Danielle van Jaarsveld discussed in class a current business trend: outsourcing.¹ Due to globalization and looser trade restrictions, companies can cut costs by shifting parts of operations their offshore. But, there are risks associated with outsourcing because companies lose some control over key parts of their organization.

Image from: http://www.financialpost.com/entrepreneur/international-business/5748902.bin?size=620×465 (Gildan’s Honduras operations)

One example is Gildan Activewear Inc., one of the largest t-shirt producers worldwide.² Gildan outsources their sewing and textile operations to Central America, the Caribbean basin, and is now seeking to outsource onwards into Bangladesh, in an attempt to boost European and Asian sales. Gildan posted sales of US$1.3 billion in 2010, and has admitted that empowering local managers, as opposed to micromanaging from the US, accounts for the company’s success in outsourcing.

Still, risks exist. Gildan manufactures in countries with unstable economic, political, and social structures, as well as countries prone to natural disasters. Furthermore, if one of Gildan’s manufacturing facilities or third-party contractors were to violate laws, this will reflect poorly on Gildan as a whole, resulting in damage to the company’s reputation along with declines in sales. It is a constant balancing act between low costs and decreasing risks; but in this economy, staying competitive has become a necessity.

Image from: http://www.zedweb.com/assets/Uploads/_resampled/SetRatioSize700550-gildan-exuberance.jpg

1. Jaarsveld, D. (Instructor). 2011, November 1.  People, Teams, and Culture [Classroom Lesson]. University of British Columbia.
2. http://www.financialpost.com/entrepreneur/international-business/Offshore+opportunities+good+pass/5747482/story.html

Word Count: 199

Image from: http://3.bp.blogspot.com/_-PPTG9oEKk8/TOJ1FQGSdUI/AAAAAAAACfw/3l22XE9ls-g/s1600/mcdonalds_free_coffee.jpg

Angus Todd blogged about McDonald’s goal to gain market share in the coffee market. McDonald’s decided to expand their McCafe line, advertising quality at a lower cost. In particular, McDonald decided to market their McCafe brand by renovating their stores and handing out free coffee, allowing consumers to judge for themselves how McDonald’s coffee stands against other, more prestigious brands.

Starbucks fought back with their own campaign. However, Angus then stated that Starbuck’s marketing campaign had little impact because consumers are looking for cheaper alternatives amidst an economic downturn. To some extent, I agree with Angus, in that some consumers will substitute away from Starbucks to McDonald’s due to the price difference, but Starbucks will always have their own niche in the coffee market.

Over the years, Starbucks has developed a brand name synonymous with taste and quality, whereas McDonald’s became known for their speed and low prices.  True coffee addicts everywhere have been groomed into thinking that Starbucks is coffee, and nothing else will do. This customer loyalty is a result of years marketing campaigns, excellent customer service, and non-rushed coffee preparations. Starbucks isn’t just coffee, it is an experience, and as such, McDonald will have difficulty competing.

Word Count: 199

Image from: http://blogs.starbucks.com/cfs-file.ashx/__key/CommunityServer.Components.UserFiles/00.00.00.21.60/coffee-2.jpg 

Video from: http://blogs.starbucks.com/blogs/customer/archive/2009/04/30/sneak-peek-at-new-ad-campaign.aspx

Damian Carrington’s blog in the Guardian states that although Britain still supplies a third of the world’s coal, the UK coal industry is dying. With carbon emissions restricted due to threats of climate change, and no “clean” uses for coal available, this failing sector threatens to leave 6,000 people unemployed in Britain alone. As coal demand will not increase in the future, Carrington further stresses that the government’s role is not to subsidize jobs in the coal sector, but rather to provide training to those unemployed to work in the growing clean energy sector.

Image from:
http://1.bp.blogspot.com/_cwrSE63jF7Y/TGrnq9FhTnI/AAAAAAAAA5I/dOshgl6RNDY/s1600/coal_fired_power_plant.jpg

Carrington is correct. As James Tansey stated during in class, there is a global trend towards decarbonisation.¹ To boost the economy, governments should create new jobs in growing, sustainable industries, such as renewable energy. Moreover, an increasing number of businesses are showing corporate social responsibility, proving that economic growth can be achieved within social and environmental limits. Coal was yesterday. Governments should ride the decarbonisation trend and invest in developing and supporting more sustainable sources of power. As the green energy sector grows, the government will see a return in the form of more job opportunities, lower unemployment rates, and an overall healthier economy and world.

Word Count: 200

1. Tansey, J. (Instructor). 2011, October 26.  Corporate Social Responsibility and Sustainability [Classroom Lesson]. University of British Columbia.

Image from: http://i.telegraph.co.uk/multimedia/archive/01299/Facebook_1299512c.jpg 

Founded in 2003 by Harvard student Mark Zuckerberg and his friends,¹ Facebook has quickly become the social networking website. This innovative product reinvented the social media market, offering a new approach as to how people interacted and communicated online.

