The Entrepreneur

Entrepreneurship is something that I’ve always felt compelled to do – maybe open up a nice restaurant franchise, eh? Yet, like or unlike many others, I haven’t been able to find that “Aha!” inspirational moment that always coincides with a success story. In reading Comm101 Section 105 student Khaled Shawwash’s post on a 7-year old entrepreneur who wants to open a restaurant himself, I learnt that there are some exemplary entrepreneurs out there. This boy makes $100 per day selling baked goods, and in total agreement with Khaled’s statement, “relative to how much I made when I was 7, he’s pretty damn successful”. Whether he ultimately succeeds in opening his dream restaurant or not, I admire his ambition.

Feeling down about my entrepreneurial future, I found solace in an article about Ottawa’s Bridgehead coffee chain. It was started by an entrepreneur, Tracey Clark, who purchased Bridgehead trading Co. back in 2000 and differentiated from all the other coffee houses by being the first in Canada to serve fair-trade coffee. 

She came across the idea of serving fair-trade coffee back in its infancy while on a Nicaraguan backpacking trip in 1987. Now, Tracey was nowhere near 7 when she came across her “Aha!” moment and she has found mountains of success in branching Bridgehead to over 13 locations across Ottawa.

After Tracey’s story, I feel much less discouraged about entrepreneurship. Maybe my “Aha!” moment will come soon. After all, Comm101 has taught me that entrepreneurs come in all ages, some even start their businesses without the desire to be an entrepreneur or even feel like they are one after becoming one. So for now, I’ll just be keeping an eye out for things to make a buck on.

Image: http://beta.images.theglobeandmail.com/115/report-on-business/small-business/article15393419.ece/ALTERNATES/w620/bridgehead-filter.jpg

An old dog trying new tricks

Articles: In China, Dell Clings Tightly to the Waning PCIBM: PCS ARE YESTERDAY’S TECHNOLOGY. CHINA: SURE, BUT GIVE US MILLIONS MORE.

After continuous retreating in the declining PC market these past few years, Dell has finally found itself cornered. Just a few weeks ago Michael Dell’s once mighty corporation that pioneered virtual integration was bailed out of the public market by private equity group Silver Lake Partners and now both have turned to Chinese markets to help the company get back on its feet. The reason for this refocus is due to China’s new title as the world’s largest PC market. Despite the large disadvantage of not being first to market, Mr. Dell recently announced in Beijing that Dell would open 2,000 new retail outlets in China – an effort to steal market share from Beijing’s own Lenovo, which currently sells 1 of every 3 computers in China.

https://www.youtube.com/watch?v=FlBK_ceg2lo

However, I believe that in order for Dell to be successful on this venture, all PC manufacturers including Lenovo, Acer, and HP need to ramp up their marketing tactics to change the average Chinese consumer’s mind about what a PC is. We in the west perceive our technologies as obsolete just after a few years whereas the average Chinese consumer expects to keep theirs for much longer. Therefore, since 90-95% of people in cities already own a PC, their perception of obsolescence must be changed to instead want “the latest and greatest” in order to keep this new PC market booming. Of course this wastefulness is going to be bad for the environment though, right?

Would you just look at Mr. Dell’s determination…

 

 

 

 

 

 

 

 

Image: <http://images.bwbx.io/cms/2013-11-07/tech_dell46__01__630x420.jpg>

Moving from “just another office” to “spicy organizational culture”

Articles: Performance Reviews: Why Bother?, Zappos Gets It Right – Again. How a Performance Appraisal Process Should Work

There’s a reason why 95 out of 100 employees are unsatisfied with their company’s work evaluation system. Bloomberg Businessweek reports that the practice of annually rounding up the workforce and grading their workplace skills out of 5 no longer adds value to the company and should be discontinued. I would entirely agree with this suggestion as, after several classes on HR in Comm101, I now understand the concept and importance of organizational culture. The typical annual performance review merely comes across as a generic grading strategy similar to schooling. The fact that it only occurs once a year doesn’t help in bettering the company as a whole as “managers should address issues when they arise, not six or eight months later.”

Compare that to a company like organizational culture-rich Zappos which, instead of evaluating their employees on generic work skills like punctuality or how well they accomplish tasks, actually reviews their employees on how well they fulfil Zappos’ 10 core values. Such a method ensures that the company is comprised of a workforce suitable for its aims. As markets expand and competition increases, I believe it is imperative for companies to shift from treating the employee as just “another guy at the office” to instilling him within an actual work community built around the company’s core values. After all, organizational culture is also reflected in the way the public perceives the company.

Image:<http://dilbert.com/dyn/str_strip/000000000/00000000/0000000/000000/00000/0000/700/789/789.strip.sunday.gif>

The importance of the stock market

Articles: Barrick Gold Corp to raise more than US$3-billion in share sale, shelve Pascua-Lama mineGourmet burger chain relishes a global rollout, starting in Canada

Controversy and construction problems of a gold-mine in Chile are largely responsible for Barrick’s debt.

