Image taken from http://www.andyhanselman.com/wp-content/uploads/2014/07/Cost-vs-Sales1.jpg

This external blog I found online is a very interesting topic. It talks about the significance of low prices and good customer service – providing data that customer service weighs more than low prices. In our lectures, we discussed a lot on customer services and its values. For example, in our lecture on organizational culture, we looked at the case of Zappos – in which they focused greatly on the company environment and customer service. This blog post linked these ideas to the lectures in which we talked about customer service, and provides reasoning and data to support the point.

In other aspect, it is particularly interesting, and in a sense ironic, because data suggests that low prices are not as significant, and customers are more likely to favor customer services when deciding on the margin. However, there are many markets show opposite trends – focusing immensely on low-cost and sacrificing its customer services, meaning there is a greater focus on the low-cost strategy rather than the differentiation strategy (of Porter’s four competitive strategies). For example, in the fast-food market, competitors such as McDonalds and A&W have a great focus on low prices – sacrificing training costs and therefore customer services. The lack of training for its workers can be seen in many of the controversial issues, such as the employee throwing water at a homeless man.

I think that a good service is more important in modern days, as it enters the technological era where an ample of information is exchanged online. Social media and social networking sites spread information about companies, so firms should weigh more on building and maintaining customer relationship rather than having a strong value on low prices. Again, it is ironic because modern trends increases the significance to focus on customer service, yet markets have a weaker focus on customer service in comparison with the previous generations.

External blog – http://it.toolbox.com/blogs/insidecrm/price-vs-customer-service-59629

Image taken from http://inhabitat.com/wp-content/blogs.dir/1/files/2013/07/ikea-sign.jpg

One of my classmates, Ravikarn, analyses Ikea’s success in one of his blog posts.

It is interesting to understand Ikea’s business model, and how it differs in each target region.

In a sense, I definitely agree that this is an effective strategy. In each country, the customer segment differ in demographic. People of different countries generally have a differing taste in furniture, and have different factors they value. By altering its business model depending on where they are targeting, it allows Ikea to capture the customer loyalty – while maintaining the key overall value proposition – of providing a low cost and high quality furniture.

However, we must still acknowledge that there are some flaws with this business plan. The main flaw that results from this business plan is the increased product-line. Although, it is true that this creates a wider variety of products, it goes against the fundamental strategy that Ikea seeks to achieve – the low-cost industry-wide strategy (as described in Porter’s four competitive strategies). From a financial point of view, having a wider range of product-line will create burden to the cost structure. Different products have different methods of production, and requires different materials. By having a variety of product, Ikea fails to maximize its economies of scale which is key in reducing the cost of production.

This strategy can be effective in the sense that it directly targets its customer segment, and benefits the customer relationship – from a financial point of view, it is a burden to its cost structure and contradicts its key value proposition as it increases costs.

I support the one for one business model to a certain extent. It is a great model which creates a distinct point of differentiation. With the shoe market being more and more saturated and competitive, it is pivotal for shoe producers to create a clear point of differentiation. In terms of porter’s four generic strategies, this model reflects a focused differentiation strategy which targets specifically to those who have high ethical standards and care for poverty.

This model clearly portrays the most important part of Tom Shoes’ value proposition – which is significant in getting ahead in such a competitive market.

However, it is true that there are significant negative consequences associated with the model. I believe that it is a great model but because of the consequences, it is still a flawed model. With alterations, such as having monetary donations rather than shipping of actual products, I believe the model can become an extremely well-structure model that creates a positive impact to society as a whole.

Image taken from http://o.aolcdn.com/hss/storage/midas/d1326e2ae3b7dc3b6edce950001694f1/201271527/Amazon+Prime+Now1.jpg

Amazon Prime Now seems to have been discussed widely near its launch. I personally believed that the standard Amazon Prime service was extremely rich and effective in its own, and have been extremely satisfied with its services. However, it seems like they have further developed the prime service, and now have a service called “Amazon Prime Now” – which delivers in approximately 2 hours at no cost for prime members, and at a cost of £6.99 for deliveries within an hour.

