...to 1995 AOL was so successful in the commercial online industry relative to its competitors because its pricing rate as the others was based on monthly subscriptions but was easier to understand by consumers. The rates were relatively the same but others charged users for premium services and downloads. For example, AOL carried a $9.95 monthly fee and $2.95 for each additional hour whereas MSN was cheaper at $4.95 and $2.50 respectively but also charged additional fee’s based on usage rates. This made it difficult for customers to calculate monthly spending on a consistent basis so AOL was the straightforward choice. The strategy to offer free trials to prospective customers was also very important in the growth of AOL. They also offered a wide range of features that allowed subscribers to easily communicate through real time conferences, e-mail, and bulletin boards. Their product was superior to other companies because they offered capabilities that others did not. For example, instead of just offering email service they went as far as to allowing real time communications by scheduling conferences and discussions on specific topics. They also allowed members to share opinions on subjects via a virtual bulletin board. Some key changes taking place as of 1995 in the commercial online industry is the occurrence of Microsoft network and the self controlling use if the World Wide Web. This allowed companies to maximize revenues because they had full control over pricing of its materials...
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...1. Prior to 1995, why was AOL so successful in the commercial online industry relative to its competitors CompuServe and Prodigy? As AOL has always been focusing on aggressively attracting new clients and managed to achieve a high retention rate, due to AOL’s proven track record of customer loyalty and positive word-of-mouth, it built up a relatively large customer base (4m customers by end of Oct 1995). AOL aggressively marketed its online service using direct mail packets with AOL software disks and entered co-marketing efforts with computer magazine publishers and PC hard- and software providers in order to distribute their software. New customers could easily activate their accounts with the provided keys and passwords by just providing their credit card information, which, compared to AOL’s competitors constituted the easiest acquisition process for new customers. Continuous investments in the development of new online services and additional contents that met customers’ needs and expectations yielded an additional competitive advantage. Those included real-time conferences, interactive communications, public bulletin boards, electronic mail, electronic magazines and newspapers, online education (real-time interactive classes, library), shopping and travelling (vacation booking, travel information and services), information services (world’s, sport, stock market news, internet access), etc. AOL built on a strong network of partner-companies which resulted in...
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...Case 6 - TiVo Company Overview TiVo founders Jim Barton and Michael Ramsay left Silicon Graphics in 1997 and the two dynamic entrepreneurs decided they would reinvent how people can watch television. TiVo was a ground-breaking invention that allowed viewers to control what they watched, when they watched it. Fourteen months after the launch of TiVo, they had 42000 subscribers with a rate of 14000 new subscribers per quarter. With 102 million TV-watching households in the US, this was about a 0.04% penetration rate. This revolutionary system allowed consumers to be fully in control of their media consumption- something never offered before. TiVo to Consumers To TiVo consumers, the ability to control what they wanted when they wanted was a revolutionary way to watch TV. TiVo held many distinct features that made the television experience unique to their consumers. The electronic program guide (EPG) was the user’s interface with the device that let them find out which shows to watch. EPG allowed access to previews for shows that could be scheduled for recording, a video magazine, a set of network showcases, and an on-screen TV guide. Another popular feature was the season pass that allowed users to specify their favourite show so that TiVo would automatically record all the episodes. Consumers also had the option to thumbs up or thumbs down certain shows so subsequently, TiVo could suggest TV programs that may interest them, further enhancing the individual personalization...
