Emily Dietrich's Blog

What differentiates a social entrepreneurship from the traditional entrepreneurial venture? A social entrepreneurship is defined as an social-mission driven enterprise that applies market base strategies to achieve a social purpose. The Planned Lifetime Advocacy Network (PLAN), a Canadian organization that helps families in securing a future for disabled relatives, is the embodiment of such a venture.

Social entrepreneur and company president Al Etmanski had a vision: to provide family members with a disability access with opportunities for financial stability, independence, and long-term friendship following the death of a parent or primary caregiver. PLAN Institution was designed as an affiliated resource center that provides books, online seminars, mentoring, and counselling services for PLAN partners. A major component of PLAN’s mission involves the creation of social networks in which individuals come together to establish relationships with a disabled person and provide support.

Al Etmanski’s innovative social mission stimulated the creation of additional iniatives. Among these, the Registered Disabilities Savings Plan allows disabled Canadian citizens to defer taxes and increase their savings. However, in order to truly be considered a social enterprise, PLAN must operate in accordance with a traditional business model. It succeeds in doing so by generating revenue through the sale of memberships, subscriptions, seminars, books, and other products. However, PLAN’s underlying goal is not consistent with the traditional corporate aim of maximizing profit. Financial returns come second to Etmanski’s social mission to provide disabled individuals with the resources to participate in decision-making, contribute to society, and live a long life of familial and financial support.

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Chip Wilson: The Vision Behind Lululemon Athletica

It is certain that Lululemon embodies an entrepreneurial entreprise through the following characteristics (taken from quickMBA):

Amount of Wealth Creation: Within the first two quarters of 2010, Lululemon Athletica experienced a profit increase of 92.9% from the fiscal period of 2009. This figure translates into around $74.5 million. For the third quarter of 2010, Lululemon is looking to generate $155-$160 million in revenue, which will only succeed in boosting profits at exponential levels.

Speed of Wealth Creation: Lululemon was founded in 1998 but did not open its first store in Kitsilano until 2000. This indicates that within approximately 10 years, Lululemon has cultivated significant entrepreneurial wealth. The store has not taken a lifetime to grow, but instead has been expanding since its creation under founder Chip Wilson.

Risk: The original idea behind Lululemon was to create a clothing store that would function as a healthy environment in which people could discuss the physical and mental components to personal fitness. This contained significant risk, as it was unknown whether customers would be receptive to the combination of products and the services offered by the store.

Innovation: It can’t be denied that the design of the Lululemon brand is extremely innovative with regards to its emphasis on healthly living. Lululemon offers several programs to aid their customers in achieving personal success, and such programs strengthen the company’s relationship with its shareholders. Among these, a goal-setting website is easily accessible to assist with outlining objectives and free in-store yoga classes are offered for customers interested in learning about the practice of yoga.

The CEO of Shoppers Drug Mart, Jurgen Schreiber, has recently announced that Shoppers will begin to export both private-label generic and store-brand drugs to countries outside of Canada. This, as revealed in a Globe and Mail article comes in response to Ontario’s recent drug reform, prohibiting $750 million worth of allowances to pharmacies that were previously collected from suppliers to sell their generic drugs. Schreiber threatened to boycott this reform by decreasing hours of operation and suspend services offered by the pharmacy. However, Shoppers still experienced a significant loss: $12 million worth of profit in the sixteen weeks leading up to October 16th. While the legislation permits Shoppers from selling store-brand drugs overseas, the drug store chain has already signed a contract to sell private-label generic drugs to an international company.

The proposal has significant implications for inventory management. If Shoppers is going to be successful in providing overseas companies with drug products, they are going to have to reevaluate their supply chain. The distributional channel of Shoppers, responsible for providing consumers with the drugs delivered to them by the suppliers and manufacturers, will now become two-pronged: the first link being between the manufacturer and Shoppers and the second link being between Shoppers and its international counterpart. Despite the increase in profit that will come from the sales of these drugs, Shoppers will undoubtedly experience severe transportation/logistical costs in transporting the drugs overseas. If the corporation can be innovative and find a way to deliver without incurring exorbitant expenses, Shoppers will reduce the amount of time drugs spend in inventory increase its inventory turnover ratio, and consequently benefit from the decrease in operational costs.

http://www.theglobeandmail.com/globe-investor/squeezed-by-drug-reform-shoppers-turns-to-export-market/article1793577/

http://www1.shoppersdrugmart.ca/en/Home.aspx

When the average Canadian homeowner-to-be goes in search of the best mortgage package, it is certain that they will evaluate several banks on their respective terms of payment, interest rates, and prepayment options depending on the amount of cash flow they wish to retain. CIBC, RBC, and HSBC offer unique mortgages depending on the status of the buyer, but all possess similiar payment methods.

