The Entrepreneurial Process

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					                           THE UNIVERSITY OF TEXAS AT AUSTIN
                             McCOMBS SCHOOL OF BUSINESS
                             DEPARTMENT OF MANAGEMENT

                  Entrepreneurial Management (Man 337.20)

                                      Preliminary Course Outline
                                               Fall 2004

                      Instructor:     Professor Graebner
                      Office:         CBA 4.250
                      Telephone:      (512) 471-7057 Fax: (512) 471-3937
                      Office hours:   By appointment

                     Unique           Days         Time                Room
                     03175            Tu Th        10 am – 11:30 am    UTC 1.118

Required Reading Materials
   1.   William A. Sahlman, Howard H.Stevenson, Michael J. Roberts; Amar Bhidé. The
        Entrepreneurial Venture, HBS Press.

   2. Reading packet: Available at the University Co-op. Note: Due to copyright provisions, the GSB
      Honor Code requires that each student purchase a new case packet. It is a violation of the Honor
      Code to duplicate case packets.

   3. Assigned Reading Links on the Web

Suggested Reading Materials
   1. Jerry Kaplan. Startup: A Silicon Valley Adventure

Course Description
This course is for anyone interested in starting a business, working for an entrepreneurial company, or
working with entrepreneurial companies as an investor or advisor. The course uses a variety of learning
media, especially cases, to examine the life cycle of opportunities in new and established business
contexts. This involves identifying a winning business opportunity, getting funding for and launching

the opportunity, growing the business and harvesting the rewards. The course also invites you to
consider how your entrepreneurial initiative can make a difference to business and society.

To be effective, entrepreneurial managers need to have an in-depth understanding of the ongoing
challenges in key functional areas such as marketing, finance, MIS, R&D, and operations.
Consequently, this course builds on and makes use of the knowledge developed in earlier classes.
However, entrepreneurial management also involves a distinct set of skills, perspectives, and insights
about the business problems and opportunities confronting the total enterprise. Therefore, students are
expected to combine knowledge from other courses with the new material presented here to develop
sophisticated analyses and solutions to pursuing opportunity in today’s fast-paced, global, and highly
competitive business environment.

Entrepreneurial management is best learned by immersion in actual business situations where one can
fully appreciate the inherent conflicts, pressures, uncertainties, and risks that entrepreneurial
management entails. Moreover, verbal communication is both vital to and inseparable from
entrepreneurial management. Therefore, there will be relatively few lectures in this course. We will,
instead, emphasize case analysis and discussion. Your active participation is both integral to your
performance in this course and a prerequisite for your enrollment. As such, please read, complete, and
sign the course agreement on the last page of this syllabus.

Class Format
The course is composed primarily of case discussions. It is important that you participate in these
conversations. To encourage participation, class discussion counts for 40% of your grade. Students
start off with zero participation points (i.e., an “F”) and accumulate points through their contributions to
classroom discussions. Attendance does not equate to participation.

Students will be randomly called upon to identify the key issues in assigned cases or provide their
analysis and answers to the assigned case study questions. Class presentation points are based on the
quality (not simply quantity) of the student’s discussion of those issues. Students may also be randomly
called on to “close” or summarize the discussion at the end of class.

You are strongly encouraged to meet in study groups of four people to prepare the cases (and you may
be required to do so in preparation for some of the classes). Your study groups are your first line of
support to get help in understanding and applying the course material. Moreover, it is important that
you develop an effective working team prior to taking the midterm.

If for any reason you will not be in attendance in class please email or call me prior to the start of class.
If you must miss a class period, you may submit a write-up of the case that was missed in order to
receive participation credit for that day. Three or more missed classes will result in a lowering of your
overall class participation grade by at least one letter grade (i.e., of the letter grade assigned to 40% of
your final grade). Likewise, if you are unprepared on a particular day please let me know prior to class.

In order to promote an environment of active listening and participation, there will be a no laptops
policy in this course.

In addition to class participation, there will be two exams in this class. The first exam will ask students
to apply the knowledge of the concepts developed in the first half of the class. This exam will be taken
in the study group teams of four people that you are required to form at the start of the course. The
second exam will be comprehensive and will ask students to apply the knowledge of the concepts
developed over the entire course. This exam will be an individual assignment.

On occasion, homework may be assigned. This may be a written assignment that is turned in at the
beginning of class. These assignments will be graded on a high pass, pass, fail basis and will become
part of your overall participation grade.

