John(YuYu)Cheng'sBlog

This post caught my eyes immediately because we have discussed Lululemon’s value proposition in class. We have brainstormed about how Lululemon can create share value by being socially responsible and generating total profit at the same time. However,It was shocking to hear an athletic brand founder Chip Wilson made a controversial statement about their company’s pants just don’t work on some body types. In my opinion, this comment is clearly a discrimination at women who are plus-sized. Although the debate has split into two sides, with one being unaffected and take a comment easily, I found this news really rude and offended. Comparing to other company’s advertisement like Nike who use obesity as an inspiring, positive figure to promote their product, Wilson’s comment is narrow minded and greatly contradicts the company’s goal for people to have fun, healthy lifestyle. It is not ethical at all for the founder of the company to be implying that their products shouldn’t be worn by plus-size women. It really attack firm’s potential consumer base as many plus size women usually wants to lose weight by doing yoga. Lululemon have already battered from  its see through pants controversy earlier this year, this simple comment will definitely ruin company’s image even more.As a result, the company is expecting lower earning and less revenue this year.

http://www.cbc.ca/news/business/lululemon-expects-lower-earnings-less-revenue-in-2013-1.1700423

http://www.cbc.ca/news/business/lululemon-says-see-through-pants-being-worn-too-small-1.1401887

I agree that social media is a strong and useful channel for business people to communicate, identify needs and discover new resources or innovations. However, after reading a blog post from Canada business network about how social media can have great impact on social enterprise’s performance, I am now acknowledged that social media is crucial platform for social enterprise to build the ties between company and community. In Comm 101 class, we have learned that social enterprises organizations generates income by selling goods and service that creates a social, environmental or cultural benefit to our society. Therefore, social media is an important tool for company to expand their consumer base. First of all, social media is able to promote company’s mission in the low cost manners (since many social networking sites are free) so people can post the detail updates frequently. In addition, social media is able to broaden company’s partners and channel. For example, it can help make reach partners and recruiting volunteer who are willingly to be part of conversation. However, the author also points out that the company need to keep consumer preferences in mind because different audiences may require a variety of approaches. Thus, the company’s marketing strategy should be more dimensional,not just solely be on social media advertising.

Links:

http://www.canadabusiness.ca/eng/blog/entry/4364/

After reading an article: the real secret of Google’s cooperate culture, I am not surprised that  Google has recently acknowledged as having the best workplace in the world by Fortune’s 100 Best Companies to Work for. From my previous post, I have mentioned that a company’s working condition and employee’s satisfaction can definitely alter whole company’s performance. Compares to Microsoft’s old stack ranking system which destroyed many employee’s working desire, Google is able to recognize the importance of job satisfaction and use it as a strategy to motivate their workers. Instead of using harsh grading system to judge employee’s performance, Google rewards mistakes. In 2009, a group earned the Award and bonuses for failing at a product development; this creation later developed into Google Plus. I am impressed that Google is able to provide series of service that allows employees to cultivate creativity through job satisfaction. It is fascinated me that a company can offers free restaurants, gymnasiums and cars to its employees. In addition, Google uses its unique organizational culture to attract talents across this competitive industry. The company allows employees to spend 20% of their time on anything of their interest and half of the corporation’s advancements come from work done during this period. Clearly, from Google’s success, it is undeniable that a good performance management and organization is a key for firm to establish itself on top of the industry.

https://blogs.ubc.ca/biancapinasco/2013/11/09/the-best-workplace-in-the-world/

http://www.corporateculturepros.com/2013/07/the-real-secret-of-googles-corporate-culture/

US lenders are offering rates on jumbo mortgages that are more than a quarter of a percentage lower than those on the conforming loans backed by Fannie Mae and Freddie Mac. According to the Mortgage Bankers Association, historically, banks charge higher rates on jumbo mortgage (about 0.25 percentage points more) than they do for conforming loans. However over the past couple of months, this pattern has been broken. This week, Wells Fargo (WFC, Fortune 500) promoted a 30-year jumbo mortgage at a rate of 4.125%, which is lower than the 4.5% rate it is offering for a 30-year, fixed-rate conforming loan. US Bank (USB, Fortune 500) is offering a jumbo for 3.875% this week compared with 4.25% for a conforming loan. And Chase’s (JPM, Fortune 500) jumbos have been running a quarter of a percentage point below conventional mortgages. “Never in my memory have jumbos been such a bargain,” said Peter Grabel, a loan officer with 13 years’ experience at Luxury Mortgage Corp. According to Malcolm Hollensteiner, head of consumer lending for TD Bank, one main reason jumbo rates are at low point is because lenders want to attract wealthy clients and hang on to them Once clients sign up for a mortgage so bank can “cross sell them other products, like brokerage services,” he said.This strategy works especially well in these days of strict underwriting standards as  Keith Gumbinger, a mortgage expert with HSH.com says that “Borrowers have to open up their whole financial picture to lenders,” “They can see where there’s value, which they might be able to sell against.”Once a wealthy client takes out one of these low-rate loans, they are likely to stick around. “With rates as low as they are, borrowers are never going to refinance the loans. Those affluent clients will stay on the bank’s books forever,” said Gumbinger. Even though this strategy is good for banks to attract long term client and build up close customer relationship; it is controversial and relates to business ethic. This change might ruin the original purpose of the mortgage and widen the social inequality between rich and poor. Do you see this unusual twist as a business ethic issue?

