Meghan Busse

Busse, Meghan and Jorge Silva-Risso. 2010. One Discriminatory Rent or Double Jeopardy: Multi-component Negotiation for New Car Purchases. American Economic Review. 100(2): 470-474.

New car customers who use a trade-in engage in two transactions with a new car dealer; they buy new cars from the dealer and sell their existing cars to the dealer. Car dealers are willing to trade off profits made on the new car versus profits made on the trade-in. Customers may or may not view the transactions this way. In this paper, we investigate whether both parties view themselves as negotiating over a single surplus amount that can be divided across two transactions. If so, new car and trade-in profit margins should be be negatively correlated: the better the deal the customer gets on a new car, the less good deal one should expect the customer to get on the trade-in. An alternative is that customers or dealers or both view the transaction as two separate negotiations. If this is the case, then customers should either to do well in both the new car and the trade-in negotiations, or do poorly in both. If this is the case, then one should expect to see new car and trade-in margins be positively correlated, among similar transactions.

Busse, Meghan, Jeroen Swinkels and Greg Merkley. 2011. Enterprise Rent-A-Car. Case 5-311-508 (KEL612).

An industry adage held that “there are two types of rental car companies: those that lose money and Enterprise.” The company that would become Enterprise Rent-A-Car was started in 1957 in St. Louis, Missouri, by Jack Taylor. Taylor set up Enterprise offices in neighborhoods rather than at airports because he believed that Americans would welcome a local option for renting cars when their own vehicles were being repaired. In 2010 Enterprise had more than 6,000 rental locations in the United States and a fleet of 850,000 cars in service. Its parent, Enterprise Holdings (comprising Enterprise, National, and Alamo brands) accounted for nearly half of the car rental market and was more than twice the size of Hertz, the number two competitor. Enterprise’s competitive advantage was the result of the combination of its practices in hiring, training, compensation, organization, customer service, IT, and fleet management, among others.

Garthwaite, Craig, Meghan Busse and Greg Merkley. 2011. Starbucks: A Story of Growth. Case 5-211-259 (KEL665).

Founded in 1971 and acquired by CEO Howard Schultz in 1987, Starbucks was an American success story. In forty years it grew from a single-location coffee roaster in Seattle, Washington to a multibillion-dollar global enterprise that operated more than 17,000 retail coffee shops in fifty countries and sold coffee beans, instant coffee, tea, and ready-to-drink beverages in tens of thousands of grocery and mass merchandise stores. However, as Starbucks moved into new market contexts as part of its aggressive growth strategy, the assets and activities central to its competitive advantage in its retail coffee shops were altered or weakened, which made it more vulnerable to competitive threats from both higher and lower quality entrants. The company also had to make decisions on vertical integration related to its expansion into consumer packaged goods.