One of the more memorable moments for me in Com 101 so far is when Scott asked the class “What do you want to be able to provide for other people?” Not what will be the smartest mathematical decision or necessarily the most profitable, but what will be the most helpful. The tobacco industry seems to be the extreme opposite of this idea. Taking advantage of human addictions and making a harmful profit out of it. The introduction of e-cigarettes is a fairly new product in the tobacco industry. Many large tobacco industries fear what they call a “Kodak Moment” where the digital side of the industry is soon to take over and that they will be too far behind to catch back up. E-cigarettes are not yet hugely popular in North America, but are growing rapidly in Europe. There have been many studies that have shown them to be substantially healthier than conventional cigarettes and even act as a better replacement than nicotine patches and gum. On the other hand, there is still controversy surrounding these substitutes. The fear is that they will encourage people who never smoked in the first place to take part in this trendy new activity.
E-Cigarettes
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I am a huge fan of the recently finished television series Breaking Bad and I always found it hard to explain to others why I found it so interesting. After reading the article “The Breaking Bad School” I realized that maybe my subconscious self was intrigued by the way it related so closely to business in general. The more I begin to analyze the show, the more I feel able to relate it directly to our Com 101 class. I find myself breaking up Walter Whites business into a model canvas and studying the importance of ethics and reasons for his inevitable demise. He started with a strong ambition to create an extremely clear PoD and value proposition, as well as creating strong partner relationships with tight operations management. With his fresh perspective on the industry and intellectual capital, he was able to produce something that no one else could. Although, at the end of the day, one must consider how they are truly contributing to the world. What seems to be a dominating theme in our classes as well as in the series was the idea of ethics. It’s easy to convince yourself that you’re doing something right when you’re accumulating huge profits. It’s much harder to tell yourself the truth when the alternative is so rewarding.
Just over one month ago, during frosh week, a man named Michael Hallatt was invited to speak in front of our faculty. He filled us in on his unconventional business plan, which was quite simple: he would buy food from Trader Joe’s across the border and then sell it here in Canada for a slightly higher price. This contraband idea landed Michael in a large lawsuit with this multi million-dollar corporation. I was happy to read yesterday that he actually survived this David and Goliath style lawsuit, but at the same time I am a more or less confused about the entire situation. First of all, Michael’s business plan doesn’t seem to make sense. Instead of purchasing his products from a manufacturer at wholesale prices, he simply buys products for full price and then resells them for even more. My thought process goes like this: Michael knows that his target demographic consists mainly of people who are already familiar and fond of the brand Trader Joes. This means that a good portion of his costumers were once willing to drive themselves across the border in order to buy the same products for a cheaper price. I find it hard to believe that these people would consciously decide to pay a higher price for the same product when they were, at one point, contempt to buy it at a cheaper price before. One could argue that his customers are paying that extra price to make up for the costs of driving across the border, but that just turns into variable costs that Michael has to subtract from his revenue. Therefore, his customers are merely paying him money to drive instead of them.