B011 (4 pages)
Industry: Mining, Quarrying, and Oil and Gas Extraction
Issues: Transfer pricing; differential tax regimes; consolidated statements; financial reporting; Canada
Difficulty: 4 - Undergraduate/MBA

Francis Ayensu, Nicole R.D. Haggerty, Julianna Faircloth, Helen Fisher, David MacNicol

Product Number: 9B14M041
Publication Date: 4/2/2014
Revision Date: 7/30/2018
Length: 4 pages

In October 2011, a young entrepreneur in Ghana faced a critical moment. Given his degree in marketing and his experience running a retail clothing store, he was confident he could branch out and start his own photocopying service in his hometown of Koforidua, where there was a distinct undersupply of photocopying services. The proposed store would be located near All Nations University, whose students and faculty would provide a stable demand for his offerings. Now he must perform a breakeven analysis and return on investment calculation to assess if he should go forward with the venture.

Teaching Note: 8B14M041 (8 pages)
Industry: Other Services
Issues: breakeven analysis; return on investment; new venture; emerging markets; Ghana
Difficulty: 3 - Undergraduate

Seung Hwan (Mark) Lee, June Cotte, Kaitlyn Kenyon

Product Number: 9B13A031
Publication Date: 9/19/2013
Revision Date: 9/19/2013
Length: 5 pages

A local, non-profit, no-kill animal shelter is committed to rescuing homeless cats and helping them find permanent homes. This shelter offers a wide variety of services, including adoption, foster programs, low-cost spay and neuter services, and low-income assistance programs for local pet owners. With a personnel shortage at the shelter and increasing numbers of homeless cats in the area, the executive director must look for ways to effectively allocate the organization’s limited resources. She wonders whether some form of social media marketing might be the answer.

Teaching Note: 8B13A031 (3 pages)
Industry: Social Advocacy Organizations
Issues: Non-profit; social media; United States
Difficulty: 3 - Undergraduate

James McMaster, Jan Nowak

Product Number: 9B09A008
Publication Date: 5/13/2009
Revision Date: 5/10/2017
Length: 21 pages

This case analysis traces the establishment and subsequent operation of FIJI Water LLC and its bottling subsidiary, Natural Waters of Viti Limited, the first company in Fiji extracting, bottling and marketing, both domestically and internationally, artesian water coming from a virgin ecosystem found on Fiji's main island of Viti Levu. The case reviews the growth and market expansion of this highly successful company with the brand name FIJI Natural Artesian Water (FIJI Water). The company has grown rapidly over the past decade and a half, and now exports bottled water into many countries in the world from its production plant located in the Fiji Islands. In 2008, FIJI Water was the leading imported bottled water brand in the United States. In the context of great marketing success of the FIJI brand, particularly in the U.S. market, the case focuses on how the company has responded to a number of corporate social responsibility (CSR) issues, including measuring and reducing its carbon footprint, responsibilities to key stakeholders, and concerns of the Fiji government with regard to taxation and transfer pricing issues. The case provides a compelling illustration of how CSR challenges may jeopardize the sustainability of a clever marketing strategy.

Teaching Note: 8B09A08 (11 pages)
Industry: Manufacturing
Issues: Environment; Corporate Responsibility; Marketing Communication; Transfer Pricing; International Marketing; Greenwashing; Green Marketing; Brand Positioning
Difficulty: 4 - Undergraduate/MBA

Chapter 20:
Management Compensation, Business Analysis, and Business Valuation

David Simpson, Colin McDougall

Product Number: 9B14M150
Publication Date: 1/26/2015
Revision Date: 12/18/2014
Length: 6 pages

In 2014, the co-founder of a new business needs to develop a solid business case for the value of her new software application, Bridgit. Focused on reducing construction delays due to poor deficiency management, Bridgit's software enables project managers to eliminate wasted resources (e.g., time, money, relationship capital) by delivering an easy-to-use software solution. Determining the value of Bridgit in the absence of meaningful numbers creates a challenge: ask for too much and lose your investment; ask for too little and appear naive or give up too much.

Teaching Note: 8B14M150 (3 pages)
Industry: Construction
Issues: Start-up; venture funding; software development; Canada
Difficulty: 4 - Undergraduate/MBA

S.K. Mitra

Product Number: 9B11N011
Publication Date: 9/12/2011
Length: 7 pages

A final-year student at a business school estimated the net present value (NPV) of his proposed business plan — a tourism and transport business in India — using three different methods and encountered different valuation results. He approached the professor who had taught him valuation concepts in a finance course and wanted to know the reasons for the difference.

Teaching Note: 8B11N011 (10 pages)
Industry: Other Services
Issues: Business Valuation; Capital Budgeting; Cost of Capital; Net Present Value Method; Entrepreneurial Finance; India
Difficulty: 5 - MBA/Postgraduate

Donald W. Barclay, Ponlerd Chiemchanya

Product Number: 9B06A037
Publication Date: 1/9/2007
Revision Date: 9/14/2009
Length: 13 pages

A recent MBA graduate was about to return to the family business, Biomed Co., Ltd. as its general manager. Biomed's parent company, Thai Drugs Co., Ltd. has just revised Biomed's market strategy, a change that created the need to align the sales compensation system to fit with the new strategy. The new general manager was charged with this responsibility. Students will work through the path from strategy to a powerful sales compensation plan that will support the strategy and encourage to execute the role of the salesforce within this strategy.

Teaching Note: 8B06A37 (13 pages)
Industry: Manufacturing
Issues: Human Resources Management; Compensation; Managing Implementation; Sales Management
Difficulty: 4 - Undergraduate/MBA