From the employer's point of view, a zero hours contract is a great example of the benefits of the flexible labour market. They allow the employer to change the number of hours an employee works each week, with more shifts offered when they are busy, and fewer when they are not; costs can therefore be controlled and matched more exactly to revenue. They are particularly popular with the fast food outlets like McDonalds and Subway, and high street chains like Boots and Sports Direct. Those employers draw heavily on the younger end of the labour market, with many of their staff being students who are looking for flexible shifts that work around their study hours; for them a zero hours contract may work well. However it is also important to consider whether this will have a detrimental effect on the business's culture; with a high proportion of staff working irregular hours it may become much more difficult to instil a culture and sense of identity with the organisation.
One of the strengths and a key component in the Co-Op Bank's USP after recent banking problems - sub-prime lending, collapse of Northern Rock and LIBOR rate fixing, was its emphasis of ethical banking.
I've become increasingly convinced from recent discussions with major accountancy firms and other major employers that workplace learning is going to challenge the preeminence of universities and colleges when it comes to obtaining higher level qualifications. The emergence of some industrial-strength Higher Apprenticeship programmes recently is a sign of that. And so to is the news that John Lewis Partnership is to extend its programme of workplace learning to offer Level 6 (university degree level) qualifications for some of its management.
This story would provide the basis for some excellent analysis by students exploring how and why John Lewis Partnership has decided to extend its internal training programmes.
Some clues can be found in extracts from the JLP press release: for example;
The so-called "University of John Lewis" will also offer a number of other development initiatives through its ‘skills programme’, which will include training in product knowledge, line management and leadership. read more...»
"Our partners give us our competitive edge, and if we want them to stay with us for the long term, we need to make sure that they have the right skills to meet the challenges we face in an evolving retail environment."
The horrific Bangladesh factory disaster has highlighted a number of business issues and proved a stark reminder of the global effects our purchasing decisions may or may not have on people halfway around the world. Tom White has already put up a blog with some initial thoughts; I thought I’d pose some further questions and examine some of the issues raised in that post.
A great starting point would be to listen to the ever-reliable Business Daily, from the BBC World Service. Their programme In the Balance invites guests to debate a topical business issue, and this week, the Rana Plaza disaster was under discussion.
One of the first questions to ask is to examine the extent to which firms which are supplied by such factories are responsible. There were more immediate causes, of course, such as the owner’s actions and the culpability of local regulation and enforcement (or lack of). But this is not the first time there have been such disasters, nor are the poor conditions in such factories surprising. So is it right that chains such as Primark continue to use such suppliers? Isn’t it their fault, with their demands for low prices and increased flexibility to meet the needs of the fast fashion market? Do they have a responsibility to ensure fair and safe working practices in factories they don’t own and which they are merely customers of? A lot of people would argue that yes, they do. But isn’t that the same as arguing we as consumers should audit the supply chains of the shops which we buy from? Primark is as much a customer as we are.
How & Why. These are the two important words for students preparing for BUSS4 and as they practice their essay technique.
So, why is that? And how can they be used?
The source of their importance lies in the skill of analysis…read more...»
Expect lots of coverage this week about the growth strategy being pursued by Whitbread plc.
Whitbread used to have a pretty diverse product portfolio including the brewing of beer and the operation of David Lloyd health clubs. However, in recent years Whitbread had rationalised its portfolio of businesses to focus on two markets where it believes it can achieve sustainable and high sales and profit growth. And it has backed that strategic focus with heavy investment. If only other UK firms would do that!read more...»
‘Feel free to browse’ often strikes me as an odd sign in many shop windows. Why wouldn’t I feel free to do so? Well, the answer should have struck me by now. Apparently, many ‘bricks and mortar’ retailers are feeling the pressure from ‘showrooming’ – when people see something they wanted in a shop, try it, check the price online on their smartphone, find it’s cheaper, and walk out.
I’ve just been reading about the phenomenon and was reminded of the sign I’ve used to illustrate this blog, which appeared in a shop window after the British camera chain went into administration. "The staff at Jessops would like to thank you for shopping with Amazon". (I think any discussion of tax avoidance can be saved for another occasion).read more...»
A superb article here from Reuters which examines the challenges facing Ikea as it accelerates its expansion into key emerging markets, notably China and India.
On the one hand, Ikea aims to exploit its global brand by applying the core retailing concept (epitomized by the store racetrack layout, flatpack goods etc) and core values that have enabled to it to become the world's largest furniture retailer.
