Am I ethical?

After stumbling upon this blog written by Chris MacDonald in Canada Business, it immediately brought me back to one of the very first classes in Comm 101 about business ethics.  The article discusses McDonalds and Target dropping their egg supplier, Sparboe Farms due to unethical animal treatment.  McDonalds’ and Target, being such large corporations, most likely accounted for a lot of Sparboe’s sales.  Consequently, this was a huge loss for the farm.

It is interesting to note that McDonalds’ was not directly dealing with Sparboe.  Rather, it received it’s “eggs via Cargill Inc., the agricultural giant that supplies all of McDonalds’ eggs.”  This shows “supply chain responsibility” on McDonalds’ part because despite not dealing directly with Sparboe, it was proactive in addressing the behaviour of its supplier when it could have easily ignored it.  This also exemplifies McDonalds’ buying power, as they are able to easily switch to a different supplier.

I believe McDonalds made the right decision.  This improves McDonalds image, appearing as a stronger ethical company.  Businesses everywhere are realizing the benefits of having an ethical brand image.  Moreover, this sets an example for other suppliers with the message that poor treatment of animals will not be tolerated.

Versus

This is in response to Rachel Reddy’s blog titled, Mike “The Situation” and Abercrombie.”  Rachel states that Mike “The Situation’s” “personality does not take away from their [Abercrombie’s] “image” they claim to uphold.”  I believe Mike “The Situation’s” image is not representative of Abercrombie and Fitch considering the fact that  Abercrombie and Fitch has branded itself as a “casual luxury” brand, providing shoppers with “classic, All-American lifestyle”clothing that does not adhere to Mike’s style.  Consequently, the company is justified in not wanting “The Situation” to be associated with it.

Although some brands have products targeted at people, such as Mike “The Situation,” who enjoy wearing tight t-shirts with embedded jewels and having noticeably fake tan skin, this is not Abercrombie’s target market.  Furthermore, Abercrombie and Fitch targets young adults, aged 18-22, whose style consists of trendy, ready-to-wear fashion.  In my opinion, “The Situation” does not fall into this target market.  As such, an individual that receives a considerable amount of press and is seen in million of magazines such as Mike, may confuse people as to what type of brand Abercrombie truly is when he wears its clothing because he does not accurately represent the brand.

Customer Service - Does it really matter?

This blog is in response to Carla Santos’ blog, titled “Customer Service is a BIG DEAL.”  In my opinion, customer service is only important to an extent.

Take Ryanair for example.  Despite receiving much publicity for poor customer service, it has been experiencing significant increases in profit.  Why? because the low cost of its services has greater incentive power over buyers than customer service does.

When I receive poor customer service, I always say I won’t give that company my business again!  Then months later, when in need of the same service, I forget about my past incident and only consider the opportunity cost of switching to a different product.  This usually leads me back to the company I vowed never to give my business to again.

Obviously this depends on a company’s brand image.  If buyers are purchasing high priced products, customers expect superior customer service. But for “run of the mill” products it is fair to assume customers base their decisions predominately on the cost and quality of the product rather than customer service.  The majority of consumers will sacrifice excellent customer service if it means receiving a product or service at a lower cost.

A few looks from the H&M Versace clothing line

Bryant Hsiao brought up some interesting points in his blog regarding H&M and Versace’s fashion collaboration.  Bryant suggests, “Versace is risking projecting a confusing image of the brand.”  I would have to disagree with this statement because H&M and Versace have both established such strong brand images, which means this one fashion line will not have a great effect on how the public views the brands.  This collaboration is simply a way to diversify the products, not change the brand completely.

Furthermore, although one may think H&M’s customers would not be interested in paying higher prices, the contrary may be true.  This sort of collaboration gives fashion lovers who may not be able to afford Versace’s high end products, the opportunity to purchase Versace pieces closer to their price range.

That being said, I believe this type of collaboration project is more successful for stores with well-established brand images.  It would be difficult for younger companies to embark on this sort of project since the two brands may have conflicting strategies or brand positioning that will confuse consumers as to what their brand truly is.

Doug Burgoyne holding his million dollar idea

In Noa Glouberman’s article in Make it Business magazine she presents an excellent example, through the company FROGBOX of how the success entrepreneurs acquire comes at a high risk of failure.

Doug Burgoyne, founder of the Vancouver based company FROGBOX, quit his well-paid job as a telecommunications company to pursue an entrepreneurial career.  FROGBOX became successful because of its point of differentiation, sustainability, which filled an empty niche in the moving market.  FROGBOX rents reusable plastic boxes and other moving supplies to customers.  The cost of their services is almost equal to that of using cardboard boxes.  Therefore customers have little reason not to use FROGBOX because not only are their services affordable, but they are eco-friendly so one does not have to feel the guilt of purchasing a large amount of one time use only cardboard boxes.

FROGBOX also displays product innovation, an essential element to successful entrepreneurship strategy.   Since start up, it has introduced new products such as reusable wardrobes and totes, dollies, and recycled packing paper.   By increasing the products and services available to customers this will increase FROGBOX’s bottom line while still staying true to their business strategy, eco-friendly moving services.

For some reason many people believe celebrities consume superlative products.  Thus, one assumes if a celebrity backs a company, it will make the company better off due to higher product credibility and increased brand exposure.  But this may not be the case, as Laura Petrecca states in this article in USA TODAY.  Celebrity investors are fairly risky.  For one, consumers may not view a celebrity spokesperson as sincere because of the large sum of money they’re receiving, which in turn may tarnish the credibility of the product all-together.  Furthermore, “Whatever that person does is going to attach to your brand — good or bad.”  Finally, celebrity involvement means positive and negative media attention.  When a problem arises in a company, reporters are quick to publicize an event linked closely to a big name.

