Month: October 2013

Starbucks is an ever-changing business. They are careful with where they open stores, including their entry into Colombia, the fourth-biggest producer of coffee beans, and also a big source of Starbucks’ coffee beans. Interestingly, Colombians are not a big fan of coffee there. However, a local coffee chain, Juan Valdez, has opened up the market and Starbucks has announced their entry into Colombia, planning to open 50 stores in the next five years. They will create shared value by using locally grown beans which benefits the domestic farmers, but coffee is not a need or high in demand in Colombia. It is a difficult obstacle that Starbucks will have to overcome in order to make profits, but will help the situation in Colombia greatly if they succeed.

At the same time, Starbucks is targeting a new market: tea. They bought Teavana for $620 million last year and just opened their first tea house in New York. Tea is the second-most popular drink in the world, and Starbucks aims to meet changing tastes by using the multi-brand strategy like with their Tazo teas, and expanding their profits across different markets.

Starbucks’ strategy shows their continuous adaptation and changing tactics to create more profit.

As a user of Instagram, I was annoyed to see that Instagram will begin to advertise on users’ news feeds. Although it is not surprising that they are trying to increase their revenue through advertising, as Facebook has already implemented that on its website, it made me question its probability of success.

Advertising is a common issue consumers deal with on a daily basis, and it is the main way certain websites such as Facebook brings in its revenue.

However, how many users actually click on those advertisements? Most people are not using Facebook to purchase products; they are simply there to socialize. That brings up a question about online services’ business models: how reliable are they?

Although the results of having advertisement on Facebook’s website clearly prove that the strategy is working, it is not a reliable long-term method of generating revenue. It highly depends on its users. For websites like Youtube, apps such as Adblock can block out advertisements completely even when services intended on playing it before a video begins. We will likely see them implement other methods such as furthering game or mobile phone app development in order to maintain their high profits in the future.

Telenor “believes that mobile financial services will become the new normal”. They target poor countries where banking is not commonly accessible, such as Pakistan and Bangladesh. Indeed, mobile banking will allow more of the population that uses mobile phones but not banking services, to be able to use bank services conveniently.

However, their business model needs to look carefully at whether the country has a good mobile phone infrastructure and coverage, government regulations that will provide a safe banking experience and whether the government will open up such a market. As Telenor aims to “fix” Myanmar’s banking system, they also face competition from Qatar’s Ooredoo, which will affect their input costs in particular regards to marketing of their SIM cards and use of their services.

Mobile banking is not a new idea, but Telenor is one of the few companies where their value proposition targets the number of “unbanked” in poor countries by allowing more convenient and safe use of banking services. It will be interesting to follow their steps of expansion in the rural world and see how mobile banking will affect the future of all of us.

This blog post references to relevant information in Anthea Low’s blog post which can be found here: https://blogs.ubc.ca/anthealow/2013/09/30/dells-equivalent-prospects-of-the-telecommunication-industry/

Many small companies sprout every day and try to push their ways into the market. One of those companies is Xiaomi, a privately-owned Chinese technology company. Their smartphone is compared to the Apple iPhone in terms of appearance and functionality, and compared to Dell for their business model. As companies such as Apple are working on the expansion into the Chinese market, Xiaomi is inching their way into the global market. They even hired Hugo Barra, a Google executive in charge of product development for Android to help in this process.

Although Xiaomi is adapting the direct business model, how successful will it be against a giant such as Apple? Apple has a strong hold on the international market, and has a strong brand. They are never idle, as upgraded iPhones continue to be released every year. Their business model clearly seems to be working as they change their products constantly to adapt to consumer’s changing demands, and leads in its inventory turnover period of 5 days in 2012.

Xiaomi may be a new and growing competitor, but as of now and probably for the next few years, Samsung, Nokia, and Apple will reign as the fairest of them all.

Related references:

• Apple beats out Coca-Cola as the most valuable brand.
• Apple is third behind Samsung and Nokia.