However, Ikea also needs to be sensitive to the specific customer needs and wants in each national market if it is to meet customer expectations and compete effectively.read more...»
The organisational structure and organisational culture at John Lewis Partnership, based around employee ownership, is distinctive and highly successful. But why? What is it about the "partnership" model at JLP which drives sales and customer service so high?
In these JLP videos, the partners themselves explain their perspectives on the business benefits of partnership in a highly competitive retail environment. The business benefits of the model are examined in more detail in the second video.
Some fantastic insights into culture here as well as the motivational impact of employee ownership.read more...»
A great video to share here with your students and pose the question - can a fast food chain based on healthy eating succeed?
Students at tutor2u's EntrepreneurLIVE 2012 events met Vincent McKevitt, the entrepreneur behind Tossed, a healthy-eating fast food chain based in London.
It looks like Vincent might soon be facing some competition from an ambitious Canadian startup Freshii which is also testing the idea that fast food can be healthy by building a chain of healthy fast-food restaurants in the U.S. and around the world.
Can the concept work? Why not? But what will it take to encourage more of us to switch from the instant satisfaction of a burger or fried chicken.
And can businesses like Freshii and Tossed compete with established multinational fast food giants like McDonalds and Subway who may simply alter their product offering if significant numbers of customers decide to start looking for a healthy-eating alternative?read more...»
Terrific insights here from Andy Street, the CEO of John Lewis Partnership, about how the concept of trust is so important in business success. Some short, sharp points here which help identify elements of the organisational culture at John Lewis Partnership and perhaps point to some of the reasons why JLP has been so successful in recent years despite the economic downturn. Essentially Andy Street sees trust as a source of competitive advantage. But it is hard won, and easily lost! Businesses - take note!read more...»
The effect of the economic downturn on small retailers, and how they are adapting, is explored in the powerful video below from the FT.
First up is a bespoke tailor trying to survive in a poor area that has been significantly affected by government spending cuts to welfare payments.
In the same location is a retailer of sporting goods. His business has changed dramatically in recent years, with demand much less predictable. Cash flow management has become much harder, so he has responded by cutting stocks and repositioning his retail product range. Can he survive against the likes of Sports Direct?
Finally, we see the effect on a furniture retailer of the emergence of pawnbrokers and other loan shops.
For these retailers, costs are rising but sales are falling. The future for these high street retailers looks bleak. Can they survive? And if so, how?read more...»
Bigger is better, or so it seemed to the UK supermarkets over the last 20 years. Size seemed to offer all kinds of advantages (or ‘economies of scale’ in business terms). Many of those economies are still very present for the larger chains (especially with purchasing and technical benefits), but I’ve been reading that this mood is shifting. Since the early 90s, the UK's £160bn a year grocery business has understood that one of the key routes to success has been the ability to open more and bigger shops.
Now it seems as though the major players have come round to thinking that size is not necessarily what matters, because shoppers are changing their habits fast. Has the “space race” run its course?read more...»
I’ve taken the title of this blog straight from a BBC article that will catch the attention of those of you who are interested in retail. What tricks have the retailers developed in recent years to get us to part with our hard-earned cash?
Here are some hooks to get you into the article:
- Why are sweets and chocolate always by the till in supermarkets? Why do they put the everyday essentials like bread and milk at the back of shop so you have to walk through as many aisles as possible to reach them?
- Why is the perfume and jewellery section always at the front of a department store?
- Why do some shops have low lighting? Why in Ikea do you have to do a loop of the whole shop rather than being able to get straight to the bit you actually want?
"We have no idea where these products will go" says one of the production line workers at a factory in China operated by Zhejiang Hongyu Medical Commodity Co. Ltd
Thousands of miles away, the final destination for those products are the shelves of retailers in developed economies, particularly the discount and/or single-price retailers who have enjoyed such rapid growth in recent years.
In this fascinating article, Tom Phillips reports for the Telegraph from Yiwu - a landlocked trade hub in China's eastern Zhejiang province - which conducts over £5bn of trade exporting low-cost consumer products around the globe. The article is a real eye-opener.read more...»
Tesco's decision to acquire restaurant change has been described as "a very significant move". That's a nice piece of evaluation. So why has Tesco decided to diversify into the family restaurant market?read more...»
A superb short video here from the FT which examines ways in which high street retailers are exploiting advances in technology - specifically the capture, analysis and use of "big data" and smartphone apps - to add value to the retail process.read more...»
