Identifying the strategic market

When are markets truly global? Will Europe be a single market after 1992, and how will we know? When are niche strategies sustainable? In this article, John Kay develops answers to these questions by developing the concept of the strategic market–the minimum area, product or geographical, within which it is possible to compete. He identifies the common strategic error involved in confusing the dimensions of the market with those of the industry, and warns that economic integration is not at all the same as the creation of a single market.     

Using Medicare data for short-run projections of the elderly population.

As the elderly population of the United States grows in absolute number and as a proportion of total population, accurate projections of that population become increasingly important for sound policy decisions. Cohort component techniques are typically used for state and local projections of the elderly population, but are often outdated or even nonexistent for many local areas. This paper suggests an alternative approach, based on Medicare data and simple projection techniques. Projections for several base periods and projection horizons are made for all states and for counties in Florida and are compared with actual Medicare enrollment. On the basis of these comparisons it appears that Medicare data and simple projection techniques can produce very useful short-run projections of the elderly population for states and local areas.     

UNITS OF DEBT WITH WARRANTS: EVIDENCE OF THE “PENALTY-FREE” ISSUANCE OF AN EQUITY-LIKE SECURITY

While units of debt with warrants are not structured as perfect substitutes for convertible bonds, there is reason to believe that firms view the two securities as viable alternative methods of raising funds. Analyses of the capital market effects of the announcement of the plan to issue and the issuance of units of debt with warrants provide unique evidence of the “penalty-free” issuance of an equity-like security. Evidence is found to support the conjecture that units are typically issued by smaller, riskier firms than are convertible bonds. However, there is no evidence that the use of this security is interpreted by the market as a sign of financial distress.     

From Experience: Reaping Benefit from Speed to Market

Many companies have gained great benefit from a speed-to-market program. Others have tried but failed to achieve measurable, sustained value. Still others have not even tried, being concerned about adverse consequences.
This article helps newcomers decide how to approach time to market. It first addresses some common fears about development acceleration, such as increased project expense and lapses in quality. An effective program overcomes these concerns, but it must do much more. It must stem from a statement, clear to all developers, explaining how faster development is tied directly to improved competitiveness and thus to higher profits for the company. A general corporate goal of a 50% across-the-board cut in cycle time will not do, nor will an underlying hope that faster development will improve developer productivity.
To help establish a clear link from speed-to-market to profitability, I suggest calculating how much a week of delay impacts profit, and I show how to align a development acceleration program with corporate programs to improve quality or productivity.     

What's in Your 403(b)? Academic Retirement Plans and the Costs of Underdiversification

Sponsors of defined contribution retirement plans typically limit the investment choices of plan participants to a small number of investment managers and a limited number of investment vehicles. Such restrictions may limit excessive risk-taking by participants but also may preclude opportunities for efficient diversification. Many college and university 403 (b) plans have restricted investment choices to the retirement annuities offered by TIAA-CREF, the current manager of over half of all 403(b) contributions. Using 10 years of historical data, we study the efficiency of this TIAA-CREF opportunity set relative to a larger set that includes several standard index funds. Extrapolations must be interpreted -with caution. Assuming optimal rebalancing, depending on loss aversion and diversification constraints, the historical sample of returns implies that over a 20-year remaining work life, an employee -with an expanded menu that includes standard index funds could gain over 40% in terminal wealth compared to one who is restricted to TIAA-CREF retirement annuities. Even when a naive diversification strategy of equally weighting (1/n) all available funds is used, the expandedmenu outperforms the restricted portfolio by more than 25% over20years. These differences generally are significant at conventional levels based on parametric and nonparametric testing and do not appear to result from idiosyncratic market performance durinz the sample period.