PriSim: Let No Good (Innovative) Deed Go Unpunished

An innovative strategic move can pay off big—or it can bury a company quicker than quicksand.

Take Navistar’s mounting troubles, one of the largest manufacturers of heavy trucks in the United States. As part of the company’s strategy in the last decade, it utilized a ground-breaking emissions-control approach that was less expensive and easier for truckers to use.

But the Environmental Protection Agency ruled that the alternate technology did not meet pollution standards. And after three years of investment and effort, Navistar recently announced that it would abandon the plan and would team up with Cummins for engine components instead—at a much higher price for customers. As a result, the company’s Q3 ‘12 earnings are being hurt by costs and fines totaling in the $100 million+ range.

Meanwhile, there are rumors of a potential takeover by Volkswagen or Fiat, and the SEC is planning an investigation.

PriSim Business War Games Inc. runs and designs customized business simulations that teach decision-makers about business, strategy, finance, and leadership.

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