A fixed-rate closed mortgage, or one in which the loan is paid back in fixed increments, is offered by CIBC at terms of 1,2,3,4,5,7, and 10 years. A mortgage on a 5-year term must be paid back at an interest rate of 5.29%, and the buyer has the option to prepay 10% each year. A buyer would choose this time of mortgage, as opposed to a fix-rate open mortgage, if they want their payment to be unaffected by fluctuating interest rates. The same mortgage is offered by RBC at a slightly smaller interest rate: 5.19%. However, a buyer may also choose RBC’s special offer of a 3.79% interest rate, on the condition that 8% interest will be paid back over a period of 25 years. At HSBC, a fixed-rate closed mortgage is offered at a 5.29% interest rate or 3.35% for HSBC Premier customers. Such a customer is defined by holding $100,000 in assets with the bank.

Each bank offers specific mortgage packages depending on the type of customer. CIBC offers an AeroMortgage, which provides the buyer with one Aeroplan mile, or points towards airline flights, for each dollar that is paid back on interest. RBC offers a Vacation mortgage for buyers interested in owing a second vacation property. Alternatively, HSBC offers an Equity Power mortgage, which allows the buyer to receive funds based on equity, as calculated between the difference between the value of their home as appraised and the value of their mortgage. A homeowner may consider this option to facilitate the liquidity of their primary asset, their home.

http://www.cibc.com/ca/mortgages/fixed-rate-closed-mortg.html

http://www.rbcroyalbank.com/products/mortgages/fixed-rate-mortgage.html

http://www.hsbc.ca/1/2/en/personal/mortgages-and-loans/mortgages/find-mortgage

Gap Ad on Groupon.com

With the promise of free jeans, Gap has become the latest in corporations to look to social networking tools in order to reach an online community rapidly expanding in population. Within the past six months, Gap has been experiencing a decline in sales, and it hopes to counteract this by offering 10,000 pairs of free jeans to people who attend Gap’s give-away event on Facebook.

Customers who aren’t able to receive a pair of jeans are instead offered an alternate deal: a 40% coupon for any piece of merchandise in the store. Gap has offered such a coupon but only on an in-store basis, and it has only just recently begun to switch to tools like Facebook, Groupon.com, and Foursquare to unveil incentives: a sure-fire way to cause queues to form out the door of Gap stores.

The use of social media results in partnering two key aspects for the financial success of a company: management-information systems and market research. By streamlining the technology utilized by a business in promoting its products, the MIS division opens up a gold-mine of resources for marketing by encouraging the generation of customer feedback and amplifying the word-of-mouth effect to levels previously unreached. In turn, the information gleaned from market research will assist MIS in pinpointing how to enhance the flow of communication, increase innovation in product design, and cut down the supply chain to eliminate operational costs.

http://blogs.wsj.com/digits/2010/11/05/gap-turns-to-social-media-to-draw-shoppers/

Savvy skiers and snowboarders around the world rejoice: it is now possible to buy stock in the Whistler Blackcomb Ski Resort. Current owner Fortress Investment Group LLC, despite the attention given to Whistler Blackcomb as a result of the recent Olympic Games, has been unable to find a new owner. What’s not to like? While Whistler is a viable asset with regards to both reputation and the amount of resources offered to consumers in the way of trails and lifts, it is not expected to achieve much growth in the coming years and this has caused Fortress to seek the investor public offering (IPO) market as a way to sell shares of the resort. Judging by Whistler’s popularity both at a domestic level and an international level, it can be assumed that the dividends paid out to these shareholders will be quite large. This should theoretically increase the incentive to buy stock in Fortress. However, the purchase of Whistler stock is not complete without risk. It is a portfolio without much diversification, as the investor would only be purchasing ownership in Whistler Blackcomb. When Whistler was owned by Intrawest, a purchase of stock in Intrawest would provide the investor with a share of Whistler in addition to a share of Mont Tremblant in Quebec, Blue Mountain in Ontario, and another real-estate business. Fortress does not offer the same reduction of risk: its assets consist entirely of Whistler. Before purchasing, an investor must consider their level of confidence and trust in the continued success of Whistler Mountain.

http://www.theglobeandmail.com/globe-investor/fortress-hopes-olympic-lure-sells-whistler-shares/article1742386/ – Article

http://www.ski.com/resorts/trailmaps/tmn_whistler.jpg – Picture

Burger King is continuing to build momentum in international markets through its decision to increase energy efficiency in its Waghausal, Germany restaurant. Not only is this a strategic move with regards to cost reduction, Burger King will be able to strengthen its appeal as a socially-conscious corporation. Burger King plans to use technologies such as LED lights, wind turbines, and ventilation systems, and the use of such will decrease the restaurant’s energy consumption by 73%. The implementation of such ecologically-friendly features has large financial benefits for Burger King in terms of fixed production costs: the use of a Duke Flexible Batch Broiler in the kitchen is expected to reduce gas costs by 52% and electricity costs by 90%. This cost reduction will result in an increased contribution margin and decreased break-even point, and this is significantly profitable for the corporation in the long-run (once the initial costs of implementation have been recovered). Burger King is simultaneously enhancing its appeal as a socially-responsible firm: its efforts to undergo energy-efficient operations convey a positive externality on society. Burger King stakeholders are not the only ones to benefit from the business – the corporation is practicing corporate social responsibility and benefitting the surrounding community through a more resource-conscious establishment.

