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CHAPTER 2 CASE STUDY

   1. What are the business benefits of Business Sufficiency, Business Sphere and Decision Cockpits?

The business benefits for these three solutions are it will eliminate time spent debating different data sets, and instead use a system that allows leaders to focus on immediate and better business decisions using the most accurate data available.

                               I.            Business Sufficiency

·         Furnishes executives with prediction about P&G market share and other key performance metrics.

·         A series of analytics models showing what’s occurring in the business right now, why it’s happening and what actions P&G can take.

ü  Sales data at the country, territory, product line and store levels, along with drivers such as advertising and consumers consumption, factoring in specific economic data at the regional and country levels.

ü  The P&G can adjust pricing, advertising and product mix to respond to the predictions.

                            II.            Business Sphere

·         Interactive system designed to reveal insights, trends and opportunities for P&G leaders and prompt, focus business questions that be addressed with data on spot.

·         Everyone in meeting sees the same information.

·         The Business Sphere allows top executives to answer their own specific business questions, and to visualize data in a more intuitive way than a simple report allows.

·         The Business Sphere also envisioned as a kind of command center.

                         III.            Decision Cockpits

·        To eliminate time spent by P&G employees debating the validity of competing version of data found in emails, spreadsheets, letters and reports.

·         By providing a one-step source of accurate and detailed real-time business data.

·       Managers and employees are able to make faster and better decisions than previously possible.

   2. What people, organization and technology issues had to be addressed when implementing Business Sufficiency, Business Sphere and Decision Cockpits?

People

• The Decision Cockpits issue is there is less communication among the workers. It is because they used the technology to solve the problem that arising. So, there is no relationship between the workers.

Organization

• Knowledgeable employee is essential for P&G Company to launch these three systems. Organization need to prepared special course, mentor-mentee or another relate coaching method to introduce and guide employee on how to use the system effective and efficiently

Technology

• Organization need to bare high launching and maintenance cost for the three systems. Moreover, company need to make sure the handling of  data effective and efficiently to avoid system down which could affect daily operation and also escape from the spread of important data
• Ex: Company might need to spend for specialist fee to install anti-virus or protection software to ensure the safety of data.

  3. How did these decision making tools change the way the company ran its business? How effective are they? Why?

These decision making tools change the way of company gathers reports and interprets of the business. Moreover it is instantaneous, with gather peoples together or via video and pulling in the right experts to fix a problem the moment it arises.

 This decision making tools can help

• Managers and employees are now able to make faster and better decisions then previously possible.
• With the gathering of managers and employees via high quality video conference Technology like Cisco Telepresence could immediate determine main problems facing by the business and how could the best decision to solve the problems effective and efficiently.
• The projects have been reduced complexity involved in generating statistical report.

-      Decision Cockpits helps in statistical analyses in real time and “drill down” to more detail version of data. Therefore the generation of statistical report could be simplifying.

•  More quickly respond to market stimuli

-   Business Sufficiency helps in prediction market share and other key performance metrics six to twelve months into the future. P&G can adjust the pricing, advertising and product mix to respond to market stimuli

    4. According to P&G CEO Bob McDonald, P&G’s new approach to decision-making represents a “cultural revolution.” Discus of this statement.s the implications

• Executives of P&G transform new way in decision making across the company by adjusting price, advertising and improving product. By conducting new system, it increases speed of making decision. For example, Business Sphere is a virtual, instant-on war room, where people huddle in person or by video around the needed data, pulling in the right experts to fix a problem the moment it arises. On the other hand, the old IT model estimated which reports are wanted by people, capture the data, and deliver it to the key people weeks or days after the fact.
• Executives of company can make a good decision at faster rate in environment with high quality video conferencing to display data visualization, market share and change of sale. They easily find out the problems and discuss with each other to solve problems in unpredictable and stressful environment.
• Moreover, it creates learning consortium between companies who able manage performance of company well by using systems such as Business Sphere and Decision Cockpits to analyse, make right decision and solve the problems which are faced by company. Managers and executives from other companies can learn from each other and discuss about how they use analytic software to move company intelligence.

