Sony announced a downward revised annual earning forecast last month. Why only Sony is struggling to recover its business performance while all the other Japanese tech companies are able to manage their economic slumps?

The major reason why the downward revision on its annual earning forecast was done is that its slow economic growth in its smartphone business. Such poor result of the business creates an additional expense for impairment management.

Sony owns a smartphone company, Sony Ericsson as their subsidiary. Its estimated value is computed based upon its future projection of the business. However, because its smartphone business has been experiencing a major economic slowdown, it resulted in a failure to achieve the initial plan. Sony actually revised its annual forecast not only the one for this year but for last year. It also arose from its failure to achieve the business plan.

The reason why that only Sony is experiencing this problem is its business model. In the past when all the Japanese manufacturing industry had high competitions, each tech maker had a strategy in which they focused on creating the most appealing hit product in which they could expect a high profit level. Walkman, one of Sony’s major products is such example.

However, current Japanese companies are not in the state of where they can pursue such bold strategy. The most feasible and profitable strategy for Japanese companies is rather straightforward. It is to reduce cost as much as possible and collect small profits from each business segment they own.

Hitachi, a Japanese company, which owns many different business segments that do not relate to one another instantly recovered its business performance.

Such business strategy that allocates companies resources to many different areas cannot realize high profitability thus it is not recognized as the best strategy globally. Sony is seeking to acquire a high recognition as a worldwide enterprise hence it still sticks with its original strategy even now.

However its business decision is actually backfiring on itself. In order for Sony to recover its business economy, I think they need to change their perspective and shift to the strategy that is more focusing on cost reduction with smaller profit yield.

Bibliography

McEntegart, Jane. “Sony Revises Its Annual Earnings Forecast to Adjust for C$1.6 Billion “impairment Charge” on Smartphone Writedown.” MobileSyrupcom. N.p., 14 Sept. 2014. Web. 11 Nov. 2014.

Images from

“Sony Forgets to Pay Internet Bills, Loses Power to Various Websites.” Complex. N.p., 16 July 2014. Web. 11 Nov. 2014.

“Hitachi Builds Public Safety Portfolio with IoT and Big Data.” InfotechLeadcom. N.p., n.d. Web. 11 Nov. 2014. <http://www.infotechlead.com/2014/10/24/hitachi-builds-public-safety-portfolio-with-iot-and-big-data-26167>

In Ling Du’s blog, she talked about how Amazon is planning to open its first physical store in the United States. One of the major things that she mentioned in this blog is that if Amazon decides to pursue this strategy, it will be hard to maintain its low-cost strategy. I indeed agree with this opinion. The biggest and the most important aspect of EC business is providing products at the lowest possible products by 100% internet based way of its business style in exchange for lack of quality physical customer service. Therefore, owning a physical store is almost like a taboo for this particular industry. Then why is Amazon doing this? The two major advantages that physical stores have fall under customer service aspect and marketing aspect.

EC businesses, developed from not owning physical stores are now experiencing such two obstacles as EC industry develops and the product category and needs expand. It is true that a lot of people prefer having a physical experience with the products that they are interested before they purchase them. Despite the public use of EC use has not increased much, there is a sign of a slowdown in EC market growth. Hence a whole new business strategy needed.

Zappos, one of the EC enterprises, tries to overcome such obstacles by providing its own unique customer service. It accepts customers returning the goods they purchased if they did not like them, and offers free shipping both ways.

On the other hand, what Amazon is trying to do is rather complicated. Their business strategy will be completely different form the ordinary EC business strategies. Amazon is seeking to expand its business and build business basis where it can maximize cost efficiency and service quality. This will result in establishing a cutting-edge business that differentiates itself from its competitors completely.
However, the needs that can be taken care of just from the enhancement of product distribution are limited. Amazon has not been able to obtain enough market shares in shoes and apparel markets because a lot of customers prefer visit nearest retail stores and “see” them physically. Their lack in shares is not only in apparel markets, but also electronics; their major selling products. A lot of customers are concerned about after service and wanting to have a customer service in person. In order to satisfy such needs, expansion of ways of delivering products is crucial. I think opening a physical store was the best and most feasible answer that Amazon could think of. By owning a physical store it can realize all the aspects that it is missing, yet as Ling Du mentioned, total fixed cost would be very costly thus a thorough consideration about the relationships between marginal benefit and marginal cost is highly required. I am very looking forward to hearing Amazon’s final decision for this new business strategy in the future.