We always hear news of a big company announcing its IPO but rarely does a secondary equity offering make the news headlines… unless of course you’re the world’s largest gold producer! Drowning in $15.4 billion of debt, Toronto-based Barrick Gold Corp. has announced plans to sell more of its equity in an attempt to raise $3 billion dollars to repay some of that debt.

You can expect to see one of these in your neighbourhood pretty soon if all goes well for Relish.

 

 

Meanwhile, a booming franchise from New Brunswick called Relish Gourmet Burgers plans to expand from its current 5 locations to 54 locations across Canada in just two years with the help of a Dubai investment firm. However, the owner’s expression of his desire to go global seems pretty far-fetched to me at this point. This story reminded me a lot of Potbelly sandwiches which itself had recently undergone its IPO to raise funds for mass expansion. But surely opening dozens of stores in a few years requires a substantial raising of capital; so I’m left wondering if we’ll be seeing Relish Gourmet Burgers ringing the Wall Street bell in the near future too.

The two stories are a good reminder to me of how vital financial markets (especially the stock market) are to all businesses. It is a great institution through which indebted companies can find salvation through equity offerings and it is also where companies like Relish can find the means –and optimism– to go big.

Images: <https://lh3.googleusercontent.com/-CypQzbtC1Q0/UYt1pZbqtZI/AAAAAAAAKXE/zNzdMg1Exlw/AntiBarrick-GOLD.jpg> <http://s3-media2.ak.yelpcdn.com/bphoto/FkOCX3LkEpPT2AZI7HEucA/l.jpg>

Smogy China moving to create shared value

Article: China, pollution and choices to end an addiction to coal in favour of LNG

The experience of Fog-tober may be over for us here in Vancouver but for the people of Harbin, China, daily life is just beginning to enter the harsh months of choking smog that envelops the city every winter. In a city with an average winter temperature of -18oC, coal-burning power plants provide energy and citizens burn coal in their homes for heat. This practice has added Harbin to the list of just another Chinese city suffocating in smog – this month visibility was reduced to just 50m and air particulate recorded to be 40 times over international safety standards.

China is now in a frantic search for supplies of Liquid Natural Gas (LNG) as it finally turns away from its addiction to coal. The peoples’ health and wellbeing living in cities like Harbin exemplify the importance of Porter and Kramer’s notion of Creating Shared Value.

Since, China is still communist, the government is basically the firm. And with regarding the problem of smog from coal-burning as an externality for the past few decades they have finally come to realize that this practice is not only unsustainable, but is also actually an “internality”. The health of the citizen must be valued by the government because it is the backbone of China’s predominantly labour driven economy. Since sick people are unproductive people, the notion of Shared Value comes into play because the entire economy is better off when the government works to improve the citizens’ health by switching power plants to burn LNG instead of coal. Therefore, if China wants to continue to prosper in the future, this externality that became an internality must be dealt with in order to drive future profits.

Image: <http://www.vancouversun.com/news/world/cms/binary/9061828.jpg?size=620x400s>

Boeing’s Investment in Innovation Leaves Company Grounded

Articles: Boeing Marketing Reorg Illustrates Hazards of InnovationHas Boeing lost the battle for Japan?

The 787’s luxury cabin was great from a marketing standpoint.

Ten years ago, Boeing announced plans that it was going to differentiate itself from the competition by innovating a wildly new, exciting, and most importantly, futuristic aircraft for its airline customers. After numerous delays, it took nearly 10 years for the first 787 Dreamliner to finally be delivered and yet, by that time the idea of having a luxurious cabin and an aircraft designed nose to tail with state-of-the-art technology seemed to the airlines a mere recollection of the optimism of the past. With so many troubles plaguing the airline industry, and frustrations mounting from delivery delays and an infamous battery fire incident this past January that grounded the fleet for 3 months, the airlines that had originally placed orders for the 787 began looking for a substitute good enough to simply get the job done. They turned their back on Boeing and found solace in Airbus’s new A350. Japan Airlines (JAL), a once loyal customer of Boeing and key partner in the 787 development program, announced its decision this week to order 31 A350s – crushing news for Boeing.

I believe Boeing’s recent story has become a fine example of poor positioning strategy. They lost their edge to Airbus because they tried differentiating themselves with something that eventually became irrelevant to the airlines, whom this difference was costing, and with this difference out the window, the airlines held the buyer power. The airlines’ opportunity cost of holding on to the 787 eventually became so great that companies such as JAL finally responded by making the simple switch to the competition.

Airbus’s A350 [pictured] beat out the 787 in JAL’s recent fleet selection.

 

<http://www.hdwallpapersinn.com/wp-content/uploads/2012/08/Boeing-787-2.jpg><http://static3.businessinsider.com/image/51b61b2b69bedd5476000000-1200/heres-the-first-completed-a350-xwb-sporting-a-fresh-paint-job-in-toulouse-france.jpg>

Which to Import?

