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Krispy Kreme Doughnuts
by Paul M. HealyKrispy Kreme is a rapidly growing firm with a business model that has excited Wall Street.
Internet Customer Acquisition Strategy at Bankinter
by F. Asis Martinez-Jerez V. G. Narayanan Lisa BremBankinter, a relatively small Spanish bank, has a large presence as an Internet financial services provider. Leading the way to profitability through the Internet will give Bankinter a major competitive advantage over the larger, more established Spanish banks. Ann Peralta, director of the Internet network in Bankinter, must evaluate whether the thousands of new customers pouring in from other portals are profitable for the bank. Peralta uses tools such as customer relationship management, activity-based costing, customer profitability, and lifetime value computations to determine the value of this cohort of new customers for the bank and in doing so, can decide on future customer acquisition strategies.
Boston Automation Systems, Inc.
by David F. HawkinsDaniel Fisher, the CFO of Boston Automation Systems, must review a number of revenue transaction accounting policies following the issuance of the Securities and Exchange Commission's Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements." Teaching Purpose: To explore the earned and realized criteria for recognition of revenue.
Keane's Acquisition of Metro Information Services (A)
by F. Asis Martinez-JerezOn August 21, 2001, Keane, Inc. announced the acquisition of Metro Information Services, Inc. This case analyzes the challenges facing firms and examines transactions whose major source of value creation hinges on intangible assets (e.g., people or knowledge).
Store24
by Susan Kulp V. G. Narayanan Dennis CampbellIllustrates how nonfinancial performance measures can be used to manage a business and evaluate the success of a strategy.
Arthur Andersen LLP
by David F. Hawkins Jacob CohenThis case highlights the history of Arthur Andersen and the collapse of the firm following the Enron Corp. audit and the Department of Justice obstruction of justice conviction.
Deferred Taxes and the Valuation Allowance at Lucent Technologies, Inc. (A)
by Gregory S. Miller Jacob CohenThe concept of deferred tax accounting is introduced, along with examples to demonstrate the balance sheet perspective of FAS #109.
Deferred Taxes and the Valuation Allowance at Lucent Technologies, Inc. (B)
by Gregory S. Miller Jacob CohenSupplements the (A) case.
How to Induce Retailers to Reduce Stockouts?
by V. G. NarayananDescribes how the lack of incentive alignment between retailers and their vendors can lead to stockouts. Also describes various means to reduce incentive misalignment and hence stockouts.
Prudential Securities
by Paul M. Healy Amanda Cowen Boris GroysbergPrudential Insurance Co. attempted to diversify into financial services by building an investment banking franchise. Prudential's initial foray into the industry was its acquisition of The Bache Group in 1982. In 2000, the company decided to exit investment banking. The firm adopted various strategic positions and human resource management strategies during the 18 years it struggled to compete successfully against prestigious incumbents. Although Prudential's efforts to establish a top-tier investment bank ultimately failed, other firms did succeed in this endeavor.
PolyMedica Corp. (A)
by David F. Hawkins Jacob CohenThe Securities and Exchange Commission and investors question PolyMedica Corp.'s practice of capitalizing rather than expensing of direct-response advertising.
Bill French, Accountant
by Robert C. Hill Neil E. HarlanBreak-even point analysis: incorporation of anticipated changes in accounting analysis.
First Commonwealth Financial Corp.
by Robert S. KaplanFirst Commonwealth Financial Corp., a financial institution in central and southwestern Pennsylvania, implemented the Balanced Scorecard for describing and implementing its new customer-focused strategy. Its founder and chairman decided that the Balanced Scorecard also should become the primary information input for the corporate governance process with the board of directors so that the board could become more knowledgeable about and more actively involved in the company's strategy. Describes how the board became knowledgeable about the company's Balanced Scorecard and how it participated in developing a Balanced Scorecard for itself. In addition to the enterprise and board scorecards, the company also developed scorecards for each senior executive for the governance and compensation committees to assess and reward senior management performance. Extensive exhibits illustrate the three different scorecards and the reports and supporting documents for these scorecards.
