From dairy to Disney: Prices are on the rise

I read this post unintentionally, but I found that it clearly explains the term of time value of money from one aspect. Time value of money means that the value of a dollar to be received in future is less than the value of a dollar on hand today, which is caused by two ways, including money received today can be invested and risks involved in lending (e.g. default risk and inflation). In this post, it explains the aspect that is related to inflation. It mentions that the prices of many different products and services increase, for example, milk, gas and tickets to Disney World. If people lend money to someone or some institutions and the interests they get is lower than the increase of inflation, they are going to lose money.

Because of this article, I better understand why some people prefer having money today than future. To me, the uncertainty of the value of a product should be less than that of currency. If they choose to have money in the future, the purchasing power is going to go down.

Time value of money can also be used to decide whether we should produce one product or not. Some people might think if the total revenue minus cost is positive, we should then produce the products. However, the true concept is that we should consider the interest rate in the market while we are doing the calculation, which is related to the reason of investment. To me considering the interest rate is similar to considering opportunity cost. In economics, should a man run his own business or work for others depending on whether the profit he can own from running his own business covers his wages. (His wages is the opportunity cost.) Similarly to that, we should also consider investment or interest rate before production.

“If the United Nations was fully funded why would we need the Arc or social enterprise?”

Before discussing this question, I want to first talk about what the Arc and social enterprise are. Arc is a Sauder Program that builds local business management and leadership capacity. Also it is a program that promotes a two-way flow of learning and sharing. Social enterprise applies commercial strategies to maximize improvements in human and environmental well-being. After knowing the definitions of the Arc and social enterprise, we can know that they are different from just funding to some places or firms. BUT why we need the Arc or social enterprise if the United Nations was fully funded? To me, the reason is:

Although enterprises have enough money, they don’t have sufficient knowledge to utilize it efficiently, which is the fact mentioned in the article “Upward Arc”. In order to run a business, owners have to know how to manage their money, their workers and their ideas. Arc can provide the opportunity to access professional knowledge.

In China, there is an old proverb: Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for a lifetime. This sentence is appropriate in this situation since funding a firm or a place can only let people there use for a short time, but teaching them how to use these money can let them make profit by themselves later.

My reply to JaeSeung’s post (2)

I am interested in JaeSeung’s post “The Rising Star: How Did Xiaomi Doubled Their Revenue?” because it talks about the famous and success brand in China in recent years. As a Chinese, I recognize the growth of this company through my real life experience. And I want to discuss it in the following paragraphs.

In JaeSeung’s post, she mentioned “within a year, its net profit nearly doubled from 1.88 billion Yuan to 3.46 billion Yuan ($566 million), not to mention its revenue was even more than doubled.” And she mainly explains the reason of its online-sale strategy. The thing I want to add to this strategy is that Xiaomi also limits the supply quantity at the very beginning of operation, so that they can control the quality of their products and attract consumers psychologically.

I would like to explain the other two reasons that mentioned in her post, including low price and marketing based on social media.

Low price:

At the very beginning, the positioning of Xiaomi products is low price. In other words, it has operational effectiveness, because it offers lower cost and superior quality at the same time. It attracts consumers who did not concern about reputation.

Marketing based on social media:

To me, this strategy is the smartest one. It creates a platform for consumers to share information and their using experience, which is also convenient for the firm to do the marketing research. Also, because of this strategy, it connects consumers and producers more closely. More importantly, Xiaomi invites consumers to take part in the designing, which increase the consumer loyalty to this brand.

The success of Xiaomi is not because of its fortunate, but because of its wise stratrgies.

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My reply to JaeSeung’s post (1)

In JaeSeung’s post “Tobacco Price Up Through the Air in South Korea”, she mentioned that Korean government will double the price of tobacco in order to decrease the consumer demand, which will influence the tobacco industries, convenient stores, etc. Her answer to the question that “is it acceptable to sacrifice the economic gain for those businesses to pass this proposal” is yes. However, I have different opinions.

The behavior of doubling the price is equivalent to setting the minimum price, which will cause excess supply. In other words, doubling the price will not only sacrifice the economic gain, but also cause the waste of resources and labor.