Zuckerberg’s risky entrepreneurial venture grew extremely profitable. Yes, while Facebook offers its services to users for free, it has been generating a positive cash flow² since 2009—mainly through revenue generated from advertisements. With a user base of over 800 million users, it is no surprise Facebook posted advertising revenues of 1.86 billion in 2010³, as companies paid huge sums to tap into an ever-expanding customer base.

Creating the “hottest” social platform had its risks. For Zuckerberg, there was no way to foresee just how popular the website will become. There was always a possibility of consumers walking away after a first glimpse. Furthermore, as Facebook’s user base continued to lag behind Myspace’s (8 million vs. 100 million in August 2006), Zuckerberg was offered $1 billion from Yahoo to sell.⁴ He turned the money down, convinced that Facebook could be worth more without Yahoo. He was right. Through Zuckerberg’s vision and hard work, Facebook evolved into the successful business it is today.

Word Count: 200

1. http://www.guardian.co.uk/technology/2007/jul/25/media.newmedia

2. http://www.facebook.com/blog.php?post=136782277130

3. http://mashable.com/2011/01/17/facebooks-ad-revenue-hit-1-86b-for-2010/

4. http://www.wired.com/techbiz/startups/news/2007/09/ff_facebook?currentPage=all

Image from: http://financialpostbusiness.files.wordpress.com/2011/10/1006tims.jpg?w=620

Tim Horton’s recently added beef lasagna casserole to its lunch menu, hoping to gain some market share in the lunch market.¹ It is also offering garlic bread, along with larger portions of its soups and chili. According to Donna Finelli, director of brand marketing for Tim Hortons, it was a “natural fit” among Tim Horton’s other comfort food offerings of hot chocolate, coffee, doughnuts, and soup.¹ Currently, Tim Horton’s is first in the breakfast market and second in the lunch market, behind McDonalds.¹

Image from: http://i.huffpost.com/gen/378944/thumbs/r-TIM-HORTONS-PASTA-large570.jpg

Although Tim Horton’s is trying to differentiate amongst other fast-food chains by offering a known Canadian comfort food, this tactic does not seem to offer Tim Horton’s a significant competitive advantage. True, lasagna cannot be purchased from competitors such as McDonalds and Starbucks, but what is stopping consumers from eating pasta at major pizza chains like Pizza Hut or Fresh Slice? Existing customers may try Tim Horton’s lasagna and new consumers may try its other products; however, one new product alone is not sufficient to truly distinguish Tim Horton’s from other fast-food restaurants. After all, other fast-food chains are also introducing new products. In the end, it boils down to taste preferences, competitive prices, and convenience.

Word Count: 199

1. http://www.thespec.com/news/business/article/610643–hortons-goes-heavy-lasagna-now-on-the-menu

Mattel Inc., the producers of Barbie, was targeted by Greenpeace in June for using packaging from Asia Pulp and Paper (APP), a company that clear-cuts rainforests in Indonesia¹. The “Barbie, it’s over” campaign gathered much attention, with consumers participating online via Facebook, Twitter, and other channels. Consumers also sent over half a million emails to Mattel requesting that its products be manufactured without harming the environment.

Image from:
 http://www.greenpeace.org/international/community_images//84/2284/28373_55576.jpg

In October, Mattel responded Greenpeace’s campaign and consumer demands with a set of sustainable sourcing principles. “By the end of 2011, 70 percent of Mattel’s paper packaging [will] be composed of recycled material or sustainable fiber.”² In appealing to consumer protests, Mattel, the world’s largest toy company, has succeeded in reworking its image as an environmentally-conscious company.

Greenpeace’s successful campaign is an example (and warning) to other companies, showcasing the importance of corporate social responsibility. Consumers are making increasingly sustainable choices, and it makes business sense to appeal to this growing market. Companies like APP need to rethink their impact on the environment and how this translates into sales. Mattel was not the first company to turn away from APP’s products, and it won’t be the last.

Image from:
http://www.greenpeace.org/international/community_images//84/2284/28320_55462.jpg

Word Count: 193

1. http://www.triplepundit.com/2011/10/mattel-greenpeace-app/#
2. http://investor.shareholder.com/mattel/releasedetail.cfm?ReleaseID=611230

Apple’s iPad is currently dominating the tablet market; however, this can change with Amazon’s release of the Kindle Fire. Available on November 15, the Fire has been predicted to surpass the iPad in first-month sales.¹ For only $199, the Fire offers a 7 inch coloured touchscreen, 6 GB of free space, unlimited storage on Cloud, more apps than Apple, and immediate access to Amazon’s online store.  It is an affordable alternative to the $500 iPad and other similarly priced tablets.

