As mentioned in the blog post, Flying Different….. The Boeing 787 Dreamliner, by my classmate Yen Fung Wong, he describes the lucrative future aspects of Boeing, which is finally launching it’s Boeing 787 Dreamliner after more than 3 years of delay.

I would like to focus on the cost of that delay rather than on the opportunities that are presented by the launch.

Announcing such a huge up-come of a product and not being able to meet their time target shows stakeholders one thing: something went wrong.

Whether it may be technological difficulties, economic factors or managerial reasons, it does not really matter which one of those applies, but it matters that stakeholder’s perception worsens as the company does not perform the way it should be.

Consequences can range between bearable and drastic. The stock can fall rapidly, which can result in lower market capital for fund rising or capital utilization. Furthermore the number of stakeholders might decrease as known unreliability is a very devastating factor to be associated with as a company.

To conclude a company should always ensure meeting their announcements and enough research and adequate analysis should be carried out in order to not fail meeting those, as in the case with the Boeing 787 Dreamliner.

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Sources:

• http://recoveringengineer.com/wp-content/uploads/2010/03/question-mark-statue.jpg

In a previous blog post by my classmate Douglas MacKellar, Johnson&Johnson’s Approach to a Sustainable Future, he outlines the approach to sustainable undertaken by the company Johnson&Johnson. Not only does the company set themselves targets for sustainable future development, but they also see it as their obligation to benefit their environment, which resources they are using.

I would like to add to his comment that not only the environment benefits from sustainable environment, but also does the company in numerous ways such as brand-recognition, positive press, and targeting future markets.

I want to mainly focus on the brand-recognition, because if a company succeeds at establishing themselves as a leading firm that society and general mass psychology perceives as benefiting their living sphere, then the society, i.e. the customers are more likely to support that view and action undertaking by purchasing their product, enabling the firm to act in a sustainable manner and improve sustainability further.

As a recent trend, not only Johnson&Johnson, but also other major successfull firms have been focusing on approaching sustainability as reputation within the business industry is a vital factor to possess; hence a firm should seek to operate in a sustainable manner as shown in the figure.

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Sources:

• http://www.jnj.com/connect/caring/environment-protection/

• http://upload.wikimedia.org/wikipedia/commons/thumb/7/70/Sustainable_development.svg/300px-Sustainable_development.svg.png

The size of a company can most certainly have an impact on the footprint that its failure can leave over an area in relation to time.

We can think of examples such as the automobile industry that can often provide critical economic development to an area by creating working-class jobs. If that company fails, it is undoubtedly the case that the resulting job losses would be more severe than those experienced in the wake of the closure of a smaller company, that only influences the local economy to a lower extent.

A governments responsibility to step in and offer capital restructuring opportunities should be carefully weighted against the social cost associated with the second best alternative use of that capital and should most certainly be structured in a way such as to encourage payback, profitability, and efficiency. As economists say, there is no such thing as a free lunch and so there should be no such thing as a free handout either.

Nevertheless, no company is bigger than the people it employs. Size offers no assurances against failure; thus a company cannot be too big to fail. However, government will tend to ensure survival of large companies, as their failure can be severe.

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In the summer of 2011 I was given the opportunity to work for one of the best Investment companies in Toronto: Byron Capital Markets.

Byron Capital Markets is an Investment Bank in Toronto that primarily deals with financing rare earth, commodity and precious metals projects. Campbell Becher is the CEO of the company since 2009 and has demonstrated incredible entrepreneurial skills to myself, which I was able to link to their current business performance within the industry.

He is extremely dedicated towards working culture. He is the first one in the office in the morning and the last one to leave. This shows his motivation and the incentive of motivation he gives to his employee’s.

