THOMAS R. PIPER, Baker Foundation Professor and Lawrence E. Fouraker Professor of Business Administration, Emeritus, is a faculty member in the Finance and Accounting Units at the Graduate School of Business Administration. He has taught in the MBA Program, as well as in other Executive Education courses, including the Advanced Management Program and General Management Program. He served as chairman of the MBA Policy Committee and was senior associate dean for 13 years.
Presently, he is studying ethics and corporate responsibility for future business leaders and shares responsibility for the School's efforts in the area of values, leadership, and corporate responsibility. He also oversaw two Senior Executive Programs sited in the Middle East and South Africa and was instrumental in an initiative to help establish outstanding market-oriented business schools in Central and Eastern Europe.
Professor Piper is the author of The Economics of Bank Acquisitions and a coauthor of Case Problems in Finance, now in its eleventh edition (with W. Fruhan, W. Kester, and R. Ruback) and Can Ethics Be Taught? (with M. Gentile and S. Parks). He is a consultant in the field of corporate financial management and was a director of FleetBoston Corporation, Marriott Corporation, and GenRad.
Fruhan, W. E., Jr., W. C. Kester, S. P. Mason, T. R. Piper and R. S. Ruback, eds. Teacher's Manual for Case Problems in Finance. 10th ed. Homewood, IL: Irwin, 1992.
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Koehn, Nancy F., Thomas R. Piper, V. Kasturi Rangan, and Richard S. Tedlow. "Making Choices: Aspects of the History of the Harvard Business School MBA Program." MBA Leadership and Learning (1992).
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Paine, L. S., and Thomas R. Piper. "Ethics, Organizations and Business Schools." In The Intellectual Venture Capitalist: John H. McArthur and the Work of the Harvard Business School, 1980-1995, edited by T. K. McCraw and J. L. Cruikshank. Boston: Harvard Business School Press, 1999.
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The case provides students with (1) an understanding of the essence of long-term financial health; (2) familiarity with the calculation and meaning of various financial ratios; and (3) an understanding of the influence of a company's operating and competitive characteristics on its investment in various type assets, on the profitability of these investments, and on the financial structure of its balance sheet. The case also allows a discussion of (1) the incomplete and lagging nature of financial measures; (2) the influence of financial measures on behavior; and (3) the reality that financial analysis often results in better, more focused questions to be asked of management, not conclusive answers.
Piper, Thomas R. "Assessing a Company's Future Financial Health (TN)." Harvard Business School Teaching Note 911-415, November 2010. (Revised January 2011.)
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The management of Monmouth Inc. is considering whether to acquire the Robertson Tool Company and the value and form that the acquisition should take. Value can be assessed using a variety of approaches including a DCF with WACC analysis, impact on EPS and market multiples. The case also requires the student to consider how the offer should be designed and implemented.
Piper, Thomas R., and Heide Abelli. "Monmouth, Inc., Spreadsheet Supplement (Brief Case)." Harvard Business School Spreadsheet Supplement 104-228, July 2010.
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Piper, Thomas R., and Heide Abelli. "Monmouth, Inc., Spreadsheet Supplement for Instructors (Brief Case)." Harvard Business School Spreadsheet Supplement 104-229, July 2010.
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CEO Aaron Feuerstein of Malden Mills decided to pay idled workers after a massive fire at his mill in 1995. Focuses on the decisions made post-fire and the rebuilding process and eventual bankruptcy of the company. Also outlines creditors' struggle to decide whether to lend Feuerstein additional funds to enable him to regain control of the company after emerging from bankruptcy.
A division manager must explain why his division failed to meet its budgeted profit performance as well as meet with members of his management team to discuss corrective action.
Jones Electrical Distribution is faced with a need for increased bank financing due to its rapid sales growth. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed and assess the attractiveness of the loan to the bank. Allows students to practice ration analysis, financial forecasting and evaluating financing alternatives.
Piper, Thomas R., and Jeffrey DeVolder. "Jones Electrical Distribution (Brief Case)." Harvard Business School Teaching Note 104-180, April 2010.
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Piper, Thomas R., and Jeffrey DeVolder. "Jones Electrical Distribution, Student Spreadsheet Supplement (Brief Case)." Harvard Business School Spreadsheet Supplement 104-181, April 2010.
