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This paper uses financial report information to analyze the accounting results of the COVID-19 vaccine development for Johnson & Johnson (J&J). This paper also uses stock price information to analyze the market reactions to the COVID-19 vaccine development and the state of clinical trials for J&J.

This instructional case investigates the interaction between J&J and the COVID-19 vaccine. This paper uses information from financial reports to analyze the accounting results of the COVID-19 vaccine development for J&J. This paper also uses stock price information to analyze the market’s reactions to the COVID-19 vaccine development and the state of clinical trials for J&J.

This case has been used in both undergraduate and graduate levels to highlight the application of accounting theories to practice and improve the understanding of financial statements, especially when Covid-19 has affected the global economy. Under this new context, students could explore new ideas from accounting aspect.

The case aims to investigate the interaction between J&J as a pharmaceutical company and COVID-19. It provides a context in which to discuss the consequences of COVID-19 vaccines from several financial perspectives, such as stock prices, accounting policies, earnings and cash flows:

LO1: Understand the responses of stakeholders to J&J’s COVID-19 vaccines.

LO2: Understand the accounting policies that J&J and its competitors follow regarding COVID-19 vaccines related to revenues, R&D expenditures and government funds.

LO3: Apply Ball and Brown’s theory to the impact of COVID-19 vaccine development on earnings quality of J&J and its competitors.

LO4: Assess the importance of COVID-19 vaccines in management decision-making through dividend policy and management compensation structure.

The case is designed to be used with the digital business model framework developed by Peter Weill and Stephanie Woerner of Massachusetts Institute of Technology (MIT) (Weill and Woerner, 2015) and is referred to as the W & W framework. This approach provides a useful structure for thinking through the strategic options facing environments ripe for digital transformation.

Research for this case was conducted through face-to-face interviews with the protagonist, as well as through a review of their business planning documents and other data and documentation provided by the founder. Some of the market and industry data were obtained using secondary research and industry reports. Interviews were digitally recorded and transcribed to ensure accuracy.

The case follows the story of Kurt Waltenbaugh, a Minnesota entrepreneur who shared the dream of using data analytics to reduce costs within the US health-care system. In early 2014, Waltenbaugh and a physician colleague founded Carrot Health to bring together their personal experience and expertise in both consumer data analytics and health care. From the beginning, they focused on how to use data analytics to help identify high-risk/high-cost patients who had not yet sought medical treatment. They believed that they could use these insights to encourage early medical interventions and, as a result, lower the long-term cost of care.

Carrot’s initial success found them in a consultative role, working on behalf of insurance companies. Through this work, they honed their capabilities by helping their clients combine existing claims data with external consumer behavioral data to identify new potential customers. These initial consulting contracts gave Carrot the opportunity to develop its analytic tools, business model and, importantly, to earn some much-needed cash flow during the start-up phase. However, they also learned that, while insurance companies were willing to purchase data insights for one-off market expansion projects, it was much more difficult to motivate them to use data proactively to eliminate costs on an ongoing basis. Waltenbaugh believed that Carrot’s greatest potential lay in their ability to develop predictive models of health outcomes, and this case explores Carrot’s journey through strategic decisions and company transformation.

This case is intended for either an undergraduate or graduate course on entrepreneurial strategy. It provides an effective introduction to the unique structure and constraints which apply to an innovative start-up within the health-care industry. The case also serves as a platform to explore the critical criteria to be considered when developing a digital transformation strategy and exposing students to the digital business model developed by Weill and Woerner (2015) at MIT (referred to in this instructor’s manual as the W&W framework). The case was written to be used in an advanced strategy Master of Business Administration (MBA) class, an undergraduate specialty health-care course or as part of a health-care concentration in a regular MBA, Master of Health Care Administration (MHA) or Master of Public Health (MPH). It may be taught toward the end of a course on business strategy when students are building on generic strategy frameworks and adapting their strategic thinking to the characteristics of specific industries or sectors. However, the case can also be taught as part of a course on health-care innovation in which case it also serves well as an introduction to the health-care payments and insurance system in the USA. Finally, the case can be used in a specialized course on digital transformation strategy in which case it serves as an introduction to the MIT W&W framework.

The case is particularly well-suited to students who are familiar with traditional frameworks for business strategy and business models. The analysis builds on this knowledge and introduces students interested in learning about the opportunities and challenges of digital strategy. Equally, the case works well for students with clinical backgrounds, who are interested in how business strategy can influence changes within the health-care sphere. Finally, an important aspect of the case design was to develop students’ analytical confidence by encouraging them to “get their hands dirty” and to carry out some basic exploratory data analytics themselves. As such, the case requires students to combine and correlate data and to experience the potentially powerful combination of clinical and consumer data. Instructors should find that the insights from these activities give students unique insights into the potential for of data analytics to move health care from a reactive/treatment ethos to a proactive/intervention ethos. This experience can be particularly revealing for students with clinical backgrounds who may initially be resistant to the use of clinical data by commercial organizations.

