Monthly Archives: November 2014

Business Analysis for Red Bull Media House

Fundamental Direction: Keep Flying

Why keep it? Red Bull Media House (North America) is Creating Shared Value to the world.

From Business Perspective: The initial purpose for Red Bull Company to set up own media company is to help to build and reinforce Red Bull’s overall brand image. This is a unique marketing strategy by running the Red Bull Media House. The Media House has become a major part of the Red Bull’s culture and helps to stabilize its status and reputation in energy drinks market. Despite of advertising Red Bull, the Red Bull Media House North America made numerous products and content, ranging from online network services to electronic goods. Such as Live Broadcast, Red Bull TV, etc. It is clear that this is also an effective way for business to earn income besides of selling energy drinks. Furthermore, Red Bull Company used the idea of disruptive innovation to set up their business, the media house helps Red Bull to build an unforgettable image in competitors’ mind, gives a strong visual impact to its audience and attracts potential partners as well as investors for their business. In contrast, if Red Bull chooses to fold its wings, they may lose the way to target customer segmentation (See Appendix A) and lose numbers of customers, because the customer loyalty is built via the media house. Therefore, in order to perform well in the competitive energy drinks market, Red Bull has to keep running the media house and this idea comes from the sustainability.

From society perspective: There’s no doubt that customers really enjoyed the things that Red Bull Media House North America offered during these years. The popularity was gained for both of the premium media products and compelling content, which were closely related to sports, culture and lifestyle. Such as the Red Bull Radio, music as well as some sports-‐related activities. One of a convincing examples should be the event called Red Bull Stratos; millions of people watched the extreme stunt in live streaming coverage and television broadcast. Several new records were set during this big event. Red Bull Media House made a great contribution to society by raising public awareness on extreme sports, broadening people’s horizons though this tech activity. Similarly, some competitions such as the Red Bull Crashed Ice and the Red Bull Rampage also provided the general public a way to get to know the basic knowledge about extreme sports as well as a consumptive idea with positive, energetic and healthy meanings behind.

Thus, CSV is a main element of Point Of Difference for Red Bull Company in positioning their brand in marketplace. This is a key competitive advantage for Red Bull Company to differentiate their products with competitors’ goods. More importantly, creating the Red Bull Media House North America is a direct way to get to know about the taste of consumers, so that the managers can make better business decisions in order to meet the core needs of market while making their new products and services through this invisible communication channel. Good and close relationships are built at the same time.

Why keep it? Red Bull Media House North America has a great market potential to make profits after taking some financial and marketing actions.

Financial and Marketing Analysis of Red Bull Media House

(Inefficient use of capital investment leads to a pessimistic Return On Capital Employed.)

Red Bull Media House continues producing premium audiovisual media content too quickly to find the interested corporate clients. This shows the supply has exceeded the market demand; the failure is caused by insufficient work of Research and Development Department. To solve this problem, R&D needs to have a successful market research to find out the market demand before to launch their products to market.
Red Bull Media House loses chances to earn profits through its media channel (See Appendix B). Each year, the company spent more than a million dollars to produce big events such as the Red Bull Stratos; The Arts of Flight, the Red Bull Signature Series, millions of people watched it through their media channels. However, it was free for anyone to view at anytime. Obviously, these events were great chances for Red Bull Media House to earn profits, but they didn’t catch it. An effective way to tackle the issue is to charge a fee to audience. These events that the company produced were unique in the market and they gained popularity and recognition in society. According to the Porter’s Generic Strategies, the managers of the Red Bull Media House should choose to use the focus strategy while charging a fee to its audience. Once by taking this action, the company will gain much more profits to try to cover its initial investment.
Losing market share was caused by both of the new entrance competitors like some Asian and European brands and also existing competitors such as Monster and Rockstar. These competitors chose to use less capital-‐intensive approaches to their beverages, and they did make success. According to the statistics, Monster sold more volume of energy drinks than Red Bull did and it had the highest operating margins in the industry. Which clearly showed that Red Bull Company didn’t get more market shares even it invested much more funds than Monster Company. This is due to the derailment of ideal and reality in managing the capital. The Red Bull Media House should realize that investing too much capital does not mean their market share will be increased. In contrast, Red Bull Media Company North America needs to pay more attentions to the local market. One of its main customer groups should be the high school and university students. By creating big events do not get closer to these customers because they have no time to enjoy the activities. In other words, Red Bull Media House North America should look for some small competitions and activities for these people, for example, setting up some interesting sports games or sponsoring the sports-‐related program in school. This is the only direct way to let student become familiar with Red Bull brand.
Moreover, it is worth to keep running the media house because it has so many opportunities. The media house earned a licensed fee to news media; they charged a fee to other companies by offering them a direct access to its fans; and Red Bull Media House North America cooperated with Fox Sports to advertise their brand, Fox Sports will help to fulfill RBMH’s (North America) goal; more importantly, they got the ITunes’s storefront on the site. These evidences also show that the Red Bull Media House North America has a great potential to earn profits by making the changes mentioned before.

Personal views on Social Entrepreneurs and Arc Initiative

By reading the articles that came from Prep 20, I gained deeper thoughts about the real meaning of social entrepreneurs as well as the Arc Program that was funded by Sauder School of Business.

