In many ways, online marketplaces are the perfect business model. Since they facilitate transactions between independent suppliers and customers rather than take possession of and responsibility for the products or services in question, they have inherently low cost structures and fat gross margins. They are highly defensible once established, owing to network effects. Yet online marketplaces remain extremely difficult to build, say Andrei Hagiu of Harvard Business School and venture capitalist Simon Rothman of Greylock Partners. Most entrepreneurs and investors attribute this to the challenge of quickly attracting a critical mass of buyers and suppliers. But it is wrong to assume that once a marketplace has overcome this hurdle, the sailing will be smooth. Several other important pitfalls can threaten marketplaces: growing too fast too early; failing to foster sufficient trust and safety; resorting to sticks, rather than carrots, to deter user disintermediation; and ignoring the risks of regulation. This article draws on company examples such as eBay, Lending Club, and Airbnb to offer practical advice for avoiding those hazards.
Many companies want to raise their level of customer service--but how? The typical response is to rewrite frontline employees' scripts and conduct pilot projects. Those tactics may be fine for a company whose service operation is functioning reasonably well. But if the operation is badly broken, or the industry is being disrupted and customers suddenly have many more choices, argue Singapore-based researchers and consultants Jochen Wirtz and Ron Kaufman, deeper cultural change may be needed. On the basis of 25 years of work with global customer service operations, the researchers recommend jettisoning four conventional practices, singly or in combination: (1) Don't start with customer-facing employees. Instead, make sure they're getting the right support. (2) Don't focus on specific skills or scripts. Educate people more generally about what "service excellence" means. (3) Don't pilot changes. Go company-wide to create momentum fast. (4) Don't worry about traditional metrics, such as share of wallet and NPS. Track the number of new value-adding actions put into practice. For companies looking to differentiate on service, these strategies can make the difference between slow, fleeting progress and rapid, sustainable success.
New research reveals that when people don't examine the ethical practices of the companies making the products they buy, they feel hostile toward consumers who do.
In early 2010, senior partners at Warburg Pincus met to review a report on Bausch & Lomb Incorporated, the firm's largest investment at the time. Warburg Pincus had led a group of investors in acquiring Bauch & Lomb on October 26, 2007, taking the company private and becoming its largest and controlling shareholder. Since the acquisition, there had been significant progress at Bausch & Lomb through changes in senior leadership and in its business model. But, shortly after the second anniversary of the investment, the senior partners were beginning to question whether the depth and pace of change was enough. They had some tough decisions to make.
Matrix Capital Management, a long-short equity hedge fund based in Waltham, Massachusetts, is assessing its investment in Tableau, a data visualization company. Tableau, which conducted an IPO a few years ago, has been experiencing substantial growth as it aims at disrupting the business intelligence software market. Matrix's investment management team is attracted by two key features of the tech company: the large addressable market and the potential to emerge as a leader in this market. However, after hitting an all-time high in the first quarter of 2015, Tableau's share price began trading down, and by September of that year the stock was trading down year-to-date. Matrix's management team wonders whether the recent market volatility presents an opportunity to add to their existing long position. This case highlights a variety of methodologies to valuate a high-growth company in the tech sector and illustrates the challenge of living up to high market expectations.
James Tallest analyzed the opportunity to invest in a distressed portfolio of high quality properties in Germany by acquiring one or more non-performing loans from Deutschland Bank. While he considers the many aspects of the deal that is about to unfold, he must decide which securities to acquire, the price he should offer to each of them, and whether to retain the former owner of the portfolio as property manager.
Launched in 2000, ASOS was one of the world's largest online fashion specialists in 2016. Focusing on young consumers aged 16-25 years, the company offered over 80,000 items on its websites, many times more than the largest fashion stores, and added several thousand new lines every week. Based in the United Kingdom, ASOS shipped products to 240 countries and territories, and international sales represented more than 50% of total revenues. But when new CEO Nick Beighton took over from founder Nick Robertson in September 2015, he faced some significant challenges. While ASOS was large by online standards, traditional fashion retailers were building their own online sales capabilities, and Amazon was expanding its apparel offering. Meanwhile, new online competitors were emerging at a rapid rate. After ASOS issued several profit warnings in 2014, its growth had slowed to 18% in 2015. Beighton was convinced that ASOS's strategy was right and that the company needed to improve its execution to recapture its historical success. Some analysts were not so sure, and the stock price still had not recovered from its 2014 fall. ASOS' goal was to be "the world's no.1 fashion destination for 20-somethings." Did this lofty ambition make sense? And did ASOS have the right strategy to achieve it?
