Category: Uncategorized

Several classmates have blogged about Nordstrom (Sean) and Target (Emily and Ben) arriving in Canada. I agree that more competition will benefit consumers through lower prices and higher quality products. It forces businesses to innovate ahead of competition. Take for example, Holt Renfrew’s strategy to stay ahead of Nordstrom by launching their new hr2 line that targets the discount designer consumer of Nordstrom Rack. Also, mall developers are pouring billions of dollars into their shopping centers, hoping to lure shoppers into other stores when they come to shop at Nordstrom and Target.

Good for the Canadian economy too as Target’s investment alone is expected to create over 20,000 new jobs by 2015, and as we see more US stores open on our doorstep, there will be less incentive to make the trip across the border. Ultimately it will all come down to the trade-off between convenience (such as time, gas and hotel) and price (14% cheaper on average in the US). It will be a win-win situation for the consumer and the Canadian economy which loses $20 billion annually as Canadians head south to shop.

Although competition doesn’t mean that every single business wins, it means that every single business tries to put their best foot forward to win each customer’s business—and stay in business. Good for Canadian consumers and good for the Canadian economy.

I agree with Andrew’s and Kellyanne’s blogs that Groupon, once the fastest growing company has not been profitable recently, due to an unsustainable business model, high reliance on advertising and no barriers for competition. Groupon lacks a sustainable competitive advantage – nothing stops a competitor (like Living Social and hundreds others) from taking their business away.

Groupon’s model is unsustainable also because it lacks merchant loyalty and is a ‘one-of’. In 2011, for example, Groupon published its deal of the day ($40 worth for $20) for a restaurant called Ragin Cajun (“Cajun”). When they came in to dine, Cajun asked the customers to fill out a questionnaire with their email addresses and shortly after, sent emails offering a 25% discount. Basically, Cajun cut Groupon out of the equation and saved a 50/50 split in revenue. So if you charge a customer $60 for an item and you offer a 50% discount that leaves $30 (Groupon takes $15 and you take $15). Groupon’s model has low value proposition for most merchants as they cannot possibly sustain offering discounts of 50-75% for long. Merchants view Groupon as a promotional tool or alternative to traditional advertising to get customers to come in the door. Once that is accomplished, they cut ties with Groupon and use their own resources at a lesser expense to market their product.

In my opinion, Groupon needs to differentiate itself by offering a more value-propositioned model (e.g. 80/20 split versus 50/50) to merchants in order to be sustainable.

In response to Adrian’s blog, I agree that Best Buy’s retail strategy to cut prices alone will prolong their demise. Best Buy cannot compete on prices against online retailers, like Amazon, as marketer Seth Godin comments: you cannot “out-Amazon Amazon.”

Best Buy should be focusing on leveraging their physical stores and their employees rather than competing online. From reviews and personal experience, Best Buy’s poor customer service turns people away like Nadia blogged:  ‘Bad customer service turns customers away.” Even Goldfayn, of Evangelist Marketing says, “[Best Buy employees] just stand and read the back of the box with you.” Although, online shopping is a growing trend, there are still some consumers that feel more comfortable with the touch-and-feel buying approach at old-fashioned brick-and-mortar shops. If Best Buy can mimic Apple’s business model of having knowledgeable salespeople and streamlined interiors, its stores may become desirable destinations.

Not only does its customer service need revamping, their model is also becoming obsolete. “Why are they still selling CDs?” Forbes asks.  Best Buy needs to reengineer its business model to stock products that consumers want, not what management thinks the customers want.

If Best Buy can win consumers on expertise and positioning themselves as the best physical place to buy electronics, it doesn’t have to win Amazon on price. This can be their differentiation strategy and competitive advantage.

See this article and blog for the top business issues a company needs to address in order to succeed: one of which is “customer service”.

Our class on social entrepreneurship was very interesting and after reading Ben’s, Sangeetha’s and Beini’s blogs, I decided to look into others. Another example of a social enterprise is the business model and marketing tactics used by Coca-Cola (“Coke”). Melinda Gates has been a huge supporter of Coke and their role as a responsible business in sub-Saharan Africa. Coke has setup massive distribution networks tapping local entrepreneurial talent in a way that supports local businesses and opens the door for innovative nonprofit work like Cola-Life. In Gates TED Talk, she highlights three key characteristics that the development community can learn from Coke:

1. “Real time” data – Coke’s ‘Knowledge and Insight’ team continually monitors the distribution and sales in real-time to understand the what/why/how of how to increase sales versus non profits that measure impacts at the end.

2. Tapping into local entrepreneurial talent – Coke has trained local entrepreneurs and provided them with small loans to set up local distribution centers. In Tanzania and Uganda, these local distribution centers represent 90% of total sales.

