Knowledge@wharton

Actors athletes and executives are among the most populous inhabitants of the rarified atmosphere of multimillion dollar incomes. Why is it then that corporate executives are coming under fire for excessive pay when athletes like Michael Jordan and entertainers like Oprah Winfrey seem to stir no such feelings of resentment? Part of the answer suggest Wharton faculty and others is that people see – and get – a direct benefit from what athletes and entertainers provide. See acast.com/privacy for privacy and opt-out information.

Managers traditionally have built their careers by concentrating on specific disciplines such as finance or marketing. Such specialization however pales in comparison to the value that executives can generate when they fuse together insights from various fields into a cohesive whole. That was the message that the heads of three companies -- ARAMARK Commerce Bancorp and Contigroup Companies -- delivered when they spoke recently at Wharton. See acast.com/privacy for privacy and opt-out information.

The recording industry has a pricing problem. People do not want to pay $15-20 for a compact disc when they can download the same music for free over the Internet. The industry’s solution appears as novel as the technology that is giving it such headaches: launch hundreds of lawsuits against otherwise law-abiding consumers who download music. As G. Richard Shell a legal studies professor and author of a forthcoming book on competitive legal strategy notes this same tactic was tried 100 years ago against Henry Ford. It didn’t work then and it won’t work today. See acast.com/privacy for privacy and opt-out information.

The U.S. stock market has jumped and the economy shows signs of perking up but Americans continue to lose jobs. Indeed some economists warn that that many of the nearly three million jobs lost over the past three years are gone for good. What’s in store for the next three months and for 2004? While most economists and market watchers are somewhat optimistic others suggest that the recovery won’t last. See acast.com/privacy for privacy and opt-out information.

Fans of the hit TV comedy “The Jerry Seinfeld Show” may remember an episode in which Jerry’s friend George leaves his car parked at work so that the boss will think George is putting in long hours even when he’s not. The idea of course is that George’s apparent productivity will net him a higher raise or bonus. Wharton professor Maurice Schweitzer would call George’s behavior “an attempt to invoke the input bias – the use of input information (in this case the false impression of long hours) to judge outcomes.” As extreme as this example might seem business decisions are frequently made based on input that is either biased or manipulated as Schweitzer and colleague Karen Chinander suggest in a new paper entitled “The Input Bias: The Misuse of Input Information in Judgments of Outcomes.” See acast.com/privacy for privacy and opt-out information.

In recent years Wharton management professor Peter Cappelli has heard companies warn about a coming labor shortage to the point where this prediction is now routinely factored into discussions about human-resource issues. The problem Cappelli found is that no such shortage will occur. In his latest research Cappelli explains how challenges in recruiting and hiring stem from changes in the nature of the employer-employee relationship not in a shortfall of workers caused by demographic shifts. See acast.com/privacy for privacy and opt-out information.

Most people generally understand that the sooner they begin planning for retirement the better. Putting money aside now rather than later means that you will have more assets in the long run. What many people don’t know however is the amount of money they will need to live on in their golden years. Experts at Wharton examine the reasons why people don’t save enough for retirement and what strategies are available to change that. See acast.com/privacy for privacy and opt-out information.

Managers have long been interested in weeding out customers that they consider to be less profitable than others. The question is how do managers determine who belongs in that group? According to several Wharton marketing professors there is no easy answer despite new and increasingly sophisticated efforts to measure what is called “Customer Lifetime Value” (CLV) – the present value of the likely future income stream generated by an individual purchaser. CLV it turns out is hard to calculate and harder to use. See acast.com/privacy for privacy and opt-out information.

It’s a familiar scenario: A company brings in a new department head who immediately decides that the way to show leadership is to reorganize. Then a new division head comes on board or a new CEO and there are more reorganizations sometimes several in one month. Yet according to Wharton management professor Peter Cappelli frequent reorganizations “are like doctors treating patients with antibiotics.” The medication might work short-term but “long-term it can be harmful.” Knowledge at Wharton looks at why some reorganizations succeed and others fail. See acast.com/privacy for privacy and opt-out information.

Women make or influence the purchase of more than 80% of all products and services. So you might think there would be nothing about women’s buying habits that American businesses don’t know. You would be wrong according to two new books entitled “Just Ask a Woman: Cracking the Code of What Women Want and How They Buy” and “Marketing to Women: How to Understand Reach and Increase Your Share of the World’s Largest Market Segment.” The authors offer their observations on what women want when they set out to shop. Hint: Think “warmer ” not “winner.” See acast.com/privacy for privacy and opt-out information.

