On November 13th, V.me, a “digital wallet” that holds multiple payment cards in a virtual repository, just ended its beta-testing. Instead of providing card numbers to make online payments, customers just simply enter a username and a password.

The amounts of credit and cash that the largest payment networks process exceeded $15 trillion last year (see graph below), indicating huge potential in the payment network industry.

This innovative technology will sooner or later cause an entire paradigm shift in the credit card industry.  The best strategies that current credit card companies should take into consideration are 1. add more online services to plastic cards in order to make it seem more attractive.  It will take some time to completely phase out plastic cards, so this strategy is still necessary to most companies.  2. Put large amounts of energy and funds into the field of virtual wallets.  Virtual wallets are efficient, eco-friendly, and closely tied in with the technology craze.  Although the cost of replacing credit card processing equipment is significant and will halt the process, the takeover of virtual wallets is inevitable.  Therefore, credit card companies should put most of their effort into product innovation and try to discover effective points of differences in this new field in order to gain a competitive advantage.

Works Cited:

“Credit-card companies: War of the virtual wallets.” The Economist – World News, Politics, Economics, Business & Finance. 18 Nov. 2012. <http://www.economist.com/news/finance-and-economics/21566644-visa-mastercard-and-other-big-payment-networks-need-not-be-victims-shift>.

This article presents unique analysis of the role of inventory and how to manage inventory.  Up until the point when a customer demands the item, inventory is simple resources that are tied up.  Therefore, the management of inventory is very much dependent on the accurate forecasting of demand.

The cereal example that was mentioned in class cannot fully incorporate all the aspects of operations that must be considered.  This is because cereal is generally nonperishable, so the lead time (i.e. the time it takes for the product to get to the customer) has very little effect on customer satisfaction.  For most small restaurant or grocery store businesses, operations is a constant battle between customer satisfaction and cost efficiency.  Firms such as McDonald’s already have a mature supply chain, constant transportation costs, and steady consumer demand.  Therefore, McDonald’s can focus all of its effort on gaining customer satisfaction, which is providing meals in a quick and efficient manner. Small businesses, on the other hand, should focus on keeping bestsellers in stock and have the shortest lead time possible for either special orders or a sudden increase in demand.

Works Cited

Griffiths, Chris. “Don’t let inventory weigh you down.” The Globe and Mail. Web. 18 Nov. 2012. <http://www.theglobeandmail.com/report-on-business/small-business/sb-money/cash-flow/dont-let-inventory-weigh-you-down/article4683167/>.

Transport Management. Web. 18 Nov. 2012. https://gc21.giz.de/ibt/en/opt/site/ilt/ibt/regionalportale/sadc/inhalt/logistics/module_01/16_components.html

Qoola’s stylish interior:

Sally Gao presented interesting ideas in her blog post, The Two Frozen Yogurt Stores in the Same Shopping Mall. She pointed out that although Qoola entered the market later than Yogen Fruz, Sally observed that Qoola usually had much more customers.

Some effective points of difference are 1. Qoola’s yogurt is self-served, providing the customer with room for customization.  Qoola also has a large variety of toppings and flavors to enhance this aspect. 2. Qoola’s store is very well designed, giving the customer a feeling of a special ambiance and a unique experience.  Not only is Qoola usually strategically located in the most stylish malls in town, it also provides its customers with free wi-fi, making Qoola a great place to hang out for teenagers.

Similar to Toms’ One for One product line, Qoola’s marketing is not so much focused on the product itself.  The marketing strategy is centered around the consumer’s entire experience of purchasing the product.  By purchasing the product, the customer is also paying for the experience of customizing their own meal and the enjoyment of the atmosphere.

Works Cited:

“Yogurt Nation vs. Tutti Frutti vs. Qoola.” Our Planet. N.p., n.d. Web. 19 Nov. 2012. <http://www.ourawesomeplanet.com/awesome/2010/06/yogurt-nation-vs-tutti-frutti-vs-qoola.html>.

“Review: Qoola Yogurt and Fruit on Denman.”Vancouver Blog. N.p., n.d. Web. 19 Nov. 2012. <http://www.miss604.com/2009/02/review-qoola-yogurt-and-fruit-on-denman.html>.

The Economist blog post, Costs to Come, points out that although the harms of global warming to the economy are quite apparent, most people still have an incentive to emit unnecessary amounts of carbon dioxide and waste natural resources.  Hurricane Sandy, which was allegedly caused by global warming, has had immense negative impacts on the suffering US economy.

However, the post also states that there is a solution to this problem – harsh taxing of the emission of greenhouse gases.  For example, the costs of car emissions must be internalized by the driver, so that the driver will have a greater incentive to drive less and use public transportation.

