Author Archives: jayv

The Importance of the Arc in the Intergovernmental World of the United Nations

With 2015 just around the corner, where have we reached exactly in accomplishing the eight ambitious Millennium Development Goals? Undoubtedly, progress has been made. The efforts of the United Nations are anything but futile. Then, is there a need for organizations like the Arc and social enterprise? Unquestionably.

The United Nation’s foreign aid program, along with its urging of countries to donate at least 0.7% of their GNIs, is effective in times of catastrophes such as natural disasters. Unfortunately, in terms of self-sustainability, this aid actually hinders the long-term prosperity of poor nations. This is explained through examples set in Rwanda and Kenya in the short video below:

This is where the Arc and social enterprise come in..

Image Source: www.mbanogmat.com

While the United Nations gives a man a fish, feeds him for a day but consequently, harms the local sunrise fishing industries, organizations such as the Arc revolutionize the local fishing industry by culminating the spirit of entrepreneurship. The Arc doesn’t directly help these individuals. It teaches them the tools to help themselves and thus, fosters self-sustainability. The Arc is different from charity. It operates on the principles of social entrepreneurship. Hence, in my opinion, it solves a different purpose than the United Nations. While the UN is more capable of handling short-run issues, social enterprise focuses on the long-run development of impoverished nations and individuals. These two spheres do not compete. They are ancillary, in nature.

RE: “Recession and Expansion..” by Elaine Au: What Must BlackBerry Do?

Elaine successfully analyzes in her blog that BlackBerry is in a trough, that is, it’s sales have been continuously declining. Her blog post immediately drew my attention as over the summer, I investigated the reason for the BlackBerry’s decline in my home country, India. Along with that, I found out the reaction of customers in India, in specific, my home city, Jaipur. Using the tools learnt in COMM 101 and on the internet, I have come up with the following analysis:

Capture

 

Capture

It is evident from the Porter’s Five Forces analysis that the smartphone market it extremely competitive. In this market, customers perceive BlackBerry’s as cowboy products, that is, they are overpriced. The reason for this is, in my opinion, the company’s past complacent attitude as they have been left in the dust by more innovative companies such as Samsung and Apple. Thus, it is recommended that:

  • the company prices its smartphones more competitively in the short run to attract customers;
  • the company should focus on the mid-range smartphones and pivot its value propositions and marketing techniques accordingly: the premium market is saturated by the iPhone, Galaxy S5, HTC One, etc., while the low income market may brand BlackBerrys as inferior smartphones;
  • the company must invest in Research and Development to avoid complacency in the future.

Using these recommendations, BlackBerry can find its own unique position on the market ladder, and hence, regain its lost market share.

Airbnb: Employee Work-space and Motivation

Airbnb HQ

Source: Airbnb (https://www.airbnb.ca/jobs)

While rummaging through news articles on the top start-ups of 2013/14, I stumbled upon Airbnb, a $13 billion company that connects travelers with people looking to rent out lodging. However, even more so than the business idea, I was fascinated by the work-space maintained by the company – “you find wide open space, carts of homemade gluten free healthy desserts being pushed around, a few dogs sitting by their owners, and rows of employees sitting side by side working together”, as described in the article and audio interview here.

Source: Airbnb (https://www.airbnb.ca/jobs)

Source: Airbnb (https://www.airbnb.ca/jobs)

This idea, which some say is inspired by Google, is radical and disruptive of the traditional “professional” work-space. Why does it work? Well, disruptive innovation is as important within the organization as it is for developing products/services that attract customers. By disrupting the work-space and changing it from a rigid to a flexible and liberating environment, Airbnb has learned the art of motivating its employees and in turn, elevating them towards productivity and innovation. By fostering employee engagement, Airbnb unlocks the intrapreneurial spirit in its human capital. The question one may ask is, “Is this worth spending millions of dollars on?” Most definitely, yes.