Increasing the price to reduce demand is possible, because according to economic theory, when price increase, the demand curve will shift to the left, and then lower the equilibrium quantity. Nevertheless, this phenomenon is theoretical, in our real life, some people are habit-formed of smoking and some of them are poor. When the price increases, these people might buy alcohol from some illegal ways, which might lead to the existence of black market. In addition, tobacco should be an inelastic product, which means that the change of demand will be less than the change of price. That is to say, this method is not efficient.

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Here are my suggestions:

  1. In the short run, the tobacco industries should print the anti-smoking ads on the packs spontaneously. For health consideration, some people might smoke less. Although, this may reduce firms’ total revenue, this behavior is also about the social responsibility of business, which might let costumers have a good impression to these firms.
  2. The government should pay more on education, especially for teenagers, and let people know the dangers of tobacco. This should be the long run solution, which can solve the problem fundamentally.

“Did Apple do enough?”

The blog I read interests me since it compares Apple and Samsung, and mentions that iphone is now catching up Samsung. This makes me feel like Samsung is now the leader in the smart phone market and Apple just follows it. Once Apple was the leader in the market, because iphone should be the symbol of revolution of mobile phone in year 2007. However, it loses its market power because Samsung uses a different system and development approach to position itself and attract customers. In order to maintain the leadership position, Apple did a lot, which is the thing I want to talk about in the following paragraphs.

First of all, I want to confirm that Apple did a good job to maintain the leadership position. As we mentioned in class, the things a firm should do including being the first to introduce the product, having a memorable name that conjures up images that help to position the product, etc. Apple tries to do most of them.

More importantly, Apple should keep the impression in the costumers’ minds. It was once the revolution of the mobile phone; to me, it should keep innovation later, which is the thing it does every year. Although new iphone this year changes to be like Samsung, the change is necessary for today’s users. Although apple-pay is not new, it is still a change for Apple. The biggest innovation is the Smartwatch that is totally different. Using a mobile phone with a watch might be a little strange, or might become a new lifestyle. I don’t know whether this Smartwatch will be the major success for Apple in the future, but I am really interested in the development trends of it.

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“Like it or not, Millennials will change the workplace”

After taking today’s class and reading this article, I remembered some related problem happened among young people in China in the recent years. I will discuss them in the following paragraphs.

A large number of young people who are in the age of 20s do not adapt to the working conditions in China. As the only child in the family, they do not want to do basic works, and work overtime. Some of them change their jobs so frequently just because they do not like the working environment. Some managers cannot understand this situation. However, this is caused because of the social environment, so both managers and young workers should change something to adapt this.

The situation that young people have different attitudes of working occurs not only in China not also in US. “A Millennial Branding study reported that 45% of Millennials will choose workplace flexibility over pay; 72% want to have a job where they can have an impact; and due to the recent recession and the high unemployment rate among young people, most need economic security.”

As the result, managers should think about whether their policies are appropriate or not. The policies for the old workers may not suitable for the new generation. For example, old workers always do what leaders ask them to do, but young workers have more ideas of their own and want to create their values. Then, firms should change their policy in order to hear from their workers and then do better. In addition, firms can change their working environment for the young generation. These changes might cost a lot, but this can motivate these people to work harder and more efficiently, which can also improve the corporate image and increase firms’ profit as well as create a positive organizational culture.

Just like the title mentioned, “like it or not, millennials will change the workplace”. This is the inevitable result in the modern society.

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After-class feedback (Class 18-Sauder Alumni)

I never thought about having my own business in the future because I am not a risk-taker. However, after today’s class, I thought it is interesting and I learnt a lot from the alumni. There are several things we have to keep in mind when we run a firm, and I want to discuss two of them in the following paragraphs.

  1. SMALL

In the initial, firms should order small quantity or produce small quantity, which will not cost much. Then, firms should put their goods in a small number of stores, so that it is easier for owners to get feedback of their new products from costumers. More importantly, firms should stay in small at the very beginning. Because there must be many problems that occur during operation, staying in small size can let the owners to deal with them more easily and minimize risks.

  1. CONSUMER NEEDS

As far as I am concerned, the answer of how could a firm success is closely related to consumer needs. Tangoo helps people to find an appropriate restaurant, and SIP provides soda with better quality. Nevertheless, it is impossible to meet everyone’s requirement. For example, Apple concentrates on creating high-tech products to attract a large group of people who need these products, but it just ignores someone who cannot afford their products. Therefore, owners should listen to costumers’ suggestion, but they should let their firms to be what they are. That is to say, let their firms to be themselves, or they might be disorganized.

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