Deutsche Bank lowers ROE target from 25% to 12%

When a company has a very high financial targets, employees are encouraged to do everything possible to achieve it, which in turn may lead to an unwanted increase in the level of risk that the firm faces. As the FT.com reports, the new leadership of the Deutsche Bank determined that the target was to high. They may have felt that they needed to curb the risk taking in the bank.

Deutsche’s new co-chief executives are expected to make a decisive break with the decade-long era of Josef Ackermann, their predecessor, when they will drop a target of generating a 25 per cent pre-tax return on equity. At a strategy presentation in Frankfurt after 100 days in charge of the bank, Anshu Jain and Jürgen Fitschen are set to announce a “substantially lower return on equity target”, one person close to the situation said.High quality global journalism requires investment. They are also expected to unveil a strategy for much closer integration of the bank’s business lines, make significant changes to the bank’s bonus model and give more details on a plan to take out €3bn of costs.Analysts estimate that the new goal could be in the region of 12 to 13 per cent ROE after tax – a benchmark more commonly looked at by investors than the pre-tax figure.

Full Story on ft.com

More Details on how Apple invented the iPhone

Slate reports:

This is the story of how Apple reinvented the phone. The general outlines of this tale have been told before, most thoroughly in Isaacson’s biography. But the Samsung case—which ended last month with a resounding victory for Apple—revealed a trove of details about the invention, the sort of details that Apple is ordinarily loath to make public. We got pictures of dozens of prototypes of the iPhone and iPad. We got internal email that explained how executives and designers solved key problems in the iPhone’s design. We got testimony from Apple’s top brass explaining why the iPhone was a gamble.
Put it all together and you get remarkable story about a device that, under the normal rules of business, should not have been invented. Given the popularity of the iPod and its centrality to Apple’s bottom line, Apple should have been the last company on the planet to try to build something whose explicit purpose was to kill music players. Yet Apple’s inner circle knew that one day, a phone maker would solve the interface problem, creating a universal device that could make calls, play music and videos, and do everything else, too—a device that would eat the iPod’s lunch. Apple’s only chance at staving off that future was to invent the iPod killer itself. More than this simple business calculation, though, Apple’s brass saw the phone as an opportunity for real innovation. “We wanted to build a phone for ourselves,” Scott Forstall, who heads the team that built the phone’s operating system, said at the trial. “We wanted to build a phone that we loved.”

Full story on Slate

Apple vs. Samsung Trial Reveals a lot of data on the firms’ stratetigies

Ina Fried of the WSJ’s All Things Digital is following the Apple-Samsung Trial and is providing an analysis of all the information the typically secretive Apple is forced to reveal.

Apple vs. Samsung Trial Forces Companies to Open Up the Books

At the bottom of the article are links to her other commentaries on the trial.

Tim Cook Interview at DX: Following Steve Jobs

Tim Cook was interviewed about a range of topics at DX, including Steve Jobs.

Jobs Was an Awesome Flip-Flopper, Says Tim Cook (Video)

Here is a summary on the remarks on Steve Jobs leadership style.

6:33 pm: Walt: How is Apple different with you as the CEO?
“I learned a lot from Steve. It was absolutely the saddest day of my life when he passed away.”
“At some point late last year, I sort of — somebody kind of shook me and said, ‘It’s time to get on.’” That sadness was replaced by his intense determination to continue the journey.

6:34 pm: What did I learn from him? Focus.
“You can only do so many things great, and you should cast aside everything else.”
Cook says that not accepting things good or very good, but only the best, “that’s embedded in Apple.”
“I’m not going to witness or permit the change of that.”
“He also taught me the joy is in the journey, and that was a revelation for me.”
Cook also made a reference to the fact that Jobs stressed the importance of owning the key underlying technologies.
As for moving on, Cook says: “I love museums, but I don’t want to live in one.”

6:37 pm: Cook says he is committed to preserving the culture of Apple.
“It is not that easy to duplicate, either,” Cook says.
“If they could, everybody would be like this,” Cook says. “You can’t get a consultant report” and change to be like Apple.

