...Charles Schwab & Co: What were the key factors underlying Schwab's competitive advantage until the mid-1990s? How have these factors reinforced each other? Competitive Advantage 1. Different Customer Group. In 1975, brokerage commissions were deregulated. Schwab took the advantage of the new opportunities and focused on providing informed investors with low-cost access to security transactions. This was a new approach compared to full-service brokerage firms. 2. Technology. Schwab invested heavily in technology as a way to lower costs. In 1985, Schwab was one of the first firms to use personal computer as a distribution channel for financial services. In the late 1980s and on into the early 1990s, Schwab developed several technology-based services. a) TeleBroker, a fully automated telephone system (in English, Spanish, Mandarin, and Cantonese) that allowed customers to retrieve real-time stock quotes and place orders. b) SchwabLink, a service for fee-based financial advisors with back-office custodial services. Also, the relationship with independent, fee-based advisors allowed Schwab to reach more customers, to sell more products. c) OneSource, the Schwab Mutual Fund program, a revolutionary fund supermarket that helped customers purchase Schwab and non-Schwab no-load mutual funds with greater ease and without paying transaction fees. It was also an exceptional distribution channel for the fund providers, especially the smaller ones who lacked...
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...1975, Charles Schwab created the discount broker. With new rules set in place commissions would now be set by market competition. While competitors like Merrill Lynch and Fidelity raised their fees, Charles Schwab chose the opposite route. For so many years the cost of trading stock was so high it limited the investment opportunities available for Americans. Schwab envisioned that individual investors would jump on the opportunity to be in control of their trading at a discounted rate. By focusing on the principle of providing the best customer experience across all channels CS revolutionized the brokerage industry. With the introduction of online trading in the late 90’s, CS became one of the top financial services firms in the nation while doubling profits. However, a dynamic marketplace posed new challenges. The stock market crash of 2001 and competition from new Internet discount brokers cut into CS’s transaction fees, which was their main source of revenue. With high trading volumes likely coming to an end CS has to focus on other sources of revenue. Recommendations CS’s decision to become the first discount brokerage firm was a great strategy to cement them as a force in the brokerage industry. However, this image was hurting them for future growth. While CS offered many of the same services affluent investors ($1MM + investable assets) sought from full-commissioned brokerage (FCB) firms, they weren’t known for them. As seen in the case study, Charles Schwab Corp...
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...Ameritrade – case study Executive Summary Ameritrade provides online brokerage services and operates an Internet-based financial management services business. 90% of the company’s revenues are from the provision of discount brokerage services. The company’s objective is to improve its competitive position in deep-discount brokerage. In order to achieve this objective, the company must grow its customer base, requiring an investment of $100 million to upgrade its technological capabilities as well as an increase of $155 million for its advertisement budget. In order to evaluate the company’s cost of capital, we used the Cost Asset Pricing Model. Since the company went public recently, it would not be an accurate assessment of the risk of the investment to find the beta of this short time period. Therefore, we chose a similar company called Charles Schwab, which has very similar sources of revenue, discount brokerage services. However, this company has a very different capital structure, so we unleveraged the beta in order to get the best, most accurate beta for Ameritrade. We assumed that the capital structure of Ameritrade did not have debt, and that the project would be financed with equity only. We found a levered beta for Charles Schwab of 2.15. After unlevering it, we got a beta of 1.8768. When using the CAPM model, we concluded that the cost of capital of Ameritrade is equal to 20.40%. Factors to be considered in evaluating the project Various factors must...
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...concepts and the metrics to specific situations. In particular, this assignment will give you an in-depth understanding of: • Market Share (Chapter # 3) • Value creation (Chapter # 4) • Market Segmentation (Chapter # 5) Rubric • Multiple choice questions that require students to show their work will receive 10 points for selecting the correct answer and (0 – 10) for showing the correct calculations, for a maximum total score of 20 points for each question. • Open ended question will receive (0- 20) points based on the clarity of the answer and the relevance of connections between the case study and the concepts covered in the course. Instructions 1. Read the mini-case. 2. Answer the multiple choice questions by selecting the correct answer. 3. Show all your work when requested. 4. Submit your assignment by the end of week 1. Case 1: The Prius Toyota recently introduced a hybrid automobile named Prius. Since its introduction, this offering has achieved a 1.2% market share in this market. Toyota has conducted research in an effort to assess its opportunity for market share development. The table below indicates consumers’ current response at each step along the share development path for Toyota’s Prius hybrid automobile as well as Toyota’s desired response at each step: |Share Performance |Current Response |Desired Response | |Director | ...
