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The purpose of this paper is to examine plastic and virtual purchasing card use by US Government agencies, with particular focus on how successful implementation might inform governmental entities of potential improvements in the cost, quality and time associated with the digitization of their procure-to-pay processes. Specifically, the paper will: analyze the evolution of card-based payments by US Government agencies, compare the value stream of plastic and virtual cards to governmental entities, analyze the value of card use as a significant and sustainable contributor to greater governmental efficiency and examine the opportunity in the portability of successful card technology implementation strategy.

The authors examined data published by the US federal government relating to agency budgets and commercial card use and combining it with industry performance metrics, projected potential savings and efficiencies for the government and its agencies.

The US Government acknowledges significant administrative cost savings and cash rebates based on its spending on commercial cards. An analysis of US Government spending indicates that changing patterns of card spending are primarily driven by activities of one agency – the Department of Veterans Affairs (VA). Through the incorporation of advances in card technology, escalation of transaction amounts and leveraging card spending data transparency, the VA has continued to increase its use of and benefit from card technology, while other agencies have languished. By replication of VA strategy, the US Government at large has the potential for billions in card-related savings.

The study implies that a large swathe of governmental agencies, after having adopted new technology (e.g. purchasing cards), are hesitant to use the new technology, a problem that afflicts most implementation efforts. Countermeasures to offset agency resistance to change should be considered and deployed.

Taxpayers demand much of government. The burden of governmental failure to exploit the benefits of innovation (such as card technology) falls on the shoulders of taxpayers. When the government cannot exploit technologies that are commonly used in the private sector, the failure lowers citizen respect for the capability of government employees and the ability of government writ large to solve problems.

Governmental failure to exploit the benefits of technology dispirits the citizenry, yielding a desire for change that may be disproportionate to the problem at hand.

The study combines General Services Administration, US Treasury and market data points to make a unique assessment of the benefits derived through 20 years of governmental commercial card use.

The authors provide a general framework of behavior under asymmetric information and develop indices of diligence, objectivity and quality by an analyst and analyst firm about a studied firm, and relate them to the accuracy of its forecasts. The authors test the associations of these indices with time.

The test of Public Information versus Non-Public Information Models provides the index of diligence, which equals one minus the p-value of the Hausman Specification Test of Ordinary Least Squares (OLS) versus Two Stage Least Squares (2SLS). The test of Objectivity versus Non-Objectivity Models provides the index of objectivity, which equals the p-value of the Wald Test of zero coefficients versus non-zero coefficients in 2SLS regression of the earnings forecast residual. The exponent of the negative of the standard deviation of the residuals of the analyst forecast regression equation provides the index of analytical quality. Each index asymptotically equals the Bayesian ex post probability, by the analyst and analyst firm about the studied firm, of the relevant behavior.

The authors find that ex post accuracy is a statistically and economically significant increasing function of the product of the indices of diligence, objectivity and quality by the analyst and analyst firm about the studied firm, which asymptotically equals the Bayesian ex post joint probability of diligence, objectivity and quality. The authors find that diligence, objectivity, quality and accuracy did not improve with time.

There has been no previous work done on the systematic and objective characterization and joint analysis of diligence, objectivity and quality of analyst forecasts by an analyst and analyst firm for a studied firm, and their relation with accuracy. This paper puts together the frontiers of various disciplines.

The subject area is strategy and business.

The case can be used for MBA students. This is equally effective in short courses meant for low-to-mid-level working executives. The case is suited for classes in strategy, general marketing, media management and family business courses.

Dainik Jagran – a vernacular daily – is the most read newspaper in India. Under the banner of Jagran Prakashan Ltd.; which is one of the leading media houses in India, the success of Dainik Jagran has been an outcome of the strategic marketing decisions taken by its founder and his successors in the post-independence era. With extensive circulation, it created a large readership base and took bold decisions to launch multi editions to its daily through a series of acquisitions, mergers and consolidations from 1975 to 2010, enabling it to step into product diversification. Readership surveys, investments in technology, advertising, regular branding events and smart phone applications are a few tools that helped. While the group has diversified into other industries, there is an underlying anxiety about the future prospects of its newspaper business. With the onslaught of online news dailies, will Dainik Jagran be able to expand and maintain its readership base using its previous business and marketing strategies? Or is it time to change strategies for businesses in the newspaper and allied media industry in India?

