Abercrombie & Fitch seems to be in trouble. The brand’s in-store sales decreased this year, and its market value collapsed. Its value proposition doesn’t seem to be as efficient as it used to be, fashion being a constantly changing market. Even the impressive advertising campaigns with half-naked male models are not enough to ensure the high popularity of the store in North America.

However, the analysis seem to be different if you consider another market, for example th European one. Abercrombie has a very strong brand image, why seems to be working better overseas than in North America. Having discussed this with other Europeans, we found that Abercrombie represented the American youth lifestyle, and was still creating excitement around its products. The brand’s presence is more recent in Europe than in the U.S.A (the first French store opened this year only in Paris) and there is less direct competition.

Therefore the world market supports the company’s profit with an increase of direct-to-customers sales worlwide this year. We can see that the same brand, advertising its products the same way, can face different outcomes and success in geographically distinct markets. Abercrombie’s high prices don’t seem to turn down European and Asian customers because the image of the brand is stronger.

Sources: BBC News article & Bloomberg article

IT and social media have changed the way we work and the way companies advertise and do business in general. It is particularly helpful to know how to make an efficient use of those tools when you want to launch a start-up. There are lots of blogs that give tips to new entrepreneurs so as to help them in the process of creating a new product or business. That is why Jun Loayza created his blog. He uses a really intimate format, talking about his life and family in the ‘About’ section.

He talks about his own experience as an entrepreneur and a consultant in social media technology for many companies. He gives tips about how to analyze the market and figure out if you have to enter it or not, about the ways to use social media and old techniques to sell a product. He also gives advice to have successful interviews. He is making jokes, using straight forward concepts and providing personal examples to make his point clear, which I really liked reading. The blog is really easy to read and provides some simple but useful advice to those who might need it.

Social media are a good alternative to handbooks and other forms of commuication for people who need advice on business issues.

Source: Jun Loayza’s blog (external blog)

Fair trade has developed really fastly in the last ten years. Farmers which have received fair trade certifications are said to produce better quality products and to be treated more even. They usually are small farmers from Latin America or African countries, who then earn more money than the other farmers, and are able to improve their standard of living.

As my classmate Rachel Servoz explained in her blog post “Is “Fair” Trade compatible with Globalization?”, Fair Trade doesn’t necessarily bring significant positive changes in farmers’ lives. What’s more, it excludes all the farmers who don’t have the certifications but who need it as much. Like charity, it doesn’t allow the empowerment of producers but keeps them in a relation of dependence with the “Western” big retailers. As Rachel says, the Arc initiative seems to be more helpful on the long-run since it teaches people how to run a profitable and fair business on their own.

As socially aware and environmental-friendly operations and products multiply in retail stores and other markets, it becomes increasingly hard to draw the line between what is really helpful and what is just a way to take more money from customers who want a clear conscience.

Sources: Rachel’s blogpost & this article

Natural disasters negatively impact on businesses, especially on supply chains, on the short as well as on the long run. The storm Sandy, which hit northeastern United States, is an example. It has caused delays in shipments of retail stores, since all the communications routes were stopped because for days during and after the storm.

Those delays are very important for most of the retailers since they will probably affect the coming holidays sales, the most profitable time of the year for many stores. The storm being located in a very populated and economically dynamic area, the greater the loss will be.

In October 2011, Thailand was flooded, causing hard drive shortage, decreasing sales and increases in price for customers, over several months.

Supply chain management is a complicated task, made even more difficult by random natural events such as those disasters. Since they can’t be anticipated, companies need to react fastly and efficiently to prevent sales from decreasing too much. They have to be able to catch up with the delays through improving logistics processes. They also have to communicate with their customers to avoid complaints and loss of deals.

Sources:

http://www.cnbc.com/id/49746822/Retail_s_New_Grinch_A_Sandy_Snarled_Supply_Chain

Social enterprises are becoming increasingly popular. The definition varies and can be really broad. Social entrepreneurs always seek social good, they make money in order to reinvest it and expand their business. Social entrepreneurs offer innovative solutions to social and societal issues that are not addressed by governments. They seem to be more economically efficient than charities.

More and more social entrepreneurs launch their companies, there is a real diversity of fields. Social enterprises can be micro-finance institutions, like  Muhammad Yunus’ Grameen Bank, as well as small craft businesses like Salem’s Ethiopia, or even skateparks.

In fact, ‘The Factory Skatepark’, a skatepark located in one of Dundee’s (Scotland) least favored areas, won the Social Enterprise of the Year award a few days ago. It is helping out the community by providing a place to have fun for young (and less young) people, with various clubs and extreme sports infrastructures. It is also employing people from the area. The fact that such an initiative won the award shows that social enterprise doesn’t necessarily have to help the poorest people in the poorest countries, but can benefit to any part of society who might need it.

Sources:

http://www.bbc.co.uk/news/uk-scotland-tayside-central-20339565

https://www.ashoka.org/social_entrepreneur

Janice Cheam, a Sauder graduate who came to tell us about her company (Energy Aware), during class n°19, used the help of “angel investors”. I had never heard this term before and I was curious about this concept.

Angel investors help start-ups that need cash to launch their business. Since it is very hard and costly to borrow from a bank, it can be a good option for new entrepreneurs. Angel investors can be family or friends of the founder of the company, but they can also be people who just believe the person or the idea has good chances to make a lot of money and expand the business.

