Month: December 2010

While it is true that the legendary Motorola MOTOFONE came close to being the world’s cheapest phone, Vodafone has won over Motorola by presenting the Vodafone 150, a $15 phone that will be a boon for the developing  countries. These countries often face a problem with communication which is sometimes seen as a hindrance in development. The Vodafone 150 is an epitome of excellence that has a great potential to change the world in more ways than one. According to UN studies, the mobile ownership will reach $5bn in 2010 and most of this will be concentrated in the developing countries. By having access to these phones in countries like India and Turkey, the people will benefit greatly the mobile banking and health services that will aid the countries’ development.

In my opinion, this cheap phone was made possible by the excellent operations management facilities at Vodafone. By analysing the operations chain and making necessary cost cutting decisions that would “reduce the price, and increase the functionality”, this cheap phone now has the potential to provide distant banking services and health aid. But to actually unlock the potential, it is necessary that the marketing and information systems departments work together and first  raise awareness about the product and then make sure that the communication network is maintained so that the developing countries actually benefit from these phones.

http://news.bbc.co.uk/2/hi/technology/8516079.stm

http://www.engadget.com/2010/02/17/vodafone-150-lays-claim-to-worlds-cheapest-phone-title/

We aren’t the only people who like Facebook, people who work in Facebook like it too. And it is because of this majority of employees with high levels of job satisfaction that Facebook is such an effective and well run organization today. There are many proofs to show how desirable a job in Facebook is: Google, also famed for its employees who have an affective commitment towards the company, is suffering from a brain drain of its employees to Facebook.

But why exactly is Facebook able to attract such talented and motivated people to work for it? The salary is definitely one of the major issues: Facebook pays a software engineer, on average a salary of $110,500 which is significantly more than what Google offers its employees.

But, pay is definitely not the only factor that can entice or retain the employees as seen in the case of Zappos which offered its employees a choice between employment and cash and they chose the former. What keeps the employees bound to the company is their job satisfaction, feeling of being treated equitable, trustworthy peers and having some scope for self-actualization.

Firstly, Facebook has a very well defined culture that easily allows people to ratify if they can fit with the culture. This leads to easy elimination of people who have different ideals than those of Facebook. Moreover, the culture is very employee friendly and can be adapted  to the needs of its employees. Since individual differences are respected, more people have the feeling of oneness with the organization which in turn helps build trust and transparency throughout the structure. This transparency is an important aspect of the culture and is extremely useful for a creative and innovation based area like social media development where ideas should be shared without qualms and under confidentiality.

The effect of the culture on the employees is in a way cyclical in nature. Only if the culture is maintained and respected can the right employees join the organization who in turn continue to strengthen the culture. And since the true worth of an organization is its social capital, it is ultimately the culture that determines the effectiveness of an organization.

URLS:

http://www.openforum.com/idea-hub/topics/managing/article/facebook-how-to-grow-your-company-while-maintaining-your-culture-lori-goler

http://www.geek.com/articles/news/facebook-beats-google-on-salary-and-employee-satisfaction-20101119/

Building upon the study of Dell’s supply chain in class brought to mind another stellar example of a company- P&G -that has an excellent supply chain as well. But unlike Dell, it is able to achieve continued success due to the efficient mix of marketing strategies that it uses.

“If you can’t drive sales and deliver product at the point of purchase, you lose,” – P&G

A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. A supply chain of a business may be simple or complex but it is extremely essential to the survival of a business as noted by Jake Barr, the brain behind the supply chain operations at Procter & Gamble. According to Barr, “If you can’t drive sales and deliver product at the point of purchase, you lose”.  He should know, after all based on certain criteria like effective brand management, customer management and agility of the supply chain, P&G was singled out for its “leading edge and scale” in a recent study by IGD. Also, it was hailed as the most admired manufacturer in the study.

So, what is the success mantra behind P&G’s efficient supply chain that enables it to transfer the consumer products giant’s detergents, soaps and personal care products to the  5 billion customers in 170 countries? The secret is the robust relationship between the organization’s marketing department and supply chain department. P&G heavily relies on its marketing strategies and consumer demand to determine what, how and what quantity of a product they need to produce. They follow the simple maxim: Cut out piles of inventory and produce only those products that consumers are actually buying. And it is cost effective too! By having less inventory, they reduce costs like warehouse rentals, maintenance, depreciation cost of the product etc.

