Apple launched two versions of the IPhone to appeal to two target groups: iPhone5C for those who are cost-conscious, and the iPhone5S for those who want a luxurious version. From my friend Jessica Lao’s blog on “IPhone5, Dilemma in Choosing Which Phone to Buy,” she believes that such strategy is a huge leap for Apple.

I, however, don’t see it working well in the market in China. According to market research firm Canalys, statistics showed that Apple currently has 4.8% of sales in China, down from 9.1% in 2012. Personally, reasons for this might be that Chinese people generally value prestige over functionality. Since it’s almost impossible to distinguish iPhone5 from iPhone5S, Apple failed to satisfy customers’ desire to show off the feeling of superiority from having the newest iPhone. Since iPhone5C is positioned as a low-end version of iPhone5S, purchasing iPhone5C doesn’t satisfy such desire either. I mean, really, what’s the point of buying a new phone that looks exactly the same as the one I already have? And why would I buy an iPhone5C that’s almost like telling others I cannot afford an IPhone5S?

Sometimes it’s customers’ attitude and purchase behaviors that determine how successful a product is, not the product itself.

Reference:

http://www2.macleans.ca/2013/09/26/chinas-apple-clone/

Picture Resource:

http://androidandme.com/2013/09/devices/spec-showdown-apple-iphone-5c-iphone-5s-versus-the-android-competition/

They say if you are just imitating something, you cannot overtake it. However, it is not always the case in China. Xiaomi, a Chinese version of IPhone, is often condemned for imitating Apple’s product launches. According to Rosemary Westwood’s blog, Xiaomi has eclipsed Apple’s products sales in the Chinese market. Two years after launching its first phone, Xiaomi accounts for 5% of smartphone sales comparing to that of Apple (4.8%).

Price has always been a potent factor that contributes to huge sales of Xiaomi’s products. The price of a Xiaomi smartphone is $285. Given the average salary in Beijing is around $870, clearly Xiaomi has a its price as a competitive advantage comparing to IPhone 5s’s price as high as $757. Indeed, Xiaomi’s sale’s strategy is actually the antithesis of Apple—partly the secret of its success. Apple earn fat margins off hardware and services, while Xiaomi is almost selling its phones at cost, according to Iris Mansour.

A larger sales volume does not guarantee a larger profit. Apple still beat Xiaomi in terms of profit gained. And the questions come to me is, although Xiaomi has beat Apple in China, can it win over the rest of the world by using the same strategy?

Reference:

http://www2.macleans.ca/2013/09/26/chinas-apple-clone/

Picture Resource:

http://asia.cnet.com/xiaomi-miphone-3-will-come-with-either-tegra-or-snapdragon-processors-62222292.htm

A company’s brand image that’s generated through its long history of operating is undoubtedly a treasure, a core competency that has to be protected. Hao Yi Huang’s blog “China KFC brings in fishball soup to outcompete rival franchises” illustrated such a case. In the blog, Hao disagrees with KFC’s decision to introduce Chinese fast food into a Western fast food restaurant like KFC. She claims that doing so “defeats the purpose of why customers even visit KFC in the first place- to get a foreign experience.”

Personally, I don’t agree with what Hao believes. When KFC first went into market in China, its value proposition might be to offer a Westernized food experience. However, as more of the similar firms such as Pizza Hut and Dicos (we can consider them substitutes in this case) enter the market, KFC’s initial value proposition is not as powerful and unique. That’s when product differentiation becomes necessary. Besides, as customers no longer see KFC just as a Western fast food restaurant, but rather, a quality-guaranteed restaurant providing freshness and convenience, KFC should introduce products that actually meet today’s customers’ needs – healthy fast food – instead of blindly insisting in its out-of-date value proposition as to provide fried chicken only.

Reference:

https://blogs.ubc.ca/kathyhuang/2013/10/16/china-kfc-brings-in-fishball-soup-to-outcompete-rival-franchises/

Picture Resource:

http://www.ministryoftofu.com/2011/01/mcdonalds-repackages-branches-china-lure-chinese-young-middle-class/

Continuing the discussion of Enbridge Pipeline, a question comes to me – to what extend, geographically, does the concept of shared value apply?