Prices have been at the center of human interaction ever since traders in ancient Mesopotamia began keeping records. Who doesn’t love to guess what something costs – or argue about what something ought to cost? So it should come as no surprise that companies spend a lot of time figuring out how to price their products and services. But two professors in Wharton’s marketing department Jagmohan S. Raju and Z. John Zhang say firms do not always go about pricing the right way despite the huge impact that pricing strategy can have on a company’s profits. See acast.com/privacy for privacy and opt-out information.

It’s the best of times … and the worst of times. Best in that participants in this year’s Wharton School Business Plan Competition represented an unusually diverse number of industries. Worst in that the ability of entrepreneurs to raise seed money from venture capitalists is distinctly hobbled by a dismal economy and an equally dismal venture capital industry. Of course what shouldn’t change in good times or bad is the ability to recognize a ‘hot’ business plan. See if you can pick the winner from this year’s ‘eight great’ finalists. See acast.com/privacy for privacy and opt-out information.

How does Southwest Airlines keep making money? After all the airline industry overall is in a shambles. US Airways and United Air Lines are reorganizing in bankruptcy while American Airlines flirts with the same fate. As a group the nation’s biggest air carriers have lost billions of dollars over the past several years with no immediate recovery in sight. Yet the secret to its success said Southwest chairman Herb Kelleher during a talk at Wharton April 22 is available for anyone including its competitors to see. See acast.com/privacy for privacy and opt-out information.

For the second year in a row Wal-Mart topped Fortune magazine’s list of largest companies and is also the magazine’s most-admired firm the first time one company has shared both honors since the annual survey began in 1955. The giant retailer continues to expand worldwide planting giant supercenters as well as new neighborhood-scale markets in its attempt to offer more and more goods to a wider array of shoppers. But Wharton faculty and outside analysts note that Wal-Mart still faces a few challenges ranging from its own centralized operations to union opposition to problems with local zoning boards. See acast.com/privacy for privacy and opt-out information.

Call-centers are usually regarded as high-pressure workplaces where pay is often skimpy and turnover is rampant. Employee turnover rates in the industry range from 25% to 45% a year – which poses a problem for employers who invest substantial amounts in training workers only to see them leave. A new study by Emilio J. Castilla a professor of management at Wharton shows that if call-center operators want to reduce such high turnover rates improve worker retention and even increase employee productivity tapping into social networks could provide a possible solution. See acast.com/privacy for privacy and opt-out information.

Should your firm target your competitors’ customers with lower prices than the competition charges them? When might it make sense instead to offer discounts to your own customers? Under what conditions might this sort of approach – known as “targeted pricing” – backfire by driving everyone’s prices down too far? Recent research by Wharton marketing professor Z. John Zhang and several colleagues examines the complex dimensions of “targeted pricing” and suggests guidelines to help companies understand when “targeted pricing” might play an effective role in their marketing strategy. See acast.com/privacy for privacy and opt-out information.

When companies outsource back-office services overseas one of the biggest challenges they face is measuring the results. Failure to monitor whether work is being performed correctly after it moves outside a company can result in massive and costly errors. How can companies protect themselves against such risks? Ravi Aron co-director with Jitendra Singh of a recent Wharton executive education program on business-process outsourcing offers some crucial insights. See acast.com/privacy for privacy and opt-out information.

One of the world’s hottest PC companies has a balance sheet worth envying a dominant position in a fast-growing market and a history of good service and innovative technology. But if you haven’t heard of Legend Computer you can be excused; for the past 19 years the company has confined itself to China. As China transforms and opens though its No. 1 PC maker is coming into the spotlight and it hopes to become a global force to rival IBM Dell and HP. Experts at Wharton and elsewhere examine the prospects of Asia’s most successful computer maker. See acast.com/privacy for privacy and opt-out information.

Is Dell doing everything right? In a sluggish PC market where global shipments only rose by 2.7% in 2002 Dell reported a 21% revenue growth year-over-year in the fourth quarter and their global market share jumped from 13.2% to 15.7%. Meanwhile Dell is a solid number one in the U.S. with 29.2% of the market. They have big plans in China and in printers. Is there any place this powerhouse is vulnerable? See acast.com/privacy for privacy and opt-out information.

In today’s economy the odds that employees’ skills will need to be updated have increased says management professor Peter Cappelli. The question then becomes is your employer going to reinvest in you through retraining or lay you off and hire someone new? As director of the school’s Center for Human Resources Cappelli wanted to know why a few companies have remained committed to retraining even as the ethos of American business has changed. The answer as Cappelli explains in a new research paper has a lot to do with what is termed “social capital.” See acast.com/privacy for privacy and opt-out information.