Alexander Cai's Blog

Oil and gas are two of the most important resources in modern society. It is used in everything from powering a car to keeping your house warm. Due to the increasing demand, energy corporations have developed a new method that enables them to harness these natural resources more never done before.

In the article, fracking is being quickly adapted by large companies around the world because it increases profit. The economies of countries with stale reserves benefit since governments make a profit from taxing and the new jobs fracking creates.

With this technique, economic benefit is certain. However, I believe by unlocking billions of barrels of oil in shale, there are bound to be environmental drawbacks such as releasing even more greenhouse gasses into the atmosphere. Especially in some countries where technology and operations are not as developed, this technique may not be standardized hence increasing the potential of spills and water contamination which can cause irreversible damage both the environment and local drinking water. When such accidents occur, it is the corporate’s responsibility to pay for the damages. Since the extent of this damage is not yet known, it is possible for long term costs to be greater than the short term benefits. Fracking is a temporary solution to quench our thirst for cheap energy during economic uncertainty. Perhaps if companies were less inclined to maximizing profits and more selfless, future generations will not have to deal with the problems which were created by us. This article helped me apply business ethics, sustainability and social corporate responsibility in the real world.

Article: http://www.businessweek.com/articles/2013-11-14/2014-outlook-shale-fracking-goes-global#r=nav-f-story

Picture: http://1bog.org/files/2013/06/still-gasland.jpg

As the severity of climate change becomes more imminent, businesses start to find ways to be more sustainable and environmentally friendly. Often this results in an increase in costs which inhibits growth potential. Especially during economic uncertain times, consumers are less likely to spend money on unnecessary items. However, Neurio has used it to their advantage.

I believe the combination of Neurio’s favourable value proposition of efficient and easy to use along with the strong branding of “creating awareness of how we use energy” has helped them create a competitive advantage to attract customers. Unlike other companies, Not only does it help customers decrease their electricity bills, but it also decreases the carbon footprint. Through this business, Neurio is naturally very focused on corporate social responsibility (CSR).

To me, there is much potential in the company as the world is moving towards eco-friendly methods. Now that the small business has success, perhaps similar companies may start-up to compete for a market share.

Article and Picture: http://www.theglobeandmail.com/report-on-business/small-business/sb-digital/biz-categories-technology/crowdfunding-is-risky-how-a-bc-tech-company-beat-the-odds/article15310323/

Over the last couple of years, the smartphone market has been widely dominated by Apple and their iPhones. Recently, however, the USA based tech giant is faced with fierce competition from Samsung and the android market.

Intentionally or not, the article confirms evidence of Barack Obama setting up bans allowing Apple’s iPhones to thrive and create a barrier to entry for Samsung smartphones to reach the market. As a result, the South Korea government has brought this issue to court.

From the point of view of a consumer, the ban against Samsung products in the USA should be lifted. This is because the issue revolves around old and outdated devices that are not selling anymore. Also, such government intervention does not reflect positively on the USA. Time is better spent elsewhere such as finding new ways to create jobs in America.

Instead of having the government back up the tech giant, they should let Apple feel the urgency to create more desirable products for customers. Perhaps Apple needs a better way to reach their customers to conduct marketing research.

Article: http://www.businessweek.com/articles/2013-10-08/did-obama-just-pick-sides-in-the-apple-samsung-patent-war

Picture: http://blog.laptopmag.com/wpress/wp-content/uploads/2012/11/Apple-vs-Samsung-lawsuit1.jpg

Consumerism in Western culture is one of the defining components of a capital market. Every time I want to buy something, I have to proceed to a checkout line. The articles theory states that the richer you are, the more likely you are to “bolt” out of line if the line gets too long.

If this article’s findings are true, this phenomenon can be very useful for small businesses because they are easily manageable. They can adjust their prices according to the length of the lineup. To maximize a business’s profits, the longer the lineup, the higher the price and the shorter the lineup, the lower the price. This system can further be enhanced by utilizing information systems to identify patterns in customer behavior so the prices can be accurately adjusted.

However, I do believe this theory is flawed. Like many other things in life, the tendency to bolt depends on many other factors such as environment and personality instead of just how wealthy a person is. Another reason to doubt the legitimacy of this theory is if it were so accurate, how come businesses have not yet utilized this technique in their advantage?

Article and Picture: http://www.businessweek.com/articles/2013-10-07/are-you-too-rich-to-wait-in-line

Over the last couple of years, Facebook has had its fair share of ups and downs. One of their successes is their installation of the data center in Sweden which has many large technology companies nervous.

