Brian Zhou's Blog

A topic covered in Commerce 101 a while back involved the issue of ethics. During the time of that lecture, the Sauder Frosh scandal was a prevalent issue, and even though that was horrible for Sauder’s image, businesses engage in even more appalling actions. Del Monte Fresh Produce will be paying $1.2 million to compensate Thai workers over a federal lawsuit stating that the workers were lied to, denied pay, forced to live in horrible conditions, and had their passports confiscated. Roughly 150 Thai workers will receive and distribute the settlement money which was attained by the U.S. Equal Employment Opportunity Commission on behalf of the workers (Dobuzinskis, Reuters).

Businesses often look for ways to improve its bottom line and a common method is engaging in offshoring manufacturing or using cheap/forced labour to produce products. In this lawsuit, Del Monte Fresh Produce, Global Horizons, and Maui Pineapple Farms are all involved in this discrimination case because of similar practices of confiscating passports and not paying wages. Del Monte Fresh Produce recruited workers in 2003 and again in 2005 with promises of $9.25 an hour, yet Del Monte Fresh Produce broke the law by not paying their workers and also forcing them to work and live In “substandard living quarters” (Dobuzinskis, Reuters). It is common knowledge that every corporation wants to maximize benefits and reduce costs, but the desire for reducing costs can never cross the ethical and legal line.

References:

http://www.reuters.com/article/2013/11/19/us-usa-labor-hawaii-idUSBRE9AI03H20131119

http://b.vimeocdn.com/ps/220/025/2200258_300.jpg

Since September, Samsung has only sold 50,000 Galaxy Gear Smart Watches. Sold at a price of $299, this smart watch is quite the failure as there are approximately 800-900 units sold per day (Clover). Watches are not particularly necessary relative to mobile phones; watches are a fashion statement. Watches do nothing more than display the time. People claim that watches are a symbol of status, and undoubtedly so; luxury watch brands like Rolex, Patek Philippe, Piaget, certainly posses the power and wealth but in the end, they tell the time. Cellphones, tablets, basic watches, music players, laptops, all tell the time, so why would a consumer pay $299 for a Smart Watch? The reason baffles me. In order for Samsung’s Smart Watches to be sold more, they would have to acquire a new design. As previously said, watches are a fashion statement, and the Galaxy Gear Smart Watches are hideous (coming from a guy with very little interest of knowledge in fashion taste). Watches are worn complementary to suits or other formal events, but Samsung has not considered the fashion influence of watches. In addition to Samsung, Apple and Google are both developing and finalizing their own smart watches. Apple is set to release their iWatch in late 2014 which will be interesting to analyze with respect to Samsung’s failure.

References:

http://www.macrumors.com/2013/11/18/samsung-sells-just-50000-galaxy-gear-smart-watches-exec-says-product-is-unripe/

Blake Mycoskie, the Founder of TOMS and also declared as the “Chief Shoe Giver” of TOMS has managed to create shared value. Initially, TOMS’ business model involved providing aid to third-world nations, but soon after, Mycoskie created the One-for-One model. This model states that for each pair of TOMS shoes sold, TOMS will donate one away. In addition, Mycoskie has even taken a step further to alleviate poverty by creating factories in Ethiopia, Haiti, and Kenya where TOMS will be the first footwear factory in Haiti (posted on HuffPost Live). TOMS has also expanded its business to produce and distribute eyewear, where the application of the One-for-One model still applies. When customers purchase eyewear from TOMS, they pay a doctor to diagnose and treat someone who cannot afford eye care, or they give a pair of glasses away.

This One-for-One model creates shared value for the company and also helps those in poverty, but in addition to shared value, the One-for-One model is also a brilliant marketing campaign (whether it was intended to be or not). One-for-One gives a positive corporate image for TOMS by relaying that it cares about those in poverty and actually takes action. Additionally, it allows consumers to feel like they have exercised a good deed by being philanthropic while gaining a new pair of comfortable shoes. In a way, this is corporate karma: caring and alleviating poverty has allowed Mycoskie to be named in Fortune’s 40 Under 40 list of top businessman (TOMS).

