First Look

July 11, 2006

Has globalization brought about a homogenization of beauty? It's a provocative question discussed by Professor Geoffrey Jones in a new working paper on how companies in the beauty business adjusted to the forces of globalism between 1945 and 1980. Although American influence was strong in the industry, Jones concludes it did not result in a "stereotyped American blond and blue-eyed beauty female ideal as the world standard, although it [ ... ] significantly narrowed the range of variation in beauty and hygiene ideals." In another paper, Jones adds a historical perspective around the question of whether large global firms are becoming "stateless." Also added to First Look this week are case studies (purchase required) on PayPal's competitive response to Google's online payment service, Best Buy's "centricity" store strategy, Edison Schools' for-profit program to manage public schools, and Argentina's aggressive strategy for renegotiating its sovereign debt. Sales is all about who you know, right? It's not that simple, says a new Harvard Business Review article by HBS professor David Godes and coauthor Tuba Ustuner. They encourage sales folks to adopt a network-based view of their world and leverage social webs to expand their effectiveness. In the end it's not just about how many contacts you have in your Palm, but what you know about them that counts. More details below.
— Sean Silverthorne

Working Papers

Globalizing the Beauty Business Before 1980

This working paper examines the globalization of the beauty industry before 1980. This industry, which had emerged in its modern form in the United States during the late nineteenth century, grew quickly worldwide over the following century. Firms employed marketing and marketing strategies to diffuse products and brands internationally despite business, economic, and cultural obstacles to globalization. The process was difficult and complex. The globalization of toiletries proceeded faster than cosmetics, skin and hair care. By 1980 there remained strong differences between consumer markets. Although American influence was strong, it was already evident that globalization had not resulted in the creation of a stereotyped American blond and blue-eyed beauty female ideal as the world standard, although it had significantly narrowed the range of variation in beauty and hygiene ideals.


Nationality and Multinationals in Historical Perspective

This paper provides a historical perspective to current debates whether large global firms are becoming "stateless." Robert Reich among others suggested that historically the nationality of multinationals was clear, while for contemporary multinationals corporate nationality is both unclear and increasingly irrelevant. However the historical evidence shows that a great deal of international business in the nineteenth century was not easily fitted into national categories. The place of registration, the nationality of shareholders, and the nationality of management often pointed in different directions. During the twentieth century such cosmopolitan capitalism was replaced by sharper national identities. The interwar disintegration of the international economy also led to the national subsidiaries of multinationals taking on strong local identities. Over the past two decades, as the pace of globalization quickened, ambiguities increased again. Yet in the early twenty first century, ownership, location and geography still mattered enormously in international business. They may matter more than in the past.



Cases & Course Materials

Edison Schools, Inc.: From the Candle to the Light Bulb?


Edison Schools, Inc., a pioneer in the for-profit management of public schools, demonstrates the challenges and opportunities related to private-sector involvement in the delivery of a public good. The case follows the organization from its start-up through its initial public offering and, eventually, through its decision to execute a management buyout to exit the public market. Explored at the corporate level is the tension between Edison's effort to generate profits and achieve excellent educational outcomes. Brief descriptions are provided of the company's experience in three markets: Boston, San Francisco, and Philadelphia.

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PayPal Merchant Services


In early 2006, PayPal management is deciding how to respond to Google's entry into online payments. PayPal, owned by eBay, has targeted online merchants outside eBay's auction community for its next wave of expansion. Google represents a potential threat to PayPal's "off eBay" strategy, as do incumbent credit card companies. PayPal management must determine whether to increase investment in its "off eBay" strategy; how to allocate investments between the two sides of its payment network (i.e., consumers and merchants); which consumer segments to target (e.g., existing PayPal account holders or new users); which types of merchants to recruit (e.g., large or small); and what changes to make to pricing terms and product features.

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Best Buy Co., Inc.: Customer-Centricity


With FY2005 sales of $27.3 billion, Richfield, Minnesota-based Best Buy Co., Inc., was the leading retailer of consumer electronics, home-office products, and related services in North America. Its operations included the distinct store formats Best Buy, Future Shop in Canada, and Magnolia Audio Video, as well as service provider Geek Squad. For the eight years leading up to 2004, Best Buy had reported double-digit revenue growth every year and rarely missed earnings. But on December 13, 2005, Best Buy missed its third-quarter earnings per share (coming in at $0.28, not $0.30). The company's stock price fell nearly 12 percent that day, a loss of $2 billion in market cap. The poor results were attributed to the aggressive rollout of 144 new "centricity" stores—revamped retail formats featuring a customer-centric operating model designed to offer targeted "value propositions" to one or two distinct customer segments. The new format was a departure from Best Buy's winning formula and required adjustments in interactions between various parts of the Best Buy organization, including a new set of segment leaders.

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The Barber of Buenos Aires: Argentina's Debt Renegotiation


This case tells the story of Argentina's aggressive strategy for renegotiating its sovereign debt from 2003 to 2005. Most creditors accepted the offer to swap their debt for new securities worth 35 cents on the dollar, with no recognition of all past-due interest. Many holdouts, however, remain outside the deal. Some experts believe that Argentina's stance will have negative consequences for the country's private sector and gives a worrisome signal about public policies; others maintain that circumstances beyond the government's control had placed the country in an unsustainable situation, and that the successful renegotiation opens up new opportunities. The case presents the story of Argentina's debt saga from the point of view of the country's creditors (foreign and domestic), its government, and private Argentine companies that had to do business in the post-renegotiation environment. The case also discusses the larger issue of how the international financial community should handle sovereign debt workouts.

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Charting the Evolution of Russian Firms from Soviet "Producer Orientation" to Contemporary "Market Orientation"

Customers in business-to-business transactions in the Soviet Union were dominated by suppliers who were in such superior positions that the situation facing customers might have been described as "supplier orientation" with customers absorbing almost all risk as well as tolerating poor quality and irregular delivery. Economic changes in the last decade of the twentieth century introduced an outlook in Russian business which might be viewed as a form of "market orientation," particularly among new types of firms represented by private ownership and privatized state-owned enterprises. However, political and economic turmoil characterized the Russian economy for most of that decade. This paper examines characteristics of Russian marketing management during this period including marketing orientation, innovation, and aspects of organizational culture closely related to marketing management. Based on interviews with one hundred large Moscow firms in the late 1990s, the new kinds of organizational forms (privatized or private) had more entrepreneurial and less bureaucratic corporate cultures, but this difference did not carry over to improved performance. Firms that perform well were more market oriented, more competitive, and less consensual in terms of corporate cultures, and more open and participative in terms of organizational climates.

Better Sales Networks

Anyone in sales will tell you that social networks are critical. The more contacts you have, the more leads you'll generate and, ultimately, the more sales you'll make. But that's a vast oversimplification. Different configurations of networks produce different results, and the salesperson who develops a nuanced understanding of social networks will outshine competitors. The salesperson's job changes over the course of the selling process. Different abilities are required in each stage of the sale: identifying prospects, gaining buy-in from potential customers, creating solutions, and closing the deal. Success in the first stage, for instance, depends on the salesperson acquiring precise and timely information about opportunities from contacts in the marketplace. Closing the deal requires the salesperson to mobilize contacts from prior sales to act as references. Managers often view sales networks only in terms of direct contacts. But someone who knows lots of people doesn't necessarily have an effective network because networks often pay off most handsomely through indirect contacts. Moreover, the density of the connections in a network is important. Do a salesperson's contacts know all the same people, or are their associates widely dispersed?

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