Monthly Archives: September 2014

Cadillac, Cadillac, pop that trunk!

Cadillac Elmiraj White

As the 21st Century marches on, it is sad to see the former epitome of luxury, the Cadillac, left in the draft of other luxury cars such as the BMW, the Mercedes, and the Bentley. Well, with the signing of Mr. Johan de Nysschen (former Head of Nissan’s luxury car division), Cadillac endeavors to regain its lost glory.

How? First, by moving its headquarters to NYC. Second, by doubling Cadillac’s product portfolio. In my opinion, expansion of the product range is an effective measure to recapture part of the luxury cars market. Cadillac plans on releasing models into numerous customer segments:

  1. Mid income – Entry Level Luxury Car (competitor to cars such as the Mercedes CLA)
  2. Mid – High income – Cadillac CT6 (competitor to cars such as the Mercedes S Class)
  3. High Income – Ultra-luxurious Car (competitor to the Bentley)
  4. Sport Enthusiasts Males – Coupes and Convertibles

By targeting several markets, Cadillac aims to revise its growth strategy from Focus Differentiation to Differentiation in a mass market. If successfully implemented, Cadillac can regain its long terms market share and profits. However, to ensure that this strategy doesn’t lead to the dilution of its brand, a combination of short and long run PR campaigns should be used, focusing on the company’s USP, that is, the luxury and quality of its cars.

Also, I believe that the move to relocate the headquarters is too strategic in nature and can distract the management from the more pressing matter of the expansion of Cadillac’s product portfolio. Furthermore, it can increase chances of insolvency as working capital will be used in the relocation, especially, given NYC’s commercial value. Instead of tying up its working capital to this, it is advised that Cadillac reserve these assets for financing the marketing, production and operations management (including Total Quality Management) of its new models. This will strengthen the short run release of the new cars, thereby allowing them to penetrate the luxury cars industry more effectively in the longer term.

Hopefully, by keeping to these suggestions, Cadillac will be able to please more than just the rappers of 21st Century..

 

Bibliography

“Cadillac: A New Standard?” The Economist. The Economist Newspaper, 27 Sept. 2014. Web. 27 Sept. 2014. <http://www.economist.com/news/business-and-finance/21620512-general-motors-hoping-boost-its-profits-expanding-cadillac-luxury-vehicles-new>.

 

 

RE: ‘”Riot to Success” by Mike Chen.’ Is the sky really the limit?

First, I would like to congratulate Mike for keeping his blog super interesting (in my opinion!). I would like to bring in a new perspective on Mike’s blog post on the success of League of Legends. I agree completely with Mike on his view – “By having a genuinely fantastic product and unparalleled customer service, Riot Games is able to run a free-to-play game while making incredible profit.” However, my concern is, can Riot Games maintain this success in the long run?

The MMO (Massively Multiplayer Online) games community has seen the rise and fall of many such games including RuneScape and Maple Story. If any of you keep up with these games (I highly doubt many of you still do, hence, my point!), you’ll see that Jagex (developers of RuneScape) and Nexon (Maple Story) continuously release updates with the aim to reignite the interest in their respective MMOs. As for maintaining their free-to-play status, Maple Story is pretty much as free-to-play as it gets. This makes me wonder, is a fantastic product really the key to maintaining a long-standing fan base in this industry? Or are the product life cycles of most MMOs naturally short ? If one looks at the ongoing trend, most developers release a new MMO every couple of years (Nexon released four MMOs after Maple Story to compensate for the fall of its first game). Hence, in my opinion, Riot Games shouldn’t limit its product range to just League of Legends. This complacent attitude can lead to fall in the company’s profits, a fate experienced by Jagex until it released other games as well. In fact, Riot Games should use the success of League of Legends as a tool to market any new games it releases in the future to ensure that it has a back-up when the era of League of Legends fades away..

 

Bibliography

Jagex Games Studio. N.p., n.d. Web. 22 Sept. 2014. <http://www.jagex.com/>.

Nexon. N.p., n.d. Web. 22 Sept. 2014. <http://www.nexon.net/>.

 

Netflix – is global domination a good idea?

Netflix-Goes-Global

 

Netflix has the ambition to spread its services all across the world. To achieve this, the company is set to release in six new European countries. Please find the article here.

Netflix’s international division is running losses of $15 million this quarter, and these costs are predicted to rise to $42 million in the third quarter due to marketing and licensing costs in these new markets. Furthermore, these six new countries, especially Germany and France, are anticipated to be difficult markets for Netflix in terms of accustoming these viewers to American television and a US based service. Increasing costs and uncertainty about the success in foreign markets are characteristics of market development, a growth strategy involving selling an existing product in a new market. This can be highly risky in the short run as losses are bound to rise, causing liquidity and cash flow problems.

However, in my opinion, Netflix’s strategy is effective as it is a forward looking approach. While the disadvantages may seem overwhelming in the short run, if the company is able to survive this period, it can monumentally increase its customer base in the long run (expected to rise to 18 million subscribers in Europe). Also, in order to ease its transition into these markets, Netflix can use partnerships as suggested in the article to avoid casting an “invader” image while also gaining useful insights into the markets.

Personally, if Netflix was available in India, I would pounce on it! Soon, hopefully..

Is CSR only about Public Relations stunts?

Apple, with it’s new, flagship smartphone, the iPhone 6, set to be revealed today, is condemned by CSR Organizations such as China Labor Watch and Green America due to the company’s failure to improve working conditions in its supplier factories in China. Please find the link to the article below:

http://www.cnet.com/news/apple-chastised-for-unsafe-working-conditions-in-supplier-factory/

I agree with Mr. Milton Friedman that mere promises of improving worker conditions are tactics “approaching fraud”. However, his view of disregarding CSR completely, and working only towards maximizing profits (while keeping withing the boundaries of the law), is, in my opinion, too extreme. As Mr. Edward Freeman voiced, it’s important to consider all stakeholders, and the community and employees are no exception. In fact, disregarding CSR in Apple’s case can be disastrous for the company given the negative effect on its brand image days before the revelation of the new iPhone.  Apple should live up to its promises of maintaining worker conditions. This would have a positive impact on the company’s public image, thereby ensuring that the new iPhone is met with positive-thinking customer and critics bases. Furthermore, it can act as an extrinsic motivator for the employees. This would allow the company to increase the productivity of its suppliers in China, and hence reduce production costs. Of course, the long-term benefits of a “good-will” cannot be forgotten, especially since Apple is a premium brand. So, while Apple, doesn’t have to be purely altruistic, it shouldn’t overlook ethics completely.