Pearson Education November 2002

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Pearson Education November 2002

Case Title

Source, Number, Length, Teaching Note

Geographical and Industry Setting, Company Size, Timeframe

Case Decision Issue

Chapter 1


J&S, p870

Dogfight over Europe: Ryanair (A), (B), (C)


# 9-700-115

8p – (A)


# 9-700-116

4p – (B)


# 9-700-117

18p – (C)

Ireland; airlines; 10 employees; 1986

In April 1986, the Ryan brothers announce that their fledging Irish airline Ryanair will soon commence service between Dublin and London. For the first time, Ryanair will face formidable competitors such as Aer Lingus and British Airways on a major route. Students are asked to assess Ryanair's entry and anticipate the response of incumbent carriers. Teaching Purpose: Allows students to hone skills in competitor analysis and in the anticipation of competitive dynamics. Cost and revenue figures permit students to examine the economics of retaliatory pricing in a business with high fixed costs and low marginal costs.

The U.S. Airline Industry in 1995


# 9-795-113


United States; airlines; 1995

Describes the economic logic leading to the deregulation of the American airline industry in 1978, and subsequent competitive developments. The roles of computerized reservation systems, airport hubs, route strategies, and fleet management are raised as unanticipated tactical responses. The decision focus of the case emphasizes the prospect of regulation. Teaching Purpose: Taught early in an advanced course in strategy, this case is designed to illustrate the connections between industry evolution and the opportunities available to firms as they seek to develop competitive advantage. A rewritten version of an earlier case.

Acer, Inc.: Taiwan's Rampaging Dragon


# 9-399-010


Taiwan and Global; computers; $3.2 billion revenues; 5,800 employees; 1976-1995

Describes the strategic, organizational, and management changes that led Acer from its 1976 start-up to become the world's second-largest computer manufacturer. Outlines the birth of the company, the painful "professionalization" of its management, the plunge into losses, and the transformation under founder Stan Shih's radical "fast food" business concept and his "client server" organization model, which are put to the test when a young product manager in Acer America develops a radically new multimedia home PC with global potential. Shih must decide whether to give an inexperienced manager in a loss-generating subsidiary the green light. Teaching Purpose: To explore the links between global strategy and structure, to evaluate leadership of transformational change, and to examine development of global competitive advantage.

Chapter 2

The General Mills Board and Strategic Planning


# 9-491-117


Minneapolis, MN; consumer food and restaurants; Fortune 500; $6.4 billion 1990 sales; 1989

Examines the General Mills Board of Directors' role in the General Mills joint venture with Nestle S.A. to sell cereals outside of North America. It raises the more general question of the appropriate role for the board of directors in strategy formulation.

Ready-to-Eat Breakfast Cereal Industry in 1994 (A)


# 9-795-191

17p – (A)



4p – (B) updates A case

United States; breakfast cereal; $9 billion revenues; 1994

Ready-to-eat breakfast cereal has historically been a stable and highly profitable industry, dominated by the Big Three of Kellogg, General Mills, and Kraft General Foods (Post). In 1994, private label cereals are making significant market share gains, and promotional competition among the manufacturers of branded cereals is heating up. What steps should one of the Big Three take to prevent these trends from undermining industry profitability, especially in light of likely competitor reactions?

Ready-to-Eat Breakfast Cereal Industry: Philip Morris

HBSP Supplement

# 9-797-104


United States; breakfast cereal; $9 billion revenues; 1994

Supplements Ready-to-Eat Breakfast Cereal Industry in 1994 (A).

Ready-to-Eat Breakfast Cereal Industry: Quaker Oats

HBSP Supplement

# 9-797-103


United States; breakfast cereal; $9 billion revenues; 1994

Supplements Ready-to-Eat Breakfast Cereal Industry in 1994 (A).

