Robert Hall's Blog

In Comm 292 we were required to look at Hewlett-Packard and diagnose the problems that the company is currently dealing with.  After a Comm 101 class where we looked at Zappos, and how they are prospering in large part due to their healthy organizational culture, I couldn’t help but notice the differences between Zappos with its strong culture and HP with its weak and flawed culture.

One of the strongest parts of Zappos is the owner, Tony Hsieh, who works in the same office space as his employees, as well as giving himself a salary of that is approximately equal to everyone else.  There is very little power difference in Zappos, as Hsieh treats his employees almost like colleagues, which in turn makes them feel more valued and gives them intrinsic motivation to help the company profit.

Tony Hsieh, owner of Zappos

Mark Hurd, the former CEO of HP, is the exact opposite.  There is a large power difference between him and his employees, and they are not necessarily treated fairly, as evidenced by a sexual harassment claim filed against Hurd.

HP CEO Mark Hurd

This is a large reason why HP is undergoing financial difficulty:  the success of a company greatly depends on the state of its organizational culture.

A few days ago in COMM 1o1 we were talking about the importance of business plans and looked specifically at Burger King launching its first store in Russia.  There are many difficulties that will arise when Burger King does this, so I decided to take a closer look at them.

First of all, Burger King’s main rival, McDonalds, has been established in Russia for nearly two decades, so there is already a recognized fast food industry brand that is known in Russia.  This will be an obstacle for Burger King because their brand will be relatively unknown, and it will be competing in the same category as a well-known competitor.

Secondly, establishing a new store in Moscow will be a relatively new experience for the executives at Burger King.  I assume that they have researched that there is a demand for fast food in Russia, otherwise they would not try this business move, but it is still very important to remember that the demands of consumers in Russia are very different from those in America.

Overall, this is a risky move on the part of Burger King, as they are going into new territory against an established competitor.  They will need a strong business plan.

In class we were talking about a new website that Disney has just unveiled.  The “Memories” site allows anyone to upload user-generated content such as videos and photos to this site.  The site is meant for only Disney-related content.

Upload any user-generated content

I think that this is a very smart business move by Disney, for one main reason: because social media has become so incredibly popular and widespread, it only makes sense for Disney to get in on the action too.  Instead of posting their pictures on Facebook, people who have recently gone to a Disney resort will be encouraged to upload it to Disney’s site.  Then, any family members or friends who wish to view said photos will be exposed to numerous pictures of other people having a great time during their stays at Disney resorts.  The hope of Disney is that these pictures that show people having a good time will influence others to visit Disney resorts as well.

Ultimately, I believe that this is a great business idea is it is a fairly cheap to run and it involves a great “user-generated marketing campaign”¹ to advertise their products.

1 http://travel.sympatico.ca/trip_harbour/disney_launches_memories_site_so_fans_park_guests_can_upload_photos_videos/3befa7f7

In a recent class of COMM 101 we were discussing how movie giant Blockbuster had filed for bankruptcy.  I did some follow-up research and read some very interesting articles about why Blockbuster is going under.  As stated in this article: http://www.boston.com/business/articles/2010/09/24/blockbuster_plots_new_strategy_in_bankruptcy/, the main factor contributing to Blockbuster’s huge losses is simply technology and their inability to deal with changes.

The changes began in 1999: Netflix, a burgeoning new company, began to accept DVD mail orders online, and they also offered subscriptions that allowed their customers to avoid late charges while possessing multiple DVD’s.  This was obviously very attractive to Blockbuster’s clients, but the management dismissed it as a “niche service”.

Blockbuster’s blunder was that technology was clearly undergoing rapid growth, and there were new companies rising up to take advantage of these new discoveries, but Blockbuster didn’t.  Blockbuster thought that its strong brand name and image could just bulldoze its way through the competition, but they were wrong.  Being able to adapt to the constantly changing business environment is of the utmost importance.

Now, Blockbuster is trying to copy Netflix’s strategy of renting online.  Before, Blockbuster was the leader; if they had been able to adapt, they would now not be the follower.

Blockbuster: failed to adapt

In my last post, I stated that I believed that Ryanair would suffer financial loss due to the mistreatment of their customers through vague and hidden charges.  I must now eat my words.  In their latest financial report, found at:  http://www.ryanair.com/en/investor/download/2010  (download the 2010 annual report), it shows that Ryanair has actually made huge profits since 2009.  In fact, they have consistently made large increases in profit since the company’s start.  In contrast to what I said in the previous blog, I actually believe that Ryanair will continue to make large financial gains.  This is because, for one thing, Ryanair has gained so much publicity through it’s controversial hidden charges that many people who had previously not heard of them are now attracted to their low prices.  Even though these people know that they will almost certainly be charged hidden fees, the ridiculously low base fee is simply too low for them to resist.  Also, before Ryanair became well-known, the hidden charges were a nasty surprise, and would have turned some people off.  Now, however, Ryanair’s customers almost expect an extra fee of some sort, thereby making it not nearly as surprising or frustrating.

We live in such a competitive business world that if a company suffers any damage to their reputation, there is a wealth of alternatives for disgruntled customers to turn to, thus causing the company to undergo financial loss.  As stated in a recent article in the Daily Monitor¹, maintaining good ethics can and should be used as a tool to aid businesses in connecting with the community.  The most successful companies in today’s market put great value on upholding their reputation through making sure that their business is based on a solid foundation of smart and acceptable ethics, thus making matters of public relations very important.  We have been shown in class an example of a company that has very poor ethics and public relations: RyanAir.  Even though RyanAir is, at the moment, very popular, I believe that if they continue to ignore good ethics by having hidden fees and generally unfair policies, the public will eventually become sick of being mistreated and RyanAir will run into financial trouble.  Ultimately, a business that is not built on an ethically sound base will suffer the consequences of poor public relations: financial failure.

¹ http://www.monitor.co.ug/Business/Smart%20Money/-/688614/1011488/-/4fmeafz/-/

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