Not every retail business is struggling (the travel agent Thomas Cook have been added to that list recently). For the second year running, John Lewis have paid their staff (or ‘partners’) a 17% bonus, as reported by the BBC and The Guardian.read more...»
Big Data is becoming increasingly significant in business management and we're always on the look out for practical examples of how it is being used in large and small businesses.
This latest video guide from the FT is simply superb material for business lessons, highlighting some practical applications among UK retailers / etailers.read more...»
The discovery of horse meat - disguised as beef - in burgers and lasagnes has kicked off a crisis which illustrates lot of key business studies concepts.
At the heart of the issue is trust. Can consumers trust what retailers sell to them?
From the consumer perspective, if a product is labelled "Beef Lasagne", is it too much to ask that the ingredients for the lasagne include beef rather than horse or donkey?
From the retailers perspective, can they trust that the products they source from their supply chains are as described? What checks and controls do they need to have in place to ensure that suppliers deliver what they promise?
Lots of other concepts are relevant to the developing story. For example, what contingency planning is in place to deal with the media storm and consumer reaction to further revelations.
In this video, the FT's Hannah Kuchler reports on how food companies now have to rebuild trust, without pushing prices too high.
When Judith McKenna (COO Asda) joined us for the Business Teacher National Conference in June 2012 I remember noting down how a strong corporate culture was identified as being a key competitive strength of both Asda and its parent company Walmart.
It's interesting looking through a series of useful resources on YouTube how the corporate culture of the firm, now the world's largest retailer, comes through particularly strongly from the annual Walmart "shareholders" meeting.read more...»
If you had lasagne last night you might be wondering if it was the last remains of the non-running hurdler "100% Pure Beef". Findus have a major problem to resolve after tests showed that their lasagne had been made from horsemeat.
Selecting a memorable brand name for a product is fraught with linguistic and cultural difficulties. A week ago, Pret A Manger had launched a spicy tomato flavoured crisp " Virgin Mary", based on the non-alcoholic version of a Bloody Mary cocktail.
After complaints from members of Protect The Pope, a Roman Catholic presure group; Pret A Manger’s CEO Clive Schlee removed the product from sale and apologised to The Church, he announced that the unsold packets of crisps will be offered to the homeless. Although no laws were broken, and no politician had expressed concern, it highlights difficulties associated with a firm's ethical behaviour - whose ethics, whose values drive what is acceptable to society.
The new product drew attention to the brand, but it
illustrates the importance of PEST analysis and Delphi techniques before a
product is launched, it also indicates the influence of new media and blogs used by pressure groups to influence opinion and commercial decisions.
My students know that I love the radio. Many a spare half an hour can be whiled away with a podcast of The Bottom Line (which returns on Thursday/Saturday this week), or More or Less, or Peter Day’s World of Business. And the great thing about this form of learning is that it can overlap with other tasks – there’s no opportunity cost! Listen to a business/economics podcast whilst at the gym, going for a run, doing the washing-up, whatever…
But whilst Radio 4 is well-scouted territory, but one students might not be so familiar with is NPR’s Planet Money. This show, from America’s public radio, is quite close in style to R4’s More or Less with a more of a business focus. 2 fifteen minute shows are podcasted a week.
This edition is a great place to start.
I adapted the title for this blog from an article and video clip I came across in the Telegraph, which contains the observation that "consumers forgot that Blockbusters still existed". I don't really think its demise was very hard to predict, and I think most of you will have seen this coming for some time.
But with the decline of Blockbusters - and so much other bad news on the High Street - I've decided to bundle together a lot of ideas and links to encourage students to work independently on this topic, to see if they can understand some of the forces putting pressure on our High Streets at the moment.read more...»
A lot of people will be saddened - but probably not shocked - by the news that HMV looks like it may be the latest casualty amongst big-name retailers. There's a lot of coverage of this story, so I've put together several links and questions to encourage you to consider some independent research on what's gone wrong, and what may be the way forwards from here.
I'm enjoying using Storify at the moment, and the links and suggestions for the HMV story are all posted here.
This short video interview with Amazon.com founder and CEO Jeff Bezos is business studies gold dust.
Jeff Bezos was recently named Fortune Magazine Business Person of the Year for 2012. Here he talks about his long-term strategy for Amazon. Bezos has always maintained that the success of Amazon is based on long-term thinking, recognising that not every innovation or invention will work.
