Brandy Melville

Retailers such as Abercrombie & Fitch and Brandy Meville target their marketing to a highly specific segment of customers. Although both brands are extremely successful, they have also received backlash from the perceived discrimination for their refusal to offer larger sizes. As Mike Jeffies, the CEO of Abercrombie, infamously told Salon, “We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely.”By limiting their clothes to only a certain portion of the population with their “one size fits most” policies, the brands cultivate the exclusivity and desirability of their clothes.

Jeffries created a quality brand that caters to affluent youth and has a sense of exclusivity. Yet this exclusionary subculture still has a mass appeal, because people want to be a part of it.

He told Salon, “That’s why we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t market to anyone other than that.”

In my opinion, these companies are simply responding to an increasingly niche capital market. Market fragmentation is the driving force as consumers want an experience tailor-made to their needs. Personally, I have always been smaller than average. My mother and I always had to shop in the children’s section to find clothing that would fit. Stores like Brandy Melville capitalize on this alienated demographic of smaller individuals. As specialization becomes more common; niche markets emerge as companies scramble to cater to specific audiences, and switch from a broad industry wide strategy to focusing on a narrow market segment.

Works Cited:

http://www.salon.com/2006/01/24/jeffries/

Greenwashing is the deceitful practice of falsely advertising the sustainability of a business in order to mislead consumers. With the increasing pressure from socially conscious consumers, businesses are striving to reduce their environmental impact. Due to lax enforcement of limited and vague regulations, businesses can easily intentionally manipulate consumer perception for ulterior motives or commit the sin of greenwashing through carelessness (Burbano). When businesses brand themselves as ‘green’, they improve their brand image and consumers are duped into supporting unethical environmental offenses.

The 7 Sins of Greenwashing

However, when it backfires the backlash can cause irreparable damage to the brand’s reputation and ultimately their sales (Kewalramani). For example, Volkswagen was recently exposed for their greenwashing tactics and corporate hypocrisy. Within days of the scandal, their share value plummeted an estimated $27.8-billion U.S. and there is the liability of billions more in fines for environmental damage and fraud (Lynes). The estimated number of vehicles affected and must be recalled is 11 million (Jennen).

These underhanded marketing tactics coupled with insincere claims of corporate social responsibility, creates skepticism and distrust as consumers are increasingly aware that many environmental claims may be self-serving (Hoffman). In many cases, sustainable business practices improve profitability. By scrutinizing existing methods and processes when they undergo an environmental initiative, businesses may discover creative solutions to minimize waste, increase efficiency and increase profits.

Works Cited:

Burbano, Vanessa Cuerel, and Magali A. Delmas. “The Drivers of Greenwashing.” California Management Review (2011): 64-87. Print.

Hoffman, Jane, and Michael Hoffman. “What Is Greenwashing?” Scientific American Global RSS. 1 Apr. 2009. Web. 27 Sept. 2015.

Jennen, Birgit. “Germany Said to Defend VW Car Owners on Recall, Repair Costs.” Bloomberg.com. Bloomberg. Web. 26 Sept. 2015.

Kewalramani, Devika, and Richard J. Sobelsohn. “”Greenwashing”: Deceptive Business Claims of “Eco-Friendliness”” Forbes. Forbes Magazine, 20 Mar. 2012. Web. 26 Sept. 2015.

Lynes, Jennifer. “Volkswagen Committed the Cardinal Sin of Greenwashing: Lying.” The Globe and Mail. 24 Sept. 2015. Web. 26 Sept. 2015.

Ikea is one of the world’s largest home furnishings retailer with 360 stores in 47 countries (Forbes). Surprisingly, this $11.8 billion empire is classified as a charity. Founded in Sweden in 1943 by Ingvar Kamprad, Ikea has achieved remarkable international success and faced few obstacles to its expansion (Forbes). The ingenuity of the brand’s unique retail formula extends to the company’s finances. By exploiting the obscure loopholes and quirks of different jurisdictions, Ikea is effectively able to minimize taxes and enjoy other benefits due to the complex fiscal maze of its business structure (Knaebel).

Ingka Holding, a private Dutch-registered company is Ikea’s parent company. In turn, Ingka Holding belongs to the Stichting Ingka Foundation which is a Dutch-registered, tax-exempt, non-profit legal entity founded by Kamprad in 1982 (Minute MBA). Although Kamprand is not currently the official owner of Ikea, he maintains a strict control through a five-person executive committee, chaired by Kamprad and his sons that oversee the Stichting Ingka foundation.

Stichting Ingka is the world’s wealthiest non profit but as it is not required to publish an annual report, its activities are shrouded in secrecy. According to their website, it aims “to own and govern Inter IKEA Group and to invest in Inter IKEA and thereby in the further expansion of the IKEA Concept, in order to secure the independence and the longevity of the Group and the IKEA Concept” (IKEA Foundation).