Chapter 3

Restructuring the U.S. Steel Industry


# 9-203-042


United States; steel; 1970-2002

Focuses on the competitive decline of the integrated steel producers in the United States from 1970 to 2002. Issues include: Should the U.S. government impose tariffs to try to protect the industry? What should labor unions do, if anything, to protect jobs and wage rates of employees in failing companies?

International Steel Group


# 9-803-162


Ohio, Indiana, Illinois; steel production; $100 million revenues; 2,500 employees; 2002

Profiles veteran investor Wilbur L. Ross, Jr.'s plan to turn around the aging steel assets of LTV, formerly America's second largest integrated steel producer. Purchasing several key assets from LTV under Section 363 of the Bankruptcy Code, Ross is able to acquire the assets free of any pension or healthcare liabilities to retirees. Examines the challenges Ross faces as he tries to make the reborn steel company into a global player as one of the world's lowest cost producers. To accomplish this, he must negotiate a new agreement with the steelworkers' union, transform the old LTV culture, and secure long-term contracts with the right customers who could fulfil ISG's capacity requirements.

De Passe Entertainment & Creative Partners


# 9-494-013


Hollywood, CA; entertainment; 1991-1993

After 24 years at Motown Industries, Hollywood executive Suzanne de Passe has decided to go out on her own to start two new businesses. The case describes de Passe's career from her beginning as Berry Gordy's assistant at Motown Records to her presidency of Gordy/de Passe Productions. Upon Gordy's departure from the production business, de Passe decides to become an entrepreneur, forming both an independent production company and an artist management company. In the management venture, de Passe has a business partner, and in the production company she hires a president and COO. Focuses on her decision to become an entrepreneur and on the working partnerships she has developed with the executives of the two companies.



# 9-502-046


North America; automobiles; $32,693 million revenues; 97,725 employees; 2001

Jim McDowell, VP of marketing at BMW North America, is debating how to follow up the success of his latest marketing campaign, "BMWFilms." This campaign features five short films for the Internet, directed by some of the hottest young directors in Hollywood. By all indications, the nontraditional campaign has been a huge success. Now the question is, what to do for an encore? Teaching Purpose: To explore the consumer behavior dynamics associated with nontraditional marketing techniques. Also allows for a discussion of the link between deep consumer understanding and the design of a new advertising genre.

Chapter 4

Dreyer’s Grand Ice-Cream (A)

Stanford University



United States; ice cream, dairy, consumer products; $1.16 billion revenues; 4,000 employees; 1998

In June 1998, the senior management team at Dreyer's Grand Ice Cream faced a number of internal and external difficulties that were some of the most challenging problems the company ever faced. Problems included profitability issues, record-high butterfat prices, aggressive discounting by competitors, higher margin better-for-you segment collapse, severance of Ben & Jerry's distribution contract, and management health issues. Given a mandatory and necessary financial restructuring of the company, the senior management team faced some tough employee issues and needed to make very significant decisions to overcome their difficult times. Teaching Purpose: To teach students how to manage a difficult organizational politics issue. – From Start Up to the New Millenium

J&S, p674

European Ice-Cream

Lynch, 3rd edition Lecturers Guide

What Strategy Now for Mars?

Lynch, 3rd edition Lecturers Guide

Chapter 5

Merloni Elettrodomestici SpA: The Transit Point Experiment


# 9-690-003


Italy; domestic appliance; mid-size; $300 million sales; 1986

Merloni Elettrodomestici is a leading Italian manufacturer of domestic appliances. In 1986, an exposition for Merloni customers is scheduled at its Milano regional warehouse. During the two-month period preceding the event, when the warehouse must be free of inventory, the company conducts a "transit point" experiment. Each day, a truckload of products from the company's central warehouse is sent to Milano, where it is immediately transferred to small trucks for local delivery. At the conclusion of the experiment, the company is considering the replacement of its 17 regional warehouses with transit points. Students are asked to evaluate this proposal and recommend a configuration for Merloni's distribution network. Issues to be considered in the analysis of the case include the impact of different network configurations on customer service and on inventory, labor, operating, and transport costs.

