Monthly Archives: October 2016

These days, there is a decreasing importance on the length of time a business has been established for, but rather an increasing importance on what specific services or products can a business provide meeting demands of the society. Take Uber and General Motors as a simplistic example. As cited on Forbes, Uber, a 5 year old automotive tech-startup business, has just recently surpassed General Motors Company, which has been established for 107 years, in company valuation. Uber is able to quickly become a successful business and have a significantly large valuation of $68 billion dollars, due to their unique value proposition.

Uber’s $68 Billion dollar valuation surpasses many long established automobile manufacturers.

In Roan Allen’s blog, he conveniently gives an analysis of Uber’s strategy as well as a Business Model Canvas of Uber. Roan Allen agrees that the value proposition is among the most important aspect of a business, and goes on to say that “a great example of a P.O.D. is shown as Uber addresses the points of parity through their provision of transportation, and then adding a points of difference by having lower costs (generally), a rating system, driver details, an automatic payment system, etc.” Through recently acquired knowledge of business commerce 101, I also agree with Roan that a product/service must effectively have both a point of parity as well as a unique point of difference. 

Uber’s Business Model Canvas.

Likewise with Uber’s value proposition and Business Model Canvas, I came across a start-up company, BenchMade Modern, a company which focuses on manufacturing customize furniture, with similar elements as Uber. Upon reading about this fast growing and successful company, I decided to create my own BMS in order to compare with Uber to find what successful factor allows these two companies to shine. 

BenchMade Modern’s Business Model Canvas.

After creating this BMS for BenchMade Modern and comparing it with Uber’s, I found that the critical elements lie in the value proposition and the consumer segment. Like Uber, BenchMade Modern also has a pleasing value proposition, in which they are one of the few if not the first, to establish a furniture manufacturing company to specialize solely on customized furniture. This allows the company to have a strong P.O.D. over other furniture companies like IKEA for example. Moreover, the company also has an incredible manufacturing time in addition to providing free product delivery. Furthermore, there is a big opportunity for the company because they have a quickly growing consumer segment of millennials aged from 18 to 34.

If they can lower manufacturing costs even more and provide more products at low cost, IKEA will be looking at a particularly tough potential competitor. Hence, I believe that a company’s success is, for the large part, derived from a strong value proposition that effectively targets a large consumer segment.

Word Count: 445

References:

1. Chen, Liyan. “At $68 Billion Valuation, Uber Will Be Bigger Than GM, Ford, And Honda”. Forbes. 4 December 2015.
2. Allen, Roan. UBC Blogs. 16 October 2016.

King Bhumibol Adulyadej stands with his mother (left), princess Srinagarindra (the Princess mother), and queen Sirikit (right) in 1982. Credit: Thierry Falise/LightRocket, via Getty Images

October 13, 2016, embeds an important mark for millions of Thai people around the globe. On this day, His Majesty King Bhumibol Adulyadej has passed away. For over 70 years, he had ruled with poise and brilliance, which allowed Thailand to become what it is today. Other nations wonder why Thai people love our King so much. The answer lies deeply in the cultural roots of the Thai people; however, in short, it was due to his selfless actions and teachings that earned the love of his people.

“No matter how hard they try, people can not hold back their tears.” Credit: Wisit Thamngern

During this time of immense sadness and sorrow for the Thai people, the nation will experience an undoubtedly decrease in the economy. During the mourning period for the King’s passing, there will be a substantial decrease in the entertainment sector, because all night-life activities are to be suspended and music festivals are to be cancelled, thus decreasing tourism, which contributes to around 10% GDP of Thailand. Moreover, as stated in BBC’s article, there is an uncertainty in the succession of the throne, as the decision was released to “delay anointing the designated heir, Crown Prince Vajiralongkorn, as the next king.” The uncertainty of the situation has worried a number of investors, and has lead to a two-week low plunge in the Thai stock market, and a drop in foreign direct investments. In addition to the decline in the stock market, the Thai baht has also dropped against the dollar to the lowest since January 2016.

Amidst the political instability and widespread sorrow in Thailand, entertainment-based businesses as well as bars and restaurants, will have to cut-losses quickly because consumption in this sector will be drastically decreased due to cultural elements affecting consumer decisions. In addition, The Wall Street Journal’s post concerning Thailand’s economic growth, stated that there will be “a sharp decline in economic activity in the coming days that could set back growth this year.”

