TourAmerica is negotiating a master contract with Voyager Inn International (Bethesda) for hotel rooms during the 1995 tourist season. Issues under consideration include number of rooms during peak, mid-, and off-periods, room rates, breakfast prices, and the cost of ancillary services. While the hotel manager is evaluated on the basis of several criteria, including adjusted daily rates, occupancy rates, and food and beverage profitability, and is also provided with a utility scheme to facilitate trade-offs among the criteria, TourAmerica uses an effective cost per registrant (adjusted for intangibles). These two approaches provide an opportunity to contrast measurement schemes and to justify the use of utility functions. This case is a role-play exercise and must be used in conjunction with “Voyager Inn International” (UVA-QA-0463).
South Africa had formally introduced a policy of inflation targeting (IT) in February 2000. By December 2001, the governor of the South African Reserve Bank, after reading the latest statistics, was concerned with the disappointing economic data. Economic activity had slowed drastically, to the point that the country appeared to be heading for a recession. The gloomy statistics forced the governor to consider whether the country had pursued the right policy. Persistently high unemployment, one legacy of the apartheid era, meant that South Africa did not have the luxury of waiting for new policies to bear fruit. With the inflation forecast to exceed the mandated target, the governor would have to tighten monetary policy, which would further restrict investment. Was it is time for South Africa to change course?
Alexandre Tombini, the governor of the Central Bank of Brazil, faced a difficult situation in July 2015. Inflation was in the double digits, well above the target rate of 4.5%, and unemployment had increased from around 4.5% a year prior to nearly 8%. Any actions Tombini took to control inflation would most likely exacerbate unemployment, at least in the short run. To further complicate matters, Tombini's office was not independent of the executive branch of Brazil's government, and Tombini faced the possibility that any of his actions that were not aligned with the priorities of the current administration could cost him his job.This case follows classes on fiscal and monetary policy in normal times and is the first class in a sequence on macroeconomic challenges–in this case, stagflation–high inflation and high unemployment. Students are pushed to consider why macroeconomic stabilization involves such acute and unpleasant tradeoffs during episodes of high inflation and unemployment. Students use the IS/LM AD/AS model as a reference.
This short case challenges students to review an array of corporate financial metrics and to match them to one of 13 listed industries. As such, students must use their intuition and common sense pertaining to the distinctive characteristics of, and the key differences between, the 13 named industries, and then identify the financial metrics that are most indicative of those traits.ExcerptUVA-C-2438May 21, 2020Ratios Tell a Story—2019As a child, Jillian Herbert had enjoyed spending many summer afternoons on her grandparents' front porch listening to her grandfather's countless stories. Some were family histories, and some were fictitious yarns that his creative mind wove together. In that realm, she recalled sitting enraptured by the exploits of courageous heroes and heroines, the adventures of travelers (who sounded a lot like her siblings) to mysterious faraway lands, and the mischievous antics of her talking pets brought to life in make-believe tales. In fact, even as an adult, she believed in the power of stories to captivate, enlighten, create connections, facilitate memory, and foster understanding.As head of talent development at a major commercial bank, she knew financial information was invaluable in understanding numerous aspects of a business. In her opening remarks at this month's basic financial statement analysis seminar for her new commercial lending hires, she had noted that ratio-focused combinations of key financial data could actually convey a richer story about a company beyond the isolated component parts of the company's balance sheet or income statement. Indeed, she had made the analogy to some parallels in everyday life. For example, a person's ratio of weight and height could convey a story of obesity or not. Grocery store prices were often displayed, in addition to the total purchase price for an item, in terms of price per ounce or per pound. The speed of a car was denominated as miles per hour or kilometers per hour. And an elementary school's students-to-teacher ratio, in part, conveyed information about the instructional attention each student was likely to receive at that school.. . .