Bibliography

Du, LIng. “Ling Du’s Blog.” Ling Dus Blog. N.p., 9 Nov. 2014. Web. 09 Nov. 2014. https://blogs.ubc.ca/emmadu/2014/11/09/amazon-physical-store-coming/

Images from

“FoneArena.com – Mobile Phones Specifications, Prices, Photos, Reviews, News, Forums, Glossary, Fonefinder.” FoneArena.com – Mobile Phones Specifications, Prices, Photos, Reviews, News, Forums, Glossary, Fonefinder. Google, 10 Oct. 2014. Web. 09 Nov. 2014.

“Zappos | The Dragonfly Effect.” The Dragonfly Effect. 　, 　. Web. 08 Nov. 2014.　http://www.dragonflyeffect.com/blog/dragonfly-in-action/case-studies/zappos/

Hoffelder, Nate. “Whatever Happened to Amazon’s Retail Stores? – The Digital Reader.” The Digital Reader. N.p., 9 Feb. 2013. Web. 09 Nov. 2014.

Hlmanshu’s blog talks about McDonalds’ new innovative approach to customer ordering and seating system. There will be touchscreens, which allow customers to choose toppings as well as seating locations. Despite he thinks it might not be a feasible idea, I think this will be rather beneficial for MacDonald’s. For his first argument, he states that it will be costly to develop such software and the touchscreen. I disagree with this point. First reason is that there is already developed software that is similar to what MacDonald’s looks for, thus MacDonald’s can easily obtain the software by forming a technical tie up with the companies that own the software. In Japan, where I am from this “touch screen ordering” system is actually very common for major restaurants. There are many restaurants, in which there is a touch screen for each table that customers can order food themselves whenever they want. Because MacDonald’s itself does not need to develop its own software from scratch, therefore they can reduce the development cost. For his third argument, he claim that during rush hours this will create an over order resulting in strain on workers. I somewhat disagree with this. It is possible to have too many orders at once from such simple ordering system, however this also means each Macdonald’s restaurant does not require a physical person to take orders thus it can reduce the labour cost or maybe they can allocate the excess labour towards the food handling division. MacDonald’s is one of the biggest fast food companies in the world. It has a focus differentiation strategy of providing a meal fastest it can for busy people. This software allows MacDonald’s to provide the food even faster because it reduces the communication between the customers and order takers. Also, this will reduce ordering mistakes significantly as the customers themselves directly order food to the kitchen staff. For these reasons this software could make MacDonald’s even “faster food” with a good reputation of order accuracy. As customer usage of this software increases, MacDonald’s can easily obtain and organize customer trends for its menus, which would be useful for the new product ideas. For all reasons and arguments above, I think marginal benefit is greater than the opportunity cost of this software, thus I would conclude that this innovative idea is beneficial that MacDonald’s should pursue this project.

Bibliography

Cahill, Joe. “This Is McDonald’s Real Problem (and There’s Nothing It Can Do about It).” Crain’s Chicago Business. N.p., 10 Feb. 2014. Web. 08 Nov. 2014.

“How Fast Food Will Handle Minimum Wage Hike.” IGN Boards. N.p., 14 Jan. 2014. Web. 08 Nov. 2014.

Akode Hlmanshu’s blog link:

https://blogs.ubc.ca/himanshu07/2014/10/05/response-to-ziyu-rita-hes-blog-post-about-new-gourmet-burger-in-australias-mcdonalds/

Akode, Hlmanshu. “UBC Business Blog.” UBC Business Blog. N.p., 5 Oct. 2014. Web. 08 Nov. 2014.

The blog I found is about how high brand items are sometimes lucking in quality. They why do people still buy them? The reason is that such customers are not looking for something that is more efficient or easily useable, rather they purchase such brand items for its appearance. I think such case is usually seen in clothing industry, as clothing does not necessarily relate to one’s life as oppose to car or food industries. In this case, the function of a product is not the main focus of the customers. Customers believe by having a brand item, they can establish social status.

Contrary some brands are known for high performance of their products. Especially tool industries where customers’ focus is more on the quality aspects rather than product design.

