A business that adapts and innovates is a recipe for profitability. Innovation is key in industries that have the characteristics of an imperfect competition. Apple is a prime example of a firm that has successfully innovated and created many points of differences to differentiate itself from its competitors. Alternatively, Kodak is a great example of a company who did not innovate and technology caused the demise of Kodak as they were not able to adapt. Interestingly, there was a blog post regarding “Amazon constantly auditing its business model.” Amazon always looked for new ways to innovate and improve its business model as they were never satisfied with their existing business model as they knew that their “competitive edge today may be a burden tomorrow.” It is amazing how CEO Bezos steadily transformed Amazon’s business model into selling numerous goods through an intricate logistics system and most of all introducing whole sellers into their business. This change gave Amazon a point of difference against its competitors such as Japan’s e-commerce site Rakuten and other sites like Best Buy. Amazon continues to be the leading firm in e-commerce because they continually adapt and innovate as they are disciplined and challenged to improve their business model.

Justin Tiu posted an interesting article regarding employee motivation and the effective ways of improving it. It is clear the employee motivation directly correlates to productivity, yet it is a difficult proposition to achieve. Why do firms still fail in effectively motivating their employees? In short, people are complicated. The article separated different types of individuals as each individual has its own dynamic. Managers now have a great responsibility in managing their team as they need to know how each individual is motivated and devise a motivation scheme for their team. However, it is still a difficult task to motivate employees as it is evident with HP’s firing of CEOs which has destroyed job security in the organizational culture leading to CEOs pursing their own self-interest such as short term goals instead of the firm’s vision. On the other hand, a motivated workforce brings great customer service which is expressed in Zappos’ great customer service. Zappos’ employees believe in the firm’s goal and strive to achieve it. How do some companies successfully indoctrinate its employees to believe in the companies goals and some do not? People are complex creatures that need to be motivated for a firm to reach success.

Benji (Hao Hua) posted an interesting article regarding the iPhone’s performance in China. His post stated that Apple’s market share in China is 4.8% and dropping. This is because of its hefty price at $757 while its Chinese competitor, Xiaomi, sells its highest end phone at $285. Firms, like Apple, are profit maximizing companies that aim to increase profitability  and microeconomics is essential in finding the quantity that maximizes profitability. We can see that the iPhone is an elastic product as there are many competitors with Xiaomi and other famous smartphone brands like Samsung and HTC. An elastic product suggests that it is price sensitive and an adjustment in price would greatly affect the quantity demanded. As a result, Apple may increase revenue if it slightly reduced its price. Ultimately, this potentially could increase profitability as reducing the price of the iPhone will allow Apple to maximize revenue. However, Benji mentioned how the Chinese valued the prestige the iPhone had against its competitors. This suggests that the iPhone may be an inferior good suggesting a reduction in price would reduce the quantity demanded as it does not give the same marginal utility value as it loses it’s ‘prestige’ factor. We can see that Apple’s business decisions greatly incorporates microeconomics in calculating 

Twitter just went through their IPO and it Twitter’s price that has skyrocketed to $44.90 from $26 as of November 8, 2013. Similarly, Facebook and twitter obtain their profits from mobile advertising, but Twitter is currently sold at 48 times its 2013 projected revenue figure. Why do investors buy the stock? Investors get attracted to the “next big thing” phenomenon where they make their investment decision based on their intuition and emotion. In turn, investors believe twitter will continuously grow and expand its earnings, but Twitter has not achieved this feat yet which has caused its stock price to skyrocket. Therefore, investors are putting added risk to their portfolio as they are gambling on twitter to exponentially increase their earnings. However, CEO Costolo produced billions of dollars  from the IPO. There are even reports that twitter is only set to make profit by 2015, yet people purchase the stock. It is clear that twitter is overvalued at the price it is selling for, but why does our ‘gut feeling’ play a huge part in our financial decisions. Therefore, individual investors and firms need to ensure that each of their financial decision is made in a group to allow a wider group of views preventing emotion in guiding one’s decision. 

A profit maximizing firm needs to minimize cost and improving operations can bring a cost advantage to the business. In turn, effective communication between the CFO and the head of supply chain management in a business is correlated to business growth.  Great communication between two departments in a business can add more insight on how the business should operate, better risk-management, and greater alignment in achieving the firm’s goals. According to a report by EY, earnings growth of 5% has been directly related to an increase in “business partnering.” What does this tell us? Group decision-making in a firm is much more effective than individual departments deciding by themselves. We can see this because group decision-making provides more complete information, a diversity of views, and creativity. As a result, decision-making increases the accuracy for businesses  as there is more information used to construct a decision and ultimately it is more widely accepted in the business. However, group decision-making can be time-consuming and conformity pressures may be present in groups. We can see that healthy relationships between the finance and operations department can warrant more cost efficient ways to run the businesses’ operations while increasing productivity at the same time. Ultimately, cooperation achieves the desires of departments which all achieve the firm’s goal of maximizing profits. 

