Mitchell Dawson's Blog

My classmate, Nick Krishan wrote this blog post on Amazon’s marketing strategy for its online store. Mr. Krishan revealed that Amazon loses money on every Kindle Fire (its tablet) that it sells. The rationale for this decision is that the low price will grab a large amount of the market from Apple, and direct them towards the Amazon store, where the company will make money. Mr. Krishan’s opinion is that more and more people are purchasing items online than they did before, so Amazon’s business strategy is a good one. I agree for additional reasons, by looking at profit. Amazon only has to sell one Kindle Fire to each customer in order for them to be able to access the Amazon store an infinite number of times. Once each consumer has a tablet, they will buy items off of the store and the company will profit. Amazon does not have to worry about losing money because only one tablet will be bought per person, but a large amount of items can be purchased per person on the Amazon store, covering the losses of the Kindle Fire, while also taking a portion of the market.

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1. First store in 1998

2. Largest store

Lululemon Athletica was founded in 1998, as a yoga specific athletic wear clothing store designed towards women looking to stay active in their middle ages. No company had a specific product with a target market similar to Lululemon at the time, one of the necessary aspects of an entrepreneurship . In 2003,  the company was recognized as the Innovative Retailer of the Year by the Retail Council of Canada. By 2005, the company was easily a multimillion dollar company and announced its IPO in 2007. This differentiates the company as a entrepreneurship from a small business because it made significant profit and experienced significant success within a small amount of time. It also separates itself from a small business because of the innovation it has, and the risk that comes along with selecting a new and specific product.

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This week in class we learned about organizational behavior and human resource management, and the downsides of outsourcing with reference to those two concepts. In this article, a Sauder professor emphasizes possessing knowledge of cultural differences when learning or teaching business. He uses China as an example, where research has shown that employees are generally less dissatisfied with angry bosses than in North America. Having knowledge of the behavior of a culture does not only apply to outsourcing, but in the local workplace as well because of an increase in cultural diversity there. In class we talked about how difficult it is to be able to effectively manage an outsourced call center. I believe that being skilled in human resource management applies to companies operating in its own country because of the growth of cultural diversity in business power countries. I think it is partly the employers job to accommodate employees with different backgrounds, especially in Canada where the country is advertised as a place where multiculturalism is embraced.

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A prototype of Mr. Harris' social network

Josh Harris has been pitching his business idea for over 18 months, with no takers yet. Mr. Harris has developed a unique prediction of the future of social networking. He believes in the near future, video feeds from people as they go about their days will be popular. Based on this prediction, Mr. Harris thinks that companies should create its own channels to create an interactive marketing channel. The marketing strategy behind this would be making mundane activities such as brushing teeth into an exciting experience through these live video feeds. When I read this, I was immediately skeptical. Mr. Harris believes that privacy is outdated, and that if society has evolved to widespread use of Facebook and Twitter, then a continuation to filming everyday life is not too much of a stretch. However, for the most part, most people don’t share anything over those websites that they wouldn’t share in real life, opposed to Mr. Harris’ new idea. Moreover, I think Mr. Harris’ business strategy is weak. He has no target market; he is counting on his idea being embraced by every customer in every market, and that is not an effective plan.

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Galaxy Tab 10.1

Samsung’s “Galaxy Tab 10.1”, the company’s tablet, has been temporarily banned by Australia courts after Apple won its patent license. Apple accused Samsung of copying several aspects of the iPad. Samsung’s tablet is the biggest competitor to the iPad currently, and this lawsuit (which is ongoing in ten other countries as well) will strengthen Apple’s dominance in the market. Last week I blogged about Samsung and its plan for expansion. I mentioned that the company is first in television sales and should be number one in cellphones by next year. This court ruling halts some of Samsung’s momentum, however, if it can alter its tablet to avoid Apple’s patent stealing accusation, the tablet could become a legitimate rival to the iPad. As a result, I believe it would be another step closer for Samsung in becoming a dominant corporation. This situation shows the importance of trying to enter a market first, which is what Apple essentially did. Apple now owns many tablet patents and can increase its market share just by accusing other companies of copying it, a significant advantage.

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As mentioned in Quinn Blunderfield’s blog post, “Opportunities for Profit in a Sluggish Economy”, many economic experts predict a decline in the American economy, and some have gone as far as to predict a fast approaching second recession. The blog post suggests purchasing stocks of public companies who are undervalued. Some experts are preaching this approach, including Warren Buffett. According to the attached article, this advice is extremely flawed. In 2008, the same strategy was promoted, just before the American economic meltdown. The article argues that single investors cannot halt the insolvency of entire European countries. In addition, the mutual funds that people like Mr. Buffett are suggesting individuals invest have large exposure to European banks. As an investor, low stock prices are attractive. However, there is a very real possibility that the European crisis continues its decline and in that case, investing would not be profitable, at least not in the foreseeable future.

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1. Amazon CEO Jeff Bezos

2. The Kindle Fire

Apple may finally have a legitimate competitor in the tablet industry. Amazon unveiled the Kindle Fire this week; its first tablet-computer. It comes at a price as low as $199, and the wi-fi versions at $499 are still significantly cheaper than an iPad. According to this blog, the Fire definitely has some disadvantages compared to Apple’s version, such as a lack of a camera and mobile connectivity. However, the Fire will be connected to the Amazon digital content system, has its own app store, and has high quality graphic display. Amazon is still working on the product, but released it now in order to steal some market share before the opportunity disappears. Similar to the strategy I learned in class, Amazon is not trying to climb past Apple on the market’s ladder. Instead, it is promoting an inexpensive tablet-computer that uses the Amazon digital content system and still carries all the popular apps, movies, songs, and ebooks, without sacrificing graphic image quality.

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In the midst of the economic crisis in the euro zone, Brazil is proposing to make funds available for the European countries affected. This will involve making about $10 billion available to give to the IMF, which would reportedly be the least riskiest way to help out the European crisis. Brazil’s finance minister Guido Mantega also recommended that all members of the BRICS bloc of countries (Russia, India, China, and South Africa) make money available to help Europe. This article is extremely interesting because of the uncharacteristic direction of financial help. The fact that Brazil will be helping countries such as Spain and Portugal is a switch from the expected. In addition to the intriguing nature of this decision, Brazil’s preposition is extremely beneficial for Brazil itself. I think this opportunity shows that the country is willing to play a greater role in global affairs, and that it has enough financial firepower to do so. Brazil’s choice to help Europe through the IMF will give it power in that institution, and relations with Spain and Portugal will improve, two countries that have large investments in Brazil. This decision will help improve Brazil’s power as an emerging market country.

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With another strike approaching, Air Canada sent a bold and forward letter to flight attendants telling them to accept the unpredictable aspect of their jobs, one of the main reasons why the flight attendants are striking. Some flights arrive late and depart

early in the morning, forcing employees to often sleep in the airport terminal. The employees consider this abusive because they are not compensated for much of these stopovers. Air Canada’s defense seems stubborn, and consists of merely pointing out that employees have already been given pay raises in the past, and that they enjoy superior work rules and salaries compared to other airlines. This is an ethical dilemma because Air Canada is neglecting customer needs and their workers’ needs in order to save money, and they are very confident with this fact. I believe Air Canada’s inflexibility on negotiations creates doubt about their interest in the well being of their workers.

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