The value of a stock determines the market capital that a firm holds. The analysis of market capital of a firm is vital for its business decisions, because it influences the rate of return to stockholders, output ratios, stakeholders interest and other relevant business factors. Hence a firm is always considering its stock value, as rapid changes can deteriorate a business significantly.

An important factor to consider for stock markets are always future expectations. Potential buyers often carry out detailed research before buying a stock of a company. Their  assessment of a companies future performance is essential for their decision. Factors that can influence the assessment of potential buyers or their perception of a firm are public media, public business portfolios and past business strategies.

The article mentions the raise of the stock of Yahoo Inc., because the public media has published articles with possible emerges with Microsoft Corp. In a case where a lowered value company is overtaken by a well-known established firm, a higher concentration of potential buyers result. This increase in potential buyers often leads to short-term fluctuations of the stock, mostly increasing. Long-term increases usually only occur along  big, and sometimes risky, changes or large quantity buys.

Word Count: 200

Sources:

• http://www.forbes.com/feeds/ap/2011/10/10/technology-broadcasting-amp-entertainment-us-yahoo-stock_8726906.html

• William F. Sharpe, “Investments”, Prentice-Hall, 1978, pp. 300 et.seq.

• Image: http://formeblog.com/wp-content/uploads/2011/07/future.jpg

The article outlines how Netflix retreated from splitting up DVD ordering by mail and streamed movies, the main services that are offered by the company.

“Consumers value the simplicity Netflix has always offered and we respect that,” – Chief Executive Officer Reed Hastings

The original idea was to split up both services and market each business individually. However, the weight of costumers satisfaction was not taken into consideration. As mentioned in the article, Netflix shares have been down by 28% since September, 18th 2011, resulting in a substantial loss of market capital.

Netflix failed to assess their customer loyalty and make desired business changes. This empathizes the value of costumers satisfaction, because each company depends on clients. If the clients are not satisfied with a certain aspect of a company, the will simply not obtain any service of good that is marketed by the firm.

In order to decrease the amount Netflix has to suffer from those undesirable changes that were made to consumers, they have to respect their customers values, which were in first place the simplicity. This reveals the importance of costumers satisfaction in today’s business, as changes need to appeal to customers in order to be successful.

Word Count: 199

Sources:

• http://www.businessweek.com/news/2011-10-10/netflix-retreats-from-plan-to-split-dvds-from-web-streaming.html

• http://www.adamssixsigma.com/Newsletters/measure_value.htm

• Customer Satisfaction – The Survey of Organizational Excellence, University of Texas