The complexity of the business’s organization and lack of transparency make it difficult for tax authorities to enforce and calculate the amount of tax that Ikea is obligated to pay. The creative accounting of Ikea brand including its foundations, multiple international holdings, and a host of subsidiaries allow it to effectively create a tax optimization financial arrangement.

References:

“Flat-pack Accounting.” The Economist. The Economist Newspaper, 13 May 2006. Web. 26 Sept. 2015. <http://www.economist.com/node/6919139>.

“IKEA Foundation.” IKEA Foundation. Web. 25 Sept. 2015. <http://www.ikeafoundation.org/>.

Knaebel, Rachel. “Money Flowing through Tax Havens and Shady Foundations, Thanks to IKEA.” Multinationals Observatory. Web. 28 Sept. 2015. <http://multinationales.org/Money-flowing-through-tax-havens>.

“Stichting INGKA Foundation – Funds for NGOs.” Funds for NGOs. 22 Sept. 2013. Web. 26 Sept. 2015. <http://www.fundsforngos.org/foundation-funds-for-ngos/stichting-ingka-foundation/>.

“The World’s Most Valuable Brands: #45 IKEA.” Forbes. Forbes Magazine, 1 May 2015. Web. 24 Sept. 2015. <http://www.forbes.com/companies/ikea/>.

Tregear, Hannah. “IKEA & The Socializers: Building Social into the Heart of a Global Business – Brandwatch.” Brandwatch. 9 Dec. 2014. Web. 25 Sept. 2015. <https://www.brandwatch.com/2014/12/ikea-assembling-a-listening-hub/>.

“Why Is Ikea a Non-Profit? | OnlineMBA.com.” OnlineMBA.com. Minute MBA. Web. 27 Sept. 2015. <http://www.onlinemba.com/blog/video-why-is-ikea-a-non-profit/>.

Earlier in 2015 Chipotle Mexican Grill, one of the fastest growing restaurants chains in the United States, made the decision to stop serving pork in hundreds of their restaurants. The company advertises a mission statement of “Food with integrity” and prides itself on their commitment to using organic produce and humanely raised livestock. During a routine audit, Chipotle discovered that one of their major pork suppliers had violated their standards of humane treatment of animals. The supplier was suspended and Chipotle “would rather not serve pork at all, than serve pork from animals that are raised in this way” said company spokesman Chris Arnold. Mr. Arnold also said that “[t]his is fundamentally an animal welfare decision, and is rooted in our unwillingness to compromise our standards where animal welfare is concerned”.

The company’s rapid expansion and incredible success proves that consumers are attracted by brand’s perceived quality of food and its high standards of humane animal welfare. While the company’s ideals are admirable, the sudden shortage of pork on its menu revealed a major flaw in the business. This shortage showed the intricacies and challenges of expanding a business while maintaining their fundamental sense of values and ethics.

Chipotle eventually found a new supplier to remedy the shortage in a way that did not force them to sacrifice its standards. Although the pork shortage Chipotle faced as they struggled to find responsibly sourced meat hurt sales temporarily, their impressive dedication to standing by their morals greatly improved the brand’s already overwhelmingly positive public image. The company continues to thrive and grow while promoting social responsibility.

References:

Drogen, Leigh. “Will Chipotle Mexican Grill, Inc. Continue Dominating the Fast Casual Segment? (CMG).” Smarter Analyst. 21 Apr. 2015. Web. 16 Sept. 2015. <http://www.smarteranalyst.com/2015/04/21/will-chipotle-mexican-grill-inc-continue-dominating-the-fast-casual-segment-cmg/>.

Lutz, Ashley. “Chipotle’s Carnitas Shortage Reveals a Major Problem with the Business.” Business Insider. Business Insider, Inc, 21 July 2015. Web. 15 Sept. 2015. <http://www.businessinsider.com/chipotles-pork-shortage-update-2015-1>.

Tuttle, Brad. “Chipotle Pulls Pulled Pork from 600 of Its Restaurants.” Time. Time. Web. 15 Sept. 2015. <http://time.com/money/3667333/chipotle-pork-carnitas-shortage/>.

Hello there!

Welcome and thanks for reading my blog! My name is Joana Lee and I’m currently a first year student at the Sauder School of Business. Here’s a little info about me:

~All the way back in May 2000, I immigrated from Taiwan with my parents and I’ve lived in Vancouver ever since.

~I’m extremely passionate about sustainability, immigrant/refugee advocacy and cultural diversity.

~In my spare time I enjoy baking, dragonboat and camping!