Explores the phenomenon of software becoming a service. Salesforce.com has catapulted into the lead for offering a customer relationship management (CRM) solution as a Web-based service. Siebel, the leader in CRM packaged software sales, has to devise a strategy to compete with salesforce.com.
On March 1, 2017, Best Buy Company, Inc., North America's largest retailer of consumer electronics and appliances, announced a third year of comparable-store sales increases and a 20.8% increase in domestic comparable online sales. These results were in marked contrast to four years of declining comparable-store sales from 2010 through 2013. The stock price rose 17% in March, and on April 20, 2017, it surpassed $50 for the first time since January 2008. When CEO Hubert Joly took over in September 2012, Best Buy was losing share to Amazon.com, which was encouraging consumers to view products at Best Buy and other physical stores and then buy them for a lower price online, a practice known as "showrooming." Undaunted, Joly had encouraged the practice, convinced that it presented an opportunity to sell to customers as long as Best Buy's prices were competitive. Joly had committed the company to a multi-channel strategy in North America and exited struggling international operations. Operating margins had increased as a result, but growth was still proving elusive. In early 2017, Joly announced that his "Renew Blue" turnaround effort was complete and that he was now intent on creating the New Blue. Would the new strategy be enough to stop Amazon's advances?
Set in April 2014, this case explores some of the important questions confronting Dileep Ranjekar and Anurag Behar, CEOs of the Azim Premji Foundation, which had entered the second decade of its existence with fresh plans and renewed vigor. Ranjekar and Behar had evolved an organizational strategy, after carefully reflecting on the Foundation's past work, that was characterized by the idea of working in an "institutional" mode and not merely in a "programmatic" mode. This meant establishing a long-term presence in the places where the Foundation worked (i.e., disadvantaged districts in the country), and engaging on a continuous and long-term basis with the public education system to facilitate change. Given the trajectory that the management team had set for the Foundation, it was constantly faced with issues related to finding the right people with the required skill sets and mindset, finding field staff to overcome the challenges of working in difficult, far-flung places, and scaling up at the right speed to achieve the desired reach and outcomes. Documenting the evolution and growth of the Foundation, the case brings to light some of the key challenges it faced in scaling up. The case highlights some of the challenges of building a large, professionally managed not-for-profit and the strategic decisions that have to be made to grow it into a sustainable organization.
Coal India Limited, the world’s largest coal mining company and India’s largest corporate employer, regularly produced less coal than was both achievable (i.e., it had excess capacity) and needed. As a result, it failed to meet the demand for coal from power utilities and other industries in the country. The Government of India, which had a persistent and large fiscal deficit, held the majority interest in the company. In January 2015, the government wanted to reduce its deficit and improve both the productivity of Coal India Limited and India’s coal supply. Should the government opt to disinvest from Coal India Limited or privatize the company?
The case, "Shivani Carriers Pvt. Ltd.: Managing Employee Motivation at the Bottom of the Pyramid", has been designed to teach students about the basic principles of employee motivation. The case is also a representative example of the problems faced by small and medium-sized businesses in employee acquisition, motivation, and retention, especially at junior levels i.e. entry-level operational and front-line roles.
Aravind Eye Care System (AECS) had a dream run on the growth path, providing affordable, quality eye care to its patients by building on economies of scale and developing a cross-subsidisation model for financial sustainability. The organisation's mission was 'to eliminate needless blindness' However, emerging demographics and disease profile question the sustainability of the approach taken by the organisation, especially as the organisational strategy, systems and processes were designed for cataract patients. With the increasing proportion of non-cataract patients, top management needs to assess the impact of the'changing patient' on various dimensions of the business model of AECS.
