Lucas Outumuro's Blog

I was intrigued by the blog post I found in the New York Times’s website. It is based on the Founder Institute, a school were students have to graduate with a new company idea. The graduates then attempt to start up this business. Only 10% of these businesses failed and 15 went dormant. The other 75% are currently moving forward.

The tuition for this institute is not only a fixed cost, but also a variable cost. This is because the students that attend have to pay to for the classes and additionally they have to give up 3.5% of their companies to the institute.

Several students that graduated from the institute were interviewed by the New York Times. Even though not all of the students were able to make profits out of their companies, they all agreed that they learn how to start a business. However, is this knowledge obtained from the course worth giving 3.5% of the company you created? This question obtained interesting responses since the students did not agree.
In general this institute may offer high quality classes, but the cost of attending may be a concern for many due to the variable cost included.

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While reading Maria Pous’s blog post, I realized how sports can turn into businesses. The blog post talks about how the sport of ultimate frisbee is becoming a business. This demonstrated how even sports that are not as popular can result as a business opportunity. The sport is being professionalized by tournaments being broadcasted by ESPN, which can turn out very lucrative for the ultimate teams.

As well, small companies have taken this rise in the sport to their advantage. For instance, the developers of the smartphone application ‘Ultiapp’ earned profits by creating an application for ultimate players to be coached and allows them to monitor their performance.

The sport of ultimate frisbee is increasing in popularity and profitability. With the increase in popularity there is a greater business opportunity for businesses to join this market and gain profits. Entrepreneurs may see this as a good opportunity for them to join an upcoming market and make a lucrative investment in this sport.

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In Jake Black’s blog post, he explains how recently the German automobile company, Volkswagen, decided to stop the production of its renowned van, the Kombi. Even though this model was success for around half a century, it recently lost popularity. This model was still being sold for historic purposes, but Volkswagen decided that this operation was not profitable for the business.

Furthermore, he analyzes how the accounting costs for maintaining the production of the Kombi outweighed the benefits obtained from it. This is the main reason why Volkswagen ended the production of this ubiquitous van. The opportunity cost from keeping the production was too high, since with the money spent in this product, the company could invest in an innovative automobile. By doing this, the German automaker would likely attract a wider audience than the one that the Kombi has currently.

Ultimately, Volkswagen’s decision to discontinue the Kombi is forward-looking since it may allow the company to spend the money in innovation. Moreover, by doing this the company would be able to keep competing with the rest of the firms in the industry.

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The Japanese multinational company, Sony, released on the 15th of november its new video gaming console, the Play Station 4 (PS4). PS4 is the first console that the Japanese company releases in seven years. This is a big event for Sony since it demonstrates product innovation and how with this product the company will compete against Microsoft’s upcoming console, Xbox One.

One of PS4’s point of difference is that it offers an affordable price to customers. The console costs only $399 compared to the price of its competitor, $499. This is likely to attract a variety of customers.

Currently, Sony has been facing severe issues, one of them being that the financial forecasts of the company’s profits are now predicted to be 40% less than the initial prediction. This lead the company’s stock value to drop by 11%. Yet, the company’s shares are still 60% higher than previous year mostly because of the huge anticipation to the innovative play station 4.

Overall, Sony is expecting to sell 5 million PS4s by march. This should allow the company to increase its profits and help the company to improve its financial issues.

Article link: http://money.cnn.com/2013/11/15/technology/sony-playstation-4/index.html?iid=HP_River

Image link: http://cms.interaksyon.com/infotech/assets/2013/08/PlayStation4.jpg

The third largest U.S. business magazine, Forbes, is exploring the option of being sold. Forbes’ profits have fallen by 7.5 % in the past 9 months. To explore its selling options, the company hired Deutsche bank.

President and CEO of Forbes, Mike Perlis, sent a letter to the employees communicating them that the company is in fact exploring the option of being sold and that is move is “more than a few over the transom indications of interest”. This may have caused worry amongst employees since with a change of owner, often leads to changes in the organizational culture and even the employees that work for the company.

Forbes is not the only printed media company that is considering being sold. Major newspapers such as Boston Globe and the Washington Post, as well as several magazines have recently been sold. The main cause for this is that the print media industry in general has faced a severe downfall in demand due to increased popularity of online media. As a consequence, the amount of advertisement displayed in print media has decreased since some of the advertising companies rather promote their products in online media.

Article: http://money.cnn.com/2013/11/15/news/companies/forbes-sale/

The demand for wine has increased steadily since 1996. However, the production

of wine has decreased by 25% since 2004. In 2012, the demand for wine was 300 million cases greater than the quantity produced. This represents a shortage in wine, which has been classified by the American researcher Morgan Stanley as wine’s “deepest shortfall in over 40 years of record”. Likewise, production last year dropped to its lowest in four decades. Due to this decrease in production, the prices for wine exports are expected to increase.