Their marketing strategies involve both push and pull strategies. In the push system, they try to sell their products as soon as possible by carrying out independent studies to forecast the demand of a certain product. Then, they would tweak the sales if demand is low and the products to be sold is high, by various promotional activities and coupons. In the pull system, P&G comes up with tactics to attract customers to the retailers and also maintain customer loyalty. For example, one of their tactics which they used in the sale of Pampers was to offer a gift with purchase. Success rate at P&G’s supply chain increased even more when they concentrated on the information about the products and used it to their advantage.

P&G is definitely one of the best organizations when it comes to supply chains and an excellent entity for many organizations to base their supply chain model on.

http://www.industryweek.com/articles/pg_recognized_as_supply_chains_best_in_class_survey_11560.aspx

http://www.baselinemag.com/c/a/Projects-Supply-Chain/Procter-Gamble-Delivering-Goods/

Robin Scherbatsky of the popular television series How I Met Your Mother, calls Tim Hortons, “the most Canadian place there is”. And why not? Holding 22.6% of Canada’s mammoth $14 billion fast food market and commanding 62% of Canada’s daily coffee “fix”, Tim Hortons has over the generations evolved to become one of Canada’s favourite cultural icons. But will this adoration and popularity that Tim Hortons has erode when it seeks to expand and in the process become “less Canadian”? Following describes the impact that organizations can have on popularity and brand value because of  their supply chain and operations changes.

The first shock that Canada got was when Tim Hortons sold its 50% stake in the Maidstone bakery in Ontario to a Swiss company called Aryzta AG. This is the facility where many of Tim Horton’s products like doughnuts and muffins are made. Selling off such a huge stake to a non Canadian company led to fears in people that Tim Hortons isn’t as “Canadian” anymore.           

The second reason why the popularity and even the  reach that Tim Hortons has may reduce is because of its new plan of using the “par-bake” method to make its products. The company adopting this means of production entails half made frozen products being sold by the franchise owners after  baking them. This is vastly different to the age old days when coffee and doughnuts were made from scratch on location by experienced bakers. However, following the new method of production has greater consequences than just drastically changing the “way it is done”. The cost of production of these goods, is surprisingly higher using the new “par-bake method” by a significant 9.9 cents per a single, unfinished donut. This increase in the cost can have an impact on the market reach if fewer franchisee owners start thinking of owing a Tim Hortons  shop to be not as profitable as before.

While this was mainly the sellers’ concern, the customers’ concern was with the new size of their favourite snack- 14.3% smaller than the original donuts. The huge increase in costs coupled with an increasing number of people thinking of Tim Hortons to be not as “Canadian” can prove to be detrimental to its future. While sales are still strong at the time of writing, increasing competition and bad media publicity (firing of an employee for giving out a Timbit) may soon cause Tim Hortons to be not a favourite anymore.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVbau_WUTixk&refer=news_index

http://www2.macleans.ca/2010/09/07/extra-large-trouble-trouble/2/

Today, I was just doing some general reading and I came across a well known  financial services organization – Lehman Brothers- who had recently filed for Chapter 11 bankruptcy protection. Lehman Brothers – up until its bankruptcy in September 2008- was a firm well known for its services in investment, private banking, private equity etc. Reading more about this very interesting case of the fall of Lehman Brothers re instilled the belief in me that ethical business practices aren’t optional any more. It is imperative and crucial for the very stability of the economy to follow ethical practices. Lehman Brothers, it was found out, had some top level executives who often cooked the numbers and changed the financial statements of the company to make the business seem stable and less prone to risk. While this image of the company was important for them to continue providing services and for its clients to retain trust in the company, the methods used for this purpose was by no way acceptable.

What is important to consider here is that such huge scandals when discovered not only shake up the company itself but can also have a ripple effect on others. For example, small private investors and other small bond holders who all depended both directly and indirectly on Lehman Brothers, were all affected badly. Also, the Lehman shareholders suffered greatly- Lehman shares dropped 90% on September 15 2008.

An important idea to be noted here is that often businesses are inclined to play their dominant strategy when competing in a market, no matter if the strategy is unethical or even illegal.  So, the responsibility then falls on the law enforcers and other society and business watchdogs to pay attention to business practices. This is because in this interconnected world that we live in, every firm or individual is in a symbiotic relationship with others- one’s failure can might as well translate into failure for all.

Trumbull, Mark. Lehman Bros. used accounting trick amid financial crisis – and earlier. The Christian Science Monitor. March 12, 2010.