Twist, In An Unusual. “Jumbo Mortgages Now Carry Cheaper Rates than Traditional Loans.” CNNMoney. Cable News Network, 12 Nov. 2013. Web. 16 Nov. 2013. <http://money.cnn.com/2013/11/12/real_estate/jumbo-mortgages/index.html?iid=GM>.

Microsoft is replacing its old employee review system with a new system that lets managers hand out raises and bonuses as they see fit, within their budget limits. The company’s old review system, known as the “stack ranking system”, had negative effect of giving a lower standing and compensation to some employees even when their managers might have felt they deserved more. According to Author Kurt Eichenwald, this program has forces every unit to declare a certain percentage of employees as top performers, good performers, average, and poor—effectively crippled Microsoft’s ability to innovate. From this terrible ranking system, it is proven that some performance managements may actually discourage the performance of employees. Mr. Eichenwald says that “Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees,” One engineer even claims that his performance reviews were “always much less about how I could become a better engineer and much more about my need to improve my visibility among other managers.”

Lisa Brummel, the company’s head of human resources, said that the former system was designed for an era when Microsoft was focused on employees as individual performers within a vertical corporate structure. The One Microsoft reorganization, which reshapes the company’s divisions around functional disciplines rather than products, is design to make Microsoft more collaborative across teams. “A forced distribution wasn’t getting at the teamwork principles that we really want to get at related to One Microsoft,” Brummel said. It is undeniable that it is a time of fierce competition for technical talent across the industry as Microsoft competes with large tech companies to recruit and retain top employees. Therefore, this new system is positive for the company because it increases worker’s working satisfaction and encourages employees to work as a team, rather than competing against each other.

Ex-Microsoft Manager describes effects of Stack Ranking: https://www.youtube.com/watch?v=bRuUm2yGYVg

Allen, Frederick E. “The Terrible Management Technique That Cost Microsoft Its Creativity.” Forbes. Forbes Magazine, 03 July 2012. Web. 16 Nov. 2013. <http://www.forbes.com/sites/frederickallen/2012/07/03/the-terrible-management-technique-that-cost-microsoft-its-creativity/>.

Yarow, Jay. “Microsoft Just Killed The Controversial ‘Stack Ranking’ Review System That Killed Employee Morale.” Business Insider. N.p., 12 Nov. 2013. Web. 16 Nov. 2013. <http://www.businessinsider.com/microsoft-just-killed-its-controversial-stack-ranking-employee-review-system-2013-11>.

China’s leaders had a closely watched policy meeting Tuesday with a promise to give market forces a bigger role in the commend economy. In a report after a four-day meeting, Communist Party leaders gave a long endorsement of private companies as “important components” of the economy but said states economy will remain its core. The market will play a “decisive role” in allocating resources, the party said. The official Xinhua News Agency said it was a positive improvement from the “core role” assigned to the market in party policy over the past two decades. Nevertheless, this change in the market structure had no indication that the government is considered any political reforms in China’s closed, secretive one-party system. Currently, Chinese leaders are under pressure to replace a growth model based on exports and investment that delivered three decades of rapid expansion but has run out of steam. Reform supporters say Beijing should be more open minded and open an array of state-controlled industries to private competition, but any ways to limit the privileges of politically favored companies are likely to face resistance. The party said it will create a committee to “deepen reforms” and gave no hint on when more changes might be approved. This vague promise insinuate that the party leaders agreed on big picture but put off battles over details such as the status of state companies that control majority of China’s economy including banking, energy and telecoms.

The Associate Press. “Chinese Economy Will Be More Open, Beijing Pledges.”CBCnews. CBC/Radio Canada, 12 Nov. 2013. Web. 16 Nov. 2013. <http://www.cbc.ca/news/business/chinese-economy-will-be-more-open-beijing-pledges-1.2423458>.

