Mapping your competitive position

A price-benefit positioning map helps you see, through your customers' eyes, how your product compares with all its competitors in a market. You can draw such a map quickly and objectively, without having to resort to costly, time-consuming consumer surveys or subjective estimates of the excellence of your product and the shortcomings of all the others. Creating a positioning map involves three steps: First, define your market to include everything your customers might consider to be your product's competitors or substitutes. Second, track the price your customers actually pay (wholesale or retail? bundled or unbundled?) and identify what your customers see as your offering's primary benefit. This is done through regression analysis, determining which of the product's attributes (as described objectively by rating services, government agencies, R&D departments, and the like) explains most of the variance in its price. Third, draw the map by plotting on a graph the position of every product in the market you've selected according to its price and its level of primary benefit, and draw a line that runs through the middle of the points. What you get is a picture of the competitive landscape of your market, where all the products above the line command a price premium owing to some secondary benefit customers value, and all those below the line are positioned to earn market share through lower prices and reduced secondary benefits. Using examples as varied as Harley-Davidson motorcycles, Motorola cell phones, and the New York restaurant market, Tuck professor D'Aveni demonstrates some of the many ways the maps can be used: to locate unoccupied or less-crowded spaces in highly competitive markets, for instance, or to identify opportunities created through changes in the relationship between the primary benefit and prices. The maps even allow companies to anticipate--and counter-- rivals' strategies. R eprint RO711G     

The stop-loss start-gain paradox and option valuation: a new decomposition into intrinsic and time value

The downside risk in a leveraged stock position can be eliminatedby using stop-loss orders. The upside potential of such a positioncan be captured using contingent buy orders. The terminal payoffto this stop-loss start-gain strategy is identical to that ofa call option, but the strategy costs less initially. This articleresolves this paradox by showing that the strategy is not self-financingfor continuous stock-price processes of unbounded variation.The resolution of the paradox leads to a new decomposition ofan option's price into its intrinsic and time value. When thestock price follows geometric Brownian motion, this decompositionis proven to be mathematically equivalent to the Black-Scholes(1973) formula.     

The effect of information releases on the pricing and timing of equity issues

With time-varying adverse selection in the market for new equityissues, firms will prefer to issue equity when the market ismost informed about the quality of the firm. This implies thatequity issues tend to follow credible information releases.In addition, if the asymmetric in information increases overtime between information releases, the price drop at the announcementof an equity issue should increase in the time since the lastinformation release. Using earning releases as a proxy for informativeevents, we find evidence supporting these propositions.     

The Empire strikes back. Counterrevolutionary strategies for industry leaders

Industry leaders frequently worry that their companies will fall victim to some revolutionary business model or disruptive technology. But new research shows that it's strategically better for incumbents to counter a revolution than to ignore or fully embrace it. Successful incumbents rely on one or more of five approaches to restrain, modify, or, if necessary, neutralize a revolutionary threat. A company that perceives a revolution in its earliest stages can use containment strategies. By throwing up roadblocks--raising switching costs, perhaps, or launching discrediting PR efforts--an incumbent can often limit the degree to which customers and competitors accept a nascent insurgency. And, sometimes, revolutions die there. If not, early containment buys a company some time to shape the revolution so that it complements, rather than supersedes, the incumbent's strengths. And even if shaping efforts fail, they can give an industry leader more time to work out how to absorb the threat by bringing the new competencies or technologies inside the firm in such a way that they don't destroy its existing strengths and capabilities. When revolutions have progressed too far to slow them down, incumbents must take a more aggressive tack. Neutralizing strategies meet a revolution head-on and terminate it--by, say, temporarily giving away the benefits offered by the challenger for free. Annulment strategies allow the market leader to leapfrog over or sidestep the threat. These five strategic approaches need not be used in isolation, as a detailed case study of the way Anheuser-Busch countered the craft-beer revolution dramatically demonstrates. Sensible industry leaders do not lead revolutions; they know they may not survive the attempt. Instead, they prefer to lead counterrevolutions.     

收购旧设备及更新计划

<正> 南方公司是美国东南部5间受控管制公用电之控股公司,并为美国最大之电力生产商。南方电力是南方公司其中一间附属公司,在世界各地从事电力发展业务。其子公司亚洲电力发展有限公司发展项目遍布中国、菲律宾及亚洲其他地区。南电收购State Line发电设备的项目是更新旧电厂以提高效率、减低烟气排放及延长机组寿命的好例子。     

Coming attraction

Francesca Cornelli, Richard D'Aveni, Andrew Kakabadse, Rosabeth Moss Kanter, Markus Reitzig, Fons Trompenaars and Kim Warren share their latest research.     

An empirical investigation of international asset pricing

We investigate several asset pricing models in an internationalsetting. We use data on a large number of assets traded in theUnited States, Japan, the United Kingdom, and France. The modeltogether with the hypothesis of capital market integration implytestable restrictions on multivariate regressions relating assetreturns to various benchmark portfolios. We find that multifactormodels tend to outperform single-index models in both domesticand international forms especially in their ability to explainseasonality in asset returns. We also find that the behaviorof the models is affected by change in the regulatory environmentin international markets.     

传统的会计方法会抑制技术革新吗?(下篇)

财务指标在决定一个项目是否应该上马时是十分重要的。但企业需要使用一系列会计和非会计方法来决定如何推进项目。     

Preferences, continuity, and the arbitrage pricing theory

This article investigates the structure on preferences requiredto derive Ross's arbitrage pricing theory (APT). It is shownthat only ordinal preferences are required. In particular, theAPT does not require that agents possess preferences representableas risk-averse expected utility functions. This characteristicof the APT is not shared by the standard equilibrium-based capitalasset pricing models.     

A Markov model for the term structure of credit risk spreads

This article provides a Markov model for the term structureof credit risk spreads. The model is based on Jarrow and Turnbull(1995), with the bankruptcy process following a discrete statespace Markov chain in credit ratings. The parameters of thisprocess are easily estimated using observable data. This modelis useful for pricing and hedging corporate debt with imbeddedoptions, for pricing and hedging OTC derivatives with counterpartyrisk, for pricing and hedging (foreign) government bonds subjectto default risk (e.g., municipal bonds), for pricing and hedgingcredit derivatives, and for risk management.