Gregor Allan's Blog

Rolls-Royce Motor Company has a storied history of selling the most exclusive vehicles to the most wealthy patrons on the planet. Their marketing strategy is simple: for your willingness to part with incredible sums of money, we are willing to supply you with every and any possible amenity and option in your sedan of choice.

This differentiation focused strategy has kept Rolls afloat for over a century. Yet up-and-comers in the quarter of a million dollar and up segment of vehicles like Mercedes-Benz’s S65 AMG are making investors in the Spirit of Ecstasy sweat. In class, we learned that market strategy and operating systems must be constantly re-analyzed and adapted to stay ahead of the competition.

Such is not the case for Rolls-Royce. 2014 has been RR’s most successful year in it’s history. Demand for their vehicles has skyrocketed. Brands that supply exclusive services are exempt from needs to change and innovate, because it will cost them their differentiation. Rolls is case and point. A hand made vehicle that takes months to craft would strike any businessperson as remarkably inefficient. Why, they would ask, would a company like Rolls Royce not streamline their operating systems to build more cars to the same level of quality in a year? The answer is simple. Rolls-Royce is an exclusive brand, and the more cars it sells, the marginally less exclusive they become, and the weaker their unique ability to differentiate themselves diminishes. RR’s executive branch knows this. They don’t live by the common “innovate to succeed” strategy. They exemplify the storied phrase: If it ain’t broke… don’t fix it.

Source:

http://www.quickmba.com/strategy/generic.shtml

Sources:http://hbr.org/1998/03/the-power-of-virtual-integration-an-interview-with-dell-computers-michael-dell/ar/1

For profit corporations have one main goal: making more money than they spend. There are many conventional ways of doing this, namely increasing sales and increasing the profitability of the goods sold. But I have learned that innovative companies are streamlining their Operation related costs to save themselves, and indirectly the consumer, money.

The computer company Dell, for example, has refined the personal computer industry’s dominant business model. Their process of Virtual Integration strikes me as insightful and innovative. Besides the clear financial advantage of cutting out the middle man, I believe Virtual Integration stands out because of its particular ethical repercussions.

Now one might ask: “What on earth is particularly ethical about making more money?”

The answer comes in two parts: Primarily, it reduces the price consumers have to pay. This forces other corporate competitors to lower their prices to complement Dell’s in order to maintain their relative market shares, thus supporting the idea of a “perfect market” in which competitors selling a nigh identical product all compete fiercely for a buyer’s capital.

Secondly, it fosters innovation amongst suppliers. If Dell, for example, isn’t satisfied with a current supplier’s product, and has no backlog of inventory to deal with, it can simply switch suppliers. This loss of a critical partner for the supplier will drive them to innovate and trigger a faster development of technology in order to maintain profit. It keeps the industry on the bleeding edge, which is good for everyone.

In all, I believe if a company can find an innovative and generally beneficial way to increase profit while reducing costs for the consumer as well as promoting innovation in multiple sectors, its a win-win for everyone involved.

Source:(http://www.nytimes.com/2014/04/06/magazine/flash-boys-michael-lewis.html?_r=0)

For-profit corporations exist to make money for their stake and shareholders. It is the purpose for which the initial investment that started said company occurred; a glorious and exponential return of capital. Yett there are times where pursuit of profit can be all-consuming.

As detailed in the article “The Wolf Hunters of Wall Street”  from the New York Times, RBC traders discovered a deliberate delay in the information relaying computer softwares to give certain traders an edge on the market. This type of dishonesty may lead to higher profit for a certain corporation, but it is at the expense of the market as a whole. John Freeman stated in his video interview that a corporation or firm has a responsibility to not only its stake and shareholders, but to the entire system it affects, from customers, to suppliers to financiers. By this definition, the illicit and debauch trading that went on under RBC and Wall Street’s nose can only harm the market in which the cheating firm operates. Milton Freidman believed that as long as a company took care of its own interests and the consumer took care of theirs, the market would excel. This applies in reverse: if a company prevents the consumer from looking after their own interests, it will promote a crash similar to the 2008 market failure.

To conclude; profit and the bottom line have important positions in any company agenda, but honesty, integrity and strong ethical values in business are in everyone’s best interests.