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...decisions. These factors provide the framework from which we base our decisions and justify our actions. Unfortunately not everything in life is so cut and dry, there often exist many gray areas that can lead to ethical dilemmas, since what one person thinks is the right course of action might not always appeal to everyone else’s ethical sensibilities. For many the words “business” and “ethics” form an oxymoron. We are frequently inundated with reports of ethical misconduct in the business world—misappropriated finances, inflated earnings, labor misconduct, and environmental recklessness are just a few of the many egregious acts to which we have become familiar. In this reading, we will explore the importance of business ethics and closely study how it relates to corporate success. We will take a look at several stellar examples of companies that regularly exhibit high ethical standards. While you read, consider how your personal ethics come into play when you make business and personal decisions that affect others. Codes of Conduct The first step towards implementing ethical business practices is to clarify what types of behaviors a company wishes to promote and what activities are considered unacceptable or prohibited in the workplace environment. As part of this step, an organization should adopt a thorough, all encompassing code of conduct, also known in some circles as a code of ethics. A code of conduct outlines the specific actions that employees must take in order to...
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...|MKTG 3596 - Integrated Marketing Communications |Instructor: Charles F. Byers | |Lec. #94665 |Office: Lucas Hall 216W | |Santa Clara University |Phone: 408-310-9244 | |MBA Winter 2014 |E-mail: cbyers@scu.edu & byers.charles@ yahoo.com | |Meeting Times: Sat. – 8:30 – 11:15 p.m. |Office Hours: Sat. 11:15 a.m. – 12:15 p.m. or by appointment | |Meeting Place: Lucas Hall 307 | | Integrated Marketing Communications Textbooks & Materials Byers & Barr, “Integrated Marketing Communications Custom Edition for Santa Clara University 3E”: Pearson Learning Solutions, 2014. CoursePack Reader – “Marketing 596 – Winter 2014” Course Description This course is designed as an introduction to the concept and practice of integrated marketing communications (IMC). It takes the participant through communication, marketing, branding, and integrated marketing theory, planning and IMC program coordination. The course also addresses the marketing communications tactics of advertising, public relations, direct...
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...Cost of Capital at Ameritrade 1 Objective j • This case provides the opportunity for you to p estimate the cost of capital. • To develop an understanding of how capital market data and the CAPM can be used to estimate the required rate of return for real investments 2 Background g • Ameritrade: formed in 1971, IPO in March , pioneer in the deep-discount p 1997, a p brokerage sector. – Helped create the deep discount market – The first to offer many new services that changed th way i di id l i h d the individual investors managed t d their portfolios. 3 • Ameritrade’s strategy: to grow its customer , q base, which required substantial investments in technology and advertising. • Needed an estimate of the project’s risk. risk 4 Q Question • How risky are these cash flows? • How are they related to the stock market? 5 To-do’s • Determining what firms can be considered comparable when estimating the cost of capital • Calculating returns from stock prices g q y • Estimating CAPM equity and asset betas from capital market data g g • Understanding the effect of leverage on equity betas g pp p • Evaluating how appropriate the estimated cost of capital is for different types of real investments 6 The Discount Brokerage Business g • What are the primary sources of revenue? – Transaction revenues • Brokerage commissions • Clearing fees • Payment for order flow – Interest revenues • Margin lending to customers • Interest on investment of...
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...61/80 Q-2 SPA WORKS MEMO To: Glen Mori, President From: Meghal Desai, Information System Manger Date: 1 January 2014 Subject: Proposed Advisory Committee Hello Glen. In the preceding years, rapid growth of spa works has created new customer base by acquiring new locations and capturing competitors market. Actually, increase of daily operations and business transactions, the current legacy system has been creating lots of issues with financial statement and decision making process because of data from numerous sources have to be combined. Such a rapid growth needs a change in legacy system in terms of selecting new committee members. As a result and as per request from a President to form a new advisory committee has been proposed to provide assistance and guidance in creation of new integrated system. This will improve Spa works business process. Below stated five committee members presented with their roles and tasks: 1) Human Resources manager: Spa Work has been going through the stage of expansion. Human Resources Manager is the key member of this organization. Main goal of Spa Works is to improve their legacy system and these will only possible through people and HR. Human Resources manager is responsible for all people related activities like recruitment, training and retention of employees as well as their daily concerns that consists of payroll, tax provisions, and benefits. Human Resources team also needs to comply all government related policies and follow...
