Case Detail

Case Summary

Spiegel Online

Case Number: 5-108-007, Year Published: 2008

HBS Number: KEL330

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Authors: Armin Rott; Karl Schmedders

Key Concepts

Business Planning, Monte Carlo Simulation, Decision Making under Uncertainty, Profitability of Online Advertising

Abstract

Spiegel Online (www.spiegel.de) is the leading news Web site in Germany. The site was first designed to accompany Der Spiegel, one of Europe’s largest and Germany’s most influential weekly magazine, which has a weekly circulation of around one million. The site’s content is produced by a team of more than fifty journalists writing in several categories: politics, business, networld, panorama, arts and entertainment, science, university, school, sports, travel, weather, and automobiles. The original content is complemented by articles purchased from news agencies and selected articles from the print edition. Spiegel-Verlag is a major contributor to the Hamburg Media School, which offers professional master’s degree programs in Media Management (MBA), film, and journalism. In their second year, MBA students typically engage in consulting projects with major media companies. In a recent assignment, Spiegel Online posed two questions to the MBA team: are there any chances for an economically successful entry into the market for interactive classifieds? And if so, what should the business model look like in detail? A student team analyzed markets for classified ads and found one market segment that appeared to be particularly promising: the market for art objects. During the development of a business plan for a new venture in this market it became apparent that there is much uncertainty about the key input parameters to the business plan. As a result, it is very difficult to assess the viability of the business idea. How can the team properly account for the uncertain input parameters? What is the impact if this uncertainty on the bottom line? Will a Web site for art objects earn or lose money? How can the team communicate this uncertainty to a group of high-level decision makers who want a simple “go or no-go” recommendation?

Number of Pages: 11

Extended Case Information

Teaching Areas: Entrepreneurship, Finance, Marketing, Technology, Statistical Methods

Teaching Note Available: Yes

Geographic: Germany

Industry: Media

Organization Name: Spiegel Online

Organization Department: Company Executives

Organization Size: Medium

Decision Maker Position: Student Consultants

Decision Maker Gender: Male

Year of Case: 2006