Applied Strategy- Extra Current Event Article- The Green Hotel Industry

Myers, Peter. Reuters News. 27 November 2012. Web. 02 December 2012.  Available at: Reuters 

Your personal daily carbon footprint is the amount of carbon dioxide released by your actions during the course of a day.  Obviously this release of carbon dioxide is bad as it is a greenhouse gas which causes global warming.  According to the article, there is a trend among environmentally minded, healthy-living consumers demanding hotels offer eco-friendly amenities.  According to recent surveys of the US traveling public, a vast majority of travelers believe hotels should “be taking green initiatives and 38% had taken steps to determine whether a hotel was green” (Myers 2012).  Those surveyed also said they would be willing to “pay $1 or more to offset their carbon footprint during a stay…” (Myers 2012). 20% said they stayed at hotels that restricted how green they could be.  Habits of these consumers include asking housekeeping not to changed sheets or towels during their stay.  Taking these steps allows managers to reduce cost and energy which save money.

According to the article, there are some hotels that have made the switch and are leading the industry with a green strategy.  Kimpton Hotels is the only leader in the US; however, Langham Hotels, Taj Hotels, and Six Senses Resorts lead outside the US.  The very large global hotel chains, however, are just behind not absent in the charge for a more eco-friendly hotel experience.  Marriott “pledged to reduce energy and water consumption by 20% by 2020; empowering its hotel development partners to build green hotels and educate its guests in becoming energy-efficient during their stay” (Myers 2012).  Retreat and meetings, the bane of many in corporate America, may benefit from these green initiatives as hotels market green meetings as a healthier environmentally respectful alternative.  While this is all very promising, analysts say there is not yet enough demand for firms to make production or construction decisions based on an environmentally friendly strategy. 

The implication for managers is a tricky one.  While the silly debate will continue for a while as to whether global warming is a fact; government regulation and mandates may be slow in coming but they eventually will come.  But there is a consumer segment, small and growing which makes choices based on how environmentally conscious a firm is.  This is not a fad that will go away quickly.  Firms can bet on the environmentally friendly route which can tap this market as well as reduce cost and energy; something that benefits the bottom line.

References:
http://www.sfgate.com/green/article/Tracking-carbon-footprints-in-hotels-New-2595028.php
http://www.elp.com/news/2012/12/03/ojai-inns-are-waking-up-to-green.html

CURRENT EVENT - HOLIDAY DISCOUNTS: Strategy How To Boost Sales In The Peak Season of The Year?

As usual, every year, before Thanksgiving Day until Christmas Day, it is the most convenient period for retailers to collect money from shoppers. The discount strategy of every brand store has been set clearly how to seduce customers to spend much money on its product because the managers realize that here comes the time the revenue generation can reach peak in the entire year. It is easily to understand why people become more incentive to shop during this time. Some people buy gifts for relatives, friends and colleagues in special events while others think this occasion is the best time of the year to stock up new stuffs and new clothes for their warehouses and closets with variety promotions from retailers. Shoppers love discount and every merchant tries to meet their satisfaction. Thus, when needs and demands are reaching at one point, which foremost strategy is best for a business to obtain its goal effectively and efficiently.

Up to now, promotion is used as one of the most effective weapons for advertisement campaign to attract customers’ glances to the products and then buy them as in need. Most of the managers, nevertheless, don’t spend much time on building discount tactics. They find it so mundane and routine. Discount method, especially in the holiday season, is a crucial method for retailers to generate revenues; it is, however, also a weapon to ruin the brand easily without cautions. As a manger, you should discover which promotion is suitably applied for characteristic of your business for the best outcome. Thus, promoters make sure that your brand is distinguished from others in the strategic promotion, for example, an inspired idea for holiday promotion. Importantly, the program brings benefits to not only the customers but also the business. Therefore, it should also help reduce expenses on operating cost and tempt the customers to buy more to increase revenues. For example, customers are motivated to buy 2 to get 1 free instead to buy 1, or better deals online than the ones in store induces customers to buy online instead of in store to reduce operating cost. Promotional calendar should be set cohesive and announced to teams in the marketing department so that the strategy works effectively regard on their connections. The managers have to keep track the affectation of the promotion on products in the market, and then learn from these experiences for the next programs. In order to make a good impression on customers, promotional strategists try to help the customers feel convenient as shopping. Gift sets are ready for customers to select when customers usually run out of time during the holidays. Coupons, circulations, and catalogs for sale preview have been sent via mails or e-mails one or two weeks or even a month in advance before holiday season comes. The website should be updated with all the events, special discounts, offers and recommendations. Thus, the customers are at ease to prepare a checklist what and where they want to buy for as gifts on their tight budgets and time constraint. You can use social media as the means talking to customers, doing surveys, and doing corporate responsibility for society. These actions can help attract customers’ attentions when people usually want to contribute to charity to help the poor and unlucky people especially in the holiday season.