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...Exchange (SWX) * XETRA Stock Exchange 1.3. The list of top 3 shareholders of Google Inc.: * Mr Lawence Page * Mr Sergey Brin * FMR LLC 1.4. Net income for Google Inc. as at 31/12/2014 (US$): 14, 444, 000 1.5. Total assets for Google Inc. as at 31/12/2014 (US$): 131, 133, 000 Use the information provided in the case and answer the following questions: 2. Identify two key factors behind Google’s early success and provide explanation as to why you believe these factors are Google’s strategic advantages. (2*4 marks =8 marks; word limit: 300 words max) 1. Google decided to implement a modified version of Overture’s cost-per-click model. Google looked at the cost-per-click bids by the relation of an ad’s actual click through rate. This ensured that relevant ad’s got top of the list positions, and ad’s that didn’t receive much exposure incurred less of a bid and was shown less. Google improved revenue. With the use of research based on Google’s competitor, Google was able to find ways to make an adjustable model, very successful for their business. Google also created ways to change the model to strategically benefit themselves for the long-term. This decision helped Google to become a rival and threat to Overture, becoming the ninth...
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...solution. We want our website to drive people to submit their purchase requests online or pick up the phone to call us to generate sales. The solution will reduce inventory by continually turning product into sales. Lastly rework our production process to yield higher efficiency and cost reduction. * Online Growth Potential Can Go’s has seen large growth in their first two years of operation. It is one of the fastest growing small businesses in the area. Can Go has the ability to offer public shares allowing them, to have much more capital to invest in potential new online products. They can build on that success by continuing to attract more investors. Being publicly traded will give them more exposure in the future. * Product Pricing Can Go will establish sales in a relatively inexpensive range, such as games. Games are often popular regardless of the recession. Selling tunes online versus selling $12-$20 CDs are often cheaper, since consumers can only purchase the individual song they want. * Can Go’s Market Share Can Go’s product selections have been well received by the market. Can Go will be able to build of this market potential by using their CRM database with built-in follow-up reminders and analytics for lead conversion to follow prospects we have identified. These invitations are...
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...GEMBA 8 - FINR - Individual Assignment - Prof. BARTOV Gianluigi Guida 1. What accounting approach has AOL used in the past that it is now changing (related to the $385 million)? AOL was spreading quarterly marketing expenses over two years rather than expensing as incurred. 2. What was AOL’s rationale for using the past accounting approach? What accounting principle(s) was it following? AOL rationale for the past approach was that spreading the marketing costs over two years was a justifiable way to match those expenses with the revenues that would have emerged as a consequence of such expenses. AOL was using the "Matching Principle" thus under the accrual basis of accounting. 3. What do you think is meant by the term the “quality of earnings” (see page two of article, top paragraph). What, in your opinion, would constitute “high” quality earnings? Quality of earnings refers to...
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...Siboni, and put down the phone. This was a crucial beachhead for Netscape in its quest for the corporate market. Netscape had initially won the KPMG contract, but Microsoft’s persistence had pried it back open. Beating back Microsoft’s latest challenge marked a great success for Netscape. This victory stood in sharp contrast to a far less happy dealmaking episode the previous year in which Netscape had tilted against mighty Microsoft for AOL’s browser business. In a sequence that gave some industry observers virtual whiplash, a pathbreaking Netscape deal with AOL had been announced, only to be undercut the very next day by Microsoft. Netscape’s ultimate loss in the AOL battle helped to define an Internet dealmaking ethos that the normally sober Wall Street Journal likened to Melrose Place in which “no player sleeps alone and no back goes unstabbed.”1 Barksdale’s mind drifted back to the trials and tribulations of the AOL saga. The Netscape Story The popularization of the Internet in the 1990s heralded a new age in digital communications. At the forefront of this dramatic technological shift was the...
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..........125 Uncertainty and Consumer Behavior ...........................................................................179 Production ........................................................................................................................236 The Cost of Production ...................................................................................................273 Profit Maximization and Competitive Supply ............................................................327 The Analysis of Competitive Markets ..........................................................................375 Chapter 10 Market Power: Monopoly and Monopsony.................................................................438 Chapter 11 Pricing with Market Power ............................................................................................480 Chapter 12 Monopolistic Competition and Oligopoly ...................................................................528 Chapter 13 Game Theory and Competitive Strategy......................................................................565 Chapter 14 Markets For Factor Inputs...
