Berry Squash
RE: BlackBerry Buyout Squashed; New Deal Yields $1 Billion, New CEO
In relation to my previous blog post on Blackberry’s potential buyout, it turns out that Fairfax Financial has decided to scale down on the deal as stated in Troy Wolverton’s blog post on Blackberry.
Fairfax Financial CEO Prem Watsa
According to his blog post, Fairfax decided to not go forward with the buyout, because it could not find and convince other potential investing partners for Blackberry. I found this interesting because some companies, such as Facebook and Amazon, have been rumoured to take interest in buying Blackberry, as opposed to banks such as BMO and Bank of America which Fairfax was targeting for. Reasons that would contribute to this divergence on the perspective of Blackberry are, very possibly, the way that banks and social media companies function very differently and have certain values that set them apart from each other.
Nevertheless, whether buyout will be secured or not, the “New Deal” between Blackberry and Fairfax involves getting a new temporary CEO, John Chen. Whether this is a good choice or not is uncertain, but implementing a new CEO has definite risks and this decision itself will invoke change in the company’s culture and overall structure.
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Works Cited
“Fairfax Financial CEO Prem Watsa.” The Financial Post. Bloomberg, 24. Sept. 2013. Web. 13 Nov. 2013.
Wolverton, Troy. “BlackBerry Buyout Squashed; New Deal Yields $1 Billion, New CEO.” Silicon Beat. SilliconBeat,4 Nov. 2013. Web. 13 Nov. 2013.
Streaming Giant
Online streaming, in China, is bigger than ever. Unlike North America and Netflix, China does not have a definite counterpart. Many websites that adopt the “look” of YouTube actually offer full-length TV and movie streaming, but it’s hard to say who actually dominates the market.
This is because consumer behaviour is extremely volatile in this particular market. Consumers are looking for the best video source, whether it’s about HD quality, shorter ads, faster uploads, or even the best subtitles, they usually will only settle for one website based on their criteria, while leaving the rest as alternatives.
Youku.com is one of the biggest and most popular streaming sites in China, and it is also originally inspired by YouTube
Due to such competitive behaviour, streaming sites in China are looking to become more profitable by expanding into the realm of television. Sites such as LeTV and iQiyi are starting to incorporate their own cable boxes (and the giant flat screen TV that comes with it) into the ads they show before videos.
However, the major barrier to entrance for streaming sites is the tight government regulations about what can be aired on TV. While streaming sites can easily buy exclusive rights to video contents from other countries, it is much harder for them to release such shows and movies onto an actual television channel. This is a challenge yet to be overcome by any firm, but definitely a sight to further consider.
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Works Cited
“Youku.com” Luxury Activist. Youku, 2013. Web. 10 Nov. 2013.
“The Chinese Stream.” The Economist. The Economist Newspaper Ltd., 9 Nov. 2013. Web. 10 Nov. 2013.
Small but Bright
Nowadays, how many small businesses in town do you think has its own website? Probably more than you think.
With the continuing rise in technology and social media, it is no surprise that small businesses are able to catch onto internet trends faster than big businesses and execute new plans based on their ability to make quick decisions and low-cost advertising.
For example, Vancouver-based Misako Hair Studio (pictured above) has a blog, a Facebook and Yelp page, as well as an interactive website that immediately catches one’s attention upon visiting.
Using social media websites such as Facebook, LinkedIn and Twitter, some even expand into Tumblr, Instagram, and making their own apps, small business owners in Canada are starting to integrate IT into their companies more than ever. Some businesses use IT and social media to reach its target market (provoking the public to Google their store name always helps) while others seek feedback from its customers, such as visiting and liking their page on Facebook. Overall, it is clear that more and more people, producers and consumers alike, are realizing the importance of interlacing technology and business instead of treating them as two completely separate entities.
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Works Cited
“Misako Hair Salon.” Yelp. n.p., 2011. Web. 3 Nov. 2013.
“Small Businesses More Social Media Savvy, Survey Says.” The Globe and Mail. Canadian Press, 25 Oct. 2013. Web. 3 Nov. 2013.
Seamingly Risky
Bangladeshi, a country located in fertile South Asia, is a fast-growing industry for clothing and textiles. Its possession of great potential and capital allows the clothing industry to boom and it also attracts many big western retailers by having the lowest production cost in Asia and duty-free access to European countries.
