In an article featured by Wharton, the “one for one” business model is explored and analyzed, leading to the claim that they sometimes cause unintended negative consequences. A big chunk of the article is spent discussing this phenomenon with the example of Toms.

Toms’ company relies on the one to one business model by giving a free pair of shoes away to children in need for every pair bought. One of the conclusions of the article is that by doing this, they harm local shoemakers and cause dependence on their free shoes. Another shoe company, SoleRebels, takes a different approach to this. They manufacture shoes in Ethiopia and treat their employees exceptionally well. Employees at SoleRebels receive 3 times the industry average wage, full medical plans, and transportation to and from work. SoleRebels is also very sustainable and environmentally friendly.

I’m aware Toms has only the best intentions with their one for one model and are working on improvements, but I believe SoleRebels is winning on the social enterprise factor. They are genuinely helping give their Ethiopian employees a better, and more prosperous life. However, both of these companies are very sustainable and have created excellent shared value.

In a recent investigation by CBC, they reported several incidences of Tim Hortons and Starbucks failing to keep their promise of sustainable and eco-friendly practices. This includes: throwing paper cups in garbage instead of recycling, disguising a trash bag as three separate recycling bins, throwing coffee grounds in the garbage instead of composting them, and still using a paper cup when people bring in their own mugs. Both Tim Hortons and Starbucks both use their sustainable practices in Canada as good public relations, but now we are finding out that it is all a lie.

What these two companies are doing is wrong on many levels. They are not only doing quite the opposite of creating social responsibility, but they are lying and pretending that they are, which is very unethical. This will no doubt upset many customers, and discourage them and many  more potential customers from buying either of their products for a long time. Also, I would not be surprised to see a drop in their stock after this announcement by CBC.

It might be time for both of these companies to look at the trend in business right now and to follow suit. For example, there has been a big push in sustainability and environmentally friendly practices as of late. If these two companies want to remain strong competitors in the Canadian market, it is crucial they attend to these matters very soon, and regain the trust of their environmentally aware customers.

Recently in the Harvard Business Review blog, Andrew Winston wrote an interesting article about a strong shift in the clean label movement. Consumers are growing increasingly uneasy with buying products from companies that don’t disclose much information regarding their products and sustainability efforts, or lack thereof. They are willing to pay more for clean label products, or products that have simplified their ingredient list. Winston argues that this shift in consumer preference comes from Millennials, due to their demand to work for companies with good behaviour and practices. He then presents a list of tough questions for companies:

Winston uses these questions as a guiding point for companies to judge how their company is perceived by the public. He concludes his article by stating that neglecting the clean label movement will cost companies customers, and employees.

A couple of years ago, it seemed that finding a company with good sustainability practices was rare; however, that is certainly not the case today, or in the future. I believe this is, and will continue to be, a domino effect. Many companies look at sustainability and see it as increased costs, and refuse to take part in order to remain competitive within the industry. But, when one or two companies start doing it and remain successful, a couple more follow, and the trend continues until its industry wide. I hope that in a couple years, the cost for using sustainable practices will become similar to a fixed cost for companies, and they will all be on level playing field.

Recently, Cobo wrote a blog about the tech giant, Apple, looking into the automobile market. Apparently, they are trying to get “project Titan” up and running by 2019, but have not said exactly what that entails. Whether is is a vehicle of their own, or technology to sell to automobile companies, is unknown. However, we do know they have 600 engineers working on this and more than enough money to fund it. It should also be noted that Apple makes returns of 40% on their iPhones, so the figures would have to be similar to justify the transition into the automobile industry. I commented on Cobo’s blog and asked if he thinks they should make this move?

Personally, I believe an Apple car would be very popular, but I can’t see them ever getting the same profit margins (40%) as their iPhones. BMW earns the highest margin and only gets 20%. If Apple thinks they will be able to double that, then they are sorely mistaken. Yes, people love Apple and their products, but to get 40% their selling price for the vehicles would have to be extremely high. People are willing to buy an expensive phone, but those same people may not be able to afford an expensive car. Also, Apple is new to the industry, which will create a lot of roadblocks to become a premier automobile manufacturer. I think they could still enter the industry and do well, but not 40% well. They might also find more success in developing and selling technology to other companies.

In recent years, there has been a shift across Canada towards what people are calling an “Aerotropolis”. This refers to airports that resemble more of a small city, rather than just runways and a seating area. Starting the movement, Pearson International Airport (Toronto) unveiled in June their newest addition: an 80,000 square foot pier with retail shops and pubs. Following suit, Vancouver International Airport is also building a designer shopping centre, but will be close to 400,000 square feet with the newest expansion. Furthermore, Montreal is renovating their runaway, while Calgary undergoes a $2 billion renovation with emphasis on a new baggage handling system which is capable of tracking a single bag anywhere in the airport.

If this expansion continues, and I believe it will, we will begin to see an entire transformation in the travel industry with airports. Pretty soon, it will become a point of parity (PoP) for airports to resemble small cities. When this happens, it will be extremely difficult for airports to have a real solid point of difference (PoD). However, in the airport transportation industry, it may be irrelevant to talk about PoD’s due to the decision making process of the consumer. Most people don’t pick what cities or airports they want to stop at during travel, they pick the flights that are the cheapest and/or most direct. Either way, we are looking upon the entrance of the airport revolution, and when we exit the other side, we just may all be living in an aerotropolis.

