Although we currently live in the 21st century, poverty and and other social  injustices still exist in many parts of this world. The efforts by the United Nations to bring change have been ineffective. What little change that has occurred is the result of initiatives such ARC, which creates employment for the impoverished people in Ethiopia.

I believe that social enterprises are needed  even if the United Nations is fully funded as the reason of the ineffectiveness of the United Nation’s goes beyond a lack of funding. What the UN has done so far with its foreign aid program is provide  food and infrastructure. While these things can temporarily resolve the problems that plague the impoverished, they don’t solve the root problems such as the lack of education and opportunities, and may actually cause harm in the long run.

Source: Huffington Post

In contrast, the ARC initiative brings sustainable changes by helping the local people develop the skill sets needed to establish a social enterprise, such as Salem’s Ethiopia. The ARC not only allowed the owner to successful expand her business and improve her livelihood, but created jobs for marginalized women who received training in making baskets, This is much more  effective than the UN, as it creates both opportunities and skills that allow the people to become self sustaining, while not displacing local businesses. Such initiatives also isolate the well being of the impoverished from the willingness of foreign countries to provide aid, which is important as the political will of world governments often change, but the need for food does not.

References: http://www.smh.com.au/federal-politics/society-and-culture/does-foreign-aid-do-more-harm-than-good-20110318-1c0a1.html

Source: Eturbonews

During the past ten years, Boeing and Airbus have experienced cutthroat competition as they vied for orders against each other. In an effort to gain an advantage over Boeing, Airbus extended its agreement to produce planes in China, which is world’s fastest growing airplane market. While this cooperation between seems beneficial to both China and Airbus, Airbus is overly short sight-sighted and may end up on the loosing end.

Creating a SWOT analysis for Airbus, I realized that its strengths lie in advanced technology and production methods, which can only be rivaled by Boeing. In addition, it weaknesses lie in its high manufacturing costs, resulting from Airbus’ labour and manufacturing base, which is mainly located in Europe. For Airbus, producing their planes in  China  allows them  to decrease costs slightly, but more importantly make their planes more politically appealing for Chinese customers. For China, Airbus’ manufacturing presence is a secure source of airplanes in times of dispute with Western powers.  More significant, however, is transfer of know how from Airbus to Chinese engineers and technicians.

Given China’s efforts in aerospace development, it is inevitable that they will be able to produce their own airplanes one day. However, by providing China with its technology, Airbus is diminishing its main competitive advantage. Given China’s low cost of labour, China would also be exploit Airbus’ weakness and eventually steal market share away from them. I believe it was prudent for Airbus to build a factory in China, since China would buy their planes anyway, as shown by China’s continued orders of Boeing airplanes, which are all produced in the US. I believe Airbus needs to re-evaluate its strategy using an alternatives graph, and determine whether the cost of developing planes in China outweighs the benefits.

References:

http://www.reuters.com/article/2014/03/26/us-france-china-airbus-idUSBREA2P1HZ20140326

http://www.airbus.com/company/worldwide-presence/airbus-in-china/

http://www.airbus.com/presscentre/pressreleases/press-release-detail/detail/airbus-and-china-take-their-partnership-into-the-future/

In the past 20 years, Visa and MasterCard have become household names as more and more of us refuse to carry cash and use credit for all our payments. Along with the advent of online retailing, where credit is often the only payment accepted, Visa and MasterCard have seen their profits grow. Yet their profits may soon decline after being forced to lower their merchant fees, where they make most of their profit, under the threat of regulation by the Harper government.

Who Needs Plastic? Source: Engadget

This is prime example of Visa and MasterCard’s failure to conduct a thorough PEST analysis on their business model. Despite having ample warning of political threats through similar situations in other countries, such as the EU, where merchant fees are kept at a low 1.5%, Visa and MasterCard continued relying on merchant fee model to make their profits. As a result, they now face loosing a big portion of the 6 billion dollars they make per year. Additionally, Visa and MasterCard also face challenges technologically, such as new payment methods such as Apple Pay, which could offer far greater convenience to consumers. With such new developments, Visa and MasterCard has develop a new business model.

In the short run, Visa and MasterCard are expected to regain some of the losses, through increasing annual fess, and reducing cardholders incentives. However, such a strategy will not be viable in the long run, with many consumers inclined to use a credit card only to gain Air Miles for cash regards and air tickets. To develop a viable strategy in the long run, Visa and MasterCard must capitalize on their strengths, such as their global network and branding, to remain relevant in an ever-changing business environment.

