Monthly Archives: November 2014

Since being founded in 1996, WestJet has grown to become the second largest Canadian airline, operating 425 flights and transporting 45000 passengers per day. One of the ways in which WestJet differentiates itself from the competition is through the low prices that they charge compared to other competing airlines.  However, this low cost structure comes at an expense. Unlike AirCanada, and other large airlines, WestJet currently does not have an inflight entertainment system. Indeed, in a way to attract more customers WestJet announced plans last year to install entertainment systems into all of their planes. However, this increase in technology comes at a relatively high cost. In order to offset the costs associated with the entertainment system, WestJet plans on adding an extra row of seats to all of their planes. They predict that this added row of seats will help them drive higher revenues and grow as a company.

Due to the introduction of ‘slim-line’ seats consumers will gain one inch of added leg room so that the space taken away is less noticeable. Indeed, this move to change the seat layout is a smart longterm strategy for WestJet. This will allow WestJet to make more profit per flight and lower their average cost per flight. Due to the lower costs WestJet will be able to lower their prices even further than they currently are and attract more people to fly with them.  Going forward WestJet will be able to continue their cost leadership strategy, and continue to attract more consumers through their low costs and added entertainment systems.

Sources

http://www.ctvnews.ca/business/westjet-may-add-extra-row-of-seats-on-flights-to-boost-revenue-1.2086288

Seth Godin is an american entrepreneur, author, marketer and public speaker. Seth posts almost a blog a day onto his site, and gets nearly 540,000 views per month. In his blog entitled “The Dorm-room startup mindset“, Seth talks about how businesses need to start out small and grow over time. Seth develops the idea that when you are starting a business you are not trying to sell it for a huge payout, you are trying to grow it over time.

This idea is important because today too many businesses are focusing on growing at an unrealistic rate. The primary goal of most startups today is to make a profit. However many people believe that more profit is better and miss building the foundation of their company. When companies try to grow to fast they run the risk of running out of finances. A rapid increase in productions corresponds to a significant increase in accounts payable, many startups cannot afford the cost. Indeed, another way in which dorm-room mindset is beneficial is that it helps ensure that the companies operations stay consistent. Two big problems associated with operations are quality and opportunity. When businesses scale up too fast not only do they run the risk of reducing the quality products that the business differentiates itself on, but they run the risk of missing out on other opportunities that may have been present and overlooked in the scaling phase.

Every entrepreneur wants to grow their business as fast as possible, however they need to ensure that they grow at a sustainable pace while staying true to the value proposition that the company believes in.

Sources

http://en.wikipedia.org/wiki/Seth_Godin

http://sethgodin.typepad.com/

http://sethgodin.typepad.com/seths_blog/2014/10/the-dorm-room-startup.html

In Troy Mcgee’s blog he wrote about the positive effects that are developed through unpaid internships. Networking, and work experience are valuable for any student trying to enter the workforce. However is the opportunity cost of working a full summer unpaid worth it. Although Troy brought up many positive points, I believe there are other factors that need to be addressed. Are unpaid internships just for the wealthy? Are internships even useful.

Troy brought up the positive effects that an unpaid internship can have. Yes, internships may develop valuable work experience, but is the wage that is forgone worth the time. During an average summer internship students work for four months during the summer, five days a week, with no compensation other than experience. Sarah Stone, a speech language pathology student claims that her internship was useless,”I made no connections. I decided that I didn’t want to be apart of an unpaid internship and do not see the experience helping in the future”. Although the theory of work experience is good, the students are forgoing over $8000 that could be made if they worked minimum wage, 10 hours a day, 5 days a week. This raises the question as to just how useful are summer internships. In 2013 the National Association of Colleges and Employers said, “only 37% of students who worked unpaid internships received jobs within a year of graduation, only 1.8% above students who had no internship at all”. Students are forgoing over $8000 just to have a 1.8% better chance at being hired, meanwhile the money they could have earned could have helped cover their student loans. Indeed, although student loans are available, it doesn’t mean they should work for free and pay them off further in the future. Through working summers unpaid students accumulate longterm debt for minimal returns.

