Hi, my name is Reina Takahashi - first year arts student in the University of British Columbia. I will be using this blog for my LAST 201 course in 2017 spring term.

My name "Reina" means "Queen" in Spanish, and my parents wanted to name myself that could easily be pronounced by other languages so they name like this (Reina is also common Japanese name).

I used to live in Brazil when I was little, and I also have a lot of Latin friends from my high school. Thanks to my friend's mom, I was invited to some culture shows and photo exhibitions of Panama, and I was interested to study more of latin pop cultures.

I'm not always the talkative one in the class but I will try my best to dedicate!

A Hotel Giant Without Hotels

Airbnb has come a long way since 2008. The co-founders first began the company in San Francisco and offered guests inflatable mattresses to sleep on. Since then, Airbnb has become the largest hotel “chain” in the world. They were valued at $30 billion while the world’s biggest hotel company (Hilton) was valued at 30% less than that. Ironically, they’ve achieved this by not owning a single room. From one Airbnb listing to 1.5 million listing in 190 nations, Airbnb has become an inspiration for many. In “Staying personal key to Airbnb’s success” by blogger Oliver Pickup, he discusses how the company became one of the world’s most valuable startups.

In his blog, Oliver articulates that the key to Airbnb’s success is being personal. By being personal, the company is able to engage with the millions of Airbnb listers. Every year, Airbnb hosts a convention called the Airbnb Open where more than 5000 hosts from over 100 countries are invited to talk. James McClure, the company’s general manager for the United Kingdom and Ireland says that the convention “Is a great opportunity to both connect with the hosts and understand how we can help serve them better.” What truly is amazing about Airbnb is that not only do they actively engage with their hosts; the company wants to do good in the world. In the company’s One Less Stranger campaign, one hundred thousand hosts received an email from CEO Brian Chesky asking them to do something to help someone else. What struck me was what Brian later said: “It’s far better to have 100 people love you than 100,000 sort of like you.”

Upon finishing this blog post by Oliver Pickup, it dawned upon me that what Brian Chesky accomplished was something truly amazing. By constantly engaging with the hosts, he was able form a personal connection with all of them. Chobani is another great example of a company caring for their workers. Hambi Ulukaya, CEO of Chobani, announced in 2016 that he was going to give 10% ownership to his 2000 employees. It should also come to notice that Chobani has become one of America’s leading Greek yogurt brands since its inception in 2005.

This blog post is significant because it illustrates how by being personal, companies such as Airbnb can become successful. As James McClure puts it: “We are very much led by our community.”

 

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Bibliography

Airbnb’s Latest Investment Values It as Much as Hilton and Hyatt Combined. (2016). Skift. Retrieved 12 November 2016, from https://skift.com/2016/09/23/airbnbs-latest-investment-values-it-as-much-as-hilton-and-hyatt-combined/

Chobani – Products. (2016). Chobani. Retrieved 12 November 2016, from http://www.chobani.com/products

Pickup, O. (2016). Staying personal key to Airbnb’s success. Telegraph.co.uk. Retrieved 7 November 2016, from http://www.telegraph.co.uk/sponsored/business/the-elevator/12114937/airbnb-success-story.html

Durisin, M. (2016). Chobani CEO: Our Success Has Nothing To Do With Yogurt. Business Insider. Retrieved 7 November 2016, from http://www.businessinsider.com/the-success-story-of-chobani-yogurt-2013-5

Wisomo, D. (2016). Undercutting Airbnb – All These Places. All These Places. Retrieved 12 November 2016, from http://www.alltheseplaces.net/undercutting-airbnb/

 

 

 

Golden Stars

Switching costs. A cost that most of us never consider when buying something but so important to companies. How are companies able to win us over and retain us? A few companies have figured out this magical formula out and by doing so, have become industry behemoths.

A great example of an industry behemoth is outlined in my classmates Zain Ali’s blog, “Apple Using Proprietary Technology to Maximize Profit”. In his blog, he mentions that Apple uses proprietary technology to their advantage. By having a completely different software, charger, applications, Apple has created an ecosystem that revolves around themselves. The underlying point here is that the switching cost is very high. Once people are in Apple’s eco-system it’s hard to leave because of the different software, charger and applications. Companies that can create high switching costs are more likely to generate more profits because of the “locked in” customer.

