Monthly Archives: October 2014

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