Why is employee motivation and happiness so important? Well, employees are the heart and soul of a company. Employees affect and, even to an extent, control the quality of production, customer service, innovation and the many other facets affecting business success. Establishing such a liberal working environment leads to decentralization, and hence, gives rise to a more productive workforce in both the short and the long run. As they say, a brilliant business idea is worthless without a motivated and productive workforce to implement it..

https://www.youtube.com/watch?v=nE6mDCdYuwY

 

The Importance of NPV: From Multi-billion Projects to Everyday Life

Jaguar Land Rover

Property of Tata Motors

Since the acquisition of Jaguar Land Rover in 2008, Tata Motors has finally begun to invest the company’s fortunes, and it is doing so with a bang! The company has capital investments plans of setting up multiple factories in China, Brazil, and the United States. Please find the article here. These investment projects will amount upwards of a billion pounds, and thus, has extremely high financial risks involved. Why is Tata Motors so optimistic with this investment then? Well, simply because Tata understands the Net Present Value (NPV) [and of course, many more qualitative and quantitative factors] of the revenue generated from its investments..

Net Present Value

Net Present Value Property of TutorsOnNet (http://www.tutorsonnet.com/)

The setting up of these factories will allow the company to benefit from various advantages such as a direct entry into lucrative markets while avoiding import tariffs and currency fluctuations. Overall, these factors will greatly enhance the company’s ability to generate profits in the long run. These profits, when adjusted to the present value by accounting for inflation and/or interest rates, must obviously justify the massive capital investment. If the NPV figure wasn’t positive or healthy, it would be unwise to invest in these offshore mega-factories.

The concept of NPV has greatly broadened by ability to understand capital investment, whether on such massive business scales or in my everyday life. Now, I am compelled to think about the present value of any future earnings before making any financial decisions. In a way, it has enhanced my risk assessment skills, and have given my analytic skills greater depth.

Privatization: A panacea for Britain’s economic and corporate ills?

The British government plans to use the proceeds from the sale of the Eurostar stake and other assets to reduce public debt. Credit Christian Hartmann/Reuters

To reduce the country’s crippling public debt, Britain plans to sell government-owned assets worth $32 billion by 2020. This includes the proposed sale of the government’s 40% stake in Eurostar International, the high speed train service operating in Europe. However, this strategy has received harsh criticism from Railroad Unions, and spokespersons for the government’s incompetence to assess the assets’ true values. Please find more details on this article here.

In my opinion, however, privatization will have longer lasting positive impacts other than just the reduction of fiscal debt. For one, increased pressure from private shareholders and the private incentive to maximize profits will cohesively lead to greater efficiency in these corporations/industries. This long term advantage, for instance, can help reduce the costs of production of the Eurostar, eventually allowing the service to be provided at a more competitive and economical price. This can negate the disadvantage that accompanies most privatized public goods, that is, disregard of public interest. Another advantage is that the short term-ism of governments can be avoided which results from governments focusing on short term welfare to boost their standings in upcoming elections.

But, given the nature of the rail industry, the government should maintain the necessary regulations to keep check on the private monopoly formed by the sale. This legal factor from the PEST analysis will ensure that the private monopoly doesn’t exploit the Brits. Hence, the sanctity of the public good can be fostered, while increasing the one-time revenue of the nation.

The debate of privatization is always a heated one, especially when it concerns public goods/services. But, given the inefficiencies of command economies, it is only viable that “the invisible hand of the free market” is allowed to sparkle magic, albeit with slight supervision from the government.

RE: ”3 Terrible Strategies for Companies Seeking Growth” by Umair Haque: The Road to Success

Businesses: Don’t you fret!

According to Mr. Umair Haque, as discussed in his (external) blog post in the HBR, the only way businesses can prosper in today’s not-quite recovered economy is by strategy. Haque states that strategy is “about building an institution that can compete.” According to him, “Competitiveness isn’t merely short-term profitability. It is about all the things that underlie lasting, healthy prosperity.” Well, which competitive advantage is Haque talking about? Sustainable competitive advantage or transient competitive advantage? Here lies the knowledge deficit.. The esteemed author leaves this conclusion to be drawn by the readers and/or businesses themselves, albeit with three suggestions of what should NOT be done.

