Month: October 2010

The Blackberry is taking the cell phone industry by storm. It has attracted not only business men but also young teens that are drawn by its instant online access and free instant messaging to anyone around the world. Despite its increasing popularity, there is still increasing competition within the cell phone market. Using Porter’s 5 forces – mainly the treat of new entrants, substitutes and intensity of rivalry – let’s analyze the competitive environment of the Blackberry:

Threat of New Entrants

There are always possible threat of new entrants in the Phone industry, not necessarily a threat of a new phone company but of new products from established companies. With the launch of the I-phone 4, the competition is high for Blackberry. They did launch the Blackbery Torch around the same time, which makes Apple one of the biggest rivalry for Blackberry for this particular product. Both are new and innovative products.

the Blackberry Torch

Threat of Substitutes

The Blackberry can be relatively expensive as it is a Smart phone, and during and an unstable economy, demand for normal phones may be higher.  However, it is also important to note, that the demand for Smart phones is high for teenagers and college students due to its instant access to the internet. Therefore, in the long run, there is not any significant threat of substitutes.

Intensity of Rivalry

What sets the Blackberry apart from other Smart phones is their development of the Blackberry messenger, which no other smart phone has. It allows users to message people with blackberry across the world without a charge, which is why it is attracting young customers. This innovation has given them a competitive advantage in the phone industry. Secondly, ever since the launch of the Blackberry Torch, they have done intense advertising to advertise their product. In Canada for example, network distributors such as Rogers, Fido and Tellus, highly advertise smart phones including the Blackberry. Therefore, these strategies that the Blackberry utilizes allows the company to survive in such a competitive environment and as stated before, gives them a commercial advantage in the phone industry. In addition, they have a a very diverse product portfolio, which helps reduces the intensity of rivalry for the company.

Based on Porter’s 5 forces, the competitive environment of the Blackberry is intense due to the launch of new products from already well-known and established brands. However, based on the increasing demand of the Blackberry and its intuitive appeal to young adults gives them a “boost” in the phone market and helps them sustain their high standing in the industry.

Recently, it has been announced that Walmart, one of the largest retailer stores, is planning to take over its equivalent in South Africa, Massmart with a $40 billion deal. Why? Walmart has been experiencing a rapid decline in sales in the United States but have been thankfully aided by strong sales of Walmart’s in China, Mexico and Brazil. According to Andy Bond, vice president of Walmart, “South Africa presents a compelling growth opportunity for Walmart and offers a platform for growth and expansion in other African countries.” (1)

One advantage of the expansion is that it will indeed help Walmart increase its sales and thus improve its financial problems. This will be a significant advantage in the long term as it will create financial stability for Walmart. In addition, expanding to different markets could help boost Walmart’s market share. Massmart will also benefit financially as they will have more support through Walmart.

Nonetheless, it may mean making redundant the workers of Massmart, and may put most of them out of jobs, which may create conflict with trade unions throughout South Africa. Since Walmart is a relatively western company, it could be a change in practices and working environment, thus creating culture clashes between employees from Massmart and Wallmart. In fact, the article states that Walmart have already run into problems with local trade unions, and people fear that it may happen again in South Africa.

Therefore, what may influence Walmart’s decision to takeover Massmart may be based on their corporate culture. Financially, the expansion will be beneficial for Walmart, however they may also need to analyze the non-financial factors that may impede their success, such as employee satisfaction. Based on what I learned in my OB (Organizational Behavior) class, the workplace environment (such as job satisfaction, interaction, is highly crucial for a large organization, such as Wallmart to succeed in.

(1) “BBC News – Wal-Mart in Talks to Buy South Africa’s Massmart.” BBC – Homepage. 27 Sept. 2010. Web. 03 Oct. 2010. <http://www.bbc.co.uk/news/business-11418762>.

In one of our Comm 101 classes, we were asked to contemplate Milton Friedman’s belief that the “only social responsibility of a business is to earn profits while following the law and basic ethical principles.” In other words, Friedman believes that business only act socially responsible to build a reputation with the consumers in order to increase demand. This got me thinking, and I finally came to the conclusion – based on business news –  that in the majority of cases, Friedman makes a valid point.

In reality, the main purpose of a business is to earn profit, and they do as much as they can to accomplish this goal. Therefore, yes, Friedman, is right to say that businesses only act social responsibility for the sake of it; they don’t do it for the better good but for themselves. Furthermore, most businesses undertake social responsibility to boost their reputation and brand image. Companies need to create a positive image in order to gain a competitive advantage in the business.

For instance, the Body Shop, at one period, created controversy because of their stand on animal rights. Primarily, the Body Shop acted socially responsible by advocating animal rights. Yet in 2006, people were stunned to learn that they had merged with L’Oreal, a company known for animal testing, thus making customers question their true standpoint. Obviously, merging with a large and well-known company such as L’Oreal will be a significant advantage to the Body Shop as it will allow them to become more financially stable and boost its brand loyalty. So was advocating animal rights a way for Body Shop to increase its reputation? If they were indeed sincere about their viewpoint, I believe that the Body Shop should not have merged with L’Oreal, but evidently their main purpose of doing this was to increase their sales, thus supporting Friedman’s statement.