Month: November 2012

Employees are one of the most valuable resources of a company. They drain their creativity to sustain the function of a company, and devote most of their time to work. Companies carefully select elite applicants as their employees. However, after being able to recruit these members, a problem that all companies faces is how to keep them afterward.

According to the U.S. Bureau of Labor Statistics, 40% of workers are planning to find a new job in next half of the year and 69% are already looking for one. These alarming numbers reveal that there is the urgency for employers to be knowledge about how to maintain their employees. The article “Five Ways to Retain Employees Forever” by David K. Williams and Mary Michelle Scott suggest “5 R’s”: responsibility, respect, revenue-sharing, reward, and relaxation time.

This reminds me of the case of Zappo that is learned in the class of people culture & teams. Zappo provides employees with 160 hours customer-loyalty training before engaging in any position. There are regular parties that are planned on the behalf of the company to appreciate the hard work of every employee. There are amenities and free food in the company that allow employees to catch their breath before continuing on. Managers are also required to spend 10 to 20% of their time chatting with their employees. By embracing the elements of responsibility, respect, reward, and relaxation time in the company culture, Zappo is able to maintain a positive relationship between the managers and the workers. Many employees even reflect that they consider Zappo as their second home. As a result of the successful bonding, Zappo is able to grow into the largest online shoe store with increasing revenue. Employees are the key assets of a company and the morale of them is closely related to the success of a company.

This blog post is in response to Ria Singh’s “Secret to Success….Shhhhhhh”.

I agree with Ria that out of all the examples that I have learned in COMM 101, the case of Zara’s supply chain management caught my attention the most. After reading articles on Zara’s supply chain, many of my questions, as a consumer, was solved.

Through the years of experience in shopping, I discover that out of all the clothing retail stores, Zara is the one that has the least amount of discount. In many fast fashion stores, such as Forever 21 and H&M, there are always shelves and racks of clothing with discount tags. However, this is not a common scene in Zara. My question was answered when I learned that one tactic Zara supply chain follows is small batch production. There is a fast turnover rate. By the time a season ends, only limited amount of leftover clothing will require a clearance sale. Many products are already consumed at its original price.

Zara also sells similar fashionable clothing as other retail stores, but only they come much earlier. The success in faster launching time is reached base on Zara’s quick response to demand. Understanding that its target group concerns more on the fashionable sense than the quality of the clothing, Zara realizes designs base on the type of material in stock. This eliminates the time for purchasing new raw material, and helps to make sure Zara is the first retail store that can provide the newest trendy clothing in affordable price.

People might have different opinion to the practices of Zara, the “quick change artist”. Fashion designers of renowned brands will criticize Zara’s supply chain. They would criticize Zara not only plagiarize their fruit of endeavor, but also fail to deliver the soul of the pieces with unsatisfying quality of fabric. As entrepreneurs, they will be amazed by the brilliant idea. The possibility of net lost is minimized and the number of return customer increases since Zara always maintain at the tip of fashion.

According to the “Coffee Business Statistics Report” generated by the E-Imports, averagely every American consumes 3.1 cups of coffee each day. To fulfill the high demand for coffee, more and more coffee stores are opening and operating. The popularity of coffee gives coffee franchises opportunity to grow and flourish. Starbucks is one of them that origin from Seattle and extends its domain across the world.

After realizing that there is a fast growing market in China, Starbucks decides to head toward China in 1999. The success of Starbucks is prominent by today – there are about 730 stores in business. However, some consumers are confused when they discover there is a price difference on coffee between Chinese Starbucks and American Starbucks. The difference is as large as 75%. The wholesale price for coffee beans has dropped more than one third in 2012, but the prices of Starbucks beverage still continue to rise. It seems like Starbucks is setting the price of coffee base on consumer’s value instead of the cost of good sold. Since Starbucks is positioned as an upscale in China, Chinese consumers are willing to pay a higher price. The coffee becomes a conspicuous consumption good and thus revenue of Chinese Starbucks continues to increase.

There are also other reasons that boost up the price. Unlike North American franchises, since the coffee culture is still developing in China, most of Starbucks franchises are located in commercial centers and tourist sights. The expensive rent, along with labour cost, taxation, and other miscellaneous expenses add a heavy burden to Starbucks shoulder. To maximize its profit, Starbucks has to shift the burden to Chinese consumers.

The difference in value proposition and cost of expenses create geographic price discrimination. However, one concern rises. If other existed or new franchises also enter the Chinese market, can Starbucks continue to enjoy its superiority in market power or will the price discrimination eventually settle?

References:

http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20121109000093&cid=1202

http://blogs.wsj.com/chinarealtime/2012/02/01/starbucks-price-increase-stirs-chinas-netizens/

http://www.e-importz.com/Support/specialty_coffee.htm

If you are enjoying your holiday in the north of Terrace in northwestern BC and observe a hazy and smoky sky, please do not be alarmed and wonder if Mayan’s prophecy revelation for 2012 is realizing. The gloomy sky is just a side effect of the practices BC Hydro is currently endeavoring in for the new Northwest Transmission Line. In order to construct the 340 km pathway for the project, BC Hydro believes it is necessary to clear the pathway up. It logs down the “barriers” and sets a fire to eliminate the evidence of its destructionon environment.

