External blog link: There’s No Excuse for Avoiding Strategy

http://blogs.hbr.org/2014/10/theres-no-excuse-for-avoiding-strategy/

Let’s start with a famous remark put forward by Jack Welch, which is also generally recognized as the definition of Strategic Management–“Strategic Management is trying to understand where you will fit in tomorrow’s world and deciding where you want to be — an getting there. ” From my perspective, I entirely agree with Frank’s opinion, THERE’S NO EXCUSE FOR AVOIDING STRATEGY!

Some people might argue that the market is changing constantly, therefore, it is more practical to focus on the present. In a way, people holding this kind of opinions are true—at least the market does change constantly. However, they ignore a fact that focusing on current situation is also the application of one business strategy called transient strategy. Strategy is the tool that helps a firm succeed in dealing with the changing market. If a firm clearly knows about its SWOT and PEST before it implements a vital decision, it gains at least an across-the-board insight into the environment, even though the information might not be perfectly precise. Facing the market in a state of flux, by applying various strategies, all a firm needs to do is alter the conditions entered into the template. Moreover, strategies do provide a firm with a clear direction that it should move towards, since strategies align the mission and vision with operations.

Despite to the fact that scholars are still debating upon deliberate strategy VS emergent strategy(also Porter VS Mintzberg), strategies for top performers are always mixed and they will come to the most cogitative ones. Would corporates with impeccable strategies always win in the market? Probably not since they might ignore actual practical application. But I know that firms without reasonable strategies are bound to fail.

References:

1. The Importance of Strategy. Boundless
https://www.boundless.com/management/textbooks/boundless-management-textbook/strategic-management-12/strategic-management-86/the-importance-of-strategy-416-4340/

2. Andrew Latham. “The Strategic Importance of an Organization’s Corporate Strategy”. Demand Media.
http://smallbusiness.chron.com/strategic-importance-organizations-corporate-strategy-12246.html

3. Paul B. Brown. “Why Business Plans Are A Waste of Time”. Forbes. Aug 14, 2013
http://www.forbes.com/sites/actiontrumpseverything/2013/05/15/the-most-successful-people-take-small-smart-steps-toward-their-goals/

The original text link:
https://blogs.ubc.ca/yitingzhang/2014/09/27/merger-tax-inversion-save-costs/

When I read Yiting Zhang’s blog posted in late September talking about Burger King’s plan of merging Tim Horton and switching its headquarters to avoid high tax rate set in the US, I realized that things are going to a relatively different direction. On October 20^th, 2014, after the revision of regulation on Tax inversion trade, the American drug company AbbVie’s merging plan with the British pharmaceutical producer called Shire stopped abruptly. It cost AbbVie nearly 1.6 billion dollars as the default money. We might want to ask: Why?

In the past decades, the US government has been frustrated by tax inversion problem due to its powerful damage to economy and the whole business environment. By restricting such relocation, recently, the US government has increased the ownership change in tax inversion from 25% to 50%; moreover, despite of the merger, firms must keep their managing branch in USA. Let us look at the example we talk about. AbbVie does prepare a large amount of capital oversea, planning that once after the merger, it can draw upon the amount. However, according to the US new regulation, once AbbVie uses its oversea capital, it would be charged for considerable taxes, making the merger operation hard to continue. What we could read from the news the the latest tendency of tax inversion—it is no longer a profitable or practical way to avoid high tax burden in local. In addition, even though certain companies did succeed to relocate, the difficulties they faced exceed far beyond what they gained, Yiting criticized that Burger King might be more profitable in use of tax inversion, considering the factors I give above, I might have to say I disagree with this perspective.

We have to admit that government does play an important role in business world for it can alter laws and regulations. After all, Burger King’s merger plan might struggle.

