Joanna Huang's Blog

Recently, Alexander Goston posted on his blog, “ ‘Go Green’ for the Environment…and Their Pockets,” providing great insight on the issue of businesses reinforcing environmental policies to be more environmentally friendly. Steps and actions taken to better protect the environment is beneficial to society as a whole, but may come at the expense of consumers while corporations end up profiting. The example given in his blog looks at hotels encouraging guests to reuse towels as a way of saving water. As hotels “preach the importance of environmentally sustainable practices among consumers,” hotels are also widening their profit margins. Hotel guests are still paying the same prices for hotel rooms, and while they willingly take part in ways to conserve resources, they are essentially paying more for less. I agree with Alexander that socially responsible businesses  should be recommended for their actions, but it should not be achieved at the expense of consumers.

After reading Jouvan Houang’s blog post on the article, “With a healthy dose of humour, Zellers says goodbye,” it is very clear that more and more companies are now taking advantage of social media as a marketing strategy to attract consumers. For Zellers, since joining Facebook thirteen months ago, their number of fans have grown to 137,052 and approximately 750,000 views on online campaign videos. I agree with Jouvan in that due to the fact advertisement costs can be quite high, Zellers made the correct choice to move away from traditional ways of marketing to advertising using social media. When maximizing revenue by increasing sales is difficult, all Zellers can do is try to minimize advertising costs while still attracting consumers, which is most easily achieved through social media sites. This also relates to the article, “ The New Science of Computational Advertising.” Undoubtedly, internet advertisements are becoming increasingly influential. As predicted in the article, once fully developed, online space advertising will be a very profitable market in the near future.

Groupon, the online site that offers great deals on a variety of goods and services, is struggling to stay afloat. For many people, the daily deals offered to consumers and merchants are no longer as appealing as they used to be.  Groupon’s third-quarter earnings report missed Wall Street predictions. According to the Globe and Mail, Groupon reported break-even earnings on $568.8 million in revenue when analysts were looking for earnings of 3 cents a share on $590.12 million in revenue. Before its initial public offering, investors praised Groupon as it was gaining prominence during the recession in 2010 into 2011. However, cash flow has decreased thirty-five per cent year over year. Europe has been problematic for Groupon partly because of the sovereign debt crisis that has “dented demand for higher-priced deals.”  Some European merchants have turned away from Groupon for offering steeper discounts. Groupon, Inc. currently has a share price of $2.76, dropping 29.592%. It will take a lot for investors to buy Groupon shares based with only a slim hope of a successful turnaround.

Groupon, Inc. 5 Year Performance

There is no doubt technological advancements are occurring faster than ever. According to the article “Well on our way to merging with machines,” Israel is one of the key places developing these technologies. Various multinational companies – Intel, Microsoft, Google, IBM, and soon Apple – currently have plant operations in Israel for important research and development labs. The Israeli operations supply chips to these companies and “anticipate what technologies are going to be needed in the future.”

The research labs believe, perceptual computing, such as the Nintendo Wii and Microsoft Kinect, will start to play a much bigger role in the future. With smartphones and personal GPS devices, people no longer have to remember all the things we used to. Oded Agam, head of vertical solutions strategic planning, wonders, “What happens to our brain cells when they no longer have to remember phone numbers? Do they just die or do they create new capabilities that allow us to do things we weren’t able to do before?” Agam believes the latter is obviously what’s going to happen. 

It is not hard to imagine that in the future, nano-machines will be “enhance our capabilities, and they’ll be able to repair us, like a repair shop that will happen inside our blood cells and increase our lifespan…humans and machines will start to have the same capabilities.”

 This past Thursday, 20,000 students gathered at Rogers Arena for one of the year’s most anticipated events: We Day 2012. It all began with Marc and Craig Kielburger, co-founders of Free the Children (FTC), “a holistic, high-impact charity and an educational partner that empowers young people to change the world.”

Free the Children has given rise to Me to We, the social enterprise that promotes “socially conscious and environmentally friendly clothes and accessories, as well as life-changing international volunteer trips” to Nicaragua, Ecuador, Ghana, Kenya, India, andChina. Half of Me to We’s annual profits are given to Free the Children to support its charity work, while the other half is reinvested to sustain the growth of the enterprise. From a business sense, Me to We’s goal is to minimize FTC’s already low administrative rate down to zero so that 100% of donations can go directly to local and international projects.

Free the Children is one of the first organizations to empower youth to make change on such a big scale. Inspired students, after attending We Day, truly believe they can make change by raising awareness and hosting fundraisers. Craig and Marc Kielburger, as social entrepreneurs, have left a legacy- a movement for change.