Shared value is defined as policies that enhance the competitiveness of the company while advancing the economical and social conditions in the community in which it operates. In the case of Enbridge Pipeline, it has stated that this project will create direct construction employment of up to 1500 jobs and that Alberta will get substantial revenue. However, economics also suggested that the Enbridge Pipeline would result in an inflationary price of oil, thereby posing serious threats to Canada’s economic wellbeing as a whole. So the question is, how do we define a community in which the Enbridge project operates? If we think of community just as Alberta, implementing Enbridge Pipeline project is viable because of the boost in the local economy from the direct construction employment of 1500 jobs. However, in a much broader sense, Canada’s economic wellbeing is put into threats if provinces act solely on their own initiatives. So the central conflict lies at the different perspectives we choose to look at issues and a mutual agreement is not guaranteed even when people are trying to reach the same value principle.

Reference:

http://www.northerngateway.ca/assets/pdf/Project%20Brochure/ENB_NGP_BrochureOct26.pdf

For decades a federal moratorium has protected B.C’s sensitive northern waters from crude-oil tankers. However, all that will change if currently proposed oil pipelines are built from Alberta to B.C, carrying 250,000barrels of oil and 150.000 barrels of condensate per day, a project known as Enbridge Pipeline. While Enbridge Inc. loudly proclaims huge benefits from such a project, environmentalists and economists are in an uproar of condemnation. So the real question is: should the Enbridge Pipeline project be continued?

Looking at this debate reminded me of an important concept we learned in class that is linked to this controversy– shared value. Shared value is defined as policies that enhance the competitiveness of the company while, as the same time, advancing the economical and social conditions in the community in which it operates. Given the possibility of the Enbridge Pipeline spill being as high as 90%, according to a study from SFU, such practice clearly doesn’t match up with the concepts of shared value. While Gateway, the CEO of Enbridge Inc., may profit substantially from this project, huge costs will be borne by Canadians in degradation of their environment and quality of life.

References:

http://www.gatewayfacts.ca/about-the-project/project-overview/

http://www.cbc.ca/news/canada/british-columbia/enbridge-spill-risk-more-than-90-sfu-report-says-1.1362489

In recent years, business has been increasingly viewed as a major cause of social problems. According to what we learned in class, a big reason behind such criticism is that businesses had remained in an out-dated approach to create value preposition – blindly focusing on the short-term financial goals while ignoring the broader influences that would determine its long-term benefits. In order to address this issue, businesses have to realize that anything gained today at the expenses of the future is not encouraged.  On Nov.15th, 2013, Ikea Canada announced its purchase of a 46-megawatt wind farm in the southwest Alberta community. This wind farm  that is expected to generate 161 gigawatt hours (GWh), which is twice as much as Ikea”s annual consumption, can for sure make Ikea self-sufficient without exhausting nature’s resources.

“The development of renewable energy has been and will continue to be important to a sustainable future for Alberta,” said Ken Hughes, Alberta’s energy minister, in the Ikea release. What Ikea did excellently illustrated the concept of sustainability. Ikea is demonstrating its commitment to the energy footprint. Truly, the capitalist system is under siege; the idea of sustainability is emerging.

Reference:

http://lethbridgeherald.com/news/local-news/2013/11/ikea-purchases-area-wind-farm/

Burger King wants its health-conscious customers to feel less guilty when gobbling up its French fries. As a result, Burger King has released a new product, the “Satisfries,” featuring at offering 40% less fattened 30% fewer calories than the McDonald’s fries. While Burger King is extracting fats out of its fries, the stock has generated fat returns. The shares are increased for 18% so far in 2013, outpacing the 7% gain for fast-food colossus McDonald’s, according to the forth quadrant report.

Miami-based Burger King runs the second-largest fast food chain stores with locations in 80 countries, right after the King of fast food chain, McDonald’s. As the competition among fast food restaurants grows fierce, According to the article “Brand Positioning” by Ries and Trout, a company that pretends that the market leader does not exist is likely to fall. By acknowledging and linking itself to the No.1 Company, McDonald’s, yet emphasize its difference – the healthier fries, customers can more easily relate Burger King to McDonald’s. Therefore, a “substitution effect” is created, in that customers who favor healthy fries will choose to purchase “Satisfries.”

