Photo credit

High prices infuriated Netflix customers to the point that Netflix lost 800,000 subscribers. In this July to September period, Netflix’s stock has plummeted the most that any DVD by mail rental has since 1999. In response, Netflix decided to raise 400 million US from external investors by issuing debt and selling 2.86 million shares of stock. Analysts believe that fundraising is a sign for trouble ahead and predict that the stock price will fall from its current $69 to $45.  Netflix’s CEO believes fundraising will pay off; “It’s not that we need the money, but it’s always nice to have more money than you need,” quotes Netflix spokesman Steve Swasey.

It is evident that Netflix needs to change their current plan to increase their revenue. The increase in external investment in the company will lead to a loss of control of the company as each investor is credited voting rights. In addition, Netflix has failed to notice that their product is price inelastic. The raise in price discouraged majority of their customers. Instead of looking for payouts, Netflix needs to adjust their prices to accommodate their target market.

Netflix stock in free fall

Photo Credit: Nike Write the Future Timeline    

Nike and Adidas, the two largest rivals for soccer gear worldwide, implemented two very different marketing schemes to attract attention for the 2010 World Cup. Adidas became the official sponsor; the referees wear Adidas, footballs are Adidas-branded also televised ads for football apparel during matches was only for Adidas. Conversely, Nike used ambush marketing. Nike created a 3 minute TV commercial called “write the future” that featured the world’s best soccer players with an intriguing cliff hanger ending. Here’s a link to the commercial.

Nike Write the Future

The success of Nike’s campaign was indisputable. Following the initial airing of the commercial, followers of the Nike brand doubled in online media and the commercial was viewed by over 20 million people.

Adidas did not have close to as much success.  Everyone believed that the World Cup was sponsored by Nike. Nike’s profits rose by 30% whereas Adidas’ rose by 12%.

Although Nike’s tactic of ambush marketing is not as ethical as Adidas full sponsorship, it clearly worked out for them. From this, I believe it is evident that ambush marketing is a huge threat for companies to sponsor world sporting events.

The World Cup Brand winner: Adidas or Nike?

After reading an external blog, it is evident that the most prominent complaint against Lululemon is their supply chain problems. Complaints have soared in about Lululemon’s extreme lack of inventory as well as poor shipping processes.

Here’s a link to the external blog: Shipping issues

The shipping processes are a huge problem because of the fact that Lululemon advertises its ability to hem or personalize pants and ship them back to your home. In addition, the suppliers of Lululemon are unable to keep up with the increased demand for the product. It is evident that Lululemon must change its supply chain in order to accommodate consumers.

The fact that Lululemon flies through inventory may not necessarily be a detriment to the company. Lululemon will have a high stock turnover rate therefore will be perceived as innovative as they will constantly be displaying new fashions.

I believe that Lululemon needs to solve the transportation aspect of their supply chain management in order to satisfy customer needs. Conversely, I believe that if Lululemon wants to remain innovative it would be more beneficial to continue keeping a low level of inventory and keep replenishing new items into the store.

Inventory control

I find it astonishing how the sound of a name can justify your employability. I completely agree with Rachael’s belief that choosing English sounding names rather than foreign ones is an unethical business practice as well as a form of discrimination.

Here’s a link to Racheal’s post

This problem is somewhat inevitable. These types of discrimination happen in the workplace every day.  For example, men are typically hired over women just because companies don’t want to pay for maternity leaves. That’s just the way it is. In this instance the business does not want to have any sort of liability pertaining to the fact that their employee cannot communicate with the customers efficiently. Therefore, someone with a non-English sounding name gets stereotyped into being unable to speak English properly.

Businesses are somewhat “too harsh” in the weeding out process during hiring. Unfortunately for the business, it can allow them to overlook a perfect candidate for their specific position. Companies should not hire people based on their ethnic background, a company should hire someone for their quality of work, past experiences and by how qualified they are to the job.

Appnovation is a Vancouver based interactive agency specializing in developing websites and software application that can be ran on Blackberry, Apple and Android devices. Appnovation was founded by Arnold Leung, a 2007 UBC Sauder school of business graduate. Over the past few years Appnovation has developed relationships with MTV, the Ontario Government, the World Wildlife Fund and many more. Arnold Leung clearly fits the definition of an entrepreneur, as he is a person of very high aptitude who pioneers change. Appnovation is innovative, high risk, and profitable therefore fits all the criteria to be an entrepreneurship Appnovation’s innovation has led to new developments for applications for modern technology. Appnovation has generated profits as a rapid pace as they have already surpassed the 2 million dollar mark after less than 4 years of operation.

Here’s some links to learn more about Appnovation.