  Picture from: http://www.zeroto60times.com/large-car-logos-2/large-volkswagen-car-logo/

As most everyone should be aware of: Volkswagen is facing serious financial and “image” trouble for their emissions scandal. If you aren’t aware, Volkswagen set up their diesel engines in North America to turn on emissions control during testing, but shut off during real driving. Their vehicles have been emitting over the legal limit of nitrogen oxide for the past several years, which has led to a recent announcement: a larger investment in electric and hybrid cars, with massive cuts to their diesel program.

Volkswagen will have to refit close to 11 million diesel cars that might contain the bad software. Analysts believe they face costs up to $51 billion Canadian, and thats not including the lawsuits, fines, and potential criminal prosecution for breaking emissions laws.

Their plan to focus on hybrid and electric cars is smart, and possibly their only option if they ever want to restore their tarnished image. Currently, people are very unhappy with them (for good reason). In order to change that, Volkswagen will have to climb back up the automobile ladder by committing to very eco-friendly cars; however, their announcement of focusing more on hybrid and electric vehicles might be in an effort to switch to a new ladder and stay on top. We’ll have to wait and see.

Toyota recently announced their plans of having fully operational self-driving cars on the highways by 2020. This technology requires the driver to activate it, but will get the vehicle on the highway, slow down or speed up, and merge lanes when necessary. However, Toyota’s Chief Safety Officer announced that programming the technology for cities is much more complicated, so that spectrum is still untouched. In order to be atop their competitors, they announced that they have been working on this technology for a decade and revealed the current technology they have in 2016 cars. Intelligent Transportation System, as they call it, allows cars to signal back and forth between each other and lights. It also allows the car to brake if the driver does not slow down while approaching a red light.

picture from: http://www.toyotacarlsbad.com/blogs/595/toyota-carlsbad-news/self-driving-cars-ready-or-not-here-they-come/

Toyota’s big unveiling seems to me like a chance to create a “ladder” or be first on a new one. In class we talked about positioning a company, and how effective being the first or having the first of something is. I believe Toyota is attempting to put themselves in the mind of the consumer as the first self-driving cars. Eventually, every big company will have self driving cars, but everyone will recognize Toyota as the first one to the game; however, if they don’t beat google to it, then they will have to find and occupy a new ladder such as: better quality, better design, etc.

According to BNN, McDonalds is unveiling state of the art kiosks as an alternative to placing your order at the front counter. You will be able to order, pay, and have your food delivered to you all at the push of a touch-screen. One big perk of these kiosks are the customizing ability to create your own burger. CEO John Betts hopes this will help boost sales, referencing the 15 cent increase with the custom burgers, and the convenience. He believes that with more time to order, and strictly paying with credit/debit cards, people will pay more to eat at McDonalds. Betts also hopes to bring more people through the restaurant at lunch and dinner, due to the decline of customers at those particular times.

picture from: www.meridianbooster.com

This article reminds me of the lecture we had in class from Mahesh Nagarajan about operations. McDonalds is trying to become more direct to their customers, by empowering them with the ability to create their burger to perfection. Personally, I think this is a very good idea to add customer loyalty, but may or may not work as Betts intends. With increased prices, people will either not want to go there for lunch and dinner, or be more willing to eat McDonalds for dinner and treat it like an actual restaurant; however, McDonalds has been known as a quick, easy, and cheap meal for so long, they will have a hard time trying to break that image. With this in mind, I don’t see people treating McDonalds as a destination to sit down and eat dinner with their family on a Friday night.

Ryan recently blogged about the mayhem over releases of Jordan shoes. As he reports, similar headlines appear in a USA Today article; the entire story can be summarized with just a few words: Jordan shoe release, large crowd, fight, injury, etc. Basically, ever since the first release of Michael Jordan’s exuberant shoes, people have been waiting in line as you would on Black Friday. This is part of the hype that makes the Jordan brand so successful and well known; however, this is also where David Silver’s lecture and Milton Friedman’s paper come into play.

Photo from: The Herald

If you read his blog, Ryan obviously believes this is unethical of the Jordan brand to allow this to continue. I agree. I commented on Ryan’s blog, curious to see if he had any suggestions or ideas for them to stop this madness, while still keeping the hype of the shoes and being successful?

Trying to think of a solution, I remember what Dr. Silver said about CVS Pharmacy, and how they thought of a creative way to fix their problem of selling cigarettes. Similar to that, I believe Nike (Jordan’s owner) should continue to keep up the hype of the releases, but find a way to keep people from getting out of control while waiting in line. One way to do this, that I can quickly think of, would be to accept pre-orders from people. That way they’re still excited for the shoes, but they don’t get rowdy waiting in line, because they know they’re is a pair safely waiting for them!

Picture from wikipedia

Recently, Coco Cola announced that since 2010, they’ve donated $120 million to various health research organizations as part of their “transparency” campaign. The donations were received by the American Cancer Society, the American Academy of Family Physicians, and the Boys and Girls Clubs of America.

However, Coca Cola believes that people, and the media, think too much about what people are eating, and not enough about how much exercise they are getting. A $120 million donation may seem generous, but in 2013, they spent $3.3 billion dollars on marketing alone. The Street also says that they would consider Coca Cola’s stock a “buy” right now.

 With that in mind, it seems pretty obvious that they made this “huge” donation to health programs to create positive publicity. By giving away a mere fraction of what they spend on marketing, they are applauded and suddenly a company that really cares about the consumers of their sugary drinks. Good for them right? True, what they did is not unethical in most people’s minds; however, I would like to see a bit more work from them to try and actually help obesity in America.

On the other hand, I slightly agree with Coca Cola that people focus too much on the diet of people rather than their exercise. I can eat healthy, and lay on my couch all day long, and I wouldn’t lose any weight. On the other hand, I can go eat McDonalds for every meal and then workout regularly and not gain weight.