It is common for a brand to have one of these two aspects excelled, but not both. It is clear if they could have the best quality at the same time as the exceptional design, they can maximize the demand for their products. Then why do they not do it? The simple answer to this question is that it is very challenging to do so, thus only few companies satisfy both aspects. One of such companies that the blog author mentions in the blog is Apple; the innovative technology company originated in California. Apple has been recognized its high luxury brand image as well as its excellent product performance amongst people. This resulted in the author to think that Apple is potential candidate for being a luxury and high quality brand. I somewhat agree with this claim. I personally am a Mac user as well and I have been quite satisfied with my Apple products. I think I would have completely agreed with his claim if Steve Jobs, the former CEO of Apple who was in charge of designing its products. The new iPhone was released not long ago. The sales of this new product iPhone 6 has been surging. However, there is a significant defect in this new product. If there is a certain pressure is applied to the device, it could bend. Although this undesirable fact about the product is widely spread on the Internet and mass media, its sales are still booming. I think the major reason for this is that Apple has a substantial and established brand image through other old products.

iPhone 6 was the first product released after the death of Jobs, so Apple as a whole has been facing a major phase change, which could have resulted in such product deficiency. For iPhone 6 only, I feel like that Apple was more like one of such luxury brands, neglecting their product quality. I hope Apple finds a way to return to its established position in the market and continue fascinating us with their innovative products.

Bibliography

McKenna, Shane. “PPC Brand Campaigns | Vroom Digital.” Vroom Digital. N.p., n.d. Web. 06 Nov. 2014.

ESPOSITO, DOM. “Apple’s IPhone 6 Plus Gets Put through ‘bend Test’ in New Video.” 9to5Mac. N.p., 23 Sept. 2014. Web. 06 Nov. 2014.

Godin, Seth. “Seth’s Blog.” Seth’s Blog. N.p., 30 Oct. 2014. Web. 06 Nov. 2014.

$22 billion acquisition of Whatsapp by Facebook, it was the biggest acquisition by Facebook in terms of purchase price.

–-What was their motive for this acquisition?

Facebook attempted to buy out other social networking service targeting heavily on teens “Snapchat”, but they failed to do so. Thus Facebook tried to compensate for this by this acquisition of Whatsapp.

Moreover, it was revealed that there is a decrease in number of teen Facebook users. Teenagers are the social cluster of people who are always eager to try something new, thus are the main customer segment of Facebook. However such important their customers’ interests are now shifting to other social networking services, like Whatsapp and Snapchat.

Facebook in fact provides their unique messaging service similar to Whatsapp, but the number of active users are smaller than Whatsapp’s. By taking over Whatsapp, Facebook will be able to easily and efficiently access such group of teenagers who always actively exchange messages everyday.

Whatsapp’s excellent user engagement and rapid growth is dues to their unique application features. Their messaging function is simple though powerful and fast. Also their number one motto is “No ads”. If you purchase a free app, the free app usually comes with all sorts of advertisements. In Whatsapp’s case, they focus heavily on providing a stress-free app by not associating with any of the advertisement companies. This is their focus differentiation, which resulted in their great success.

An app like Whatsapp is a “killer applications” for variety of meanings. Wherever you are or what ever you are doing, this app draws your attention.

The world trend is now shifting more towards to more versatile applications equipped in smart phones rather than websites like Facebook.

I am very interested and curious about how Facebook is going to strive hard to survive such competitive market in the future.

Bibliography

Zolfagharifard, Ellie. “Facebook Completes Its $22 Billion Acquisition of WhatsApp after European Regulators Give the Green Light.” Mail Online. Associated Newspapers, 07 Oct. 2014. Web. 24 Oct. 2014.

“Silicon Valley Mega Deal: Facebook Buys WhatsApp for $19 Billion (Rs 1,14,000 Crore).” TheTechPandacom. N.p., 20 Feb. 2014. Web. 25 Oct. 2014.

Microsoft bought out Nokia, the Finnish smart phone company for €5.44 billion in this April, however there is not a good outcome from it so far.

At the beginning people thought that this acquisition of Nokia is for Microsoft to catch up with the 2 major smart phone enterprises, Apple and Google. Apple has been manufacturing their own hardware by themselves, but outsourcing the devices from a Taiwanese company. Google’s main sales item “Nexsus” series is manufactured by Lenovo in the result of an acquisition of Motorola mobility by Lenovo. Now Google is focusing solely on production of software. Thus both of these enterprises are specializing in one thing rather than trying to cover every thing within their companies in order to achieve a high quality in a main component of their productions. This resulted in a great success in both businesses.