Yet it is doubtful that people will find this solution attractive, because high carbon taxes or large public investments have negative short term impacts. As the diagram above points out, the global cap and trade costs are huge compared to the impact of a hurricane, and even the Vietnam War is dwarfed by the whopping 1.9 trillion dollars. Looking only from the short-term economic point of view, it is difficult to determine whether or not the tax should be imposed, but we cannot disregard the ethical impacts of our decisions.  We need to create a sustainable system, not only because it will undoubtedly generate great economic value in the future, but also because we have the social responsibility to take initiative in improving the future of the global community.

Works Cited:

“The Cost of Global Warming: A Story in Pictures.” The Foundry: Conservative Policy News Blog from The Heritage Foundation. N.p., n.d. Web. 19 Nov. 2012. <http://blog.heritage.org/2009/04/06/the-cost-of-global-warming-a-story-in-pictures/>.

Cathy Lee‘s blog post, “Toms: One for One”, describes why the well-known social enterprise, Toms Shoes, became incredibly successful and internationally renowned during the past few years.  Cathy mentioned that customers are largely attracted to the company’s mission in addition to the trendy designs.

While Toms has had great success with the One For One shoes and glasses product lines, many critics point out that this is good marketing but bad aid.  There are numerous cheaper alternatives to solving the social issues that Toms addresses, and Toms’ free goods are out-competing some of the local businesses that would have benefited the community with both quality goods and jobs.  However, I think that Toms’ marketing campaign has raised global awareness of certain social issues, which is a result that is more beneficial in the long run than material aid.

Toms’ marketing strategy is revolutionary in that it did not focus on marketing the qualities of the product; it marketed the impact of purchasing the product.  Normally, when a customer buys a product, the utility that the customer gains is only from the qualities of the product itself.  However, when a customer buys a pair of Toms glasses, he or she also gains satisfaction from the thought that they helped others in need by the act of purchasing the glasses.  This point of difference helped Toms stand out from other brands, and became the basis for the success that Toms enjoys now.

Works Cited:

“TOMS Shoes: Good Marketing – Bad Aid” Good Intentions Are Not Enough. N.p., n.d. Web. 19 Nov. 2012. <http://goodintents.org/in-kind-donations/toms-shoes>.

Coca-Cola is recently marketing something that they call “the Fountain of You,” which is a machine that allows customers to mix in as many types of Coca-Cola products as they want.  There are countless combinations: orange-peach vanilla coke, or strawberry-flavoured Sprite with a hint of Fanta, giving the customer a chance to explore and personalize.

Personalization in marketing usually focuses on the process of creating your very own version of the product instead of the qualities of the product itself.  This is a very effective way to appeal to consumers, because we are often inclined to feel that we are special and in power when products are customizable.

Unlike the baby boomer generation, modern consumers are very much used to being in power.  Almost everything in our life can be personalized:  facebook pages, cellphone applications, and computer desktop images are all chances for consumers to make a mass produced product special.

Coca-Cola has taken advantage of the personalization trend in consumer psychology.  Without developing brand new flavours in order to adapt to consumer needs, Coca-Cola simply provided the consumer with a chance to create their own Coke product.  There is very little cost associated with this strategy, but great returns in terms of both revenue and advertising value.  Well played, Coca-Cola, well played.

Work Cited:

“Custom-mix your own Coketail.” The Globe and Mail. N.p., n.d. Web. 18 Nov. 2012. <http://www.theglobeandmail.com/report-on-business/industry-news/marketing/custom-mix-your-own-coketail/article4510673/>.

“Rick Ross To Unveil New Coca Cola Freestyle at Memphis Wingstop.”365voice.com. Web. 18 Nov. 2012. <http://365voice.com/rick-ross-to-unveil-new-coca-cola-freestyle-at-memphis-wingstop-meet-greet/>.

Microsoft has launched a test in Canada on an innovative advertising gimmick called NUads on the Xbox live.  NUads allows people to interact with the ad by answering short questions or filling out questionnaires. This new strategy has been proven to be quite successful.  Xbox’s ads have a much higher click-through rate than any other online banner ads, and people are willing to spend more time absorbing the information presented.

This is a great way to obtain direct feedback from customers as well as advertise a product.  Unlike the normal old passive ads that can only influence a consumer through repetition and time, the NUad engages the subject perceptually and intellectually.  The information presented is thoroughly processed by the subject on the first time they interact with the ad, whereas traditional ads need to be shown again and again to the consumer in order to be impactful.  However, filling out questionnaires may not be the best method to use on the Xbox because people would usually expect something that is more exciting and engaging when they are playing video games.  I suggest incorporating ideas from video games into the ads so that gamers will find the ads less monotonous.

