In Jalees Jaswal’s “The Power of Instragram,” she describes how Brandy Melville, an “LA inspired clothing store” has gained popularity within a competitive clothing retail industry through its effective use of Instagram to appeal to its young female target segment. In my eyes, the company’s success demonstrates the “performance gap between companies that embrace technology and companies that resist it” that Erik Brynjolfsson mentioned in the article we read for our class readings. Although Brynjolfsson’s view is concerned with the internal operations of a business, I believe the same applies externally. Brandy Melville was able to recognize and capitalize on the way the social and technological trend of Instagram aligned with its “trendy clothing” value proposition.

Brandy Melville’s Instagram only features skinny, Caucasian models.

While the company’s use of social media to differentiate itself is commendable, there are some ethical concerns which need to be addressed. The retailer only showcases skinny, Caucasian models on their website and Instagram (above image). Furthermore, Brandy Melville only offers a single size—small. I understand that this activity is legal and allows the company to focus on a niche customer segment, however, I believe that—in conjunction with their value proposition to deliver fashionable clothing—it sends the message that only white, small-sized females can be fashionable. Not only does this hurt their brand image among other women, according to Porter’s Five Forces it also restrains the business through an increase in buyer power created by a smaller number of consumers in their target market with lots of alternatives to choose from.

It is a shame that a company with such an innovative marketing strategy has elected to disregard corporate ethics in today’s world.

Check out Jalees’ entire blog!

Image Sources: (1) “Brandy Melville Reopens on N.Main St. in Downtown Walnut Creek” (2) Brandy Melville’s Instagram.

The hospitality industry has high barriers to entry due to the need for considerable capital investment and dominant industry leaders such as Hilton taking advantage of economies of scale. Nevertheless, AirBnB is emerging as a notable competitor through disruptive innovation. The “online community marketplace” appeals to the low-end market by making travel more affordable while creating value for local home owners with unoccupied living space. AirBnB has grown rapidly in the last few years and boasts users from across the globe.

AirBnB’s value proposition: A simple online platform which allows “hosts” to offer idle housing for short-term rent to discount-seeking travellers looking to minimize their travel costs.

Its only revenue stream is commision from both parties, and it is able to offer its value proposition by keeping margins low and sacrificing the quality of service which accompanies a traditional hotel chain.

My PEST analysis reveals the vulnerability of AirBnB in the future.

Recently, AirBnB received a $10 billion valuation from it’s latest round of funding. However, I would abstain from labelling it an industry leader just yet. While the business model is disruptive, it is also vulnerable compared to the traditional hotel chains, as depicted through the external threats in my PEST analysis above. Before AirBnB can progress, the company must conduct extensive market research to answer questions such as What level of quality are the discount-seeking travelers in our customer segment willing to sacrifice for the lower prices?  and How can we ensure that hosts are responsible and abiding by local law?

Additional Sources: “AirBnB’s legal troubles: what are the issues?”

Image Sources: AirBnB Website and My Own PEST Analysis

Growing demand for oil in Asia is an economic opportunity which the Canadian oil industry has been trying to take advantage of for years. However, strong opposition from BC’s First Nations is an external social and political threat limiting companies like Enbridge from reaching the continent. The Nak’azdli have vowed to stop Enbridge’s Northern Gateway pipeline because they believe that it is not worth the risk of a spill on the waterways in their traditional territory.

Enbridge is trying to pay off First Nations rather than establishing positive relationships with them.

Today I came across an article in which Jack Toth, the CEO of a social enterprise which aims at forging positive relationships between industries and aboriginals, suggests that “businesses need to move from doing things for the [First Nations] and start being involved with them“.

This applies directly to Canada’s oil industry.

If Canada’s oil companies want to access Asian markets, they must include the interests of BC’s First Nations in their business models. Instead of simply offering these stakeholders a share in profits, corporations need to collaborate with them to figure out alternate routes and address environmental concerns.

In Enbridge’s case, however, I reckon it is too little too late. Their poor brand image, as underlined in an old post of mine, will prevent the Nak’azdli from accepting the Northern Gateway pipeline.

Image Sources: Google Images

Snapchat’s market value continues to increase despite no revenue stream.

Around this time last year Snapchat declined a $3 billion dollar acquisition offer from Facebook. Nearly a year later, the ever-so-popular mobile app is being valuated at $10 billion. Keeping in mind that the app does not have a revenue stream, one might wonder how it can be worth such a staggering amount.

Let’s take a closer look.

Looking at Porter’s Generic Strategies, it is clear that Snapchat adheres to a focus differentiation strategy. The company has differentiated itself from other social media apps by offering a unique photo sharing experience catered to the demands of the teenage market segment. The app is fun, simple and—best of all—free of advertisements. This user-friendly experience is why the number of active users is said to be over 100 million. Companies looking to acquire Snapchat are interested in its large, loyal user base—we are the reason it is worth so much.

While many believe the app needs to start generating ad-revenue, I believe it should continue providing the user-friendly experience which is expanding their user base. Eventually, with a greater number of users, Snapchat can subtly introduce creative advertising in order to become profitable.

Image Sources: “The Truth About Snapchat”