References:

http://live.huffingtonpost.com/r/segment/c-suite-toms-ceo-blake-mycoskie/5280f34478c90a2e7f0001b8

http://www.toms.ca/blakes-bio/l

http://sites.psu.edu/atrimbleenglish15/files/2013/09/toms-copy1.jpg

BlackBerry, “the sinking smartphone manufacturer” (dnaindia) has attempted to patch its hole and stay afloat in midst of the smartphone battle. A few years prior, BlackBerry Messenger (BBM) was a prominent component that allowed BlackBerry to capture, retain, and gain market share. It is worth noting that at the time, BBM was the first in the market in terms of its services. BBM is a messaging application that allows users to carry real-time conversations with individuals, groups, and also show what time the message was seen. Years later, currently in 2013, BBM’s revival attempt is short-lived; its once competitive edge for being first has vanished.

BlackBerry’s decision to revamp BBM is a rather hopeless, last cry for help; BlackBerry tried to implement their old strategy: a differentiation strategy, except now, many other applications exist with similar features that people once glorified in BBM. For example, WhatsApp, iMessage (i.e. BBM for iPhones), FaceBook message, WeChat, Viber all contain elements, if not all, of BBM’s components. Applications now allow users to send messages over Wi-Fi or data connection, show when messages are seen, allow group chats, and allow voice recordings. BlackBerry’s decision relies on the user to reminisce and have nostalgic feelings for the once popular BBM; however, with the technological advances, BBM is now only another application found in the Play/App Store and nothing more.

References:

http://www.dnaindia.com/scitech/report-blackberry-updates-bbm-for-android-and-iphone-1920030

http://n4bb.com/wp-content/uploads/2012/04/BlackBerry-Messenger.jpg

Ralph Waldo Emerson once said that “what lies behind you and what lies in front of you, pales in comparison to what lies inside of you” – this could not be any truer with regards to a corporation. Lee Valley Tools has decided to narrow the spectrum of corporate executives’ salary and the salary of a relatively low-entry job. Leonard Lee, the founder of Lee Valley Tools has adopted a spectrum of 10:1 with respect to highest-paid worker and the lowest-paid worker. Corporate culture often defines power measured by salary, but Lee Valley Tools challenges this status quo. When the highest-paid worker receives only 10x more than the lowest-paid worker, Lee states that “[they] get tremendous loyalty from employees” (qtd. in Grant). With respect to Emerson’s quote, the past recession, profit losses, loss in market share, etc. hardly exist as a threat to the organizational culture within. Likewise, future profit projections, or financial goals compare very minutely to the corporate culture. All of these past and future failures, successes, goals, and challenges all exist to shape the corporate culture and in order to recover from past failures, and to ready for future successes, the corporate culture must be harmonious. Certain organizations like Lee Valley Tools, Whole Foods Corp, Costco, and the company covered in class – Zappos – have adopted this method of having corporate executives receive a drastically low pay. However, this remains beneficial because employees feel needed, respected, and connected, which improves the working environment allowing for increased efficiency and productivity which ultimately converts to profit.

References:

http://www.theglobeandmail.com/news/national/time-to-lead/how-one-company-levels-the-pay-slope-of-executives-and-workers/article15472738/