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...The Knot Entrepreneurial Finance Wouter Buijze: 6172466 Tijmend de Vries: 5947472 Gijs Derkzen: Teacher: Vladimir Vladimirov Critical success factors According to Sahlman, the success of entrepreneurial ventures, such as The Knot, is dependent on four critical success factors, namely the people, the opportunity, the deal and the context. Each of these factors is dynamic and the entrepreneur must constantly reevaluate and adjust the four factors to create value. People The category people include the key players of the entrepreneurial venture. Within this category, the strengths and weaknesses and the experience of the people involved is critical. The entrepreneur has to determine if something is missing in the team, thus if people should be added or replaced. The Knot’s management team consists of four ex New York University’s Film School students. All of them are experienced entrepreneurs. First, Liu and Roney are co-founders of the CD-ROM development company RunTime Inc. Pervious, Liu was an experienced manager and Roney spent six years as creative director and editor. Second, Wolfson and Fassino are founders of the Digital Media Division for Margeotes Fertitta + Partners. Before, Wolfson was founder of a creative production company and Fassino has experience in the advertising industry. The two different companies successfully collaborated at the Sotheby’s project. The four partners emphasize the potential of their collective experience and know-how, including...
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...service Founded by Reed Hastings Established in 1998 and headquartered in Los Gatos, California More than 90,000 DVD titles Offers flat rate rental-by-mail to customers Growing library of more than 5,000 choices that can be watched instantly on their PCs Over 6.7 million subscribers They have over 55 million discs and ship 1.6 million a day, on average Corporate History Netflix was incorporated on August 29, 1997 Began operations on April 14, 1998 Initiated an initial public offering (IPO) on May 29, 2002 selling 5,500,000 shares of common stock at the price of US$15.00 per share On June 14, 2002, it sold an additional 825,000 shares of common stock at the same price Netflix posted its first profit during fiscal year 2003 Netflix mails about 190,000 discs per day to its 670,000 monthly subscribers. Subscriber counts have increased from one million by the fourth quarter of 2002 to around 5.6 million at the end of the third quarter of 2006 How Netflix Works? Features Instant Viewing Queue Browse Movie Recommendations Community Netflix Facts Ratings Rental Habits Recommendations Customer Satisfaction Inventory Volume Environment Services Flat-fee service Various plans Sells gift subscriptions Instant Viewing Sells used DVDs to its subscribers Pricing Levels 1 1 2 3 4 5 6 7 8 at-a-time at-a-time at-a-time at-a-time at-a-time at-a-time at-a-time at-a-time at-a-time (2 a month) - just $4.99 a month...
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...competition from industry giants like Disney and Viacom. While the company is required to adhere to the restrictions by the Federal Communications Commission, the FCC has been loosening the reigns slightly with regards to the diversification and size of the main media players. The regulation goal of the FCC is to prevent one company from solely influencing the information passing through the airways and entertainment outlets into the mind of consumers. Porter’s Five Forces: In order to carefully formulate the strategies to be employed by Time Warner, a comprehensive examination of each of its business areas needs to be evaluated. Time Warner has five main business lines: AOL, film entertainment, publishing, programming networks and cable systems. We will begin the analysis of T.W. and its merge with AOL, including the consequent benefits and shortcomings. As a basis for this analysis, we will be using the most applicable forces in each situation out of Porter’s Five Forces: bargaining power of buyers and suppliers, threat of entry, threat of substitutes/compliments and industry rivalry. The following link shows the business segments of Time Warner and their contributions....
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...determine the type of strategy that contributed most effectively to the creation of a successful and profitable multibusiness model. Additionally, this paper will recommend an appropriate new strategy for each company that may maximize profitability and improved competitiveness in the industry. Yahoo!, Inc. Competitive analysis To better understand Yahoo’s internal and external opportunities and threats, in order to better estimate Yahoo’s ability to capture value, our starting point would be a quick analysis of operating and financial performance of Yahoo comparing to its peers in the industry during the last four years. We already studied around 10 on-line based service providers with AOL having the closest business model, size and shared markets. One of the most important industry features observed was the ability of taking the advantage of economies of scale, the larger the revenues a company can generate, larger profit margins could be realized and so more value created to shareholders. Although no...