In early 2014, recent Stanford University graduate Tyler Shultz was in a quandary. He had been working at Theranos, a blood-diagnostic company founded by Elizabeth Holmes, a Stanford-dropout wunderkind, for almost a year. Shultz had learned enough about the company to realize that its practices and the efficacy of its much-touted finger-prick blood-testing technology were questionable and that the company was going to great lengths to hide this fact from the public and from regulators.Theranos and Holmes were Silicon Valley darlings, enjoying positive press and lavish attention from potential investors and technology titans alike. Just as companies like PayPal had revolutionized the stagnant payments industry and Uber had upended the for-hire transportation sector, Theranos had been positioned as the latest technology firm to substantially disrupt yet another mature sector: the medical laboratory business. By the start of 2014, the company had raised more than $400 million in funding, and had an estimated market valuation of $9 billion.Shultz's situation was exacerbated by the fact that his grandfather, the highly respected former US Secretary of State George Shultz, was on the Theranos board and was one of Elizabeth Holmes's biggest supporters.But Tyler Shultz worried about the customers he was convinced were receiving highly unreliable and often inaccurate blood-test results. With so much at stake, Shultz wondered how he should proceed. Should he raise his concerns with the firm's investors? Blow the whistle externally? Report to industry regulators? Go away quietly?This case and its subsequent four brief follow-up cases are based largely on interviews with Tyler Shultz, and outline the dilemma he faced and the various steps he would take both to extricate himself from his unsavory position and let the public know the full extent of the deception at Theranos.Five optional handouts are available to instructors to further discussion after the case has been debriefed. The handouts serve as additional decision points for the students if your class time permits.
This public-sourced case describes the latest restructuring efforts by Deutsche Bank (DB) and gives a short history of prior restructuring efforts from the decade before. In July 2019, Christian Sewing, the new CEO of DB, announced a series of measures that included, among others, the elimination of global equity trading, the layoff of 18,000 employees, the creation of a “bad bank” to transfer noncore assets, and the suspension of dividends until 2022. The case describes key decisions a bank CEO makes when a bank needs to change course to return to profitability and growth. The case offers an opportunity to debate these key decisions, as well as discuss some of the prior ones during earlier restructuring efforts, and put the students in the CEO's shoes: What would you do and why? The case also describes key banking performance metrics (e.g., ROE, ROA) and other critical variables such as those reflecting capital health (Tier 1 ratio), as well as gives an overview of the bank business model and factors impacting bank profitability and value.
This case invites students to assess the impact that Brexit, the withdrawal of the United Kingdom from the European Union, might have on a New York–based hedge fund's portfolio and, specifically, its UK assets. The case is designed to prompt students to make market assumptions and investment hypotheses based on a combination of numerical data and qualitative information. It requires no numerical computations; instead, it asks the student to interpret both markets' short-term reactions to the Brexit vote and strategy shifts from UK and European business leaders in order to evaluate longer-term implications for the economies of the United Kingdom, Europe, and the world.
David Simmons is a waiter at a struggling Italian restaurant located down the block from where he lives. Money is tight for him right now, as his limited income means he lives paycheck to paycheck. However, David knows things will look up for him soon because he was recently offered a job as a bank teller across town—his first desk job.This case helps students learn about building credit. The case addresses what a FICO score is, who computes it, how it is determined, and what it is used for. Excerpt UVA-F-1866 Aug. 6, 2019 Understanding FICO Scores Introduction Sitting in his tiny apartment, David Simmons sighed and rubbed his forehead after opening the last two bills in his mail pile—the ones hidden behind the new Sports Illustrated issue on his desk. Money was always tight with David, given his inconsistent income as a waiter at a struggling Italian restaurant down the block. He knew how to prioritize and avoid paying his bills as long as possible. He was not proud of being late on some bills, but he occasionally did it out of necessity to make ends meet. The most important bills came first. He had already paid his rent, electricity, water, gas, cell phone, and insurance bills for this month; however, there were two bills remaining to be paid. David unfolded the late warnings from Cox Cable and his Bank of America Visa credit card and laid them on his desk. Threats more than bills, David thought. He had never been this late on any bills before. Both letters claimed that not paying the required balance within a week would lower his credit score. . . .