Hewlett-Packard-Compaq: The Merger Decision
by Jonathan Barnett Krishna G. PalepuHewlett-Packard's proposed $24 billion acquisition of rival Compaq marked the largest merger in the history of the computer industry. The merger was Hewlett-Packard's response to sweeping changes impacting the technology industry. The severity of the stock market's reaction to the deal's announcement, coupled with a "slim but sufficient" 51.4% shareholder approval margin, left many wondering whether the deal was beneficial for shareholders.
Farmington Industries, Inc.: Managing Currency Exposure Risk
by David F. Hawkins Jacob CohenThe December 20, 1994 Mexican devaluation creates U.S. dollar losses for an unprepared U.S. corporation with multiple operations in Mexico.
Mondavi Winery
by Thomas Doyle Gregory S. MillerExamines Mondavi Winery's struggle to communicate its value proposition to the market following an apparently successful IPO. The Mondavi Winery had a strong reputation for innovation in the wine industry and had undertaken an IPO to secure the funding needed to continue to build on this tradition. Although the IPO was an initial success, the stock price soon began to fall. Places students in the role of the company founder, Robert Mondavi, as he considers how to communicate the vision of his family's company to investors. Beyond the primary issue of developing a communication strategy, this case allows students to consider the demands for communication created by an IPO and the impact on the management of the company.
Ford Motor Co.: Quality of Earnings Growth Analysis (A)
by David F. Hawkins Jacob CohenEven though Ford Motor Co. reports improved profitability, an equity analyst issues a sell recommendation and Standard & Poor's downgrades long-term debt.
Bond Ratings
by David F. HawkinsDescribes the considerations entering into a long-term debt rating.
Executive Remuneration at Reckitt Benckiser plc.
by Jay W. Lorsch Krishna G. Palepu Ashley C. Robertson V. G. Narayanan Lisa BremReckitt Benckiser plc has developed an executive compensation system. This case outlines the structure of the system, its emphasis on performance-based pay and a global outlook, and explains the role of the human resources department, the board of directors, and company shareholders in determining pay. It raises questions about how to balance incentive remuneration effectively in recruiting and retaining top managers, while addressing shareholder concerns about executive compensation.
Accounting Fraud at WorldCom
by David Kiron Robert S. KaplanThe principal players in WorldCom's accounting fraud included CFO Scott Sullivan, the General Accounting and Internal Audit departments, external auditor Arthur Andersen, and the board of directors. The case provides sufficient detail to allow for a full discussion of the pressures that lead executives and managers to "cook the books," the boundary between earnings smoothing or management and fraudulent reporting, the role for internal control systems and internal audit to prevent or rapidly detect accounting fraud, the expectations about governance processes performed by external auditors and the board of directors, and the pressure and consequences when middle managers follow orders that they know are wrong. Written from the public record, the case contains numerous quotes from an individual involved in the WorldCom fraud that were reported by the Investigative Committee and Wall Street Journal articles about several of the individuals caught up in the situation.
Midwest Office Products
by Robert S. KaplanPresents an easy introduction to time-driven activity-based costing (ABC) that allows students to build a simple ABC model of order profitability. Midwest's time-driven ABC approach is based on two categories of parameter estimates. The first is the cost per hour of employees performing diverse tasks, such as order-entry operators and delivery personnel performing desktop deliveries. The second is the estimated time required for employees to perform each type of task (manual vs. electronic orders, nearby vs. distant deliveries). Students apply the time-driven ABC model to five representative orders to estimate order profitability based on a far more accurate portrayal of the cost of processing and delivering orders. Stimulates a discussion about the actions, such as pricing and process improvements, to enhance the profitability of orders and also how to report and manage the cost of unused capacity. A rewritten version of an earlier case.
Enron Corp.: May 6, 2001 Sell Recommendation
by David F. Hawkins Jacob CohenA consulting firm to institutional investors recommends selling Enron Corp.'s equity short on May 6, 2001, while many sellside analysts are recommending the stock as a "buy."
Salem Telephone Co.
by Julie H. Hertenstein William J. Bruns Jr.A computer subsidiary appears to be unprofitable. Managers must determine whether it is actually unprofitable and consider whether changes in prices or promotion might improve profitability. Allows clear separation of variable costs from fixed costs. A rewritten version of an earlier case.
Tots R Us
by Thomas D. Fields Tom Fields Susan KulpPresents an overview of many issues associated with cost accounting and control.