Ching Him (Ivan) Kwok's Blog

As I stumbled across Rhiannon Wademan’s Blog, it echos the idea of corporate ethics as mentioned in my previous post.

First, it is recognised that Wall-Mart is in attempt to take action in its Corporate Social Responsibility by investing in green energy, solar panels in this case and also supporting green product, also known as organic product, which reduce the chemical harm or chemical deployed to the soil and air. These actions creates shared value. And as such, it should be able to improve its image and coporate reputation.

The fact that it has increased in carbon emission is alarming, which as far as I concern, the logistics of their goods from supplier to ware-house, ware-house to different stores, may have created those cumlative carbon emission. There are measures that can be applied to its supply chain in order to reduce carbon emission such as increasing inventory by transporting more, using bigger trucks for one delivery instead of having multiple deliveries by small vehicles. Or invest in a whole new fleet of trucks that gives less emissions. They may also consider getting local suppliers instead of crossing over the boarder. However, this will hugely impact one of the POD which is providing a variety of choices from different places.

Source:
http://www.news.com.au/travel/travel-updates/plane-crashes-off-coast-of-bali/story-fnizu68q-1226619817622

An air crash would certainly create PR pressure, harming a company’s reputation and costs financial lost too. However what it was interesting was near the end of the article. This low cost carrier signed a contract for 234 new Airbus, creating a historical record of aircraft sold in one order in Airbus history. A low cost carrier usually have a focus strategy in low cost, usually by providing lower service onboard, maximising number of seats on a flight.

It is rather unusual how a low cost carrier would have such liquidity (oxygen) to make such an order, where business ethics comes into a play. Did the airline cut-corner in maintence? Or did they cut the training cost? or promoting in-experience 2nd officers as captain? Another low cost carrier in Indonesia was forced to cease operation by government due to its poor quality of pilot training and maintence discovered as a result of this aircrash investigation.
It is reasonable to suspect that due to the low oxygen, current ratio, that the airline may have taken short-cuts to reduce their cost while maximising their revenue.

However, the government is also to blame for not enforcing the regulation strictly.

Source: http://ca.finance.yahoo.com/blogs/pay-day-/more-canadians-turn-online-holiday-shopping-165129938.html

In the past, people might spend a lot of time at a shopping mall comparing prices and different products, looking for the best gift for christmas. However, a recent survey stated that most people are shifting their shopping from physical to virtual – Online shopping. What does this means to the firm?

According to the business Canvas, it means that there is a shift in the channel reaching customers. From indirect to possibly direct sales. Customer Relationships also is closely related to Channel, if customers wish to be reached by internet, then they’d expect that they may recieve immidiate personal assistance before, during and after the process of purchasing.

This reminds me of the IT aspect. When the internet became major channel reaching customer, they will need have a good platform. The whole process cannot rely solely on IT department. Management team, marketing team, Customer relation team… they all have to communicate with IT department in relation to what data they need, how to read the data, creating contingency plan if system went wrong. The communication is essential and frequent to make sure the end product is functions as both the customer and firms wanted to be.

There creation of business is simply because there are wants or needs that consumers that are not fulfilled, that is, the productions are there to fill in the gap, attempt to create most value proposition that fits the need of the customers. When I was browsing through the blogs, I’ve found Victoria Yang’s Blog regarding lean-start up.

When we create value proposition, we attempt to fulfill the customer’s need as much as possible to add most value to the product

As Victoria had stated that “there will be major unknowns that the  company will have to learn about and then adapt to”. Indeed, customers mind are un-readable and not predictable, that is simply human kind. Thats why there is the existance of marketing in attempt to position the product into the customer’s mind. As such, it is impossible to have a clear idea if it fits the need of customer from the start. Indeed, a traditional 5 year plan would rarely succeed from the start, where as the lean start up, which uses the minimum cost to create prototypes, having constant feed back from customers, in order to generate a product that fulfill the customer’s need (value propostion), then hence, profitability.

As I stumbled across Anglea Lee’s Blog, how the social enterprise beings me back to the lesson we had about the CSR, which carries CSV out. The firm that was mentioned in her blog “Social Sister” have form the main goal of investing in women entrepreneurship while making some profit to a degree where it may continue to pursue CSV.

They have distinguished themselves from charity to for-profit organisation. A charity is where they have no intention for profit, whereby they may recieve public donation. As for Solar Sister in this case, they are for-profit, however its just that they do use the profit in re-investing for shared value, acting out Corporate’s Social responsibility.

Reconcieving Products and Markets
They have recongnise the need of equality in society, and they have aim at the segment of women entrepurenership, Equality plays a big part in an economy. If women were not recognised in work, its simply a waste of human resource – the skills and knbowledge they posses. Furthermore, they do promote enviornmental impact, which is the greatest unmet needs in the global economy.

During the govenrment shutdown, the market didn’t seem to be affected.

