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

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- 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- The impact of the corporate identity mix on corporate reputation

Authors: Kevin Money, Susan Rose, and Carola Hillenbrand

The authors interpreted corporate reputation (CR) as trust and positive emotions hold by stakeholders toward companies. In addition, the authors believed that an organization does not automatically own the trust and positive emotions that stakeholders hold toward it but can influence them via daily business operation (BO) gradually and gain its reputation ultimately. The authors also recognized CR as a key success factor of organizations. The purposes of this article are to verify whether corporate identity mix (CIM) is an antecedent of CR and to test the correlation between a strong CR and stakeholder behavior.

The theories and studies the authors acknowledged and applied when conducting the research are as follows: the relationship between CIM and CR (Pitt and Papania, 2007), the two-level study of the corporate brand and CR (Brown et al, 2006), the organizational level study of corporate brands (Aaker, 2004), the individual level study of organizations (Fombrun and van Riel, 2004; Walsh et al, 2009; Money et al, 2010), and the operationalization of CIM on CR at the individual level (Walsh et al, 2009). Based upon these theories and studies, the authors further developed a five-construct research model with four hypotheses.

The four hypotheses are (Money et al, 2010):

1.          Positive experiences of CIM contribute to positive corporate brand benefits (CBB).

2.          Positive CBB contributes to positive perceptions of CR.

3.          Positive experiences of BO contribute to positive perceptions of CR.

4.          Positive perceptions of CR contribute to positive consequences of CR.

The results of the research support the four hypotheses and validate the model. Furthermore, there are four findings of the research: (1) it is possible to measure the impact of CIM and BO on CR; (2) the research suggests the relative importance of CIM, CBB, BO, and CR; (3) the research makes the CIM framework (Melewar and Jenkins, 2002) measurable; and (4) the study confirms and theorizes the individual-level concepts (Brown et al, 2006).

The implication of this research is that CR is manageable and measurable. First, managers/executives may develop a CR watching system. Since every industry has its own characteristics, managers may weight differently on elements constructing CR. By scrutinizing the whole system, managers may then know which element should be improved first or least. Also, through the CR watching system, managers can also easily acknowledge the exact responsibility of every related department and improve the personnel promotion system.

Source: BrandManagement; 5^th June 2010, Vol. 18, 3, 197-211

The Strategy Seminar: Applied Strategy- Process Integration and Information Sharing in Supply Chains

This is an article studying whether hold-ups, or the potential for hold-ups, within a supply chain affect process integration and information sharing between firms.  The article defines process integration as an investment with the goal being to enhance process integration and/or information sharing between firms.   Manufacturers are concerned valuable, proprietary information given to the distributors will be leaked; while distributors concerns center on manufacturers using internal sales teams to do distributors jobs once a sales area is developed.  The US is a transaction cost economy, an economy which once dependence is established between firms the value from these dependences can be shared between partners.  The relevance of this study with the current global financial crisis, firms are seeking an advantage to stay competitive, to remain solvent, and, if feasible, increase profitability. 

This study tested six different hypotheses.  The study uses performance scorecards and financial performance data (i.e. Sales Growth, Sales Productivity, Profitability, Contract Renewal) collected from major petroleum manufacturers and their relationships with independent petroleum distributors.  The first hypothesis is “as asymmetry (or unevenness) of interdependence increase, the extent of process integration and information sharing in manufacturer-distributor partnerships decreases” (Schloetzer 1011).  The second hypothesis is “as the magnitude of interdependence increases, the extent of process integration and information sharing in manufacturer-distributor partnerships increases” (Schloetzer 1011).  The third hypothesis is “the extent of process integration in manufacturer-distributor partnerships enhances partnership financial performance” (Schloetzer 1011).  The fourth hypothesis is “the extent of information sharing in manufacturer-distributor partnerships enhances partnership financial performance” (Schloetzer 1012).  The last two hypotheses are “the extent of process integration and information sharing in manufacturer-distributor partnerships are directly (5^th) or indirectly (6^th) related to distributor contract renewal via financial performance” (Schloetzer 1012).  

The results for the first two hypotheses support the main idea; when there is a larger interdependence, both partners then depend on each other more and when there is larger unevenness between firms the reverse is true.  Results for hypotheses three and four, show, in practice, larger supply chain integration allows firms to grow larger together rather than seeing a larger benefit going to one partner in the relationship.  Hypotheses five and six both predict positive relationships between supply chain integration and contract renewal.  The results of the study also show that as process integration and information sharing grow between firms so does sales growth & productivity and profitability. 

The implication of this article is with the current global financial difficulties and with firms increasingly looking for better financial performance.  A way to do this is to increase process integration and information sharing between supply chain partners.  Rather than increasingly benefiting only one firm in the relationship, this mixing process will increase financial performance of both firms through sales growth & productivity and overall profitability.

Schloetzer, Jason D. “Process Integration and Information Sharing in Supply Chains”, The Accounting Review (2012): Vol. 87, 1005-1032. Web. 16 Sep. 2012.