Knowledge at Wharton

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.

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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.

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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?

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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.

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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.

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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.”

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What makes some companies so much better at managing customer relationships than their competitors? Put a different way how are companies like Enterprise Rent-A-Car Pioneer Hi-bred Seeds Fidelity Investments Lexus Intuit and Capital One able to stay more closely connected to customers than their rivals in ways that significantly influence the profitability of the firm? It’s a question that Wharton marketing professor George Day answers in a new paper. His research notes among other things three distinct approaches to customer relationship management (CRM) each with dramatically different results.

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Many Western companies are considering moving back-office operations such as call centers to low-wage countries like India. While this approach can result in significant savings when the project is handled right potential pitfalls can undo the benefits. Knowledge at Wharton spoke with two executives who have undertaken such projects for their organizations to understand where the pitfalls lie and how to avoid them.

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In the foreword of Who Says Elephants Can’t Dance? Louis V. Gerstner Jr.’s memoir of his nine years as CEO of IBM the author confesses that he isn’t one for reading the kind of book he’s written. After a twelve-hour day at work he asks “who would want to go home and read about someone else’s career at the office?” Apparently a lot of people do if book sales are any indication. Although he has his critics Gerstner’s book tells how he turned IBM from a potential dinosaur into a dancing pachyderm.

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According to Ken Lewis chairman chief executive of Charlotte-based Bank of America standalone investment banks are headed for obsolescence and perhaps even extinction. Speaking at Wharton on Nov. 7 Lewis painted a grim future for the once high-flying investment banking business while discussing the strategy corporate culture and ongoing expansion of Bank of America.

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