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Note on Antidilution Provisions: Typology and a Numerical Example
by Walter KuemmerleAntidilution provisions are an important element of most financings offered to entrepreneurs by venture capitalists and business angels. Yet few entrepreneurs are familiar with the different types of antidilution provisions and their mechanics. Compares the three most common scenarios for a financing round: no antidilution protection, weighted-average antidilution protection, and full-ratchet antidilution protection. Discusses the nature of antidilution provisions and provides a numerical example.
Note on Antitrust and Competitive Tactics
by Dennis YaoProvides an overview of antitrust law as it relates to competitive strategy. Discusses the problem of managing antitrust risk and provides a guide to business actions that pose antitrust risk.
Note on Application of the Antitrust Laws to the New Economy: An Analysis of United States vs. Microsoft Corp.
by Constance E. BagleyAnalyzes the 1991 decision of the U.S. Court of Appeals for the District of Columbia Circuit in the seminal New Economy antitrust case United States vs. Microsoft Corp., 253 F.3rd 34 (D.C. Cir. 2001), which arose out of Microsoft's efforts to promote Internet Explorer and to supplant Netscape's Navigator Internet Web browser as the leading browser. This case contains a detailed discussion of the application of the U.S. antitrust laws (Sections 1 and 2 of the Sherman Act, in particular) to technologically dynamic markets characterized by network effects. Issues addressed include: 1) the legality of exclusive dealing arrangements, 2) what constitutes illegal monopolization (including how courts define the relevant market and what constitutes anticompetitive conduct), 3) predatory pricing and the rules of impossibility, 4) the essential facilities doctrine, 5) the exercise of intellectual property rights (such as patents or copyrights) as a business justification, and 6) what constitutes an illegal attempt to monopolize. The U.S. Court of Appeals' decision is summarized, and extensive excerpts from the opinion appear as an exhibit.
Note on Attracting Stakeholders
by Howard H. Stevenson Amar V. BhideAcquiring resources--or to put it more broadly, attracting stakeholders--is a basic entrepreneurial task. While every enterprise needs employees, customers, suppliers, and financiers who are willing to risk their time and money, attracting these "stakeholders" to an entrepreneurial venture is a particularly difficult challenge. This note first describes the importance of the challenge and then the set of tasks the entrepreneur must work on in order to overcome it: Designing the enterprise to minimize the stakeholder investment needed, selecting the right stakeholders, and then convincing them to participate in the enterprise.
Note on Bank Loans
by Susan L. Roth Scott P. MasonDescribes traditional bank lending product, the role of the lending officer, credit evaluation, and the structuring of credit facilities and loan agreements.
Note on Bankruptcy in the United States
by Timothy A. Luehrman William A. TeichnerAn introduction to, and summary of the laws, rules, and procedures established in the United States for settling the claims of creditors on a bankrupt company. Covers both Chapter 7 liquidations and Chapter 11 reorganizations.
Note on Basic Option Properties
by George Chacko Vincent Dessain Anders Sjoman Peter HechtOptions are contracts that give the right, but not the obligation, to either buy or sell a specific underlying security for a specified price on or before a specific date. Explains the basis of options, covering fundamentals such as option terminology, the payoff schemes of options, parameters that influence their value, the put-call parity, and the upper and lower bounds of options prices. Presents problems for students to solve.
Note on Behavioral Pricing
by John T. GourvilleThe note introduces the behavioral or psychological aspects of consumer price acceptance. Begins by reviewing the traditional economic approach to product pricing and consumer price acceptance--namely, that consumers should be willing to purchase anytime a product's perceived value exceeds price. This purely economic approach questioned, and the concept of transaction "fairness" is introduced as an additional component of consumer price acceptance. Through paired vignettes, the behavioral side to product pricing is explored in some detail. In the end, the traditional economic perspective on product pricing is combined with the behavioral or psychological perspective to provide a more realistic understanding of how consumers respond to a firm's pricing decisions.
Note on Blockchain and Bitcoin, 2017
by David B. Yoffie Anthony K. WooIndustry and Background Note: Blockchain was a self-sustaining, peer-to-peer ledger technology with an integrated set of computer codes for managing and recording transactions without the involvement of any central authority.1 The technology represented an innovation in information storage and distribution that eliminated the need for a trusted party to facilitate digital relationships.2 Although originally devised for the digital currency bitcoin, blockchain technology promised to make data storage and management processes more democratic, secure, transparent, and efficient.3
A Note on Boards in VC-Backed Ventures
by Ramana Nanda Shikhar Ghosh Suraj Srinivasan Terrence ShuIndustry and Background Note
Note on Bond Valuation and Returns
by George Chacko Vincent Dessain Monika Stachowiak Peter HechtAll securities can be evaluated based on certain common characteristics: value, rate of return, risk, maturity, and so forth. This case examines how bonds are valued and how their rates of return are computed. It begins with basic definitions and features of fixed-income instruments and proceeds to basic bond mathematics. An overview of the U.S. Treasury market is provided, as well as some national markets for other important domestic government bonds.