Image from: http://www.tech2date.com/wp-content/uploads/2011/10/Apple-iPad-Vs-Amazon-Kindle-Fire.jpg

The low price point has also sparked a debate regarding if Amazon will earn a profit from the Fire.² UBM TechInsights has predicted a manufacturing cost of $150, whereas others estimate a loss of $10-50 per unit. Some are even speculating that Amazon’s only profits will come from sales on Amazon.com. More accurate cost calculations can only be made after the Fire’s release.

The Fire is the first of its kind to bring the shopping experience to the consumer. It is a brilliant business scheme, as consumers are paying (for the Fire) to buy more (from Amazon.com). If Amazon’s online store remains priced competitively, Amazon will widen its consumer base and see an increase in sales through the Amazon marketplace.

Word Count: 200

1. http://www.foxnews.com/scitech/2011/10/09/5-reasons-amazon-kindle-beats-ipad/
2. http://news.cnet.com/8301-1023_3-20114722-93/amazon-kindle-fire-profit-or-loss-for-retailer/

Video from: https://www.youtube.com/watch?v=ryat012X8Qc

Priscilla Wito’s blog on Aakash, the world’s cheapest tablet, emphasized on how Datawind—the company behind the Aakash—is seeking to “push India forward,”¹ by providing affordable technology to students. With a student price tag of $35, the Aakash has a 3 hour battery life, web browsing, video conferencing, and two USB ports.²

Image from:
http://www.thehindu.com/multimedia/dynamic/00803/09TH_AAKASH_803535f.jpg

Priscilla linked the Aakash with the Tata Nano, previously discussed in class. My question is: Will the Aakash suffer the same fate as the Tata? As stated in class, the Tata did not remain popular in India for long.

As income increases, consumers tend to purchase better, more expensive, products. As a result, sales for the Aakash might decline drastically after some years. How will Datawind combat this issue and remain profitable? True, it can offer a progressively more expensive, better quality product with more features; however, if consumers are going to spend more money, wouldn’t they then choose to buy on the basis of brand, as well as quality? As with Priscilla, I agree that Datawind has taken a good initiative in offering widely accessible technology with the purpose of enhancing student learning… I just do not see how this business venture can remain sustainable.

Word Count: 198

1. https://blogs.ubc.ca/priscillaw/2011/10/09/datawind-makes-affordable-technological-access-in-india/
2. http://www.bbc.co.uk/news/world-south-asia-15180831

Image from: http://walmartstores.com/pressroom/news/6811.aspx

Since 2003, Wal-Mart has invested $3 billion into advanced inventory tracking technology.¹ Using radio frequency signals and microchips, Wal-Mart can now track its inventory in real-time.

Then, in September 2011, Wal-Mart realized, from the data they had collected throughout the years that consumers tend to spend more money “at the beginning of the month, when many people are paid, and… [less] at the end of the month when they run out of money.”² This trend shows that many people are living pay-cheque to pay-cheque. To stay competitive, Wal-Mart then decided to offer more inexpensive products.

Wal-Mart is using business information systems (MIS)³ to track consumer trends and adjust their offerings to better cater to their customers. Furthermore, they are also taking advantage of their MIS to experiment on offering high-end merchandise aimed for higher-income families at one of their test stores, named “Urban 90.”

Wal-Mart has proven that the information provided by MIS is invaluable. It has a competitive advantage over other retailers in that Wal-Mart can use real-time data to quickly respond to changes in consumer behaviour. Other retailers should do the same, as MIS can be used to both improve a company’s offerings and expand its customer base.

Word Count: 200

1. http://news.cnet.com/Wal-Mart-puts-big-bucks-into-tracking-tech/2100-1008_3-5104493.html
2. http://www.theglobeandmail.com/report-on-business/economy/wal-mart-cashes-in-on-income-gap/article2166522/
3.  http://mis.sauder.ubc.ca/

Arthur Andersen LLP used to be one of the most prestigious accounting firms around before the Enron scandal was revealed. As an auditor, Andersen was responsible for double checking Enron’s financial documents to ensure that they followed the “Generally Accepted Accounting Principles (GAAPs).” They did not. Enron had elected to hide a large portion of their debts to show a larger (made-up) profit. Not only did Andersen approve the false financial documents, the firm also shredded the evidence when the US Securities and Exchange Commission opened an investigation in late 2001.

Companies should behave ethically; however, every person within an organization should also maintain the same ethical beliefs. The entire Enron scandal occurred largely due to a lack of ethics from select individuals in positions of power. Enron made the decision to “cook the books,” and Andersen opted to turn a blind eye. A company is only as good as its people. In particular, auditing firms put their reputation on the line after every audit; so, the questionable morals of only a few had the power to completely destroy Anderson’s name. After all, an audit is useless if no one trusts the auditor.

Word count: 193
References used:
http://www.usatoday.com/money/energy/enron/andersen-verdict.htm
http://www.cbc.ca/news/business/story/2002/03/14/andersenindictment_020314.html