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Copyright: © 2013 The Wharton School of the University of Pennsylvania
The phrase ”free shipping” is like a siren song to many who shop on the Internet. For whatever reason a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10 says Wharton marketing professor David Bell. Bell noticed this phenomenon a few years ago while doing research for an online grocery store and the observation prompted him to look more closely at the ways Internet retailers use shipping charges -- or the lack thereof -- as a promotional tool. The result is a recent paper titled ”Free Shipping and Repeat Buying on the Internet: Theory and Evidence ” by Bell and colleagues Skander Essegaier from Koc University and Yinghui Yang from the University of California at Davis.
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Consumers’ love affair with expensive customized cups of coffee shows no signs of abating even though most orders consist of little more than a cup of water a splash of milk a spoonful of coffee grinds and 30 seconds of labor. Indeed Starbucks has managed to turn its customers’ craving for caffeine into a $6.4 billion a year business with close to 6 000 company-owned coffeehouses already up and running and five new ones opening each day. All of which explains why so many coffee sellers seem intent on taking away some of Starbucks’ highly profitable market share. Yet according to Wharton marketing professors some companies are so obsessed with swiping business from Starbucks or losing customers to it that they may be abandoning a niche that has already proved profitable.
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Corporate leaders must build international organizations to compete in today’s economy and be prepared to defend globalization at home according to Klaus Kleinfeld chief executive of the German electrical and engineering conglomerate Siemens AG. Speaking at a recent Wharton Leadership Lecture Kleinfeld said U.S. concerns about the sale of port assets to a Dubai-based firm and French resistance to the sale of yogurt-maker Danone -- which French officials called a ”national treasure” -- highlight growing fears that globalization comes at the cost of jobs in developed countries. He also addressed the need for labor unions to be more flexible offshoring concerns the benefits of conglomerates and the qualities he looks for in potential leaders.
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When General Motors last month offered buyouts and early retirement packages to 113 000 hourly workers the move focused new attention on a key aspect of the continually evolving relationship between employers and employees. Buyouts often signal management’s decision to strategically change the company’s direction and start easing out those workers who are part of what is now considered the old regime. Meanwhile employees who stay behind suddenly recognize that they are replaceable parts with little job security and no long-term commitment from the company. What messages do buyouts send to employees? How are buyouts structured? Is there a ’right’ way and a ’wrong’ way to handle the buyout process?
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Roy Vagelos a highly regarded pharmaceutical executive who spent two decades at Merck including 10 years as CEO has often said that ”research remains my life blood ” and indeed he has stayed active in the industry since his retirement from Merck in 1994. For example he is chairman of the board of two small drug companies Regeneron Pharmaceuticals and Theravance and in 2004 co-authored a book entitled Medicine Science and Merck. Vagelos recently spoke with Robbie Shell editorial director of Knowledge at Wharton and Steve Guglielmi Knowledge at Wharton senior editor about the future of the pharmaceutical industry including competition from generics the impact of outsourcing biotech alliances pricing strategies and the next big drug breakthroughs.
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Kevin Werbach a professor of legal studies and business ethics at Wharton spoke recently with David Yaun an IBM executive about the company’s Global Innovation Outlook project. According to Yaun ”traditionally companies have identified innovation with gadgets and gizmos but that thinking is being transformed.” The definition of innovation is being broadened -- it is becoming more open collaborative global and inter-disciplinary. ”The barriers to innovation and collaboration have come down dramatically ” Yaun says. This was the second in a series of interviews about themes to be featured at Supernova a conference Werbach organizes in collaboration with Wharton in San Francisco.
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In the debate over how to build better models to help the world’s neediest citizens supporters of for-profit social-impact organizations argue that their model is more sustainable than non-profit schemes. Non-profit and foundation executives agree that new paradigms are necessary but caution that for-profit models could ultimately put profit ahead of serving the poor. The issues surrounding this debate were further explored at the recent Wharton Social Impact Management (SIM) Conference whose theme -- ”Solutions to Social Problems Incident to our Civilization” -- borrowed a phrase used 125 years ago by school founder Joseph Wharton in his directive for business education.
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Azim Premji 60 owns more than 80% of Bangalore-based Wipro India’s third largest software exporter which had annual revenues of $1.8 billion in 2005. Forbes magazine reckons that his net worth exceeds $13 billion and it places him at No. 25 in its most recent ranking of the world’s richest people. In the first of a two-part interview with Knowledge at Wharton Premji speaks with Ravi Aron a professor of operations and information management at Wharton about Wipro’s reorganization last year following the departure of its former CEO; why the company chose to move to a new structure based on so-called verticals; how Wipro’s business operations are changing; and the challenges the company faces in building management talent.
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A talking chimp arriving in e-mail inboxes speaks in its sender’s voice through a telephone connection or recites a pre-recorded joke for the boss. Burger King’s ad campaign offers a ”subservient chicken” site where viewers can type in commands to a person in a chicken suit with red garters. JibJab is developing a new site called JokeBox where consumers and corporations can post and share funny videos or jokes online. These are among the latest viral marketing campaigns that blend advertisement and interactive entertainment across informal consumer networks. The convergence may be inevitable say Wharton faculty and others but it remains unclear whether such an approach is sustainable and measurable and whether it will actually generate new business.
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Everyone uses commodities such as wheat cocoa crude oil butter coal and electricity. But most investors know that speculating on commodities in the futures markets is only for the pros and no sensible amateur would bet his retirement or college funds on sugar silver orange juice or feeder cattle. But are commodities really that risky? Using the most comprehensive data on commodities futures returns ever assembled Wharton finance professor Gary Gorton and K. Geert Rouwenhorst finance professor at the Yale School of Management have reached a surprising conclusion -- that commodities offer the same returns as investors are accustomed to receiving with stocks. Gorton and Rouwenhorst present their findings in a paper titled ”Facts and Fantasies about Commodity Futures.”
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