Numeric Investors manages equity portfolios with the use of a momentum model and a value model. The momentum model is based on earnings surprise and analysts' revisions of their earnings estimates. The firm offers long-short as well as long-only strategies, and its approach involves high portfolio turnover. Numeric has experienced rapid growth in assets under management, which has resulted in higher transaction costs. The firm has already closed many of its products to further investment, and needs to decide where to go next. The case provides a rich setting within which to discuss value investing, momentum investing, the efficiency of analysts' earnings estimates, stock market efficiency, long-short investing, transaction costs, the relationship between assets under management and performance, performance fees, and the business strategies of investment management firms.
In April 1997, Tristan & America, an apparel retail company based in Montreal, was considering the purchase of StaffWorks, an automated labor-scheduling system marketed by Campbell Software. The M.I.S. director of Tristan & America, was concerned about whether StaffWorks fit his company's need, how the software related to other information systems currently used by the company, and what constituted a good scheduling package. This case illustrates the use of decision support systems (particularly the scheduling system) and store traffic data in retail management. It also describes the considerations in scheduling retail store staff and the complexities of organizational buying in the retail context.
Three brothers inherit a business in Egypt; the complications begin as each gets married, has a family, and becomes torn among different family interests. Now the third generation is appearing.
Documents the evolution of Best Buy, an electronics retailer, from its founding in 1966 to its very successful "Concept 2" strategy in 1996, boosting its sales ($7.2 billion) past industry #1 Circuit City. Its CEO Richard Schulze offers a new vision (Concept 3) to address the company's changed competitive and consumer environment. Reduced profitability in 1996, however, calls for creative adaptation of Concept 3.
Senior functional officers (marketing, manufacturing, research & development, control, and human resources) clash over alternative ideas for turning around a business in decline. The general manager is faced not only with choosing between competing ideas, but also managing conflict and determining whether his consensus-oriented style is appropriate to the needs of the situation.
Illustrates how a new management team at Medtronic's Cardiac Pacemaker business reversed a steep decline in market share by adopting certain management principles for new product development: clarifying strategy, aggregating project planning, accommodating the number of projects to match development capacity, and establishing a platform/derivative product architecture, and others. This case is useful in both MBA courses and executive programs.
Chase Bank and Chemical Bank intend to merge, producing the largest commercial bank in the United States, the fourth largest in the world. Projected financial benefits under the merger reflect significant planned reduction in operating costs, including 17,000 employee layoffs. Management also expects the merger to produce significant revenue increases as a result of increased economies of scale and scope, and other benefits of size and market leadership. The task of valuing the merger gains, negotiating an acceptable merger price, and implementing the post-merger restructuring is extremely complex.
Explores the development of a new product offering based on the first issuance of "real" bonds in the United States. Looks at a specific organization's efforts to position itself to profit from this market development. Follows naturally from a case on nominal bonds.
This is an MIT Sloan Management Review article. Three forces are changing the customary rules of distribution channel management: proliferating customer needs, shifts in the balance of power in channels, and changing strategic priorities. Many firms are outsourcing the distribution function to third parties. Others, using IT, direct marketing, database marketing, and other variations, contact customers directly, so the roles of the distributor or dealer are evolving. And some firms are simultaneously experimenting with a number of distribution options before committing to one system. Firms are also dealing through specialists rather than generalists, because specialists tend to be more focused and nimble than the manufacturer in a turbulent environment. The authors propose a strategic approach to planning for future channel configurations, control of the channel, and resource commitment. The channel must address customer needs, ensure that the customer sees the value in the company's offering, be cost efficient, and handle any new products and services that emerge. The authors suggest that a company first assess its current distribution channels, each channel's profitability, its market coverage, and the cost of each channel function. Next, a company should choose a channel arrangement based on sound design principles that recognize that the distribution strategy must contribute to the business' overall objectives.
This is an MIT Sloan Management Review article. A company that initiates a customer loyalty program usually wants to retain existing customers, maintain sales levels and profits, increase the potential value of existing customers, and encourage customers to buy its other products as well. But, based on a review of behavioral loyalty research, the authors posit that the schemes do not fundamentally alter market structure and, instead, increase market expenditures without really creating any extra brand loyalty. Research shows that only about 10% of buyers for many types of frequently purchased consumer goods are 100% loyal to a particular brand over a one-year period. Consumers do not buy only one brand. For any loyalty program to be effective, say the authors, it must leverage the value of the product to the customer. Therefore, the program must have: (1) a direct or indirect effect, such as the General Motors rebate scheme that builds up savings toward a new car; (2) a perception of value, such as cash; and (3) timing--when rewards are available. The more delayed the reward, the less powerful. The authors suggest ways to design an effective program: ensure that it enhances the value proposition of the product or service, fully cost the program, maximize the buyer's motivation to purchase again, and consider the market conditions when planning.
Vic, the CEO of a sporting goods company in this fictional case study, is pleased with the numbers. For several years now, they've gone steadily in one direction: up. But there's trouble in paradise. Hidden from the public's view of industry-dominating winners--from the coolest snowboards to the hottest in-line skates--lies a product-development department that may be ready to shatter like cheap fiberglass. Carver, the company's chief of product development, is the workaholic mad genius who is responsible for most--he might say all--of the company's successful products. At the same time, he has managed to alienate the rest of his staff. Four commentators suggest how Vic can keep the company's product-development group intact and its sales growth strong. In 97401 and 97401Z, Victor Vroom, June Rokoff, David Olsen, and David H. Burnham suggest how Vic can keep the company's product-development group intact and its sales growth strong.
Vic, the CEO of a sporting goods company in this fictional case study, is pleased with the numbers. For several years now, they've gone steadily in one direction: up. But there's trouble in paradise. Hidden from the public's view of industry-dominating winners--from the coolest snowboards to the hottest in-line skates--lies a product-development department that may be ready to shatter like cheap fiberglass. Carver, the company's chief of product development, is the workaholic mad genius who is responsible for most--he might say all--of the company's successful products. At the same time, he has managed to alienate the rest of his staff. In 97401 and 97401Z, Victor Vroom, June Rokoff, David Olsen, and David H. Burnham suggest how Vic can keep the company's product-development group intact and its sales growth strong.
Vic, the CEO of a sporting goods company in this fictional case study, is pleased with the numbers. For several years now, they've gone steadily in one direction: up. But there's trouble in paradise. Hidden from the public's view of industry-dominating winners--from the coolest snowboards to the hottest in-line skates--lies a product-development department that may be ready to shatter like cheap fiberglass. Carver, the company's chief of product development, is the workaholic mad genius who is responsible for most--he might say all--of the company's successful products. At the same time, he has managed to alienate the rest of his staff. In 97401 and 97401Z, Victor Vroom, June Rokoff, David Olsen, and David H. Burnham suggest how Vic can keep the company's product-development group intact and its sales growth strong.