Components and Weighting

Your grade will be based on four components, which are weighted as follows:

Class participation (Individual)                       40%
Midterm Case Analysis (Team)                           30%
Final Exam (Individual)                                30%

Total                                                  100%

Class Participation

The essence of entrepreneurial management is a willingness to make decisions on the basis of imperfect
and limited data, and despite great risk and uncertainty, to have the courage and boldness to carry out
proposed actions. In the end, goals, targets, and ideas must be converted into actions, which requires
convincing others. Consequently, the classroom should be a considered a laboratory where you can test
your ability to convince your peers of the value of your ideas.

Clearly, you must participate in class if you are going to share your ideas with others. Yet there is no
need to speak in every session. Some of the best contributors participate far less often than the most
active speakers. Though less vocal, their thoughts are truly insightful and persuasive. The issue is
primarily one of quality, not quantity.

In a typical session, two students will be asked to start the class by answering a specific question or
discussing a specific issue. Case preparation, which includes careful thought about the assignment
questions and the associated readings, should be sufficient to handle such lead-off responsibilities. After
a few minutes of initial analysis, we will then open the discussion to the rest of the class. While there
are many ways to effectively prepare for class, every student is responsible for having a plan of action
for the case protagonist, be it an individual or an entire organization. Action plans answer three
questions: (1) What’s going on?; (2) What do we do next?; and (3) How do we make it happen?

Shown below is a description of how I will calibrate your class contributions:

Outstanding contributor. In-class contributions reflect exceptional preparation. Ideas offered are
always substantive, and provide one or more major insights as well as direction for the class.
Arguments are well supported and persuasively presented, and reveal that this person is an excellent
listener. Comments invariably help others to move their thinking to a higher plane. If this person were
not a member of the class, the quality of our discussions would be greatly diminished.

Good contributor. In-class contributions reflect thorough preparation. Ideas offered are usually
substantive, and provide good insights and sometimes direction for the class. Arguments are generally
well supported and often persuasive, and reveal that this person is a good listener. Comments usually
help others to improve their thinking. If this person were not a member of the class, the quality of our
discussions would be diminished considerably.

Adequate contributor. Contributions reflect satisfactory preparation. Ideas offered sometimes provide
useful insights, but seldom offer a major new direction for discussion. Supporting arguments are
moderately persuasive. Comments occasionally enhance the learning of others, and indicate that this
person is a passable listener. If this person were not a member of the class, the quality of our
discussions would be diminished somewhat.

Unsatisfactory contributor. Contributions in class reflect inadequate preparation. Ideas offered are
seldom important, often irrelevant, and do not provide insights or a constructive direction for the class.
Integrative comments and higher-order thinking are absent. This person does very little to further the
thinking and potential contributions of others.

Non-participant. The person has said little or nothing in this class to date and so has not contributed
anything. Such persons are free-riders because they have benefited from the thinking and courage of
their peers but have offered little in return. If this person were not a member of the class, the quality of
the discussion would be unchanged or possibly improved.

In assessing your class contributions, I ask myself the following questions:

   a. Is this person an excellent listener?

   b. Are the points made relevant to the discussion and linked to the comments of others?

   c. Do the comments add value and new insight, or are they simple recitations of case facts?

   d. Do comments improve our understanding by clarifying and highlighting the important aspects of
      earlier remarks?

   e. Does the participant distinguish among different kinds of data – facts, opinions, personal beliefs,
      theoretical concepts, etc.?

   f. Is there a willingness to test new ideas, or are all comments safe? Example: seconding or
      repeating earlier comments without elaboration.

   g. Does this person raise great questions that expand the scope of our conversation?

Study Groups

You will be required to form study groups of four students and submit a list of your study group
members by the third day of the course. You will take your midterm exam with this group. In addition,
there may be some case assignments and/or classroom activities that will require you to prepare and
participate in your study groups. In no case will changes to study group membership be permitted
during the course. If problems arise in the study groups, it is the study group’s responsibility to resolve

Mid-Term Case Analysis (Group Exam)

The mid-term involves a written case analysis that you will do with the study group that you formed at
the beginning of class. A detailed assignment and the exam case itself will be distributed approximately
three days before it is due.

