Image from http://www.brandchannel.com/home/post/2013/08/02/Netflix-User-Profiles-080213.aspx

After reading a blog post from my classmate, Peter, about declining growth from Netflix as a result of a higher monthly subscription rate, something that immediately came to mind was Netflix becoming more vulnerable to disruptive innovation.

Often times, Netflix is portrayed as a disruptive innovator in the video rental industry. Netflix was a key pioneer of subscription-based online streaming services, which ultimately contributed to the closure of video rental stores such as Blockbuster and Rogers Plus. Netflix was able to offer a similar service that was far more convenient, as customers were able to access the content they wanted without having to leave the comfort of their own home.

I agree with Peter, who said that customers are more likely to jump ship following an unexpected increase in price. However, I believe Netflix should re-evaluate its subscription rate because popular TV networks, such as CBS and HBO, are planning to launch their own streaming services. Unlike Netflix, these networks can distinguish their service with popular television series they have distribution rights to, such as Game of Thrones. For Netflix, this might be a warning sign for things to come, as the television industry’s interest in online streaming can impact Netflix’s long term success. By making exclusive television programming available on-demand, streaming platforms for these TV networks can be tailored to viewers that only want access to a specific selection or genre of shows. If these services are priced competitively, Netflix might eventually become a victim of disruptive innovation, as customers have less incentive to switch back to a service that is generic and relatively more expensive in comparison. It seems that Netflix may now be in the same position that Blockbuster and Rogers Plus was in several years ago.

Sources:

http://www.dailyfinance.com/2014/10/16/netflix-earnings-monthly-rate-hike-cuts-subscriptions/

http://www.hollywoodreporter.com/news/michael-wolff-hbo-cbs-streaming-742721

Dasiqox Tribal Park

Even though sustainable development is of great interest to large businesses across Canada, it is alarming that many companies are still engaging in destructive business practices like deforestation. According to an article posted on rabble.ca, Canada is the world’s leading nation in terms of overall deforestation, with 21% of all global forest loss taking place in Canada since 2000.

The scale of deforestation in Canada reveals that conservation efforts are becoming more unattractive. This issue is exacerbated by rising development in many Canadian industries, such as oil and gas. However, businesses need to ask themselves if the ends justify the means. Even though land development offers new opportunities for profit, companies need to consider the lasting consequences of their decisions. For instance, the land for Dasiqox Tribal Park, aimed to protect “cultural, heritage and ecological values,” includes the site of a mine proposed by Taseko Mines Ltd. By engaging in a long-winded dispute concerning the use of this territory, Taseko is wasting valuable time and resources on a proposal that might not even get approved. By damaging the natural habitat, wildlife becomes endangered and the cultural and historical significance of the area gets compromised. Given these external factors, Taseko needs to decide if this project is really worth the high cost that comes with it.

However, I believe businesses should take advantage of the new opportunities presented by these external factors. For instance, Taseko could offer employment and infrastructure for First Nations groups in the area. By forging these new relationships, Taseko and these aboriginal groups could find common ground that benefits both parties.

Sources:

http://www.vancouversun.com/news/metro/Unilateral+park+declared+Tsilhqot+includes+Prosperity+mine/10192766/story.html (includes image)

http://rabble.ca/columnists/2014/10/canada-now-worlds-leading-deforestation-nation

Image from http://www.freshbooks.com/blog/tag/pricing-model/

In a study recently conducted by Simon-Kucher & Partners, a global strategy consultancy, less than 35% of planned price increases are actually implemented by companies. This rate dropped from around 50% in 2012.

Within a company, managerial accountants play a central role in the decision-making process. After our lecture on managerial accounting, I was able to connect the findings of this study with the responsibilities that managerial accountants bear within their respective organizations. According to the study, companies are failing to reach target profits for new products and struggling to increase prices on existing products to generate a higher return. This is an issue that managerial accountants would be familiar with. To maximize profit, products and services must be priced appropriately. In order to do this, multiple factors including competition, industry trends and costs must be thoroughly examined. Managerial accountants must collaborate with and unite other departments in the price determination process, so that essential information and data can be attained for further analysis. Only then can the viability of a pricing decision be determined.

In this particular example, businesses are engaging in ‘price wars’ with competitors, which makes planned price increases difficult as companies are unwilling to risk their current position in the market. This rationale for reneging on a price increase has considerations concerning strategy and positioning. In response to the scenario above, a managerial accountant would likely have collected data about its close rivals to conduct a competitor analysis, so that the tactics of their direct competitors can be understood. Ultimately, this provides management with the information and tools necessary to make a new strategic decision (like holding back on a price increase) that can potentially adjust company activity.

Source:

http://www.retailtimes.co.uk/companies-fail-successfully-position-new-products-market-new-study-reveals/