STRT-430 Business Strategy 9/24/21 Reading Notes

Inside the Simon & Schuster Blowup Over Its Mike Pence Book Deal
 S&S employees upset that company was publishing Pence’s book
 S&S CEO stood his ground- said it was important to publish a wide array of views
 In contract to Hawley, Pence did not take actions to delegitimize our democracy on Jan. 6
 “He said Mr. Pence’s role in one of the most tumultuous periods of U.S. history will
make for compelling reading. More broadly, he said, the publisher can treat its employees
with respect and also publish authors with views they find anathema. “Those two realities
don’t have to be in conflict,” he said.”

On the Hook: The Ill-Fated Union Of an Insurance Giant And a Bail Bondsman--- AIG
Wagered on a Maverick Of the Business, and Lost; Incentives to Run for It --- Now,
Sniffing Out the `Skips'
 AIG sold insurance to H&H- a large bail bonds company
o “The 10% fee is the agent's to keep, with a cut going to the agent's insurer for
providing the actual bondand for being the ultimate guarantor of the bond if the
defendant skips and the agent can't pay.”
 The head of H&H, Ray Hrdlicka, deviated from industry norms
o Let defendants pay less than 10% (through payment plans)
o Issued bonds without collateral
 Hrdlicka presented his business to AIG as being less risky than traditional insurance
clients:
o “Unlike an insurance policy under which an insurer has to pay when there isa
legitimate claim, he told the men, the bail-bond business has several built-in
layers of protection. There is the build-up fund, and then there is the commitment
of an operator like H&H to chase down a fugitive or friends and family to collect
the collateral, or to go after co-signers when there is no collateral.”
 Regulatory environment played a factor here- most states required that clients put up
10%. So H&H gained competitive advantage by giving bonds to less worthy clients
 H&H was running out of money and had to issue extra bonds so that it could use the
collateral to cover expenses
o “As the new year began, the bad news mounted. On Jan. 5, the Washington
Department of Licensing, acting on a tipfrom Mr. Davis, the former H&H trainer,
concluded that H&H's Signature Bail Bonds had deposited collateral money inthe
operating account to help cover items such as payroll. Mr. Hrdlicka later admitted
to the findings and signed anorder that revoked his license in the state and denied
him the right to reapply for 10 years.”

Space’s Trash Collector? A Japanese Entrepreneur Wants the Job

 “Mr. Okada is an entrepreneur with a vision of creating the first trash collection company
dedicated to cleaning up some of humanity’s hardest-to-reach rubbish: the spent rocket
stages, inert satellites and other debris that have been collecting above Earth since
 Sputnik ushered in the space age. He launched Astroscale three years ago in the belief
that national space agencies were dragging their feet in facing the problem, which could
be tackled more quickly by a small private company motivated by profit.”
 “He also said that Astroscale would start by contracting with companies that will operate
big satellite networks to remove their own malfunctioning satellites. He said that if a
company has a thousand satellites, several are bound to fail. Astroscale will remove
these, allowing the company to fill the gap in its network by replacing the failed unit with
a functioning satellite.”
o “He said this approach would also get around a hurdle in international law to the
removal of space debris — the required permission of the owner. Under a 1967
treaty, man-made objects in space belong to the countries that launched them, and
cannot be touched without approval.”

Ben and Jerry’s Maker Uses Phones to Track Sustainable Palm Oil
 “Rapid expansion of plantations in past decades, fueled by surging demand for a cheap
and versatile edible oil, has been linked to the burning of tropical rainforests, destruction
of wildlife and land conflicts with local communities.”
 “This is the first time we’re dealing with palm oil this way, and it’s the first time we’re
using cell-phone pings to uncover the structure of the supply chain,” James Crawford,
founder and chief executive officer at Orbital said in an interview. “We’re looking at
what’s actually happening everyday on the ground and tracing materials all the way back
to the first mile -- which farms are linked to which mills, which mills are linked to which
refineries, and which refineries are linked to which warehouses.”
o “It’s consumers that are driving manufacturers to seek better visibility into where
raw materials are sourced from, especially if it involves commodities associated
with farming practices that aren’t sustainable, Crawford said.”


Think
What business is Simon and Schuster in? How does it make money in that business?
Consider that the Vice President Mike Pence book will generate more revenues than the
money paid to Pence and the various costs of production. Do you think that S&S should
publish the book? Is the mere fact that some employees object to this strategy a reason to
note move forward with it?
 S&S is in the business of publishing and selling books. Makes money by selling lots of
copies! I do think that S&S should publish the book- they would greatly benefit
financially from publishing, and Pence would just go to another company if S&S said no.
The fact that some employees object is not a reason

What did Ray Hrdlicka do in order to increase the profits of H&H Bail Bonds? Why didn’t
it work?
 Deviated from industry norms and was willing to issue more risky and customer-friendly
bonds in order to increase market share. Allowed defendants to pay the 10% fee through
 a payment plan, instead of up front, and allowed defendants to receive bonds without
collateral.
o Didn’t work because the lack of collateral decreased clients’ motivation to show
up for court. So forfeiture rate rose to about two in five- higher than the industry
average.

Can Astroscale's activities create value? Will Astroscale be able to capture that value as
profits?
 Yes, will create value by removing clients damaged satellites and allowing them to
replace them with functioning ones
 In the long term, will be able to remove space debris, which can cause damage to other
satellites and disrupt satellite networks

Will the tracking of palm oil increase Ben and Jerry’s profits?
 It could if the positive brand publicity and reputational improvements are substantial
enough that sales rise sufficiently