In addition, each team member will be required to submit a confidential ‘peer evaluation’ form in which
you will divide up a fictitious $100,000 bonus between the other members of your team in a way that is
representative of their contribution to the midterm exam. Peer evaluation forms will be passed out with
the mid-term exam. Individual grades on the midterm may, in some cases, be adjusted based on the
each individual’s peer evaluations.

Final Case Analysis

The final involves a written case analysis that you will do individually. A detailed assignment will be
distributed approximately one week before it is due.

Other Points

Please note the following:

       a. Students must make a demonstrated, good-faith effort on all required elements of the course
          in order to earn a passing grade.

       b. In determining final grades, class contribution is given particular emphasis in settling
          borderline cases.

       c. You are required to form study groups and strongly encouraged to brainstorm within these
          study groups about cases and reading assignments.

       d. If you miss class, you are responsible for informing me beforehand and obtaining any notes,
          handouts, additional reading materials, or assignment changes from your classmates.

                    The Entrepreneurial Process (Man 337.20)
                         Course Topics and Assignments

I. Introduction: What is an entrepreneurial manager?
Class   Date          Cases, readings and assignments

1       Thursday,                    Introduction and goals for the semester
        August 26

                      Reading:       1. A note on case learning (9-899-105)
                                     “The Road Well Traveled,” Ch. 6 in The Entrepreneurial Venture
                                     2. “The Financial Perspective: What Should Entrepreneurs Know,” Ch. 14 in
                                        The Entrepreneurial Venture

                      Questions      1. What is your plan for getting the most out of a case discussion-based class?
                      for Reading:   2. How does participating in a course on the entrepreneurial process help you in
                                        managing your career?
                                        (Use the above questions to guide your reading. You do not need to hand in
                                        a written response to the above questions).

                      Assignment     Student Background Information
                      to be turned   1. Copy of your resume
                      in next        2. Please write a description of your ‘ideal job’ (one paragraph) and turn this in
                      week:             at the beginning of the next class.

2       Tuesday,                     What is an entrepreneurial manager?
        August 31

                      Case:          R & R (9-386-019)
                      Reading:       “A Perspective on Entrepreneurship,” Ch. 1 in The Entrepreneurial Venture
                                     (Note: This is a key reading for the course)

                                         1.   What factors created an opportunity for Bob Reiss and the "TV Guide

                                         2.   What were the risks and rewards faced by Bob Reiss and other
                                              participants in the enterprise? Hint: Consider a breakeven analysis

                                         3.   Would this approach have worked for Parker Bros. or Milton Bradley?

                      Turn in:                  1.   Copy of your resume
                                                2.   Description of ‘ideal job’

                                     Study Group Formation

                                     You are required to form study/midterm exam groups of four students. The
                                     midterm will be a group case analysis write-up. You are strongly encouraged
                                     (and for some classes may be required) to work in these study groups as you
                                     prepare the cases. Each study/midterm group must submit a list of their
                                     members by the end of the next class period.

3   Thursday,
    September 2

                  Case:         Vermeer Technologies (A): A Company is Born (9-397-078)
                  Reading:      A note on pre-money and post-money valuation (A) (9-802-179)
                                A note on pre-money and post-money valuation (B) (9-802-180)

                  Class         Vermeer Technologies (A-1): Hiring the CEO (9-397-079)
                  Handouts:     Vermeer Technologies (B): Realizing the Dream (9-397-080)
                                Vermeer Technologies (C): Negotiating the Future (9-397-081)
                                    1.   What decisions did Charles Ferguson make, and what actions did he
                                         take, from late 1993 through January 1995 to build an enterprise that
                                         attracted an offer from a group of venture capital firms to invest $4
                                         million at a $4 million pre-money valuation?

                                    2.   As Charles Ferguson, would you agree to the proposed deal?

                                    3.   In January 1995, what can go right and what can go wrong for
                                         Vermeer? As Charles Ferguson, what would you do to seize the
                                         opportunities and mitigate the risks?

4   Tuesday,                    Entrepreneurial management and the corporation
    September 7

                  Cases:        Distributed to students after class on Thursday, September 2
                                Vermeer (D): Making Transitions (9-397-082)
                                Vermeer (E): New Beginning (9-397-085)

                  Class         Vermeer (F): FrontPage 97 (9-397-110)
                  Handouts:     Vermeer (G): Epilogue (9-397-121)

                                    1.   What did Chris Peters hope to get from acquiring Vermeer?

                                    2.   How would you evaluate Chris Peters' actions to integrate the Vermeer
                                         team into Microsoft?