 

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After crashing on a demonstration flight, will the new Russian jet ever find sufficient customers

Getting 85% percent right in strategy implementation is not sufficient when it comes to airplane product. The previous example of the A320 which crashed on early test flights shows that it is crucial that plane crash is due to human error. NY Times reports:

Until a crash inquiry is done, analysts said, Sukhoi will have difficulty marketing the Superjet. “It would be entirely understandable for any potential customer to hold off until it’s determined whether the cause was human error or mechanical failure,” said Sash Tusa of Echelon Research and Advisory in London.
While it is rare for such a young aircraft to crash, it is not unprecedented — an Airbus 320 crashed during a demonstration flight in 1988, killing three people and injuring 50. Investigators determined that the cause had been pilot error and found no evidence of a malfunction. The A320 went on to be one of the world’s best-selling aircraft models.
If analysts identify human error as the cause of the plane’s crash, most of the existing 240 Superjet orders will stay on the books, Mr. Tusa said, but “if it turns out there is some kind of major design flaw with the aircraft, those orders aren’t worth the paper they are written on.”

  Full Story on NY.Times

Honeywell’s spectacular turnaround

The Economist reports an amazing on an amazing turnaround of Honeywell. It appears to be a great example of strategy implementation.

Honeywell likes its meetings short but plentiful. Every production cell, as the smallest shop-floor unit is called, starts the day with one. The aim is to try to identify problems and ideas for improvements, which are then pushed up to senior managers. Even the lowliest worker is expected each month to come up with two implementable ideas for doing things better. As an illustration of the firm’s devotion to “continuous improvement”, this is one of the pillars of what has become known as the “Honeywell operating system” (HOS).

This new production system, introduced over the past eight years, has helped transform Honeywell from a troubled giant to one of America’s most successful companies. Honeywell’s sales in 2011 were 72% higher than in 2002, and its profits doubled to $4 billion. A new emphasis on generating cash also means the firm has more money in the bank for every dollar declared in profit.

Full Story at Economist.com

Department of Justice Files Suit Against Apple and Major Publishers of ebooks

Apple did not join the settlement of the lawsuit. This is a major win for Amazon. It will be fascinating to watch how the suit will unfold.

Details:
Apple should settle suit
Associated Press on Suit April 11

 

Reversal of Fortunes: In smartphones Microsoft is in the position that Apple was in the PC era

The New York Times reports on this amazing reversal of fortunes.

Microsoft’s weak position in mobile apps is in stark contrast to the clout it had with developers in the heyday of the PC era. Its success with Windows was partly built on an all-out effort it made in the 1980s and ’90s to get independent software companies to make Windows the primary operating system for which they wrote applications.That influence began to weaken somewhat when the Web era took off and more companies began to design services and products that ran through browsers. But it has accelerated further as much of the creative talent in the developer world has shifted toward smartphone and iPad applications. Sarah Rotman Epps, an analyst at Forrester Research, said Microsoft’s relative weakness was a function of not having a big enough audience of users. “Developers go where the money is, and the money is where people are,” she said.

Full Article at NY Times

Vertical Integration Works for Apple—But It Won?t for Everyone

Wharton professors explain why Apple integrated model of designing both hardware and software may not work for other companies. Knowledge@Wharton reports:

Google recently acquired mobile device maker Motorola Mobility and will soon manufacture smartphones and television set-top boxes. Amazon’s Kindle Fire tablet represents its bridge between hardware and e-commerce. Oracle bought Sun Microsystems and now champions engineered systems (integrated hardware and software devices). And even long-standing software giant Microsoft now makes hardware for its Xbox gaming system. Technology titans are increasingly looking like vertically integrated conglomerates largely in an attempt to emulate the success of Apple.Vertical integration dictates that one company controls the end product as well as its component parts. In technology, Apple for 35 years has championed a vertical model, which features an integrated hardware and software approach. For instance, the iPhone and iPad have hardware and software designed by Apple, which also designed its own processors for the devices. This integration has allowed Apple to set the pace for mobile computing. “Despite the benefits of specialization, it can make sense to have everything under one roof,” says Wharton management professor David Hsu.

Read full story.

JetBlue to Review Procedures After Pilot Meltdown: CEO

A pilot on a JetBlue flight had a complete mental meltdown. The co-pilot had to lock him out the cockpit and passengers had wrestle him down and constraint him with their belts. If you are the CEO, what you want to know know is whether this was an isolated incident (which can always happen) or whether your HR systems are not properly design. For this reason it makes sense that the CEO ordered a review.  Read full story here.

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