Changan Automobile Co., Ltd.

Dennis  Campbell; Donglin   Xia

Case | HBS Case Collection | July 2006 (Revised March 2008)

Changan Automobile Co., Ltd.

Abstract

Chairman Yin Jiaxu must communicate that the company's extraordinary reported performance in 2002 reflects Changan's unique strategy within the competitive dynamics of China's automobile industry. Changan's 2002 annual report demonstrated an extraordinary level of success for the company, with net income growth of 421% over the prior year. Chairman Yin viewed this astonishing level of growth as the reward for the company's strategic shift in sales mix toward Changan's higher margin automobiles, coupled with component price decreases and hard-fought internal cost reduction efforts. However, an anonymous article posted on the Internet attributed Changan's reported success to fraudulent financial reporting, attracting the attention of the press, analysts, and financial Web sites. At the heart of the concerns raised in the article were fluctuations in Changan's quarterly gross margins, including a large increase in gross margin in the fourth quarter, a large amount of accrued marketing expenses on its balance sheet, and high reported margins on one of its top selling models, the Star of Changan SC6350 minivan. Facing suspension of trading in Changan Automobile Co.'s shares on the Shenzen Stock Exchange amid widespread investor concern over the company's financial reporting practices, Chairman Yin must devise a communication strategy to convince investors that the company's financial reports reflect the underlying economics of the company.

Keywords: Financial Reporting; Ethics; Corporate Disclosure; Media; Business and Shareholder Relations; Auto Industry; China;

Format: Print

17 pages

Find at Harvard

Citation:

Campbell, Dennis, and Donglin Xia. "Changan Automobile Co., Ltd." Harvard Business School Case 107-006, July 2006. (Revised March 2008.)

Case | HBS Case Collection | October 2017 (Revised April 2019)

Eastern Bank: Innovating Through Eastern Labs

Karen Mills, Dennis Campbell and Aaron Mukerjee

Eastern Bank is a 200-year-old New England mutual bank with a community focus. Eastern specializes in small business lending, having made strategic investments to become the top SBA lender in New England in the midst of the Great Recession, when other banks were pulling back. But with technology threatening to disrupt Eastern’s relationship banking model, CEO Bob Rivers is getting worried. Looking to spur innovation at the bank, he set up meetings at MIT to talk with “fintech” entrepreneurs. In a deliberate quest for innovation talent, Rivers finds his way to Dan O'Malley, co-founder of the payments division at Capital One and, most recently, CEO of a failed online bank. O'Malley agrees to join the bank as Chief Digital Officer, leading product development, customer support, and “Eastern Labs”—a new office enclosed by glass walls and located in the middle of Eastern's main lobby. Rivers provides Labs with $4 million annually—1% of gross revenues—to develop new banking technologies, and promises to help O’Malley spin out his own company if he develops product that can be monetized. O’Malley conducts tests in insurance cross-selling and small business lending, eventually launching a completely automated small business lending product. Rivers keeps the promise by helping O'Malley spin out a bank technology company called Numerated, and secures a 25% equity share for Eastern. But by the time of the spin out, Rivers is reassessing the success of the effort. Did Rivers have the right intrapreneurship model? Did he change the culture at Eastern? Did he make a mistake spinning off Numerated into a separate company? What lessons can he learn for “Labs 2.0”?

Keywords: Banks and Banking; Technological Innovation; Entrepreneurship; Management;

Citation:

Mills, Karen, Dennis Campbell, and Aaron Mukerjee. "Eastern Bank: Innovating Through Eastern Labs." Harvard Business School Case 318-068, October 2017. (Revised April 2019.) View Details

Cite View Details Educators Purchase

Faculty & Research

Changan Automobile Co., Ltd.

Abstract

Citation:

About the Author

More from the Author