Works Cited:

1.”Tax inversion”, Wikipedia
http://en.wikipedia.org/wiki/Tax_inversion

2. Yang Liu. “Burger King makes use of tax inversion, leading to disputes in the USA”. Finance Huanqiu. Aug 26, 2014
http://finance.huanqiu.com/view/2014-08/5118503.html

3. Richard Rubin. “Burger King Deal Advances Amid U.S. Inversion Crackdown”. Bloomberg. Sept 23, 2014
http://www.bloomberg.com/news/2014-09-23/lew-tries-to-limit-tax-cut-deals-with-inversion-crackdown.html

4. David Gelles. “After Tax Inversion Rules Change, AbbVie and Shire Agree to Terminate Their Deal”. NY Times. Oct 20, 2014
http://dealbook.nytimes.com/2014/10/20/abbvie-and-shire-agree-to-terminate-their-deal/?_php=true&_type=blogs&_r=0

http://www.google.ca/finance?q=NASDAQ:AMZN&fstype=ii

Amazon, the biggest Electronic commerce(E-commerce) company of the world, is known for its bad condition of earnings in the past few years. However, even though Amazon “does not look nice in its financial statement” year by year, when we look in the share price of Amazon in NASDAQ, it is not difficult to find out that the shares has a rising basic tendency. And we might want to ask——Why?

As known, the tendency of share price should accord with a firm’s financial situation reflected by its annual financial statement. However, the particularity of Amazon demonstrates another important index of evaluation which is slightly ignored by us in class, that is, cash flow. The customers trading on Amazon basically pay with their credit cards and Amazon would receive the amount of money almost simultaneously. Nevertheless, as a retailer, Amazon does not give the money to its wholesalers promptly; they pay 90 days after transaction. The negative operation circle simply means Amazon owns a large amount of calculating funds all the time. We know that it can operate as a bank or a finance company by investing the funds in hand. Obviously, what Amazon can earn by doing so won’t be shown in gross profit rate in its financial statement; what counts in this case is its considerable cash flow.

So it is not surprising that a company might not be able to repay loan even though “it looks nice on amazing profit”. And when we consider the situation of a firm, it is important for us to pay more attention on its performance on cash flow.

Reference:

1.Justin Fox.  “At Amazon, it’s all about cash flow.” HBR. Oct 20, 2014

http://blogs.hbr.org/2014/10/at-amazon-its-all-about-cash-flow/

2. Cash Flow Analysis of Amazon.

http://finance.yahoo.com/q/cf?s=AMZN+Cash+Flow&annual

3. Dana Blankenhorn. “Amazon Keeps Rolling on Cash Flow”. The Street. Oct 25, 2013

http://www.thestreet.com/story/12083041/1/amazon-keeps-rolling-on-cash-flow.html

http://www.vancouversun.com/news/metro/Unilateral+park+declared+Tsilhqot+includes+Prosperity+mine/10192766/story.html

The issue of First Nations stakeholder, one of the biggest topics throughout Canadian history, can also serve as a concern for corporation, as it might tightly restrain an organization’s model design as well as the development. The news shows that Tsilhqot’in people declared a vast expanse of land as their sovereign territory, which contains the site of the largely investitive New Prosperity mine. What made the company worry about is that Tsilhqot’in people did not allow huge-scale logging activities with concern of environmental problems. Undoubtedly, the certain situation Taseko faced turns out to be a disaster for it.

It is a bit hard to judge whether First Nations stakeholders display a political or a social impact on Taseko’s business. It is a political issue, for First Nations can be treated as “a special party” concerning the special protection granted by federal government—and it is the origin of the business problem. However, it is a social factor as well. It is the Tsilhqot’in people that ask for several environmental requirement in order to achieve sustainable development as well as biodiversity.

Clearly, we cannot categorically define First Nations stakeholder issue as one kind of external effects on the model since external effects always have multiple shocks in different fields—that is, the external influences of a business model take on complexity and overlap. For example, a regulation about financing involves both political and economic aspects; while a large amount of patents and professionals available are involved with social-cultural as well as technological areas. So is First Nations issue a political or social factor affecting business models? I would say both, as it is external.

Reference:
1. Tsilhqot’in Nation Government
http://www.tsilhqotin.ca/
2. “Tsilhqot’in First Nation granted B.C. title claim in Supreme Court ruling”. CBC News. June 26, 2014
http://www.cbc.ca/news/politics/tsilhqot-in-first-nation-granted-b-c-title-claim-in-supreme-court-ruling-1.2688332
3. Adams, Howard (1999). Tortured people, The Policies of Colonialism, Penticton, B.C.: Theytus Books.