Whereas Microsoft is trying to focus on smart phone business by release of windows phone however their attempt failed due to the lack of progress in other device makers. Before Nokia worked together with Microsoft, their Windows programmed smart phones were like existing Android phones with a little bit of modifications. By using Nokia’s main smart phone platform for the windows phone, they got a bit of increase in sales but it was not innovative enough to make a huge impact on Android or iOS smart phones. This failure to gain popularity resulted in layoffs of Nokia workers.

However, I think without the acquisition of Nokia, the situation now could have been worse for Microsoft. Nokia was not a huge device maker, yet they had an established brand image so it drew some attention from the public. But now Microsoft is trying to shift away from Nokia’s name. This might decrease Microsoft’s share value because Nokia’s brand name is still recognized by consumers all over the world except the US.

Public view of Microsoft is that it is an enterprise that produces goods that are targeting more on other enterprises than the general consumers, thus their company reputation is more of a conservative image. I believe by incorporating different hardware brand, Nokia, they can change such company image. Under Nokia’s brand they can make an innovative production targeting general consumers and at the same time they can use the same technology, human resources ad supply chain they can provide devices targeting enterprise under Microsoft brand name. This new way of bringing business could possibly result them to achieve a great success in both markets.

Bibliography

“Microsoft to Phase out Nokia Name.” BBC News. N.p., 22 Oct. 2014. Web. 23 Oct. 2014.

Johnson, Luke. “Microsoft Completes Nokia Takeover.” – News. N.p., 25 Apr. 2014. Web. 23 Oct. 2014.

the photo is from

SOUZA, ELSON DE. “Microsoft Compra a Nokia: Entenda O Que Pode Mudar Nos Próximos Anos.” TechTudo. N.p., 3 Sept. 2013. Web. 23 Oct. 2014.

First nations who had been considered as a minority group are now playing an important role in the process of passing BC Hydro’s $8-billion Site C hydroelectric megaproject. They now have a powerful voice against the two levels of government and challenging them so as to take down the project.

Hydroelectric megaproject is considered as the most economic solution to the greenhouse gas emission problems. However there are many problems arise from the construction of the dam. It will significantly damage the ecosystem as well as natural habitat and wild animals inhabit around the area. More importantly, there is going to impair First Nation practices and their finish opportunities resulting in the strong opposition to this hydroelectric project.

B.C government cannot proceed to this project unless they obtain an approval from First nations and establish a partnership with them. To do so, it is necessary for the government to carefully negotiate with first nations because their historical relationships are rather complicated and there is still a conflict remaining between them. Here are some points I think the government should try in order to make obtain the approval from first nations. It is possible that some first nation people are interested in this project rather then objecting against it. Job opportunities for first nations are still limited in today’s society, thus the government can ensure that there is going to be more job opportunities from this new project. Secondly, the government can provide new facilities and a new area that all the first nations can use even after the dam construction. Thirdly, the government could also try to find the alternative way or location the hydroelectric project can be done. Canada possesses a huge amount of natural resources and land, so investigating that hydroelectric power would become a key. Lastly, the government should do more extensive and focus research on the project and how it can be done. At this point they are estimating that the dam will flood 83km of the river causing endangering wild animals inhabitant is that area. As the technology develops, there is always a better and efficient way of doing this at a low cost.

Establishing a partnership with another group of people is not a simple process that can be done by a brief discussion of few people. Partnership relations are about an exchange of views and ideas for the mutual benefits, hence respecting each other is utmost importance and should not be neglected.

Bibliography

O’NEIL, PETER. “First Nation Chiefs to Stage Site C Showdown.” Www.vancouversun.com. VANCOUVER SUN, 18 Sept. 2014. Web. 05 Oct. 2014.

MOORE, DENE. “First Nations Insist B.C. Choose between Site C Dam and LNG Projects in Peace River Region.” The Globe and Mail. The Canadian Press, 24 Sept. 2014. Web. 05 Oct. 2014.

“No Clear Yes or No on B.C.’s Mega-dam Site C Project.” The Globe and Mail. The Globe and Mail, 8 May 2014. Web. 05 Oct. 2014.

