A vital characteristic that a business needs is adaptability. Anyone familiar with the stories of Kodak and Blockbuster will easily be able to see why the ability to modify a company is so necessary. As technology advances and consumer preferences change, the need and attractiveness of companies inevitably fade unless change is instated.

A recent article shows how one brand is evolving.
Newsweek, 79-year-old news magazine, is combatting the faltering popularity of print media by switching to solely online publication. Annual losses in recent years left Newsweek with a bleak future. With tablet and smartphone apps being more popular than ever, the strategic change to become completely digital could prove to be a great decision. Also, by eliminating the printed versions of Newsweek, production costs are being dramatically cut.

The question lies in whether or not consumers will make the transition into purely digital news. Like the many suggestions that books will eventually die out and be replaced by eBooks, the same can be offered to explain the future of newspapers and magazines. As this transition takes place, it is important for news providers to ensure that the strategic change is implemented properly.

The Globe and Mail recently reported about Costco’s unexpected gains. Costco Wholesale Corp., who recently raised membership fees, experienced higher profits than originally expected. They earned $609 million in the fiscal fourth quarter, a vast increase compared to the $478 million earned in the same period last year. Despite a 10% increase in membership fees, revenue from memberships grew by 18%.

These recent findings further outline the attractiveness of the wholesale industry. Low supplier power is evident due to the large quantities that stores like Costco purchase. Since suppliers rely on Costco to purchase such a great amount from them, Costco can buy for a lower cost. The recent figures regarding the inelasticity of raising membership fees show that the wholesale industry also has low buyer power. When Costco increased their fees, customers were not sensitive to the change. To still experience the unique service that Costco offers, they had to accept the increased fees. In addition, there are only a handful of rivals that offer a similar service to compete with.

With this all information, it’s is inevitable to wonder why there are not more discount wholesale stores competing with stores like Sam’s Club and Costco. Of course, one must consider the high entry barriers that eliminate almost all threat of new competition.

Claudia’s post about Herbal Essences provides good insight to a successful repositioning of a brand. Over the past few years, the brand has undergone a total makeover. They changed their entire image, from packaging to product names. While maintaining its reputation of using organic ingredients, Herbal Essences can now also appeal to a younger generation.

In their book, Ries and Trout explained the importance positioning your brand in the mind of the consumer. It further states that it is especially difficult to change a consumer’s impression. However, the story of Herbal Essences shows that successful repositioning is possible. This contrasts greatly from the results that many other brands see when trying to establish a new identity.

In a previous post on this blog, the future of Burberry was called into question. The CEO was changing the identity of the company through putting an emphasis on technology and taking away from the traditional sophisticated look. Comparing the two companies shows that a change of identity must be done appropriately.

It is much harder to see success from reinventing a brand’s image in some industries compared to others. Creating a new image is a very difficult task to accomplish, but Herbal Essences provides a good example of how it can be done successfully.

Burberry Goes Digital – The Economist

Choosing a new direction for a company can be a very risky decision. For company’s as old and established as Burberry, the risk is even larger. Unfortunately, the recent decline in sales and popularity of Burberry requires new tactics to revive the brand founded in 1856.  In Asia, the company has seen a significant fall in sales growth while other luxury brands like Louis Vuitton and Hermes have been scarcely affected. The firm’s current CEO, Angela Ahrendts, believes that an integration of technology is the way forward for the company. Along with interactive screens in stores, Ahrendts plans to implement ‘Customer 360’. It will allow store clerks to access the customer’s buying history.

New Burberry store opened in London features a 22 feet high screen

Although these ideas seem very modern and technologically savvy, it takes away from the reason shoppers choose Burberry in the first place. The brand has an identity of providing luxury garments in a sophisticated setting. The current, loyal customers of Burberry do not come to the store expecting to be amazed by technological innovations. The article mentions a quote from a London designer: “Louis Vuitton offers them deep-pile carpets. Burberry offers them big computer screens,”.  This sums up the loss of Burberry’s identity. It’s important for companies to not forget their initial attraction. As a luxury clothing brand, Burberry needs to maintain their image as a prestigious place for higher-class shoppers.

As explained in an article from The Economist, a new trend emerging in the business world is the integration of chief customer officers. CCOs are intended to enhance the customer experience. As the Internet has grown, it has become far easier for customers to express their negative experiences with companies for others to see.  This communication has led to customers forming opinions about companies without firsthand experience. Ultimately, customer service has taken on an even more important role than before.

Is too much emphasis being placed on the satisfaction of the customer? In essence, the customer is the single most important aspect of a company’s success. There simply is no company without the customer. Too often, customers are forced to speak to automated machines when calling a company. This is a basic practice that, if altered, can significantly improve customer happiness. Nothing screams bad customer service than spending an hour speaking to a machine.

It’s undeniable that customer service is vital to success. Dissatisfied customers can have a major impact on companies. As stated in the article, bad customer service saw many customers leave AOL when other alternatives were available. With this in mind, it is of utmost importance to make sure that customers are happy. Having specific roles within a business that focus on simply finding ways to improve the customer experience is a good way to improve a company as a whole.

There is an accepted misconception that slavery is dead in the modern world. However, a recent article in The Globe and Mail opens the window to a world of unpaid labour in the city of Vladivostok, Russia.

The article exposes the story of Babai who, like many others from North Korea, is working up to 12 hours days renovating the Russian city. However, their payment is not provided to them but rather to the Worker’s Party of North Korea. In addition, the workers are living in inadequate conditions with up to 100 living in an apartment together. Although wrong, the totalitarian regime of North Korea is not the ethical issue at hand here.

The immoral judgment lies in the Russian businesses and government that choose to hire North Korean workers despite the obvious lack of payment. In the business world, it’s inevitable that costs need to be minimized. Foreign workers are an easy way to cut costs.

However, there are ethical choices that need to be made prior to cost minimization. The moral question facing Russia is whether to support the poor treatment of North Korean workers by providing jobs or to take away the opportunity to work and escape their homeland? The sad truth may be that unpaid labour in Russia is the closest that the North Korean workers will get to freedom. For many, bondage and liberation has become synonymous.