Case Study Discussion Questions for Case Studies in Entrepreneurial Management
and Finance
Professor Edward H. Chow
Spring 2011
1.
(2/24) Introduction and get acquainted: Entrepreneurship and finance
Lecture and discussion:
A perspective on Entrepreneurship, Howard H. Stevenson, 1988 (9-384-131)
How is finance related to corporate objectives?
Note on the financial perspective: What should entrepreneurs know? William A.
Sahlman, Harvard Business Publishing (9-293-045)
In your view, what is entrepreneurship?
2.
(3/3) Identify entrepreneurial opportunities and development of business model
Lecture and discussion:
Some thoughts on business plans, William A. Sahlman, 1996 (9-897-101)
Note on business model analysis for the entrepreneur, Taz Pirmohamed, 2002
(9-802-048)
Reinventing your business model(R0812C) (Chinese translation in 哈佛商業評論繁
體中文版 2008 年 12 月號：商業模式再創新)
Prepare an example to analyze the business model of a company.
you in class to talk about the example.
3.
I will call upon
(3/10) Exemplary entrepreneurs
Lecture and discussion:
Pioneering strategies for entrepreneurial success（BH 260）
Case study:
Bill Gates and Steve Jobs, 2008 (9-407-028)
1) How have Gates and Jobs shaped technology? How has technology shaped them
and their companies?
2) Compare the leadership styles and approaches of Gates and Jobs. In what ways
are they similar? Different?
3) Who do you believe is the better business leader?
4) Who would you want to work for? Who would you want to work for you?
5) How does a charismatic leader transition a company for long-term success?
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4.
(3/17) Managing the risk of early ventures
Beating the odds when you launch a new venture (R1005G) (Chinese translation in
哈佛商業評論繁體中文版 2010 年 9 月號：管控風險的創業冒險家)
Case study:
R&R（9-386-019）
1) What is the opportunity in the Trivia game business?
2) Why is it an opportunity for Bob Reiss?
3) Why did others contribute to Reiss’s success?
4) Why is the whole deal economically possible?
5) Are there any non-economic risks?
6) What kind of follow-up should Bob make to his success?
5.
(3/24) Analysis of possible business model
Case study:
Beta Golf, Sahlman and Roberts, 2005 (898-162)
1) Why does Beta Group exist? What economic function does it serve? What is the
business model for Beta? What does this tell us about translating innovation
into value?
2) What is a sensible development plan for the HXL technology? Of the various
choices for exploiting the technology, which would you choose? Why? In
what order?
3) Given the response from Callaway, what should Zider and Krumme do next?
4) What would happen to this project if it were developed inside an existing
industry competitor? What would a venture capitalist do with Beta Golf?
Remember to turn in your term paper proposal.
6.
(3/31) Discuss your term paper proposals
7.
(4/7) Refining business model
Case study：
Zipcar: refining the business model, Myra Hart, Michael J. Roberts and Julia D.
Stevens, 2005 (9-803-096)
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1) Evaluate this potential venture and the progress that Chase has made.
2) What is the business model, and how has it changed between December 1999
and May 2000? What do the data from actual operations in September say
about how the business model is playing out in practice? Does this data give
you comfort or concern?
3) What actions should Chase take as result of the September operating results?
4) What is the strongest argument Chase could make to a potential investor about
the attractiveness of the venture? What, specifically, should her elevator pitch
be at the Springboard forum?
8.
(4/14) Challenges for the CEO after the establishment of the company
Case study：
Keurig, Paul W. Marshall and Jeremy B. Dann, 2004 (9-899-180)
1) How attractive is the Keurig system to each of the following participants in the
Office Coffee market?
A. The typical Office Coffee Distributor
B. The Coffee Roaster (use Green Mountain as typical)
C. Keurig
D.
E.
A typical Office Manager
The Coffee Drinking Employee
It will help the class discussion if we use some common assumptions.
Number of brewing units in office =1,937,000 (Exhibit 6)
Number of cups consumed per brewing unit per day = 43 (page 11)
Number of work days per year = 250
Number of cups consumed per year in offices = 20.8 billion (product of three
assumptions above)
Current average cost of cup consumed = $0.125 per cup (Exhibit 6)
Profit to Keurig per K-cup produced = $0.04 (page 5)
Output per year for package line = 16.125 million K-cups (page 11, needed to
support 1,500 brewers)
Price per K-cup to office coffee distributor = $0.25
Price per K-cup to Office Manager = $0.50
2) What advice do you have for Nick Lazaris concerning his dealing with MTS, the
current vendor for the package line, and the other potential vendors? Be specific:
What price goal would you have for the negotiation and what would you r negotiating
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strategy be?
3) What advice do you have concerning the selection of the vendor for the brewing
machine?
4) What actions should Keurig take to penetrate the Office Coffee Service market?
Be specific: How should they price the brewing machine to the OCS distributors?
How rapidly should they plan to grow and what should they do to avoid constraints on
this growth plan?
5) What should they do about the Home coffee market segments? How soon should
they plan to enter, and what specific actions should they be taking now to facilitate
this entry?
9.
(4/21) New venture finance
New venture financing, Howard H. Stevenson and Michael J. Roberts, 2006
(9-802-131)
A note on valuation of venture capital deals. Hellmann, 2001 (E95)
How venture capitalists evaluate potential venture opportunities, Roberts, 2005
(805-019)
1) Before even reading the case, develop your own set of criteria for evaluating a
potential new venture.
2) Based upon the case, as well as your own model developed above, develop a
fully-fleshed out model of the criteria which should be used. On what criteria
do the VC’s seem to be in agreement with each other, and on which do they
differ? In what ways does their model differ from your own?