Josh Williams is a Student at the NAU who has driven buses on campus and wants to improve the transportation on campus. He is convinced that purchasing a new type of bus that is more fuel efficient, has larger capacity, better designed for boarding, and has a longer life is worth the higher purchase cost. He sets out to prove it by creating a discounted cash flow (DCF) analysis. Since many of the estimates for the DCF analysis are uncertain, he decides to perform a Monte Carlo simulation (MCS) analysis. Students are asked to step into Josh’s role and perform the analysis.

Josh Williams was a Student in the authors’ MBA program. Both authors teach in this program and one author was the Advisor for Net Impact and worked with Josh to present his idea to the university administration. The authors have changed a name or two but otherwise, the case describes a real situation in a real organization without disguise.

The authors have used this case in a first semester MBA-Applied Management course, Decision Modeling and Simulation. Students already have experience with DCF analysis and have been introduced to MCS. With this case, students apply MCS at the conclusion of a three-week module on predictive analytics. Students have run at least two MCS models and have become comfortable with the software. The case would also be appropriate for a senior-level undergraduate course such as business analytics or management science. It might also be useful for other courses that include the MCS modeling technique learning objectives such as project management.

This case provides an opportunity for students to perform an MCS analysis. MCS is useful when many of the inputs to a DCF analysis (or any model) have been estimated and the modeler is concerned that the estimates are uncertain and could perhaps be a range of values. MCS can be used to understand the effect of this uncertainty on NPV which in turn may affect the decision. The case could also be used without MCS focusing just on the DCF analysis with deterministic sensitivity analysis.

This case study is related to start-up post-listing investment analysis. Through this case study, students will be able to perform the business analysis guided by the Venture Evaluation Metric tool, perform financial analysis using the discounted cash flow methods and perform investment analysis recommendation with justifications from the business and financial analysis performed above.

This case study sets out the study of a scalable start-up, Zomato, which is a successfully listed start-up firm in India. Despite the start-up development success in the pre-listing, the firm has exhibited a continuous unprofitable finance performance in the post-listing and has further experienced a volatile share price performance, both of which have puzzled existing and potential investors. In addition, some analysts are in the opinions that the firm share price valuation have been inflated with overvaluation since in the initial public offering stage and remain traded with overvaluation in the market. Notably, considering the negative indicators mentioned above, investors are concerned about long-term sustainability of the firm business and financial performance. In the context of post-listing investment, the following questions are material to investors: What is the realistic growth trajectory for Zomato in the medium term? What is Zomato’s share fair value in the medium term? Can one see opportunities or risks ahead of investing in Zomato’s shares? What will be the investment strategy for new investors?

This case study is suited to bachelor’s and master’s level in business schools studying entrepreneurial finance analysis.

Teaching notes are available for educators only.

CSS 1: Accounting and finance.

In a typical strategy course, growth strategies like mergers and acquisitions (corporate strategy) are introduced in the second half of the course. To analyze the case, students will use strategies such as Porter’s five forces and resource-based view and will discuss why firms pursue mergers as a growth strategy, along with sources of synergies and risks in mergers. Finance theory used includes analyzing a given discounted cash flow analysis and perform a comparable multiples analysis to find the value of a merger target.

The industry and financial information in the case comes from publicly available sources, including company 10K reports, business press reports and publicly available industry reports. The information about Lockheed Martin’s strategy comes from interviews with Peter Clyne, former vice president for Lockheed Martin’s IS&GS division. He then held the same position for Leidos Holding Corp., after the IS&GS division was divested and incorporated into Leidos.

This case is an interdisciplinary case containing aspects of strategy and finance. Lockheed Martin made a strategic move in 2016, to divest its Information Systems & Global Strategies Division (IS&GS), which engaged in government consulting, primarily in the defense and aerospace industries. Lockheed wanted to reassess its decision to divest consulting, given the high growth rates expected in this business, particularly in cybersecurity consulting. On the other hand, if Lockheed decided to maintain its hardware focus, it wanted to expand its offerings. In addition to a strategy analysis, two possible target firms can be analyzed: Fortinet and Maxar.

This case raises a broad set of issues related to the evaluation of M&A transactions across two different industries and corporate strategy, as it relates to strategic fit of the potential targets and LM’s current capabilities. It is appropriate for the core course in strategy at the MBA or senior undergraduate level. It can also be assigned to specialized courses in Mergers and Acquisitions. It is not appropriate for a lower level strategy or finance course, as it requires students to have prior knowledge of basic finance valuation techniques.

Capital structure theory.

The case is meant for teaching and class discussion, and uses only secondary data based on published sources. The interpretation and perspectives presented are based solely on the secondary data.