http://www.activelivingzoomers.com/in-praise-of-lee-valley-tools/

Merriam-Webster defines profit as “the advantage or benefit that is gained from doing something” yet this definition is often forgotten in the shadow of the more commonly associated definition: “money that is made in a business.” In a corporate mindset, making financial gains exceeds any other objective, usually. Generation Y, the Millenials, have however managed to revive the forgotten definition of profit. In Virginia Galt’s article in the Globe and Mail, she notes that current business students have increased emphasis on social concerns in contrast to the traditional objectification of profit. McGill’s Desaultels Faculty of Management has added education and experience for social missions in its annual expedition, which was requested by students. Galt quotes  Professor Graham, acting director of Schulich School of Business’ MBA program, which highlights the challenges of social entrepreneurship; many businesses receive funding from investors while NGO’s or businesses designed to enhance social conditions may be less favourable from investors. The Arc Initiative, founded by Professor Jeff Kroeker, accentuates the challenges with social entrepreneurship while offering students at Sauder an opportunity to engage in a conference that impacts Ethiopia and Columbia. Opportunities such as the Arc Initiative bring joy to us, the Millenials, as our critical thinking skills – trained by business concepts – can be applied in situations where reaching certain financial goals are not the main priority. We can make a difference.

References:

http://www.theglobeandmail.com/report-on-business/careers/business-education/commerce-beyond-the-profit-motive/article15274613/

http://www.chnook.org/partner/the-arc-initiative/

Twitter Inc’s decision to go public brings back the memories of Facebook Inc’s initial public offering (IPO) approximately a year and a half ago and raises the question of why Twitter would decide to do such thing. Twitter’s stock rating was issued “buy” from a brokerage firm before Twitter got public; this raised the hype and speculation that Twitter could almost double its stock price within a year. “Twitter’s planned IPO is one of the most anticipated since Facebook Inc’s” yet one must remember, that at the time, Facebook’s IPO was one of the most anticipated as well, and their stock price pummelled. Twitter, like Facebook, leveraged the fact that advertising agencies could invest in their social media platforms to generate more awareness. Twitter boasts impressive resources: it acquired online mobile-advertising group MoPub, has advertising alliances with broadcasters, capture global TV market with Amplify, keyword targeting, search capability, e-commerce, and mobile apps.

Although Twitter has similarities to Facebook, Twitter differs in the fact that it has steady streams of advertising and mobile usage by consumers. At the time Facebook launched their IPO, they were relatively premature in establishing the business-side of things; Facebook let themselves be influenced by the public hype. Twitter also has comparative advantages: Facebook positioned themselves first as the social-media platform to go public and Twitter can fortunately learn from the mistakes made by Facebook. Twitter also offers more value than Facebook due to their 140 character limit and spam filtration: unlike Facebook, Twitter has little-to-none spam accounts. Twitter isn’t the first social-media platform, but it positions itself in the mind of the public as the most personalized and user-friendly social-platform. Furthermore, it is of interest to note that Twitter has never made a profit, rather it remains in debt and that it is expected that Twitter to not gain profit from their IPO.

Read about Twitter’s Slowing Growth and Twitter’s IPO Demise.

Twitter gets ‘buy’ rating even before listing. Chandni Doulatramani. October 7, 2013.
http://www.theglobeandmail.com/report-on-business/international-business/us-business/twitter-gets-buy-rating-even-before-listing/article14722911/

Apart from the “American Dream”, perhaps America’s defining mottos involve the fact that the government is “by the people, [and] for the people.” However, 150 years later, one would have never guessed that the American government is indeed “for the people.” Three days ago, the U.S. Government shutdown due to discrepancy between the Democrats, specifically Obamacare, and the Republicans. Obamacare, in its simplest definition, can be likened to Canada’s Healthcare in which the public obtains health insurance to help offset otherwise expensive costs. Obamacare was rejected by the Republicans and the House which consequently cost 800,000 employees their jobs. Fortunately, the American Government has decided to give compensation pay for their federal employees while the shutdown occurs. Nevertheless, in addition to the federal employees, regular citizens are being negatively affected.