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Dollar stores have been in the market for quite a few years now, but it is not until recently that they have become a real threat to retailers. According to CIBC World Markets, Dollar store annual sales are rising by about 9 percent, which is more than three times the annual average in retail sector for the past five years. Other retailers, such as Canadian Tire and Wal-Mart are catching on to the trend of offering one dollar merchandises. These retailers are “counting on consumers coming in for a $1 item and at the same time purchasing other, more expensive, products.”

Canada’s Dollar Stores are finding success in targeting a broad industry with a low cost leadership strategy, according to Porter’s Generic Strategies. Dollar stores attract customers with their competitively low prices, expansive selection of products, convenience, and overall simplicity.

In addition, consumer preferences are now shifting in favour of dollar stores. Well-off shoppers who originally rejected the idea of purchasing dollar items are joining the middle class in shopping at expanding dollar store chains. The dollar stores’ leading position in low cost production is a sustainable strategy that has proven to  be successful in today’s competitive market.

“Real Friends. Real gifts,” is the new tagline Facebook is using to promote a new service that allows users to send tangible goods to their friends. The launching of this gift service marks Facebook’s “first official foray into dealing in physical goods.”

Facebook, entering the online retail industry, will not be able to compete at the same level as Amazon.com Inc. Facebook lacks one crucial element to make the gift-giving service work: the physical addresses of users. When someone orders a gift, a Facebook message is sent to the friend, asking he/she to fill in a house address.

Robert Hof offers a personal view for this gift-giving service in his blog, indicating problems with not knowing shipping costs until the very end and questionable reliability of merchants as a whole.

Is this new addition a sustainable strategy to differ itself from other online services and increase its revenue? As noted in Michael E. Porter’s “What Is Strategy,” ” A competitor seeking to match an activity system gains little by imitating only some activities and not matching the whole.” Perhaps a service requiring people’s physical addresses is not ideal for Facebook seeing as gift-sending may not be as convenient as it seems and user privacy issues may arise.

International Franchise Corporation, the company behind the well-known Canadian frozen yogurt brand Yogen Fruz, has started a new brand, Yogurty’s Froyo. Why has the company’s marketing team decide to come up with an entirely new brand name when Yogen Fruz has already been established? Aaron Serruya, chief executive officer of International Franchise Corporation, feels the name Yogen Fruz “[is] so embedded in people’s minds as the company that blended the fruit,” the perception is a disadvantage. With the fast-growing demand for low-fat soft serve frozen yogurt, Yogurty’s Froyo needed to be created in order to compete at the same level as other frozen yogurt chains, such as Menchie’s. As noted in “Positioning” by Al Ries and Jack Trout, “It often is easier and cheaper to introduce a new brand rather than change the positioning of an existing brand.” Yogen Fruz will still have a presence in places like shopping malls, while Yogurty’s will hopefully find success by targeting new and perhaps younger consumers and become known as a street brand.

Why are people willing to pay an annual $55 fee to become a member just to shop at Costco? The exclusive membership card, a sustainable point of difference for the company, offers deals and coupons for regular members and a 2% reward for executive members on most purchases.

People choose Costco, the leading wholesaler in high-quality products, over other shopping centres for its unbeatable price. Costco’s financial report shows its gross margins, at 12%, are lower than Wal-Mart’s 24%. Costco and its own store brand, Kirkland Signature, “doesn’t strive for parity, it demands superiority.” If the right product hasn’t been created yet or an existing one can be improved, Costco creates its own from scratch, exploring new techniques and technology. It is then able to bring the new product to the market for a better price than other comparable products.

Costco offers discounts and benefits for members while providing high-quality products; the member fee is only a fraction of the savings one gets from shopping at Costco. 

Primark, a huge fashion store in the UK, fired three of its clothing suppliers after finding out they were involved in the exploitation of children in their factories.

BBC’s article, “Primark fires child worker firms,” uncovered Primark was unknowingly receiving shipment from suppliers who were sub-contracting illegal firms to produce embroidery and sequin work through child labour. As a business, Primark’s decision to fire the factories is an action that “fulfill[s] a responsibility to shareholders.” Had more people found out the dark truth about Primark’s suppliers, consumers in today’s society would make the decision to not buy from Primark and sales would go down.

George Weston, chief executive, states, “We don’t want kids working on our clothes. We bring a lot of good to the people who work in our factories in proper working conditions. We want people paid properly.” Primark Better Lives Foundation has been set up to provide financial assistance to improve the lives of young people. It is engaged in a mutual relationship with most of its suppliers by providing just and reasonable benefits while receiving affordable products in return.