Aol Case Study - 3

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Chapter 2 America Online, Inc. Teaching Note Introduction The America Online (AOL) case is a comprehensive financial-statement analysis case. It enables students to do strategic analysis, accounting analysis, financial analysis a: and prospective analysis in a rich context. It can he used either as the first case in a course. on financial; statement analysis to set up the course framework or towards the end of the course as a comprehensive case. If it is used at the beginning, the instructor should be prepared for a discussion that raises more questions than answers. However, it can he an excellent way to motivate the students to learn the course tools. If the case is used at the end, the instructor should challenge the students to do an…show more content…
As a result, subscriber retention rates were high. Second, because AOL was able to act as a powerful intermediary between a large subscriber base and high quality content providers, it had significant bargaining power with both parties, increasing its profitability. Third, chat rooms, which were a very popular part of AOL 's service offering, benefited from the large subscriber base. Chat rooms offered the unique feature that the subscribers themselves created the content in real time. Question 2 By 1995, several important changes were taking place in the commercial online industry. First, Microsoft decided to enter the industry with its Microsoft Network (MSN). Given Microsoft 's vast installed base of operating systems, it had a natural advantage in gaining market share quickly if it could bundle MSN with its MS-DOS or Windows operating systems. Given the considerable financial resources available to Microsoft, MSN could be a source of formidable competition to AOL. Another source of potential competition to AOL that began to emerge by 1995 was Netscape. By offering easy-to-use Web browser programs, Netscape enabled free access to the Internet and the vast array of data on the World Wide Web. As a result, commercial online services like AOL, which charged a fee to access the same data, faced an important threat. 2 Many
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