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