Referring to http://www.economist.com/businessfinance/displayStory.cfm?story_id=15465835&source=features_box2
From the link above, I extracted this simple, yet insightful, quote: “Toyota still has great strengths, not least financial, but it has lost something precious and may never get it back.”
Long story cut short – Toyota’s cars have been proven to have faulty pedals with dangerous acceleration potentials (ie they accelerate without the intention or control of the driver), and therefore over 2.3 million cars have been called back in America. Yes, Toyota can sustain the lost financially, but can it sustain the loss of reputation as a world class car producer?
Personally, it will take Toyota at least a year before they can recover from such a drastic event. From a consumer’s point of view, the brand is no longer fully associated with high quality products. Though one may argue that Toyota run by humans that are prone to error, errors that cost lives are too fatal to incur and forgive in a short period of time. We can see the effects in display, with Toyota’s sales “plunging by 16%”.
Is waiting the best solution? Absolutely not. Toyota, having identified the problem, can gain the confidence of its customers once more by showing explicitly how they are approaching a solution. Toyota would also have to tighten up on safety measures and regulations before allowing cars to be sold on the market. Such a mistake is intolerable, and it is evident why.
Profit = Revenue – Cost
In the past, many companies looked toward maximizing revenue. Today, however, the focus has shifted towards minimizing costs.
It should be agreed that one business requires good relations with its supplier to have an efficient supply chain. This is, of course, not always true. Since the goal is minimizing costs whilst maximizing revenue, Dell has found it more efficient to go direct, cutting out the ‘middle man’. Their factories were able to sell goods directly to customers via the internet. However, not all companies can achieve the same goal through the same means as Dell, and not many would want to risk using such means. This can be explained with the following equation:
Surge in demand for your product + Product not generated quickly enough = dissatisfied customers
Especially in the current economic times, when the global economy is highly unstable and therefore unpredictable, it is difficult to say that having low inventory levels is exactly ‘good’. Although one might not predict a surge in demand anytime soon, still, you never know. This is especially worrying if your product is highly demand elastic.
There are also factors to consider in maximizing efficiency within the supply chain, such as using more than one supplier, or the sourcing of materials. Whatever the methods, it is important to consider the long term effects of a strategy used to minimize costs or to maximize revenues.
So I mis-read the instructions, and I didn’t post about ethics in my first post. This post is a hybrid of make-up for the first post + strong feelings towards this topic.
Topic: ‘Freedom and Democracy”
Link: http://www.economist.com/world/international/displaystory.cfm?story_id=15270960
Firstly, I do think the West has built in certain associations within the English language. We simply associate ‘good’ with ‘freedom’, and ‘freedom’ with ‘democracy’. While I think there is a more objective argument to support democracy, I also think it is ethically wrong to intrude into what other countries find to be the optimum strategy of political rule.
Political freedom, I think, is less possible in a country like China. Imagine having all 23 provinces voting for a single leader. Such a wide-scale election would not only be impractical, but it is likely to produce undesirable results. What if a demagogue without skill became leader and drove the country into chaos? At the very least, now, with China’s one party state, the chosen leader is competent and capable in leading a country. Not all countries are suited for democracy.
This brings on the question of ethics, for why should Western society constantly promote democracy and good to be one of the same? It’s not the truth. Certainly, democracy is associated with freedom (although this is merely Majority’s Tyranny as shown by the article), but should freedom or ‘Majority’s Tyranny’ be associated with good? I leave you to answer that. For now, I will conclude by asserting that they are not one of the same, and that we should not always think ‘free’ is the same as ‘good’ in every situation.
Ryanair has been around since 1985, but only recently did I realize how dominant they were in the airline market. Let us consider the following table:
Ryanair carries more international passengers than any other airline as a result of their competitive business strategy. Unfamiliar with Ryanair’s business strategy?
Ryanair’s Main Strength
Many believe that the largest contributor to Ryanair’s success is the fact that it offers extremely low costs. I must agree, but only because they have led to differentiation of Ryanair from other airlines. By being the first in the airline industry to offer such low prices, Ryanair has created familiarity with consumers that desire low prices over comfortable flights. Other airlines, like Air Canada, cannot emulate Ryanair’s success because they are not recognized as airlines that deliver the lowest prices possible, and to invest so much into their brand name is particularly risky.
Ending Thoughts, Questions
The economic climate, in the past 3 years, have been far less than desirable, leading people to turn to low prices. If the the global economy strengthens, it should follow that people would conspicuously spend – a situation where Ryanair’s ‘cheap’ image might be more harmful than advantageous. Only time will tell.