Another company that has created high switching costs for themselves is Starbucks. Over the years, Starbucks has not only differentiated themselves from the rest of the industry by making specialty drinks, they have also created a loyalty program that “locks in” customers. Through the collection of stars, customers can redeem free drinks and food. Furthermore, Starbucks has their own online app where customers can pay through their own phone using money preloaded on their Starbucks app. Customers can also skip the wait of the line by ordering their drinks on the app. With the introduction of the Starbucks app, customers who are in the Starbucks ecosystem find it hard to leave because of what they’ve already invested into the Starbucks ecosystem. Customers who have alternative options are faced with a dilemma. Are they willing to pursue the cheaper/better option and forgo all the stars they accrued over the months or are they willing to cough up the additional thirty cents to maintain the benefits they are currently enjoying with Starbucks? More often then not, customers choose the later. Customers choose the later because Starbucks has been able to create high switching costs for themselves.

There is a positive correlation between switching costs and profit. Because companies can retain their customers, companies have the leverage in a typical consumer market. Therefore, when determining a company’s success, high switching costs are usually a part of the equation. Apple and Starbucks are just two prime examples of companies that have been able to create high switching costs for themselves.

Word count: 407

Greenberg, A., Barrett, B., Moynihan, T., McHugh, M., Hempel, J., & Pierce, D. (2016). The FBI Now Says It May Crack That iPhone Without Apple’s Help.WIRED. Retrieved 30 October 2016, from https://www.wired.com/2016/03/fbi-now-says-may-crack-iphone-without-apples-help/

High Switching Costs. (2016).News.morningstar.com. Retrieved 25 October 2016, from https://news.morningstar.com/classroom2/course.asp?docId=144752&page=4&CN=

Love Starbucks? You’ll Hate The New Starbucks Rewards Program. – 91.7 The BOUNCE. (2016). 91.7 The BOUNCE. Retrieved 30 October 2016, from http://www.thebounce.ca/2016/02/23/love-starbucks-youll-hate-the-new-starbucks-rewards-program/

Why Starbucks is winning at loyalty. (2016). Marketingmag.ca. Retrieved 25 October 2016, from http://www.marketingmag.ca/brands/why-starbucks-is-winning-at-loyalty-152974

 

The power of being first

 

The power of being first. By coming in first, companies not only get bragging rights but also a whole set of advantages. Brand name recognition, economies of scale and switching costs are all perks that come by being the first to bring a product or service to a market. Kleenex is a great example on how brand name recognition has allowed their brand to become synonymously associated with normal everyday products.

However, like my peer Claire Lee indicated in her blog, “A Goodbye to a Legend”, to maintain a company’s #1 status requires flexibility. Blackberry is an excellent example of how a company that enters into a new market meets its downfall through ignorance. Blackberry had a great produ

ct but failed to innovate as consumer trends shifted. Claire Lee says “While other companies produced products to satisfy this demand, Blackberry was solely focused on their value proposition- security and productivity- to keep their existing customers.” This rings true for many other companies that had great services/products but failed to change with the consumer.

Kleenex on the other hand was able to innovate as trends changed. By being the first into a market, and following consumer trends, Kleenex was able to avoid Blackberry’s fatal mistake. Kleenex has now been genericized to refer to any facial tissue regardless of brand and the Oxford dictionary now has a definition for Kleenex: “An absorbent disposable paper tissue.” How has Kleenex become so popular that we now refer to any facial tissue as such? It was by being the first one in the market and by constantly finding other ways to engage with the consumer.

Kleenex was the Western world’s first facial tissue. It was introduced in 1924 by Kimberly-Clark and marketed as the first hygienic, disposable cleansing cloths. In 1932, the Kleenex began running ads with their new phrase “The handkerchief you can throw away!” By associating themselves to a handkerchief, people began to use the word Kleenex to refer to any disposable facial tissue. Additionally, Kleenex most recently ran an advertisement called “Unlikely Best Friends” which displays the similarities between a man in a wheelchair and Chance, a dog who lost the use of its legs. This heart wrenching commercial was shared 138,000 times in a week and made it so that if you didn’t have a box of Kleenex now, you’ll feel like you’ll need one. Kleenex knew this and made the ad’s tagline to be “Kleenex: Someone Needs One.”

By being first to provide a product to a market, Kleenex was able gain an advantage that has kept them ahead of their competitors. However, Kleenex was able to maintain its advantage by constantly finding other ways to engage with its consumers.