3) To what degree do you believe that your proposed new venture conforms to these
criteria?
Case study:
Good money after bad? (R0703A)( (Chinese translation in 哈佛商業評論繁體中文
版 2007 年 3 月號：哈佛個案研究，創意是個爛生意？)
1) If you were Harbinson, what would you include in your presentation to the
investment committee of ScharfsteinWeeks (SW)?
2) Were there any things that should have been considered by SW in its first-round
investment?
3) Were SW to invest in Seven Peaks (SP) again, what must SW do to enhance the
probability of success?
4) If you were SW, would you continue to invest in SP?
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10. (4/28) Understanding term sheets
A “Rich-vs.-King“ approach to term sheet negotiation (9-810-119)
Case Study:
Spiffy Term, Inc.: January 2000 (SM86)
Discussion questions are in the text of the case
11. (5/5) Deal structuring and fund raising
Case study:
Endeca Technologies (A), Hardymon and Lemer, 2003 (802-141)
1) Critique Steve Papa’s fund raising strategy for the “C” financing round. What
steps did he take that were sensible? What mistakes did he make?
2) What are the virtues and drawbacks of accepting the financing package offered
by the insiders? The Ampersand proposal?
3) Why did the original investors initially want an outside investor to take the lead
role in new financing, but were willing to do so later on? How should
Bessemer view the outside package? How should Venrock?
4) What are the key differences in the term sheets offered by the insider group and
Ampersand? What explains the key differences?
5) Analyze the impact of renegotiating the anti-dilution provisions. Consider both
the quantitative and qualitative impact. (When considered the quantitative
impact, note that the previous formula adjusted the conversion price to the
average of the price in B and C rounds, weighted by the sizes of the two
financing rounds.) Was Bessemer’s request to adjust these terms reasonable?
12. (5/12) Separation of ownership and compensation
Case study：
NanoGene Technologies, Inc, Roberts and Cyr, 2003 (803-117)
1) Evaluate the founders’ decisions regarding the split of equity and compensation
level. As a potential venture investor in the company, would these decisions
concern you?
2) Evaluate the size and composition of the founding team. What is the difference
between being a “founder” and an early employee?
3) Evaluate Paige Miller as an addition to the team, and assess her compensation
demands. Would you hire her on the terms she seeks?
4) Assess the company’s progress on each of the specific issues discussed in the last
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section of the case: the hiring process; a compensation policy; the company’s
culture. Specifically, in each of these areas, what should the company do?
13. (5/19) Management of fast growing new venture
A note on managing the growing venture, Richard G. Hamermesh, James L. Heskett
and Michael J. Roberts, 2005 (9-805-092)
Why entrepreneurs don’t scale, Hamm, 2002 (R0212J)
Case study：Management of growth
Shurgard self-storage: expansion to Europe, Richard G. Hamermesh and Indra A.
Reinbergs, 2005 (9-804-112)
1) What is your assessment of Shurgard and the self-storage business?
2) How has Shurgard performed in Europe to date? Will self-storage turn out to be a
successful business in Europe?
3) What is your view of the firm’s expansion plan in Europe? Is it realistic to plan
for 133 to 170 stores by 2003? What challenges/opportunities will Shurgard’s
management face?
4) The consortium is proposing to invest 122 million Euros of equity by 2003 in
return for 43.3% ownership. Is this a fair valuation? A detailed evaluation of
this real estate business is quite complicated, but one way to get a rough
estimate of the valuation is to use the two steps below:
a. Case Exhibit 8C (Exhibit TN-1) provides a pro forma income statement for the
“minimum plan” in which 133 stores would be built by 2003. Assuming no new
stores were built after 2003 and that all these stores reached steady state profits in the
next year or two, what would the consolidated EBITDA be for Europe? (See Exhibit
8B for an estimate of mature store margins.)
b. Under these assumptions, what is a reasonable value to project for Shurgard
Europe? Is 43.3% ownership reasonable for the consortium?
5) Review the terms and conditions, such as board membership, proposed by the
consortium? Are these reasonable from the perspective of Shurgard?
Would you advise Shurgard to go ahead with the expansion plan and proposed
financing?
14. (5/26) The impact of financing model on the development of company
Case Study：
E Ink Financing Growth, Sahlman, 2000 (800-252)
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1) What is the nature of the opportunity confronting E Ink?
2) What do you think of their 3-stage approach to achieving their long-term goal?
3) How much money should the company raise? From whom? On what terms?
4) What should luliano and his management team do?
15. (6/2) realization of value, IPO or sell out
Case Study:
Nantucket Nectars, Jon M. Biotti
1) What are the pros and cons of remaining independent?
Going public? Selling
the company?
2) If management decides to consider selling the company, how should they
orchestrate the process? Should they hire an investment banker?
3) How would they identify and deal with prospective buyers?
4) If management decides to sell the business, how should they think about their
role after the sale?
5) What should management do?
16. (6/9) Challenges of a Taiwanese new venture
Case study:
Shacom.com (undecided yet)
1. Familiarize yourself with the traditional huei system.
2. Why would one participate in a traditional huei and what are the potential risks and
rewards?
3. What modifications has Shacom.com made to the traditional huei system?
4. What are the core components of Shacom’s strategy? Does the company have the
appropriate human resources to carry it out?
5. From SinoPac’s perspective what are the opportunities and risks?
6. What is the potential for this system in the global marketplace and how should the market
be penetrated?
7. What is the value of a share of Shacom.com?
8. Should Chien renegotiate the deal with SinoPac? On what basis?
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