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A recent article published by CBC states that young homeowners are in trouble if real estate prices decline in the near future. The problem is not that homeowners will lose money, but that their overall net-worth will decline while they are already in debt. Young homeowners tend to place their entire net-worth into their home. Their early payments of their mortgage will most likely be paying off interest and it will all result in a decreased valuation of their worth.

Young homeowners place the majority of their net-worth into their homes

Personally, I would like to own a home one day, as well as many other young people in the lower mainland. However, housing prices in Vancouver have been quite steep making such a scenario a distant reality. The Bank of Canada estimates that houses are currently overvalued between 10 to 30 percent. A crash in pricing, while beneficial to new buyers, will cause a significant number of homeowners to go underwater where their assets cannot cover their debts. According to a follow-up article, cities with higher prices such as Toronto and Canada will experience declines in net-worth dramatically worse than the national average. While this situation is a delicate one, it can be handled by young buyers making wise decisions in order to minimize debt and remain in a health place financially.

Homeowners in larger cities are expected to be hit the hardest

I was scrolling through Mustafa Puri’s blog and was intrigued by his post regarding Walmart competing in the e-commerce industry. While it is very important for companies to remain agile in order to adapt to the ever-changing preferences of customers, I do not believe Walmart will be able to compete with the online retail giant Amazon. Walmart is the world’s largest retailer of any kind and offers extremely competitive prices for an abundance of goods. However, their in-store success will not directly transfer to the online industry. While Walmart does a lot of things well, Amazon focuses solely on e-commerce, allowing the company to become experts on the subject. In addition, Amazon is an agile innovator while Walmart is built as a traditional retailer and cannot respond to shifts in the industry as well as Amazon can.

Walmart is the largest retailer of any kind in the world

In the Porter’s five forces diagram mentioned in class, the concept of barriers to entry is highlighted. While there are no regulations stating Walmart cannot enter the online industry, it is tough for them as Amazon is a well-established brand which dominates online retail. While Walmart’s loyal customer base will generate a significant amount of revenue through online sales, the company will be unable to catch up to Amazon in the online race.

Porter’s Five Forces

I agree with and support the one-to-one business model because it creates social value for society while allowing companies to become reputable.  The model puts high value on social issues, and helps the less fortunate through encouraging consumers to purchase products which will benefit others. This model is beneficial for the company as well because the well-being of the company and its community go hand-in-hand. While the risks for such a model may exist, the benefit to society certainly outweighs the costs. Many believe that the one-to-one model is favorable as long as it does not undermine certain industries. However, firms are not responsible for the success of smaller businesses targeting the same market segment.

In class, we have discussed whether or not corporations are required to be socially responsible. While I do not feel such activities are necessary, they are a good idea if a company wants to build an identity as a corporation which cares about its community. TOMS shoes have found a way to further their business by using the one-to-one business model. The owner founded the company with aspirations to help people around the globe, however, I’m sure he’s not complaining that his company is earning significant profits. The one-to-one business model benefits society as well as the corporations that decide to employ it.

TOMS gives to the community while earning profits as well

A recent report released by Canada’s Parliamentary Budget Officer states that four out of every ten young workers are overqualified for their first jobs after graduating. Students pay thousands of dollars to earn university degrees, and are unable to take advantage of the qualifications earned alongside their education. This situation has costs attached to it, as employees may experience high levels of job dissatisfaction and employee turnover may become a big problem for many companies. According to the report, business is one of the main areas in which over qualification is a major problem.

Many university students consider their education to be an investment, as it will make the path to success a much easier one. However, one may feel that the experience is a waste of time and money if it is leading to low-ranked positions that are suited for less experienced people. In class, we have discussed where we would prefer to work once we graduate. There was a large discrepancy in responses, but many of us envisioned ourselves in positions of authority. If this trend continues at the current rate, many of us will end up working in positions which will not test our abilities to the extent that we had hoped.

  Many entry-level jobs in Canada employ over qualified workers

http://www.huffingtonpost.com/lee-schneider/dont-let-your-startup-fail_b_8518574.html

In his post, blogger Lee Schneider explains the challenges that entrepreneurs face when aspiring to create a start-up that will last. Through our discussions in class, I have learned that one of the most important things a product can do is relieve the everyday pains that consumers have. If a product meets a real need in the market, it has a much higher chance of being successful versus an item that just looks cool. “Finding an audience” is crucial when attempting to establish oneself as a competitor in the market. As Schneider mentions in the article, to build a start-up can be a lot of fun, however, sustaining it is another story.

Successful products relieve the pains of their consumers

I myself was quite shocked when Professor Cubbon stated that approximately 90% of start-ups fail. I was not aware of the degree of difficulty that comes with starting one’s own company. However, this became apparent to me when Sauder alumni presented to our class. James Clift of VisualCV failed numerous times when attempting to create a new product, but it did not deter him from entrepreneurial success. Schneider’s blog post is quite useful as it allows the reader to contemplate what is of the utmost importance when attempting to create a start-up. While many start-ups do fail, the ones that succeed give us valuable insight on how to kick-start an idea.