Bezos defines the success of Amazon as being based on the following cultures and beliefs:
- Start with the customer - Amazon's goal is to be the most customer-obsessed business in the world
- Have a willingness to invent
- Think long-term: allow 5,6,7 years before you expect to see financial returns on investment (Bezos is dismissive of short-term payback criteria)
- Be inspired by what competitors do, but don't be afraid of them ("your margin is my opportunity")
This afternoon The High Court appointed PricewaterhouseCoopers as Administrators of Jessops the high street camera retailer. The company has debts of £80m.read more...»
You may have read about the company Teapigs, which presents itself as a quirky small upstart company, when it began its life under the close support of a much bigger business. Here’s another example: Harris and Hoole - a coffee shop that presents itself as an independent chain but is in fact 49% owned by…read more...»
Markets for ethical goods and services have remained resilient throughout the economic downturn as a progressive core of retailers and producers continue to factor sustainability such as Fairtrade ingredients into their products and services.
That is the conclusion of The Co-operative’s annual Ethical Consumer Markets Report (pdf) which shows that since the onset of the recession five years ago the total value of ethical markets has gone from £35.5bn to £47.2bn.
Acting as a barometer of green markets since 1999 when annual ethical sales were just £13.5bn, the report analyses sales data for various sectors including food, household goods, eco-travel and ethical finance.
Amongst the biggest growing categories during the recession are sustainable fish up 323 per cent from £69m to £292m, Fairtrade which has increased 176 per cent from £458m to £1,262m and free range eggs sales up 78 per cent from £444m to £792m.
However, sales of organic produce, although now stabilised at £1.5bn, have declined from a high of £1.9bn in 2008.
In 2011, ethical food and drink markets increased 7.8 per cent per cent to reach £6.9bn. Markets for green home products were up 10.6 per cent to £8.4bn and ethical personal products were up 4.3 per cent to £1.8bn
The huge rise in online shopping brings opportunities for new businesses - but also the imperative need for efficient and low-cost operations. Profit margins are squeezed for all businesses, and retailing online, rather than through expensive high street shops, provides a valuable way of achieving that cost objective - but only if the orders can be supplied efficiently. As Net-a-Porter chief executive Mark Sebba says, "If we don't focus on the customer, then we're lost. So what does the
customer want? The customer wants an absolutely impeccable service and
she or he wants the product really as soon as she or he can possibly get
Author Mark Tottman provides some extra guidance for Edexcel students about how to make the best of his superb Unit 4a revision toolkit on SuperGroup:read more...»
I’ve taken a lot of interest in Tesco’s overseas strategy, which took them to the United States in 2007 with their Fresh and Easy store chain. The set-up was bold; adding lots of capacity but high fixed costs, meaning the enterprise has consistently struggled to break even. Now Tesco have just confirmed that they are launching a strategic review that may lead to the sale or closure of its US operations. Dramatic news. What’s behind it?read more...»
I steered clear of the topic of Black Friday this year. Perhaps it’s not as hyped as it was. Instead, this year the media has been making a lot ‘Mega Monday’ or ‘Cyber Monday’, emphasising the growing role of internet retailing in the UK.read more...»
Starbucks in the UK is suffering from some pretty terrible publicity at the moment and this news about some changes in its UK HRM strategy probably don't help the mood amongst the baristas and other employees in Starbucks outlets...read more...»
HMV's previous attempt at a strategy of diversification has now ended after it agreed to dispose of its business units involved in live music and entertainment. Lots of evidence in this case study about how risky diversification can be. HMV paid £46m to acquire MAMA Group back in 2010:
Compare and contrast should be the mantra for A2 business students looking for real-life business examples to deepen their understanding. Here are two news stories which related to the broad topic of CSR which provide quite a vivid contrast.read more...»
If you've noticed the high-profile Christmas campaign for Aldi this year (see the two example videos below) you may be interested in this article from Yahoo which gives a few pointers as to how the company have managed to turn the recession into a major profit-making opportunity.
Whilst the major TV campaign shows that Aldi are now in a position to market themselves to directly compete with Morrisons, Sainsbury's et al, the article shows how the key to their success lies in the 'Product' aspect of the marketing mix - their profits up by an incredible 200% over the last two years. By minimising the use of big-name brands and concentrating on giving value-for-money with their own home-branded products, Aldi have given cash-conscious consumers a genuine alternative to the more established supermarkets in the UK.read more...»
Amazon is increasing its share of many consumer retail segments in the UK and it is fast becoming an almost dominant player in the market for seasonal demand at Christmas. In this Telegraph article, we get a behind-the-scenes perspective on the scale and complexity of the Amazon retail opportunity here in the UK.