His specific adaption to clients inquiries enables him to be innovative. Because he listens and responds to the clients he services, he makes the most precise and effective changes to ensure their loyalty and satisfaction. Furthermore the time consumed in this process is minimized through high communication and ability of employee’s to adapt once factors of finance projects change. This maximizes the firm’s profit, and minimizes the risk to a low extent; hence his business can be classified as tremendously successful due to entrepreneurial skills.

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Sources:

• http://www.byroncapitalmarkets.com/

• http://www.byroncapitalmarkets.com/byron/campbell/

The idea of outsourcing requires context in order to arrive at an opinion on whether or not it is positive or negative.

Outsourcing to companies is only likely to be engaged if there is a reasonable expectation that doing so is advantageous to the company who is seeking to outsource. Companies usually recognize when another firm has competitive advantages to better fulfill a certain requirement, hence they demand their service for better business performance.

There is also qualitative advantages that can be derived from outsourcing such as those obtained when capital flows to socio-economically challenged areas. The foreign investment has the potential to build upon raising living standards and creating jobs, whereas the negativity associated with outsourcing typically stems from the idea that firms have a responsibility to invest in their own backyards and that doing otherwise can take away from the economic performance of their home country. Outsourcing may also pose moral dilemmas where outsourcing providers fail to maintain adequate working standards.

When the concept of outsourcing is understood, it can provide positive benefits for business performance by seeking out efficient opportunities when companies weigh their decision to outsource on both quantitative and qualitative grounds.

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Distributors can directly and indirectly affect the performance of businesses they do commercial activity with as well as those with whom they may not have a relationship with but do operate within the same industry.

Direct influence on business performance can occur when distributors fail to accurately maintain consumer confidence. Reductions in consumer buying will arguably have detrimental affects on supplier orders. If a distributor receives bad publicity, it can impact upon the supply chain and have adverse affects on more primary levels.

Indirect influence from other distributors may affect business performance of non-affiliated operations if those distributors are large enough to have influence on public opinion. This can be both a positive and negative influence.

The distributor is most often the relationship manager in terms of aftercare, trouble-shooting, and dispute resolution. This emphasizes why a distributor needs to service its customers well if it wants to maintain a healthy consumer demand and thereby demand at the prior stages of its own supply chain. Economists call this rippling affect from consumer to the beginning of a supply-chain the ‘bull-whip affect’ because of the incremental changes felt throughout the various levels of a supply-chain with the strongest being felt at the base level.

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Sources:

• http://www.quickmba.com/ops/bullwhip-effect/

• http://3.bp.blogspot.com/_eW5SzPH5YSQ/R8ucMkrDJXI/AAAAAAAAABY/Kf4Mk0E66xY/s400/Bullwhip+Effect.JPG

Why firms fail to accurately stock the right quantities of products depends on multifarious factors.

Firstly, even despite the best economic forecasts, they are at best, strong likelihoods of an event occurring; hence predictions about future demand are likely to be wrong; thus firms cannot know the perfect quantity. Nevertheless, inventory systems have been developed that allow a company to reduce the risk of having excess or insufficient stock, like those governed by the ‘Just-in-time’ principle do best at limiting excess stock. An example of a firm that has demonstrated success with this model is Wal-Mart.

It should be noted that perfect quantity can be achieved on a custom-order basis. While this model is not ideal for all consumer goods, it does well under circumstances like those affiliated with luxury purchases like high-end automobiles or government infrastructure components like trains, planes or ships like those related to government awarded contracts to companies like Irving shipping. This implies that the product is produced after the consumer has demanded it and is willing to wait for it.

To conclude typical market circumstances for most goods make it difficult to accurately predict consumer demand and thereby maintain the leanest and fastest moving inventories.

