Month: October 2016

Each day, the number of Chinese tourists across the globe rapidly increases. For instance, approximately 2m Chinese visit the US every year, but by the end of the decade, this is expected to reach 3m. To both accommodate and benefit from this trend, the American hotelier market is expanding, with significant investment from Chinese nationals who recognize the opportunities associated with accommodating their fellow citizens abroad.

In Gulliver, the business travel blog in The Economist, A.W. examines HNA and other large Chinese corporations’ current business decisions on huge investments in American hotels and the rationale behind it. 

This week, HNA group, the 4^th biggest aviation company in China, announced that it is to buy a 25% stake in Hilton Worldwide Holdings while being a shareholder in other well-known hotelier brands such as Embassy Suites, Hampton Inn and Conrad. Following HNA Group, other massive Chinese investments in American hoteliers were made, escalating the trend and Chinese ownership in the market. Despite being anchored in industries irrelevant to hotel-based tourism, these companies are continuously and aggressively purchasing popular and profitable properties in what would appear to be a random manner.

Why would aviation or insurance companies buy hotels in the US? The writer argues that to Chinese investors, American hotelier is a safe haven for Chinese investors to park their money during volatility in the Chinese economy. Since a recent downturn in the financial stability of China, the securing of money in American hotels has brought a sense of safety to investors’ accounts.

I would applicate similar trends are occurring throughout the real estate sector, as ownership by Chinese foreigners is becoming common around the world. In general, Chinese investors tend to lean towards safe purchases rather than pursuing risky opportunities that could stimulate greater profit. In turn, this leads Chinese investors to focus on luxury areas that are economically and politically stable, such as metropolitan areas like Vancouver and New York.

I believe HNA group’s current investment decision was a wise choice in both the short and long term. For the short term, it is the safest and most solid option for the company to retain their money, and quite possibly achieve a return, even if minimal, on their investment. Over the long-term, there is more possibility to achieve the HNA group’s ambitious goals for the future to be in top 100 companies by 2020 and 50 by 2030. By stepping into the hotelier market, the company has doubled in size, thus, it is more likely for them to attain its goals. One benefit of adding breadth to their ownership would be opportunities to combine aviation and insurance with accommodations, which essentially monopolizes the tourist sector and beat competitive companies by offering bundled costs for consumers.

Word count: 450

Resources:

http://www.economist.com/blogs/gulliver/2016/10/rooms-growth

http://www.hnagroup.com/en/corporation/group-profile/about-us/index.html

Images:

http://assa.aero/archives/18968?cat=1&ckattempt=1

https://www.expedia.ca/St-Louis-Hotels-Hilton-St-Louis-Downtown-At-The-Arch.h1152198.Hotel-Information?rfrr=Redirect.From.www.expedia.com%2FSt-Louis-Hotels-Hilton-St-Louis-Downtown-At-The-Arch.h1152198.Hotel-Information

While browsing through classmates’ blogs, Michelle Kwok’s submission, titled “Mobile Nintendo?” had several interesting perspectives on Nintendo’s current business decisions that I found relatable and largely support.

Nintendo is a Japanese company that started the “era of living-room gaming.” Nintendo is often credited as the precipitator for an enormous consumer base today with companies like Sony and Microsoft entering the market with their video game consoles.

The 21^st Century has presented the proliferation of smartphone gaming, technological advancements and independent developers outside of the mainstream video game providers. The rapid growth of the smartphone market has forced companies to remain competitive in that industry, provoking traditional gaming companies to adapt their strategies and utilize smartphones as personal gaming devices.

Michelle discusses the “huge change” of Nintendo to “jump-start” into the mobile gaming market with mobile “Super Mario Run,” and resisting their conservative approach towards games. Additionally, Michelle offers her opinion, which postulates that Nintendo’s efforts to sustain themselves by refocusing their production are beneficial to the company.