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Piper, Thomas R., and Jeffrey DeVolder. "Jones Electrical Distribution, Faculty Spreadsheet (Brief Case)." Harvard Business School Spreadsheet Supplement 104-182, April 2010.
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Piper, Thomas R., and Aldo Sesia. "Malden Mills (TN) (A), (B), and (A) (Abridged)." Harvard Business School Teaching Note 307-018, January 2007. (Revised March 2010.)
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The newly appointed dean of a South American business school is eager to transform the learning process from the traditional lecture method to one that actively engages students and contributes to the development of critical managerial skills, attitudes, and world view. To be successful, a number of organizational processes must be changed, and strong alliances must be created with key members of the faculty, administrative staff, alumni, and students.
No corporate credo is better known than that of Johnson & Johnson. Describes the history of the credo, including the credo challenge initiated by the CEO, James Burke, in 1975 and the role the credo played during the Tylenol poisoning crisis.
John Lynch, CEO of the Dressen Division of Westinghouse, was elated by the proposed leveraged buyout by the private equity firm, Warburg Pincus Ventures. The buyout would rid the division of a 'bad' parent and place the division's destiny in its own hands. A recently instituted restructuring plan seemed likely to improve profitability, but the turnaround was in its infancy. Would sources of finance support a financing plan that relied heavily on debt? Would Warburg Pincus Ventures be prepared to pay a price sufficient to win the bidding contest?
Divisional management must decide whether to support a leveraged buyout by a private equity group and, if so, what percent of ownership should go to the various partners involved. The appropriateness of the financing structure and the value of the equity depend on the sustainability of the turnaround effected less than one year earlier.
Piper, Thomas R. "Marriott Corporation (A) Financial Projections Exercise." Harvard Business School Spreadsheet Supplement 307-703, November 2006.
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Paine, Lynn S., Thomas R. Piper, Charles Nichols, and Aldo Sesia. "Marriott Corporation (TN) (A) and (B) (LCA)." Harvard Business School Teaching Note 307-015, October 2006.
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CEO Aaron Feuerstein of Malden Mills decided to pay idled workers after a massive fire at his mill in 1995. Focuses on the decisions made post-fire and the rebuilding process and eventual bankruptcy of the company. Also outlines creditors' struggle to decide whether to lend Feuerstein additional funds to enable him to regain control of the company after emerging from bankruptcy.
Nohria, Nitin, Thomas R. Piper, and Bridget Gurtler. "Malden Mills (A)." Harvard Business School Case 404-072, December 2003. (Revised August 2006.)
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A shift in strategy from broadcasting standardized programs throughout its footprint to localized programming necessitates a review of STAR's organizational structure. Growing complexity and a need for local responsiveness point toward adoption of a country-based organizational structure. The question arises concerning the systems that must be in place if headquarters is truly to decentralize decision rights. The case also raises the issue of the need for senior executives at corporate to redefine their roles.
The CEO of a semiconductor equipment manufacturer is assessing the financial forecasts and financing plan prepared by the chief financial officer. Continued rapid growth will create substantial financing pressures, especially if profitability fails to recover and/or if a major, unexpected economic downturn occurs.
The Cartwright Lumber Co. faces a need for increased bank financing due to its rapid sales growth and low profitability. A rewritten version of an earlier case.
The head of SysCom's test equipment division is concerned about how to answer employee and customer questions concerning the possible sale or liquidation of the division. The consequences of alternative approaches (full transparency vs. strong optimism and reassurance) for the various parties differ substantially. Also involves important legal, regulatory, and reporting requirements.
The head of the Carlson Division stands to benefit substantially in financial terms if a private equity firm wins the bid for the division. The division is in the early stages of a performance turnaround, with only three quarters of profit improvement and no audited figures. The division head has a well-developed plan to improve performance and is confident that operating profits will double within five years. If this occurs and if the private equity firm is successful in buying the division at its target price, the division head's equity interest may be worth $60 million in five years. How much should he disclose to strategic buyers and to the parent company in terms of the turnaround plans and prospects? What are the legal and ethical requirements?
Senior executives of Nissan and Renault are considering a major investment in Nissan by Renault. An important consideration is whether a major restructuring of Nissan's operations will be possible, given the value placed on lifetime employment and the impact on communities. Also of concern is the likely decrease in commitment to restructure once the equity investment has been made.