In my opinion, companies in general benefit from celebrity support.  This is particularly advantageous for small start-up companies that will receive valuable advertisement and publicity it would not have gotten otherwise.

Nook vs Kindle

Barnes & Noble (B&N) pulled DC Comic’s books off it’s shelves recently after the company sold exclusive digital rights of it’s comics to one of B&N’s largest competitors, Amazon.  Matt Stuart and Stacy Cowley from CNN quote Jamie Carey, chief merchant of Barnes & Noble in article, “Regardless of the publisher, we will not stock physical books in our stores if we are not offered the available digital format, to sell and promote the physical book in our store showrooms and not have the e-book available for sale would undermine our promise to Barnes & Noble customers to make available any book, anywhere, anytime.”  First of all isn’t refusing to sell the comics in stores contradicting this alleged promise to “make available any book, anywhere, anytime?”

Furthermore, this was excellent strategy on Amazon’s part because it forced Barnes & Noble into a dilemma.  Should B&N continue receiving revenue from products that have exclusive deals with rivals or pull products resulting in loss of revenue and customers?  The first option would mean an increase in publisher’s deals with companies like Amazon because they see no repercussions in doing so.  The latter would prevent publishers from making exclusive deals with e-book companies.  Barnes & Noble chose the latter, which made a statement to companies such as DC Comics that if companies won’t play by B&N’s rules then B&N won’t hesitate to pull products.

I believe Barnes and Noble made the wrong decision.  Books are moving toward electronic medium and by not adjusting it’s business model accordingly, B&N will be forced to stop sales of popular books as more and more companies begin to make deals with e-book providers.   Proven here, it may not always be in a company’s best interest to exercise it’s buying power.

Change is cool!

Apple’s success is a result of understanding that technology is not static; it’s constantly growing and changing to meet the needs of buyers.  Maskai Tajima mentions in his blog that “Apple’s recent marketing and product development spirals around the dilemma concerning, changing preferences of consumers today.”   I believe apple has dealt extremely well with changes in consumer’s needs. The company’s ability to analyze consumer trends and act accordingly has been proven with their modification in iPod development.  After noticing a decline in iPod sales (most likely due to the iPhone, which now accounts for half of the company’s yearly profits), Apple slashed prices rather than introduce a new iPod this fall.    Lu Fang writes in his blog, “To determine what consumers wants is not a one-time work.  This should be carried throughout the entire life of a certain business.”  Apple creates products according to shifts in the market’s needs.

Furthermore, Apple has recently presented a number of new product features that give the company a technological edge.  For example, Jefferson Graham writes in USA TODAY, “a talking personal assistant named Siri,” found in the iPhone 4S “which combines voice activation and artificial intelligence”  In addition the company has brought forth the iCloud, which “makes all your media available to all your devices and puts Apple in the driver’s seat for the consumer cloud.”

Holt Renfrew's signature bag

How could Holt Renfrew, a store selling high end clothing and accessories that not everyone can afford last 174 years in the retail business?  The answer is simple, brand.  When you see someone walking down the street holding a magenta bag with the words HOLT RENFREW scrawled across, you immediately think that person is carrying an expensive, good quality, luxury product.

Mark Derbyshire, president of Holt Renfrew

Jenny Lee quotes Mark Derbyshire, president of Holt Renfrew in the Vancouver Sun, describes retail as a theatre saying, “It should be an experience. I believe you come to Holt Renfrew to feel good.”  That’s why the store offers incentives to sale associates such as a trip to Vegas if they meet sale targets.  This is a great way for management to prompt their team to create special relationships with customers that will leave shoppers wanting to go back to the fun and positive atmosphere of Holts.  Furthermore, the store offers entertainment on weekends which encourages shoppers to make Holt Renfrew a part of their weekend routine.  Holt Renfrew has also begun a brilliant strategy of receiving smaller shipments of products more frequently.  Therefore, customers feel the need to visit the store more often to check on new stock that may not have been there a few days ago and that they can purchase immediately before it sells out.

Forest Ethics' awareness poster regarding tar sands

Banana distributors Dole and Chiquita make up a large portion of the banana market selling approximately 27 billion bananas a year.  Therefore their environmentally unfriendly method for transporting and refrigerating bananas overseas, certainly has a significant negative impact on our global environment.  The oil used to fuel these ships comes from tar sands in Alberta, home to some of the filthiest oil on the planet.  Toxins released from tar sands pollute water, air, and forests, causing increased cancer rates of populations in neighbouring communities.

This raises an ethical issue as to whether companies should use toxic fuelling methods in order to capitalize on profits even if doing so means threatening the well being of local people and resources?  By using the tar sands Dole and Chiquita’s main goal clearly is bringing in as much profit as possible.  Although this may be the best option economically, ethically, the better choice would be to convert to more sustainable transport means.

The switch to cleaner fuel practices will not be difficult with the help of Forest Ethics, a group designed to assist companies in reducing their carbon footprint.  Forest Ethics has already worked with numerous companies such as Whole Foods and the Gap in changing their fuelling systems by finding fuel resources that do not come from tar sands.  Both establishments remain strong competitors in their industry despite this change thus proving businesses such as Dole and Chiquita can do their part in reducing pollution without sacrificing a large portion of profits.

http://bx.businessweek.com/business-ethics/view?url=http%3A%2F%2Fwww.triplepundit.com%2F2011%2F08%2Ftar-sands-oil-bananas%2F

http://forestethics.org/dole–chiquita-embroiled-in-escalating-tar-sands-controversy-