There has been a big change in monetary policy in the United States. Further cutback in quantitative easing, QE, has been arranged in FOMC in September. According to Janet Yellen, an American economist who takes the chair at the Board of Governors of the Federal Reverse System, if there is any move in restoration of labor market and increase in price, there is an enough possibility that QE could be terminated in the next FOMC which will be held in October. The money market is estimating that after the termination of QE, there will be a rise in the federal fund rate. There is an outlook for the future federal fund rate made by the members of FOMC has been released in the public. Despite the estimations of each member vary, the lowest estimation is indicating there will be a 2 % rise in the federal fund rate. If the rate of interest goes up, the interest that each enterprise has to pay increases, resulting in a fall in an income. Therefore, stocks will likely to decrease. Furthermore, it will make the process of investors taking loans which is used for investments more difficult, thus equity investment will be much harder to carry out and an enterprise has to face the difficulty in the growth of its stock price. It is true that newly-established enterprises are free from the pension and other legacy costs and their introduction of the new technology eases the innovative projects, compare to other established companies. However, such young enterprises have a major disadvantage in terms of the financial resources. Zero interest rate policy makes it relatively easy for such new business groups to collect funds from investors. Hereafter, the monetary policy of FRB will shift from the relaxation phase to the retrenchment phase. As quantitative easing being terminated and the interest rate increases, it will be quite difficult for new enterprises to gather capital. In my previous blog, I talked about Elon Musk’s brand new, innovative business and how they could be successful in the future. However, this change in monetary policy will significantly burden his businesses. What Elon Musk should do is that he should quickly realize both the spaceship development and mass production of the electric cars before the formalization of the rise in the interest rate and become a superior enterprise, which has a firm financial foundation and does not get much affected by the change in the interest rate.

Bibliography

HILSENRATH, JON. “Fed Chief Yellen Seeks Interest-Rate Consensus.” The Wall Street Journal. Dow Jones & Company, 14 Sept. 2014. Web. 25 Sept. 2014.

HILSENRATH, JON. “Fed Plots Cautious Course on Rate Hikes.” The Wall Street Journal. Dow Jones & Company, 17 Sept. 2014. Web. 25 Sept. 2014.

On September 17^th Space X which was funded by Elon Musk was chosen by NASA for the space shuttle development plan. Amongst all the leading aviation enterprises, the nearly-established company, SpaceX received 2.6 billion dollars as a development expense from NASA. Why has a young company like Space X been chosen by NASA for the new space ship development plan? It had been a common notion that spaceship businesses could only be managed by the major companies, which have a large amount of funds and distinct achievements. However, Space X overturned this idea. SpaceX gains an advantage over other similar industries in terms of its quality of spaceship at the low price. SpaceX is especially focusing on developing low cost space rockets; “cost leadership”. Moreover, SpaceX has already succeeded in couple flight experiments, which appear to be a huge advantage over its competitors. Elon Musk is also a founder of Tesla motors. Tesla is known for high quality electric sports car. Now they are seeking for mass production of their cars. In order to do so, it is essential to reduce the cost of high quality batteries used for the cars. They are now planning to build a Giga factory for the production of batteries with a financial assistance from their partner companies. Because their cars are powered by solely electricity, and electric cars bring about employment opportunity in the US, they receive a preferential privilege in terms of taxation from governments of Nevada and California.

The main focus of both of Space X and Tesla motors is not simply pursuing a substantial profit. Rather, they challenge various kinds of things by an innovative approach so as to simultaneously realize energy saving and low cost. Such corporate philosophy and high aspirations are being recognized by the governments and investors led to the great result like this today. We can anticipate that Elon Musk will blow people’s minds by his new, bold and innovative activity in the future.

Bibliography

PASZTOR, ANDY. “Sierra Nevada Challenges NASA Awards of Space Taxi Projects to Boeing, SpaceX.” The Wall Street Journal. Dow Jones & Company, 2014. Web. 27 Sept. 2014. http://online.wsj.com/articles/sierra-nevada-challenges-nasa-awards-of-space-taxi-projects-to-boeing-spacex-1411777886

Davenport, Christian. “NASA Awards Space Contracts to Boeing and SpaceX.” Washington Post. The Washington Post, 2014. Web. 27 Sept. 2014. http://www.washingtonpost.com/blogs/the-switch/wp/2014/09/16/nasa-awards-space-contract-to-boeing-and-spacex/