Distribution →
- 10 Apr 2013
- Research & Ideas
Learning Curve: Making the Most of Outsourcing
Companies that view outsourcing as an easy way to offload commodity work are missing powerful improvements to be gained by working closely with service providers, says Professor Robert S. Huckman. Open for comment; 0 Comments.
- 24 Oct 2012
- Working Paper Summaries
Diasporas and Outsourcing: Evidence from oDesk and India
Diaspora-based exchanges have been important for centuries, but the online world reduces many of the frictions these networks solved. How do the Internet and diaspora networks connect? This study investigated the importance of Indian diaspora connections on the oDesk platforms for outsourcing. oDesk is the world's largest online labor market, processing $30 million per month in contracts as of May 2012. This research finds strong evidence that diasporas still matter and influence economic exchanges even when many frictions are minimized. In fact, the case study suggests more often than not that diaspora use increases as familiarity with the platform increases. This suggests a longer-term complementarity between diaspora networks and online tools that may aid the persistence of these networks. At the same time, the oDesk evidence also makes clear that the role of diaspora networks should not be overstated. While they contributed to India's success on oDesk, diaspora connections were clearly not a driving force in India becoming the top destination for oDesk contracts. Key concepts include: The frictions that online platforms like oDesk minimize are frictions that diaspora networks have historically been used to overcome. This makes their role for future economic exchanges uncertain. Diaspora connections still matter. Ethnic Indians working in countries outside of India are 32 percent (9 percentage points) more likely to choose a worker in India than non-ethnic Indians. Yet, even with the increased likelihood of outsourcing to India, diaspora connections played a very small role in India's rapid development on oDesk. In fact, diaspora connections appear to follow rather than lead the platform's development. Diaspora connections occur through the actions of many people in small ways and the extreme concentration of impact due to a few key people. Diasporas will continue to use online platforms in an effective manner, but diasporas will not be responsible for a country's overall success on the platform, at least in countries of moderate to large size. Closed for comment; 0 Comments.
- 22 Feb 2012
- Working Paper Summaries
The Dynamic Effects of Bundling as a Product Strategy
This paper investigates the practice of bundling as a product strategy, and identifies how consumers make choices between products and bundles in a dynamic environment. Authors Timothy Derdenger and Vineet Kumar look at the handheld video game market to study bundling in a platform setting with the goal of investigating several key questions of interest to practitioners who make product decisions: First, do consumers value bundles over and beyond their component products, indicating a synergy, which some researchers have hypothesized? Second, have there been differing opinions on whether mixed bundling, that is offering both the bundle and individual products for sale, is more effective than offering only pure bundles or even compared to offering only the products for sale? Given the prevalence of bundling in technology markets, it is critical to understand whether bundling is more effective in environments with strong network effects or with weak network effects. Key concepts include: Consumers have a negative synergy effect, that is they are willing to pay less for the bundle than for the individual console and game, leading to the question of whether introducing such bundles can increase revenue. Because bundles act similar to damaged goods, they work well in dynamically segmenting consumers and allow for purchases to occur earlier in time—the presence of bundles induces consumers to purchase earlier rather than wait. The time shifting of hardware purchases has a strong effect on software sales, since more consumers who own consoles will purchase video games over a longer time frame. Mixed bundling is especially effective compared to pure bundling, and the authors find that moving to pure bundling would reduce sales by over 20 percent. Strong network effects do not enhance the value of bundling, suggesting that bundling may instead prove more useful in settings with weak network effects. Bundling is thus a strategy that could serve as a substitute to creating stronger network effects. Closed for comment; 0 Comments.
- 01 Aug 2011
- Research & Ideas
Immigrant Innovators: Job Stealers or Job Creators?
The H-1B visa program, which enables US employers to hire highly skilled foreign workers for three years, is "a lightning rod for a very heated debate," says Harvard Business School professor William Kerr. His latest research addresses the question of whether the program is good for innovation, and whether it impacts jobs for Americans. Key concepts include: An uptick in the number of H-1B visas given to Indian and Chinese engineers correlates with an increase in the number of US patents. The H-1B program seems to have no overall effect on the number of jobs held by American-born scientists and engineers, nor does it affect the number of patents from inventors who have Anglo-Saxon names. Closed for comment; 0 Comments.
- 19 Jul 2010
- Research & Ideas
How Mercadona Fixes Retail’s ’Last 10 Yards’ Problem
Spanish supermarket chain Mercadona offers aggressive pricing, yet high-touch customer service and above-average employee wages. What's its secret? The operations between loading dock and the customer's hands, says HBS professor Zeynep Ton. Key concepts include: The last 10 yards of the supply chain lies between the store's loading dock and the customer's hands. Poor operational decisions create unnecessary complications that lead to quality problems and lower labor productivity and, in general, make life hard for retail employees. Adopting Mercadona's approach requires a long-term view and a leader with a strong backbone. Closed for comment; 0 Comments.
- 11 Jan 2010
- Research & Ideas
Mixing Open Source and Proprietary Software Strategies
Open source and proprietary software development used to be competing strategies. Now software firms are experimenting with strategies that mix the two models. Researcher Gaston Llanes discusses recent research into these "mixed source" strategies. Key concepts include: Software companies are taking a "best of both worlds" approach by creating products that use a combination of OS and proprietary software code. The researchers wanted to get a clearer sense of when a profit-maximizing firm should adopt a mixed-source business model and what that model might look like under different circumstances. Results indicate recurring patterns and strategies that managers can take into consideration when setting strategy. Closed for comment; 0 Comments.
- 30 Nov 2009
- Research & Ideas
Tracks of My Tears: Reconstructing Digital Music
Record labels have depended on album sales to boost profits. But in the digital music era, consumers prefer single songs over music "bundles." The result? Harvard Business School professor Anita Elberse says it is time for the industry to rethink its products and prices. Key concepts include: The unbundling of albums into a series of separately sold songs on digital music stores is hurting record label profits. Labels are less likely to get away with selling a bundle based on the strength of one or two tracks if the other songs are far less appealing. A strong artist reputation helps to curb the negative impact of unbundling. Labels might consider pushing for higher prices online and generally more flexibility in setting prices. Giving preference to quality over quantity and designing smaller, more consistent bundles may be beneficial. Closed for comment; 0 Comments.
- 13 Nov 2008
- Working Paper Summaries
The Effect of Labor on Profitability: The Role of Quality
Determining staffing levels is an important decision in retail operations. In 2006, retailers spent $393 billion on employee wages, more than 10 percent of their revenue that year and more than their inventory holding costs. Hence, staffing levels have a major impact on retailers' costs. But at the same time, staffing levels affect conformance quality—how well employees execute prescribed processes—and service quality—the extent to which customers have a positive service experience at the stores. While there is overwhelming evidence that conformance quality and service quality improve sales, both generally and in retail settings, their effect on profitability is not clear. To examine how the amount of labor at a store affects profitability through its impact on conformance quality and service quality, Zeynep Ton analyzed extensive data from stores of a large retailer. Key concepts include: How well employees execute prescribed processes is an important driver of financial performance. It is important to design processes that are simple and easy to follow, especially when there is high employee turnover, as in the retail industry and when offering a self-service environment. Good process design needs to be backed up with an organizational culture that emphasizes conformance to these processes. Too much corporate emphasis on payroll management may motivate managers to operate their stores with insufficient labor capacity that, in turn, degrades financial performance. Emphasis on payroll management can also degrade employee morale. Closed for comment; 0 Comments.
- 06 Nov 2008
- Working Paper Summaries
Extending Producer Responsibility: An Evaluation Framework for Product Take-Back Policies
Managing products at the end of life (EOL) is of growing concern for durable goods manufacturers. While some manufacturers engage in voluntary "take back" of EOL products for a variety of competitive reasons, the past 10 years have seen the rapid proliferation of government regulations and policies requiring manufacturers to collect and recycle their products, or pay others to do so on their behalf. Toffel, Stein, and Lee develop a framework for evaluating the extent to which these product take-back regulations offer the potential to reduce the environmental impacts of these products in an effective and cost-efficient manner, while also providing adequate occupational health and safety protection. The evaluation framework is illustrated with examples drawn from take-back regulations in Europe, Japan, and the United States. Key concepts include: The authors identify key policy levers that promote cost efficiency while reducing risks to the environment, public health, and the workers involved in recovery operations. Key policy decisions include setting the scope of manufacturer responsibilities, the stringency of recovery and recycling targets, design-for-environment requirements and substance bans, restrictions on when customer fees can be imposed, and limitations on the industrial organization of the recycling market. Closed for comment; 0 Comments.
- 03 Mar 2008
- Research & Ideas
Marketing Your Way Through a Recession
In a recession, consumers become value oriented, distributors are concerned about cash, and employees worry about their jobs. But a downturn is no time to stop spending on marketing. The key, says professor John Quelch, is to understand how the needs of your customers and partners change, and adapt your strategies to the new reality. Key concepts include: Brands that increase advertising during a downturn can improve market share and return on investment. Early-buy allowances, extended financing, and generous return policies motivate distributors to stock your full product line. In tough times, price cuts attract more consumer support than promotions. CEOs must spend more time with customers and employees. Closed for comment; 0 Comments.
- 10 Jan 2008
- Sharpening Your Skills
- 13 Apr 2007
- Working Paper Summaries
Incorporating Price and Inventory Endogeneity in Firm-Level Sales Forecasting
Benchmarking and forecasting firm level performance are key activities for both managers and investors. Retailer performance can be tracked using a number of metrics including sales, inventory, and gross margin. For operational reasons, the sales, inventory, and gross margin for a retailer are interrelated. Retailers often use inventory and margin to increase sales; and sales, conversely, provide input to the retailer’s decisions on inventory and margins. Inventory and margin also influence each other. This research uses firm-level annual and quarterly data for a large cross-section of U.S. retailers listed on NYSE, AMEX, or NASDAQ to construct a model that examines the interrelationships among sales per store, inventory per store, and margin. Key concepts include: This model can be used to benchmark retailers' performance in sales, inventory, and gross margin simultaneously. The model can also be used to generate sales forecasts even when sales were managed using inventory and gross margin. Closed for comment; 0 Comments.
- 26 Jul 2006
- Research & Ideas
The Strategic Way to Go to Market
Too often channel strategies develop at the last minute--when a product is ready to go to market. But this haphazard approach leaves a lot of efficiencies and synergies by the wayside, says V. Kasturi Rangan. Enter the concept of the "channel steward." Key concepts include: Distribution strategies are often supplier-conceived methods to get a product to market, but these strategies fail to capitalize fully on channel partners or customers. A "channel steward" is a player in the chain who is best positioned to look out for the interests of all involved and devise a win-win strategy. Distribution strategy needs the attention of high-level executives—not just a product manager. Think of the Internet as a complementary go-to-market tool, not a total solution. Closed for comment; 0 Comments.
- 20 Dec 2004
- Research & Ideas
How an Order Views Your Company
HBS Professors Benson Shapiro and Kash Rangan bring us up to date on their pioneering research that helped ignite today’s intense focus on the customer. The key? Know your order cycle management. Closed for comment; 0 Comments.
- 12 Jan 2004
- What Do You Think?
How Should We Think About the Exportation of Jobs?
It looks like productivity increases in the U.S. are accommodating growth with little increase in the number of jobs. Doesn’t it suggest that the jobs that people do hold must be getting better? Closed for comment; 0 Comments.
- 28 Apr 2003
- Research & Ideas
Supply Chain Risk: Deal With It
Suddenly your supply chain is full of weak links, everything from terrorism to political instability to dock strikes. Could you and your customers withstand a disruption? Closed for comment; 0 Comments.
- 07 Apr 2003
- What Do You Think?
Should Global Business Initiatives Be Devalued?
Are executives who ask this question overreacting to current events? Or, if the current geopolitical events are merely symptoms of a greater and longer struggle, should we begin to think about devaluing, discounting, or postponing global initiatives in favor of more predictable business investments "closer to home"? Closed for comment; 0 Comments.
- 30 Mar 2003
- Research & Ideas
The Future of IT Consulting
A new Harvard Business School working paper traces the evolution of IT management consulting and trends for the future. Read our e-mail interview with professor Richard Nolan and HBS Interactive Senior Vice President Larry Bennigson. Closed for comment; 0 Comments.
- 21 Oct 2002
- Research & Ideas
The Parable of the Bungled Baggage And the Unhappy Customer
Sometimes a seemingly harmless corporate decision such as a budget trim can lead to big problems elsewhere. HBS professor W. Earl Sasser tells what happens when budget constraints and customers collide. Closed for comment; 0 Comments.
How to Do Away with the Dangers of Outsourcing
The collapse of the Rana Plaza garment factory in Bangladesh should be a warning to companies that embrace outsourcing, says Professor Ranjay Gulati. Closed for comment; 0 Comments.