This case studies the growth of OYO Hotels (OYO) to illustrate the operational processes necessary to succeed in the service sector. The case allows for a discussion of employee- and customer-management systems, tech-driven solutions, and profit drivers. The material unfolds OYO's growth and its solution for making economy hotels discoverable and bookable online. The case raises a series of questions around OYO's business model, its ability to translate across global markets, and growth potential. It has been successfully taught in a second-year MBA class on the management of service operations. Excerpt UVA-OM-1641 Rev. May 1, 2020 OYO Hotels USA: Coming to America Jakayla Michel, a second-year MBA student, stood in the hallway gazing at her smartphone. She flicked her finger across the screen, reading through the job postings on Indeed.com for OYO Hotels USA, the new American arm of the fast-growing Oravel Stays Private Ltd. (OYO) that had been launched in February 2019. OYO had grown in just six years from a single room listing in India to one million rooms spanning the globe—one of the largest hotel chains in the world. The company boasted a tech-driven solution for making economy hotels predictable, discoverable, and bookable online that had attracted leading investors like SoftBank, Sequoia Capital, Lightspeed Venture Partners, and Airbnb, attaining a heady $ 10 billion valuation. OYO's 25-year-old wunderkind founder, Ritesh Agarwal, had produced what the Wall Street Journal was calling an "emerging-market unicorn among unicorns." After first becoming the leader of hotel rooms in India, OYO had begun in 2017 to export its formula into Malaysia, Nepal, China, Indonesia, and the United Arab Emirates (UAE). In fall 2018, OYO entered its first developed market, the United Kingdom. And now it was spending $ 300million to enter the United States. Michel, who had been a junior investment banker for four years after college, was looking for a career shift. She didn't mind taking a short-term step back in pay to join a company with growth potential, but wanted to make sure the opportunity was real. OYO seemed to be hiring for every type of position in the United States: human resources director, field sales director, territory operations leader, and business development manager. She spotted opportunities in Dallas, Texas; Los Angeles, California; Portland, Oregon; Las Vegas, Nevada; Miami, Florida; and Myrtle Beach, South Carolina—and even near her family's home in Washington, DC. With a few taps, Michel saved the positions that seemed most interesting to her (Exhibit 1), made a note to herself to further research the company later, and found a seat in her operations class. When she got home, she looked through OYO's website, which described OYO's secret sauce as "design cool, in spaces whenever you need them, at fantastic prices." The company seemed to be operating a franchise model wherein it spent hundreds of thousands of dollars to upgrade small, unbranded hotels, hang the OYO shingle, and charge the hotel owner around 20% per transaction. The company's team of engineers created apps to streamline such things as customer procurement, front desk management, room pricing, food and beverage offerings, and even room cleaning. The company said its upgrades increased hotel utilization and profitability. . . .
Few cases allow the student to understand the relationship between brand strategy, marketing strategy, implementation, and analysis. While some conceive of the process as being sequential, this case demonstrates that in fact, this process is more fluid, and that implementation and analysis impact subsequent strategy.This field-based case provides a rare glimpse into the turnaround of a brand that was all but dead. After Buick suffered more than five decades of declining business results and an inferior brand image versus all rivals, few thought that the brand could be resuscitated. This case provides a valuable under-the-hood look at how the Buick team, over time, progresses through a series of marketing improvements all anchored on an evolved strategy. Specifically, Buick introduced a shift in brand strategy behind an evolved brand essence statement (i.e., brand positioning), improved product lineup, new-to-the-world innovation, enhanced dealership service, and more compelling advertising. The results led to a record number of product awards, significantly improved advertising measures, improved service ratings, and better business results.Despite significant improvement across multiple dimensions of the business, Buick still trailed key competitors on one of the most important measures Buick tracked—the brand momentum rating—suggesting that there was still more work needed to complete the brand turnaround. The case introduces Molly Peck, the new marketing director on Buick, who is wondering what more, if anything, Buick should do. The material allows for instruction around marketing strategy and the process of converting it into implementation through the use of a creative brief.
The case examines the development and launch of an exchange-traded fund (ETF) based on JUST Capital's socially responsible corporate ranking methodologies. The case provides a market overview of Environment, Social, and Corporate Governance (ESG) and socially responsible investing (SRI), what has driven growth in those areas worldwide, and several best-practice investment approaches. Following the overview, the case describes the founding and development of JUST Capital, explores JUST Capital's ranking methodologies, and presents the decision point faced by the CEO: requisite selection of one of three strategies in order for JUST Capital to generate "self-sustaining" revenue.
The case describes a hypothetical hedge fund manager who is examining whether to invest in bitcoin. The case discusses potential risks and rewards of investing in bitcoin, the role of bitcoin and digital currencies more broadly, and financial innovation in the space, such as ICOs. It can be taught as part of a second-year MBA elective course in investments, financial institutions/capital markets, or fintech.
In June 23, 2016, voters in the United Kingdom have just approved a referendum calling for leaving the European Union. The case describes the motives for European integration, the rise of separatist movements in the United Kingdom and elsewhere, and the referendum process itself.The purpose of this case is to provide a contemporary counterpoint to a discussion of the economic and political motivations for the American Civil War. Dominant themes highlighted here are economic nationalism, political nationalism, cultural centrism and ethnocentrism, and populism.
