Ammar Textiles, a medium sized knitwear producer is faced with determining a transfer price for selling fabric from its main manufacturing facility in Pakistan to its first overseas unit in Muscat, a small country in the Middle East.

Ammar, Pakistan’s pioner knitwear producer and exporter, launched about 15 years ago by a young, innovative entrepreneur ha not only grown successfully itself but has spawned an entire industry that hasa made Pakistan known to quality conscious brand names such as Levi Strauss and Nike. The industry has grown on the initiative of several "new breed" entrepreneurs whoare not following the traditioanl textilte familes of Pakistan. These families rely on government subsidies nad strong lobbying to remain competitive in low value added parts of the textile industry where they feel management know-how is not needed. Apart from facing all the tests entrepreneurs face, the knitwear sector faces a complete lack of technical support institutions. Another major constraint is the availability of capable, trained managers. Admist this environment Belal Ahmed, the founder of Ammar has introduced the concept of professional management. While his managers work hard to keep up with the growing sales and product line, management control and decision support systems at the firm lag the requirements that growth imposes.

The firm’s owner has planned anew manufacturing facility abroad, in Muscat, to overcome the constraint that quotas imposed by importing countries place on his growth plans. Little analysis seems to have been done in this decision. Just as the plant is about to start production, a tax issue with the Muscat government changes the economics of the business in Muscat. This heightens the need to establish a transfer price between the parent unit in Pakistan and the shirt stitching facility in Muscat. The governments of both countries, the parent company managers, Belal Ahmed himself, and the manager in Muscat will all be affected by the transfer price decided. Apart form the transfer price for this deal it now appears to be time to establish a clear transfer pricing policy to transfer products between the owner’s various companies. This first management debate regarding the issues surrounding cross border transfer pricing marks the first attempt to deal with transfer pricing. Apart form the motivational and economic considerations the case illustrates the role of cost accounting systems as facilitating the transfer pricing policy. It also highlights the state of management control systems in industries in early evolution.

Apart form the accounting and behavioral issues that affect transfer pricing, there is also an ethical twist to this situation. The multifaceted issues highlighted should serve as an important primer for some of the issues in managing growing firms in countries with a weak institutional base and with limited managerial capability in evolving industries. The case allows students and instructors to explore a variety of quantitative and qualitative issues in managing young, growing firms in developing country environments.

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Two brothers are planning on quitting their jobs and starting a printing business. Students are put int eh role of a personal friend who has been asked to make financial recommendations concerning the acquisition of their printing equipment. They have several leasing alternatives, as well as the option to buy new or used equipment. The brothers will have to personally guarantee these leases, so if the business fails they will incur significant personal costs.

Students are asked to make straightforward lease versus buy decisions. Excel or other spreadsheet may be used to facilitate the analysis. Students have to take realistic financial information and determine which of several interest rates are appropriate for use in their calculations, as well as identify what the Financial Accounting Standards Board would classify as a bargain purchase option. Finally, student s have to consider the broader implications of this type of decision, including the riskiness of new businesses nad the role that financial flexibility might play in it’s success or failure.

This case is appropriate for any accounting, finance or small business course offered at the junior level or above. At a minimum, students should have a background in present value computations. Knowledge of accounting for leases is helpful, but not necessary, if instructor is willing to present some foundation material on that topic.

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The Echlin case provides an opportunity for the student to analyze operations through income statement analysis, and analyze solvency through balance sheet, income statement and cash flow analysis. Analysis of the case flow statement should highlight the financing and investing choices undertaken by Echlin over the four year period 1994-1997.

The results of these financial analyses can be used to judge why Echlin’s stock price was locked in a narrow trading range, while the overall stock market soared. The student can use Echlin’s comments in late 1997 to restructure operations and adopt EVA to determine a stock price either through discounted cash flows or discounted abnormal earnings over a future five year period. A concluding discussion could address the wisdom of Echlin’s vigorous acquisition strategy requiring increasing debt levels, the results of impressive sales growth but at a cost of shrinking margins.

This case should be suitable for an MBA class discussion. One possible choice would be a single class coverage of the analysis of the past four years; a second choice could be a two class discussion covering the analysis of the past four years and then a projection of the next five years. The student can project future cash flows or future abnormal earnings to determine a stock price.

The case presents Echlin in late 1997 after it had reported four years of increasing sales, achieved partially through acquisitions, but offset by declining margins. The firm had decided to grow by acquisitions and internal growth rather than by internal growth solely. This strategy of acquisitions required the use of increasing debt levels, thus weakening the solvency ratios. Over the four year period the firm’s stock price remained in a narrow trading range ($30s), significantly trailing the rest of the market.

In late 1997 after Echlin reported a large restructuring charge and adoption of the EVA philosophy, the firm became a target of a hostile bid. After months of wrangling over the legality of the hostile bid, Echlin sought out a "white knight" and the firm was soon taken over by Dana Corporation.
 

This case introduces students to target costing during new product development. It illustrates how market data on prices and capabilities of competitive products can be used to develop target prices, then combined with required margins to arrive at a target product cost. It introduces students to new product development as a legitimate focus of managerial accounting attention to address product cost and other managerial accounting issues. It illustrates the value of financial skills to new product development.

