Maggie's

(Reply on external blog post: http://blogs.ft.com/businessblog/2012/10/pricing-the-apple-ipad-mini-ask-steve/#axzz2CAC3I0tD)

IPad Mini is out in the market and creates controversy. It is a bigger size of iPhone and a smaller size of iPad. The internal system and most of the external appearance have no significant change. Some Apple fans still buy it but many rational customers are criticizing the products.

Andrew Hill made two very good points in his blog. First, he states that Steve Jobs, the founder of Apple, did not focus on the profit but the quality of the products. Steve Jobs would rather keep the price low to gain more market share. However, the Apply without Steve Jobs now sets a relatively high price for iPad mini. Higher price naturally leads to lower demand, on the other hand, the product doesn’t reach people’s expectation.

The second point Andrew made is about the culture of the company. Apple is famous for it revolution. iPod, iPhone and iPad brought revolution to the mp3, cell phone and the PC industry. One main culture and characteristic of Apple is innovation. However, the iPad Mini disappoints everyone. Its appearance does not match the company strategy. Or we can say, it makes no sense to be in the market, since it didn’t bring any revolution.

(Reply on Shuang’s post https://blogs.ubc.ca/shuangliu/2012/10/08/there-is-an-urgent-need-to-accelerate-investment-in-india/#content)

In Shuang’s post, she stated clearly what inflation is and gave examples how government acts help fight the inflation. There are usually two ways to help fighting inflation, the fiscal policy and the monetary policy. The former one is government actions, and the later one is the policy related to the money and interest rate. I agree with Shuang, though the market is fluctuated and will finally adjusted by itself, it takes time. Sometime policies involvement is not an bad idea.

Here in the article, India’s GDP growth is decreasing and misses the expectation. Facing the terrible economy, the policy they choose is the fiscal policy. Obviously the government want to help with it.

“The government’s policy changes began with a 14 percent increase in diesel prices announced on Sept. 13 to restrain expenditure on compensation for below-cost sales. The administration also said it will pare the supply of subsidized cooking gas.”

In this situation, government give subsidies to the victims who are suffering the inflation. The subsidies create the deficit of the government budget. The IMF suggests the government to reform the structure “includes tax and spending reforms, in particular, reducing or eliminating subsidies, while protecting the poor.”

In my opinion, fiscal policy is good, but each coin has two sides. While it is helping boosting the economy, it creates some other problems such as the deficit. Instead of remaining the monetary policy unchanged, use appropriate monetary policies can also balance the economy.

Recently the project of Comm 292 is going on. The project is about BC Hydro Smart Meter Program. Due to the requirement, I researched many articles about the program. One of them, which grabbed my attention, called How smart is the Smart Metering Implementation Programme. It is interesting because it combines concepts in both Comm 101 and 292 class. The article talks about the IT part of the Smart Meting Implementation Programme. This is also the program which supports Janice’s (the CEO of Energy Aware) business. The Programme is an large -scale project that is proceeding in many countries.

Installing the smart meter, the government claims, can help the environment and lower the cost of energy. Customers can also save money on using energy. However, the programme requires big amount of IT management since a massive amounts of data will be collected and analyzed. According to the class,20-70% of IT system are wasted and less than 8% are value. The statistic shows that developing a valuable IT system is complicated and might cost more than the saved. In the article, “The NHS NPfIT, for instance, was initially estimated to cost about £2.3bn over three years, but later extended to £12.4bn over 10 years. Commentators have said it would probably have cost £20bn to complete.” Due to all the fact, no wonder people start criticizing and distrusting the programme and the government.

http://www.computerweekly.com/feature/How-smart-is-the-Smart-Metering-project

(Feedback  of class)

On November 8th, we had a special 101 class. Neither Jeff nor Paul were the speaker, but two of the Sauder graduated students. Janice Cheam’s presentation impressed me, not only because I am now doing a project about BC Hydro’s Smart Meter. She told us about the process of starting a business. She was a brilliant student in UBC who won a lot of case competitions. Instead of just getting a job after graduated, she was brave enough to start her own business. She has no experience for her to get aid from the bank. Most of the foundation money was the prize of winning the case competitions. However, she got an Angel investor to support her business. The development is very difficult which took Janice and her team a year to prepare.

After researching, I found out that Energy Aware Technology, Janice’s company, is the 2006 BC Hydro Sustainability prize winner. The selling point of the product is the environmental friendliness. Nowadays people care more about environment and the energy. Not because of the energy is expensive, but just this is a right thing to do. Starting a business, to be successful, has to match the market trend and the customer’s taste.

The example we are given in class which talked about the supply chain is Zara. I am interested in it not because I am a girl and Zara is a popular clothing brand, but also it special business model.

Comparing to the other brand, it is differentiable by building the factory in Europe but not Asia. Many clothing manufacturing build their factory in Asia, especially China, since the resource and labor there are cheap. Lowering the cost equals increasing profit. While Zara does not follow the pattern. It does not care about decreasing the cost in this way. It shortens the supply chain, which means they cut the shipping time and can provide new apparels faster than any other firms. In the fashion industry, who becomes the first can gain more market share.