3. Marketing – Coke’s marketing of ‘open happiness’ is associated with a lifestyle that people want to live and takes on different meanings based on local cultures and how they define happiness. In South Africa, for example, happiness is associated with community respect.

Coke is another model social enterprise which displays how sustainable businesses can contribute to social advancement and have a lasting impact in building the capacity of individuals and their communities.

I was shocked to see how some corporations rushed to profit by capitalizing on Hurricane Sandy through social media tweets:

To reverse their insensitivity, I believe companies should step up and apologize like Gap did. Conversely, take American Apparel’s so-called apology saying they didn’t mean to offend anyone but tweeted to increase sales for keeping their people’s jobs. For a brand that adheres as ‘made in the USA’, shouldn’t they have offered a more sincere apology for their lack of sympathy to Americans? I believe so.

See further articles and tweets on American Apparel’s social media aftermath:

• http://shine.yahoo.com/fashion/retailers-capitalize-hurricane-sandy-too-soon-210600100.html
• http://www.cbc.ca/news/yourcommunity/2012/10/american-apparels-hurricane-sandy-sale-sparks-hate-storm.html
• http://www.forbes.com/sites/marketshare/2012/10/31/american-apparels-hurricane-sandy-sale-brilliant-or-boneheaded/

After reading Gaby’s, Connie’s, and Darren’s blogs, I believe social media should only be used if effective and ethical. Social media cannot be stopped entirely due to the increased frequency of using it as a marketing tool as found in the McKinsey Report: 39% of companies use social media and this percentage may go up by 47% in the next four years.

Even though social media has worked successfully for some, many have failed. These B2B and Harvard Business Review blogs explore the reasons for social media failure. As well, a Forbes contributor warns that social media can build a guilt-free, relatively anonymous environment with no accountability.

I believe companies should tread social media carefully because it provides voice to people all across the globe but if they do, here are some helpful tips.

There has been talk about the Starbucks Tata joint venture in several internal blogs (Dayah and Tanita) and news headlines. Now, there are three stores in India (opened in October 2012).

In response to Dayah, Starbucks is staying true to its brand promise of delivering a premium service, by taking the middle road in pricing amongst its 1,800 competitors. For instance, a small coffee selling for 85 rupees ( $1.57) while more expensive than their biggest rival, Café Coffee Day is cheaper than foreign-owned, Coffee Bean & Tea Leaf. By locally sourcing its coffee, Starbucks’ price point has been reduced by approximately 33% to suit India’s price-sensitive market. This is Starbucks’ competitive advantage.

In response to Tanita, I believe Starbucks can capture its market share even though India is known for its tea preference. Socializing at “hot spots” or coffee shops is becoming increasingly popular amongst youngsters and analysts predict the Indian coffee market could double in the next five years. Approximately 200 million people (18-25) live in India. Starbucks is targeting this market, specifically the working professionals who eagerly look for private space outside of their cramped homes (large families) to network or simply, meet with friends. As the Guardian commented, “it’s not about the coffee, it’s about the coffee house” even though cheap coffee is available everywhere. By creating the most elegant store ever designed according to the CEO, Starbucks plans to capture this age bracket that will want to come to Starbucks Tata: the third most popular place after home and work.

I agree with Tri’s and Daniel’s blogs, regarding BlackBerry’s precarious position in North America where Apple’s iPhone and Android phones are increasingly dominant. Although RIM faces intense competition, I believe it is not too late if they deliver a superior product.  In a category driven more by user design and user experience, BlackBerry must find a point of difference beyond security, BBM, and its physical QWERTY keyboards.

RIM has been criticized for its failure to keep pace with innovations from its rivals, undelivered promises, inconsistent marketing campaigns, and unclear platforms upon which to build and rally behind.

All hopes rest on the BlackBerry 10 smartphones promised to provide a ground-breaking next-generation smartphone user experience. In addition, RIM has hired advisers to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives. I agree that BlackBerry can tout on its strengths including its durability compared to its competition. As well, they can continue leveraging on their solid security features that most corporations choose because of data encryption and compression.

I believe BlackBerry has a chance to turn the company around as indicated above and in the predictions outlined here by Forbes. Look at the video below:

http://www.bbc.co.uk/news/business-19315461

Articles:

http://business.time.com/2012/06/25/blackberry-bankers-rim-edges-closer-to-sale/#ixzz28Gbx7qvk

http://gadgets.ndtv.com/mobiles/news/blackberry-makers-outlook-brightens-but-risks-remain-analysts-273365

http://newyork.newsday.com/business/technology/rim-s-future-hangs-on-blackberry-10-success-experts-say-1.4051976

http://www.huffingtonpost.ca/2012/04/03/rim-going-out-of-business_n_1400838.html

http://www.newsfactor.com/story.xhtml?story_id=83945

http://www.pcworld.com/article/242168/gloomy_outlook_for_future_of_blackberry.html

http://www.theglobeandmail.com/globe-investor/flatlining-user-base-spells-end-of-rims-growth-story/article4562338/

Tim’s blog commented on Carlsberg and their distribution strategy in Thailand. I definitely agree that Carlsberg, one of the world’s premium beer brands, is taking the right steps to gain brand perception and its share in this market through a joint venture with Singha Corporation.

