Recently Facebook and Ticketmaster announced a strategic alliance focused on allowing customers to buy event tickets while knowing where their Facebook friends are sitting. Rachel discussed this alliance in her blog. After reading her ideas, I thought: Strategic alliances and mergers are popular for organizations but do they really benefit consumers? And if so, how and why?

In the 1980’s our telecommunications industry was populated by provincial telephone monopolies.  But the role of telecommunications in the lives of Canadians was about to change. The telecom companies knew that the sector must change if it was to be part of the future and not a historical relic. BCTel ruled telecommunication in BC. In Alberta, telecom was the domain of AGT.  Two companies who in the provincial contexts were giants, but on the national stage were insignificant. The imperative was ‘change or die’. TELUS was the result and is now one of our most progressive telecom companies.  The combined capital and intelligence from the merger allowed the new entity to thrive and help define the future of telecom.

And so back to Ticketmaster and Facebook: while there is excitement, the alliance’s success will ride on a strategic vision that will allow the alliance to deliver real value to customers that transcends the current hype.

Reference: www.telus.com

A bit of Telus History: 

This year has been disconcerting for the global economy. The EU has been hit particularly hard. While there has been a lot of debate about the stability of Ireland, Greece and Portugal, the recent downgrade of Italy’s credit rating takes concerns to a new level. On September 20^th, Standard & Poor’s downgraded the Italian economy. This has a huge impact on both Italy and the world economy. As the fourth largest economy in Europe, Italy’s downgrade has equity markets and political leaders reeling. Could this have a domino effect? Is the rest of Europe at risk too?  While answers are not clear, the speculation is ominous. With each of France and Britain in precarious positions and with Germany’s tolerance for bailouts running thin, concern about the potential ripple effects of the downgrade are real. As political and financial leaders search for the path to economic stability in Europe, we need to ask ourselves: How much change are we prepared to accept in our own personal and business lives to ensure Canada’s future economic stability? It is a question that, so far, we have tried to evade, but a day of reckoning may be on the horizon.

Article Reference: Forbes Business Article 

Video related to Italy’s downgrade:

Isn’t the sole purpose of advertising to attract customers? Well, most businesses would say yes, and indeed that is what most companies seek to do. However, it is crucial that companies are cautious with advertising campaigns. What might first appear to be clever advertising, may damage a company’s customer and public relations. There has been some unfortunate advertising in the past that has actually turned customers away: the opposite effect of good advertising. Marketers must understand the environment in which products and services are promoted and make sure that images, mottos, slogans etc. do not offend consumers.

In May 2011, United Airlines launched an ad campaign titled “You’ll like where you land”. Many potential passengers found this statement distasteful and offensive. The reason for the backlash is that ten years earlier a United Airlines plane was involved in the disasters on “9-11”.

United Airline's offensive advertisement

Consumers blamed the poor taste of the ad on  “ignorance” as opposed to “malicious” behavior. However, the damage was done: customers do not want to do business with an ignorant (or even an insensitive) company.

Companies must balance creativity with sensitivity in marketing; one false move could damage a reputation for a very long time.

Article/Picture Reference: Business Insider Article 

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Enron was a ‘darling’ of the energy sector during the 1990’s. It grew rapidly from a small start up to the seventh largest company in the USA. Everyone wanted a piece of Enron, pushing its stock up dramatically. Senior executives reaped millions from bonus and option plans that were tied to the share price. The temptation was too much: executives and their advisors concocted an elaborate scheme to artificially inflate Enron’s reported success and drive the share prices even higher.  The scheme worked until Sherron Watkins spoke. Ms. Watkins was a ‘whistle blower’ who publicized the sham that had been created. Enron collapsed within months, as did its accounting firm.

Enron is a classic example of the disastrous outcomes waiting for a company whose values and ethics become compromised by greed. Executive compensation plans that reward primarily on share price may encourage inspired activity to slip into unethical and potentially illegal action, resulting in decisions that not only undermine the vision of an organization, but its very viability.

Article Reference: BBC News Article

Picture references: Picture 1, Picture 2 

Summary of the Enron Case: