Monthly Archives: September 2014

How important are USP to a business?

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First of all, what is USP? Unique selling Proposition may be considered as something in a product that differentiates itself with similar or identical products in the market. Why is it that businesses want to have a USP? the answer to this question is that, creating a unique selling proposition for a product should is a first priority of the business, because without making a business stand out from the rest, it will be difficult for that business to convince the target audience to buy products from them. 

USP are often discussed in the business’s mission or vision statement. however, some top brands like Apple, doesnt really discuss their USP in their business statements, in fact it makes top end quality products such as the the iphone, ipod, macbook, and Imac to speak for themselfs and convey the USP to its customers directly.

Business’s often uses 3 steps to formulate their USP’s;

  • Whats the business’s uniqueness?
  • Providing solution to common problems faced by customers while using the product
  • and finally, business then join these two elements and rewrite/formulate their USP

USP may require alot of capital (Research and Development) which will be counted as a negative (-) in the firms income statement, however, in the long run, it is always beneficial for companies to have a solid USP to differentiate themselves from the common products in the market. hence, is USP of a business really worth the price? this is something the business should consider!

Accounting Scandal leads to downfall of a Business

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Accounting scandals are political and/or business which arise with the disclosure of financial misdeeds by trusted executives of corporations or governments. Such misdeeds typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets or under reporting the existence of liabilities, sometimes with the cooperation of officials in other corporations or affiliates.

Men walk past a sign of Olympus Corp outside the company's showroom in Tokyo

A few large companies have been alleged to have manipulated their financial statements. I was interested in the case of Olympus Corporation accounting scandal- 2011. As a result of the scandal, Olympus Corporation was sued by six major banks at Japan. these bank includes;  Mitsubishi UFJ Trust & Banking Corp., Master Trust Bank of Japan Ltd., Japan Trustee Services Bank Ltd., Trust & Custody Services Bank Ltd., Nomura Trust & Banking Co., and State Street Trust & Banking Co. Several articles (Bloomberg) suggests that Olympus Corporation was sued for $273 million in damages over a 13 year fraud!

Financial manipulation may have helped Olympus Corporation by attracting more investors in the short run, however, being sued for over $273 million over 13 year? Is it really worth it? didn’t think so!

 

Bloomberg Article on Olympus Accounting Scandal.

 

 

 

McDonald’s to go green in Germany?

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McDonalds has realized that a paradigm shift is going to happen in their company. The Green Movement has many reactions from different stakeholders. However, the article says that McDonald’s should get some credit for trying to be more eco-friendly in the environment.

mcdonalds-koelnAccording to the article, Beeck said that; “With the new appearance, we want to clarify our responsibility and relationship with natural resources,” Beeck said. However, the change of their logo and theme color to green may have negative impacts to the company. One commentator on a German design blog said it was a bad call and might cause the brand to lose its unique identity it’s built up over the years.  The theme color of McDonald is yellow and red as it resembles the ketchup and delicious fries. And changing the theme color to green may affect the brand recognition of the fast food giant. However, in my perspective, McDonalds will not lose its identity and it will in fact be more recognized for its good environmental deeds.

This is not the first time that this fast food giant has gone out of the way to align itself environmentally, it made several attempt by installing electric car chargers in their food outlets and it redesigned the lids of McFlurry in order to save the German “Hedgehogs”. This might be an expensive measure in the short term, however, in the long run, the company will be able to attract more customers and hence generate more revenues.

 

To read the full article, click on the link below;

http://eurokulture.missouri.edu/mcdonalds-turns-green-in-germany/

Business Ethics and CSR activities

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microsoft-green_hp2

The IT giant, Microsoft topped the Reputation Institute Global CSR Rep Trak 100 study after beating Google and Disney company.

The IT giant gave away more than $900m in cash and software to nonprofits worldwide last year, reduced its carbon emissions by 30 per cent per unit and made several investments in the HR department which was recorded as the companies biggest ever investment in overall employee compensation, as per the citizens report.

The question now arises, was all this investment worth it? well, Off course! alot of companies, especially in the IT industries, tries to attract more consumers and investors by performing various kinds of CSR activities in the community. It was recorded that the other top 100 companies which made it to the “Reputation Institute Global CSR Rep Trak” spent about $50 million a year on average on CSR activities, however, the message was not being heard by the consumers and investors. More than half (55-61 per cent) of consumers are neutral or not sure if those companies can be trusted to be good corporate citizens, behave ethically nor are appealing places to work that treat their employees well. maybe because of this ranking, Microsoft will be able to attract more consumers and attract more amount of investors, investing in the company. To a certain extent, doing various kinds of CSR activities is beneficial for the society as it gives away potential welfare gain (Positive Externality) to the society, but at the same time, different stakeholders may have different perspective about practicing CSR activities. This is majorly due to stakeholders such as the investors, does not care about the society and just focuses on making more and more profits, however, stakeholders such as the government and consumers will actually want to see these companies are producing their goods or service “Ethically”. This is rather a matter of judgment and perspective.

However, at this point of time, we finally have a reason to say that Microsoft is doing better than any other IT firms.

 

 

 

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