http://investor.bk.com/phoenix.zhtml?c=87140&p=irol-newsArticle&ID=1437859&highlight= -Article

http://www.everlight.com/upload/sup_file/pressrelease/BurgerKing_Germany_082710/Everlight_BurgerKing_Interi.jpg -Picture

It is well known amidst the finance world that an accessible way for investors to jump into the financial market is through the purchase of bonds, whether they be issued from a corporation or from a government. From the perspective of an investor lacking the appropriate experience, government-issued bonds would be an ideal choice as they are comparatively risk-free. For a potential North American investor it is interesting to compare the interest rates, terms of maturity, and liquidity of the Canada Premium Savings Bond, or CP Series 75, with the American EE/E bond. The CP Series 75 bond has a ten-year term of maturity, while the American E/EE bond matures after twenty years but continues earning interest until thirty years after purchase. The interest rate of such a bond, as of May 2010, is 1.40%. This is a fixed interest rate and the amount is dependent on the date when the bond was issued. In comparison, the interest rate on the CP Series bond as of April 1, 2010 is 1%. Both bonds can be redeemed after one year. However, the CP Series bond can only be redeemed on the day of or 30 days after the yearly anniversary of its purchase. The EE/E bond can be redeemed at any point following one year. The American E/EE bond is more liquid, has a higher interest rate, and a longer maturity date. However, the length of this maturity date, in combination with the current instability of the U.S. financial market, could pose a risk to investors who don’t wish to be tied-down for so long. On the flip side, the Canadian bond is equally liquid in terms of length of required holding, but restrictive in that it can only be redeemed within a specific period of the year. What is an investor to choose?

http://www.treasurydirect.gov/indiv/research/indepth/ebonds/res_e_bonds_eeratesandterms.htm#may2005 – U.S. Bond Info

http://csb.gc.ca/5170/canada-savings-bonds-rates-announced-april-2010-draft/ – Canada Bond Info

The great debate facing technologically-savvy users of the 21st century: Mac vs. PC. It is evident by one glimpse inside the Irving K. Barber Learning Centre that the Apple Corporation has found tremendous success with sales of MacBook laptops. With the strength of the Mac brand, Apple has boosted its profits by highlighting several points of difference between the lightweight, versatile MacBook and its PC competitors. I would like to draw your attention to a commercial entitled “MAC vs. PC: Box.” Apple demonstrates impeccable marketing finesse by illustrating both a metaphorical point of parity and a point of difference between Mac and PC computers. The two men are both sitting inside a cardboard box, symbolic of a computer. The boxes are alike in that they both possess the same generic function (a point of parity). However, the Mac man is able to leap out of his box to accomplish tasks without hesitation, while the PC man is burdened with preparations that diminish any user-friendly appeal. A point of difference can be seen with the colors of the cardboard boxes. The PC box is a bland brown and is a more traditional cardboard construction. The white of the Mac box is sleeker and suggests a more modern device. This can even be seen through the differing appearances of the two men: the PC man is older, stiffer, and wears glasses while the Mac man is a young, energetic, and dressed casually. Through the subtle metaphorical points of parity and differences of this ad, Apple is able to establish itself as the better of the two in the minds of the consumer and this is crucial with regards to brand positioning.

We live in a society striving for sustainability : individuals and organizations are constantly developing innovative products to protect the environment from further harm. However, the environmentally-friendly movement comes at a cost to businesses, who must adapt their marketing strategies to persuade the most ecological of consumers to buy their products. Known as eco-labelling, companies entice customers to a product by extolling its environmental benefits. However, as a Globe and Mail article points out, businesses have crossed the line by exaggerating the ecological merits of a product and consequently misleading consumers. The Competition Bureau has developed eco-labelling guidelines: for instance, companies must avoid vague assertions in the label, not declare a product to be substance-free if the substance is not considered in production, and not loosely use the term “sustainable”. With respect to consumer choice, environmentalism is beginning to shape the products that customers buy. Businesses are only trying to cater to the market when employing these advertising techniques, false they may be. Is that so wrong? Yes. Companies are distorting the environmental truth of a product to consumers in the hopes of reaping the benefits. Then the question is: how can businesses ethically compete for customers in this green era?

http://www.theglobeandmail.com/life/article44533.ece -Article in The Globe and Mail

http://www.inhabitat.com/wp-content/uploads/iiglabels-lead.jpg-Picture