Oskar Wallin Comm 101

Royal Bank of Scotland have decided to scrap sales bonuses for staff selling mortgages, credit cards and loans. Instead, they will be giving employees pay increases of around 5%. Normally, I would be against a change like this due to the decrease in incentive for employees. In this case it protects costumers from being offered loans and mortgages they have no chance of paying back. Therefor, I believe that this is a socially responsible move by the bank.

Since RBS is 73% government owned, this move makes a lot of sense. The government should be more concerned  with helping people than increasing sales numbers. An incentive like this would be more appropriate in a privately owned business as their main objective will always be to make profit. This raises the question, how ethical is it for any bank to use incentives like this? Do banks hand out loans without believing they can be paid back? I don’t think it’s ethical to use financial incentives like this in this particular industry. I think that RBS made the correct decision in changing the way they compensate employees.

Works Cited:

Ben Horowitz makes some interesting points in his blog post “Cash Flow and Destiny”. In this short post he goes on to address the importance of cash flow. Investors can be a good way for a business to generate funds. However, if you take someones money, you also take their opinion on board. Horowitz explains how was able to succeed by ignoring the voices of investors and potential investors. This might not always be possible due to desperate cash flow problems and agreements made when taking their money

For a start up, cash is needed for the company to grow and to avoid layoffs and possibly bankruptcy. Every startup must find a good balance between cash from investors and being able to take the company in the direction they want. Businesses fail due to poor cash flow all the time. At the same time, they also fail due to dilution of power and an unclear direction for the business. I believe that businesses should be careful when choosing who to work with and who to take money from. The quality and knowledge of the investor may be more important than the dollar value of their offer.

Works Cited:

Horowitz, Ben. “Ben’s Blog.” Ben’s Blog. Web. 19 Nov. 2015.

Tek Kitt Ong posted an interesting story on his blog about Abercrombie and Fitch and their marketing strategy. The former CEO of the company, Michael Jeffries said that he only wants attractive people to wear their clothes. The business even decided to only produce sizes 14 and under for men. They are losing a lot of potential clients this way. However, Tek Kitt argues that this idea could be successful as this image will be appealing to a lot of people.

I would say that he is correct, it is appealing to a lot of people. However, I believe that these policies will effect the company and its image in the long run. People still associate A&F with some of the controversial comments made by Jeffries and other managers. Personally, I don’t believe this type of high school like exclusiveness is a sustainable strategy (Berfield, Susan). I believe that that hype will eventually die and the business will be facing an uphill battle to fight this. The best way for the business to move forward would be to invest in a new marketing campaign based on new values and expanding their clothing options to suit a larger number of people.

Works Cited:

Berfield, Susan. “How Abercrombie & Fitch and CEO Michael Jeffries Lost U.S. Teens.”Bloomberg.com. Bloomberg. Web. 18 Nov. 2015.

Ong, Tek Kitt. “Tek Kitt Ong’s Blog | Just Another UBC Blogs Site.” Tek Kitt Ongs Blog. Web. 18 Nov. 2015.

Cole and Parker which is a company that sells high end socks are doing a very interesting promotion. Twenty percent of their profits go to aspiring entrepreneurs in developing countries. Corporate social responsibility like this can be useful for a business despite the high costs it entails.

Companies that display corporate social responsibility are often appreciated and encouraged by the public. This may lead to higher sales revenue. In addition to that, a unique idea like this gives the company a lot of positive exposure. You could even argue that this is a sustainable unique selling point. They are aiming to improve economies in a way that most charities don’t.

Twenty percent is of profit is a lot to give away. What intrigues me is how a company in the private sector is able to do this and why they are willing to do it. To understand this, it is important to be aware of the significant benefits of CSR. These include improved costumer loyalty, costumer retention, increased exposure and improved reputation. As a private sector business, the aim is to provide profits. CSR is important in terms of decency but ore importantly, it can be beneficial in terms of revenue and exposure too.

Works Cited:

Meyer, Sean. “Kickstarting Entrepreneurs.” London Community News. N.p., n.d. Web. 13 Nov. 2015. <http://www.londoncommunitynews.com/news-story/4409198-kickstarting-entrepreneurs-by-selling-the-jazziest-of-socks/>.

Before launching a new product, every business needs to do market research to get an understanding of how this new product will perform. However, market research is not always useful.  A perfect example of this is Targets failed attempt to enter the Canadian market. In order to succeed in any competitive market, you must be aware of the culture, wants and needs of your target segment (Audra, Bianca). Before entering a market like this, careful and useful market research should be conducted.

Targets problem is that they did not fully understand Canadian consumers. They did not get their pricing strategy right and their brand image in Canada was effected by it. In addition to that shoppers complained about a lack of inventory (St. Louis, Dara). These issues all originate from market research problems. Problems with market research could be the questions asked, type of research (Quantitative vs qualitative etc), biased consumers etc. In this case the questions asked were not sufficient to establish a good overview of their target market.