The impact of US government 2013 appeared not to affect too much of most citizen’s daily life. As For leaders in all industries, it creates an uncertainty and uncertianty is the last thing one wants when making decisions. Uncertainty usually will diminish the firm’s willingness to continue to expand their business or hire more people as they’re not sure if they’d have their expected return. In addition, as a lot of federal employees will recieve an un-paid leave, the willingness to spend for those people will decrease, and hence less sales for the companie, which might cause a chain effect of recession. However, on the contray, during the 3 weeks time, they have continued to hire more people and expand their business as stated in the article. This may be due to a steady demand from overseas, as the article also stated Manufacturing industry alone increased by a healthy 19,000 over the 3 weeks. As what Phebe Kwok have mentioned in her blog, that depreciating many external values may lead to world-wide recession, which occured in history, therefore, it may be in turn for the international community and firms to act themselves to prevent such happening, which reduced the impact of the government’s shutdown.

Source:http://www.theguardian.com/business/2013/nov/08/upbeat-us-jobs-data-december-tapering-federal-reserve

Source: http://finance.yahoo.com/news/u-n-aviation-body-reaches-190028348.html;_ylt=A2KJNTvua1NSbHYAFSbwFAx.

Plane forming smoke patterns from engines.

As global warming become increasingly concerned world-wide, a lot of industries tried to play their “social responsibility” which is known not existance, unless it was an individual act; the only social responsibility of business is to earn profits while following the law and basic ethical customs, else the Executive would go aginst the shareholders will.
Therefore, in order to ensure the social responsibility is achieved, regulations are required in order to force the businesses ot minimise their negative externalities.

By enforcing such regulations Like Emission Trading System (ETS) will add variable costs to the company, as it penalise every single flights performed. This is an act of imposing tax.
Imposing tax, which was suppose to target businesses to become more efficient, its ultimate burden is at the expense of employee and customer. Either they will cut cost by reducing the employees or dismissing employees as profit margin has narrowed, or at the customer will bare partial if not most of the cost through the form of Surcharge in this case.

As Clarisa’s blog (https://blogs.ubc.ca/clarisamadilao/2013/09/26/corporate-ethics-are-outrageous-ex-ceo-payouts-justified/) commented, in such a complicated world, ethics may only be practised voluntarily, or by law.

When a national flag career, Japan Airlines collapse, where the value of the firm is just “$150m – less than the price of a new jumbo jet.”. What could have went so wrong?

“JAL will have to replace some of the older, less fuel-efficient planes in its fleet and reduce the number of routes it flies.” -The error can be caused by lack of communication / Co-ordination with-in JAL.
There are a total of 6 airlines running under JAL,

which we can consider this as dis-economy of scale when it makes a lose. This error may be caused by marketing / Business Development, since they are responsible for opening different routes or simply acquiring the subsidaries.
However, their decision most probably based on statistical data from the Accounting department. There are a few limitations that apply to Accounting,
– considerable amount of judgement and estimation used
-> They may have over estimated their revenue and under-estimated their cost.
– based on historical cost principle
-> The most significant cost in an airline is the fuel cost, it accounts around 27% of the cost, they may have fail to estimate the rising fuel cost.
Or even Operation, as they may fail to use the right aiccraft type for different routes.

Source: http://news.bbc.co.uk/2/hi/8466997.stm

Source:
http://www.bloomberg.com/news/2013-09-10/credit-suisse-is-sued-over-mortgage-securities-losses.html

Phoenix Light SF Ltd. sued Credit Suisse over alleged misrepresentations in the offering of $362 million worth of mortgage-backed securities.
– Credit Suisse is an investment bank which helps other institution or high profile indivduals to make investments. its usually large transaction amount, such as this case of 362 Million. They built their reputation by helping their customer to make profit, while they gian commision each successful transaction. (Regardless if customer make profit or not in the end.)
– Just before the economic crisis, to make breaking record of sales, and simply running out of “investment” opportunities, multiple investment firms has started to publish some lower quality (high risk) investment in a disguise. This comes to an issue about business ethic. Eventhough it was mentioned that there wasn’t really anything known as “business ethics” earlier in this course, however, this move may affects the company’s point of parity – its credibility. The best marketing strategy is simply “the brand is what you tell your friends afterwards”, In this case , it will lose its customer base in longterm, at least, they will lose Phoneix Light as one. (following case shows good business ethics secures customer base:
https://blogs.ubc.ca/caitlinlim/2013/09/12/business-ethics/)

See also for similar case:

The Dark Truth Behind Nike’s Colourful Converse

Link: http://en.ce.cn/National/Local/201309/03/t20130903_1322288.shtml

– “the parent company had assigned annual growth goals as high as 25 percent in recent years, 7 to 8 percentage points more than the average growth rate of the industry.”
– If the parent company was able to make such an assigned goal, then they must have an advantage that the other firms within the industry doesn’t. Apprenently, it was by bribing the doctors to issue their own drugs.
– It is quite obvious that it’s an illegal move in order to compete with-in the industry.
1) It violated tax laws, since the money used to bribe wasn’t being taxed.
2) Doctor’s “income” tax wasn’t taxed either.
3) There are general laws that prohibits this kind of behaviour as government encourage a fair competition environment in order to encourage entreprenuers to start a new business. The ultimate goal is to have more firms entering the market, not only that govennment may earn more tax income, but also for the benefit of the consumers as more firms mean high competition, hence lower price.

– They enforced a salary scheme that forces salesman to reach an assignered amount of sales in-order to recieve their negotiated salary, if under-target, they’d recieved a penalty on their salary.
– The threat acted as an “motive” for people to break the law.