This case deals with several types of uncertainties faced by project team in an oil company north east in India. These challenges and uncertainties are in the areas drawing approval, supply chain, critical equipment availability, soll type, control room, soil type, employee availability, environmental clearances, safety and wildlife clearances. This project demonstrates the ownership issues, why it is difficult to complete a project on time in the Northeast of India or why public sector project gets delayed.
National Innovation Foundation (NIF) was a partner organization of the Honey Bee Network (HBN), which was a networked organization of individuals, innovators, farmers, scholars, academicians, policy makers, entrepreneurs and non-governmental organizations (NGOs). The HBN worked to create a network of grassroot innovators and acknowledged him/her by protecting the IPR of the innovator. It is a Government organization, and hence works under bureaucratic setup. However, it works with non-government organizations as well as, individuals and therefore, should be very flexible. NIF desires to get a web-based information system developed. The challenge are multi-fold: selection the appropriate platform (ERP, Best-of-the-breed, or customized solution), technology (content management systems, frameworks versus coding), software development methodology (classic waterfall model or agile), process (on project basis or work and time based contract). The case helps to compare various alternatives on the above issues. This would achieve their objective. The project team had to take decisions on a number of crucial aspects like deciding which software development methodology and what approach to follow which would suit the unique requirements of the organization. NIF was a dynamic organization and their requirements kept changing. How to determine a pricing policy was another major concern for the project team.
This case deals with steps taken by NTPC in construction and project management in 500 MW power plant. The project have several innovative ways of managing challenges, in land acquisition, design, implementation, contract worker management, enforcement of safety rules, managing regulation iand in team building in leadership. A suitable case for site management, it shows in spite of being a public sector undertaking, how the project was constructed in record time of 42 months.
The three cases (Case A: JSW Steel's Ispat Acquisition: The Opportunity; Case B: JSW Steel's Ispat Acqusition: The Setback & Case C: JSW Steel's Ispat Acquisition: The Turnaround Strategy) describe the business situation leading to acquisition of Ispat by JSW, the acquirer company's failure to realize synergies post-acquisition, and the subsequent turnaround initiatives to salvage the situation. In 2010, JSW Steel, a 14 mtpa Indian steel company acquired Ispat Steel with annual production capacity of 3 mtpa. The acquisition was part of JSW's multipronged strategy to realize its aspiration of being a 40 mtpa firm. At the time of acquisition, Ispat had huge debts, a long pipeline of unfinished projects, high production costs and unpredictable cash flows. Its main plant, Dolvi was shutdown for 45 days. However, the plant also had numerous advantages. It was located near the seashore and was technologically very advanced. Case A describes the events leading to acquisition of Ispat by JSW. It captures the facts, opinions and inferences around the acquisition decision, which were used as inputs in the due diligence process to assess synergies between JSW and Ispat. The case describes the economic, competitive, and industry factors prevailing in 2010 when JSW was thinking of acquiring Ispat.
The three cases (Case A: JSW Steel's Ispat Acquisition: The Opportunity; Case B: JSW Steel's Ispat Acqusition: The Setback & Case C: JSW Steel's Ispat Acquisition: The Turnaround Strategy) describe the business situation leading to acquisition of Ispat by JSW, the acquirer company's failure to realize synergies post-acquisition, and the subsequent turnaround initiatives to salvage the situation. In 2010, JSW Steel, a 14 mtpa Indian steel company acquired Ispat Steel with annual production capacity of 3 mtpa. The acquisition was part of JSW's multipronged strategy to realize its aspiration of being a 40 mtpa firm. At the time of acquisition, Ispat had huge debts, a long pipeline of unfinished projects, high production costs and unpredictable cash flows. Its main plant, Dolvi was shutdown for 45 days. However, the plant also had numerous advantages. It was located near the seashore and was technologically very advanced. Case A describes the events leading to acquisition of Ispat by JSW. It captures the facts, opinions and inferences around the acquisition decision, which were used as inputs in the due diligence process to assess synergies between JSW and Ispat. The case describes the economic, competitive, and industry factors prevailing in 2010 when JSW was thinking of acquiring Ispat.