The U.S. government is shutdown at the moment and it costs the U.S. government money and everyone else! Tourism and airline revenues are greatly affected by this shutdown. U.S. passports can’t be issued during this shutdown resulting in millions of visitors turned away with 368 National Park Services closed too. 200,000 applications for U.S passports are put to a halt reducing the revenues for tourism. The government shutdown also affects startup businesses as loans from the government have to wait. This whole government shutdown prevents economic growth as it does not provide a fertile ground for startups and most of all it removes people from work as 31% of government services are shutdown. As long as the Congress is in a dispute, the U.S. is in somewhat of a standstill which increases the cost as potential revenues are not capitalized on and increases the unemployment rate. The saying, “Time is Money” is extremely relevant to this situation as the longer this shutdown lasts, the higher the cost. As a result, this puts the U.S. at risk to defaulting its debt which affects the whole global economy and may tip the U.S. into a recession. We can see that the government has a significant impact on businesses and daily lives.

The United States are known for groundbreaking startups such as Google, Youtube, Apple, and Microsoft. These U.S. companies wouldn’t have started without having risk-prone leaders who took a chance with their idea. However, the culture in Germany is very risk-adverse. Under 50% of Germans think that creating a business is an attractive idea. It’s intriguing how the tolerance of risk changes with geographical location; as a result, it greatly affects business decisions. Business creation in Germany is lagging behind the United States as many German venture capitalists have a general fear of failure as they invest more selectively and expect propositions to break even within 18 months. In addition, Germany does not innovate because it focuses on the industries it excels in like the car industry resulting in a trade surplus. Even with low unemployment, why take risks? Innovation is a cost in the balance sheet that can skyrocket making it a very risky proposition. A risk-adverse environment is not the right breeding ground for innovation resulting in a lack of innovation in Germany. Overall, we can see that a country’s culture can greatly affect business decisions, like Germany, and create barriers in business start-ups and innovation.

Innovation. Innovation is a trending concept that many businesses try to avail to give their firm a first mover advantage that potentially increases their profit margins. The Top 5 Innovative companies are Apple, Samsung, Google, Microsoft, and Toyota. 4 out of 5 are in the technology industry and I thought about how innovation and marketing go hand and hand. Apple has been a successful innovator, but the unique distinction of the “i” has successfully differentiated apple from its competitors. The marketing team cleverly consistently used “i” in their product’s name, for example, iPod, iPhone, and iPad. Thus, positioning the product effectively in the consumer’s mind. Similarly, Samsung transformed the phone industry with its numerous selections such as the Note and the Galaxy S series. However, the marketing team creatively presented the phone as customizable and a “Life Companion.” This illustrates that innovation cannot be capitalized effectively without a creative marketing team. A great example is Lenovo. Lenovo is known for manufacturing powerful laptops, but is only 22nd in the top 50 most innovative companies. As a consumer, I still would purchase a Mac over a Lenovo (I’m using a mac). Ultimately, marketing is a powerful tool that triggers innovation to be the difference between firms.

Transportation and Logistics focus on productivity and efficiency. Within logistics, there is a common goal of reducing the use of resources without jeopardizing quality in the production, packaging, and transportation processes. However, security is a concern for the operations team as it has been a growing concern in the U.S. and around the world. In a three month period from June to August, there were a total of 202 thefts in the U.S. which incurred an average loss of around $166,000. As a result, we can see that the security of goods is equally important as production logistics. Businesses have to lower costs by implementing stricter policies in the transportation of goods. One of the culprits of the increased theft is the use of unsecured lots. In turn, businesses can invest in secured lots for drivers to park the trailers in which prevents future theft. On the other hand, businesses can avail of successful middlemen to complete the transportation process like Fedex. Like what Mahesh Nagarajan said, middlemen can give businesses the cheapest price as they can avail of economies of scale reducing the average price. Overall, the article illustrates how theft is a risk in the logistics process which businesses need to solve.

In the 1990’s there was a global boycott campaign against Nike for using sweat shops; however, after 20 years they have gone on the initiative of transparency which has mended   Nike’s world brand. Rob Harrison, editor of Ethical Consumer states that, “the cooperation operates with openness and transparency that would have been unthinkable 20 years ago.” Nike quickly adapted and learned from their grave mistake. From this example, we can see that corporate social responsibility (CSR) is a key aspect in managing a global firm  like Nike. Global brands, such as Nike, are under great scrutiny which leads to greater risk in trade secrets being revealed. Whether Nike’s beliefs are different from society, Nike has to ensure that the firm does not offend the society as a whole. Pressure Groups, customers, employees, and all other stakeholders can potentially be the demise of a firm. We can learn that ethics within a business is a growing trend in managing a business; Adidas, Puma, Reebok, and Timberland are all involving ethics with their business. Although global firms are implementing CSR, many businesses are focused on profit maximization. It brings the question if its ethical to use CSR as a tool to increase profits within a business?