                                    3.   Compare Vermeer as an organization before its acquisition and the
                                         Microsoft organization. How are they similar? What are their major

II. Understanding the difference between an idea and an opportunity: Fundamentals for the
5      Thursday,                    Recognizing opportunity and developing business models
       September 9

                      Case:         TBD (will be distributed via Blackboard)
                      Reading:      "Some Thoughts on Business Plans," Ch. 9 in The Entrepreneurial Venture
                                    (Note: This is a key reading for the course)

                      Assignment:   TBD

6      Tuesday,                     Refining the business plan
       September 14

                      Case:         Zipcar: Refining the business plan (9-803-096)
                      Reading:      Why business models matter (HBR R0205F)
                                    Note on Business Model Analysis for the Entrepreneur (9-802-048)
                                         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? Do these data give you comfort or concern?
                                         3.   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?

                                                    a.   Fishbone diagrams will be helpful in answering these
                                                         questions. Trips/customer should be an entry in your
                                                    b.   The last two rows of Exhibits 3 and 5 contain errors. (The
                                                         row labeled “Total Overhead Costs” is actually variable
                                                         costs + Boston overhead; the row labeled “Net income
                                                         before tax” is actually revenue – variable costs - corporate
                                                         overhead only.)

7      Thursday,                    Developing business models and relationships outside the firm
       September 16
                      Case:         Keurig (9-899-180)

                      Assignment:   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. The typical Office Manager
                                                      E. The Coffee Drinking Employee

                                    It will help the class discussion if we use some common assumptions:
                                    Number of brewing units in offices = 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 avg 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 packaging line = 16.125 million K-cups (page 11, needed to
support 1500 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 dealings with
     MTS, the current vendor for the packaging line, and the other potential
     vendors? Be specific: What price goal would you have for the negotiation
     and what would your negotiating 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?

Be prepared to share your analysis for questions 1-4

III. Gathering Resources and Launching the New Venture
8      Tuesday,                     Financing the venture: Venture Capital
       September 21
                      Case:         Term Sheet Negotiations for Trendsetter, Inc. (9-801-358)

                      Reading:      “Venture capital,” Ch. 15 in The Entrepreneurial Venture – especially pages
                                    272-280 (note: this is a long reading)

9      Thursday,                    Financing the venture: Search Funds
       September 23

                      Cases:        Beacon Fire Safety (will be distributed via Blackboard)
                      Readings:     Early Career LBOs Using the Search Fund Model (9-897-092)
                                    Skim: “Purchasing a Business: The Search Process,” Ch. 11 in The
                                    Entrepreneurial Venture

                      Assignment:   TBD

10     Tuesday,                     Financing the venture: Angels
       September 28

                      Case:         Walnut Venture Associates (A): RBS Group Investment Memorandum (9-899-
                      Reading:      Angel Investing (HBSP 9-800-273)
                                    Angel Investing: Innovation within the Establishment (Stanford Graduate
                                    School of Business E-127)
                      Class         Walnut Venture Associates (B): Due Diligence -- Customers (9-899-063)
                      Handouts:     Walnut Venture Associates (C): Due Diligence -- Market Size (9-899-064)


                                    1.   Who are angel investors? Why are they investing in start-ups? Why would
                                         an entrepreneur seek financing from an angel?

                                    2.   Evaluate the potential investment in RBS from Walnut's point of view.

                                    3.   As a Walnut investor, what critical issues do you see as requiring more
                                         investigation/due diligence on your part prior to investing, and how would
                                         you accomplish that? What level of comfort/certainty would you need to
                                         have prior to investing?

                                    4.   As Bob O'Connor, what issues/concerns do you have related to Walnut's
                                         investing in your business, and how would you resolve those issues?

11   Thursday,
     September 30
                    Case:         Walnut Venture Associates (D): Deal Terms (9-899-097)
                                  Glossary of Deal Terms
                    Reading:      Review “Venture capital,” Ch. 15 in The Entrepreneurial Venture
                    Assignment:       Put yourself in Bob O'Connor's shoes.

                                  1.   What do you think the investors are trying to accomplish?

                                  2.   What is a reasonable valuation for RBS in June 1998?

                                  3.   Assume that in five years RBS is liquidated for $3 million. If the deal
                                       proposed in the term sheet is accepted, who will receive the $3 million? If
                                       RBS is liquidated for $10 million, or $30 million in five years, who will
                                       receive the money?

