Scudder, Stevens & Clark faced a unique problem. According to the case study, the ôstrong relative success in both the mutual fund arm and the institutional management arm also posed problems for Scudder. Maintaining the growth was one concern, and managing the growth was another: (p. 1)
The fund management has experienced growth because of its wide and deep product line, offering something for every investor. It also gained status by putting the customer first. Serving the two masters of profits and customer service is a never-ending battle. In fact, types and qualities of funds are becoming an inherent source of tension between certain partners.
Scudder has rededicated the company to the individual customers as the targets, who are also the targets for the other mutual funds. Since there is little competitive flexibility in the basic mutual fund products-ûMFs have started focusing on the way they package, deliver, and provide service on those products.
But these factors have little influence on the institutional arm customers who are returns driven and have little loyalty. ScudderÆs profitability depends on reaching a good balance between risk management of both its funds and its company.
Scudder has tried to win more consumer trade with new products, but it's difficult to invent them in a business whose fundamentals are as unchanging as the rules of arithmetic. Attempts to compete on price have been equally disastrous. The dead and dying savings and loans showed what can happen when you try to get business by paying too much for deposits or charging too little for loans. So MFS have turned to marketing out of necessity.
Scudder, Stevens was innovative and not afraid to take chances. The partners supervised several expansions through careful research and awareness of trends in customer attitudes and retailing.
Four expansions had a substantial impact on the calculation of profits
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