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...Jessica Turner has a master's degree in accounting and an undergrad degree in business. She established Turner Test Prep, a CPA exam review center, after being rejected by the Big Six accounting firms. She decided to bring the company into existence when she was searching for other employment options, and also because she had experience in the field when she worked at a review center's business office before taking up her master's degree. There, she inadvertently started teaching the math portion of the reviews, and received training in teaching. After passing the CPA exam on the first try herself, she decided that she would like to help those who want to take the CPA exam pass on their first try as well. And so she developed a business and marketing plan, convened with various professors to create a comprehensive curriculum, and opened her firm's doors. Instead of the normal review route of using books, software, or online courses, she provided a full service 6 week, 3-6 hours a day review regimen for her clients that include one hour live lectures from various professors, discussions about test taking skills and organizational skills to digest information faster, provided audiotapes that the clients can listen to at home or in their cars, executed timed mini tests as well as practice essay questions, one on one bi weekly client meeting to see how they've progressed and for them to ask questions, and a direct line to her via e mail for any queries the clients may have. She Even...
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...Corporate Finance Case Study Solution 1. What factors should Ameritrade consider when evaluating the proposed advertising program and technology upgrades? Ameritrade needs a cost of capital to evaluate new projects. Firms maximize their value by taking all positive NPV projects. is the expected cash flow in period i is the discount rate To calculate an NPV, we need a discount rate. In the A-Rod case we used 8%. In the Ocean Carriers case we used 9%. In this case we will learn how to determine an appropriate rate. If Ameritrade analysts use a discount rate that is too high, good projects may be rejected. If they use a discount rate that is too low, bad projects may be accepted. Also the Ameritrade analysts should consider, that their company’s internal discount rate was often used as 15%, but some managers felt appropriate the rate of 8-9%. At this time, the external discount rate, used by Credit Swiss First Boston was 12%. Good observation. So actually computing the NPV earlier, Ameritrade analysts accepted only the best projects which fitted their high requirements. Now at the end of your analysis, we see that Ameritrade has a cost of capital close to 22%. This high hurdle rate means that Ameritrade should only accept projects with a very high potential rate of return (as long as they are of similar risk levels). 2. How can the Capital Asset Pricing Model (CAPM) be used to estimate the cost of capital for a real investment decision? (Note: A real investment decision here is contrasted...
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...Dear Andy! Sorry for my second delay with the case – it is all the preparation to university exams. I shall try to finish Friendly Cards in time. So I used to make parallels from cases to our real life and economic situation in Ukraine. At the time we do not have such companies as Ameritrade in Ukraine, because this kind of business does not have it’s customers right now. This is a new thing to our country, and as usual, all the new things are taken distrustfully. I can recall only one example : it is FOREX, but it actually deals with the currency exchange rates, buying and selling currency. The only same thing – all the processes are being held online. 1. What factors should Ameritrade consider when evaluating the proposed advertising program and technology upgrades? Ameritrade needs a cost of capital to evaluate new projects. Firms maximize their value by taking all positive NPV projects. [pic] [pic] [pic] is the expected cash flow in period i [pic] is the discount rate To calculate an NPV, we need a discount rate. In the A-Rod case we used 8%. In the Ocean Carriers case we used 9%. In this case we will learn how to determine an appropriate rate. If Ameritrade analysts use a discount rate that is too high, good projects may be rejected. If they use a discount rate that is too low, bad projects may be accepted. Also the Ameritrade analysts should consider, that their company’s internal discount rate was often used...
