Monthly Archives: October 2016

An 85 billion dollar Merger and Acquisition, (M&A) is no small feat. The proposed merger between Time Warner and AT&T ^[1] has been especially criticized because of their sheer magnitude. Merging these two giants together would create a great imbalance in the market and potentially a monopoly if details were overlooked. Politicians from both Democratic and Republican parties have slammed the deal, saying that it is too much a concentration of power.

“This deal would mean higher prices and fewer choices for the American people.” – says Bernie Sanders. ^[2]

This merger is a problem dying to explode. Applying Porter’s 5 forces ^[3] to this case, a merger would mean less rivalry in the market, a higher concentration ratio and therefore a high barrier to entry. Leaving the industry highly unattractive to enter for potential entrepreneurs meanwhile hurting consumers with limited choices. Furthermore, consumers will be left with limited buyer power; with few substitutes in the market, buyers are fragmented and virtually have no influence in the prices set by the industry.

Additionally, this merger would mean that AT&T will be controlling the devices consumers use to watch TV as well as what kind of content they choose to watch on the device. They would be expanding their segments and be able to capture a new stream of revenue by diversifying. Similar companies in Canada already provide telecommunications and multimedia; examples are like Bell and Rogers. They do not pose a big of threat as AT&T and Time Warner because of two reasons; there is strong competition in the Canadian market and the size of these companies cannot compare to the two titans. This deal is bound to damage the income of the American people; it is up to the government to decide whether or not to approve this deal.

TV Show Game of Thrones, owned by Time Warner.

According to Market Watch’s Mark Hulbert, his opinion is that this deal would be would inherently bad for the stock market, potentially sparking a renewed wave of M&A’s. He believes this wave will end up bursting like the tech bubble in 2001. A high percentage of M&A deals have been financed with cash recently, reflecting an overvaluation in the bond market. Overvaluing or undervaluing something for a long period of time can conceive the potential for financial crisis.

In my opinion, I whole-heartedly believe that this deal is doing more bad than good. Especially for the average consumer, there is no reason to want this merger to succeed. Phone plans and TV bundles are expensive enough already. Allowing two giants to merge together will permit for unreasonable price surges; being done gradually so that consumers will not notice. This deal is clearly dangerous and absolutely should not proceed, I cannot see any benefits to consumers; the government must reject this proposal and stop the deal all together.

Word Count (450)

Citations:

^[1] Merced, Michael J. De La. “AT&T Agrees to Buy Time Warner for $85.4 Billion.” The New York Times. The New York Times, 2016. Web. 30 Oct. 2016.

^[2] Gryta, Thomas. “AT&T Faces Political Barrage Over Time Warner Deal.” WSJ. Wsj.com, 2016. Web. 30 Oct. 2016.

^[3] “Porter’s Five Forces.” Porter’s Five Forces. N.p., n.d. Web. 30 Oct. 2016.

source: CNN 

With the US Election approaching in less than a month, the consequences of this grave decision will follow us for the majority of our time at Sauder. Should Donald Trump or Hillary Clinton be elected, the world economy, and certainly Canada’s, will deviate from the status quo. Both candidates’ position on economic policies will obviously affect us Canadians; especially because we are the number one trading partners to the States ^[1].

Incumbent President Obama’s push for the Trans-Pacific Partnership (TPP) allows for lower trade barriers to Canadian imports ^[2], a benefit to Canadians and a direct influence on Porter’s 5 forces. Contrarily to the TPP, the North American Free Trade Act (NAFTA) is negatively looked upon; many Americans see it as outdated and was a job breaker ^[3], calling for the renegotiation of the deal.

Interestingly, both candidates oppose the TPP, in addition, Clinton wants NAFTA renegotiated ^[4] and Trump is willing to remove it completely ^[5]. The two presidential hopefuls oppose Obama’s policies on trade because they believe it shifts focus away from American workers; and is therefore going to be unfavorable for Canadians. According to Curtis Kothe’s blog NAFTA is actually beneficial to free trade within the continent, especially in Canada. However with the onslaught of public opinion against NAFTA in the States ^[6], its reformation will be seen with either candidate; and Canada, will most likely loose out as a result.

The rejection of the Keystone Pipeline from Obama is supported by Clinton ^[7]. Trump however, is much in disagreement arguing that the profits are going to make the US rich again ^[8]. Trudeau’s dream for the pipeline ended as a result of President Obama, a President Trump will certainly revive that dream. Resulting in the introduction of thousands of jobs and billions of dollars of revenue over the years in both Canada and the United States ^[9]. Having said that, the implication of even a single oil spill will lead to disastrous environmental consequences as well as financial.

Historically, Democratic presidencies benefit the Canadian economy.