                                  4.   What proposed terms do you find most troubling and why? What would
                                       you try to renegotiate, and what might you be willing to give up to get what
                                       you want?

                                  Assume Series A has preference over Series B.

                    MIDTERM       The midterm will be passed out at end of class. This is a team case analysis that
                                  will be done in the study groups that you submitted to me on the second day of
                                  class. No rearranging of groups is permitted. You will also be required to fill
                                  out a ‘peer evaluation’ form, where you assign each of your other group
                                  members a portion of a ‘$100,000’ bonus based on your assessment of their
                                  contribution to the midterm. These peer evaluations may be used in some cases
                                  to adjust individual midterm grades.

12   Tuesday,                     Financing the Venture: The 3Fs
     October 5
                    Case:         Foreign Cinema (will be distributed via Blackboard)
                    Assignment:   TBD

13   Thursday,                    MIDTERM DUE at the beginning of class. Late midterms will only be
     October 7                    accepted in extreme circumstances, and will be reduced by one letter grade
                                  per day late (e.g., late midterm, with an acceptable reason, turned in by
                                  5pm the next day will be penalized one letter grade).

                                  We will have a class discussion on this day.

     Tuesday,                     Plus Program
     October 12

     Thursday,                    Plus Program
     October 14

     Tuesday,                     Plus Program
     October 19

     Thursday,                    Plus Program
     October 21

IV. Growing Successful Ventures
14     Tuesday,                   Building the team: Employment agreements
       October 26
                    Case:         Balance (A) (9-801-169)
                    Reading:      “Entrepreneurship Reconsidered: The Team as Hero,” Ch. 2 in The
                                  Entrepreneurial Venture
                                  “Compensation and Benefits for Startup Companies” Harvard Business Review
                                  Jan-Feb 1989
                    Assignment:       1. Consider the dynamics of your study group during the first half of the
                                          course. What were the strengths and weaknesses of the group? How
                                          will you address the weaknesses while maintaining/improving on the
                                          team strengths in the second half of the course? (Answer in 500 words
                                          or less and hand in one submission per team).
                                      2. Evaluate the terms of the proposed employment agreement between
                                          Hahn and Balance, Inc. Be specific.
                                      3. Imagine that you are Fitzgerald and you intend to hire Hahn. What
                                          salary, equity stake, and employment terms are you willing to grant?
                                      4. What negotiating strategy would you employ to reach that outcome?
                                      5. In light of the agreement that you, as Fitzgerald, hope to reach with
                                          Hahn, what compensation package should you offer to Knappman and
                    Class         Balance (B) (9-801-170)

15     Thursday,                  Legal issues in the growing firm
       October 28
                    Case:         Lawyers and Leases (9-801-166)
                    Reading:      Legal Aspects of Entrepreneurship (9-802-161)
                                      1.     Should Chaudry sign the lease agreement?
                                      2.     Should Chaudry seek counsel from an attorney, and if so, which one?
                                      3.     Does Chaudry face any other immediate issues that he should discuss
                                             with an attorney?

16     Tuesday,                   Sales in the Entrepreneurial Venture
       November 2

                    Case:         Austin Woman Magazine (to be distributed via Blackboard)
                    Reading:      Negotiating with a Customer You Can’t Afford to Lose (HBR 88605)

                    Assignment:   TBD

17     Thursday,                  Returning to the well: Raising additional financing
       November 4
                    Case:         National Demographics and Lifestyles (A) (9-388-043)
                    Assignment:         1.   Evaluate the NDL concept and the principals’ progress to date. Are
                                             the basic economics of the business sound? You may wish to
                                             consider separately the economics of the client services and list sales
                                        2.   Assess the company’s financing history. What questions or lessons
                                             does it suggest? Who is ending up with the value here?
                                        3.   As NDL’s principals, how would you convince your venture backers
                                             to provide the next round of financing?
                                        4.   As a venture capitalist, how would you respond? If you make this
                                             follow-on investment, would it be subject to any restrictions? Please
                                             be prepared to role-play both an NDL principal and a VC in class.