What interests me is the complexity of market research. A lot of time and money is invested into this. Even a massive firm like Target can have their market research be completely redundant if the wrong questions are asked.

Works Cited:

Audra, Bianca. Small Business Chron. N.p., n.d. Web. 16 Nov. 2015.

St. Louis, Dara. “Why Target Failed in Canada, and What Other Companies Can Learn from It.” Vision Critical. N.p., 30 Jan. 2015. Web. 16 Nov. 2015. <https://www.visioncritical.com/target-canada/>.

Comm 101 Class 20: Social Enterprise class preparation

I agree with Dambisa Moyo ‘aid is dead’ because the negative long term effects of developmental aid can be seen throughout Africa. It hinders the local economy and prevents brands from establishing themselves in the market. The possibility of aid also lowers urgency and insensitive to work hard.

A common misconception is that Dambisa Moyo is against all aid. Bill Gates even claimed that she promotes evil (Nsehe, Mfonobong). I don’t agree with this statement because there is a big difference between humanitarian aid and developmental aid. Humanitarian aid is necessary in order to save lives and suffering people. Developmental aid is meant to catalyse economic growth and improve industry. In reality, this does not happen. You could argue  that a lot of resources are donated for political reasons, out of guilt and without sufficient knowledge on the countries economy. Developmental aid simply can’t be a platform for sustainable growth. As resources come in and undercut prices, local business suffers and companies can’t expand.

Another important issue caused by aid is corruption. It is estimated that Africa loses 150 Billion USD per year due to aid (Glassman, James). However, the biggest issue is damage done to local business as western products are distributed in the form of aid.

Works Cited:

Glassman, James. “Foreign Aid: The Good and the Bad.” Forbes. Forbes Magazine, n.d. Web. 16 Nov. 2015.

Nsehe, Mfonobong. “Bill Gates Criticises Zambian Economist and She Responds with Fire.” Forbes. Forbes Magazine, n.d. Web. 16 Nov. 2015.

In a blog written by another comm 101 student a few interesting points were explained. Farmers in Brazil have started producing their own high quality coffee rather than just selling coffee beans. This is due to the price elasticity of coffee beans. They found that the price of high quality coffee was more price inelastic. In theory this should be a safer alternative as the market price would fluctuate as much. (Wallin, Gustav)

http://www.goldacrecarmobrokers.co.uk/coffee.php

However, I do not agree that this is a safer option. The coffee industry is a huge market. Therefor we should expect an increase in competition given that Brazil  exports by far the most coffee in the world. This high quality coffee market is relatively easy to enter and coffee is produced in high quantities in many countries around the world (Vietnam, Indonesia, Columbia etc) (Leading Coffee Producers Worldwide 2013 | Statistic). Competition is likely to increase which would make the price elasticity more elastic over time. Also, you have to be aware that costumer preferences could change over time. Relying solely on high end coffee is risky as costumer preferences could change and a growing number of competitors could make things difficult going forward. Given the amount of people who are dependent on coffee exporting in Brazil, this type of specialisation would not be viable for a lot of them due to the size of that market. I would say that exporting coffee beans is a safer option for farmers in Brazil.

Bibliography:

“Leading Coffee Producers Worldwide 2013 | Statistic.” Statista. N.p., n.d. Web. 04 Oct. 2015. <http://www.statista.com/statistics/268227/top-coffee-producers-worldwide/>.

Wallin, Gustav. “Gustav Wallin | Just Another UBC Blogs Site.” Gustav Wallin. N.p., n.d. Web. 04 Oct. 2015. <https://blogs.ubc.ca/gustavwallin/>.

The fast food market is becoming increasingly competitive. Due to the similarities of most brands, marketing becomes even more important. Most businesses in the market offer cheap and simple food that can be purchased quickly. How do you differentiate yourself from your competitors? The answer is effective marketing.

http://www.huffingtonpost.com/2013/01/11/taco-bell-1-cravings-value-menu_n_2459017.html

In this particular industry, there are a few things that can be done to stand out. Offering healthy alternatives proved to be very succesful for subway. Offering delivery and 24/7 service has proved effective for McDonalds and Burger king in man locations. A few years ago, Taco Bell was seen as a low quality brand.  They have since transformed that perception through a number of marketing moves.

They have improved the quality of their ingredients and advertised this at their restaurant locations (Lutz Ashley). They have added more healthy options to their menu. In addition to that, they have expanded into the breakfast market. Diversification and improvement of the menu has attracted many new costumers. Also, Taco Bell has embraced the simplicity of many of their products and identified that there is a strong demand. Unlike many other fast food brands they have heavily advertised their take away system. Taco Bell uses social media to advertise products and many costumers are encouraged to post pictures of their Taco Bell meals (Taco Bell:Marketing Genius and Taco Extraordinaire). This and word of mouth advertising have become the most important components of Taco Bell’s very successful advertising campaign.