    5. How are these systems related to P&G’s business strategy?

Since the P&G’s business has its own goals the business strategy which is to digitize its process from end to end and to fundamentally change the way it gathers, reports, and interprets data, The systems used by P&G’s is related to its business strategy, it eliminates the time spent debating different data sets, and instead of use a system that allows leaders to focus on immediate business decisions using the most accurate data available at that precise moment. Next is, P&G’s business sphere uses an interactive system designed to reveal insights, trends and opportunity for P&G’s leader and prompt them to ask focused business question that can be address with able to focus on the business strategy by devoted time and energy when it is most needed trough these systems, the managers and employee are now able to make faster and better decision that were data on the spot. Other than that, instead on decisions for improving the business all P&G’s employees are previously possible. Lastly, the company enjoys a reduced complexity involved in generating a statistical report, as well as cost reductions from maintaining one standardized set of data across the enterprise instead of duplicated, redundant data. Employee-generated emails have dropped sharply because more workers can answer their own questions and obtain their own information. The company is also able to better anticipate future events affecting the business and more quickly respond to market stimuli.

Business Sufficiency

• First, they focus on exceptions, what’s doing better and worse than expected, so P&G executives can learn what’s working and copy it, while heading off the flops. Second, the models are all predictive, and delivered through dashboards, charts, and supplemental analytics served up through data visualization and analysis software. The predictions are continually refined toward the end of each quarter. Third, they show a range of possible outcomes, allowing for what-if scenario planning. This complex data is presented visually in business processes, allowing decision makers to view the data more easily, process the information faster, and quickly turn insights into actions.

Business Sphere 

• The visualization helps people to “see” the data in ways they would not have been able to with just numbers and spreadsheets. It challenges assumptions while simultaneously presenting the data in different ways, revealing potential solutions that previously may have not been apparent. This allows company leaders to harness massive amounts of data to make real-time business decisions.

Decision Cockpits 

• Decision Cockpit makes data available on the desktops of decision makers. With the success of the decision cockpit, P&G has been able to do away with more than 80% of the company’s standardized business intelligence reports. Most users embraced the new approach as more attractive and usable than spreadsheet-based reports sent by email, but in some cases users had to be “forced over the hump” of reliance on the old report

CASE STUDY CHAPTER 10

1.   Analyze Pandora Using The Value Chain And Competitive Force Models. What Competitive Forces Does The Company Have To Deal With? What Is Its Customer Value Proposition?

Pandora highlights specific activities in their business by using the business value chain model where competitive strategies can best be applied and where information systems are likely to have a strategic impact. There are many primary activities such as personalized music which Pandora provides search on basic of song title, artist name or genre so that it will quickly scan the entire music database and play music of searched criteria for the customer and user experience like Pandora is easy to use and user can skip a song in anytime everywhere. Next, the secondary activities in the Pandora such as it is no commercials because it provides two kinds of subscription, the one with the monthly subscription amount has less than competitions and the one which is free with commercials, it still has less ads than FM/Am radio. Then extension music selection Pandora has a wider selection of songs than AM/FM radio with provides access from any music supported device including mobile and web.

According to Porter’ competitive force model five competitive forces that shape fate of firm are traditional competitors, new market entrants, substitute products and services, customers and suppliers. In case of Pandora, there have many traditional competitors like iTunes and Amazon. To compete with them, Pandora has swamped the market with its service in different forms on every platform and offers competitive pricing for advertisers and customer. In this regard Pandora has established itself and has the advantage over are current rivals. Next, Pandora is a now start up can enter into online music industry without many barriers and difficulties so the threat of new entrants is quite substantial. Then Pandora has to deal with the threat of substitution in the music industries includes the traditional land based radio, satellite radios and any internet music providers. Pandora provide the best content to its customers because their customers can select a particular genre of music they like and they listen to only that particular kind of closely related music at Pandora. Suppliers in Pandora’s case, those who sell the rights to music companies like Sony and others, Pandora must pay for its customers’ playlists as a result it is disadvantages to have pay all the supplier’s royalties.  