18     Tuesday,                    Making Bets on Growth
       November 9
                     Case:         Austin City Limits Music Festival (will be distributed via Blackboard)
                     Assignment:   TBD

19     Thursday,                   Managing the Board
       November 11
                     Case:         FogDog (E100)
                     Reading:      “Why sane people shouldn’t serve on public boards,” Ch. 24 in The
                                   Entrepreneurial Venture
                                   “How small companies should handle advisors,” Ch. 25 in The Entrepreneurial
                     Assignment:   TBD

20     Tuesday,                    Managing Risk
       November 16

                     Case:         ONSET Ventures (9-898-194)
                     Reading:      A Note on the Value of Information in an Entrepreneurial Venture (9-802-143)

                     Assignment:         1.   What is ONSET’s model for spawning entrepreneurial ventures?
                                              What is your assessment of their model?
                                         2.   Is TallyUp a good fit with ONSET’s model?
                                         3.   Should ONSET invest an additional $1 million or seek $3-4 million
                                              from the venture capital community? What are the pre- and post-
                                              money valuations of TallyUp at each round of financing?
                                         4.   How much money should ONSET raise for Fund III?

V. Harvest and Exit Options
21     Thursday,                   Dealing with Bankruptcy
       November 18
                     Case:         Stephen Shang (to be distributed via Blackboard)
                     Reading:      “Bankruptcy: A Debtor’s Perspective,” Ch. 26 in The Entrepreneurial Venture

                     Assignment:         1.   Why has Stephen Shang been associated with so many companies that
                                              have failed?
                                         2.   Assess Shang’s career path. How has he managed to survive as an
                                              individual despite the demise of several of his employers?
                                         3.   What lessons can you learn from Shang’s story?
                                         4.   What should Shang do next?

22   Tuesday,                    Creating Value through an IPO
     November 23
                   Case:         Kendle International (9-200-033)
                   Reading:      “Going public” by Constance Bagley and Craig Dauchy, Ch. 23. in The
                                 Entrepreneurial Venture

                   Assignment:   In the spring of 1997, Kendle was facing a major strategic decision. The
                                 company had lined up two possible acquisitions that would expand the company
                                 outside the U.S. and it had been working on an initial public offering to finance
                                 the acquisitions. It was now time to decide whether to go ahead with the
                                 program or to proceed with a lower risk, phased approach to acquisitions and

                                      1.   What is the basic business model of Kendle International? What are
                                           the key success factors that determine profitability? What are the key

                                      2.   What is your assessment of the company's recent performance and
                                           current position in the marketplace?

                                      3.   Does Kendle need to establish operations outside the U.S. or can it
                                           survive as a domestic company? What operational issues is Kendle
                                           likely to face if it expands internationally?

                                      4.   Do the acquisitions of U-Gene and gmi make sense? Are the proposed
                                           deals priced fairly?

                                      5.   What is your estimate of Kendle's economic value in April 1997, based
                                           on the present value of expected cash flows?

                                      6.   Would you proceed with both acquisitions now or do one followed by
                                           an IPO and the second acquisition later?

     Thursday,                   Thanksgiving Holiday
     November 25

23   Tuesday,                    Creating Value through M&A
     November 30

                   Case:         Kate Spade (9-800-002)

                                 1.   Evaluate Kate Spade's progress to date. How has the team done in
                                      identifying and pursuing the opportunity?

                                 2.   What are the key factors for success as the company moves forward?

                                 3.   Which, if any, of the options would you recommend the company
                                      accept/pursue? Why? What are the company's alternatives?

                                 4.   What will it take for Kate Spade to achieve its stated goal of $100 million
                                      in revenues?

                   Assignment:        1. Of the options listed at the end of the case, which one is your

                                            a)   A
                                            b)   B
                                            c)   C
                                            d)   D

24   Thursday,                  Class wrap-up and course debrief
     December 2
                  Assignment:   TBA

This Page Intentionally Left Blank

Student Information and Course Agreement

Your name ____________________________________________________

Preferred name to use in class _____________________________________

Pronunciation of name (if needed) _________________________________

Your concentration/specialization __________________________________

Your full e-mail address _________________________________________


Your objectives in taking this course ___________________________________________

Your work experience _______________________________________________________

What Other Entrepreneurship Courses:
Have you taken?                    ___________________________________________
Are you taking now?                ___________________________________________
Do you plan to take in the future? ___________________________________________

Student Agreement: I, the above-named student, have read this syllabus and agree to actively
contribute to class discussions, which is required both to enroll in and pass this course.
Furthermore, I understand that much of my grade is based on the quality of my contributions.

                           _________________________________   _____________
                                 (Signature)                 Date