http://nyti.ms/1841F9n

In this blog I have posted two links, one for a clip from the New York Times the Other is a Ted Talk by Chrystia Freeland. In the clip from the New York Times was about a handful of developments in Manhattan that are joining a larger group of large ultra luxury condominium developments marketed to the worlds billionaires. In the clip a digital rendering of a current project to build the Western Hemisphere’s highest residential building called 435 Park Avenue is averaging unit sales at $7000/sq foot. As exorbitant as that figure may sound a development in West London called One Hyde Park averages a $9500/sq. foot! The reason I attached this link along with the Ted Talk is because I watched by Chrystia Freeland was entitled :The Rise of the new global super-rich. She pointed out that income inequality in today’s global economy is increasing at an alarming rate. In America in the 1970’s the top 1% accounted for approximately 10% of the national income, but 2013 the top 0.8% account for around 8% of the national income.  When I heard those numbers and watching the clip about the growing demand for “ultra luxury” real estate in New York became very believable. I think their is a huge issue not only in the United States but globally with regulation of multinational corporations and political decisions that are supposed to be in the interest of the masses when billions of individuals live in poverty while the world’s elite are ready to pack up and move on up into an ultra luxury condo. I generally agree with a Capitalist system but government intervention is necessary in order to control the actions of the private sector when global economy reaches such levels of inequality.

http://www.businessweek.com/articles/2013-10-22/at-red-hot-chipotle-sustainable-ingredients-are-the-marketing

Chipotle Mexican Grill was one of the first fast food chains that I hadn’t recognized or been familiar with back in Ontario when I came to Vancouver. I tried it, immediately fell in love with the product. I’m most definitely a fan of mexican food and when I can get it on the go even better. But at the same time I haven’t stepped into a Taco Bell in years because by my standards that isn’t Mexican food and perhaps not even food at all! I’m only kidding but, on a more serious note the fact that Chipotle’s focuses on sourcing as much of it’s ingredients as possible from organic, local and sustainable sources definitely had a huge positive impact on my image of the brand and the food tasted much healthier than Taco Bell or some other mexican fast food chains. In the article it states that, “in March, the company became the first U.S. chain to label and push to eliminate its genetically engineered ingredients. That’s why Chipotle has created marketing messages that most fast-food brands would view with horror.” This strategy of focusing on where they get their ingredients and food from, as opposed to what it is, has allowed them to operate in an extremely ethical manner for their industry. It also allows them to differentiate themselves and market their product, cutting certain marketing and store costs while also selling a quality product to consumers that benefits the local economy and community. This is an awesome example of a company creating shared value and not just focusing on corporate social responsibility efforts.

http://www.businessweek.com/articles/2013-10-30/this-preflight-safety-video-is-selling-more-than-safety

Today we are bombarded with advertising, its almost impossible to escape where ever you go, but in some situations it just isn’t ok to be advertising to some one. In the operating room, while firemen extinguish a fire in your home, and perhaps while your being given emergency safety instructions on an air plane. Virgin America has now filmed an over the top, 5 minute theatrical video filled with both song and dance to replace their typical mild mannered to the point preflight safety video. On the surface this could be justified as a way to catch peoples attention, as I know from experience that the classic safety video’s aren’t the most engaging and frequent flyers almost block them out entirely, but they still concisely deliver some very crucial safety information to the passenger. The problem I see with this new “glee” (as stated in the article) like video is that the true purpose behind the video seems to become a blurred combination of engaging people of safety protocol and selling them the Virgin America experience. I feel as though I might be more inclined to watch the entire video, safety might not be what I have going through my head after it. I feel this touches on an ethical issue, that being to what extent the Virgin can/should be held accountable for how distorting the purpose behind the safety video.

Coffee giant Starbucks recently paid $2.7 billion dollars to get out of a distribution contract with Kraft Foods Group. Starbucks CEO Howard Schultz had this to say about the costly decision,“Having gained full operating control, we now have the flexibility and the freedom to control our own destiny and, most importantly, preserve and enhance the Starbucks Global business and brand around the world.” Starbucks executives believe that the future of the brand is one with a a large Consumer Packaged Goods element along with the development or their sales to hotels, airlines etc… Their CPG sales for the fiscal 2013 year hit $1 billion dollars which is double their sales from 2010. I found this article and more specifically decision by the Starbucks executives to be quite interesting because I had never considered how their operations deals and model could have been impacting their sales in such a way. The CEO explained that prior to paying out of the contract with Kraft they could only produce singe-serve coffee products for Kraft’s Tassimo System, forcing them to loose out on sales from competing systems such as Verismo  and K-cups. Hopefully investors agree with the CEO that this decision will pay off for Starbucks in the long run allowing their business to have more direct control of product channels and operations but and that the price of freedom in this case wasn’t too high!