Video of the interative ad: Interactive TV Ads on Xbox Live

Works Cited:

“Microsoft Xbox ads go interactive.”The Globe and Mail. N.p., n.d. Web. 18 Nov. 2012. <http://www.theglobeandmail.com/report-on-business/industry-news/marketing/microsoft-xbox-ads-go-interactive/article4568297/>.

“Interactive TV Ads on Xbox LIVE – Cannes Lions – Microsoft Advertising.”Online Advertising and Digital Marketing solutions – Microsoft Advertising – US. N.p., n.d. Web. 18 Nov. 2012. <http://advertising.microsoft.com/video-gallery/view-video?uuid=24aabe25-94cf-532a-cbb8-d6f8dda23025>.

Burberry’s profits have not been meeting its shareholder’s expectations. Its sales growth has fallen from 30% to 20% in China, the largest luxury goods market.  Most analysts say that this slump in sales growth is mainly due to China’s economic slowdown, but shares in LVMH only went down by 4%, while Hermès sales in China has maintained the the same rate of growth.

Since Burberry has done terribly compared to its peers in the same environment, it is possible that its latest business strategy in is fundamentally flawed.  CEO of Burberry, Angela Ahrendts, has been fervently advocating the use of technology in Burberry’s marketing strategy.  Consumer habits have been shifting toward this direction, but it is questionable as to whether or not the luxury goods industry should also follow the technology trend.  Burberry products are very expensive, so buying one is quite a big decision.  It is very difficult as a consumer to make that decision without direct perceptual inspection of the real, tangible product. In addition to the lack of direct contact with the product, there is this inherent feeling of insecurity associated with digital transaction, making many consumers feel uncomfortable about paying large sums over the internet.

Upon the examination of consumer psychology, Ahrendts’ failure is due to the simple fact that most people feel more comfortable buying luxury goods in shops rather than online.

Work Cited:

“High-tech fashion: Burberry goes digital.” The Economist. N.p., n.d. Web. 1 Oct. 2012. <http://www.economist.com/node/21563353>.

“Sand in our stilettos: Burberry’s ‘Retail Theatre’ Concept.” Sand in our stilettos. N.p., n.d. Web. 18 Nov. 2012. <http://sandinourstilettos.blogspot.ca/2010/09/burberrys-retail-theatre-concept.html>.

During the past 10 years, China has become increasingly influential both politically and economically.  Many companies have taken advantage of the blooming Chinese market and the cheap labor, while others feel that China has been taking away too many opportunities. The United States and several European countries believe that China is more of a threat than an opportunity according to a study done by Transatlantic Trends.  China and the US have also been taking tough stances against each other in terms of economic policy.

However, surely no one can denies the contribution China has been making to support global economy.  After the global economic catastrophe of 2008, China put 4 trillion RMB into the market in order to ensure economic recovery, and managed to maintain an annual growth rate of more than 9%. This incredible growth rate helped many other countries regain confidence and bring up demand, thus leading to the eventual recovery of global economy in 2009.  Therefore, I think that the reason why some countries are viewing China more as a threat could be due to political reasons rather than economic reasons.

Works Cited:

“China contributes more to global economic recovery than US.” China.org.cn – China news, weather, business, travel & language courses. Web. 21 Sept. 2012. <http://www.china.org.cn/opinion/2012-03/26/content_24985353.htm>.

“Daily chart: Who’s scared of the dragon?” The Economist. Web. 21 Sept. 2012. <http://www.economist.com/blogs/graphicdetail/2012/09/daily-chart-11>.

The 2008 Wall Street crisis caused the world to experience the most devastating economic disaster since the 1930 Great Depression.  A significant cause of this crisis was due to defective mortgages (i.e. mortgages that did not contain all of the required documents) which created the housing bubble of 2006.  With little or no regard for the welfare of the general public, the companies writing high-risk mortgage loans eventually left people homeless and themselves penniless.

I believe that the basis of business ethics is the feeling of sympathy.  Only when people can feel sympathy for each other do the standards of ethics begin to take affect.  As Adam Smith said in The Theory of Moral Sentiments, humans have an inherent tendency to sympathize with others.  However, this is usually when the two subjects are closely related to each other or are directly observing the each others’ situation.  In the case of the 2008 economics crisis, a group of highly intelligent people manipulated the system unethically in order to maximize their profits, because their sense of sympathy during the process was reduced due to the complexity of the process itself.

Informative Video on the Wall Street Crisis: 29 Oct 2008 Wall Street Expects Collapse

Works Cited:

“Wall Street: Wall Street’s crisis.” The Economist – World News, Politics, Economics, Business & Finance. N.p., n.d. Web. 18 Nov. 2012. <http://www.economist.com/node/1088