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525 Week 9 Objectives
FBE 525 - Class Objectives -- J. K. Dietrich
Week 9 – October 19, 2006 (or Saturday, October 14, 2006)
Dimensional Fund Advisors: 2002 – Discussion Questions
This case describes a specific strategy in the asset-management business and introduces issues
associated with product development, changing market structure, and the importance of
implementation in realizing the most value from an approach. Some questions to keep in mind in
analyzing the case are:
1) How does the history and evolution of DFA influence its “philosophy” and approach to
developing a business strategy?
2) What is a product in the asset management business and what are examples of different
product types? Compare DFA’s products to others in the asset-management business
and what are their differences and similarities? How does “product design” and
implementation strategy interact for DFA and other asset managers?
3) How does DFA define its market and what are its sources of competitive advantage?
4) What is happening to the demand for managed assets in the United States and in the
world that affects the future market for asset-management products and, given this, how
do you and DFA expect the market for these product to develop in the future?
Bloomberg L. P. – Discussion Questions
While the case writer is emphasizing human resource issues in this case, our purpose in
discussing Bloomberg is to examine value creation in information-based financial services.
Despite this disclaimer, human capital and labor are important in value production in this
business and part of our focus will be to see what that means to a financial manager or strategist
in this industry. The case is unique in providing an up-to-the-minute look at information services
at the wholesale level. After analyzing and discussing this case, students should understand the
relevance of information technology to financial services like securities and asset management
services and have some understanding of issues in making profits in providing these services.
Again, determinants of market power and competitive advantage are of substantial interest.
Some general questions to keep in mind in reading the case are:
1) What is Bloomberg’s product and what value does that product have to customers? What is
old and what is new in Bloomberg’s product? Who are its customers, how large is its
market, and who are its competition?
2) What are the sources of revenues and costs for Bloomberg? Can you provide some rough
estimates of the cost side over time? How is its historical model apt to be changed by
technological change, if at all?
3) What are the factors affecting economies of scale and economies of scope for Bloomberg?
Does Bloomberg experience the effects of either of these?
4) What are the strategic issues facing Bloomberg as discussed in the case? Given your
personal experience with the industry or with related businesses, what are other strategic
challenges for the firm?
525 Week 9 Objectives
Suggested Wall Street Journal (WSJ) or other Articles
October 9 , 2006
“PNC Nears $6 Billion Mercantile Deal” (A3) – Another bank merger, illustrating consolidation in banking
in U.S. and possible reasons for value creation
“Bad Loans Draw Bad Blood” (C1) – Risks in mortgage lending, including buying back soured loans,
illustrates long-tailed credit risk from that business
“NYSE’s Speed Test Starts Off Well” (C2) – Shortening of response time for transactions using electronics
on traditional exchange may change order flows on oldest exchange
October 10 , 2006
“Private-Equity Firms Face Anticompetitive Probe” (A3) – Possible litigation from auction and bidding
processes followed by cozy private-equity firms’ relations
“Sovereign to Force CEO to Resign In Compromise With Santander” (A3) – Another good story about how
poor performance leads to changes in CEOs
“Spitzer Aims At Another Mark: Fee Disclosure” (C1) – Regulation of asset-management firms conditions
economic environment
“Tracking the Numbers: PNC Merger May Put to the Test Regionals’ Ability to Compete” (C3) –
Challenges to banks as business restructures
“Moody’s, S&P Still Hold Advantage” (C5) – Discussion of credit-rating business provides insights into
nature of important industry