Combining Singha’s strong market portfolio in Thailand with Carlsberg’s international premium brands further strengthens Carlsberg’s position in Asian markets. As part of the partnership, Singha will also benefit through the launch of its brands through Carlsberg’s international networks. Thus, a win-win situation for both solid companies while at the same time allowing Carlsberg to compete with Heineken which had a 4.3 percent brand share in Thailand last year.

Thailand’s market offers solid prospects for growth, strengthened by a growing economy that has proved to be resilient to the global recession, expanding populations, and rising disposable income levels. Thailand is one Southeast Asian country where Carlsberg has a negligible footprint so tapping into this country that boasts a population of over 67 million is a viable strategy.

The Thai market represents a great opportunity to build Carlsberg’s brand recognition and exploit growth options in the Asian markets.

Articles for further reading:

http://www.fdbusiness.com/2012/09/carlsberg-group-forms-strategic-partnership-in-thailand/

http://www.ft.com/intl/cms/s/0/f1fd5db8-093f-11e2-a5a9-00144feabdc0.html#axzz28BB5JL1Y

http://www.ibtimes.co.uk/articles/389717/20121001/carlsberg-singha-deal-partnership-thailand.htm

After reading Dabir’s and Peter’s blogs about fuel-efficient vehicles, I decided to look into the cost-benefit analysis of these vehicles further. Supply and demand, gas prices, greenhouse gas emission concerns and other factors ultimately shift hybrid market flows.

Expensive rare-earth metals used in hybrid engines drive up costs. However, automakers are now moving towards redesigning their motors to make them more cost efficient. Previously, Toyota’s Prius Hybrid compared to an equivalent conventional car cost the consumer $6,000 more whereas now the difference is $2,500.

Fuel prices and fuel-efficient cars go hand in hand. In 2011, when gas prices soared, so did buyer appetite and prices for fuel-efficient cars. According to Edmund’s analysis, the payback time or break-even point shortens only if gas prices remain high. Referring to the Toyota Camry in the table below, If Buyer 1 purchases a Hybrid (25K) and Buyer 2 purchases a standard (21K); Buyer 1 pays an ‘opportunity cost’ to own a hybrid as the $4k invested ($25k – $21k) takes at least six years to break even.

Although I too support the environment, the amount of money spent on hybrids does not support my investment.

Articles for further reading:

http://auto.howstuffworks.com/economic-impact-of-hybrid-cars2.htm

http://www.forbes.com/sites/michellekrebs/2012/02/28/with-gas-prices-rising-should-you-buy-a-hybrid-or-ev/

http://www.tomshardware.com/news/car-hybrid-gas,5754.html

As a technology enthusiast, and after learning about Business Ethics, I read about the Apple vs. Samsung lawsuit in which Samsung willfully infringed several Apple patents.  The result: A billion-dollar payment from Samsung, plus an injunction against sales of infringing Samsung smartphones. Apple’s win sets a precedent for companies to think ethically about product design and patent compliance.

How will this lawsuit affect the manufacturing of devices and the consumer’s decision-making process? The New York Times predicts this will, “welcome diversity in phone and tablet design — or they may be stuck with devices that manufacturers have clumsily revamped to avoid crossing Apple.” Consumers will have more choices. Conversely, consumers could be affected by the monopoly Apple has on these patents by pricing products at will or by charging a royalty that third-party vendors (like Samsung) will pass on resulting in an expensive product.

Samsung is one of the leading smartphone makers and its executives must make ethical decisions to not infringe upon Apple’s patents. The late Steve Jobs summarizes business ethics well:  “We think competition is healthy, but competitors should create their own original technology, not steal ours.”

Related Articles:

http://www.bbc.com/news/technology-19391235

http://www.cbc.ca/news/world/story/2012/08/24/apple-samsung-patent-battle-california.html

http://cybershack.com/news/apple%E2%80%99s-has-won-battle-has-it-won-war

http://www.reuters.com/article/2011/04/18/us-apple-samsung-lawsuit-idUSTRE73H6FV20110418

Picture Reference:

http://www.negrielectronics.com/blog/news-updates/latest-news/apple-wins-the-lawsuit-against-samsung/#.UE_odEL3Du0