This paper aims to help current and future managers understand capital structure theory and the various equity and debt finance options available for raising capital. It also examines the financial analysis and strategic management of black swan events. After the class discussion, students will understand how to financially and strategically manage a company during black swan events and also have a deep dive into capital structure analysis of a large company.

MBA/postgraduate/undergraduate courses on corporate finance or advanced corporate finance. Executive/management development programs and short duration Massive Open Online Courses on investment decision-making and advanced corporate finance. MBA/postgraduate/undergraduate courses on corporate strategy and economic environment and planning.

The learning outcomes are as follows: to assess the competitive position of a small business-to-business (B2B) company to remain competitive in a developing country; to identify and shape the business opportunity that represents serving small and medium enterprises that would lead to competitive positioning in the B2B environment; and to compare innovation and commercialization projects through strategic dimensions related to managing a technology company in a way that fosters business profitability and growth.

Margarita Kaplun, founder and CEO of Kapter, a small company providing country-wide technical and consultant services on thermography to industrial hubs in Mexico, had positioned the company as a reputed provider. However, the company had experienced razor-thin margins. Margarita needs to decide whether they pursue the following grant to fund a project on technology development that will source the competitive position or pursue a commercial project that help them achieve a larger customer base to reap higher income.

The case is oriented for an undergraduate audience, attending entrepreneurship, innovation and industrial organization courses. It depicts issues of technology-based entrepreneurship and is suitable for students in business, management and engineering.

Teaching notes are available for educators only.

CSS 11: Strategy.

Supply Chain Management, Technology, Procurement, Supply Chain Finance

The key learning objectives are as follows: to gain critical insights into e-commerce supply chains of fashion garments; understand the importance of digitization to manage the risks due to supply chain disruptions; evaluate the role of digitization to improve supply chain performance; understand the importance of supply chain finance in maintaining a healthy buyer–supplier relationship; and appreciate the role of supply chain digitization to transform a regional supply chain into a global supply chain.

This case highlights the challenges faced by fashion garments industry due to fragmented nature of their supply chains, where the manufacturing base was in the east and most of the consumers in the west. Digitization can create a bridge to integrate these supply chains to drive out their inefficiency, fragility and vulnerability to disruptions.

The case could be discussed in 90 min of an Operations Management, Supply Chain Management and Technology Management class at MBA or Executive MBA level.

Teaching notes are available for educators only.

CSS 9: Operations and Logistics.

In this return on investment (ROI) for customer relationship management (CRM) case scenario, students must calculate the ROI for analytic CRM enabled by an enterprise data warehouse. The case is based upon a real-life consulting engagement with a major Fortune 100 telecommunications company. In this case the executive management team's strategic objective is to grow the customer base by 5 percent annually by customer acquisition. The internal rate of return calculated from the data given in the case is more than 800 percent for one year, and sensitivity analysis shows this is a robust projection, suggesting it should be funded without question. However, the strategy of the firm is customer acquisition in an environment of high customer churn. As a result of these dynamics, the revenues and net income of the firm are actually decreasing by hundreds of millions of dollars each year. A better solution would realize that the executive team has the incorrect strategic objective. Customer acquisition is the wrong approach in an environment of high customer churn and executives should focus on customer retention and cross-sell and up-sell to high-value customers. The case discussion therefore takes students beyond CRM ROI to focuses on the key strategic concepts of customer relationship management.

Students learn how to calculate return on investment (ROI) for analytic customer relationship management (CRM) initiatives. The case also discusses in detail the difference between operational CRM and analytic CRM. The case solution is relatively straightforward with a very good ROI. However, the true learning of the case is for students to understand the strategic context of analytic CRM and to question assumptions in any ROI model.

At three o'clock in the morning on September 10, 2001, Thierry Hautillac, a risk arbitrageur, learns of the final agreement between Pinault-Printemps-Redoute SA (“PPR”) and LVMH Moët Hennessy Louis Vuitton SA (“LVMH”). After a contest for control of Gucci lasting over two years, PPR has emerged as the winner. PPR and LVMH have agreed for PPR to buy about half of LVMH's stock in Gucci for $94 per share, for Gucci to pay an extraordinary dividend of $7 per share, and for PPR to give a two and a half year put option with a strike price of $101.50 to the public shareholders in Gucci. The primary task for the student in this case is to recommend a course of action for Hautillac: should he sell his 2% holding of Gucci shares when the market opens, continue to hold his shares, or buy more shares? The student must estimate the risky arbitrage returns from each of these choices. As a basis for this decision, the student must value the terms of payment and consider what the Gucci stock price will do upon the market's open. The student must determine the intrinsic value of Gucci using a DCF model as well as information on peer firms and transactions. The student must consider potential synergies between Gucci and PPR and between Gucci and LVMH. The student must assess the likelihood of a higher bid, using analysis of price changes at earlier events in the contest for clues.