Reference: http://www.theglobeandmail.com/globe-debate/editorials/lower-credit-card-fees-good-lower-costs-unlikely/article21447600/

Over the past ten years, technology, and specifically the internet, has truly revolutionized the shopping experience. Nowadays, it is possible purchase a product you want by simply logging onto Amazon or Ebay, putting the item in your virtual shopping cart, and checking out with your saved credit card details. Such convenience has affected shopping malls which are increasingly threatened not only by online retailers such as Amazon and Ebay, but traditional retailers such as Best Buy and Ameican Eagle, who also sell directly through the internet.

How Convenient Can it Get? Source:http://infotel.lk/

In order to adapt to the changing market, I believe malls and traditional  retailers need to redefine their value proposition, POPs, and PODs. In the past, the convenience from consolidating hundreds of stores might be considered a POD for a shopping mall. But in the age of technology, this is simply a POP, with online retailers offering products from millions of sellers. In an effort to differentiate themselves, stores like  “Canadian Tire’s Sport Chek” have added “digital screens and interactive displays,” yet this doesn’t really create any additional value for the customer. Dawn Lye also states in her blog post that developing such “advanced technology today is… extremely difficult [and expensive]”. On the other hand, other malls have started targeting a different segment, adding retailers that sell high-end goods. For such malls, their value proposition is relieving the worry of buying fakes and the offering a centralized location with every luxury brand. By targeting a segment that values being able to try and feel the product, these malls have redefined their POD by highlighting a part of the shopping experience that online retailers can not match. 

References: https://blogs.ubc.ca/dlye/

Who’s the Genius?
Source: techmtaa.com

According to Doug Sundheim in his HBR blog post, innovation is not key to building a competitive advantage. He claims that “innovation is byproduct” which seems to be contradictory, as Google and Apple have built their success by introducing innovative products. According to Micheal Porter, a company needs  competitive advantages, which according Rita McGrath in her article (HBR, June 2013), are “transient” and not “sustainable, leading to a need for constant innovation. With this in mind, what is Sundheim saying?

In my opinion, Sundheim makes a very important point that many companies fail to grasp. He states that “focus [on innovation] tends to… sideline” customers, whereas “focusing on solving… problems tends to be born from customer-centered motives” and naturally leads to innovation. Many companies in their pursuit of delivering the best and greatest product tend to forget about the customer’s needs. If these companies actually used tools such as the value proposition canvas, they would know that the first question they needed to answer is what job does the consumer need to have done. By focusing on customer’s needs, a company can understand what the customer’s pains and gains are, and how to create products that act as the gain creator and pain reliever. By helping a customer reduce his pains, a company generates a point of difference that is actually relevant for the customer.

Sundheim also notes that focusing on solving a customer’s problem develops “determination to see the world through your customers’ eyes” within a company. We can see this with Apple, which only includes functions that reduce customer hassle, despite pressure to introduce novel functions like Samsung that don’t contribute to the user experience. According to Sundheim, such “mindset… can’t be captured in a process” and must be fostered, which is why companies like Apple manage to maintain a competitive advantage. Unlike innovation,  dedication to the customer simply can not be copied.

References

http://blogs.hbr.org/2014/10/successful-innovators-dont-care-about-innovating/

BC Hydro’s dam on the Peace River will cost not only billions of dollars but also kilometers of fertile land used by First Nations to hunt and trap

BC Hydro’s $7.9 Billion dollar hydropower project has encountered much opposition financially and environmentally. Although the project has received environmental approval from both federal and provincial governments, many First Nations have voiced concern over the flooding of aboriginal land, which would affect their ability to hunt, trap and fish. Other opponents also voiced concerns over the financial viability of the project, claiming that the upfront costs are unjustified given the unknown growth in demand for electricity, and that smaller scale hydroelectric plants developed by would have lower overall costs. BC Hydro and the crown government it represents has downplayed these concerns, while First Nations groups have vowed to challenge the project in the Supreme Court.

The government, represented by the provincial crown corporation of BC Hydro, must understand understand how it can create shared value, and that the need for electrical capacity does not necessarily have to come in conflict with environmental and First Nation interests. This is especially important for BC Hydro, as it represents a government that has to act in the interests of all its citizens, including First Nations. The government needs to realize that building the dam could create externalities that outweigh the benefits of the dam. For example, damaging the livelihoods of the First Nations could increase their reliance on social aid, increasing costs for the government. By downplaying issues for the First Nations, the government is making huge PR mistake given that Premier Clark is trying to advocate for cooperation instead of litigation. Only by looking at the benefits and costs with a broader perspective that incorporates the interests of all citizens will the government realize that alternatives, such as geothermal and small scale hydropower, create much greater shared value.

