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This is an MIT Sloan Management Review article. Early research in e-commerce projected that online retailing would spiral into a never-ending price war. But recent research has shown that customers are more likely to pay higher prices to online retailers of high quality that they trust. But how do customers evaluate quality in online retailing? What are the specific aspects of an online transaction that customers value and use to distinguish one site from another? The authors explored these issues by surveying customers who had recently engaged in an online retail transaction to determine how they evaluate the quality of their experiences with online retailers. The results demonstrated that customers' perceptions of quality and satisfaction with online purchases depend on three things: interaction with the Web site, delivery of the product, and how prepared retailers are to address problems when they occur. Of the three, product delivery has the strongest influence on customer satisfaction and future purchase intentions. The authors further break down each of the three aspects of quality to create a complete picture of what it takes to build a trusting relationship with customers in an e-commerce environment.

This is an MIT Sloan Management Review article. Responding to competitive pressures, a growing number of corporate managers are dismantling organizations and cultures that were built on selling particular products and replacing them with new structures designed to be more responsive to customer needs. The push to restructure around customers is more than a new management fad. It is supported by success stories at companies including IBM, Cummins India, Fidelity Investments, and Imation. Companies transitioning from product-oriented to customer-centered organizations progress along a continuum. They begin with informal coordination to overcome the deficiencies of product or functional silos, adding integrating functions (such as key account managers and customer segment task forces) as needed. The market logic for becoming customer focused is often compelling. In surveying 347 companies, the author found that companies that embraced this approach saw accountability for customer relationships improve, and information about customers was more readily shared. These companies were also easier to do business with, according to customers. However, the author found that transforming product-centered cultures can be difficult and that the potential benefits do not necessarily translate into superior performance.

This is an MIT Sloan Management Review article. Launching new ventures outside a corporation's core business is risky and failure prone, yet, it is often perceived as vital to innovation and organic growth. Can investing in new ventures add value to a company despite the risks? To explore that question, the authors conducted an in-depth study of corporate venturing at Nokia Corp. between 1998 and 2002. The research yielded a number of lessons about corporate venturing. For example, Nokia discovered that looking at the success or failure of an individual project as a business was the wrong way to evaluate the effectiveness of the venturing program. Whether they succeeded as businesses, Nokia's corporate ventures often added important capabilities to the core business, such as familiarity with a new customer segment for the company. In fact, seemingly unrelated investments sometimes led to technologies that later benefited the company's core business. The authors conclude that, to extract value from corporate ventures, companies must use different management practices than in their established businesses, structure new ventures so that they don't face pressure to deliver immediate results, and emphasize learning. Although 70% of Nokia's corporate venturing investments during the period studied were either discontinued or completely divested, the capabilities and technologies developed nonetheless played an important role in helping the company's core businesses respond to change.

This is an MIT Sloan Management Review article. As businesses add more and more products to their portfolios, they face diminishing returns on variety and greater costs in bringing their products to market. As a result, managers must balance the costs and benefits of variety in determining their product lineups. The authors worked with a wide range of businesses and discovered that a widespread approach, whereby low-volume products are cut first, is often ineffective. As an alternative, the authors discuss five critical lessons for maximizing the value and effectiveness of variety management, and present a process for making value-driven variety management successful. First, all products are not created equal. Both complexity costs and benefits may vary considerably for different types of product variants. Second, be exhaustive. The impact on any one cost area may be insignificant. It is the compound effect of the impact that creates the complexity monster. Third, take a return on investment view. A business case for adding variety should consider impact of both one-time and recurring costs over the whole product life cycle and balance this against the incremental benefits over the product life cycle. Fourth, tailor the variety-management strategy to the type of complexity cost. Fifth, reduce product complexity costs without reducing product complexity.

This is an MIT Sloan Management Review article. There are now at least 10 separate schools of thought regarding strategy and more than a dozen common definitions of the term. To clarify and deepen our understanding of corporate strategy, the author suggests general guidelines that set the boundaries of the discipline to facilitate future executive decisions. The author argues that strategy comprises three objectives: creating value, handling imitation, and shaping a perimeter. The ability to sustain value creation, whether from the customer's or the shareholder's perspective, is the ultimate goal of any strategy. Concepts such as benchmarking, differentiation, core competencies, unique resources, institutionalism, and competitive rivalry are all connected with the ability to prevent, implement, or leverage imitation. Decisions about diversification, outsourcing, vertical integration, internationalization, and positioning are all linked with the search for a profitable perimeter.

This is an MIT Sloan Management Review article. Conflict is inevitable in any large organization, and these conflicts, particularly in the board of directors, can often be costly to a firm both in terms of real dollars and in lost organizational focus. However, drawing on best practices in conflict management, the author suggests that organizations can take a comprehensive approach to settle conflict quickly inside the board, making use of four resources available to any organization. The first is the board itself. Directors and boards should take the lead in addressing their own problems and disagreements using the most constructive approaches possible. Boards also need to establish a set of internal and external resources. Internally, they can rely on resources such as general counsel, the chief ethics officer, and the organizational ombudsman. Externally, organizations can rely on mediation and arbitration as well as investigative counsel. In cases of last resort, the board can rely on public resources such as the courts and government agencies. However, this approach may not be enough. The authors suggest a new role: the board ombudsman, for a highly competent, independent, and confidential resource who can help directors and boards to solve problems through effective, informal methods, such as assisted negotiation or shuttle diplomacy.