It is clear that all businesses have to make profits in order to survive in the society. Besides of making money, the social entrepreneurs are trying to creating their businesses’ value to contribute to the world. Like charity, some Africa programs are built by these people. What they intend to do is to help the people from extreme conditions to survive and to create social values to the whole society.

Let us take the Salem’s Ethiopia as a convincing example. It said that Mrs. Kassahun was worried about how to expand her business meet the current demand her craft product. By taking Arc Initiative program, her problem was solved perfectly; She taught more women how to make the basket by hand and this way helped her gain more labour to run the business. More people gain the skills about hand-making and the market demand could be fulfilled at the same time. Obviously, this is a win-win solution.

On the other hand, I think the most attractive idea about the social entrepreneurs is to create the social value. Even though United Nations would fully funded, companies are still lacking new idea and thought. No more creative opinions, no more values can be generated anymore.

References:

http://www.theglobeandmail.com/report-on-business/small-business/sb-growth/day-to-day/can-fair-trade-boutique-expand-without-alienating-customers/article4405520/

http://skollworldforum.org/about/what-is-social-entrepreneurship/

http://www.sauder.ubc.ca/Global_Reach/ARC_Initiative

Comment on Yiyi Nie’s Blog—-Returns of 10 billion pain

Company’s return policy has become more and more popular in the modern life; it is undeniable that this policy maximize customers’ benefits because customers can decide to return the goods without any extra charges. However, this generate more losses to businesses. As the workforce increases, companies have to employ more workers, pay warehouse rent to accommodate those returned goods.

As Yiyi’s said in her blog: it is unfair to both buyers and sellers if customers continue buying and returning the products. I agree with her opinion in this point. However, from my perspective, the customers should not pay full responsibility for the products’ quality after they purchasing. Let us to think about the clothes, the seller guaranteed that you can use water to launder the clothes without any changes in color, while the color ran after washing. Obviously, this is not buyer’s fault.

Therefore, the best solution to tackle this problem is to maintain the refund policy if there’s any quality-related issues. In extent, in order to protect sellers from making loss due to return of consumer goods, the products without any quality problem will not be returned once the customers bought them.

Thus, this way protects both consumers’ and sellers’ right, and help managers supervise the quality of goods in the production process. No more quality fault of goods, no more return anymore.

Reference blog: https://blogs.ubc.ca/nyy96/2014/09/29/common-on-returns-a-10-billion-pain/

Comments on Michael Carney’s Blog—-The iPhone Effect (External business blog)

Nowadays, we all know that Apple has become a leading company among the technology industry. Especially for its financial performance. From the two diagrams shown in Michael’s blog, both of Apple’s revenue and gross profits has experienced a high growth over the recent 10 years.

As Michael said in his article, Apple’s dominance is unchanged although the performance of Microsoft is also very well. From this point, I personally think the key factor for Apple’s success is its Creative Social Value. No matter how many similar electronics companies will launch to market in near future, the social status of Apple’s Ltd will not be changed if it can continue to do the innovation. Also, the quality of the product makes a great contribution to its success; unless Apple’s competitors, lots of technical issues just appear after selling to their customers. For example, the GT-I9300 made by Samsung ltd.

On the other hand, besides the production part; making suitable market strategies in different period of time is one of a key factor to success. Like Michael mentioned in his blog, Apple chose A16Z to be its cooperate partner, this action played an important role during its development. A16Z, the most valuable VC company in the world, helping Apple find technical designers and workers, providing them with capital investment and looking for opportunities to develop the business.

The several points mentioned above are my views for the Apple’s growth.

Reference blog:http://pando.com/2014/11/06/the-iphone-effect-two-graphs-that-leave-no-doubt-about-apples-financial-dominance/

Personal views on Scotiabank’s cost reduction plan

Recently, the Bank of Nova Scotia has announced that it would close some braches and cut 15,000 jobs in order to reduce its cost. This action will have a direct effect on unemployment inside and outside the Canada and lead to a fall of Scotiabank’s stock. The following below are my personal thought:

After doing research, I found that the main reason causes the mass layoff is the overall growth pressure for banking industry. More specifically, the financial crisis has hurt Canadian banks with operations in the Caribbean as well as the South America. However, this huge decision will cause a series of social problems. Almost two third of the employees will lose their jobs; thus, the crime rate may increase due to high unemployment rate. More importantly, other Canadian banks will probably follow Scotiabank’s action and reduce the number of positions in the near future, so the impacts on gross domestic product and the country’s economy will be hard to imagine.

Canadian banking industry is trying to reduce its workers in order to reduce the overall cost so that the profits can be increased. From my perspective, these banks should not experience a fast growth just by continued firing people; this action will definitely increase the pressure to citizens as well as government. As a leading company in banking industry, the bank of Scotia needs to pay full responsibility to society, including both of its employees and customers. It is undeniable that making profit is the main purpose of a company, but sustainability is also important in order to survive in long term.

Reference: http://www.reuters.com/article/2014/11/04/bank-nova-restructuring-idUSL4N0SU5C920141104