Knowledge@Wharton
Knowledge@Wharton is an online resource that offers the latest business insights, information, and research from a variety of sources. Content includes analysis of current business trends, interviews with industry leaders and faculty, articles based on the most recent business research, book reviews, conference and seminar reports, and links to other websites.

• Why Firing Your Worst Customers Isn't Such a Great Idea
  Fire your bad customers. That piece of advice has become widely accepted in recent years as companies have sought to manage their relationships with customers in more sophisticated ways. The rationale is clear-cut: Low-value customers end up costing more money than they provide. So why not jettison them and focus your customer-relationship efforts on more profitable individuals? Or, as an alternative, why not try to increase the worth of the low-value customers to your firm? Not so fast, suggests a new study by two Wharton marketing professors -- Jagmohan Raju and Z. John Zhang -- which concludes that firing low-value customers actually decreases firm profits and that trying to increase the value of these customers may be counterproductive.
• Jeremy Siegel on the Interest Rate Cut: The Fed May Be 'Behind the Curve'
  For the third time in the past few months, the Federal Reserve's Open Market Committee has chosen to cut short-term interest rates by a quarter percent or 25 basis points. The Fed cut its main short-term rate target to 4.25% and the "discount rate" charged on direct Fed loans to commercial banks to 4.75%. In its statement justifying the decision, the Fed noted, "Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today's action, combined with the policy actions taken earlier, should help promote moderate growth over time." Will the Fed's decision help promote "moderate growth?" Knowledge@Wharton asked Jeremy Siegel, a professor of finance at Wharton and author of The Future for Investors, to analyze the Fed's decision and its impact on the markets.
• A Closer Look at Sovereign Wealth Funds: Secretive, Powerful, Unregulated and Huge
  The Abu Dhabi government is buying a 4.9% stake in Citigroup for $7.5 billion. UBS is selling a 10.8% share to the government of Singapore and an unnamed Middle Eastern investor for $11.5 billion. Two Middle Eastern government funds now own a third of the London Stock Exchange. Governments, through investment pools known as sovereign wealth funds, have put tens of billions of dollars into Western financial firms this year. But is foreign ownership -- or, more precisely, foreign government ownership -- really a good thing? Many experts think this mushrooming trend bears watching, especially for any sign that these funds are evolving from pure investment vehicles into tools for exerting political pressure on the "target" countries.
• Forget Endorsements: Sports and Entertainment Stars These Days Want Equity
  A generation ago, the only financial goal for a superstar African-American athlete at the peak of his career -- beyond a large contract -- was to nab a lucrative endorsement deal with a big sneaker company, like Nike, or a national brand, such as McDonald's. The idea was to earn several million extra dollars before his skills began to wane. Those short-term goals remain, but today, many in the National Basketball Association or the National Football League want something more substantial -- like a long-term piece of the action. A panel at the recent 34th Annual Whitney M. Young, Jr., Memorial Conference looked at the business deals and humanitarian activities that today's stars are conducting well after their days on the playing field are over.
• Marrying Marketing Science with the Front Lines: One Book Publisher's Winning Combination
  The event was a contest designed to highlight the ways that advanced marketing science can improve the bottom line. The place was the Practice and Impact of Marketing Science 2007 conference held earlier this month at Wharton. And the winner was the National Academies Press (NAP), the book-publishing arm of the National Academy of Sciences, which presented information on how marketing research had helped it realize a common but often elusive goal -- reaching as many customers as possible at the highest attainable price.
• Who Owns You? Finding a Balance between Online Privacy and Targeted Advertising
  On November 6, Facebook outlined a strategy to integrate more targeted advertising into its popular social networking website. Facebook CEO Mark Zuckerberg saw the new initiative as an opportunity for users to refer products to each other and allow friends to share information as they shopped online and visited other websites. The system, called Beacon, was also intended to lead to more relevant -- and profitable -- advertising through precise targeting based on a user's buying habits, social circle and geography. But on December 5, after receiving numerous complaints, Zuckerberg issued an apology and changed the way Beacon operates. The whole incident, according to Wharton experts, raises questions about privacy, marketing tactics and what consumers can expect in the future.
• Social Marketing: How Companies Are Generating Value from Customer Input
  Fansumers, viral videos and social computing -- these are just some of the many buzzwords pinging around the marketing world today. While making sense of them isn't easy, the concept behind them is clear: Online technologies allow customers to communicate in new ways with one another, and companies must decide whether to ignore, co-opt or dive into these new waters of interactivity. "Consumers want to feel they are being heard, and they love having an impact on the future development of products," says one Wharton professor. "To the extent that they can air grievances, or understand the company's position, that can be beneficial for the company itself."
• Putting a Different Face on Africa: Hope for an Economic Turnaround
  Africa's stunning lack of basic services, such as electrical and telephone grids and Internet connectivity, might cause many to despair, but Euvin Naidoo looks at the map and sees something different: hope. During a keynote address at the recent 15th annual Wharton Africa Business Forum, Naidoo -- president and CEO of the South African Chamber of Commerce in America -- noted that with the world pushing for alternative sources of energy, such as windmills or geothermal power, it will be easier to implement these new technologies in Africa than in more developed countries. "The key about disruptive technology is that it has a chance to innovate at the base of the pyramid," said Naidoo.
• View from Dalian, China: The New Risk Architecture and Our Growing Interdependence
  In early September, nearly 1,700 leaders representing business, politics, the arts and universities gathered in the city of Dalian, 600 miles east of Beijing. Erwann Michel-Kerjan, managing director of the Wharton Risk Management and Decision Processes Center, who was selected as one of the World Economic Forum's Young Global Leaders this year, attended the five-day event, which included participants from 90 countries. He offers his report on what he calls "The New Risk Architecture."
• GE's Judy Hu: 'We're Reinventing a Brand and a Company'
  Jeff Immelt, chairman and chief executive of General Electric, is remaking one of the world's best-known companies into an eco-minded innovator. Judy Hu has to communicate his vision to the world. Hu is global executive director for advertising and branding for the Connecticut-based conglomerate and overseer of its award-winning "Imagination at Work" and "Ecomagination" ad campaigns. "Jeff decided that we could no longer drive growth through acquisition," says Hu, who spoke at the recent 2007 Wharton Marketing Conference. "We had to focus on R&D and creating new products and services. Our story is about a new vision for GE."
• Maurice Flanagan's Emirates Airline: Flying High and Treating Customers like Sheikhs
  If you were looking for clues on how to save the troubled airline industry, you might be tempted to start by focusing on Dubai-based Emirates -- one carrier that has continued to increase traffic and revenues even as most of its rivals struggle with rising fuel and personnel costs and mounting losses. But Maurice