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Sources:

• http://web.archive.org/web/20040909200301/http://www.businessreport.com/newsDetail.cfm?aid=127

• http://money.howstuffworks.com/wal-mart.htm

• http://www.canadianmanufacturing.com/general/halifaxs-irving-big-winner-in-33-billion-federal-ship-contracts-44865

• http://www.huffingtonpost.com/theblog/archive/walmart-movie-posters.jpg

The value of a stock determines the market capital that a firm holds. The analysis of market capital of a firm is vital for its business decisions, because it influences the rate of return to stockholders, output ratios, stakeholders interest and other relevant business factors. Hence a firm is always considering its stock value, as rapid changes can deteriorate a business significantly.

An important factor to consider for stock markets are always future expectations. Potential buyers often carry out detailed research before buying a stock of a company. Their  assessment of a companies future performance is essential for their decision. Factors that can influence the assessment of potential buyers or their perception of a firm are public media, public business portfolios and past business strategies.

The article mentions the raise of the stock of Yahoo Inc., because the public media has published articles with possible emerges with Microsoft Corp. In a case where a lowered value company is overtaken by a well-known established firm, a higher concentration of potential buyers result. This increase in potential buyers often leads to short-term fluctuations of the stock, mostly increasing. Long-term increases usually only occur along  big, and sometimes risky, changes or large quantity buys.

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Sources:

• http://www.forbes.com/feeds/ap/2011/10/10/technology-broadcasting-amp-entertainment-us-yahoo-stock_8726906.html

• William F. Sharpe, “Investments”, Prentice-Hall, 1978, pp. 300 et.seq.

• Image: http://formeblog.com/wp-content/uploads/2011/07/future.jpg

The article outlines how Netflix retreated from splitting up DVD ordering by mail and streamed movies, the main services that are offered by the company.

“Consumers value the simplicity Netflix has always offered and we respect that,” – Chief Executive Officer Reed Hastings

The original idea was to split up both services and market each business individually. However, the weight of costumers satisfaction was not taken into consideration. As mentioned in the article, Netflix shares have been down by 28% since September, 18th 2011, resulting in a substantial loss of market capital.

Netflix failed to assess their customer loyalty and make desired business changes. This empathizes the value of costumers satisfaction, because each company depends on clients. If the clients are not satisfied with a certain aspect of a company, the will simply not obtain any service of good that is marketed by the firm.

In order to decrease the amount Netflix has to suffer from those undesirable changes that were made to consumers, they have to respect their customers values, which were in first place the simplicity. This reveals the importance of costumers satisfaction in today’s business, as changes need to appeal to customers in order to be successful.

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Sources:

• http://www.businessweek.com/news/2011-10-10/netflix-retreats-from-plan-to-split-dvds-from-web-streaming.html

• http://www.adamssixsigma.com/Newsletters/measure_value.htm

• Customer Satisfaction – The Survey of Organizational Excellence, University of Texas

“A good reputation is more valuable than money” – Publilius Syrus

This quote emphasis the value of reputation in today’s business. Reputation is more valuable than money, because the level of reputation in a company often determines the amount of money they can obtain.

In a blog post by Michelle Medeiros, she argues that reputation is arguably the most intangible asset that a firm can posses, because firms with good reputations are more attractive to investors, customers, suppliers and exchange partners. This often leads to an improved overall performance of a firm. If a company does not have a good reputation, they often lack those favorable factors.

However, this reputation is often an incentive for firms to falsify data or try to hide actions from public media, customers, suppliers and exchange partners. Ideally firms do not want any damage to their reputation in order to enjoy higher profits and competitive advantages over other firms.

Firms will find ways of misleading mainly consumers to increase their reputation. They often advertise with programs that they have undertaken to help Third World Countries, but often lack evidence. It is down to the consumer to judge the reliability of a firm to assess their true reputation and decrease the amount of dishonesty in business.

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 Sources:

• http://www.cuttingedgepr.com/articles/corprep_important.asp

• http://michellemedeiros.wordpress.com/2011/04/04/why-corporate-reputation-matters/

• http://www.brainyquote.com/quotes/keywords/reputation.html

• http://michellemedeiros.files.wordpress.com/2011/04/i-dont-like2.jpg