A word of caution on calculating market-based minimum capital risk requirements

This paper demonstrates that the use of GARCH-type models for the calculation of minimum capital risk requirements (MCRRs) may lead to the production of inaccurate and therefore inefficient capital requirements. We show that this inaccuracy stems from the fact that GARCH models typically overstate the degree of persistence in return volatility. A simple modification to the model is found to improve the accuracy of MCRR estimates in both back- and out-of-sample tests. Given that internal risk management models are currently in widespread usage in some parts of the world (most notably the USA), and will soon be permitted for EC banks and investment firms, we believe that our paper should serve as a valuable caution to risk management practitioners who are using, or intend to use this popular class of models.

What Tenants Want: UK occupiers’ requirements when renting commercial property and strategic implications for landlords

Businesses need property in order to generate turnover and profits. If real estate owners are to be able to provide properties and related services that are desirable, it is crucial that they understand tenants’ requirements and preferences. Changes in the way businesses operate might well lead to an overall reduction in space requirements in all sectors. Faced with reductions in demand, landlords will find themselves in an increasingly competitive marketplace for tenants. Of the array of strategies available to landlords, what strategies should they employ for maximum effect? This paper examines what United Kingdom tenants want from commercial property (retail, industrial and office). The first part provides an analysis of data from several hundred interviews with occupiers of commercial properties owned by some of the largest UK real estate investment companies. Results are presented for each of the asset classes separately. The second part compares the findings with previous research and discusses the strategic implications for landlords.

Treating the Tenant as a Customer: can good service improve real estate performance?

Customer Relationship Management (CRM) theory suggests that good customer service results in satisfied customers, who in turn are more likely to remain loyal and recommend the service provider to others. Applied to real estate, this theory implies that landlords should see a return on any investment in the service they give to tenants, in the form of increased lease renewal rates and fewer void periods, achieved without compromising rents. This paper examines determinants of occupier satisfaction, and investigates the relationship between occupier satisfaction and property performance, using measures such as capital growth, income return, lease renewal rates and total return. The analysis is based upon a pilot study using occupier satisfaction responses from around 2500 interviewees based in multi-tenanted offices, shopping centres and retail warehouses on out-of-town retail parks in the UK. The analysis is being extended to cover a larger sample for the author’s PhD. Part 1 of the analysis examines occupier satisfaction, whilst Part 2 considers its impact on property performance.

Customer engagement planning emerging from the “individualist-collectivist”-framework: an empirical examination in China and UK

Purpose – Today marketers operate in globalised markets, planning new ways to engage with domestic and foreign customers alike. While there is a greater need to understand these two customer groups, few studies examine the impact of customer engagement tactics on the two customer groups, focusing on their perceptual differences. Even less attention is given to customer engagement tactics in a cross-cultural framework. In this research, the authors investigate customers in China and UK, aiming to compare their perceptual differences on the impact of multiple customer engagement tactics. Design/methodology/approach – Using a quantitative approach with 286 usable responses from China and the UK obtained through a combination of person-administered survey and computer-based survey screening process, the authors test a series of hypotheses to distinguish across-cultural differences. Findings – Findings show that the collectivists (Chinese customers) perceive customer engagement tactics differently than the individualists (UK customers). The Chinese customers are more sensitive to price and reputation, whereas the UK customers respond more strongly to service, communication and customisation. Chinese customers’ concerns with extensive price and reputation comparisons may be explained by their awareness towards face (status), increased self-expression and equality. Practical implications – The findings challenge the conventional practice of using similar customer engagement tactics for a specific market place with little concern for multiple cultural backgrounds. The paper proposes strategies for marketers facing challenges in this globalised context. Originality/value – Several contributions have been made to the literatures. First, the study showed the effects of culture on the customers’ perceptual differences. Second, the study provided more information to clarify customers’ different reactions towards customer engagement tactics, highlighted by concerns towards face and status. Third, the study provided empirical evidence to support the use of multiple customer engagement tactics to the across cultural studies.

Scoping customer relationship management strategy in HEI - Understanding steps towards alignment of customer and management needs

Higher Education Institutions (HEI) are complex organisations, offering a wide range of services, which involve a multiplicity of customers, stakeholders and service providers; both in terms of type and number. Satisfying a diverse set of customer groups is complex, and requires development of strategic Customer Relationship Management (CRM). This paper contributes to the HEI area, by proposing an approach that scopes CRM strategy, allowing us a better understanding CRM implementation in Higher Education Institutions; maximising alignment of customer and management desires, expectation and needs.