Bibliography:

Lutz, Ashley. “Taco Bell Made 2 Changes That Transformed The Brand.”Business Insider. Business Insider, Inc, 28 Mar. 2014. Web. 04 Oct. 2015. <http://www.businessinsider.com/taco-bell-marketing-strategy-2014-3>.

“Taco Bell: Marketing Genius and Taco Extraordinaire.” Promotional Products Blog. N.p., 25 Oct. 2012. Web. 04 Oct. 2015. <http://www.qualitylogoproducts.com/blog/marketing-taco-bell/>.

Japanese company Toshiba mislead investors through accounting fraud. They inflated earnings by at least $1.2 Billion US Dollars. Requests were made by senior managers to alter financial documents released to the public (Toshiba Executives Resign Over $1.2 Billion Accounting Scandal).

http://fortune.com/2015/09/08/toshiba-accounting-scandal/

The managers responsible for the financial fraud have since been forced to resign. There is an interesting overlap in accounting and ethics here. The information provided in the company’s income statement was not correct. This was done in order to attract investors, maintain a strong brand image and improve the companies position on the stock market. This issue raises some interesting questions. Should Toshiba be punished further? Clearly, the company is very important to the Japanese community in terms of economic benefits (Jobs, Taxes, international presence etc). How about the individuals responsible for this? This is a serious offence as investors could lose a significant amount of money due to the dishonesty of Toshiba. The targets set by the business were too ambitious which lead to managers being pressured into fraud (Toshiba’s Accounting Scandal Worse than We Thought).

The company has promised to restructure completely to avoid similar problems in the future. However, there is still an issue in terms of accountability. Financial statements are important tools for companies as they attempt to attract investors and make all stakeholders aware of how the business is doing. It is interesting to look at the connection between accounting and ethics to see how different aspects of business are all linked.

Bibliography

“Toshiba’s Accounting Scandal Worse than We Thought.” Fortune VWs Deadline Fed Minutes and a New Speaker 5 Things to Know This Week Comments. N.p., 04 Oct. 2015. Web. 04 Oct. 2015. <http://fortune.com/2015/10/04/week-ahead-vw-fed/>.

“Toshiba Executives Resign Over $1.2 Billion Accounting Scandal.” Bloomberg.com. Bloomberg. Web. 2 Oct. 2015.

Chicken Supplier Baiada who provide goods for KFC, Subway and McDonalds are suspected of exploiting workers in Australia (Patty, Anna).

https://commons.wikimedia.org/wiki/File:McDonald%27s_Golden_Arches.svg

https://commons.wikimedia.org/wiki/File:McDonald%27s_Golden_Arches.svg

http://www.payoom.com/updates/kfc-cost-per-sale-campaign-now-live-payoom/

A group called ‘Fair Work Ombudsman’ have been investigating Baiada’s activity for the last couple of years. FWO is a non profit organization that works to improve labour conditions (About Us). Their findings are staggering. Baiada uses a number of contractors to accommodate their supply. Employees are forced to work 18 hour shifts with low pay. In addition to that the workers are sometimes paying rent to stay in housing provided by the company. 21 workers are staying in slum like conditions and are illegally getting salary deducted for housing. FWO were unable to get sufficient information from the companies books and several documents were suspected missing or fabricated.

(Patty, Anna)

(http://metro.co.uk/2015/07/23/several-infected-with-salmonella-after-kissing-and-cuddling-chickens-5309324/)

Baiada claim that they were unaware of these issues. This raises an important question in terms of ethics. Baiada outsources in order to protect the company (Om, Jason). Is it the responsibility of Baiada to be aware of its contractors methods? These complications often arise for major businesses (For Example Adidas). Incidents like this often lead to negative brand association for the business but should Baiada pay damages due to the actions of contractors? Clearly the actions of the contractors are inexcusable. The debate is weather Baiada should be held accountable if FWO’s allegations prove to be correct. In todays business climate, is plausible deniability enough of an excuse or should the business be expected to be aware of everything the suppliers are doing. Another issue for the business is that large amounts of profit is unaccounted for. In terms of ethics, what is the appropriate plan of action for labour organisations and governments in a situation like this? Is there even sufficient proof for government intervention? Personally, I believe that a full investigation of all documents and workplaces should be granted in order to avoid the exploitation of these workers.

Bibliography:

“About Us.” Fair Work Ombudsman. N.p., n.d. Web. 16 Sept. 2015. <http://www.fairwork.gov.au/about-us>.

Om, Jason. “Foreign Workers Exploited at Baiada Chicken Processing Plants: Investigation.” ABC News. N.p., 17 June 2015. Web. 16 Sept. 2015. <http://www.abc.net.au/news/2015-06-17/foreign-workers-exploited-at-baiada-plant-investigation-reveals/6554570>.