References

http://www.vancouversun.com/life/First+Nation+chiefs+stage+Site+showdown/10215965/story.html

http://www.vancouversun.com/life/Premier+urges+cooperation+more+litigation+government+natives+reach+fork+road/10194776/story.html

http://www.theglobeandmail.com/news/british-columbia/first-nations-challenge-to-site-c-approval-could-make-dam-a-test-case/article21121456/

Yahoo was once a household name known for it search engine and email services. Today, Google has more than 50 percent market share in the search engine business, and Yahoo has become increasingly irrelevant. Over the past ten years, Google has innovated by developing the most popular smartphone platform in the world, which acts as a platform for users to use its core search and services, while Yahoo has stagnated by not introducing any new services. As a company, Yahoo has failed to realize competitive advantages can no longer by expected to be sustainable, especially in the rapidly changing IT industry.

However, Yahoo has a card up its sleeves, its large share in Alibaba and Yahoo Japan, which are worth 30 billion and 11 billion respectively. Together, these shares are worth more than Yahoo, meaning that Yahoo’s core business, search, is worth nothing. An important question is whether Yahoo can sustain itself off the rising share prices of Alibaba and Yahoo Japan. Under agreement, Yahoo is required to sell a significant stake in Alibaba now that Alibaba has gone public. This means that Yahoo’s share price will be less affected by Alibaba. In addition, now that Alibaba has gone public, Yahoo’s shares could fall as stockholders sell and buy Alibaba shares directly. Although Yahoo bought many start ups such as Tumblr in the last few years, it has failed to turn these investments into revenue. If Yahoo is to stay relevant, it must use its investments to help revive its core search business.

Links: http://www.bloombergview.com/articles/2014-03-17/is-yahoo-s-business-worth-less-than-nothing

http://www.businessweek.com/articles/2013-10-16/how-much-is-yahoo-worth-without-alibaba-not-much

Source: http://freightlinersf.com/

Over the years, McDonald’s has built a reputation of providing, fast and delicious food at an affordable costs. However, as times have changed, so have the tastes of consumers. These days, people have become more aware of healthy living, and how a diet based on “burger, fries and soft drink is an ‘unhealthy choice'”. As a result, McDonalds has been introducing healthier choices such as  caesar salads, and grilled chicken snack wraps.  While I applaud McDonald for providing healthier choices to consumers, I cannot say I don’t have doubts about their change in market strategy. For a company that has relied on a cost leadership strategy for so long, developing a new focus (differentiation) strategy will take millions of dollars and a very long time. Yet, in the hearts and minds of people, McDonald’s is still a fast food company.

One must also notice McDonald’s increasing prices as it shifts to a focus (differentiation strategy). Ten years ago, one could buy a Big Mac meal at McDonalds for less than five dollars; the same meal now costs almost 10 dollars. McDonald’s target segment has always been the been the lower-income, and college students. The pains of these people are not having much time or money and McDonald’s provided them with fast, cheap meals. But McDonald’s new strategy targets the wealthier and health-conscious, a market segment already fulfilled by competitors like Subway and Quiznos, at the cost of the former. Lastly, many of McDonald’s healthier alternatives, such as “chicken sandwiches–even if they are grilled–are higher in calories and/or fat than we prefer,” making it even more doubtful that they will become a healthier choice in the minds of consumers. Therefore, McDonalds should return to its roots, and provide cheap, unhealthy meals.

Links: https://blogs.ubc.ca/jasonwong123/

http://www.independent.co.uk/life-style/food-and-drink/news/fast-food-is-the-unhealthy-choice-mcdonalds-tells-its-own-staff-9025364.html

http://www.sparkpeople.com/resource/sparkdining-eatery.asp?id=3

Link: http://www.theglobeandmail.com/report-on-business/blackberry-revenue-plunges-loses-423-million-in-fourth-quarter/article17715869/

Over the past 10 years,  cell phones have  increasingly become an integral part of everyday lives so one would think established phone vendors like RIM, Motorola and Nokia would thrive. However, instead of capitalizing on this growth, these firms have failed to innovate, and as a result paid a heavy price as new comers such as Apple and Google stole most of the market share. This year, RIM posted its first sub-1 billion dollar quarterly revenue and its new Q10 and Z10, failed to challenge Apple and Samsung in the consumer hardware market. Being incompatible with older Blackberry servers installed at many firms, RIM even managed to alienate its last stronghold, the corporate market. Facing ever declining market share, RIM’s new CEO is betting on the Blackberry’s old revenue stream, paid services like BBM. But once again, RIM is relying on an outdated business model. as many services are available on competing devices that are not only free.  As a result many corporate have migrated from Blackberry. Therefore, RIM cannot hope to survive by revisiting old revenue streams or those of competitors. RIM must realize competitive advantages do not last, and that must innovate and find a new business model.