However, the catch with Bangladeshi is that hiring labour is cheap, and the factories are not exactly the safest place to work. In The Economist‘s article on Bangladeshi, it is mentioned that thousands died this April when “a factory near Dhaka collapsed.”
Western companies that have production sites in Dhaka and other areas in the country have implemented plans to make work conditions safer, but this isn’t merely an ethical issue. The Bangladeshians who actually own the clothing factories are realizing that what they’re doing might not actually increase their profits and overall welfare although the industry continues to become bigger. They are contemplating exit barriers and other ways to become more profitable.
Integrating both ethical and financial issues are important, but certainly, it is also very costly and risky to balance the two in order to achieve the most value-driven outcome.
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Works Cited
“Bursting at the Seams.” The Economist. The Economist Newspaper Ltd., 26. Oct. 2013. Web. 26 Oct. 2013.
Abreadcrumb and Fish?
RE: Bad Press or Good Value Proposition?
Upon stumbling onto Julie’s blog post on Abercrombie & Fitch, I have to agree that the company has a very distinct image (and smell) that pops right up when someone mentions their name. More often than not, the strong appearance and appeal to teenagers is what defines A&F in the public eye.
It is advantageous, as Julie also mentioned, to have a target demographic they can speak out to. The elitism puts off some people from going into their stores, which is a double-sided knife, because Abercrombie does want to deliberately filter out customers that might not match their image.
But in the long term, the beliefs that Abercrombie & Fitch promotes quickly avert from one generation of “cool” teens to the next, without leaving behind a stable customer base that is specifically loyal to A&F, unlike brands such as Lululemon and Zara, but whom also have weaknesses and controversy in other areas.
The point is that in order for A&F to grow as a business in the future, it is important to build onto their current business model, and integrate aspects such creating shared value for teenagers and adults who aren’t just looking to be cool on the outside, but also attaining inner value and giving back to the community.
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Works Cited
“Abercrombie & Fitch Logo.” Seam Bliss. Abercrombie, 2013. Web. 20 Oct. 2013.
Rocky Trouble
RE: “Tesla Shares Drop After Fire”
Fellow classmate Vivian’s blog post on Tesla’s accident caught my attention and interest, and the content also engaged me to think about how much the Internet can blow certain things out of proportion, to the point it actually has affect on the company in question.
Although the above is also a bit of an exaggeration, it is very true that Tesla stocks did drop 10 percent, as Vivian also stated in her post, after the incident was reported and a video of this was posted on YouTube. The company suffered from this incident even though they might not have predicted that threats would come from such an unlikely external factor, which was a piece of metal that flew off a trailer and punctured the Model S sedan’s car battery.
Luckily, the driver did not suffer from any injuries from the accident. But for Tesla’s reputation as a brand, it definitely etched into the minds of its consumers that there are safety issues concerned with the Model S sedan. Because car buyers primarily take safety into account and they want to minimize their chances of being in a car accident, they will likely reconsider when it comes to Tesla vehicles in the future.
Vivian’s blog post includes well-written points about the incident, and I would encourage anyone who has interest to read it.
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Works Cited
Pfaffenbach, Kai. “A Tesla Model S Car.” Reuters. Reuters, Sept. 10 2013. Web. Oct. 7 2013.
Poladian, Charles. “Tesla Motors CEO Elon Musk Identifies Cause Of Model S Sedan Fire, Defends Electric Car’s Safety.” International Business Times. IBT Media Inc., Oct. 6 2013. Web. Oct. 7 2013.
Marketing and Bubble-gum Pop
AKB48 is Japan’s crowned pop idol group, and all of their CD singles for the past two years sold over 1 million copies in Japan. What lies behind this miracle degree of success is no other than the genius marketing strategy that drives AKB’s appeal.
The members of AKB48 in their outfits from the single, “Flying Get”
Each of their CDs comes with a ticket to one of their handshaking events. It aligns perfectly with AKB48’s “brand” motto, “Idols you can meet.” Fans in Japan have the chance to shake hands with the members and talk to them…as long as they buy their CDs.