In February 2018, Jerome Powell had taken over as chair of the FOMC. At first glance, the macroeconomic conditions inherited by Powell appeared favorable for continued stability: unemployment and inflation were low, and the economy had been steadily growing for nearly a decade. Yet despite the appearance of stability, the economy faced significant risks that required the Federal Reserve's attention. Was an uptick in inflation imminent, and if so, should Powell raise rates to limit any inflationary pressure? Or was the economy still operating below capacity, and if so, should the Federal Reserve take a more accommodative stance? To gain perspective, Powell needed to look back at the past fifty years of monetary policy in the United States. Excerpt UVA-GEM-0165 Rev. Nov. 11, 2019 Jerome Powell: Navigating a New Course? In March 2019, Jerome Powell was preparing for the upcoming meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve System (the Fed). Powell had been appointed the chair of the FOMC only a year ago to replace Janet Yellen, who had presided over a four-year period of economic growth and relative macroeconomic stability. Powell's comments following the FOMC meeting would be heavily scrutinized by many who were gauging whether Powell would continue the gradual increase in interest rates that began under Yellen or whether he would reverse course to help stimulate the economy. At first glance, the macroeconomic conditions inherited by Powell appeared favorable for continued stability: unemployment was near historic lows (Exhibit 1), inflation was below the Fed's target of 2% (Exhibit 2), and the economy had grown steadily for nearly a decade (Exhibit 3). Yet despite the appearance of stability, the economy faced significant risks that required the Fed's attention. Following the Great Recession, the Fed had embarked on an unprecedented increase in the monetary base, which contributed to fears of lurking inflation. Marty Feldstein, chair of the Council of Economic Advisors under President Ronald Reagan, articulated these concerns: Inflation is a risk, even if it is not inevitable. The large volume of reserves...makes that risk greater. It will take skill—as well as political courage—for the Fed to avoid the rise in inflation that the existing liquidity has created. . . .
In October 2016, Timothy Sloan, the newly appointed CEO of American banking giant Wells Fargo, faced a massive public-relations crisis. A few weeks earlier, a United States government agency had announced the results of its regulatory review of the bank and exposed a shocking practice common in the retail division, in which aggressive community bankers had created more than a million fraudulent accounts and credit card applications on behalf of unaware customers for the past several years. Over the next few weeks, the bank—and Sloan's predecessor, John Stumpf, in particular—suffered from harsh criticism from politicians, journalists, and former employees alike, ultimately forcing Stumpf's resignation. As Sloan sought to minimize the public-image backlash and restore general trust in Wells Fargo, he struggled to construct the best communication strategy for the bank's next chapter.
This case replaces UVA-M-0837. It can be used in a variety of marketing and strategy classes to understand how (1) at a macro level, a shift in consumer and environmental factors can impact firm strategy and (2) at a micro level, an e-mail-based marketing campaign designed to address these changes can impact firm-level performance. The case puts the students in the position of CEO Robert Huth as he is preparing for a board meeting. He had taken David's Bridal from a loss in 1996 to sales of over $1 billion by 2011, but he was concerned about future growth. People were waiting longer and longer to get married and, once they decided to, were spending much less than in the past, so the industry had seen year-over-year declines since 2007. How would David's Bridal establish its brand in the minds of a new generation of brides who shopped, purchased, and decided differently than had brides in past generations?
This case uses an array of carefully selected and excerpted revenue recognition related information contained in Salesforce.com's January 31, 2019, 10-K. Maria, the fictional protagonist, is seeking to understand those disclosures as part of her preparation for an upcoming job interview with the company. As such, she is relying on those disclosures to provide insights as to the company's main product/service lines, the events that signal when and how much revenue the company has earned (i.e., the essence of its business model), along with the related official generally accepted accounting principles (GAAP) criteria pertinent to the valuing and timing of recorded revenues.
This case aims to study the growth, evolution, and social innovation of iThrive Games, a socially minded initiative that aims to create meaningful opportunities using technology for teens to enhance the knowledge, mindsets, and skills they need to thrive through development and across the continuum of mental disorder to wellness. iThrive's focus has been on creating “meaningful games”—that is, games that promote health and well-being of teen players. Founded in 2014 by Dorothy Batten, President of DN Batten Foundation, the organization's mission was to collaborate with game developers, partner with teens across the game development cycle (ideation to testing), and provide resources to foster teen thriving through gameplay. To do so, the organization took a unique social entrepreneurial approach. Drawing on a positive psychology framework and building the brand among key stakeholders including game developers, researchers, funders, youth, educators, and parents, the organization orchestrated a community dedicated to advancing the meaningful games field, and in doing so, have widespread impact.
