Master Case Assignment 1

Master Case Assignment 1 - CEG GSB 703 Master Case...

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CEG GSB 703 Master Case Assignment #1 Adam Ohanesian Email: [email protected] Table of Contents I. Why AOL was successful relative to its competitors a. Pricing b. Initiatives c. Bull analysts II. Key Changes and the affect on AOL a. Joint ventures b. Microsoft Networks III. Justification to capitalize subscriber acquisition costs a. Company perspective b. Ethical perspective c. My opinion IV. Should AOL change accounting policy as of 1995? a. Company response versus my view 1. Prior to 1995, why was AOL so successful in the commercial online industry relative to its competitors CompuServe and Prodigy?
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AOL was so successful in the commercial online industry relative to CompuServe and Prodigy for a few reasons. First is the pricing plan which AOL structured and was considered the easiest for their customers to understand and anticipate. AOL offered complete access to all of their services for a monthly fee of $9.95 for up to five hours each month. Each additional hour was $2.95 with no additional downloading fees. AOL’s competitors CompuServe and Prodigy charged the same monthly fee however they charged additional fees for downloading and premium services. The additional fees charged by CompuServe and Prodigy imposed difficult anticipation to their customers monthly spending. The second reason AOL was so successful was the four initiatives management created to increase its revenue generated from other sources besides membership fees. The first initiative is to invest in growth of existing service. AOL believed it could attract and retain new members by expanding the range of content and services it offers, and building a sense of community online. The second initiative is to exploit new business opportunities such as e-commerce, entry into international markets, and the consumerization of the Internet. The third initiative is to provide a
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This note was uploaded on 09/02/2011 for the course GSB 703 taught by Professor Girardin during the Summer '09 term at Nichols.

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Master Case Assignment 1 - CEG GSB 703 Master Case...

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