Knowledge at Wharton

The financial markets are in turmoil. Inflation is picking up. Home prices are falling. More companies are laying off workers. Oil prices are sky-high. It’s getting harder and harder to borrow money. It seems like a nest of conspirators is preying on America. Even Washington is reinforcing the impression with talk of sweeping reforms to the system of economic oversight. Indeed  economic commentator Ben Stein has promoted the notion of market manipulation from the shadows largely in the form of hedge funds. Yet Wharton faculty reject that idea saying instead that the market is suffering a hangover from the easy-money excesses of recent years. Hosted on Acast. See acast.com/privacy for more information.

Securitization is often blamed for aggravating -- if not causing -- the subprime mortgage crisis that keeps roiling U.S. real estate and credit markets. By repackaging pools of mortgages into securities that could be resold to investors the argument goes securitization permitted unscrupulous underwriters to offer housing loans to poor borrowers and transfer the risk to Wall Street. How then will the present credit crisis affect the future of securitization? According to professors from Wharton’s finance and real estate departments securitization will not disappear -- but it is in for radical changes. Hosted on Acast. See acast.com/privacy for more information.

Kevin Roberts has been CEO Worldwide of Saatchi & Saatchi since 1997 and in the space of 11 years has cemented the ad agency’s reputation as one of the most successful and creative companies in the industry. Roberts is perhaps most well known for an idea he came up with called ”lovemarks” -- which means creating a brand for which the consumer has ”loyalty beyond reason.” During a visit to campus last week he talked with Knowledge at Wharton about lovemarks and other initiatives. In addition as part of the Wharton Leadership Lecture series he spoke about the skills needed to be a successful marketer what consumers really want his personal management style and the need to have a dream. Hosted on Acast. See acast.com/privacy for more information.

In a new research paper titled ”Dogs on the Street Pumas on Your Feet: How Cues in the Environment Influence Product Evaluation and Choice ” Wharton marketing professor Jonah Berger suggests that what you see in your everyday world can influence what you buy. For example participants in one study who were shown more images of dogs liked sneakers from the Puma brand more than those who had not seen the images -- because dogs are associated with cats and cats with Puma. ”Marketers ... think they have to come up with a catchy slogan or slick advertisement to create a buzz ” Berger says. Instead companies can get a payoff by creating a link between their product and a cue in the environment. Hosted on Acast. See acast.com/privacy for more information.

Innovation timing a good idea and luck are all ingredients of success in the technology industry according to speakers at the recent Wharton Business Technology Conference titled ”Enterprise Agility: Lead with Speed.” Former Microsoft executive Rob Glaser who went on to found RealNetworks and Glenn A. Britt CEO of Time Warner Cable both said strong technology businesses are built on firm technical footings but shaped by business forces that are not always predictable. ”Any successful entrepreneur who says luck did not play a role is either lying or lacks self-awareness ” stated Glaser. Hosted on Acast. See acast.com/privacy for more information.

The ongoing credit crisis in U.S. financial markets has claimed a huge and high-profile victim: Bear Stearns. After being slammed by what amounted to a run on the bank during the week of March 10 the Wall Street firm agreed to be acquired -- for $2 a share -- by JP Morgan Chase over the weekend in a deal overseen by Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Federal Reserve lowered interest rates the same day -- and did so again on March 18 by three-quarters of a percentage point. Are other Wall Street firms likely to follow Bear Stearns into oblivion? Will the Federal Reserve’s efforts help to boost confidence in the financial system? Finance professor Jeremy Siegel author of The Future for Investors discussed these questions and more with Knowledge at Wharton. Hosted on Acast. See acast.com/privacy for more information.

With their low fees all-day trading and tax efficiency exchange-traded funds have captivated investors. There were no ETFs before 1993; today there are nearly 700. While most experts think ETFs were a good innovation -- built like index-style mutual funds but traded like stocks -- some worry that the increasingly specialized ETFs introduced in recent years stray from the faith encouraging too much risk-taking. That concern is heightened by recent Securities and Exchange Commission proposals to let new funds come to market with less oversight and to invite proposals for introducing actively managed ETFs. Knowledge at Wharton looks at the recent action and angst surrounding ETFs. Hosted on Acast. See acast.com/privacy for more information.

Paper costs are rising mail rate hikes are looming and competition from new media continues to grow. Yet marketers’ use of direct mail and other printed materials is stronger than it’s been in years. Thanks to variable-data printing companies can now tap purchase-history databases to design create and print entirely personalized catalogs that cross-sell products and services to individual consumers. They can also combine print with other media in the evolving discipline known as cross-channel marketing. But whatever strategy a company adopts experts note the challenge is the same: Finding the right way to communicate with customers. Hosted on Acast. See acast.com/privacy for more information.

A tug of war over the future of media may be brewing between so-called user-generated content -- including amateurs who produce blogs video and audio for public consumption -- and professional journalists movie makers and record labels along with the deep-pocketed companies that back them. The ultimate outcome: a hybrid approach that features entirely new business models say experts at Wharton. Hosted on Acast. See acast.com/privacy for more information.

Accounting techniques like budgeting sales projections and financial reporting are supposed to help prevent business failures by giving managers realistic plans to guide their actions and feedback on their progress. At least that’s the theory. But when Gavin Cassar a Wharton accounting professor tested this idea he found something troubling: Some accounting tools not only fail to help businesspeople but may actually lead them astray. He analyzes these conclusions in two separate research papers. Hosted on Acast. See acast.com/privacy for more information.