In my opinion, given the ever-changing nature of the business cycle, isn’t it only logical to keep one’s advantages “transient”? Please read Rita Gunther McGrath’s article (HBR, June 2013) on Transient Advantage for more information.

The Business Cycle

Customer perceptions and industries change greatly as an economy progresses from a boom, reaches a peak, slows down into a recession, crumbles into a trough, and so the cycle continues. If businesses focus on fixed industries rather than targeting ever-evolving arenas, they will fail to “get the job done” for their customers. Tools such as the Value Proposition Canvas can be extremely effective in evaluating the needs of customers, and should be used not on ad-hoc but continuously. The consequent customer satisfaction can not only help develop strong relationships (another aspect of Transient Advantage), but also lead to both short and long run prosperity. This will satisfy many other stakeholders including shareholders and other investors, the economy, etc.

Thus, I argue that the most effective way to overcome the problems discussed by Haque is by avoiding the development of a “much too” comfortable strategy that will only lead to complacency in the long run. I agree with some of the concepts of sustainable competitive advantage. However, given today’s high velocity industries, transient advantage seems to be the true road to success.

 

Bibliography

Haque, Umair. “3 Terrible Strategies for Companies Seeking Growth.”Harvard Business Review. N.p., n.d. Web. 11 Oct. 2014. <http://blogs.hbr.org/2014/10/3-terrible-strategies-for-companies-seeking-growth/>.

 

Enbridge vs First Nations: Can money buy you everything?

The Yinka Dene Alliance has warned Enbridge not to trespass on the traditional territories of its six First Nations. The Yinka Dene Alliance is opposed to Enbridge’s $7.9-billion Northern Gateway oil pipeline. Photograph by: GORDON HOEKSTRA

Enbridge’s $7.9 billion Northern Gateway oil pipeline project has been greatly hindered by the external social factor of the First Nations. As mentioned in an article by The Vancouver Sun, the President of the project states that the predicted start up year of 2018 for the pipe line seems to be an achievable target given the protests by the Yinka Dene Alliance. While 26 of the 40 First Nations have given permission for their land to be used in return for an equity in the project, the Yinka Dene Alliance seems adamant on its decision. For it, the district holds tremendous physical (a source of myriad types of fish, etc.) and spiritual value.

Enbridge must understand the social aspects of this conflict. In its attempt to use money as a motivator, the company has failed to recognize the perception of these First Nations. If it’s to successfully convince the Yinka Dene Alliance, Enbridge must familiarize itself with the cultural implications of the project for the alliance. Having done so, the project can be shaped in a way that reduces the negative social aspects of the development on these First Nations. These efforts can then be carefully publicized using suitable PR campaigns. Enbridge, however, must be very subtle with these campaigns so as to avoid them seeming like mere showcases of superficial empathy. Also, by implementing a Total Quality Management (TQM) system in its project, along with appointing external safety auditors, Enbridge can remove any inhibitions regarding the environmental concerns of the project. This can help the company gain the confidence of the opposing First Nations.

I feel that the above solutions are a more effective long run approach than offering equity to First Nations. These communities give social aspects more importance than monetary endeavors, and by completing its Corporate Social Responsibility, Enbridge can “bridge” the gap between the proposal and actual materialization of its Northern Gateway project.

Bibliography

“Northern Gateway Pipeline through BC Unlikely to Start up by 2018.” The Vancouver Sun. N.p., n.d. Web. <http://www.vancouversun.com/news/metro/Northern+Gateway+pipeline+through+unlikely+start+2018+project/10174245/story.html>.

“There Will Be No Pipeline.” The Vancouver Sun. N.p., n.d. Web. 05 Oct. 2014. <http://www.vancouversun.com/news/There%2Bwill%2Bpipeline/10122968/story.html>.

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..