As Michael Porter suggested, company should focus on one strategy to develop a comparative advantage against its competitors and never try to combine two or more strategies or the company would fall into a dilemma that is “stuck in the middle”.

However, in my opinion, in such a volatile and fast-changing modern market condition, concentrating on a single direction can be disastrous because you never know when will an “accident” pop up and crash your business.

For example, Nokia corporation was the largest mobile phone producing company and occupied a market share of 32% by the end of 2010 and now they are only left with 3%. Their mobile phone business was just sold to Microsoft of a price of US$7.17 billion this September.

It is not hard to tell that the strategy that Nokia was using before the technology innovation was providing relatively cheap, good quality functional phones which can be concluded as a low-cost strategy. In 2008, Nokia had a market share of approximately 60% which seems that Porter’s theory is working so well and Nokia will never be tumbled out of the throne. At that time, the operating system of Nokia’s smart phone was the dominant one and Nokia had no pressure to improve its system but continued to offer cheaper keyboard phones and smart phones and beat its competitors by price. Nevertheless, this solely strategy doesn’t prove itself to be sustainable and result in the breakdown of Nokia empire.

It is not bad to keep the company’s cost down but implementing differentiation to the products will help a company to survive longer.

Source:

http://en.wikipedia.org/wiki/Nokia#2000_to_present

During the economic recession in United State in 2008, Honeywell International Inc. experienced are dramatic drop in demand for their products. Usually, for an labour-intensive company like Honeywell, they will make a decision to reduce the staff trimmer in order to reduce the operating costs of the company. However, the CEO of Honeywell, Dave Cote chose to survive this economic downturn in a different way.

He believed that to make a some employees to be on leave without pay for short period so that no one get fired and everyone can therefore “feel better”. However, I think this is not a wise decision. The employee with a better efficiency will feel uncomfortable for the loss they suffer during the leave. They could enjoy a higher wages if company simply decide to have a job cut. Some of them eventually decided to leave Honeywell due to their insatisfaction. For those employees with a lower efficiency, they get to be “on a vacation” for a longer period of time and they couldn’t even survive with the little wage they earn. Keeping them to work in company cannot bring any extra value and it could be damaging especially during the recession period.

Source: http://honeywell.com/About/Pages/ceooftheyear.aspx

http://hbr.org/2013/06/honeywells-ceo-on-how-he-avoided-layoffs/ar/1

The second day of US government seems to have a relatively insignificant impact on US’s as well as other countries’ economy, but what if last for a month or maybe even longer?

According to statistics, almost eight hundred thousands of government workers have stopped receiving salary and this is a big issue for majority of them. As a result, the sales of some business are anticipated to decrease which could result in a reduction in the workers’ working time as well as wages. These consequences may eventually go into a vicious circle and cause a severe damage to US’s economic system.

For some Canadian companies that export products to the U.S., they may expect their goods to stay at the border for a longer time and therefore cause inefficiency.

Canadians should be aware that Canada’s economy are stable yet susceptible to variability in U.S. and Europe since many Canadian businesses somewhat restricted by other countries’ regulations.

Sources:http://globalnews.ca/news/876912/us-businesses-worry-about-a-prolonged-shutdown/

http://globalnews.ca/news/873079/us-govt-shutdown-bad-news-for-canadian-economy-at-tipping-point/