Monthly Archives: November 2013

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>.