Students are introduced to the new product development process and issues such as the importance of time-to-market and planning for product manufacturing. Business students are also introduced to the contributions of industrial designers and product engineers, and how their skills and capabilities enable them to drastically reduce product costs, while maintaining or enhancing product capabilities.

This case was developed for MBA and executive courses in managerial accounting. It can also be used in graduate business courses in entrepreneurship and new product development, and in product design or industrial design courses addressing the management of new product development. It is well suited to programs and courses that take an integrative, interfunctional perspective into traditional functional courses.

Endius Inc. is a startup company entering the medical products market. Endius has developed a prototype for a promising new surgical instrument, a steerable surgical forceps. Innovative characteristics enable the forceps to be utilized for spinal and sinus surgeries using new surgical approaches. Endius’s new president, Tom Davison, and previously raised venture capital and launched a highly successful product in the medical device industry. Davison was determined to get Endius out of the R&D phase and into product commercialization and product launch. He begins securing funding for this startup through his venture capital connections, and developing a commercially viable prototype of the product. The case focuses on the latter issue.

Endius partnered with Product Genesis Inc., a product development consultancy, to develop a commercial version of the steerable surgical forceps. They planned to review Endius’s prototype, then generate design alternatives for each subsystem. In this review, the joining Endius and Product Genesis product development team needed to establish a target cost for the commercial version of the steerable surgical forceps early in the product development process. They they must use the target cost as a design objective just like cutting force or weight to guide, contrain, and evaluate product development..
 

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This case is designed to illustrate to intermediate or advanced financial accounting students the concepts of "earnings management" and earnings "quality". Students are asked to explain the substantial change in Apple’s net income (loss) between 1997 and 1998 and the significant difference between Apple’s net income and cash flow from operations. To develop their solutions, students are required to access the SEC’s EDGAR database, visit Apple’s Web site, research financial literature and apply various GAAP accounting guidelines to a fact-based situation.

Solutions to the case do not yield a definite yes or no related to "earnings management". Students have to draw their own conclusions regarding whether Apple deliberately "managed" its earnings and if so, to what extent; whether GAAP guidelines are applied appropriately; and whether the relative quality of earnings improved or not over the two reporting years under different economic conditions. The case should help students learn to get more comfortable and make financial decisions based on only "soft" evidence as to reported earnings amounts.

The case can be used in its entirety or in part as appropriate for the class. There are three primary areas in Apple’s 1996 and 1997 statements where earnings management might be suspected. The instructor could limit the discussion to only one or two of these if desired. The main learning po9ints of the case are not severely compromised by limiting the scope of coverage. In addition, several side issues are brought up in the case (e.g., efficient stock market theory) that can be explored or not as necessary.
 

The case is targeted for an undergraduate course in systems analysis and design. It highlights systems analysis issues in settings other than the corporate environments in which traditional SDLC methodologies have been extensively tested. Students have an opportunity to engage in real-life problem solving as they identify limitations in the use of a standard approach to systems analysis and design. The case has the ancillary benefit of introducing business students to the economic and social environment of Haiti, which the United Nations has designated as being in one of two "Fourth World" countries (along with Bangladesh). By analyzing and discussing this case, it is hoped that business school students may pause briefly in their quest for fortune to consider how they might help others who must cope with drastically fewer resources.

Although available in printed form, we expect that the Fonkoze cases will be published on the Web, with links to appropriate other sites and images.

In spring 1997 Anne Hastings, volunteer director of Fonkoze, a non-profit credit union in Port-au-Prince, Haiti requests help from a team of MIS professors to automate their record keeping. Fonkoze provides micro-loans to small groups of Haitian street vendors. Transactions are recorded on paper, and at the end of the day, all customer activity is halted so that employees can perform interest calculations (on battery-powered calculators), review transactions, and identify delinquent accounts. The number of members has increased to the point that Fonkoze can no longer rely on this inefficient manual system.

Fairfield University Professors Winston Tellis and Patrick Lee agree to help Ms. Hastings. They plan to utilize a well-accepted systems development life cycle methodology, the FAST method. FAST, a rapid application development methodology, was developed by Whitten and Bentley. One of the reasons it was selected is that it is very flexible, and yet has links to structured techniques. In addition, it is customizable and extensible to object oriented technology should that be necessary. Yet, as the project unfolds, Tellis and Lee discover that the FAST method (like other standard SDLC methodologies) rests on a foundation of assumptions that do not hold true in a poverty-stricken nation with unstable leadership and an inadequate infrastructure.

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The difficulty of successfully implementing a large, long-term information systems project, even with the best planning and a carefully executed implementation strategy, is demonstrated. Students are exposed to the technology involved in an intranet project and to the cultural dimensions of such a system. The rapid pace of change in the technology itself is compounded by a change in the vendor’s industry structure. Learning outcomes include understanding the components of an intranet which is connected via an extranet to the internet and understanding the organizational behavior issues associated by the change in work environment. Students should evaluate the implementation strategy employed and develop a recommendation on how Blue Star should respond to the acquisition of their major vendor for the project.

