Case: America Online Inc.‚ Topic: Strategy Analysis Prior to 1995‚ AOL was so successful in the commercial online industry relative to its competitors CompuServe and Prodigy primarily because of its pricing rate structure which was the easiest for customers to understand and plan for ahead of time. CompuServe and Prodigy offered the same pricing as AOL for its standard service‚ but‚ charged additional fees for premium services and downloading which made it more difficult for customers
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Case study: America Online‚ Inc. Q1.Prior ro 1995‚ why was America Online‚ Inc (AOL) so successful in the commercial online industry relative to its competitors CompuServe and Prodigy? The America Online‚ Inc. was so successful due to its pricing rate structure‚ which was the easiest for consumers to understand and anticipate‚ compared to its competitors. AOL charges a cheaper monthly fee of $9.95 for the access to all of America Online’s service for up to five hours each month. Each additional hour
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Prior to 1995‚ why was America Online (AOL) so successful in the commercial online industry relative to its competitors CompuServe and Prodigy? The reasons for the success of AOL were manifold. Not only was it a pioneer in many new offerings to the customers‚ it also pursued aggressive marketing to retain and capture customers. The following are a few reasons for the 4 million users it had by the end of October 1995. • AOL’s rate structure was the easiest for the customers to understand and anticipate
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Q1: The major explanations to the reason why AOL was so successful in the commercial online industry comparing to its competitors CompuServe and Prodigy are as follows: · AOL offered the unique and board range of features such as Online Community‚ Computing and the like‚ so their services are relatively differentiated · AOL kept good relation with its customer because of the easy access to AOL’s online service which only required to have a personal computer‚ a telephone line‚ and a computer‚ and
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capitalize subscriber acquisition costs justified prior to 1995? Ans: AOL’s accounting policy was labeled aggressive and capitalized its subscriber acquisition costs when its archrival CompuServe didn’t. AOL’s biggest expenditure was the cost of attracting new subscribers and maximizing shareholders’ value: 1. Separate registration numbers and passwords were issued to customers. They cost more than $40 per new subscriber in 1994. 2. AOL aggressively marketed its online service both directly
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billion. But there’s a catch. In the last couple of years‚ AOL has made $100 million in acquisitions that some analysts feel are languishing. Observers have also criticized the way AOL treats some of the costs of attracting new members as capital expenses. They say that AOL is more dependent than ever on attracting new members and retaining old ones‚ a process that has become more costly. According to Cowen & Co.‚ in the last quarter of 1995 AOL added 1.8 million new members‚ but lost 950‚000‚ leaving
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Diversification strategies are strategies used by companies to try to increase profitability through greater sales volumes obtained by new products and/or services. Amazon.com has diversified quite a bit since its conception in 1995. Starting out as an online bookstore‚ and evolving into a one stop e-shopping hub where millions of people shop for a variety of different items over the internet. Amazon.com today is one of the largest online retailers in the world. However‚ when companies try diversification
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named America Online‚ the company only had a mere 100‚000 members. By 1994‚ America Online had reached the million-member mark; by 1995‚ America Online became the largest provider of online services and began to put their foot in the international market door. The dream of entering international markets proved to be very difficult for the New Market Operations unit in AOL international. Originally‚ all of the services America Online provided were geared towards the American market. Changing their
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out of the competition for Internet browser control. This was accomplished mainly by bundling Microsoft’s Internet browser‚ Internet Explorer‚ with its operating systems. Netscape was unable to compete and was ultimately purchased by America Online. AOL can now utilize several of the Netscape’s strengths to add value to their base product as an Internet portal and in establishing the browser of the future that will be used in non-PC Internet connected devices. Problem Statement Microsoft is attempting
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1. Prior to 1995‚ why was America Online (AOL) so successful in the commercial online industry relative to its competitors‚ CompuServe and Prodigy? 2. As of 1995‚ what are the key changes taking place in the commercial online industry? How are they likely to affect AOL’s future prospects? 3. Was AOL’s policy to capitalize subscriber acquisition costs justified prior to 1995? 4. Given the changes discussed in question b‚ do you think AOL should change its accounting policy as of 1995? Is the company’s
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