Shane Neetichow's Blog

The article “Starbucks’ profits jump as sales climb” (4 November 2010) on the BBC business website discusses the increase in profit over the last “three months”.  This can directly relate to the massive marketing strategy Starbucks have created. I’m sure every now and then Starbucks will have a couple of new flavors and those flavors are poured nicely into small cups for trails. This falls under market research process. This process consists of the hypothesis or the problem, design, sources, data collection, sample plan, collect data, analyze and report. Free tasting enables Starbucks to monitor the feedback for that new drink. Therefore they are able to “forecast” the demand with their supply to create efficiency (Data). Secondly this also falls under consumer behavior and decision, since the free trail drink may attract costumers for their sincerity. Furthermore Starbucks also have a concept to fix drinks until consumers are satisfied. This includes giving out unsatisfied cup of coffee for free. This concept will enhance consumer decision, since they are guaranteed to have a perfect cup of coffee. Overall, Starbucks has successfully market their brand; which, resulted in an “86%” increase in profits.

“Japan stimulus to inject $60bn into flagging economy” this article form the BBC news explains how Japan is suffering recession. Prices of goods and services in Japan keep falling causing the consumer to wait for prices to drop. This deflationary problem has been revolving in Japan for several years. Deflation creates a weaker currency therefore exports are more expensive. One of japan’s major revenue is from technology and automobile exports. This could mean they would loose out to new competitors such as the TATA motors compared to Toyata, mentioned in class. However in this article, it is states that “the Japanese cabinet has approved a plan to pump more than $60bn into the country’s struggling economy”. This injection of money is a major investment to boost the population’s spending. Thus forcing aggregate demand to increase and eventually will result in a demand pull or cost push inflation. Therefore solving the drop in prices of goods and services.

http://www.bbc.co.uk/news/world-asia-pacific-11498607

Wal-Mart Domination

“Wal-Mart, the world’s largest retailer, is in talks to buy South African wholesaler Massmart in a deal worth more than $4bn.” This large investment in South Africa may create uproars but it can also create satisfaction for South Africans. “Wal-Mart’s moves into other territories have sometimes brought it into conflict with local trade unions.” In addition local stores and market in South Africa will be damaged by the super market industry domination. The lack of competition will drive out local stores forcing un employment rate to increase. However, large industry such as Wal-mart will provide massive job opportunities. Furthermore the economies of scale will provide convenience and low cost groceries for South Africans. Nevertheless the profit made by Wal-Mart will be transferred back to the United Sates since they are a foreign firm. Foreign firms in the short run can also benefit domestic economy because people are gaining more jobs. Therefore there is more spending the economy, this will boost the growth and recover domestic economy. In conclusion the arrival of Wal-Mart depends on several different factors whether it will benefit the South African society/economy or not.

http://www.bbc.co.uk/news/business-11418762

Finance is one of many basic fundamentals in the business, since it explores profit, investment and several other concept for business. In addition it can also be stated that, finance is the concept of moving money through time. This links directly to the investment sector in finance. Investment is for everybody, nevertheless not everybody chooses the right investment. Many of today’s millionaire receive their wealth from stock prices which they have invested many years back. However many of those men has gone bankrupt. It is interesting how lack of study has been made on this aspect. Is it fair to consider investment in stocks is a business man’s gamble? It is possible to argue that stock prices will leave you with something, unlike gambling in a casino where only a shirt and trousers are the only things left. On the other hand investing in property has always been a safe bet. The prices increase over time according to inflation, and occasionally the prices rockets up due to high demand in that area. On the other hand property can be considered as a hard item to sell, it requires time and effort to negotiate and finalize a deal.

A business action or plan will always be criticized and analyzed in several ways. Many of the criticism revolves around ethical issues that impacts the society. The article “US decides against China currency investigation” from BBC ( http://www.bbc.co.uk/news/business-11146860 ) discusses how China are devalue-ing their currency. The weakening of the Yuan currency creates cheap exports for China, which is their main source of revenue. However, this impacts the rest of the world negatively especially the US where firms are being forced out of the market due to the low prices of imports. Therefore the US “retaliates” imposing tax on imported goods from China. This is the opportunity cost for China for pushing down the price. Here the question is whether it is fair to have a cheap cost of production? China in this circumstances acts like a bully, they buy foreign currency to benefit their own currency. In many parts of the world, people are loosing jobs due to the tough competition. Therefore ethically it is wrong to create such an impact on others. On the other hand in China’s Employment rate increases so in a domestic point of view it is ethically right to create jobs for the society. Nevertheless it is unethical to strongly influence the demand and supply of the exchange market, undermining the concept of the market mechanism.

In the Lieber Light case there are several possible solutions to the problematic entry of Vancouver lights. Vancouver lights set their prices lower to undermine Lieber Light. The first instinctive plan by Lieber Light would be to push their price down too. In theory this plan would force out the Vancouver light out of the Industry. However “its cost structure is to high” to win on price. Therefore alternative solutions would be to take on the early factors of production. It may be possible to negotiate with suppliers, to decrease their price for the Lieber Light. This would reduce the company’s variable cost. Lieber light may also reflect on their employees and since they are not making as much profit several employees may have to be laid off. In addition this employment situation may create efficiency in the company, since employees are now pressured to create more sales. One of the last options would be to shift the market target, since Lieber Light possesses brand loyalty due to longer period time in the market it may create products that are focused towards high end consumers, with luxurious materials in their sky lights.