Majestic Wine, is one of the UK’s largest wine retailers. The company recorded a 39% increase in sales in Prosecco, an italian sparkling wine bran over the past 6 months. The brand offers a cheaper alternative to French champagnes such as Veuve Clicquout and Bollinger. The Retailer stated the sales of the French Rival fell “flat” over the past 6 months while they saw a massive increase in popularity of Prosecco. They argue that the cheaper price tag makes Prosecco a very attractive alternative to champagne for those looking for something that can be enjoyed on more of a weekly or nightly basis as opposed to only on holiday’s or special occasions.  To me this article is a prime example for outlining the concept of bran positioning which I learned briefly about in our Comm 101 lecture on Marketing. Prosecco has done a good job of creating their value proposition, and positioned their brand accordingly. It appears to me that they realized people will always associate a French Champagne as the high end celebratory alcoholic beverage of choice, but they’ve also realized that’s not necessarily a bad thing. Prosecco has identified a position that they can be a leader in as opposed to trying to knock off the well established champagne. By marketing themselves a “luxury” beverage for every day Prosecco is successfully settling into a place in consumer’s minds and their sales are a reflection of that.

http://www.theguardian.com/technology/2013/nov/13/snapchat-facebook-buyout-offer-rejected

The popular and rapidly growing messaging app “Snapchat” recently turned down a $3billion dollar acquisition offer from social media leader Facebook Inc. The CEO and Co-founder, former Stanford student Evan Speigel says that he won’t be taking any offers into consideration until 2014 on the premise that the app will be able to continue to grow its user base and therefore “justify an even larger valuation”. To date the app has been downloaded by almost 10% of mobile phone users in the U.S. and currently has 350million photos being exchanged daily. Although Snapchat has been growing at an exceptional speed as it has only been around since 2011, the app has earned no revenue and like tech start-ups such as Instagram, Facebook and Twitter people question its profitability and actual intrinsic value. Speigel is only 23 year old and a part of me questions what’s really driving his decision making process. Facebook’s offer of $3billion is a very handsome and in my opinion a rather generous one considering at the Snapchat’s future is extremely unknown. They have little to no proprietary elements to their product or business model. Snapchat needs to maintain their cool factor if they hope to grow at their current rate and in today’s technology world for something to be cool is as fleeting a definition as ever. I personally believe the decision was greedy and would not refuse a 3$billion dollar offer for my “cool” app.

Facebook Inc. and Twitter Inc.’s logos

http://finance.yahoo.com/blogs/breakout/4-reasons-twitter-ipo-rocked-where-facebook-rolled-192651553.html

Twitter Inc.’s IPO on November 7th did extremely well. Their stocks went on the market at $26 and shot up almost 73% in the first day of trading. Lots of debate and discussion preceded Twitter’s IPO with sources arguing both ways in terms of how successful or unsuccessful people claimed it would be. I would argue that a big reason for the magnitude of buzz around the microblogging social media company was due to the disastrous IPO that Facebook had in May of 2012. Although Facebook Inc. has recovered well their IPO provided twitter with a long list of what not to do’s when it came time for them to take a kick at the can. This Yahoo Finance article and interview outlines 4 reasons why Twitter’s IPO was incredibly successful and Facebook’s couldn’t have gone more wrong.

1.Market Timing : The Market is in a much better position now than it was a little over a year ago when Facebook went public, and even furthermore positioned exceptionally well for an IPO.

2. NYSE not Nasdaq: Historically tech start ups have sought out the Nasdaq as home to their IPO’s, which exactly what Facebook did. Unfortunately, the Nasdaq was partly responsible for Facebook’s catastrophe and for that reason Twitter decided to go public the NYSE. According the article the NYSE did an exceptional job with Twitter Inc.’s IPO.

3. Stage of the Company: Facebook was a much more mature company when it went public, it had a massive user base and already began earning revenue. Twitter on the other hand had is and was at much younger stage in its life, this leaves a large amount of opportunity and speculation regarding it’s future.

4. Facebook was 1st: Sometimes being 2nd has its advantages and Twitter undoubtably gained a lot from having its IPO after Facebook. They were able to look carefully at what went wrong in order to decide what to do write when it was their turn.