Word count: 450

A Need for Kleenex | Heavenly Sunshine. (2016). Arceysbibleminute.com. Retrieved 15 October 2016, from http://arceysbibleminute.com/?p=3831

About Kleenex® Tissue Brand & Messages of Care. (2016). Kleenex.com. Retrieved 10 October 2016, from https://www.kleenex.com/en-us/about

Behind Kleenex’ viral success. (2016).Thestable.com.au. Retrieved 17 October 2016, from http://www.thestable.com.au/kleenex-tops-the-viral-charts/

Bellis, M. (2016). The History of Kleenex: It Wasn’t Meant to Blow Your Nose.About.com Money. Retrieved 10 October 2016, from http://inventors.about.com/od/kstartinventions/a/Kleenex.htm

First Mover. (2006). Investopedia. Retrieved 10 October 2016, from http://www.investopedia.com/terms/f/firstmover.asp

Recover Deleted Photos from BlackBerry Effortlessly. (2016).Datarecovery.wondershare.com. Retrieved 17 October 2016, from https://datarecovery.wondershare.com/phone-recovery/blackberry-cell-phone-photo-recovery.html

 

Target’s Failure in Canada

A net loss of 2 billion. That’s what Target’s mistake ended up costing them. This was supposed to be Target’s big leap to the Great White North and their first attempt at international expansion. However, Target fell short in their quest and withdrew from Canada within two years of its launch. There are many factors that may have attributed to Target’s demise but the main reason why I think they failed was because they had a poorly executed business model for Canada.

In 2011, by announcing their purchase of 220 leases from Zeller Inc. for $1.825 billion, Target began their entry into Canada. This move was heralded as genius by many because it saved them both time and money on building their own stores. However, this very move was the main reason why Target never went off in Canada. The locations Target inherited were locations that weren’t frequented by Target’s main customer: the middle class. With bad locations and unappealing stores, Target dug itself into a hole too deep to come out.

By opening so many stores in such a short period of time, Target failed to provide the necessary inventory for the Canadian stores. Shelves ended up being empty and stores were low on products to sell. For customers, there was no incentive to go to a bad location, and buy items that never ended up getting restocked. As this problem persisted, customers found alternatives such as Walmart to satisfy their needs.

If target had gone back to the basics and re-evaluated themselves on the business model canvas, problems that ended up costing them 2 billion dollars could have been avoided. They would have realized that buying the leases off a company that was slowly dying off in Canada would not been in the best interests of the company even though it saved them money in the short run. Additionally, if the operations manager had planned the expansion into Canada better, the issue of shortages would not have been a problem. However, Target didn’t plan the expansion as well as they should have and ended up slinking out of Canada defeated and embarrassed.

 

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Bibliography

Looking beyond Target | Canadian Grocer. (2016). Canadiangrocer.com. Retrieved 1 October 2016, from http://www.canadiangrocer.com/worth-reading/what-went-wrong-for-target-canada-48093

Wahba, P. (2015). Dumpy locations, empty shelves and poor pricing compared to Wal-Mart doomed Target’s efforts in Canada.. Fortune. Retrieved 1 October 2016, from http://fortune.com/2015/01/15/target-canada-fail/

Business Ethics

Is it possible for a company to have good business ethics and make profit? According to Corporate Ethics and Corporate Governance by Zimmerli, Richter, and Holzinger, (2007) Milton Freidman states that a business can only achieve good business ethics when it compromises its sole motive of making profit. For example, by reducing a company’s carbon footprint, the company must pay for expenses that it otherwise wouldn’t have had to pay. However, I beg to differ. I believe that there are ways companies can exhibit good business ethics without making expenditures.

Insert, IEX and Brad Katsuyama. When Katsuyama founded IEX, his goal was to create a stock exchange that was fair to everyone. In an age where seconds mean millions of dollars, businesses that were located closer to the various stock exchanges in New York benefited greatly while those that were located further away lost out on millions.

Image 1: The importance of Milliseconds (New York Times)

Realizing this unfair advantage some businesses had over others, Brad Katsuyama set out to create an exchange that would be fair to all businesses. His efforts culminated in the founding of IEX, the Investor’s Exchange, in 2013. What differentiated IEX from the other stock exchanges was how it delayed data transfer by 350 microseconds for everyone. Over the years, Brad Katsuyama’s revolutionary approach to how people trade stocks has gained steam and is shown through the increase in IEX’s market share. Since January 2014 to July 2016, IEX has seen its market share go from 0.131% to 1.58%. That’s an approximately 1200% increase in a short span of 30 months!

Business ethics isn’t something that has to be quantifiable. You don’t have to spend money or lose out on potential profits to display how your business displays good ethics. You can be an honest, fair company and still exhibit good business ethics. And IEX is a concrete example on how it has achieved good business ethics by creating a sense of fairness for all.

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IEX Trading. (2016). Statistics. Retrieved September 9, 2016 from https://www.iextrading.com/stats/

Lewis, M. (2014). The Wolf Hunter of Wall Street, The New York Times. Retrieved September 10, 2016 from http://www.nytimes.com/2014/04/06/magazine/flash-boys-michael-lewis.html

Zimmerli, W., Richter, K., Holzinger, M. (2007). Corporate Ethics and Corporate Governance.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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