Angel investors usually invest in small businesses from the sciences or technology sector. They also tend to invest in innovative companies, like Energy Aware, which created an environment-friendly device to monitor households’ electricity consumption. They ask for shares of the company in exchange for their investment. Angel investors take high risks, therefore they expect high returns. I think it is important that such investors help new business emerging, so that innovation is not stopped because of lack of financial resources.

Sources :

http://business.financialpost.com/2012/07/16/angel-investors-take-notice-of-canadian-startups/

http://www.investopedia.com/terms/a/angelinvestor.asp#axzz2CZ36oC00

In this post I will be referring to Rupinder Ahluwalia’s post entitled ‘Starbucks is going to India!’, I will try to answer the questions he asked.

Starbucks will finally be coming to India by the end of October. The company, named Tata Starbucks, is a joint venture between the American Starbucks and the Indian Tata Global Beverages. A lot of Westernized coffee brands and shops already exist in India so we can wonder if Tata Starbucks will find its way in the market. Another issue is the current slow in India’s growth, which could lead the market to be less profitable. However, Starbucks is a worldwide know brand, which reflects the Western World and a certain quality of coffee.

The target market basically is educated young Indians, working or students who travel abroad and have seen or tried Starbucks in other countries. This can be considered as a competitive advantage.

We see more and more alliances between Western and Indian companies. Tata Starbucks is a 50:50 joint venture, which means that none of the two companies is taking over the other. It seems like Indian companies are getting more and more power over Western ones, as the takeover of the French steel company Arcelor by the Indian Mittal Steel in 2006 or the buyout of Jaguar cars by Tata in 2008 show.

Additional sources:

http://www.thehindu.com/business/companies/tata-starbucks-to-open-first-caf-by-endoctober/article3945405.ece

A French dating website called ‘Adopte un mec.com’ (literally ‘Adopt a guy.com’) launched the first store in which women can come to shop for a man. It is a temporary store that opened in Paris in mid-september and has been travelling around France, Belgium and Switzerland since then. The store targets young and single women, over eighteen years old. The principle is that men with certain characteristics (for example Mr. Muscle or Mr. Adventurous) stand in Ken-doll-like boxes all day long while women look for the perfect match, interact and take pictures with them.

The website always uses unexpected advertising strategies but this is the biggest communication ‘coup’ it has made so far. The organizers say that the concept has to be taken with a grain of salt. Some people found it degrading and unethical.

It is a pretty risky strategy because it can create strong reactions, although it seems to have increased the brand’s popularity, with over a thousand people coming to the Parisian store.  It can also be argued that if women were in the boxes instead of men, this would lead to a big controversy, harming the brand’s image for good.

Companies are constantly pushing the boundaries of what can be advertised or not, they change over time and according to cultural and social values. The limit is very thin between a daring strategy and an unethical marketing move. Internet-based companies seem to be going further and further, for example ‘Gleeden’, which defines itself at ‘The first extramarital dating site made by women’. Can companies cross every ethical and moral limit in order to make profits? To what extent should ethics be leading their marketing strategies, and even the product or service provided itself?

[A short video to have a look at the store]

Sources :

http://www.dailymail.co.uk/femail/article-2201753/AdoptAGuy-French-dating-site-launches-travelling-store-women-men-literally-shelf.html

http://www.lepoint.fr/insolite/adopteunmec-com-ouvre-une-boutique-ephemere-avec-des-hommes-en-vitrine-11-09-2012-1505171_48.php

Facebook launched a video commercial to celebrate the fact that it now has over a billion users worldwide. Its marketing strategy can be considered as unusual, since the social media itself is an usual type of businesses.

Facebook hadn’t created video advertisements but the brand’s name and logo are visible everywhere on the Internet. Its target market is one of the widest possible since it is available worldwide; all the people who use the Internet can have access to it without any cost to register or any complicated process to complete.

It is interesting to see that although Facebook is such a popular media, its financial viability and profitability isn’t so secure. Facebook’s IPO and break into the financial markets wasn’t as successful as one could have expected, regarding its huge visibility and brand awareness.

Ads on social media websites are not considered potentially very profitable by the markets. Facebook, like the video games that we talked about in class n°8, is not a media in which people are receptive to ads, it is used for entertaining purposes only.

Therefore, one of Facebook’s challenges in the future will probably be to figure out how to use such a broad users database in order to make profits and attract investors.

[Source here]

A newspaper revealed at the  beginning of year 2012 that some managers at IKEA France had spied on their employees and customers between 2003 and 2009. They asked a private security company to check in a confidential police files so as to get information about some of its employees’ criminal records or bank account information. IKEA’s high management denounced these practices and dismissed the managers allegedly involved in the spying affair.

The aim of the managers was to make sure that the persons they recruited were trustworthy and hadn’t done anything illegal in the past, which seems a fair concern. However, spying on people is illegal no matter the incentive, which is why this case is a real ethical issue. Can an employer go as far as to spy on his employees to ensure his company’s best interests? Law and morals would say no, but some owners and shareholders agree to that kind of actions.

Today, IKEA is involved in a new conflict with its employees in Turkey, where local managers are preventing the workers’ union from giving similar and decent working conditions to all.

Companies such as IKEA, which try to convey the image of a friends and family oriented company, really are affected by such ethical issues. IKEA has to respect its employees’ rights if it doesn’t want its credibility, therefore its sales, to decrease.

TS

[ Main articles used for this post : here, here and there. ]