Burger King’s Promotion of “Satisfries”:

https://www.youtube.com/watch?v=ajesfE2ZGDY

Reference:

http://www.bnn.ca/News/2013/10/4/Burger-King-tries-to-fatten-margins-with-skinny-fries.aspx

Picture Resource:

http://www.brandeating.com/2013/09/news-burger-king-new-satisfries.html

Starbucks, one of the largest coffeehouse in the world, has filed a trademark as “Fizzio” for its trials of launching carbonated drinks.

From analyzing such a case by Porter’s Five Forces, Starbucks’ action can be categorized as a differentiation of products due to increasing rivals. The saturating coffee market will bring about the pressure of close competition from rivals; the competition among Blenz, Tim Hortons, and etc. will be markedly fierce. Furthermore, a large number of firms also slows down market growth, in that firms are having a hard time fighting for market share.To prevent from being stifled once the market of coffee-related drinks becomes saturated, Starbucks utilize its unique and powerful brand identity and opened up many new opportunities.

However, such a seemingly beneficial proposal is hard to put into action. In terms of value proposition, people regard Starbucks as a brand of coffee, and it would be hard for them to link that conception to carbonated drinks. While Starbucks wants to diversify its value proposition to step into a relatively unsaturated/undeveloped market,its strong value proposition has branded in customers’ mind. In order to expand the market, Starbucks may have to put extra effort into marketing its new products.

Two things happened in those days that are in extreme contrast: The Canadian Tech Darling of BlackBerry announced that it expects a loss of roughly $1 billion of the second quadrant, whereas Apple proclaimed that the combined sales of its  iPhone 5s and iPhone 5c peaked at 9 million units through the first weekend of resease. Why is there such a huge difference? According to Gerry Purdy, an analyst from the mobile sector for Compass Intelligence, BlackBerry was overconfident with its revenue coming from device sales in a way that it missed out the opportunity to create a more advanced system, an imperative medium in order to keep up with the increasing expectation of smart phone from customers. Hence, the once pioneer company in the field of smart phone quickly lost its competitive advantage as it failed to keep pace with innovations from the most uprising rivals, Apple. Indeed, what BlackBerry incurred demonstrates the magnitude of customization. BlackBerry persisted in producing cell-phones with physical keyboard while ignoring the coming age of touch screen. Without pinpointing customers’ changing demands, it failed to tailor its product cycles in a timely fashion, which brought about the gigantic loss in both financial aspect and brand loyalty.

References:

http://www.ctvnews.ca/business/following-another-round-of-massive-layoffs-what-s-next-for-blackberry-1.1464552

http://bgr.com/2013/09/23/apple-iphone-5s-5c-sales-numbers-opening-weekend/

The Enron Scandal is considered the most notorious one within American History. By misrepresenting earnings reports, the executives of ENRON embezzled funds funneling in from investors who were not privy to the true financial condition of Enron. It took Enron 16 years to go from about ten billion dollar assets to more than sixty-five billion dollar assets, and took just less than a moth to go bankrupt. Looking at the case, Enron’s culture contributed much to this ethical scandal. Indeed, Enron emphasized competition and financial goals only. The harsh, condescending atmosphere resulted from the sole pursuit of financial achievements caused a culture of deception. Due to the fear of losing jobs, employees started blindly focusing on making good financial numbers and ignored the value of ethic. Once someone started cheating, his co-workers would have to do the same- regardless of the notion of righteousness- to keep up the financial achievements and avoid losing jobs. This fiercely competitive environment also led to a lack of communication among employees. When there was little information being shared, nobody really has the “big picture” perspective of the company’s operation. Thirdly, the lack of communication between employers and employee also contributed to the fraud. In Enron, it’s discouraged to express one’s doubts and opinion on the executive team. Therefore, employees in Enron were pressured to shut their mouths, protect their own short-term interests, and try to achieve their goals even if it went against ethical standards.

A interesting video to watch about the AMAZING rise and SCANDALOUS fall of Enron.

 “People become the victims of their own greed.”

Reference:

Kirk Hanson  (2002) Japanese newspaper Nikkei:Lesson from the Scandal

http://www.scu.edu/ethics/publications/ethicalperspectives/enronlessons.html