The value proposition is a business or marketing statement that reviews the reason for a consumer to buy a product or use a service. It convinces a potential consumer that a particular service or product will add more value than their similar services. In Pandora’s case the value of service to customer grows over time. Once people are on the site and using Pandora’s service, they do not want to leave. Pandora does for its customers are provide access to music through the “Music Genome Project.” This project was started by the founders of Pandora and offers a way to classify music so that similar music by different artists will group together into what they call a personalized radio station.

The music is evaluated by professional musicians for genre, and then within each genre 200-500 different data points are set for each song by the music professional. A function is used to identify the distance between songs so that similar songs can be included in a customer's playlist. A user can apply additional weights to promote or demote certain bands so they will play more or less often on their radio station. This really is impressive technology that would be almost impossible to replicate by another company.

2. Explain how Pandora’s “freemium” model works. How does the company generate revenue?

In the beginning Pandora tried to get music subscribers by giving people 10 free hours, then asking them to pay $36 a month after that for the service. As the result, 100,000 people listened to their 10 hours music for free and then refused to pay for the annual services. Of course no-one was willing to pay so much for a service that they could get for free by switching on an FM radio.

After that model failed they tried several other options until they decided to use the “freemium” model they are using today. The freemium revenue model works best when there is a very large audience for free service providing revenue in terms of advertisement fees and one can offer paid upgrades to make it worthwhile for consumers to pay to get the additional added value. With a freemium service the basic service is available for everyone for free, but with strict limitations in bandwidth and ads between songs which results in a lower quality listening experience. It has found most success with Pandora One, a premium service that provides higher quality streaming music, a desktop app, fewer usage limits, and most importantly, no advertising. Freemium revenue models offer customers a superior service in return for paying subscription fees, whereas “free” revenue models are typically based on advertising support.

The premium service is priced at just $36 a year, 1/12 of their previous asking price. Three dollars a month is much more easily for a consumer to justify. The premium service offers higher bandwidth songs and no advertising.

Nearly 90 percent of Pandora’s total revenue comes from advertising. Pandora generates revenue mostly by advertising. Money comes in mostly from ads, but it's almost all given right back in royalties and licensing. Pandora has two ways to make money: advertising and subscriptions, with advertising making up 90% of revenue. In the third quarter of 2014, Pandora took in $180 million, of which $144, or 80%, came from advertising. Mobile has become increasingly important to Pandora's bottom line, with mobile advertising growing 58% year over year to $104 million this past quarter. The other $36 million of Pandora's revenue comes from subscriptions and "other." Pandora has 3 million paying subscribers for its Pandora One service, for which users pay $3.99 a month. Since Pandora has been growing its top line 50% annually, it could see revenue hit $649 million for the full year, which is its fiscal 2014. Analysts expect Pandora's revenue to grow 40% to $909 million, giving Pandora's shares a multiple of 5x revenue.

As of November, listener hours for Pandora were 1.49 billion, an increase of 18% from 1.27 billion during the same period last year. And Pandora's share of total U.S. radio listening was 8.44%, an increase from 7.17% at the same time last year. So obviously there is a lot of incentive for advertisers to put their money onto Pandora stations.

3. Can Pandora succeed with its “freemium” model? Why or why not? What people, organization, and technology factors affect its success with this business model?

Yes. Pandora can succeed because freemium is an efficient way of a amassing a large group of potential customers and companies. It incurs very low marginal cost, approaching zero for each free user of its service, when a business can be supported by percentage of customer that willing to pay. There are also other revenues like advertising fees that can make up for shortfalls in subscriber revenues.