In my opinion, Hillary Clinton is undeniably the safer bet. She is a known quantity and won’t be unpredictable like Donald Trump; additionally, Democrats have proven to increase the Canadian economy. These external factors all relate to the Political and Economic aspects of the PEST analysis learned in class. Referring to Porter’s 5 forces, placing tariffs and removing trade agreements yields high barriers to entry especially for Canadians who want to expand to the States. With increasing difficulty, Canadians are limited and would have to stay local, thus decreasing economic growth. Overall, both candidates will limit the growth in Canadian economy; it’s just a matter of how drastic one goes compared to the latter.

Word Count (447)

Citations

[1,5,8] @globeandmail. “How a Trump Presidency Would Affect Canada’s economy.” The Globe and Mail. N.p., 2016. Web. 16 Oct. 2016.

[2] “Why the TPP Is Such a Big-and Good-deal for Canada.” Macleansca. N.p., 2015. Web. 16 Oct. 2016.

[3,6] “Obama Defends Free Trade Push to Supporters: This Isn’t NAFTA.” Washington Post. The Washington Post, n.d. Web. 16 Oct. 2016.

[4] “Hillary Clinton Statement on Endorsement by the UAW.” Hillary Clinton Statement on Endorsement by the UAW. N.p., n.d. Web. 16 Oct. 2016.

[7] @globeandmail. “How a Clinton Presidency Would Affect Canada’s economy.” The Globe and Mail. N.p., 2016. Web. 16 Oct. 2016.

[9] @globeandmail. “Keystone XL: The Benefits and Costs of a Controversial Pipeline.” The Globe and Mail. CALGARY — The Globe and Mail, 2013. Web. 16 Oct. 2016.

Pokémon Go, if you have never heard about it, you must have been living under a rock for the past couple of months. Since its launch in July, the augmented reality game already broke five Guinness World Records ¹, including most international charts topped for downloads and revenue; surpassing competitors like Tinder, Facebook, Candy Crush and Instagram. Although the initial success brought Nintendo unexpected revenue, investors are now questioning whether this triumph will be sustainable on the long run.

Nearing the end of the summer, the amount of active users and engagement in Pokémon Go steadily declined ²; adding fire to doubts on the future of the game and the augmented reality sector as a whole. Some have argued that this trend is logical because it represents loyal users reaching a plateau ³, however investors are very skeptical. The initial prediction for Apple’s revenue on the game was 3 billion dollars over two years ⁴, but any success at that magnitude seems overly optimistic with the current trend.

According to Google Trends, interest in the augmented reality sector spiked with the release of Pokémon Go and declined in cohesion. This proves how consumers have minimal interest in the field and would rather invest in virtual reality on the contrary ⁵. The difference between the two is that augmented reality is adding virtual components to our current world as is, whereas virtual reality is the construction of an entire world where the developer can program anything to their liking, for example, a video game.

I believe that users just got tired of the game quickly, without any new updates or innovation, the initial surge lost momentum and interest became deprived. So, moving forward, where can this former champion go? Some have suggested including updates that draw parallels to the original game, person to person battles as well as trading Pokémon.

As an attempt to recapture interest, Niantic and Nintendo invested on wearable technology, Pokémon Go Plus ⁶. In my opinion, I do not see any benefit from this investment. A specific piece of technology for the sole purpose of playing a game use will not satisfy the growing needs of efficiency and innovation for consumers.

My suggestion for the company is to capitalize on what made them so successful initially, the nostalgia of the player’s childhood. Many players have commented on reliving their childhood through playing the game, I believe that is what attributes most to the success. Converting to virtual reality instead of augmented reality is another option worth seeking. As evidenced by Google Trends, consumers prefer a fantasy world, like the original game, as opposed to an augmented one ⁷. If Nintendo focuses on providing what the consumers want, I believe that they will capture success once again.

Endnotes:

^[1] Swatman, By Rachel. “Pokémon Go Catches Five New World Records.” Guinness World Records. N.p., 2016. Web. 03 Oct. 2016.

^[2,5,7]“These Charts Show That Pokemon Go Is Already in Decline.” Bloomberg.com. Bloomberg, n.d. Web. 03 Oct. 2016.

^[3]Morris, David Z. “Pokémon Go Is Stalling Out, Probably Because There’s Not Much Game There.” Fortune Pokmon Go Is Stalling Out Probably Because Theres Not Much Game There Comments. N.p., 2016. Web. 03 Oct. 2016.

^[4] How Big? Pokemon Go Set a New Apple Record as the App with the Most App Store Downloads in Its First Week. Ever. Apple (AAPL. “Pokemon Go Breaks Apple Download Records.” CNNMoney. Cable News Network, n.d. Web. 03 Oct. 2016.

^[6]Farber, Madeline. “A Wearable ‘Pokémon Go’ Device Is Set To Launch Next Week.” Fortune A Wearable Pokmon Go Device Is Set To Launch Next Week Comments. N.p., 2016. Web. 03 Oct. 2016.