Bill Gross started his first company (a solar-powered device manufacturer) when he was15 years old. After graduating from Caltech, he started a software company, GNP, that he latersold to Lotus (the spreadsheet software pioneer that is now part of IBM). Gross had made aconsiderable amount of money and was interested in exploring better ways of getting ideasconverted into profitable businesses. He became fascinated by the idea of business incubatorsabout the same time he became fascinated with the business potential of the Internet. In 1996,he pooled some of his wealth with contributions from several partners to create Idealab.Idealab was one of the first companies to provide an incubator that was open to individualentrepreneurs. Idealab provided venture capital and gave entrepreneurs a place to work anddevelop their business ideas alongside other entrepreneurs. In the first wave of electronic com-merce, Idealab was very successful. Although many of its incubated companies eventuallyfailed, enough of them succeeded that Idealab was able to fund several generations ofnew businesses through its operations. In its first year, it supported 10 new businesses,including the very successful CitySearch Web site. In its second year, Idealab helped createanother 10 businesses, including the successful sites Shopping.com, Tickets.com, andWeddingChannel.com. In subsequent years, Idealab incubated companies such as NetZero,Cooking.com, CarsDirect.com, Picasa, and GoTo.com (which later became Overture and waseventually acquired by Yahoo!). Not all of Idealab’s companies were successful, however. Oneof the most dramatic failures of the first wave of electronic commerce, eToys, had been anIdealab company. Idealab had more winners than losers, though; by early 2000, the companyhad more than $4 billion in assets.In 2000, Gross devised a new strategy that would go beyond Idealab’s original purpose asan incubator. He developed a plan to compete with Amazon.com using existing Idealab compa-nies. His plan was to combine about 10 of the companies in the incubator (including specialtyretailer Eve.com and online jewelry store Ice.com) and promote them (using large amounts ofmoney that would be raised from outside investors) as a single marketplace under the nameBig.com. However, just as Gross began raising money to support the launch of this new mar-ketplace, the pool of dot-com investment funds dried up. The new combined company quicklyfailed. Eve.com and Big.com no longer exist. The founders of Ice.com bought their companyback from Idealab and moved it to their home in Montreal (where the company is now operatingprofitably). Within a few months, the failure of Big.com and the lower stock market valuations ofIdealab’s holdings reduced the value of the company’s assets from $4 billion to $200 million.Idealab’s investors were upset by Gross’ change in strategy and by the drop in theircompany’s value. In January 2002, 44 of them sued Gross and other Idealab managers for 750Million. $750 million. The suit alleged mismanagement of the funds invested and further alleged that Gross had used Idealab funds to pay personal expenses. Eighteen months later, a court heldthat the allegations were without merit and the suit was dismissed. Gross was once again ableto devote his time to operating Idealab as an incubator.Gross laid off more than two-thirds of Idealab’s employees and stopped accepting outsideventure capital. Idealab no longer provides incubator space for entrepreneurs who have devel-oped ideas on their own. The company only funds ideas generated by the Idealab managementteam. Idealab’s asset value has rebounded somewhat and is now between $400 million and$800 million. Idealab still incubates a number of online businesses along with startups in theareas of social media management, solar power generation, and data management.

Required:1. In its first three years of operation, Idealab recruited entrepreneurs to its incubator who hadbusiness experience, but who did not know much about the Internet. In about 300 words,explain what benefits Idealab was able to provide to these entrepreneurs and why theincubator environment was beneficial to them.

2. In about 200 words, analyze Idealab’s 2000 decision to change its focus from being anincubator to merging its companies in an attempt to compete with Amazon.com. In youranalysis, discuss whether the decision was a strategic error or just a case of bad timing.

3. In about 200 words, explain why you think Gross decided to devote Idealab’s resources tothe development of internally generated ideas in 2003. Be sure to consider whether thischange will help Idealab succeed in the second wave of electronic commerce.

ABC’s chemical waste is stored in a warehouse at an off-site location. While inspecting the warehouse, engineer Scott Lewis notices several leaking drums. He calls Tom Treehorn, head of ABC’s Division of Chemical Waste. Tom responds, “I’ll be right over with a crew to bring the leaking drums over here.” Scott points out that the law forbids returning chemical waste to the “home” site. Tom replies, “I know, but I don’t have any confidence in the off-site folks handling this. We know how to handle this best. It might not be the letter of the law, but our handling it captures its spirit.” • Scott believes that Tom Treehorn is serious about preventing environmental problems — especially those that might be caused by ABC. Still, he knows that the Environmental Protection Agency will be upset if it finds out about Tom’s way of dealing with the problem; and if anything goes wrong, ABC could get into serious legal difficulties. After all, he thinks, ABC is not a waste disposal facility. • What should Scott do at this point? Q1 – write the identification of the problem Q2- what is the factual issue and conceptual issue Q3- write identification of alternative course actions Q4- write the evaluation of alternative solutions Q5- write the justification of choice 26-lastly write the action plan and implications of decisions.