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...Statements and Balance Sheets. I think it’s overpriced. How much do you think I should pay?” How will you use I/S and B/S to assess the target firm’s fair value? 5 Warren Buffet Emphasized importance of looking at a firm’s Competitive advantage of products Long-term growth potential… for good investment 6 Sound Fundamental Analysis One does not buy a stock, one buys a business. When buying a business, know the business. Good firms can be bad buys (if overpriced). Price is what you pay, value is what you get. Value of firm = Value of Debt + Value of Equity TA = L + SE (BV) on B/S 7 TA – L = SE SE (BV) vs. Market value of equity 8 Stock Price What is intrinsic value? Is the price overvalued? P/E=41: What earnings growth rate investors predicted? 9 Learning Objective of the Course I. Valuation based on Financial Statements Predict firm value and challenge the market! II. Financial Statement Analysis Assess a firm’s future performance & analyze how a firm creates value Creative, forward-looking & value-focused analysis! 10 Features of PART I: Valuation How do we calculate intrinsic value (really...
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...1. Apple Inc: Strong Innovative Strategy “Innovation distinguishes between a leader and a follower." – Steve Jobs I listed Apple Inc because of the innovative style of their management. Apple has kept the pace by using strategic innovation to maintain leadership position in the technology industry. Apple's innovative strategy is simply breathe taking. You can never predict what they’ve got up their sleeves. They are always coming out every now and then with one innovative product or the other. They’ve caused several frenzies in the marketplace with products such as iMac, GMac, IPod and IPad. "To turn really interesting ideas and fledging ideas into a company that can continue to innovate for years, it requires a lot of disciplines." – Steve Jobs "In three years, every product my company makes will be obsolete. The only question is whether we will make them obsolete or somebody else will." – Bill Gates Apple’s innovative style has made them consistently rank top ten in the Fast Company's list of innovative companies. I try to model Apple in my own little way byconstantly improving on businesses. I constantly seek innovative ways to increase customer’s loyalty and profit. If you want to make innovation one of your company’s core values, then Apple is one of the successful business strategy models you can emulate. "Pretty much, Apple and Dell are the only ones in this industry making money. They make...
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...32 34 36 48 49 50 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Objectives of Pricing Pricing Techniques Categories of Pricing Methods New Product Pricing Policies Product Mix Pricing Strategies Product Line Pricing Five geographical strategies Pricing in Practices Two-Part Tariff with Two Consumers Bundling in Practice Pricing science Pricing of Multiple Products Products with Interrelated/Interdependent Demand Pricing Practices in Market Economy 25 Theories To Get You Started Arbitrage pricing theory Cost-of-production theory of value Multiple-product Pricing Multi-product pricing Conclusion 1 Pricing Practices Pricing practices sometimes seem peculiar. When first-class hotel rooms in London, Tokyo, or Paris go for $300 to $500 per night, Holiday Inns offers Weekend WebSaversSM rates at Chicago’s O’Hare International Airport from as low as $62.48 per night—more than 50 percent off regular prices. Not to be outdone, Howard Johnson’s says vacations are more fun with family package rates up to 70 percent off regular prices. Meanwhile, Marriott offers advance purchase rates on the Internet for as low as $59 per night at the Courtyard Marriott Village at Lake Buena Vista, Florida. At the Hilton Durham, in North Carolina, weekday rates are $109.95 and $89.95 on the weekend. What is going on here? Rather than a mad scramble to build market share at any cost, hotelchain rates represent a shrewd use of information technology. Any night that hotel rooms stand empty...
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