The cause of this drop in production of wine is most likely to be the poor weather conditions affecting Europe, where the greatest quantity of wine is produced. This made wine production to drop by 10% last year. Yet, the production in countries such as the United States, Australia, Argentina, China and South Africa has increased for the past few years. In total there are more than one million wine producers around the world.

Despite decreases in wine production in Europe, France is the largest consumer of wine, consuming 12% of th

e world’s wine. The country that consumed the second greatest amount of wine is United States followed by Italy and China. Overall, the wine suppliers should aim to increase the supply in areas not affected to be able to maintain the production and consumption of wine in these countries and in the world.

Article: http://www.bbc.co.uk/news/world-24746539

Waterloo-based company, Blackberry is planning to become a private company. By becoming a private company it means that the business will not be able to sell shares in the stock market and shares will be privately exchanged instead. The company’s current largest shareholder Fairfax Financial, a canadian insurance company, is going to purchase the remaining shares at $9 per share. The prices of these stocks seem to high since the stocks at that moment were selling at 8.24 per share and also because the company had previously announced a quarterly loss of $1 billion.

Going public is not the only alternative the Canadian company is considering since they have even considered a possible sale of the company. The company will take until November 4th to find offers that might be better to its shareholders than the one offered by Fairfax Financial.

If the company receives multiple offers, it will have to decide in a bidding war which offer benefits the company and its shareholders the most. Blackberry is currently fighting against many competitors in the industry and it is hoping that the offer that they take will allow the company to be able to compete again with the rest of the companies in the market.

http://money.cnn.com/2013/09/23/technology/mobile/blackberry-private/index.html

Japan Airlines has reached an agreement to purchase 31 airplanes from the manufacturing company Airbus for $9.5 billion. All of the 31 planes will be A350s, one of Airbuses’s more fuel efficient models. This is Airbus’s largest order for this model in the whole year and is the largest order ever received by the company from a Japanese airline. Furthermore, this order gives Japan Airlines the option to purchase 25 additional planes.

This agreement is seen negatively by one of Airbus’s main competitors, Boeing. Boeing has dominated the country’s aviation industry and is now losing one of the main airlines in this market. On the other hand, this could also be seen as an achievement for Airbus since they were able to finally enter this market.

Recently, the aviation industry has been hurt by a slowdown in demand and the high volatility of global fuel prices. However, both Boeing and Airbus have been able to obtain an increase in demand for their new more fuel-efficient models. Ultimately, Airbus’s A350 and Boeing’s 787 Dreamliner are the two fuel-efficient models that have allowed the companies to gain an increase in their demand.

http://www.bbc.co.uk/news/business-24424873

http://www.komonews.com/news/boeing/Japan-Airlines-makes-first-purchase-from-Airbus-not-Boeing-226741791.html

The social networking company Twitter is about to become public and aims to debut with a $1 billion Initial Public Offering (IPO). This was revealed on the company’s own Twitter page by tweeting that the company’s S-1 will be filed publicly with the Security and Exchanges Commission (SEC). In other words, the company has submitted the form necessary to register in the SEC, which will allow it to sell stocks as a public company.

Twitter has increased its revenue from just $28 million in 2010 to $317 million by the end of 2012. Despite this growth in revenue, Twitter still made a loss of approximately $69 million in the first half of 2013. Regardless of the losses, the company’s growth lead analysts to believe that the company’s public offering will get a good response.

It is certain that Twitter will join the stock exchange, but it is unsure which stock exchange. Analysts believe that it is more likely that it will join NASDAQ since many other technology companies have come to the market with this exchange.

http://www.bbc.co.uk/news/business-24392336

http://www.latimes.com/business/hiltzik/la-fi-mh-twitter-20131004,0,3742550.story

https://twitter.com/twitter

Numerous companies decide to manufacture their products in a developing country due to the cheaper labour costs available. However, some companies decide to abuse of these cheap labour costs, making this an unethical business operation.

For instance, Apple has been accused of owing millions of dollars in unpaid overtime wages to its supplying company in China. Additionally, investigators claim that workers have been found for 11 hours a day with no rest, besides a 30 minute lunch. Is this the proper way to treat employees?

Most people will agree that such treatment is incorrect and should be stopped right away. To solve this issue, Apple should reconsider its business ethics. Business ethics are, as defined by the Cambridge dictionary, the rules, principles and standards for deciding what is morally right or wrong when doing business. Since, the treatment they have given to the Chinese employees is considered morally wrong, then Apple should guarantee that the manager of this operation stops such treatment, as well as paying the unpaid wages. Ultimately, Apple should increase its concern in its business ethics not only to improve its reputation, but also to increase the employees’ job satisfaction.

Article: http://www.channelweb.co.uk/crn-uk/news/2293259/apple-supplier-accused-of-illegal-and-unethical-staff-treatment