But the cherry on top of it all is AKB48’s “General Election” that occurs every year. It’s merely a fancy way of saying a popularity contest, but the cost of one vote is equivalent to buying one CD, and voting per person is unlimited. The winner of the election, who gets the most votes, will be featured in the next single, and become widely exposed to the media. This glamorous opportunity completely drives AKB’s die-hard fans crazy to support their favorite member.
These are the several points of differences that separate AKB48 from the countless idol groups in Japan. But the real challenge is how long they are able to maintain this miraculous success streak.
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Works Cited
“AKB48 Janken Tournament.” Jefusion. AKB Group, 2011. Web. Oct. 6. 2013.
St. Michel, Patrick and Daisuke Kikuchi. “AKB48 ‘Election’ Shows Marketing Brilliance.” The Japan Times. The Japan Times Ltd., 31 May 2012. Web. Oct. 6 2013.
Berry Madness
As Blackberry transcends into the private, it’s always helpful to find out what was occurring for the company, and what drove their decision.
The once massively popular and leading provider of smartphones, Blackberry Ltd., has “signed a letter of intent agreement” with Fairfax Financial on September 23, which confirms that Blackberry will be bought out for $4.7 billion. And long story short, all BB shareholders will be delivered $9 per share in this transaction, and that the company will pursue future endeavors as a private company.
With this contract Blackberry will install new management, and possibly better vision, for a chance to turn the tables around. Even if this deal isn’t sealed, at this point there’re worse paths that Blackberry would’ve had to take. Fairfax Financial’s CEO Prem Watsa states, “I’m not underestimating their short-term problems…these happen all the time” (Perkins) and hopes to be the white knight that saves Blackberry from its downward spiral.
Although Blackberry is in the jam for the market of smartphones, its potential as an enterprise has not been completely overshadowed by its past challenges. Perhaps, this was the ultimate reason that motivated Fairfax’s plan for Blackberry’s acquirement.
Shorter Time, Higher Cost
With the launch of the new iPhone, carrier companies are more than ready to jump into action.
Under the new wireless code, Canadian phone carriers have shortened the 3-year contracts to two years, but instead raised the cost of monthly plans. Although on the surface this seems to be a reasonable change, there is much to be looked into. The old 3-year plan allowed customers to gain ownership of cellphones at a cheaper, or non-existent price by signing a monthly plan contract that lasts over the span of three years. Now that the length of the plans have been cut down, the price of contracts, especially over smartphones, have gone up. Even though the higher prices show little disadvantage when compared to buying an unlocked smartphone at full price, with unlimited calling, texting, and limited usage of cellular data involved in the contract, customers are paying $50-$100 every month that quickly adds up over a few months. It is arguable that more expensive are necessary to enjoy the full smartphone experience, but overall, higher contract prices in general will affect customer values and their decisions in choosing a carrier.
Works Cited
Dobby, Christine. “Canadians Can Cancel Phone Contracts Without Penalty After Two Years Under New Wireless Code.” Financial Post. National Post, 5 June 2013. Web. 21 Sept. 2013.
Lasalle, Luann. “Canadians Will Pay More for Cellphones Over Two-Year Contracts Instead of Three.” The Province. Postmedia Network Inc., 25 Aug. 2013. Web. 22 Sept. 2013.
Ethics that Swirl
“Ethics” is a word I’ve heard many times before, but “business ethics” is a concept I had a better grasp of after reading a certain story.
In 2012, a pair of twin entrepreneurs, Marvin and Jon Gurman, ventured into the business of frozen yogurt. What they started out of curiosity soon turned into their current ambition. The Gurmans, who were co-chairs of their family company JCorp Inc., partnered up with the co-founders of Yeh! Yogurt, and began establishing new yogurt stores, as well as expanding their franchise throughout Canada (Jermyn, 1).
Marvin and Jon Gurman promoting Yeh! Yogurt in their sports car, painted to suit the occasion.
What caught my eye in this success story is that Marvin and Jon Gurman were ethical when they decided to buy out their partners in December 2012 due to creative differences. But after parting ways, they supported their partners for pursuing their new endeavors in the industry. Moreover, they also ensure their employees and franchisees are well-encouraged. They were collaboratively expanding their company with their employees, and their employees were willing to contribute with their ideas. The twins believe that “communication is key”, and it still holds true.
Their success stems from their work and business ethics, and as the Gurmans would’ve put it:
“You Go, You Get.”