My question now is that would Twitter’s IPO been nearly as successful as it was had it not been for Facebook’s failure to provide them with a road map of what not to do? How much of Twitter’s success can actually be chalked up to their own company and not their ability to learn from another’s mistakes? How does this relate to their market cap, is it really a proper valuation of their business? It will be interesting to monitor Twitter’s stock over the following year as the begin to implement real revenue generation models.

http://www.businessweek.com/articles/2013-10-29/goldman-sachs-tells-its-new-employees-to-work-less

Goldman Sachs, the multinational investment banking firm has taken an interesting approach to attract junior analysts and protect them from being snatched up by rivals. In the online article from Bloomberg Business Week it explains that the firm is encouraging their Junior Bankers to take weekends off, when historically the first several years of an investment bankers career have been characterized by gruelling 7 day work weeks. Goldman’s Co-Head of Investment Banking David Solomon explains that, “The goal is for our analysts to want to be here for a career”. The industry is extremely competitive but those who have what it takes to make the cut are still privy to working for the company of their choice and Goldman Sach’s believes that this tactic will attract the some of the best talent out of school and encourage them to learn and stay with their firm. In the article the point is raised as to whether or not this type of incentive can actually be implemented considering the type of work ethic and drive young investment bankers all share. I believe that this decision is a smart play by the firm. The finance world is physically and mentally tolling on even the smartest and most resilient of the whose chose to work in it, and moves like this allow Goldman Sach’s to create an appealing corporate culture and be pioneers in and industry that seldom reaps the benefits of a happy healthy and well rested employee.

Video Crain’s: Best Places to Work 2012

Red Frog Events LLC is an event management/planning company that was founded in Chicago in 2007. In 2012 the company ranked 9th in Crain’s Chicago Business’ annual list of Best Places to work. In 2013 Forbes Magazine named Red Frog #18 on their Most Promising Companies in America list.

Whats their secret? Founder and CEO Joe Reynolds would accredit the companies success to their exceptional team and corporate culture. From the start Reynolds wanted to instil a “work hard, play harder” mentality into the culture of the business. Naturally one would assume an element of creativity is fundamental to any event planning company but Reynolds insisted on taking it one step further. During the first 2 years of its life the business was extremely successful and moved into a larger space which is referred to as camp red frog by its founder and employees. Reynolds claims that the costly investment into the space was necessary to achieve the culture he envisioned for the business and inspire employees to be as creative as possible. The environment makes employees want to be at work and beyond that; features several amenities that make it hard for one to leave. Things like a $100 000 tree fort conference room/ work space, a meeting room with swings instead of chairs, foosball tables, free food and alcoholic beverages and the list goes on. The real appeal of working for Red Frog is their Unlimited Vacation Day policy and exceptional health care benefits and insurance package. The companies extremely selective hiring process allows the business to remain profitable and efficient despite the obvious potential for a Red Frog’s business model to be a money pit. I believe like Zappos Red Frog has carved out a unique corporate culture model and work environment where employees want to work as hard and efficiently as possible because they truly love their job, and as a result the business’ balance sheets reflect this accordingly. Who needs a vacation when going to work already feels like a holiday?

Red Frog Events’ entrance to their unique and fun office space in Chicago.

“‘Burgernomics’: Behind Today’s Fast Food”

-Video from The New York Times

The End of an Era: Aging Fast-Food giants might be in serious [Mc]trouble.

 More and more individuals in North America are becoming concerned with what’s going into their food and where its coming from. Healthy living and eating is sweeping across Western society at a rapid rate. Eating gluten free has become “cool” and ensuring your local burger joint is using quality, fresh, and sustainable ingredients is a must! Consumers are today are much more concerned with the quality and sourcing of their food and this behaviour of increased awareness has even begun to reach the fast-food consumer. Not only are people concerned with what they’re putting into their body, they want to make sure the person on the other end of the counter is earning a fair wage before they decide if they wan’t fries with that! Fast-Food giants, such as McDonald’s, Wendy’s and Burger King aren’t seeing exceptional growth they’ve become complacent in for decades and will need to learn to adapt to this needs and wants of this new generation if they hope to survive in the long run. As is seen in the video from The New York Times, consumers as young as 8-10 years old want to know what’s going into their food and are willing (or at least their parents are) to pay more for better quality product. Perhaps the first change for many of these titan’s is to look at the ethical structure of their business model and move away from maximizing efficiency (i.e low quality goods and poor wages and employee treatment), because as is outlined in the clip McDonalds bottom line products have the worst profit margins of all their products. Although we may be decades away from seeing the fall of the golden arches and their siblings, new ethically aware and conscious generation of consumers has arrived and if they’d like to stick around we would like our voices to be heard (and our organic beef patties on gluten free buns)!