The Butler Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case. Allows students to practice ratio analysis, financial forecasting, and evaluating financing alternatives.
A major paper company is considering acquiring the assets of a company that is threatened by a hostile takeover. The acquisition can be evaluated in terms of industry attractiveness, comparative advantage, and cash-flow analysis.
The management of an electronics company must decide whether to use a single hurdle rate for all projects or to move to a system of different hurdle rates for each of its two divisions. The divisions differ substantially in terms of risk and seem to have substantially different costs of capital.
This exercise comprises seven problems that collectively allow students to work through each type of cash flow that is encountered in capital budgeting. The instructor can also address such issues as product cannibalization and real options.
A turnaround expert must determine whether a firm in distress is worth more as a going concern than its liquidation value. If so, the finances of the firm must be restructured in a way consistent with the bargaining power of the holders of the various securities. The restructuring requires a delay in principal repayment, rate concessions, and a debt-for-equity swap.
Moore, Ronald W., and Thomas R. Piper. "Infinity Carpets, Inc." Harvard Business School Case 299-014, September 1998. (Revised December 1998.)
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A senior executive of a U.S. multinational is attempting to develop a set of financial, operating, and ownership arrangements that will be acceptable to the management and employees of a major Polish company and to the Ministry of Privatization. The arrangements must also be consistent with the financial and strategic objectives of the U.S. multinational. A rewritten version of two earlier cases.
After a decade of mediocre performance, the Norton Co. enters 1990 with the prospect of increased sales in the next few years. Yet Norton is pursuing slow growth industries, and a lower than expected earnings announcement at the beginning of 1990 has depressed earnings forecasts by brokerage firms. BTR, a large highly successful British conglomerate, is considering making a takeover offer of Norton but is troubled by a number of issues. This case takes a behind-the-scenes look at how a company like BTR would value a potential takeover target and analyze how the acquisition would impact BTR's operations and performance, and how it might stave off competing bids if it were to make an offer.
The owner of a rapidly growing retail lumber company is considering the financial implications of continued rapid growth. The magnitude of the company's future financing requirements must be assessed in the context of the company's access to bank finance and/or equity finance. A rewritten version of an earlier case.
The president of a medium-sized electronics company is evaluating the financial forecasts and proposed financing program submitted by the chief financial officer. The forecasts are prepared in constant dollars, on which basis the proposed financing plan seems reasonable. However, when inflation is incorporated into the forecasts, the financing need far exceeds available sources of funds, and adjustment on the operating side is necessary. The danger of relying on a single set of forecasts based on the most likely outcome is also demonstrated.
The executive president of a major industrial company must decide 1) whether to acquire a small hand tool company and, if so, 2) the value and form that the acquisition package should take.
The president of a toy company is considering the adoption of level production in a business characterized by highly seasonal sales. The issues include balancing the cost savings and the inventory risk, estimating the seasonal financing need, and determining the appropriate approach to the bank. A rewritten version of an earlier case.
A senior loan officer is reviewing the recent performance of a company that has failed to repay its loan as scheduled. The failure results from a cyclical downturn in sales, coupled with a lag in cutting back production. Inventory risk is minimal. Teaching objective: Practice in financial analysis and in understanding the impact of business cycle on durable goods companies. Also an opportunity to evaluate the situation from a lender's perspective. A rewritten version of an earlier case.
A company is considering the elimination of a product line. As part of that consideration, it must develop possible strategies for closing the division, and identify the economic and non-economic implications of the strategy. The situation is complicated by the company's need for an infusion of equity capital.
Provides an opportunity to evaluate an investment in a new product line in strategic, competitive, organizational, and economic terms. The economic analysis involves an estimation of the relevant cash flows and discounting them at an appropriate hurdle rate.
Faced with large external financing needs and a low stock price, Con Ed management must decide whether to pay a cash dividend in April 1974. Based on Consolidated Edison by G.C. Lodge.
A loan officer must decide whether to lend $8 million to a rapidly growing high technology company. The company has had a series of relationships with three other banks. Reports from loan officers at these banks are mixed and raise questions as to the ease with which a relationship would proceed. The full range of issues must be considered in evaluating the credit worthiness (character, collateral, capacity, conditions, pricing). The loan officer must also determine how much weight to place on a comfort letter from a major pharmaceutical firm.
