Month: October 2012

Luna Tsoi’s blog post

After launching into the Chinese market for the sixth year, Home Depot, the second largest American retail store, marked its failure and retreated from the market by shutting down seven stores. Reports show that the Chinese Home Depots suffer a few million dollars of deficit every year. Even though the company did make attempt to reposition itself by opening up an online store, the endeavor to change was already too late.

 

I agree with Luna Tsoi “Home Depot misread the market’s appetite for do-it-yourself products.” China, a country with a population of over one billion, has a large amount of labor force, which lower the price of laboring. As a result, many Chinese consumers would prefer hiring help for renovation and maintenance than purchasing construction product to work on their own. However, the problem of the misread in appetite should not be fatal. Ikea, an international home product retail company that also focus on DIY, is successful and popular in Chinese market. Also on the other hand, Home Depot does provide renovation services to satisfy a variety of consumer need. However, according to the response of Chinese consumers, what disappointed them the most was quality of the service. There are deceptions in the contract and the result is not satisfying.

 

Another core problem that lead to the failure is the competition in the niche. There are a lot of existed construction product retail store in China. Even though they might not be as organize in terms of management, these small retail stores sell products with satisfying quality at a much lower price. Home Depot, without other outstanding point of difference, fails to attract consumers.

 

The point that I have contrary agreement with Luna Tsoi is “Home Depot has unappealing physical location.” Many Home Depots, in fact, were surrounding by residences. In the end, it is the high retail price and disappointing services that drew away customers. Home Depot failed to follow its slogan “More saving. More doing” in the Chinese market and it eventually led to its retreat.

 

Source:

Home Depot’s Failure in China

http://online.wsj.com/article/SB10000872396390444433504577651072911154602.html

http://www.businessinsider.com/ikea-home-depot-china-failed-2012-9

http://jiaju.sina.com.cn/news/zt/jdb/

http://tieba.baidu.com/f?fr=bk&kw=%BC%D2%B5%C3%B1%A6

 

This news article describes the competitiveness currently in the wireless industry. The niche was previously dominated by the Big Three – BCE Inc. , Telus Corp. and Rogers. The Harper government tried to benefit wireless users by introducing new companies like Mobilicity and Wind Mobile by auctioning wireless spectrum. The tactic did reach a short-term success. According to the demand and supply curve theory in economic, as more suppliers enter the market to fight for market shares, the equilibrium price will decrease. This effect is notable and it is supported by the fact that wireless providers are now increasing the amount of service in their price-reduced plans.

 

However, the change in price might only be a short-lived success. The high barrier of entry in the telecom industry suggests the danger for the revival of the Big Three monopoly. First of all, one wireless provider needs to raise a large amount of capital in purchasing wireless spectrum and retail stores while building towers. Secondly, the government’s regulation on the industry needs refinement. Anthony Lacarvera, the chairman of Globalive Wireless Management Corp. , noted that “The Government doesn’t have … teeth to enforce polices that are in place.” For example, the Canadian government failed in the policy in having the incumbents to share the spectrum tower with new entrants. Thirdly, the only point of difference between providers is the price because of the underestimation in the number of Canadian cell phone holders. New entrants struggle to gain market share by decreasing price amount to a level that may lead to deficit. Many players might withdraw under financial difficulty. Eventually, the market share will be redistributed to the Big Three and oligopoly will be resumed. To attain a permanent success, instead of concerning on how to attract new competitors, I believe the government should begin the reformation of the telecom industry by focusing in maintaining a sustainable competition.

 

To read the article, please click:

http://www.theglobeandmail.com/technology/tech-news/canadas-newly-competitive-cellphone-market-at-risk/article533723/?page=all