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...CASE STUDY– Trilogy Software Few industries have undergone as much turbulence in the past few years as those in Internet-related businesses. One of the leaders in this industry is Trilogy Software, based in Austin, Texas. Trilogy, founded in 1989, creates software to help e-businesses handle procurement, customer service, relationship management, and data integration. Its 1500 employees serve an impressive client base that includes Ford, FedEx, Land’s End, Charles Schwab, and Motorola. Trilogy’s president and CEO, Joe Liemandt, seeks to hire and keep employees who can flourish in a chaotic environment, who are willing to take risks, and are not afraid of working long hours. Liemandt has fashioned a strategy for Trilogy that encompasses maintaining the high energy of a start-up with the experience of an established company. An important part of that strategy is continually recruiting “only the best”—bright, dynamic individuals from the best universities, business schools, and industries. By hiring great people and giving them significant responsibilities from day one, Liemandt hopes his firm will be able to respond to competitive challenges, keep its entrepreneurial spirit alive, and achieve its goal of being a high-impact company. New recruits are wooed to Austin with dinners, cultural and recreational outings, and competitive salaries. Once there, the recruits go through “boot camp”—an intensive training program conducted to turn rookies into Trilogians. In classes led...
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...we would like to express our greatest appreciation to Allah for His love and blessings upon us. Secondly, we would like to express our sincere appreciation to Sir Ahmad Suhaimi for his guidance and advice in making sure our research project is completed within the timeframe. We would also like to thank him for all his support and patience in supervising. Our work, which greatly motivated us throughout the completion of the research project . Thank you so much. Lastly, we would also like to thank our parents, as well as our fellow friends , for their constant support and encouragement throughout our studies at KLMUC. The research project would not have been possible done without the care and concern shown. We would also like to dedicate our appreciation to Malaysian Government for PTPTN and MARA financial aid, which has helped us with the funding and support necessary to study. Introduction of Internet and E-commerce History of the Internet began with the development of computers in the 1950s. Point-to-point communication between mainframe computers and terminals was the beginning. Since then, the development of Internet had grown in alignment with the rapid development of computers1. E-commerce emerged during the 1990s when Internet was opened to commercial use and in 2000; E-commerce became a hit in United States and Western European where a great number of businesses represented their products or services in the World Wide Web2, promoting and selling to businesses...
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...performance in gaining an entry into Quick & Reilly? In view of this, would you rate his performance favorably? Going forward what is most potent threat that could jeopardize Carman’s plan? Justify your answers using case facts. Siebel Systems was formed with the dual objective of being a high technology enabler focused entirely on customer satisfaction with enduring values. The company was part of the tipping point of IT being a back end function to a growth driver. It captured the most crucial aspect of this evolution, that of enabling a firm to reach out to its customers when and where the customers required service. By 2001 it had over 50% of the CRM market share, was touted to be the best in the industry in CRM solution and had global presence. It was going from strength to strength and the biggest factor contributing to this growth was its “ecosystem of partners” strategy coupled with its single minded focus on customer satisfaction. The research results were proof of how effective Siebel was in achieving its aims, garnering its customers return on the CRM investments in 9.6 months only along with a 20% increase in customer satisfaction levels, 19% increase in productivity levels & 16% increase in customer retention levels for its customer firms. In the case of Carman we need to first understand the relationship from the customers’ need. Quick & Reilly was clearly a firm in distress but with tremendous potential, given its enduring business proposition. It had reached a growth...
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...------------------------------------------------- COURSE OBJECTIVES The topics covered in this course are Open Innovation and Management of Technology and Innovation. The objectives of the course are: 1) to understand a number of crucial theoretical, empirical and managerial issues in business innovation; 2) to develop the ability to apply theory to real world cases; 3) to develop the ability to critically assess the usefulness of competing or complementary theories. ------------------------------------------------- STUDY MATERIAL Books Burgelman, R.A., Christensen, C.M. and Wheelwright, S.C. (2009). Strategic Management of Technology and Innovation, 5th Edition, McGraw-Hill International Edition, ISBN 978-007-126329-0. In this course manual the abbreviation BCW refers to this book. Chesbrough, H. (2006). Open Innovation, The New Imperative for Creating and Profiting from Technology, Harvard Business School Publishing Corporation: ISBN 1-4221-0283-1. Articles Some material is not covered by the books mentioned above. Therefore, there are some additional articles you have to study. All these papers are available via online (university library) sources. These are not provided as hard copies. Make sure you obtain: Cooper, R.G. (2008), “Perspective: The Stage Gate Idea to Launch Process – Update, What’s New, and NexGen Systems”, Journal of Product...
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