Although Thailand’s is currently in a state of social, political and economic instability, I believe that the passing of His Majesty King Bhumibol Adulyadej, is a powerful turning point in each Thai person, which will allow the Thai people to unite into a stronger nation as a whole. As a Thai, I am confident that this economic downturn is simply temporary and the economy will indefinitely bounce back and economic growth will resume.

Word Count: 384

References

1. Turner, Rochelle. Travel & Tourism, Economic Impact 2015, Thailand. PDF. London: World Travel & Tourism Council (WTTC).
2. Head, Jonathan. “Thai king’s death: Who holds power now?”. BBC News. 16 October 2016.
3. Plank, Willa. “ASIA MARKETS: Asian Stocks Mostly Higher; Thai Markets Bounce Back”. Dow Jones Business News. 14 October 2016.
4. The Editorial Board. “The King Who Personified Thailand”. The New York Times. 14 October 2016.
5. Handley, Paul. “Bhumibol, a King of the People, Leaves Them to the Generals”. The New York Times. 13 October 2016.
6. Hookway, James. “Thai King’s Death Casts New Shadow Over Struggling Economy.” The Wall Street Journal. 14 October 2016.

Image Taken From: http://www.nytimes.com/2016/08/25/business/smallbusiness/lukes-lobster-restaurants-coops-seafood.html?ref=smallbusiness

The simple desire to eat fresh authentic Maine lobster was the driving force that allowed Luke Holden, an investment banker, to open and run his own lobster business, Luke’s Lobster. Luke’s Lobster is now a highly successful and fast growing business. In just about 5 years, Luke now has 19 restaurants, 2 food trucks, and a lobster tail cart in the United States, while in Japan, he has expanded to five lobster shacks. I believe the reason why Luke is so successful is due to his vertical integration implementation strategy, which allows for a sustainable competitive advantage.

As we have read and seen the example of Michael Dell’s skillful implementation of vertical integration, likewise, vertical integration has yet again proven to be a powerful strategy in business. Undergoing this strategy, Luke established his business in such a way that there is virtually no middleman involved throughout the entire chain. This key move allowed Luke to attain sustainable competitive advantage due to differentiating his business from traditional lobster businesses where they typically have a middle man in between key processes such as delivering and logistics. Sustainable competitive advantage, defined in class as, “performing different activities from rivals or performing similar activities in different ways,” is the essential element that allows a business to outperform its competitors. Luke was able to obtain this advantage through his business model, in which he solely tracks where and how his lobsters are caught, controls the quality, freshness, and pricing, alongside packaging and preparing the lobsters into his restaurants.

Vertical integration not only allows for substantial cost advantages for his business, but it also allows Luke to better ensure the quality of his lobsters and lowers risks for such Food-safety concerns like E.Coli. In addition, this strategy allows for sustainability, where he says, “We’re able to trace every pound of seafood we serve back to the harbor where it was sustainably caught and to support fishermen we know and trust.”

Moreover, after coming across Victor Chen’s Blog, I immediately recognized that once again, vertical integration, when applied strategically, leads a business into the direction of success. Like Michael Dell and Luke Holden’s business model and strategy, Jim Koch, the founder of a billion dollar beer company written in Victor Chen’s blog post, was highly successful in employing vertical integration. As Victor explains, much of Koch’s success is due to vertical integration and Victor adds that, “for 32 years, this method allowed Koch to consistently give his consumers what they wanted.” I am not sure about business owners out there, but if I was one, I would definitely join these men in taking the vertically integrated approach to my business.

Word Count: 445

References:

1) A Restaurant’s Sales Pitch: Know Your Lobster –  http://www.nytimes.com/2016/08/25/business/smallbusiness/lukes-lobster-restaurants-coops-seafood.html?ref=smallbusiness
2) The Power of Virtual Integration: An Interview with Dell Computer’s Michael Dell – https://hbr.org/1998/03/the-power-of-virtual-integration-an-interview-with-dell-computers-michael-dell

Blog Posts:
Victor Chen – https://blogs.ubc.ca/victorchen/2016/10/02/key-to-a-successful-business/

Image: Greta Rybus for The New York Times – http://www.nytimes.com/2016/08/25/business/smallbusiness/lukes-lobster-restaurants-coops-seafood.html?ref=smallbusiness