Merloni Elettrodomestici: The New Century Begins


# 9-303-062


Europe; major appliances; $2 billion revenues; 1975-2002

Merloni Elettrodomestici was founded in 1975. This case traces the evolution of the company's strategy, organization, and management as it becomes the #3 player in Europe (the #1 in Eastern Europe). Issues involve questions of geographic expansion, resource allocation, and organization. Teaching Purpose: Challenges of general management, strategy, students, and people.

Merloni Elettrodomestici SpA: Building for Profit


# 9-300-118


Europe; major appliances; $2 billion revenues; 1975-2002

In 1995, the Merloni management is faced with profitless prosperity. A rise in raw material prices in the face of ferocious competition in their markets hurts margins. At the same time, the company is trying to expand geographically in order to become Pan-European and to consolidate the position of three brands. Teaching Purpose: To develop in considerable detail the management problems associated with internationalization in Europe: heterogeneous markets requiring differentiated approaches to product and marketing. This is made all the more difficult by multiple brands.

Merloni Elettrodomestici SpA: Building for the New Century


# 9-301-112


Europe; major appliances; $2 billion revenues; 1975-2002

In 2001 a young (35) new CEO has to develop a strategy to move his company beyond the hyper-competitive conditions of Western Europe. A major acquisition in Russia and a new web-based service business provide interesting new directions. This case traces the development of strategy and organization at this European multinational. Teaching Purpose: To examine the challenges of building and managing a multinational over nearly three decades and to consider the entrepreneurial climate of strategic management.

Merloni Group


# 9-383-152


France, Italy; major appliances; mid-size; $350 million sales; 1982

The general manager of the recently-established French subsidiary of an Italian appliance company is in conflict with headquarters about unexpectedly poor financial performance. Headquarters management believes it should be able to exert more control over the subsidiary's strategic decision. The subsidiary general manager feels the Italians are already intervening too much. A change in organization structure is being debated.

Airbus A3XX: Developing the World’s Largest Commercial Jet (A)


# 9-201-028


France; aerospace; 2000

In July 2000, Airbus Industrie's supervisory board is on the verge of approving a $13 billion investment for the development of a new super jumbo jet known as the A3XX that would seat from 550 to 1,000 passengers. Having secured approximately 20 orders for the new jet, the board must decide whether there is sufficient long-term demand for the A3XX to justify the investment. At the time, Airbus was predicting that the market for very large aircraft (VLA), those seating more than 500 passengers, would exceed 1,500 aircraft over the next 20 years and would generate sales in excess of $350 billion. According to Airbus, it needed to sell 250 aircraft to break even, and could sell as many as 750 aircraft over the next 20 years. This case explores the two sets of forecasts, and asks students whether they would proceed with the launch given the size of the investment and the uncertainty in long-term demand. Teaching Purpose: Illustrates the basic economics of large projects and the complexity in estimating even top-line demand for products with useful lives of up to 50 years. Also illustrates the role of governments in large projects, both as investors and as customers. Finally it explores the competitive dynamics between a monopolistic and a potential entrant in which entry costs exceed $10 billion.

Airbus A3XX: Developing the World’s Largest Commercial Jet (B)


# 9-388-028


France; aerospace; 2000

Supplements the (A) case.

Chapter 6

The Pharmaceutical Industry: Challenges in the New Century


# 9-703-489


Global; pharmaceutical; $400 billion revenues; 1990-2003

Provides a broad overview of the numerous internal and external forces that were driving change in the global pharmaceutical industry in 2003. These forces--including downward price pressures, political and social pressures, increased development costs, new technologies, new and different competitors, consolidation, and threats to its basic business models--were changing the way drugs were discovered, developed, manufactured, tested, regulated, marketed, sold, and purchased. Teaching Purpose: To provide students an opportunity to conduct an environmental scan/industry analysis of a complex global industry. Allows for the development of scenarios for industry evolution. A rewritten version of an earlier case.