Note on Building and Leading Your Senior Team
by Linda A. Hill Maria T. FarkasAs performance demands intensify in fast-moving global markets, more executives are coming to rely on senior teams for strategic and operational assistance. Team building with powerful senior executives presents special challenges, including competition for their boss' position. Examines those challenges and describes in detail two primary responsibilities of managing such teams effectively: managing team boundaries, that is, the political dynamics of the team; and team process-leading the team. Contains a special appendix discussing leading and building global teams. To discuss how to build an effective team culture by harnessing the energies of talented, diverse individuals to create coordinated action.
Note on Building the Self-Sustaining Firm
by Amar V. BhideDescribes the strategic and organizational challenges of turning a fledgling enterprise into a self-sustaining business. In contrast to traditional life-cycle models, the note argues that businesses evolve in idiosyncratic ways. Therefore the leaders of young businesses have to develop strategies while taking into account the whole situation (rather than a "stage of growth") and after consideration of a broad mix of options. Furthermore, success in attaining sustainability is as much a matter of execution as it is of picking the right growth strategy.
Note on Bundled Payment in Health Care
by Charles C. Huang Regina E. HerzlingerThe note explains how bundled health care payment differs from fee-for-service payment; provides examples of the difference between the two; describes early innovators in bundling and their results; provides guidance on how to make it happen; and elucidates the legal issues bundling raises. Bundled payment will replace virtually all other health care payment formats. This note explains how and why.
Note on Business Model Analysis for the Entrepreneur
by Paul W. Marshall Taz Pirmohamed Richard G. HamermeshDescribes the primary elements and defining characteristics of a company's business model from the perspective of an entrepreneur. Introduces several analytic techniques and provides illustrative examples of business models to support the analytic framework presented.
Note on Capital Cash Flow Valuation
by Richard S. RubackPresents the capital cash flow method for valuing risky cash flows. In this method cash flows are calculated to include the benefits of interest tax shields. In a capital structure, with just ordinary debt and common equity, capital cash flows equal the flows available to equity--net income plus depreciation less capital expenditure and the change in working capital--plus the cash interest paid to bondholders. The interest tax shields decrease taxable income and thereby increase cash flows. Since the interest tax shields are included in the cash flows, a before-tax interest rate that corresponds to the riskiness of the assets is appropriate to value the capital cash flows.
Note on Case Learning
by E. Raymond CoreyThis guide, written for students, is intended to help in case preparation and in understanding case learning.
Note on Charter Schools
by Annie Wheeler Geoff Marietta John Jong-Hyun KimIndustry and Background Note
Note on Comdisco's Lease Accounting
by Krishna G. PalepuA series of examples are used to illustrate Comdisco's leasing transactions.
Note on Comparative Capitalism
by Clayton RoseThis note draws on academic work, as well as social and economic data across several countries, to provide a basic understanding of some of the differences among capitalist systems. It begins with a description of the system of capitalism, and characteristics that to a greater or lesser degree are universally shared. It then moves to describing two models of "comparative capitalism," as well as examining state capitalism. Finally, for additional perspective the note provides cross-sectional and time-series data for social, economic and political metrics for five different capitalist systems - China, Germany, Japan, Sweden and the United States.
Note on Comparative Capitalism
by Clayton RoseThis note draws on academic work, as well as social and economic data across several countries, to provide a basic understanding of some of the differences among capitalist systems. It begins with a description of the system of capitalism, and characteristics that to a greater or lesser degree are universally shared. It then moves to describing two models of "comparative capitalism," as well as examining state capitalism. Finally, for additional perspective the note provides cross-sectional and time-series data for social, economic and political metrics for five different capitalist systems - China, Germany, Japan, Sweden and the United States.
Note on Compensation and Incentive Systems
by Michael J. GibbsProvides a brief analysis of issues in the design of an effective compensation system, with particular emphasis on incentives. Provides an analytic framework for thinking about compensation. Topics covered include the composition of the pay package, fringe benefits, and training. The analysis of incentives discusses the trade off between incentives and risk, the problem of performance measurement, and the use of promotions as incentive compensation. Designed for use with a teaching module on compensation.
Note on Competitive Positioning
by Anita M. McgahanEmphasizes the connection between a firm's activities and its prices, costs, and volumes. A firm obtains a competitive advantage when it adopts a system of interrelated activities that generate superior profitabiltiy. Briefly describes differentiation and low-cost strategies.
Note on Consumer Market Segmentation
by Christine D. UrbanIntroductory note on the concept of market segmentation and its processes.