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FROM Kellogg MBA Blog: The cost is not just the cost | MBA Learnings |
Second-year student Rohan Rajiv is blogging once a week about important lessons he is learning at Kellogg. Read more of his posts here. Let’s take a situation where a firm decides to buy a smaller technology firm for $1 billion. Every decision that is made is typically the result of a cost-benefit analysis. In some cases, this analysis is entirely quantitative. In others, it has a huge qualitative element (e.g. fit with strategy). Either way, the costs of the acquisition are not just the cost of acquiring the company. Those are just the financial costs. The costs that should matter to us are the economic costs of the acquisition, driven by the opportunity cost of using that capital. In this case, the acquiring company had three options on how to spend the billion dollars related to that acquisition (there are options beyond this, but we’ll assume the acquisition was critical):
Understanding opportunity costs is fundamental in life just as it is business. At any given time, saying “yes” to a decision just because it provides us some benefit is a really bad way to make decisions. The way to make such decisions is to ask, “Is this the best possible use of my time given all my priorities?” Great strategy requires us to make choices after understanding tradeoffs. And having a good decision making process that considers opportunity costs is an integral part of great strategy. Rohan Rajiv is a second-year student in Kellogg’s Full-Time Two-Year Program. Prior to Kellogg he worked as a consultant serving clients across 14 countries in Europe, Asia, Australia and South America. He interned at LinkedIn in Business Operations and will be heading back to LinkedIn full-time after he graduates in June 2016. He blogs a learning every day, including his MBA Learnings series, on www.ALearningaDay.com. Filed under: Academics, Student Life Tagged: cost-benefit analysis, MBA Learnings, strategy |
FROM Kellogg MBA Blog: Meet the professors behind Kellogg’s Super Bowl Ad Review |
The 12th annual Kellogg Super Bowl Ad Review is quickly approaching, and with advertising spots selling at a reported $5 million, the stakes are higher than ever for marketers. On Sunday, Feb. 7, more than 50 Kellogg students will join Professors Tim Calkins and Derek Rucker as they try to separate the Super Bowl advertising winners from the losers. Read on to learn more about Calkins and Rucker — two of Kellogg’s most widely recognized marketing professors — including their past involvement with the Ad Review and what they’re most looking forward to about this year’s ads. Tim Calkins Clinical Professor of Marketing Professor Calkins compiled the first Super Bowl Advertising Review in 1999 and launched it in its current format in 2005. “The Super Bowl is a remarkable marketing event,” Calkins said. “I love seeing what brands come up with. The Kellogg review itself is fairly intense. The panel has to evaluate dozens of spots, and then we have to quickly turn around and release the official results. It is exciting working with students to make sense of all the ads.” Calkins said he is always interested in seeing which brands manage to stand out. The same is true for him this year. “There is so much going on during the Super Bowl, it is difficult to break-through the clutter, but every year a few brands pull it off,” Calkins said. “I’m also watching to see which brands struggle. The intense pressure to be creative means some will miss the mark.” He also noted that he is curious about the tonality of the 2016 Super Bowl ad spots “because Super Bowl advertising reflects the mood of the country. Most of these brands have done extensive market research, so the spots tell us something about how people are feeling and what is important.” As a longtime leader of the Kellogg Super Bowl Ad Review, Calkins has had the unique opportunity of seeing the full evolution of Ad Review participants: “Quite a few students who were on the panel in the early days are now working on the new Super Bowl spots,” he said. Derek Rucker Sandy and Morton Goldman Professor of Entrepreneurial Studies in Marketing Professor Rucker is the co-developer of the ADPLAN framework, a strategic and quantitative advertising assessment tool that is used during the Kellogg Super Bowl Ad Review. What does he enjoy most about leading the Ad Review? “For me, it’s the entire atmosphere and environment of the Kellogg SB Ad Review,” Rucker said. “The energy in the room is just amazing. It’s a great and unique venue for interacting with our students and for taking fundamental marketing skills learned in the classroom and putting them into action in advertising’s biggest stage. “I particularly enjoy it when I see the students identify and articulate why they viewed a particular spot as hitting or missing the mark. Seeing our students display their prowess in strategy is stimulating.” Every Super Bowl, Rucker looks forward to two things:
Join Kellogg’s 12th annual Super Bowl Ad Review virtually and follow the conversation on Twitter using #KelloggSB and @InsideKellogg. Filed under: Academics, Student Life Tagged: #KelloggSB, ADPLAN, faculty, marketing, Super Bowl, Super Bowl Ad Review |
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