Jordan Andrews' Blog

“If the United Nations was fully funded why would we need the Arc or social enterprise”?

If the United Nations was fully funded, there would still be a need for the Arc Initiative or social enterprise because of the difference between large-scale and small-scale operations. The UN represents the majority of the world, therefore their initiatives would embody a large segment of the population. If they were to participate and fund small businesses, many of the country members would question as to why the funds are not being invested in large-scale operations that can benefit the majority. As a result, the door opens for the Arc Initiative. These types of programs create shared value for both parties involved: the programs gain experience and the businesses being helped gain unique solutions in an attempt to become more efficient. The types of businesses that the Arc Initiative takes on are ones that also create shared value within the community, whether it’s employing workers or producing quality products. Similarly, social enterprise’s create profits while producing a good or service that benefits a disadvantaged segment of the population. The United Nations is too large to be able to take on small-scale businesses as such. Nonetheless, it isn’t a bad thing as it opens up opportunities for students to gain experience and provide business knowledge in order to contribute to a good cause.

Sources:

UBC Sauder, “Arc Initiative“

Taking it back to 2004 in the hockey equipment industry: Reebok acquired the brand CCM. The takeover came at a time when CCM was losing its customers to other established brands such as Reebok and Bauer. Rather than integrating the two brands into one product, Reebok chose to keep the brands separate and create products under both lines of hockey equipment. This strategy proved to be profitable for the company in the first few years. Unfortunately, in recent years, both lines of equipment have decreased in customer popularity due to the emergence of Bauer as a leading brand in the sport of hockey. As I have worked at a hockey retailer for just over a year, I have had the privilege of first-hand experience on the general vibe around each brand of product and the hype is always revolving around Bauer. When the Reebok-CCM product reps come into the store to show staff the new product, the description of the product is always in relation to what Bauer currently provides to the market: “Our new CCM Tack skate fits similar to Bauer’s MX3 skate; Our CCM Tack stick has a similar kickpoint to Bauer’s MX3 stick”. In contrast, when Bauer product reps come into the store, they simply describe their product and the improvements they are bringing to the market. Reebok-CCM has made attempts to differentiate itself by producing top of the line equipment at a lower price point than competitors such as Bauer. Again, consumers realize the far better technology infused into Bauer’s equipment and are willing to spend the extra money for it. Most recently, Reebok-CCM has begun to discontinue the line of Reebok. More specifically, the company has taken the Reebok Ribcor stick and re-introduced it to the market as the CCM Ribcor. The stick still has the exact same design as before with a few improvements and the brand name CCM painted on the stick. Reebok-CCM can’t expect to gain market share by sustaining innovation. The company needs to create a disruptive innovation in order to compete with top brands like Bauer. It’s unfortunate that a prior leading brand, Reebok, has been forced to discontinue its original brand from a loss of focus due to the acquisition of CCM. The competition of brands within a company itself isn’t sufficient, especially in the hockey industry.

Bauer Sponsor – Alex Ovechkin | Washington Capitals

CCM Sponsor – John Tavares | New York Islanders

Sources:

CBC News, “Reebok to buy CCM“, CBC News, April 8th/04

Although Audi does not have one distinct feature that its cars are known for, I believe that it is profitable and works well for the company based on its current competitors. As described in Paola Lopez’s blog, I do agree with her in the sense that some consumers will see the Audi brand being convenient as an all-in-one vehicle, and some consumers will not see an attractive brand because of the lack of one distinct, exceptional feature. With that being said, I disagree with Paola on her comment that “it can work really good or really bad” for Audi. I don’t believe Audi was making a gamble when they established their business model; i.e. this will work very well or this won’t work at all. Similar to any industry, there are companies that some consumers will refuse to purchase from. Audi has proven that it is possible to remain in competition with its top quality competitors by producing a vehicle that meets multiple consumer wants and needs. Personally, I have always had an attraction to the Audi brand over brands such as Mercedes-Benz. I was not aware of the detailed features of each vehicle; I simply preferred the look.

Audi has established itself as a well-rounded auto company. Is there any other way? If they were to produce vehicles at a lower price point, they would face competition from Toyota, Chevrolet, Ford, etc. For this reason, Audi has a sustained position in the auto industry as a well-rounded vehicle that still maintains the high-performance sport features that many consumers are willing to invest their money.