According to the company’s second quarter report, the world largest sport apparel company have exceed analyst’s expectation with 8 percent revenue growth and report earnings of $0.86  per share.  Earlier this month, Nike joined the Dow alongside Goldman Sachs and Visa, becoming the sole apparel-maker on the index. Those three filled spots vacated by Alcoa Hewlett-Packard (HP) and Bank of America, which were removed from the benchmark index because of their low stock price. Nike have shown some outstanding result as newbie of Dow member this week. Not only the firm have hit its record of $70 per share; its year-to-date gain of 34% through Wednesday ranked the stock as the second best performer in its new index family. Nike also stated revenue growth in every part of the world except for in China, where it declined 3%. Analyst points out that the strong competition is the main factor that cause the negative growth in China. Chinese consumer preference tend to shift toward Nike’s biggest rival, Adidas, because Adidas often introduces more fashionable merchandises to attract buyers. Trevor Edwards, brand president of Nike, says that China is still their key focus and they are taking “decisive “action to reset the market by store layout and product selection. Next year, the company’s marketing strategy is going to target on the World Cup in Brazil. Edwards said that Nike intend to build up their brand as the leading football brand in the world.

“Nike’s Stock Goes Swoosh! -Video.” CNNMoney. Cable News Network, n.d. Web. 28 Sept. 2013. <http://money.cnn.com/video/investing/2013/09/27/investing-the-buzz-nike-earnings.cnnmoney/index.html?iid=SF_INV_River>.

“Nike Earnings Just Did It.” CNNMoney. Cable News Network, 26 Sept. 2013. Web. 28 Sept. 2013. <http://money.cnn.com/2013/09/26/investing/nike-earnings/index.html?iid=SF_INV_River>

Cheng, Andria. “Can Nike, Newbie on the Dow, Continue to Deliver?” MarketWatch: TheWallstreet Journal. Marketwatch, 26 Sept. 2013. Web. 28 Sept. 2013. <http://blogs.marketwatch.com/behindthestorefront/2013/09/26/can-nike-newbie-on-the-dow-continue-to-deliver/>.

According to a closely-watched measure, U.S house price shows the biggest annual increase since 2006 as it rose 12 per cent compared to last year’s statistic. The measure index states that 13 out of 20 measured cities have shown some increase growth rates in the past year. The biggest growth rate is Las Vegas with 27.5%, and San Francisco, Los Angeles and San Diego all saw rises of more than 20%.  An analyst Stan Humphries, a chief economist for real estate data provider Zillow, says that an increase in the house price is sign of economic recovery and is good for the market in general as it shows steady job growths, low montage rate and relatively low price. However, the survey points out that house prices in those cities are still way below the peaks hit before the 2008 financial crisis. There is a hidden concern about whether this phenomena is going to be a repetition of the 2006 US real estate house bubble as a change in house price being to dramatic. In my opinion, even though a housing price growth is a positive sign of the economic recovery, it is better for the house market price to increase at a slower pace to prevent any sudden bubble burst. Will US real estate face another bubble crisis? Or this increase  is a positive boom for US economy?

“US House Prices in Biggest Annual Rise for Seven Years.” BBC News. BBC, 24 Sept. 2013. Web. 28 Sept. 2013. <http://www.bbc.co.uk/news/business-24225746>.

“U.S. Housing Prices Jump 12.4%, Leading to Worries about a Bubble.” CBC News. CBC News, 24 Sept. 2013. Web. 28 Sept. 2013. <http://www.cbc.ca/news/business/u-s-housing-prices-jump-12-4-leading-to-worries-about-a-bubble-1.1866835>.

Writer, CHRISTOPHER S. RUGABER AP Economics. “US Home Prices Rise 12.4 Pct., Most in 7½ Years.” ABC News. ABC News Network, n.d. Web. 28 Sept. 2013. <http://abcnews.go.com/Business/wireStory/us-home-prices-rise-124-pct-years-20355067>.

Blackberry has recently announced that they are planning to cut 4500 global jobs (which is equals to 40% percent of its workforce) in order to curb their company crisis. According to the firm’s second quarter sale reports, it is expected a loss about 955 million dollars. The company claims that the losses are primarily associated with the poor sales of new Z10 model smartphone. In the recent COMM 101 class, we have used the SWOT analysis to discuss why this “once a pioneer” in the smartphone field is now facing many internal and external difficulties. The brand image of Blackberry has damaged and become its major weakness after many delays of releasing new phones. The delays of the z10 smart phones have reduced consumer’s desire and make people doubted about the quality of the phone; hence, many loyal customers choose to stick with their old blackberry instead of buying a new one. As a result, the blackberry’s chief executive Mr. Heins said that only 2.7 million out of 6.8 million shipment of z10 has shipped in the past 3 months. Another problem with the Blackberry is that they have experienced many system failure all over the world in the past year. In order to back to the top, Blackberry needs to focus on software and app improvement (apps are too limited) as well as branding and broadening their target populations.

Read More:

“Blackberry to Cut 4,500 Jobs amid Earnings Plunge.” BBC News. BBC, 20 Sept. 2013. Web. 28 Sept. 2013

Russell, Johnathan. “BlackBerry’s Problems Began with Apple’s Success.” Telegraph. N.p., n.d. Web. 28 Sept. 2013. <http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/9033921/BlackBerrys-problems-began-with-Apples-success.html>.

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