I agree with Michelle’s point that shifting their focus to smartphones was a wise choice for Nintendo. Free-to-go smartphone games are ubiquitous, and their primary customers (casual gamers) would prefer to pay a small amount of money rather than purchase an expensive console. Likewise, many consumers already own smartphone devices, so the idea of paying for additional applications at relatively low costs is appealing to everyday users.

As in any market, consumer opinion and taste change with time and trends. As customers’ shift their values and needs, companies have to adapt in order to satisfy demand and prevent becoming obsolete. For instance, if the Gap continued selling wide leg jeans instead of keeping current with consumption trends, we can assume they would not generate a revenue. The same can be said for cars, sports merchandise and technologies.

The relationship between businesses and customers’ buying style reflects the natural process of coevolution; in order for a business to remain competitive, they must adapt to changing customer preferences. Nintendo provides an example of this awareness by recognizing a trend and utilizing this to reestablish themselves as innovators in the field.

The concept of transient advantage refers to a strategy that allows firms to change more quickly and more often to maintain a strong position in the market for many years. Nintendo embraced the fact that they need to adapt and recognized that utilizing transient advantage meant that needed to pursue new initiatives. However, Nintendo has not abandoned their traditional interests in developing gaming consoles, which illustrates their belief that they remain influential and competitive in that realm of gaming.

Word count: 434

References:

http://www.economist.com/news/business/21707949-giant-console-industry-has-lost-generation-gamers-smartphones-can-it-reclaim

https://blogs.ubc.ca/mkwok/

https://www.innosight.com/insight/making-the-shift-from-sustainable-to-transient-advantage/

Image:  https://www.nintendo-europe.com/

The rapid declining population of bees are a significant concern for both scientists and entrepreneurs who capitalize on their production. Bees play an imperative role in the human food chain through pollinating a majority of global crops for consumption. The bees’ role is pertinent in sustaining the world’s physiological needs as well as the economy and its various sectors. This decrease has been well-documented and researched, which has evoked several fundamental causes for the plight of the honeybee. For instance, in a recent finding, American beekeepers lost 44.1% of their hives between March 2015 and April 2016. Researchers note that there are two primary reasons generating this sharp decline; the varroa destructor, parasitic mites that kill bees, and the abundance of US aerial spraying, which is utilized to target mosquitoes that could carry the Zika virus, which also killed an overwhelming number of bees. One article from South Carolina dramatically illustrates the emaciation of bees as a result of their being “nuked.”

To address the ongoing extinction of bees, as well as to mitigate food and financial security issues, the BBC highlights the technology firm, Bee Smart, who developed a tool that monitors hives through live-streaming video to allow beekeepers to easily and efficiently check whether threats to their well-being. Bee Smart compares this to a home-security system, but as opposed to familial protection alone, their innovative product could extend beyond the hive through preventing substantial loss in agriculture and its related markets.  Therefore, the idea of being able to remotely monitor the state of a bee hive is becoming increasingly significant and potentially life-saving.

Delving into the beekeeping industry appears to be a well-informed decision for Bee Smart. In the past, beekeepers have largely been able to ignore significant development of technologies because they simply did not exist, and like other sectors where employee work-ethic and reliability are taxing, bees were evolved to produce. However, Bee Smart will face some competition in the field, as rival firms are producing chemicals for treating varroa, while others pursue breeding varroa-tolerant bees. Although competition exists, Bee Smart stands out because it utilizes non-biological and non-chemical technology. While others are trying to address an inherent weakness of bees, Bee Smart is working to maintain the quality of bee hives, which should entice investing beekeepers who strive to maintain their populations and remain in the market.

Bee Smart is an ethical business that is based on addressing a global issue with a socially responsible goal of maintaining bee populations and doing so without compromising ecological environments. Additionally, Bee Smart has potential to be highly profitable, as there is a high possibility for their technology to assist in increasing agricultural revenue.

Word count: 443

Sources:

http://www.bbc.com/news/business-37386490

http://www.beesmarttechnologies.com/en/