James Clift is the co-founder of VisualCV

I was reading Marvin Bains’ blog and I found his post about FullContact to be quite interesting. The company out of Denver offers its employees a $7500 bonus for vacations, as well as salary. They have also introduced an idea of “unlimited vacations,” where employees can negotiate the length and times of their vacationing.

As someone who wants to work for a firm in the future, the idea of unlimited vacations is very appealing to me. It certainly gains the loyalty of employees, and makes them happy in the process. However, is this the optimal solution when aspiring to gain loyalty? In my opinion, this policy could cause trouble for the company and other workers. While those on vacation will feel relaxed, the employees at home will be left to struggle with the burden of the increased workload. This policy may also facilitate laziness among the workers as they would rather be on vacation all the time. In addition, workers may feel indispensable as they can go on vacation often and not be let go, as there is a shortage of labour in the US market, and they will not work as hard. While the idea of “unlimited vacation” may be great for employees, both the benefits and costs of such a policy must be weighed in order to determine whether or not it is productive for the business. While the treatment of employees is important, the stability of the business must be prioritized, and such a vacation policy may harm productivity.

 To gain loyalty, FullContact offers its employees “unlimited vacations”

WOW Air has recently unveiled a plan to fly planes from Canada to Iceland one way at $99, and to numerous destinations in Europe for $149. Launched in 2011, WOW offers discount flights with very few amenities to passengers in various destinations across the globe. The company began in Europe but is beginning to expand into the North American market, and is offering North American travellers a very affordable option to go east. Through the declining price of jet fuel as well as the use of very basic planes, WOW Air has been able to keep costs low and expand rapidly since its debut four years ago.

A typical WOW Air plane

I believe WOW’s business model meets a real need as many people wish to travel but cannot always afford it. Students and young professionals do not always have the money to afford a flight on a big-name airline. WOW offers point-to-point transportation and nothing more, minimizing fares more than anyone before them. As they continue to expand into new territory and gain market share in the industry, WOW airlines seems to have a very bright future ahead of them.

WOW Air offers affordable transportation options to those in need

Five provinces recently increased their minimum wage in an effort to resolve long-standing outcries regarding liveable incomes. Newfoundland, Ontario, Manitoba, Saskatchewan, and Alberta all boosted their minimum wage rates. Given rapid increases in costs across the country, it is believed that minimum wage will have to reach new heights in order to provide a good quality of life for the general public. Despite the increases ranging from $10.50 to $11.25 an hour, many feel that $15 an hour is the ideal rate.

What minimum wage is ideal?

While this will delight many, a higher minimum may not be the best thing for everyone. Should the wage rate become too high, companies may need to cut current jobs, and stop hiring for other positions, creating long-term unemployment in the economy. Furthermore, small businesses will not be able to hire as many employees. A trade-off needs to be made where employees receive a livable wage, and companies are still able to make profitable margins. While many are currently satisfied, higher costs in the future will lead to an ongoing battle about what the minimum wage should be. This issue is far from over.

What effect does a higher minimum wage have on employment?

Martin Shkreli, CEO of Turing Pharmaceuticals recently increased the price of a drug called Daraprim from $13.50 a pill to $750. The drug is used to treat life-threatening parasitic infections and has been a viable option to those battling AIDS and cancer for over seventy years. Referred to as the ‘most hated man in America’ by the Financial Post, Shkreli has received immense criticism for his decision, but has defended his actions thus far. However, in a recent interview with NBC news, Shkreli has agreed to lower the price of the drug, but has not specified as to what the new price will be.

A photo of Martin Shkreli

Whether Shkreli is just looking to turn a profit, or plans to use the money for research and development of other drugs, he believes what he is doing is right, and he has the right to do it. Is it Shkreli’s lack of compassion that led him to do this, or is it merely a man looking to advance his personal gain? In my opinion, Turing Pharmaceuticals has a responsibility to its customers to provide affordable and effective medication for those in need. However, Shkreli has made a decision in favour of profits, and is not going to back down any time soon.

A step in the right direction

It is human nature to take advantage of situations that are beneficial to us even at the expense of others. As companies strive to achieve the highest possible profit margin, they must find ways to cut costs. An example of this is the numerous companies that seek cheaper labour by exploiting people in third world countries. In such competitive industries, a company must decide whether maximizing profits, or owning up to their social responsibilities is more important. It is up to each firm to decide whether an optimal profit must involve the use of cheap labour or can a trade-off be made for something more ethically acceptable.

• Child Labor Free is based out of New Zealand, and is the first global foundation which upon presentation of evidence, will certify clothing as child labor free. The company’s objective is to allow consumers and brands to work together to create better outcomes for children involved in slavery.
• Nike is one of the more popular companies that was shamed for outsourcing its manufacturing to third world countries, to the point where their reputation was hurt, and sales were affected. However, the company was able to generate an enormous image turnaround by creating a Fair Labor Association, publishing a list of factories it contracts with, and creating corporate social responsibility reports.

While consumers may still purchase goods produced through cheap labor, companies should do their part in behaving ethically and coming up with new alternatives to maximize profits.