Change management in practice: an ethnographic study of changes to contract requirements on a hospital project

Changes to client requirements are inevitable during construction. Industry discourse is concerned with minimizing and controlling changes. However, accounts of practices involved in making changes are rare. In response to calls for more research into working practices, an ethnographic study of a live hospital project was undertaken to explore how changes are made. A vignette of a meeting exploring the investigation of changes illustrates the issues. This represents an example from the ethnographic fieldwork, which produced many observations. There was a strong emphasis on using change management procedures contained within the contract to investigate changes, even when it was known that the change was not required. For the practitioners, this was a way of demonstrating best practice, transparent and accountable decision-making regarding changes. Hence, concerns for following procedures sometimes overshadowed considerations about whether or not a change was required to improve the functionality of the building. However, the procedures acted as boundary objects between the communities of practice involved on the project by coordinating the work of managing changes. Insights suggest how contract procedures facilitate and impede the making of changes, which can inform policy guidance and contract drafting.

An approach to develop flexible systems with organizational-interoperability requirements

Flexibility of information systems (IS) have been studied to improve the adaption in support of the business agility as the set of capabilities to compete more effectively and adapt to rapid changes in market conditions (Glossary of business agility terms, 2003). However, most of work on IS flexibility has been limited to systems architecture, ignoring the analysis of interoperability as a part of flexibility from the requirements. This paper reports a PhD project, which proposes an approach to develop IS with flexibility features, considering some challenges of flexibility in small and medium enterprises (SMEs) such as the lack of interoperability and the agility of their business. The motivation of this research are the high prices of IS in developing countries and the usefulness of organizational semiotics to support the analysis of requirements for IS. (Liu, 2005).

Two-way communication costs and the boundaries of the firm

Casson and Wadeson (International Journal of the Economics of Business, 1998, 5, pp. 5-27) have modelled the dialogue, or conversation, which customers have with their suppliers in order to convey their requirements, while taking production implications into account. They showed that this has important implications for the positioning of the boundaries of the firm. Unfortunately, their model has the restriction that communication is only costly in the direction of customer to supplier. This paper extends their model by introducing two-way communication costs. It shows that the level of communication cost in the direction of supplier to customer is a key additional factor in determining the nature of the dialogue that takes place. It also shows that this has important additional implications for the positioning of the boundaries of the firm. Custom computer software development is used as an example of an application of the theory.

Performing knowledge requirements analysis for public organisations in a Virtual Learning Environment: a social network analysis approach

This paper describes an application of Social Network Analysis methods for identification of knowledge demands in public organisations. Affiliation networks established in a postgraduate programme were analysed. The course was executed in a distance education mode and its students worked on public agencies. Relations established among course participants were mediated through a virtual learning environment using Moodle. Data available in Moodle may be extracted using knowledge discovery in databases techniques. Potential degrees of closeness existing among different organisations and among researched subjects were assessed. This suggests how organisations could cooperate for knowledge management and also how to identify their common interests. The study points out that closeness among organisations and research topics may be assessed through affiliation networks. This opens up opportunities for applying knowledge management between organisations and creating communities of practice. Concepts of knowledge management and social network analysis provide the theoretical and methodological basis.

Customer retention management in the recession

The purpose of this article is to explore customer retention strategies and tactics implemented by firms in recession. Our investigations show just how big a challenge many organizations face in their ability to manage customer retention effectively. While leading organizations have embedded real-time customer life cycle management, developed accurate early warning systems, price elasticity models and ‘deal calculators’, the organizations we spoke to have only gone as far as calculating the value at risk and building simple predictive models.

Achieving customer satisfaction through integrated products and services: an exploratory study

Complex products such as manufacturing equipment have always needed maintenance and repair services. Increasingly, leading manufacturers are integrating products and services to generate increased revenues and achieve customer satisfaction. Designing integrated products and services requires a different approach to new product development and a clear understanding of how customers perceive the value they obtain from actual usage of products and services—so-called value-in-use. However, there is a lack of research on integrated products and services and how they impact customer satisfaction. An exploratory study was undertaken to understand customers’ views on integrated products and services and the value-in-use derived from such offerings. As value-in-use and its impacts are complicated concepts, a technique from psychology—Repertory Grid Technique—was used to gather data in 33 interviews. The interviews allowed a deep understanding of customer views on integrated products and services to be obtained, and a systematic analysis identified the key attributes of value-in-use. In order to probe further, the data were then analyzed using Honey’s procedure, which identified the impact of the attributes of value-in-use on customer satisfaction. Two key attributes—relational dynamic and access—were found to have the most influence on customer satisfaction. This paper contributes to the innovation field by identifying customer needs for integrated products and services and how these impact customer satisfaction. These are key points and need to be fully considered by managers during new product and service development. Similarly, the paper identifies a number of important areas for further research.