As the news around big liquidation sale of Sears has surged on various websites, a potentially unethical business behavior is unveiled: customers found original priced tags have been replaced with a sticker stating higher price. From the picture below shows the ripped new price tag and the original price at $2 lower.

Price Tags(Biggin. V, 2017)

Through the economic lens, it can be easily explained that Sears adjusts their price due to the increase in demand. However, since the demand is created by the incentive of discounts, in other words, the promised reduction in price, re-adjusting the price of items becomes an arguably unethical action for consumer perception since the real benefit to consumers are now lesser than expected from the promotion. Therefore, some consumers see such action as a betray in trust from the retailer.

After this behavior is revealed and disclosed through media, the demand of the items will likely to decrease significantly due to the decrease in incentives from the promotion. Although other retailers may overcome the negative public image they receive from such news articles, Sears may end-up with a permanent wound, because the nature of a liquidation sale. Once customers of Sears discover such behavior and demand for sales items decline dramatically, a recover in demand usually takes longer period of time or needs higher incentive to purchase the items, giving Sears to possible paths: extend the sale period longer or increase sales percentage to reduce price furthermore. By extending the sale period longer, Sears will automatically increase the operation costs due to the requirement of labor and utilities, which results in reduced profit. Moreover, there is no guarantee that the demand of customers will last and recover after the ramp-up time. On the other hand, if Sears chooses to lower the sale percentage, although the incentives is likely to increase demand back up again, consumers may question that similar incident will occur again: even the sales is announced at higher percentage reduction, the original price may have been altered again. In short, either option will leave Sears a reduction in revenue comparing to the current promotion model.

In conclusion, the business act of Sears leaves its customers a gap of trust, which does not only costs Sears to sacrifice additional profit from the liquidation sale. Thus, despite whether the action is economically natural, it is for the consumers’ perception and decision on the boundary of business ethics, that ultimately affects the reputation and profitability of the firm in the end.

Word Count: 439

Biggin, V. (2017, October 29). [Price Tags]. Retrieved October 29, 2017, from http://www.cbc.ca/news/business/sears-canada-liquidation-sale-higher-prices-1.4373270

Harris, S. (2017, October 29). ‘Duped’: Sears shoppers allege retailer inflated prices for liquidation sales. Retrieved October 29, 2017, from http://www.cbc.ca/news/business/sears-canada-liquidation-sale-higher-prices-1.4373270

 Nasdaq, n.d.

Nasdaq, so called National Association of Securities Dealers Automated Quotations, announced a collaboration with SEB group which seeks applications of blockchain technology on mutual fund market (Aitken, R., September 2017). The project undergoes with a goal to use blockchain to establish a more reliable and efficient exchange system.

As the world’s first electronic stock-exchange, Nasdaq is also the first exchange that enabled customers to trade cryptocurrency. More recently, Nasdaq opened Ethereum for European investors. These steps allows Nasdaq to pronounce its value proposition within action:”Develop efficient and reliable technologies that orchestrate and facilitate capital markets activity”(Nasdaq, n.d.). Furthermore, with the collaboration with SEB, it is clear that Nasdaq embraces futuristic blockchain technology as tech-giants including Alibaba and Microsoft, rather than rejecting like JP Morgan.

 Ransbotham, S., April 2016

This business strategy of Nasdaq has differentiated itself from other exchanges, which positions Nasdaq as one of the pioneers in adapting blockchain in real application. Since mutual fund contains various sophisticated procedures and complex ledgers, the characteristics of blockchain allows both investors and mutual fund managers to track and proceed transaction in a simpler manner with higher precision. Thus, once the project successes, Nasdaq is able to expand it’s market share greatly with the continuously growing popularity of blockchain.

Risks and challenges are considerable heavy for this “joint project”(Aitken, R., September 2017), of course, just like Ethereum is facing an upcoming hard fork with a discovery of a “consensus bug” (O’Leary, R. R., Octobor 2017). Similar fork is also occurring for Bitcoin in November, which demonstrates a critical weakness of adopting blockchain applications, that once a technical mistake is observed, the renewal of system often requires complete updating software: resulting as a hard fork. Therefore, the real reliability and effectiveness of this collaboration still lays in question since the rick and financial cost of development may outweigh the product, until a more thorough solution can be discovered for blockchain’s software update.

After-all, Nasdaq conveys its value to investors and customers deliberately through such business decision, which allows results as a beneficial marketing outcome. Hence, to conclude, Nasdaq successfully represents its point of differentiation that reveals its value proposition through business activities, which many companies still lack.

Word Count: 422

Reference

Aitken, R. (2017, September 27). NASDAQ Collaborates In SEB’s Blockchain Investment For Mutual Funds Market. Retrieved October 14, 2017, from https://www.forbes.com/sites/rogeraitken/2017/09/27/nasdaq-collaborates-in-sebs-blockchain-investment-for-mutual-funds-market/#4ef418c3696b

Ransbotham, S. (2016, April 26). [As a technology enabling greater data transparency, the opportunities blockchain offers are immense.]. Retrieved October 14, 2017, from http://sloanreview.mit.edu/article/blockchain-data-storage-may-soon-change-your-business-model/

Nasdaq. (n.d.). [L1_Pillar_headline]. Retrieved October 15, 2017, from http://business.nasdaq.com/list

Nasdaq. (n.d.). Nasdaq’s Story. Retrieved October 14, 2017, from http://business.nasdaq.com/discover/nasdaq-story/powerful-model

O’Leary, R. R. (2017, October 14). Ethereum Developers Find Geth Bug as Hard Fork Nears. Retrieved October 15, 2017, from https://www.coindesk.com/ethereums-geth-client-finds-vulnerability-less-two-days-before-fork/