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.