BC Hydro claims the construction of Northwest Transmission Line is a sustainable development. By transporting energy via electrification, the amount of greenhouse emission will decrease. However, since BC Hydro has decided to set fire on the unused logs, extra 600,000 tones of CO2 gas will be released into the atmosphere. BC Hydro is fulfilling the present demand of energy by compromising the ability of future generation to achieve their needs. The project’s goal in being sustainable is ruined. BC Hydro defends due to the poor quality of the logs and the far distance from mills, it is inefficient and expensive to transform the cut-down trees into merchantable logs. However, one factor one should take into consideration is ultimately BC Hydro is just another profit maximizer. There is an incentive for the company to minimize the cost of the construction.  The company might use the quality of the wood and difficulty of transportation as an excuse. The above concerns lead me into wonder whether the seemingly environmental Northwest Transmission Line is just another project greenwashed by the government.

References:

http://www.vancouversun.com/business/resources/Hydro+burns+hundreds+thousands+trees+along+Northwest/7556455/story.html

http://www.cbc.ca/news/canada/british-columbia/story/2012/11/07/bc-transmountain-hydro-timber.html

MSN sound effect

1999 is a year of advancement to Microsoft. In that year, Microsoft first introduced Windows Live Messenger (MSN) to the global Internet users, and this communication media quickly became a trend that dominated the world for over a decade. However, there is always an end to every story. In the morning of November 6^th, 2012, Microsoft announced that Skype would replace MSN in the first quarter of 2013. MSN will retire from the world’s stage.

The cause for the fall of MSN is traceable. Over the last few years, Microsoft shows a lack of attention on users’ satisfaction. Users have been reporting about MSN’s bad user service and problems with log in, junk mails, viruses and scamming. Microsoft shows no endeavor in deriving solutions. Also, there are an increasing number of competitors in the market. The emergence of Facebook, Twitter, Whatsapp and other innovative medias not only introduce new communication experience, but also undermine MSN’s market share. However, MSN remains traditional. Since 2005, Microsoft had published three new versions of MSN, but there were no significant improvement on these updates. In the end, Microsoft pays the price for its mistake. In 2012, the number of active user plummets to 100 million, returning to the 2003 level, and the figure is even smaller than Skype’s current record of 280 million users.

Microsoft finally realizes the urgency of the problem, and decides to replace MSN by Skype, with the intention to maintain the current users while exploring new groups of applicants. This is only the first step in Microsoft’s plan of revolution. It also decides to replace Hotmail by Outlook, and even consider connecting systems of PCs and tablets like Apple. I agree that by changing the strategy from being traditional to being innovative is a correct approach. Microsoft tries hard to discover another breakthrough.  However, it is still yet too early to decide whether or not these are successful and useful changes. First of all, the transition from MSN to Skype is difficult for many users. Some users might report in lose in contact information and not everyone can adjust to the new system of communication. Some users might even consider turning completely away from Microsoft to other applications. Secondly, instead of being innovative, Microsoft is only following steps of Apple. This makes me question about the capability of Microsoft in developing a new niche.

The story of MSN once again alarms possible entrepreneurs the importance of creativity in the technology market. No monopoly can last forever and groups that fail to adapt to changes will eventually become obsolete.

References:

http://www.shareeveryday.info/archives/1099#more-1099

http://tech.uk.msn.com/apps/windows-live-messenger-replaced-by-skype

http://webtrends.about.com/od/profi3/p/Microsoft-bio.htm

http://tech.qq.com/a/20121107/000025.htm

For the above working environments, which one are you more prone to work in?

Many companies are attempting hard to survive from the wave of recession by achieving short-term goal and redesigning long term plans. However, many of them have missed the importance of employee morale as a factor to achieve successes. The Lego Group is an example of a successful business that understands this importance and thus creates comfortable environment for the employees.

Employees are definitely one of the most important resources of a company. They are the fountains for innovative ideas and they are the interface between customer and the company. Without their hard work, a company can collapse even if it does posse possibilities.

I agree that there is a positive correlation between the happiness and hard work of employees and the environment of the company. If the company does create an atmosphere that feels like being at home, the worker’s creativity will escalate. According to the article “How the Lego Group has built a creative corporate culture”, the Lego Group designed a workspace that is as open and light as possible. Also, according to the article, employees are allowed to bring their children to work, a policy that helps in decreasing the burden of working parents.

In addition, to reinforce on teamwork, one of the corporate culture of the company, the Lego Group designed corridor areas for employees to have fun and opportunity to chat with co-workers. Through exchanging idea, curiosity, one of the important elements in inventing and designing, is provoked. The environment encourages employees to continue in being playful and energetic, which can promote the continuation of the successful legend of Lego.

Reference:

How the Lego Group has built a creative corporate culture 01/03/2010

http://www.changeboard.ca/content/3125/How-Lego-has-built-a-creative-culture/