Immusol & Novartis


# 9-303-038


San Diego, CA; biotechnology; 90 employees; 2001

Should Immusol strive to become a fully integrated pharmaceutical company? How should small Immusol structure a deal for its novel technology with the giant Novartis? Teaching Purpose: To look at the nature of licensing deals between large resource-rich firms and small technology-rich ones.

Genzyme’s Gaucher Initiative: Global Risk and Responsibility


# 9-303-048


United States/Egypt; biotech; $800 million revenues; 1981-2001

In Egypt, Genzyme's humanitarian commitment to treat all sufferers of the rare Gaucher disease worldwide first confronts its commercial imperative to recoup the huge investment required to bring the drug Cerezyme to market. Here Tomye Tierney must decide how to balance the demands of the sales organization that faces saturating developed markets, but major growth opportunities in developing economies. They believe that as long as the Gaucher Initiative--Genzyme's partnership with Project Hope--is providing free Cerezyme, they will be unable to convince the Egyptian government to authorize reimbursement, which can run from $200,000 to $300,000 per patient annually. CEO Henri Termeer believes Genzyme can hold firm to both the humanitarian commitment and its strong patient-focused commercial objectives. But it is Tierney who is on the front line and negotiates the delicate agreement between Genzyme sales, Project Hope, and Egyptian authorities. Teaching Purpose: To focus on international expansion and new market entry in the context of the tension between corporate responsibility and commercial viability.

Marketing Antidepressants: Prozac and Paxil


# 9-502-055


United States; pharmaceuticals; 2000

Describes the marketing of Prozac and Paxil, two of the best-selling mental health drugs in history. Set in 2001, several months before the expiration of Prozac's patent, Eli Lilly (Prozac's manufacturer) and GlaxoSmithKline (Paxil's manufacturer) must decide how to respond to the introduction of generic Prozac into the market. Teaching Purpose: To explore the positioning and counter-positioning strategies available to companies who produce similar products. In addition, provides a vehicle for discussing how to sustain value in the face of low-priced competition. Finally, allows for a discussion of the ethical issues surrounding the marketing of prescription pharmaceuticals.

India’s Intellectual Property Rights Regime in the Pharm Industry


# 9-702-039


India; pharmaceuticals; 1970

In 1970, the Indian government significantly revised its patent law, Patents and Design Act of 1911. The 1911 act was enacted when India was a colony of Great Britain, and it was controversial because it led to the total dominance of India's pharmaceutical market by multinational corporations. The 1970 act substantially reduced both the scope and the extent of patent protection and some credited the act as giving rise to India's own indigenous pharmaceutical industry. In 1994, the Indian government committed itself to conforming its intellectual property rights regime to the requirements of the WTO. Domestic political opposition was fierce toward any attempts to move away from the 1970 act. Teaching Purpose: To teach concepts on import substitution and intellectual property rights.

General Electric Medical Systems – 2002


# 9-702-428


Global; medical products; $8 billion revenues; 2002

Discusses one of General Electric's flagship divisions--the world's leading provider of medical diagnostic imaging equipment. Provides an opportunity to examine a multinational confronting massive technological and demographic changes around the world. Genomics has created a global opportunity by making personalized medicine seem possible--medical intervention that caters to the genetic makeup of the individual and emphasizes prevention more than cure. Yet, the pursuit of this opportunity requires fundamental changes in the business model at a time when the model is being stressed by the idiosyncratic needs of catering to the large Chinese market and adapting to the needs of an aging population around the world. Demonstrates how multinationals can create value both by replicating their business models worldwide and by adroitly splitting the value chain across national boundaries.

Chapter 7

The Global Oil Industry

Stanford University

# IB15

Energy resources, Global business, International business, Mining, Petroleum, Petroleum industry.

The oil industry, one of the first international businesses, exerted a tremendous influence on almost all aspects of business, economics, and geopolitics throughout the 20th century. Their products revolutionized daily life. And the struggles to control and assure access to oil supplies and markets were a major element of international conflict throughout the century.

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