The CEO of a U.S. electronics firm is assessing the financial forecasts and the financing plan prepared by the chief financial officer. Given the cyclicality of the industry and the volatility of the firm's performance, the CEO is unsure as to the usefulness of forecasts based on straight line extrapolation of rapid sales growth and stable relationships of profits and assets to sales. The teaching objectives include: 1) how many years into the future should the forecasts run given the level of uncertainty, 2) how can one deal with the high uncertainty when preparing the forecasts or designing a financing plan, and 3) how to estimate the financing needs under conditions of adversity.
The manager of international finance of a major U.S. electronics company is concerned about the exposure of the firm to changes in exchange rates. Of particular concern is the exposure of operations to changes in real exchange rates. The teaching objectives include: 1) understanding operating exposure and contractual exposure; 2) understanding the issues in estimating operating exposure; 3) understanding possible actions to neutralize operating exposure; and 4) assigning responsibility for the management of operating exposure.
Management must choose between two mutually exclusive bids to build two drilling rigs. Both bids involve attractive export credit financing denominated in foreign currencies.
A truck manufacturer must decide whether to bid on the sale of 120 trucks to a private firm in Costa Rica. If a bid is submitted, a decision must be made on whether to protect against the credit, exchange rate, and sovereign risks.
The Wilson Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case by J.K. Butters.
Gentile, Mary C., Kenneth E. Goodpaster, and Thomas R. Piper. "Managerial Decision Making and Ethical Values, Instructor's Manual." Harvard Business School Case 2-321, December 1989.
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Piper, Thomas R. "The Poletown Dilemma and Poletown Dilemma: The Outcome, Teaching Note." Harvard Business School Teaching Note 390-069, November 1989.
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Goodpaster, Kenneth E., and Thomas R. Piper. "H.J. Heinz Co.: The Administration of Policy (A), (B), (C), and (D), Teaching Note." Harvard Business School Teaching Note 390-045, November 1989.
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Senior management of General Motors must select a site for a new assembly plant to replace two plants located in Detroit. The economics strongly favor a site in an adjacent state. However, a relocation would have substantial, negative impact on the existing work force, the City of Detroit, and suppliers in the Detroit area. Selection of a Detroit site would result in higher costs and would require the taking by eminent domain of 1,200 homes in the community of Poletown. The case raises issues of corporate responsibility, business-government relations, and stakeholder analysis.
A senior loan officer is reviewing the recent performance of a company that has failed to repay its loan as scheduled. The failure results from a cyclical downturn in sales, coupled with a lag in cutting back production. Inventory risk is minimal. This case is an updated version of Cutrite Shears.
Marriott is considering the repurchase of ten million shares. This is apparently at odds with the financial policies that the Board of Directors passed two years earlier. Students must discuss why the policies were passed and why changes are now necessary. Includes a discussion of debt policy, financing policy and dividend policy. Students also discover stock is currently undervalued.
A credit analyst for a furniture manufacturer is confronted with two customers who have exceeded their credit limits. The financial performance of each has been weak, and one of the customers has a highly leveraged balance sheet. Industry conditions are weak; the manufacturer apparently has excess capacity; and the credit analyst is caught between the conflicting demands of the sales managers and the credit manager. The case provides an opportunity for ratio analysis.
A large integrated oil company is debating whether to switch from a single hurdle rate to multiple hurdle rates for project analysis purposes. Raises questions on: 1) determination of the cost of equity; 2) the usefulness of multiple hurdle rates to adjust for project risk; 3) differences between a project's risk and its impact on overall corporate risk; and 4) the limitations of project analysis and capital budget systems.
A large diversified company must develop a strategy for a division whose performance has deteriorated due to its aging product. Alternatives range from liquidation to a major investment in a new product. The formal capital budgeting system is compared with the informal process by which projects are identified and presented. This case is a consolidation of MRC, Inc. (A) and (B) by R.W. Moore.
Paine, Lynn S., and Thomas R. Piper. Ethics, Economics, and Organizations." Presentation. "Breaking New Ground: Initiatives in Management Education, 1980-1995. Lecture at the Symposium in Honor of John H. McArthur Series, Harvard Business School, Boston, MA, October 01, 1996.
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