Sources: Paola Lopez, “Audi’s personal ladder,” UBC Blogs, Oct. 1st/14

I found the lecture conducted by Danielle van Jaarsveld on the concepts of organizational culture and human resources management very interesting. This is partly due to the fact that I have bought my shoes through Zappos for the past few years and was not aware of the operations fuelling the business. I was very intrigued by the customer service and general culture revolving around the company. For this reason, I have chosen to do a business model canvas to outline Zappos’ structure in what makes the company successful:

Key Partners: Founder – Nick Swinmurn, CEO – Tony Hsieh, the “No Title/Do Everything” – Fred Mossler.

Key Activities: Customer Service, Selling of Clothing/Shoes, Social Media/Website Platforms.

Key Resources: Employees for Customer Service/Production, Investors.

Value Propositions: Culture, Clothing, Customer Service, and Community (the 4 C’s). Company Slogan: “Powered By Service”.

Customer Segment: Mass Market (all ages, different price points).

Customer Relationships: Self-Service: ordering through the website / Personal Assistance: one-on-one customer service over the phone / VIP program / free shipping / 365-day return policy.

Customer Channels: Online Sales on Website, “Word of Mouth” marketing, Quality Customer Service (to keep consumers coming back). 

Cost Structure: Fixed-Costs: employee salaries, machines, administration / Variable Costs: employee wages, variable overhead.

Revenue Stream: Sale of products through the website.

Sources:

Zappos Website – zappos.com

Alexandra Jacobs, “Happy Feet,” The New Yorker, Sept. 14th/09

I found Juliet Choi’s blog on CVS Caremark ending the sale of tobacco products in their stores quite interesting. The change of operations isn’t necessarily shared value as CVS is losing profits. However, I do agree with Juliet in that it may become a shared value operation over the long-term as the company gains publicity. Tobacco products and health services do not correlate; to provide health care advice to quit the use of tobacco, but to offer that same product as a customer walks out of the store brings a mixed message to customers and a bad image upon the company. By eliminating the sale, there is a good chance that CVS will attract more customers because of their “social benefit” approach. In addition, it also allows CVS to differentiate itself from large store chains such as Walmart that continue to sell such products. There are clearly no health benefits from the use of tobacco and there comes a point where companies must re-evaluate what they are in the business for. Of course profits are a main goal of most businesses/organizations, but with the global scale of social media in the world today, businesses must be extremely careful in their activities. I believe CVS has made a tough, but beneficial change in their business model that will hopefully attract more customers to their health department.

Sources:

Juliet Choi, “CVS Caremark’s End of Tobacco Product Sales,” UBC Blogs, Sept. 9th/14

Stephanie Strom, “CVS Vows to Quit Selling Tobacco Products,” The New York Times, Feb. 5th/14

John T. Delaney’s blog in the Huffington Post on the topic of social media disconnect describes a key issue that directly correlates to the students at UBC’s Sauder School of Business. We spend an excessive amount of time using social media to connect with other people. In doing so, we become accustomed to communicating through texting/tweeting/emailing. Thus, the irony of social media is that although we are connected to more people through the internet, we tend to lose the face to face social skills that are necessary in order to be successful in the field of business. A high grade in a class can only get you so far; you still have to be able to convey your skill set to a manager in a job interview; you still have to be able to sell a product to potential investors. In addition, successful businesspeople must be able to efficiently interact with employees, customers, and in some cases competitors. Social media also has multiple advantages which is why it is important to find a balance between social media and social interactions. For this reason, I think COMM 101 is such a vital course in developing our business skills. We use social media, but we also participate in face to face discussions. This provides the opportunity to develop our abilities to express thoughts and ideas through social interaction.

Sources:

John T. Delaney, “How the Social Media Disconnect Will Affect Business Schools,” Huffington Post, Oct. 15th/14

What makes a $0.99 app worth $21.8 billion? It is the popularity and demand among consumers. Many years ago, BlackBerry was at the top of the cellphone market. Their unique feature was BlackBerry Messenger (BBM). BBM allowed BlackBerry users to instant message each other without the long waits between text messages. This feature was very popular among consumers. Unfortunately, it wasn’t available to other smartphone users. WhatsApp identified a gap in the market and created a platform that allows instant messaging between all smartphone users. Recently, they have extended features to include group chats and the ability to voice call contacts. WhatsApp used a focus differentiation strategy in order to fulfill a consumer need. As the popularity of the app grew, so did the evaluation of the company. Facebook felt the need to acquire the innovative app because of the access to the extensive consumer market that WhatsApp has secured over the years. The acquisition was not solely based on profits. Because Facebook has gone public, the acquisition of WhatsApp will also entice possible investors to invest into the company. Therefore, the stock of Facebook will increase as a direct result of the success that WhatsApp has attained over the years. With that being said, Facebook isn’t the only beneficiary of the deal. $2.8 billion in exchange for the ownership of an app sounds like a great deal to me.