Discount method will make a big difference for the merchants with the suitable strategies when all shoppers desire to save as much money as possible, especially in holidays. Of course, the sellers should catch these opportunities as the most advantage on their sides in competition. Along with the promotional programs, the assistance for customers via social media also creates a good image of the brand in heart of the customers. That's the reason why most of the business retailers consider holiday season is the best chance in the year to competitively boost their revenues and images in the market.

Reference:
http://blogs.hbr.org/cs/2012/11/the_seven_sins_of_holiday_pric.html
http://smallbiztrends.com/2012/11/social-media-holiday-marketing-strategy.html
http://www.trimarksolutions.com/inside/internet-marketing/online-holiday-strategy-for-small-businesses/
http://multichannelmerchant.com/crosschannel/news/0728-four-tips-for-holiday-strategy/

Applied Strategy- Current Events- Margins in the tablets industry

All recent technology articles are seemingly focused on Apple and its success at creating both software and hardware products based on existing products but slightly modified to make demand for like products seem endless.  Microsoft, long known as a giant in the software industry, recently released its new Surface tablet which might become its first big device and service provider success, outside of the Xbox.  Profit margin is a good measure of success in the computer industry where manufacturing typically takes place in low cost countries and with products then imported to the US for sale.  This article is based on a breakdown by IHS iSuppli, who stripped down a Surface tablet and found Microsoft can earn even bigger margins on the Surface tablet based on current retail prices than the lowest cost/highest margin iPad offered by rival Apple.  A margin of almost 53% compared to a margin of 44% for the new iPad.  The margin estimates are only based on manufacturing costs and don’t include items like marketing, distribution, and other costs.

According to the article, the key to the Surface’s success appears to be the addition of a keyboard to the tablet.  In comparison to the iPad, which does not offer a keyboard as part of the tablet, Microsoft is gaining margin and defining the product through this keyboard, which doesn’t cost Microsoft much to include.  The keyboard also acts as a screen guard- another option not included with the basic iPad but available as an additional purchase.  The result is a blurring of lines between what is considered a tablet and what is considered a laptop PC.  What Microsoft and Apple are currently doing runs counter to what is happening in the broader tablet market.  Amazon and Google, makers of the Kindle and Nexus tablets respectively, use a strategy which attempts to get consumers to purchase their products, even if it means a very low margin, with the belief they will make profits off the content consumers purchase from them afterward. 

The outcome isn’t clear to date, as Microsoft only released the Surface at the end of October.  If successful, however, the implication for managers isn’t a complex lesson to learn.   If you can receive a greater margin over your competitors and differentiate your product enough to increase market share or successfully enter a new market in your competitors’ territory, you’ve positioned yourself well.  Also important to remember is low cost / high margin isn’t the only factor going into a successful product launch in the technology industry; differentiating yourself from your competitors is equally important.

Source: Microsoft's Surface a bigger moneymaker than Apple's iPad?

Author: Dara Keer

References:

1. http://www.computerworld.com/s/article/9233310/Surface_s_high_profit_margin_reveals_Microsoft_s_ape_Apple_strategy
2. http://www.eweek.com/mobile/microsofts-surface-brings-in-more-dollars-than-ipad-does-for-apple/
3. http://www.eweek.com/mobile/early-surface-store-sales-validate-microsofts-strategy-analyst/

Applied Strategy: Current Event – Japan’s Consumer Electronics Companies

For past several decades, Japan has been famous for its consumer electronics. Nikon, JVC, NEC, Casio, Nintendo, and Sony, just to name a few, are all big brands not only in the Asian market but also in the global one. Japan’s robust economic power also arouse scholars’ interests in investigating its key success factors. A great amount of academic writings and books related to Japan were published, such as Journal of Japanese Studies, Social Science Japan Journal, The Lone Samurai (William Scott Wilson, 2004), and Japan as Number One (Ezra Vogel, 1979). However, since 2008, started with the impact of global financial crisis, Japan has suffered from a series of difficulties. It would be interesting to update our knowledge of the current status of Japan’s economy and specifically to watch over the performance of Japanese consumer electronics companies.