One thing I have long been confused and ill-informed about is the automotive industry; the last thing I remember having occurred years ago when GM and Chrysler filed for bankruptcy. Since then I never understood why new Chevy’s, Jeeps, and all continued rolling out of the TV promos and onto my neighbourhood streets. The article Boom here, bust there was able to shine some light on the situation for me. Apparently the American auto industry is booming. Say what? Though nowhere near what it once was, it still has managed to pull off a decent recovery. Europe’s automakers on the other hand have been struggling to make ends meet for the past 6 years. Looking at the European automotive market from Porter’s Five Forces model, it became apparent to me that the industry has some interesting rivalry caused by various characteristics. Slow market growth is probably the largest reason for manufacturer rivalry as demand for cars has declined significantly especially in Western Europe where the urban population often lives comfortably riding public transit. The Europeans are also suffering from an industry shakeout where automakers have been over-producing cars for years and this over-supply leads to price wars, competition, and failure. Another reason for European woes are government barriers in exiting the industry, such as France and Belgium’s laws making it extremely difficult and costly for Renault and Peugeot to lay off workers and shut down factories. In contrast, the United States looks strangely healthy; a younger population, cheaper production costs, and a leaner product output that actually suits demand can explain the recent boom. Now I’m left wondering, why is Detroit still broke?

Kilts Catching on in the USA

I was surprised to find a recent article today regarding Metro Vancouver’s very own Men in Kilts’ ambition of expanding their service to 50 new cities, mainly south of the border. Prior to reading this article, I had only heard of the company locally but had an unclear perception as to what they did and was totally clueless on their national expansion and success. As services like window cleaning tend to be predominantly local, it is very impressive that Men in Kilts has not only expanded eastward in Canada, but even to cities on America’s eastern seaboard in just over a decade and turned their annual revenue from $20,000 to $6 million this year.  I believe a major factor in why this company has been so successful is because it has positioned itself effectively in the market. As Al Ries and Jack Trout explained the power of a name. The memorable name of this company differentiates it from the competition as only it conjures images of “tough Scottish men labouring on your house” while having the friendliness and charm to wear kilts. Such a different customer relationship probably helps it in securing loyalty as well. Expanding on the power of their name, it is not limited by anything but their workforce and uniform. Since the name has no specific service attached to it, such as “Window Cleaning” or “Gutter Cleaning”, Men in Kilts has the ability to expand into countless more services as they enter those 50 new markets.

(Image from <http://www.vancouversun.com/business/smallbusiness/cms/binary/8994917.jpg?size=620x400s>)

Absolut Vodka launches new ad campaign to reconnect with target market

I recently found an article on The Globe and Mail that reported on Absolut Vodka unveiling its revamped marketing campaign featuring new, talented artists creating works for the brand that will be advertised digitally and conventionally.

https://www.youtube.com/watch?v=93uIGknDJIc

This classic distributor holds a point of difference in branding as it has always leaned toward a bold, striking, youth oriented image as opposed to a more conservative brand such as Russian Standard. After looking at several other Vodka brands’ websites to see their image, and thinking about a perceptual map with a bold-image to conservative-image axis, Absolut would fittingly be placed far towards the bold image end, a brand like Russian Standard Vodka would be more oriented toward the conservative, and furthermore, Smirnoff would range somewhere in the middle of the axis. I found it interesting how Absolut wants to reconnect itself with its target market (people about 20-35 years old) because the original consumer base they developed as loyal customers in the late 80’s has grown too old. I believe that selecting these multinational, talented, young artists to lead their campaign suits their brand image soundly and I wish them success with this campaign.

(Absolut’s vibrant image illustrated by its bottles <http://www.absolut.com/content/posters/Global/absolut-unique-promo.jpg>)

Business Ethics

As stated by Friedman, the business’s actions do not have to be founded upon the basis for societal well-being. Instead, the sole purpose of a business is to maximize the desires of its stakeholders, in most cases the desire being profit. I found an article from 1999 which discussed the “social responsibility” aspects of two of the world’s most well-known multinationals: Disney and Mattel. Having outsourced its production to firms in China, both corporations had come under scrutiny regarding sweatshop-like conditions in its factories. In response to this social outcry, Disney carried out thousands of inspections and even cancelled its partnership with one of its largest factories that failed to meet the criteria. Mattel implemented a similar stance. This is where Friedman’s mentioned “cloak” of social responsibility comes into play. Honestly, how many people would be convinced that the corporate executives at Disney or Mattel suddenly awoke with the decision that, under their corporations’ name, they simply wanted to improve the lives of their offshore employees? Because to me, there is no evidence to support than a corporation actually seeks to assist anything else but itself and its interests. Using the toy sweatshops as an example, Mattel only sought to better improve the conditions within its subcontracted factories because the brand and image of Mattel itself was under the threat of a public-relations disaster and a potential boycott of its products which, obviously, would in turn correlate to lost profit. The very essence of profit itself is far beyond monetary value. Profit could simply mean what benefits a business receives out of an investment – in this case the profit is an improved public opinion. A corporation seeks to improve itself under the “cloak” of social responsibility because it sees a potential benefit in the long run. Put simply, the corporation really does adhere to its fundamental purpose of maximizing the profits for its stakeholders. Businesses are really very much like humans because, when you help someone, aren’t you really just helping yourself?