Zara does very well in limiting the supply chain. In my opinion, it also does very well in the marketing. According to the class which talks about brand positioning, I think Zara applies this technique to boost their sales. By limited the quota of the clothing and shelf lives, Zara creates a shortage and scarcity of their products. Customers then buy more of the products and visit the shop more often. They provide what customers needs faster. That is its point of different.

http://web.ebscohost.com/ehost/detail?sid=d65d9600-68a0-44d5-9ad7-45b1e5baf270%40sessionmgr104&vid=1&hid=105&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=22161327

(Feedback of Case#2)

During the class, we were introduced different cost of a company, such as fixed cost, varible cost, sunk cost, and relevant cost. Varible cost and relevant cost are easier to understand since one of them changes relatively to the output and the other changes depends on the decision which the administration makes. But the fixed cost and the sunk cost confused me. But after doing Case 2, I can now clearly seperate these two cost.

Fixed cost is the cost that will disapear when you shut down the company. For example, in case 2, when you shut down the adult department, you don’t have to pay the salary for the manager any more. So the salary is the fixed cost. While the rental fee of the factory is a sunk cost for the company. Shutting down one of the department will not affect the rental fee, because you still need the factory for operating the other product lines. Sunk cost is the cost once it has paid, it can not be recovered.

There is a video I found just now which explains clearly about the fixed cost and the sunk cost.

https://www.youtube.com/watch?v=Eu2UWaFDQKM

http://finance.yahoo.com/blogs/daily-ticker/apple-shares-fall-iphone-5-sales-fail-meet-145041575.html

Iphone 5 is now coming into the market. Unlike the usual, Apple’s shares fell instead of defying gravity. The problem is the new product sales didn’t meet the analysts’ expectation. Comparing Iphone 5 to the prior product, Iphone 4S, there is no big and attractive difference. This leads to the low sales, and the falling of the shares. Iphone sales occupies 50% of Apple’s revenue and 60% of the profit, which determine the annual return of Apple. The investors are now watching the sales number. If Apple doesn’t boost the sales, the shares will keep falling and cause more trouble.

Another problem is the policy in the U.S.. Recently subsidies by the cellphone carries allow the customers switches from one smart phone to another upgrade one by paying less money within the contract days. This action highly reduce the revenue of both the carriers and the Apple.

In the article, Piecky says if Apple introduced a new, lower-priced phone that could sell in Brazil, China, Mexico and other developing markets, that will boost the iphone sales. I am not totally agree with him. As a Chinese, I can see the insane iphone fans. Yet, selling lower-priced phone can increase the quantity demand, but will also overset the business plan and reputation of Apple, which is selling high-tech product.

http://www.quickmba.com/marketing/ries-trout/positioning/

The article highly generalizes the importance of brand positioning. As a customer, I understand that it is impossible for people to remember every advertisements. Just like the Olympics Games, everyone knows who is in the first place and hardly remembers the second or the third. Same application among brands. That’s true that customers keep in mind only the first. To be the first comes into customers’ mind or the first in the category. But sometimes it’s difficult to range the first in the category. Finding other unoccupied position to be number one is an easier way to get into the market. For example, when we talk about clothes, people think about LV, Gucci because they are the top luxury brands; think about H&M since it is famous for the cheaper price and the popularity. Another example, Lululemon is the company selling professional yoga outfit and it is well-known in North America. So when customers consider buying yoga apparel, the first brand jumps out of their mind is Lululemon. Although nowadays there are many copycats, it’s so hard for the competitors to get the leadership position.

(Reply on Gordon’s blog post https://blogs.ubc.ca/gordonblog/)

According to Gordon Woo’s post which talks about business ethic, HP lays off great amount of employees. Laying off employees seems like the fastest and most direct way to cut the cost, but it brings many problems after. First of all, it shows that the company doesnt concern about the stuffs. This is a business ethic problem. Actually there are many ways of cutting cost, such as find new and cheaper resources. Second, the restructuring can create the insecurity among the employees. They are afraid of losing jobs. Under this situation, they can not concentrate to the work due to the negative working environment. The workers’ emotion directly affect their performance and the company’s profit. Most of the time it is not worth to reduce cost in this way. In my opinion, companies which lay off big amount of employees for cutting down the production fee is immoral and cold-blooded since the employees input their work and effort. Do you think of any better ways of cutting down the cost?

The business ethics is an controversial problem in the business market which now is full of competitions. Every company wants to beat the others and gains the maximum profit. Companies are struggling between the profits and the legality, or  the honesty to the customers. The article “It’s Not That Easy Going Green” talks about the business ethics against the environment. Berry is an ardent environmentalist. He recently discovered that his cotton industry ironically hurting the environment and the food system. As the CEO of Apparel Source Inc., he chooses to follow his passion. He uses the organic cotton instead of the traditional one, although the new material costs more money. The next step he does is to convince the retailers to sell his organic cotton garments. Berry finally did the bold shift for his company. It is not an easy decision to choose between the profit and the environment. Many companies consider that the environment is much less related to themselves than the profit, and that’s why the business ethics problems exist nowadays.

http://www.inc.com/magazine/19990501/791_pagen_2.html