Youtube video: Appnovation

Appnovation Web

Picture Credit: Nike is Changing the World

Sienna posted a blog about “The girl effect” that Nike has founded to promote women’s education in developing countries.  Here is a link to her article: Business Ethics

Sienna’s blog, as well as our discussion on corporate social responsibility in class intrigued me to research Nike’s current social responsibility plan. The following is what I have discovered.

After the constant criticism of using child labour, poor working conditions and poor wages, Nike decides to clean up its act.  Nike has increased its wages to above the national minimum wage and no longer use child labour.

Nikes turn around in other aspects relates to the importance of Corporate Social Responsibility. Without social, economic and environmental aspects taken into account, Nike cannot be viewed as a modern, innovative business. Nike prides itself in being the top sporting goods brand, and cannot allow itself to lose customers because of their supply processes. With the implementation of their social responsibility plan, Nike’s profits have soared.

I agree with Sienna that what Nike is doing is socially responsible. With the addition of cutting child labour and poor working conditions, Nike redeems (to some extent) the past unethical things the company has done.

Corporate Social Responsibility News

When economic hardships prevail, what do consumers turn to? Well, cosmetics of course.  During the recession in 2001, Leonard Lauder, of Estee Lauder has observed in times of economic hardships, the demand for cosmetics drastically rises. Consumers find joy through simple pleasures.  Economist David Rosenberg believed these purchases reflect the “era of frugality,” as people are more willing to save. Spending patterns have shifted to sporting goods and hobbies rather than purchasing foreign cars or extravagant toys. The use of shopping coupons is up 27% from 2008. People need to save. It will always be more cost-effective to purchase sporting goods or hobbies or “homemade fun,” as it will lead to happiness. To achieve Maslow’s self- actualization, a consumer would benefit from pursuing a hobby as it is not artificial happiness created by materialism. However, it is hard to differentiate what really creates happiness, owning luxury goods or pursuing a hobby.  It is evident that in times of economic hardship, one cannot purchase luxury goods, therefore must turn to the alternative. It leads to self- actualization rather than self-esteem.  Can one achieve self-actualization materialistically?

Lipstick Index up as American Seek Small Luxuries

Maslow’s Hierarchy of Needs

Abercrombie and Fitch a premium brand feels their brand image is being tainted’, by Mike Sorrentino, a cast member of “Jersey Shore”.  Mike, “The Situation,” has been spotted gallivanting around Europe intoxicated and insane. In response, Abercrombie offered Mike a substantial payment if he agrees to stop wearing Abercrombie. Abercrombie believes that they belong in the luxury brand sector that caters to only high income population. Therefore, Abercrombie believes that their image of elite, aspirational teens is not well represented by The Situation. Their profits were reportedly failing because of him. Is it ethical to disallow someone to wear a brand?  After Abercrombie’s announcement to pay The Situation, their profits have fallen 7%.  Abercrombie alienated their consumers. Abercrombie is too fixated on their brand image to realize that perhaps it’s their product needing a fix. A company cannot arbitrarily choose their consumers! Abercrombie’s elitist arrogance is tainting their brand.  Shouldn’t anyone who pays for a product be allowed to wear it?

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Wal-Mart's Old Slogan?

Wal-Mart dominates the supermarket world but is looking for a change to affect consumer behaviour. Wal-Mart has found that continually reducing prices on their goods has been less successful than anticipated. They are unable to attract wealthier consumers with their bargain brand goods. Therefore, Wal-Mart has decided to offer more expensive brands such as a new food line “Our Finest” and Bauer sports equipment. I believe that this is yet another attempt to change consumer’s behaviour.  By allowing a new target market in their store, Wal-Mart believes they will buy high quality brands as well as Wal-Mart’s existing brands. I believe that this may alienate their old customers. Due to Wal-Mart’s reputation of being a bargain brand, I do not believe that they will be able to attract a new market of elitists. In addition, they will lose brand loyalty from their previous customers. Wal-Mart must stick to selling bargain brands.

Wal-Mart Cashes in on Income Gap

Dell, a multi-national computer and technology corporation has been found using unethical business practices. Customers believe that Dell is using “the bait and switch.” Essentially “the bait and switch” is a selling tactic where a company advertises an extremely cheap item, but when the consumer goes to buy it, they switch it with a more expensive alternative. In this case, a computer was advertised at $599 that included a printer, but was sold out, so Dell billed the client $1300 for a similar computer. It is evident that these unethical promotions are affecting the brands image. Dell no longer dominates the market. My question is, why would Dell, an already successful, established business need to use these unethical practices as a promotion? Perhaps it is because they are being dominated by Apple or Sony.

Dell Sued Over Bait and Switch Charges