The article took Sharp and Panasonic as the examples of Japanese consumer electronics companies. Recognized by the article, these companies are now facing several challenges: (1) the high technology does not translate into high price/profit, (2) companies from other countries successfully use low-price started to defeat their market share, (3) companies from other countries have also developed competitive technologies, (4) the continued appreciation of Yen, and (5) the weaknesses in product design and marketing. In short, the issues discussed are: (1) R&D investment, (2) marketing and pricing strategy, (3) currency policy, and (4) product design. The consumption of consumer electronics is tied to people’s salaries; meanwhile, people’s salaries are tied to the development of economy. That is to say, to figure out the future market capacity, we first have to precisely forecast whether it will be a bull market or a bear one. Consider the likely economic growth in the future two years (announced by Fed officials), it is quite possible that consumers can accept high-price consumer electronics. Thus, Sharp and Panasonic may keep developing their high technology and charging higher prices. In addition, due to the death of Steve Jobs, Apple’s design and marketing capability has now aroused some analysts’ doubt. I believe that in future three to five years, Apple will not be as prosperous as when Jobs was alive. And these future three years may give them a great chance to catch up their design and marketing capability. I also believe that the low-price strategy adopted by Chinese companies, Taiwanese ones, and Korean ones will keep working in future years -- since they do not possess that high-level technology as Japanese companies do, low pricing is their only exit. All Japanese companies have to do to compete with Chinese companies, Taiwanese ones, and Korean ones is to establish a reasonable price-quality set that the market can accept.

Consider all of the factors above, the practicing managers of Japanese consumer electrics companies still have to do the thorough market research to know what the market expect the quality should be and how it expect the reasonable prices will be before conducting technology development and setting prices. In addition, it would be wise to take advantage of their high technology to produce quality products and to differentiate them from the low-price competitors.

Source: Sharp, Panasonic Continue to Show Weakness

Author: Jeff Uscher

Reference:

1. http://news.cnet.com/8301-1001_3-57547921-92/the-era-of-japanese-consumer-electronics-giants-is-dead/

2. http://www.businessweek.com/articles/2012-11-08/sharps-profits-on-lcd-panels-worse-than-flat

3. http://www.guardian.co.uk/business/2012/nov/11/japan-electronic-money-short-circuits-economy

4. http://www.bloomberg.com/news/2012-11-09/sharp-says-foxconn-talks-could-continue-beyond-march-deadline.html

5. http://www.businessinsider.com/japanese-gadget-makers-need-a-miracle-2012-11

The Strategy Seminar: Applied strategy- Assessment of financial indicators for evaluation of business Performance

Authors: Inta Kotane, Irina Kuzmina-Merlino

Riga International School of Economics and Business Administration, Latvia

Using financial ratios and indicators to evaluate a company performance is a universal way over the world. However, which indicators help the investors to figure out the company’s situation the most effectively, especially for a small business? Inta Kotane and Irina Kuzmina-Merlino conducted a research about indicators and ratios in financial statements to apply for evaluation the company’s position.

As you know, it’s hard for a small business to get loan from the credit bureau since its financial resources which is contributed from an owner or partnership is limited. Therefore, the purpose of this paper is to suggest building up a financial indicator system which then is applied to evaluate small company’s financial position in Latvia. Although the objective of this study aimed to small business in Latvia, in my opinion, the feasibility of these study outcomes is worth for small business over the world.

Coming up to the target of the research, the authors looked into the necessary of financial indicators and then prove their crucial roles in identify a company performance. Then they applied their findings into the practical situation in Latvia. From that, they generate a model of financial indicators system to measure how good the small business is operating.

The methods used in this research are: “logical analysis ad synthesis, content analysis and a monographic method.” The data is collected from “Lursoft Ltd.” and “Latvia Central Statistical Bureau”, the largest “information provider” in Latvia.

After the research, some financial indicators, such as current ratio, net working capital to sales ratio, debt to equity, financial cycle, sales margin, return to equity, and maturing are identified as foundation for the model used for evaluating the performance of the small business. More indicators to supplement to the system depend on the features of the industry. The more indicators the system has, the more accurately the performance of the company is judged. However, the system must include those indicators above; and these indicators are required correlated and correspondent to each other. In order to get the right evaluation basing on the system, the examiners have to make sure that the financial statement is prepared strictly according to the international financial reporting standards (IFRS). Otherwise, at least the data in the financial statement are proved to be objective. The level of accuracy from this system prediction is counting on the precision of the financial statement as well.

This research is valuable for not only financial analyst but also investors and strategists. For the strategists, ratios in a financial statement are effectively strategic tools when they can translate the meaning information from the financial statement in management. They are the supportive tools for analyzing the operation of the small business since it can help to save time with reliable results. The examniers need to focus on these main financial indicators which are listed above initially as analyzing to have an overview of the operation. Then relying on the size and specific features of each manufacture, they can supplement other necessary financial indicators in their analysis.

Source: Inta Kotane, Irina Kuzmina-Merlino, Assessment of financial indicators for evaluation of business performance, ISSN 1822–8402 European Integration Studies. 2012. no. 6, http://dx.doi.org/10.5755/j01.eis.0.6.1554

The Strategy Seminar: Applied strategy- CRM Is All About Bringing People, Processes & Technology Together - A Case Study Of Banking Sector In India

Bihari, Suresh Chandra. "CRM Is All About Bringing People, Processes & Technology Together - A Case Study Of Banking Sector In India." Romanian Journal of Marketing 1 (2012): 50-56. Business Source Complete. Web. 17 Oct. 2012.