This is an MIT Sloan Management Review article. The success of the IKEA Group, the world's largest furniture retailer, is generally attributed to its highly innovative strategy. Through global sourcing of products and customer self-service in the areas of furniture delivery and assembly, IKEA achieves a low-cost position that enables it to charge low prices. Meanwhile, IKEA's use of Scandinavian design and an innovative retail environment increase customers' perception of receiving good value. By examining the history of IKEA, the author concludes that, while founder Ingvar Kamprad initially had a general vision, many important details of IKEA's strategy were developed through experimentation and adaptation to market circumstances rather than through preplanned strategy formulation. In academic literature, this approach to strategy is known as logical incrementalism. The author suggests that IKEA's experiences in strategy development demonstrate the importance of starting with a clear vision but refining it over time; experimenting constantly and being willing to make mistakes; seeking to turn problems into opportunities; and learning from other people's ideas.

FHP Wireless develops and sells Wi-Fi networking hardware with value-added software to create "wireless meshes," the technology that makes metro-scale Wi-Fi coverage possible. A wireless mesh connects many wireless routers together in a network that reduces backhaul (the connection between a particular network and the internet) costs by an order of magnitude over alternative metro-scale solutions. Follows the founders through the development of the FHP product, financing, and the company's early attempts to bring its product to market. Concludes as the company faces several strategic alternatives to addressing its unexpectedly slow revenue ramp. The company must choose between several target markets, and the decision is complicated by a declining cash balance and a new investor.

The environmental manager at the Royal Bank of Canada (RBC) has finally received the detailed environmental and social risk assessment of the Qatargas II LNG Project. RBC was a potential participant in a syndicated loan for a project financing venture in Qatar. The project would extract and process liquid natural gas there and transport it to the United Kingdom market. RBC was among the first banks to use an environmental and social risk assessment process based on the Equator Principles that supported the principles underlying sustainable development. However, environmental non-government organizations (NGOs) further complicated any financing decision; they were only too quick to point out publicly any shortcomings. Moreover, it was not clear if problems might occur in monitoring and enforcing any loan covenants. Two basic questions remained: first, does the Qatargas II Project make sense to RBC as it attempts to balance economic, environmental, and social performance (i.e., the triple-bottom line); and second, do the Equator Principles provide a competitive advantage?

Jim Quigley, CEO of Deloitte and Touche's consulting practice, asks senior partner Cathy Benko to lead Deloitte & Touche's much publicized Initiative for the Retention and Advancement of Women (WIN). Benko, already the Lead Client Service Partner on one of Deloitte's largest west coast engagements and the firm's High Technology Sector Leader, rejects the offer. This sets off a series of moves by players across the firm. The case follows Benko's early career, detailing the reasons why Quigley believes she is the right person to lead the initiative. Both Quigley and Benko make decisions and take steps that shape Benko's role as a leader in the firm.

Cathy Benko pulls together a group of Deloitte and Touche's top partners for a weekend discussion of the Initiative for the Retention and Advancement of Women (WIN). Benko, stimulated by the strong reaction by the attending partners, agrees to take on the leadership role. But only after negotiating the details of the role with CEO Quigley.

Supplements the (A) case.

An abstract is not available for this product.

In early 2003, CEO Ben Verwaayen and Chief Broadband Officer Alison Ritchie of BT Plc. are trying to transform the former British Telecom from a stodgy telephone company into a 21st century broadband company. Their efforts to focus the firm on broadband issues within the UK are being thwarted by a reluctant management team. Discusses the problems Verwaayen and Ritchie face in forging a social revolution within BT and illustrates the challenges of cross line of business innovation.

An abstract is not available for this product.

Students make a market in a new security, posting bid and offer prices and quantities for a new derivative security.

Students act as managers or investors. Managers have the ability to manipulate reported earnings, and investors must bid for shares taking this into account.

A couple has to decide whether to continue renting a townhouse or buy the one next door. Allows for a discussion of net present value, internal rate of return, and the costs and benefits of homeownership.

Melissa Howland, founder of an investment firm, must choose between two competing investments, which differ in size, maturity, and rate of return.

Covers inter-firm, IT-enabled supply chain collaboration and focuses on supplier-manufacturer collaboration. To assess collaboration from a holistic point of view, the case describes the distinct role played by the various parties involved in the collaborative effort: the manufacturer and its supply base, as well as a consulting firm, a supply chain process outsourcing company, and a software provider. Centers on the two latter companies--World Wide Technology (WWT), a $2 billion supply chain process outsourcing company based in St. Louis, and ClearOrbit, a rapidly growing software company based in Austin, Texas. Presents the story of a world-class automotive original equipment manufacturer (OEM) whose purchasing operations for maintenance, repair, and operations material had grown complex, costly, and error prone. In mid-2004, WWT, along with a consulting firm, proposed an outsourcing program to the OEM: the consulting firm would perform strategic sourcing and WWT would manage the entire fulfillment cycle. A critical feature of this program was that it would be collaborative. Early on in the program, however, it became apparent to WWT that delivering on the collaborative requirements of the program demanded the aid of specialized technological capabilities. WWT decided to partner with ClearOrbit, a company that had recently developed an Internet-based solution for companies to manage POs, deliveries, and invoices with a supply base regardless of size and technological resources available at each supplier. Describes the challenges of design, implementation, and growth of the program.