The study has the following outcomes: application of value chain concept in businesses serving two-sided markets; application of environmental analysis, Porter’s five forces analysis and related strategy concepts; and learning to critically approach and develop a sustainable growth strategy framework for a successful family-run newspaper business in India.

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CSS 11: Strategy.

After fifteen years of use by U.S. Federal government agencies, purchase cards are still caught in a debate between the drive to improve governmental efficiency and the need to prudently manage and control spending of taxpayer resources. This paper gives decision makers facts by which to evaluate the purchase card experience to date by providing a brief history of legislative actions related to purchase cards, analyzing patterns of purchase card spending by Federal government agencies, estimating the potential size of the purchase card program, and identifying the costs and benefits of shifting low-value transactions to the purchase card. The paper concludes with recommendations for government action.

Explains that a common problem of cost control at design stage is the firm’s (manager’s) desire for the lowest cost compatible with supporting innovation and the designer’s preference for the optimal design, which may be unnecessarily sophisticated. Develops a mathematical model to represent this situation, pointing out that the manager is usually unaware of the design alternatives unless they are revealed by the designer, but can use budgetary limits and “load” costs onto certain cost drivers (e.g. number of parts) to influence the designer’s choice and align his/her interests with those of the firm. Suggests that the difference between actual and “loaded” costs is a function of the non‐cost benefits from design choice (e.g. competitive edge) and the degree of information asymmetry between manager and designer. Considers the implications for costing activities and the limitations of the model.

Internal control mechanisms are fundamental to organizational governance; particularly, to the agency relationship associated with decentralization of decision rights. Management accounting and organizational literatures provide conflicting predictions on the association between decentralization and internal controls, with some research arguing that internal controls be tightened to mitigate the risks associated with greater decentralization of decision rights while other work avers that tighter internal controls defeat the purposes of decentralization. In this chapter, we argue that managers choose these two organizational design variables jointly. Capitalizing on a unique database of control practices in the purchasing and payment process within the procurement function, this chapter examines the relationship between control tightness – a critical characteristic of internal controls – and decentralization. Using a simultaneous equation model, the study finds that decentralization and internal control design are endogenously determined. Tight control is negatively associated with the level of decentralization, while decentralization has a positive effect on the tightness of control. These results reconcile the apparently contradictory results relating these two variables. The chapter also finds that decentralization and tight control mechanisms operate both independently and synergistically to improve performance.

Achieving high level of customer satisfaction (CS) involves spending marketing resources in terms of money, managerial time, and focus. Consistent with the return on quality framework this paper aims to look at both the costs and benefits of a satisfaction program.

This paper reports the results of a longitudinal study of a beverage distributor. Two satisfaction surveys were conducted before and after the launch of the program. Profitability was calculated using activity based costing (ABC) principles. The link between changes in satisfaction and changes in profitability was analyzed.

It was found that as a result of the launch of satisfaction program CS increased significantly, but the weighted least square analysis of the relationship between CS and customer profitability (CP) shows that it does not necessarily result in higher customer profits. CS is found to be positively related to sales volume and gross profits at the customer level. However, a net profit measure of CP, derived after careful allocation of costs based on activities, shows a much more complex and non‐linear pattern of relationship.

The paper shows that there are several valuable lessons to be drawn from the study. First, the cost of increasing satisfaction could be substantial. A positive relationship between satisfaction and profitability, posited by most of the customer satisfaction literature, could reach its limit much sooner than generally believed. Second, allocating costs based on activities in serving the customers, and not merely on revenues is important since doing so results in a different and more complete profitability profile of customers, as is described in the sample. Finally, the complexities and non‐linearities in the CS‐CP link documented in this study imply that satisfaction improvement efforts (and dollars) should be directed towards larger customers and customers who are already relatively highly satisfied.