Sources:

AP, “Facebook acquisition of WhatsApp a done deal,” The Vancouver Sun, Oct. 6th/14

Every company/organization faces external factors that impact their business model; some are positive and some are negative. Throughout the history of Canada, a significant amount of conflict has occurred between the First Nations and the Canadian government. The past mistreating of First Nations has put extreme pressure on the government to avoid burning any bridges. More recently, the expansion of oil industries has been popular due to a rise of demand in Asia. This usually involves expanding onto First Nation land which raises environmental concerns and can affect their people’s general way of life. This is the case for the Enbridge Northern Gateway Project. The plan to build oil pipelines was meant to start in 2018, but the conflict at hand has caused significant delays. The socio-cultural aspect of external factors affects the project in a negative way. The attitudes of the BC First Nation peoples aren’t in line with the Northern Gateway’s and the recent toxic waste spill in Mount Polley being a possible cause of a long tension crack dating back to a 2010 inspection report raises great concern [1]. However, from an economic standpoint, the Northern Gateway project would benefit Enbridge as well as Canada because of revenue attractiveness and global market conditions in Asia. With that being said, “the broader benefits must not be outweighed by adverse effects on the Aboriginal interest” [2] in order for the First Nations to consider complying with the Northern Gateway’s business model.

The Northern Gateway Pipeline

Sources:

[1] Gordon Hoekstra, “Crack in Mount Polley mine’s dam noted in 2010 inspection report,” The Vancouver Sun, Sept. 26th/14

[2] Peter O’Neil, “Nation chiefs to stage Site C showdown,” The Vancouver Sun, Sept. 18th/14

Canadian Press, “Northern Gateway pipeline through B.C. unlikely to start up by 2018,” The Vancouver Sun, Sept. 4th/14

Isabelle Montpetit, “Background: The Indian Act,” CBC News Canada, May 30th/11

General Motors Co. has been cornered into a tough position due to the fact that they have failed to produce quality vehicles to consumers. 30 million vehicles have been affected by the recall across GM’s multiple different models; in particular, the recall of 2.6 million cars with defective ignition switches linked to at least 23 deaths [1]. GM’s plans for the future include continued growth of models into China along with the re-instation of Cadillac as a luxury car brand [2]. Because of the recent blow to GM’s “image” in the automotive industry, the company must re-establish itself as a brand that consumers trust and can be excited about. In order to do this, GM has to divert the negative attention away from their product by attacking a different market/customer segment. GM can apologize all they want for their manufacturing defects, but fixing the defects of their old models won’t help sales in the future. Lack of awareness of Cadillac from a consumer perspective [3] poses an opportunity for GM to push into the expanding luxury car market in China. GM can regain consumer trust and market share by creating a differentiable high-quality vehicle that can outperform, as well as compete, with top brands such as BMW and Mercedes. However, GM must have a flawless growth strategy in production in order to return to profit and re-establish their brand at the top of consumers’ minds as GM is currently under the microscope.

GM’s Cadillac CTS-V

$$$$$

Sources:

[1] Ben Klayman, “GM recalls more than half a million vehicles,” The Globe and Mail, Oct. 3rd/14 

[2] Joann Muller, “GM Chief Outlines Growth Strategy,” Forbes, Oct. 1st/14

[3] Jeremy Cato, “Haven’t we seen this one before? The Cadillac saga continues,” The Globe and Mail, Sept 25th/14

With the dominance of Apple and Samsung in the smartphone industry, Sony has announced that it expects a loss in its mobile business this year, contributing to an expected annual loss just over $2 billion. It is the first time since 1958 that Sony has cancelled dividend payments. Dividends are payments made by a corporation to its shareholders as a distribution of profits. This is a key factor as we had just learned the basics of accounting principles in our last lecture. A company not being able to pay its shareholders dividends, after many consistent years, shows a significant loss in company revenue. The company plans to cut staff in its mobile communications business and to focus on its high-grade smartphones along with the introduction of a SmartBand fitness device. However, with Apple’s release of the iPhone 6 and iWatch, as well as the expected release of Samsung’s Galaxy S6, it will prove extremely tough for Sony to compete in the smartphone industry. Sony needs to create a product that is significantly different from its competitors in order to entice consumers to purchase their products. Otherwise, Sony may have to direct their smartphone resources to their TV, camera, audio, and video game businesses in order to increase their market share.

Sony Xperia ion LTE Smartphone

Sources:

Elaine Kurtenbach, “Beleaguered Sony predicts $2.1 billion loss as smartphone future falters,” The Vancouver Sun, Sept. 17th/14