Although there is still debate whether unpaid internships really generate valuable experience I still believe that labour laws need to be put into place requiring companies to pay any intern for there compensation. This will allow all students to take part in work experience, not just those who can afford to work without being paid.

Sources

http://iamthepdxsx.com/2014/05/01/unpaid-internships-galore/

http://arbiteronline.com/2014/11/06/unpaid-interships-provide-misleading-opportunities/

In 2011 the Toronto Star was Canada’s largest circulating newspaper, however since then they have seen a steady decrease in readership levels. In the last quarter operating revenue fell 7.3% and the number of subscribers continues to decrease. In order for them to return to the success that they have reached before, the Toronto Star is adapting a new business model which will change the way that they make money and attract customers.

Currently the Toronto Star profits off a “paywall” strategy. This means that they charge readers to view their site and their online content. Infact a similar strategy is used by the ‘Globe and Mail’. However, due to the surplus of free content available on the internet already and the falling number of subscribers they have come to the conclusion that there is more revenue is to be made through add placements and through the development of a free tablet application. 

Although changing their business plan means changing the way in which the company profits it will allow for more growth. Consumer’s have unlimited resources for which they can view at no cost to them. Indeed, this new strategy that they are adopting will not only engage a larger audience, but it will help them attract a younger audience. The youth of today are not the type of consumer which intents to pay to view news articles that could be found on various websites for free. The action of making their content more accessible will make their site more attractive towards the student population.

In the long run this strategy that the Toronto Star is adopting will help them generate an increase in profit compared to previous levels. Although the company will lose their method of earning revenue for every subscriber they receive, they will now be able to attract more costumers and charge an increased price for advertisements on their website and on their tablet application.

Sources

http://www.theglobeandmail.com/report-on-business/torstar-swings-to-profit-on-boost-from-harlequin-sale/article21452577/

After losing 272000 contracts and $192 million in the most recent quarter Sprint released a statement on Monday saying that they intend to lay off 2000 workers. Since early 2014 share prices have fallen from $10.79 per share to $6.20, nearly a drop of 40%. Sprint’s share of the market is slowly dwindling due to competition from rival companies, AT&T, and T-Mobile. In fact, on Oct. 27th T-Mobile reported having the best third quarter results in their history, gaining 2.3 million costumers. As an effort to reverse the current situation Sprint hired a new CEO Marcelo Claure in August to lead the turnaround efforts. After price cuts, strategy changes, and layoffs, the big turnaround has yet to take effect.

Going forward Sprint needs to primarily deal with their massive loss of costumers and try to build long term subscriber growth. In the most recent consumer survey Sprint was ranked dead last in customer satisfaction for poor service, reception, and reliability. A few years ago Sprint started on the path to upgrade their network to allow for faster service, however the transitional period has been long and slow causing more and more consumers to switch carriers. Indeed, for Sprint to remain the United States’ third largest wireless carrier they need to continue to grow and strengthen their wireless network at an increased speed. More money and time needs to be invested into improving all operations of the company so that they can hold onto their current subscribers and in the long run develop a larger company as a whole.

Update

After Monday’s disappointing earning’s report share prices fell today 17% today to $5.16. This shows just how uncertain the investors’ confidence is in Claure’s ability to fix the current situation that Sprint is in. Many analysts were expecting to see improvements in earnings after the change in leadership, however those expectations clearly fell short. If the year end earnings report does not show an improvement from the current situation it could leave an uncertain future destined for the company.

Sources

http://newsroom.t-mobile.com/media-kits/t-mobile-us-reports-third-quarter-2014-results.htm

http://www.kansascity.com/news/business/article3554846.html

https://mysprint.sprint.com/mysprint/jsp/landingPage/contactus.jsp