Facebook’s Logo

Facebook’s redesigned data center is more cost friendly to build and run. Best of all, they did not buy parts from big suppliers. This courageous and rewarding step by the company will have profound impact on the market:

1. Companies following Facebook’s prototype will cut operation costs and become more environmentally friendly simultaneously. 
2. Big suppliers of data storage will lose billions of dollars due to the shift towards this more cost effective Asian vendors.

However, by constructing their own systems, the long term costs are not yet known. Some questions that beg an answer include:

1. How reliable are these self-build systems?
2. What happens if parts break down?

Yes, Facebook’s self-built data center is appealing in the short run. However, what are the long term costs?

News Article: http://www.sfgate.com/business/article/Facebook-revolutionizes-data-center-design-4874140.php

Being quite passionate about Electro Dance Music, the 2 deaths at Ezoo burned in my mind and led me to question:

1. What are the business implications of the cancellation of the last day of the festival?
2. Could this tragic incident be prevented?

The extensiveness of the festival and how easily trouble can occur if security is insufficient. Especially when people are drinking alcohol and taking drugs.

Logically, the the 2 deaths was an urgent and high importance matter. Although the decision to cancel the last day decreased the profits, I feel the organizers did manage to protect their reputation. By protecting their reputation, they dodge the risk of the withdrawal of sponsorship and future potential profits.

I feel the organizers could have prevented this tragedy by investing more time and money into operation costs. Extra security to escort drunk people and people who have taken illicit drugs out of the event could have countered the deaths.

Original Article: http://www.nytimes.com/2013/09/02/arts/music/electric-zoo-festival-cut-short-by-two-deaths.html?_r=0

Air Canada Logo

Airlines were hit hard the by the 2008 economic recession. Still today, many companies in this business have not yet fully recovered as supported by low trading values compared to 5 years ago. Some the reasons include the continuing economic uncertainty and competitive nature of the business that has left many investors hesitant about investing in airlines.

Amidst the concerns, the announcement of Air Canada’s success in cutting costs has left a ripple of positive feedback from investors. This competitive advantage is a possible reflection a strong management team where different departments work effectively together towards a common goal. In this case, a decrease in costs suggests the the operating division and accounting division are working effectively to allocate resources. If such teamwork continues, Air Canada will definitely be a great threat to other airlines.

In modern day developed countries, there is an emphasis on creating sustainable energy. Although it costs more initially, the investment in future generations generate better returns in the long run.

Recently, Japan has approved a handful of solar projects making it the largest solar market in the group in the coming year. I think this is a smart move especially after the nuclear meltdowns as a result of the earthquake is a common occurrence. However, it should be done with caution. Other than being costly, solar panels take up a lot of space. Perhaps the land could be better utilized. Furthermore, the repair cost on solar panel is quiet expensive as well.

I would personally double check the projected financials in the long run and set money aside in case the projects take a turn for the worse such as earthquakes damaging the panels. Also, information systems can be utilized to create statistics. By analyzing this data, improvements can be made to maximize efficiency.

Article: http://www.bloomberg.com/news/2013-10-02/japan-s-solar-projects-constrained-by-land-and-grid-bnef-says.html

War has been eminent throughout human history. With each conflict, the involved nations’ economy has been affected. Recently a planned attack by experienced Somali militants on a luxury mall has left many Kenyans and tourists dead and injured. Certainly, this has made many news articles around the world.

After hearing this incident, as a consumer, I would be less likely to enter the region because of the violence. With possibly many others with the same thoughts, business from tourists in the region is likely to decline. In order to combat this, if I were a business owner, I would try to find a partner outside the region to sell my product. However, in such a destitute region, this idea seems highly unlikely. Therefore, the only way I can imagine to survive is to rebrand my products and alter the business model so it targets local residents. If possible, I would buy insurance to ensure the safety of my business.

Being the owner of a business in third world country with violence is not an easy task. However, by adapting the business model to the changing environment and meeting what is demanded can help the business thrive. This can include changing the value proposition. 

Article and Picture: http://www.theglobeandmail.com/news/world/death-toll-in-kenyan-mall-siege-expected-to-rise/article14459430/

A recent article demonstrates how government intervention can have an impact on business as well as the difficult challenges and decisions businesses have to make. Also, the article questions the degree of ethics of certain business practices.

It is imperative for companies to improve efficiency in order to remain or become competitive in the market. However, Belo Sun Mining Corp. has done this unethically by deciding not to take time or money to consider the possible ramifications on the environment and on the indigenous people in the area if a new mine were to be developed. The act of not initially surveying the surrounding suggests the company is afraid of a negative-impact report. This possible threat could have suspended the project until a solution was proposed. Hence stakeholders might have reconsidered and withdrawn their investments from the company because of turmoil. Other than price and time, evidence against the development of the mine is a possible reason why Belo Sun Mining Corp. did not invest in a study about the effect on the indigenous community and the environment.