The capacity of Amazon to process so many orders so accurately really is quite staggering, particularly given the volume of customer orders that are processed at the busiest time in the run-up to Christmas. I particularly noted the role that complex search algorithms play in organising the way that orders are picked and despatched. A key economy of scale is that the same technology is used in all Amazon's distribution centres worldwide.
An earlier article in the Telegraph explained how Amazon UK is expected to recruit around 10,000 temporary staff this Christmas, with the best-performing staff being asked to become permanent employees as new distribution centres are opened.
It's always worth following the news releases of the CEOs of major businesses to see what they are up to and what they are saying. I spotted this press release from the office of Philip Clarke, the (relatively new) CEO of Tesco in which he outlines his observations on the role of the CEO in fostering innovation in a large, complex business. The press release is actually a transcript of a speech given at the recent FT conference on innovation in business.read more...»
When you get a Dominos Pizza delivered you're very much dealing with a local provider. Hopefully it arrives within 30 minutes, piping hot and you are happy. What you don't really see with that delivery is the incredibly complex, data-driven IT systems that Dominos provides to its franchisees around the globe.read more...»
I like the short animation animation below by the team at dunhumby. Dun who? dunnhumby is a United Kingdom-based Retail media group, best known for being key to the creation of Tesco Clubcard. Currently a subsidiary of Tesco, the company employs approximately 2000 people in 30 countries. dunhumby runs a 40-terabyte database, selling information to companies including Procter & Gamble, Coca-Cola about consumer preferences. If you are reading this blog entry, it is highly likely that you are in that database somewhere!
The video describes how the use of Big Data analytics can potentially help businesses personalised the products and services offered. To be able to do that, a business needs to have insights into yout behaviour and preferences. Insights are created from the analysis of data - a great example of Big Data in action.read more...»
Angus Thirwell the co-founder and CEO of Hotel Chocolat is immensely grateful to Joanne Harris and Juliet Binoche. respectively the author and star of the hit film Hotel Chocolat. The movie educated a generation of aspirational chocolate lovers in how to pronounce Hotel Chocolat and has helped millions of consumers in Britain and around the world advocate the hit chocolate retail brand without committing a pronunication faux-pas! I wonder how many satisfied customers realise that Hotel Chocolat does not exist? Perhaps they have typed the name into Trip Advisor hoping for a review of a retreat flowing with rather wonderful chocolate made from a St Lucian plantation?
Twenty years ago the Co-op had a share of the grocery market similar to Tesco’s. Then Tesco took off and left it behind. This isn’t so much a blog on the rise of Tesco, but picks up on a few ideas about where the Co-op may have gone wrong, and some indications that the co-operative ‘movement’ is fighting back.read more...»
Retailer Argos has announced a 5 year "transformational plan" which is ideal case study material for A2 business students and I would suggest is essential reading for students taking more specialist units in retailing.read more...»
Comet has joined the likes of JJB Sports, Clinton Cards, Blacks Leisure and Peacocks in the roll-call of large, well-known but failed retailer chains. This one is big - with the potential loss of over 6,000 jobs depending on what emerges from the mess.
Surely this was inevitable. Comet, the struggling electrical retailer, was close to failing earlier in 2012 when it was rescued by a venture capitalist for just £2 (+ debts). However, a proposition based purely on selling at lowest price was unlikely to succeed for Comet against the likes of Amazon, Tesco and others with a much stronger online capability and a much stronger customer base. Comet's failure (it has been put into administration) leaves just Dixons Group as the last remaining specialist electrical retailer - a case of last man standing?
The timing is a little unusual. Electrical retailers usually make a large proportion of their most profitable sales in the 6-8 week run up to Christmas. So the losses must have been pretty horrendous for OpCapita to decide the best option was administration.
The Comet case study makes excellent research material for business studies lessons and there is no shortage of good analysis of the timeline of Comet's demise in the usual sources. Here is a selection:
I'm not quite sure where to start with this one. Some quite extraordinary claims/allegations being made about the leadership style of the CEO of Abercrombie & Fitch and the culture of that business. You can read about them here in the article in the Independent.read more...»
This is more than just a question of business location. It’s well established that John Lewis think very carefully about their target market segment when deciding where to locate department stores or Waitrose outlets. Recent reports claim that the retailer is now ‘thinking small’ to beat the recession, with compact stores in smaller prosperous towns.read more...»