(Photo by Eric Cantor “illustrating” that the Democrats were not willing to negotiate)

In their efforts to shift the public blame of the Republicans (discovered through polls), to the Democrats, they staged a photo where the Republicans sat in a conference table with the Democrats absent. This “stunt” backfired when the Democrats retorted by stating that the past few months have involved Democrats’ multiple attempts to call a meeting with the Republicans refusing. Politics, be it on an international scale or individual scale, remain prevalent throughout business. In this political issue, elements of Porter’s Five Forces are illustrated: Democrats exist similarly to Supplier Power and also provide barriers to entry. The Democrats, the “powerhouse” of Congress, can ultimately decide how to act in accordance to governing rights and laws while the Republicans can only attempt to influence their choices. This shutdown also incorporates barriers to exit; to solve this, Republican House Speaker, John Boehner, could submit a bill without any anti-Obamacare amendments, but doing so would result in high possibility in Boehner “losing his speakership.” As a result, this trivial issue continues to take its toll on the general public while the debt ceiling, America’s actual biggest concern, lies unresolved.

Sources:

U.S. government shutdown: What’s next? Mark Gollom, CBC News. October 4, 2013.
http://www.cbc.ca/news/world/u-s-government-shutdown-what-s-next-1.1875050

House Majority Leader Eric Cantor posts photo of GOP ‘ready’ to negotiate. Leslie Larson, New York Daily News. October 4, 2013.
http://www.nydailynews.com/news/politics/cantor-house-gop-invite-democrats-meet-article-1.1472931

In an information and efficiency based era, the prevalence of technology continues to demonstrate itself in our everyday lives. We use technology for emailing, GPS, for communication, and for remembering people’s birthdays. Through the luxurious designs and appearances of such phones and technology, does one ever consider the problem that subtly exists? This shift in technology is evidenced by the fact that Apple has knocked Coca-Cola off No. 1 spot on Interbrand’s list of Best Global Brands. Apple’s estimated value is $98.3 billion which is a 28% leap from 2012 while Coca-Cola’s value rose by approximately 2% to 79.2 billion. Out of the top 10 most valuable brands, five of them operate in the technology industry. Startling? Definitely not, but this brings up the question of whether technology actually negatively affects us. Despite the global brands, Vancouver itself has boasted many enterprises based on technology. Technology is “…changing our behavior: how we buy, how we communicate with each other, even whether we speak with each other… [and] have literally changed the way we live our lives.” As a result of such sleek, lavish, and elegant design, we, as humans, have become a rather anti-social generation that lacks proper mannerisms and knowledge in networking and communicating face to face. Technology has allowed people in its respective sector to gain great financial rewards, but at what cost? It’s at the expense of a generation that lacks etiquette and confidence with face to face interaction. This is not to say that everyone lacks these qualities, but for the vast majority, people cannot function properly without technology as it has integrated itself into part of our identity.

Sources:

http://www.nytimes.com/2013/09/30/business/media/apple-passes-coca-cola-as-most-valuable-brand.html?ref=business&_r=0

Ethics remains a questionable topic not in the principle or intention, but in the subjective idea of when the ethical line is crossed. Like any other event, multiple sides of the story exist and with this in mind, one must consider how such a vague “line” determines whether one acts in an ethical or unethical manner. The tragedy 12 years ago remains appalling, but surely 4,383 days later, an ad by AT&T can exist without being called “‘tacky,’ ‘terrible,’ and ‘gross’ among other criticisms.” The ad consisted of a “photo of a hand against the New York skyline, holding up a smartphone to take a photo of…where the twin towers used to stand.” I understand the tragedy of thousands of deaths, and I truly sympathize with those who lost loved ones, but nevertheless AT&T remains a telecommunications corporation that has a sole purpose of expanding its clientele and dominating the market. AT&T did not exploit overseas labour costs, bribe, nor (as we know) have any horrendous working conditions, or have intentions to ridicule the suffering and pain of 9/11. They simply had a photo of ground zero which allowed them to fulfill its “one and only one social responsibility: to use its resources and engage in activities designed to increase its profits” (Friedman).

Sources:

http://www.theglobeandmail.com/report-on-business/industry-news/marketing/att-its-still-too-soon-for-a-911-themed-ad/article14248783/