The main purpose of this article is to define what Customer Relationship Managements (CRM) is, “the process or methodologies used to understand customers’ needs and behaviors to build stronger relationships with them,” how to develop it, what are the challenges in the implementation, and how it can be applied to the banking sector, specifically, the Indian banking sector. (Bihari 2012)  Second, the article shows why CRM is important in banking, an industry which historically is focused on transactions not creating customer relationships.  Third, it focuses on innovations in CRM and what the future of CRM will look like in India.  Lastly, the author analyzes select Indian and global banks to provide examples of CRM in action. 

The paper’s research found CRM is currently popular because of increased competition between banks through globalization.  Banks used to be transaction based but are now focusing more on customers.  Customers are increasingly expecting more services and products from their banks.  Increases in information technology (IT) not only give consumers more banking options from banks, but it also gives banks more options to analyze their customers’ behaviors.  Banks realize there is a significant advantage in acquiring new customers and by keeping customers they already have profits can increase up to 35% (Bihari 2012). 

The study suggests banks can develop a CRM strategy by identifying and creating initiatives with the overall strategy of the firm in mind.  Bank must set growth objectives for each of the initiatives.  Initiatives should include increases in new and existing customers (Bihari 2012).  There are, however, problems associated with CRM. First, it is hard to establish good and effective measurements of CRM.  If effective measurements cannot be established it is easy to see how banks would not go forward with an investment with its Net Present Value (NPV) unknown or hard to measure (Bihari 2012).  Second, true profitability of a bank is hard to measure and accounting standards for financial performance may not replicate true performance (Bihari 2012).  Third, banks have a rule for pricing decisions.  The 80-20 Rule is that 80% of profits come from 20% of customers.  If a bank provides poor services to these customers they can move to competitors (Bihari 2012).

The implications for bank managers are with increased competition banks need to come up with new ideas.  Good customer experience leads to customer acquisition and retention which then leads to increased profits.  By focusing on customers, banks can acquire vast quantities of customer information and make informed decision about what customers want and when.  CRM can increase overall profitability through better infrastructure and performance as it relates to customers relationships (Bihari 2012).  Much like in marketing, CRM allows banks to study and segment their customers.  This permits banks to see which customers are profitable and which are not (Bihari 2012).

The Strategy Seminar: Applied strategy – An underlying market based strategy for insurers

In 2010, according to the data of the United States Census Bureau, the GDP of finance and insurance industry accounted for $1,235 billion dollars, roughly 8.42% of the overall GDP of the country. Meanwhile, insurance industry plays several important roles for the society: (1) it functions as a financial intermediate institution, (2) it helps individuals and organizations to manage their risks, (3) it is the biggest investor of any other industry, and (4) it provides indemnity against loss, which actively secures the development of the economy. Recognizing the importance of the insurance industry, the authors attempted to examine the customer relationship management (CRM) strategies used by insurance firms. Specifically, they conducted this research for three purposes: (1) to understand technological applications in insurance industry, (2) to know how the insurance firms utilize CRM to analyze the customer potential, and (3) to find out a more sufficient approach to input customers’ data to the CRM systems.

The research was conducted under semi-structured, in-depth interviews. The authors interviewed 30 individuals from three Indian insurance firms. These 30 individuals ranged from first-line employees to executives. The four insurance firms were: ICICI Prudential LifeInsurance, Aviva India, Birla Sun Life, and HDFC Standard Life. The authors then concluded the findings as follows:

1.         Most of the firms used Talisma software as their CRM system but some developed their own systems.

2.         The CRM was used to record customers’ profiles, transaction details, and reminder services. These were all fundamental functions of the CRM.

3.          Lack of updating customers’ data.

4.          The CRM also provided customers’ preferences in activities and risks accompanied.

5.          The employees’ perception of CRM did not match with the current systems.

6.          The employees had positive responses to the current CRM.

7.          The firms desired to employ CRM as a catalyst between themselves and the channel partners.

8.          The employees were aware that service quality was necessary for differentiation.

This study provides some valuable understanding of the CRM applied in the insurance industry for managers of insurance firms. Based on the research, we may know that to cope with the stiff competition in insurance, a better quality of service is needed. And CRM is a useful tool for insurers to realize everything about their customers. A major work for insurers is to update their CRM system constantly to reflect the reality. The CRM should not only provide customers’ names, addresses, phone numbers, or policies hold, these are all basic data; the system should provide more, such as customers’ financial situations and life plans. The more comprehensive an insurer can know its customers’ potential, the better a firm can serve its customers, and the more it can differentiate itself from others.

Source: Synergy (Jan, 2011). Vol. IX No.1
Authors: Dr. Mercy S. Samuel and Prof. Pallavi Mittal