The case was written for a junior or senior level technology management course but could be used alternately in an MBA program or in a data communications class.

Jim Groover, the new Chief Information Officer (CIO) at Blue Star Insurance, has convinced the CEO and Board of Directors to make substantial investments in information technology so that Blue Star can continue to compete successfully in the healthcare insurance market. To increase their responsiveness to customers, an imaging and workflow system has already been implemented. Now, an intranet project is underway. The future success of the company depends on the success of these major projects. The intranet project leader, Frank Wright, is people smart as well as technology smart. He began his career with the company by teaching personnel in small doctors’ offices how to use Blue Star’s systems to electronically file claims. So far, the team’s well-wrought implementation strategy has worked well. Then Frank hears some deeply disturbing news: the carefully selected major vendor has been acquired and because of this acquisition, may no longer be the appropriate choice for the project underway. Changing vendors now would be difficult technically and politically. Not changing vendors might mean failure later. How should Blue Star respond to this acquisition?

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Contact Person: Charlotte S. Stephens, Auburn University, AL 36849
Mail: 36 Sourwood Drive; Pine Mountain, Ga. 31822 USA
Voice (706) 663-2549; FAX (334) 844-5159; e-mail: cstephens@business.auburn.edu

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The case can be used to achieve a wide range of teaching objectives. The richness of the situation affords instructors an opportunity to guide students through discussion of myriad issues, including the differences between object orientation and traditional programming languages and methodologies, computer integrated manufacturing, C.A.S.E., communication with technical nad non-technical senior management, project managemetn, professional responsibility, and IS human resources management. Characterizations and issues are sufficiently robust to permit meaningful role playing in discussions.

The case is intended to be used in both object orientaiton and IS management and strategy courses, potentially by the same students. The case is appropriate for graduate or advanced undergraduate courses. The teaching note is presented as a menu of topics from which instructors may choose.

This teaching case outlines the experiences of The Foxboro Company, a leading producer of industrial automation systems, in its first major object oriented development. FoxAES, the product under development, is a mission critical computer integrated manufacturing system. The development group faces major technical, organizational, and managerial challenges in moving toward the object oriented paradigm. The company and product names and all data are real; only individuals’ names are disguised.
 

This set of cases is intended for use with MIS courses. The cases provide students opportunity to understand the strategy and operations of a company that is geographically spread and managed through manual systems. The student has opportunity t o consider the parameters of decisions on several issues including hardware, software, and training. The A case provides opportunity to identify the issues that JSMC needs to consider in designing an appropriate system for their company. The B case asks the student to evaluate the system that Shields is suggestion.

In 1998 JackSmith Management Company, Inc. (JSMC) managed 20 property sites of multiple housing units. All of the records on site were handled manually. The merger of Jackson Development Company, Inc. with Smith Property Management, Inc. (SPMI) to form JSMC the prior year had impelled the need to move to an automated accounting and property management system. In addition, owners Bob Jackson and Pat Smith were well respected by the regional HUD administration. They expected their combined company, JSMC, to grow significantly over the ensuing decade. The system design and implementation issues they confronted included hardware, software, facilities, and employee skills and training.

The A case gives the background and history of the firm along with basic information about its operations. The B case gives the consultant’s solution.

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The closely-held company which is the subject of this case – Werner Ladder – has been a family-run business since 1922. Over time, significant changes in their distribution channels and competitive environment have led to a pressing need to re-engineer order processing.

This case, aimed at an undergraduate or graduate MIS course, provides students with sufficient information to develop process documentation (including data flow diagrams or a system flow chart) and to offer recommendations for an order processing reengineering project.

David Conn was in charge of a project to reengineer order processing at Werner Ladder, a company which utilizes three distribution channels: Retail, Hardware and Paint, and Professional. A consultant’s study had reported that these channels loved Werners’ products, yet found the company difficult to deal with. Management was concerned with this finding, as they had always viewed customer service as one of their core strengths.

Werner Ladder was committed to shipping an order within seven calendar days or five working days of receiving it. Yet in spring 1997 it took Werner two working days just to get an order into the system, which put considerable pressure on Distribution Planning to plan for the shipping of orders. Meanwhile, many of Werner Ladder’s most important customers – such as Home Depot – were demanding even higher levels of service. Bill Rippen, Director of Corporate Distribution, had decided it was necessary to reengineer order processing.

In April 1997, two departments which reported to Rippen -- Customer Service and Order Entry and Maintenance -- were involved in processing orders from receipt to their release to Distribution Planning. Customer Service, organized by market channel, received orders via phone, fax, or EDI. Customer service representatives reviewed orders for accuracy and completeness before passing them along to a second group, Order Entry and Maintenance. There, numerous coding and approval steps were performed by as many as six different people. Errors were so prevalent that the final step before release of an order was proofing. Up to 40% of orders contained some form of error.

The many handoffs and people involved became particularly problematic when a customer requested a change in an order. It was difficult to locate a specific order amid the piles of paper that accumulated in various employees’ in-boxes and out-boxes.

Thus, the case provides students with ample opportunity to identify problems in Werner’s order processing and to offer recommendations for process redesign.