This is a big development in its business model, and further emphasizes its value proposition in providing goods at high services, at minimal time. Although not a change to the degree that it alters the business model completely, however I believe it is significant to the extent that we can label this a technological innovation, as it improves means in providing its service to patrons.

This will definitely be a strength for Amazon, as it is a very strong and effective point of difference other competitors fail to incorporate. This means that this implementation will act as a threat for competitors, and will greatly increase the barriers to entry for the delivery market – especially because prices on Amazon Prime Now are generally reasonable, “many which are similar to those of the same goods sold in retail stores, sometimes even lower”.

Although we are uninformed of the cost structure of this service, if the cost structure is reasonable, this is definitely an extremely strong move taken by Amazon that will greatly reduce competition for them. A great deal of customer segment are sure to enter the market with this change who seek for values in terms of high delivery speed. Because of the buzz this service has created, it can also be seen as a market strategy. In the modern era, “mouth of word” and “social curation” are such an important ways for a business to gain awareness. And the “buzz” created achieved this, therefore the move can also be seen as a marketing strategy that fits the modern market.

Main article: http://retailanalysis.igd.com/Hub.aspx?id=23&tid=3&nid=14035

Some information taken from: http://www.expressnews.com/lifestyle/article/My-Amazon-Prime-Now-experience-6619151.php

Taken from http://www.sustainabilitybythesea.org/wp-content/uploads/2013/03/toyota-prius.jpg

I think this is an absolutely intriguing article that discusses that integrating transportation method which focuses on fuel efficiency is not a good enough measure to prevent greenhouse emission issues.

This is particularly interesting because of how we discussed in one of the lectures about fuel efficient cars (particularly Tesla cars, the Nissan leaf, and the Toyota Prius), discussing about its business plan and how it was effective in creating a point of difference which focuses on emission standards. In my particular group we discussed about how our environmental standards are improving, and that these fuel efficient cars can be seen as a solution to such environmental issues.

I think if this study gains further evidence, and reaches the awareness of the public it may significantly damage the businesses which invest greatly in fuel efficiency. There are a great deal of automobile companies which has greatly invested in fuel efficiency, as they believed it was the future of the market. If the general view on the fuel efficient automobile incorporates the fact that it may not be a good enough solution, potential customers will be less willing to invest in such markets – significantly cutting its revenue streams.

In the current market, having a high fuel efficiency is a very strong point of differentiation that can greatly attract consumers that have high environmental standards. However, the strength of this point of differentiation will be weakened greatly. In terms of Porter’s four generic strategies, it will definitely fit under the focus strategy, however will not really go under either of the cost or differentiation column – therefore can be seen that incorporation such point of difference will be a flawed strategy to take.

http://www.cbc.ca/news/business/road-transportation-emissions-1.3314447

Looking back at history, university degree has been an asset, obtained by the gifted few. However, as the economy has advanced, societal norms has changed to adapt it. Now, people obtaining an university degree is more of a norm.

The demand for highly educated workers has not kept up with the supply – as the report states – however, this is not a big issue to the extent that it is stated in the article.

This issue is highly relatable to me, and should be to every member of the Sauder community, as people striving to earn a degree in one of the top universities in the world.

Firstly, by completing a diploma and obtaining a university degree, it provides opportunities to people. A university diploma enriches people with various skills and knowledge which help them succeed in the real world – whether the occupation require a degree or not.

Secondly, by having a wider pool of people attempting to obtain a degree, it helps them filter the talent pool, and gives further opportunities to the people truly talented. In the old societal structure, people who have been talented may not be able to succeed due to the lack of opportunities given to them. Although this issue is still prevalent in the current model, it has been reduced substantially.

Lastly, because there is demand for education, the educational infrastructure has developed so significantly. Without such high levels of demand, the education structure has not developed to the extent it is today.

Generally, in a business and economic standpoint, a disparity between the supply and demand is considered a negative thing – however it is not necessarily the case. Naturally, there is both a positive side and a negative side, however this can be said true to everything. The structure has adapted to fulfill the needs and wants today. Although the report may suggest otherwise, I believe that having a higher supply of educated individuals are a positive effect to the society.

Article

http://www.cbc.ca/news/business/pbo-jobs-1.3317890