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Business Location: Entrepreneurs Get Creative with Where to Locate their Businesses
A terrific video here from Jonathan Moules, the Enterprise Editor of the FT, which showcases some creative choices of business location in London.
This would make a great stimulus piece for a lesson on startup business location - what are the attractions of some of the unusual locations featured?
read more...»The problems of overnight success – and how to prepare for growth
I’ve come across a great article and video clip about the problems faced by a company whose business boomed overnight. A nice problem to have, and an interesting problem too!
read more...»Strategy: Kazou Hirai and the Forgone Bonuses
For Sony's CEO Kazou Hirai - a promise is a promise.
Back in April 2012, when Kazou Hirai took over as CEO from Sir Howard Stringer, he pledged to restore Sony's troubled Consumer Electronics division to profitability within one year.
In a significant programme of retrenchment, Sony has shed over 10,000 jobs (about 6% of the workforce), sold off major property assets and substantially cut production at the heavily loss-making Sony Television business (which is a significant part of the Consumer Electronics division). The result is expected to be Sony's first corporate profit for five years when it reports final result for the year to 31 March 2013 in May. However, the Consumer Electronics division remains unprofitable - Sony has not met its objective.
The reaction by Hirai? It is reported that forty of Sony’s top executives, including Hirai, are to give up bonuses worth between 30 and 50 per cent of their pay. The decision will save Sony around $10m, which is not particularly significant in financial terms.
read more...»Strategy: Profiting from the Smartphone Revolution
Consumers around the world are falling in love with mobile devices, notably smartphones and tablets. However, as this excellent short FT video explains, many businesses (including leading brands) are struggling to adapt to the migration of consumers from desktops and laptops to mobile devices.
read more...»BUSS4 - Want Good Analysis? Think How & Why?
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...»Shocker or Cracker? BYOD and find out
Seeking a way to make costs, revenue and profits interesting for my business students and get them digging deep into the reality of cost control, revenue generation I developed the "Shocker or Cracker?" activity.
This requires students to conduct independent research within the classroom using their own electronic devices (laptop, tablet or samrtphone) and helps to generate a healthy sense of competition.
There has been increasing debate about the merits of adopting a Bring Your Own Device (BYOD) policy within schools and colleges so I thought I'd give it a go...
read more...»Strategy: Organic Growth Powers Whitbread’s Success
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...»BUSS4 Revision: Economic Environment for UK Businesses
Here is an updated revision presentation on aspects of the economic environment for UK businesses in the late spring of 2013.
read more...»Return on Capital: a snapshot of British Business
Whenever you are investigating a firm’s accounts – perhaps using ratio analysis – you quickly realise that the answers you’re generating only really make sense when you compare them against something, like last year’s figures, or those of a rival.
My students are looking at a case study (OCR F297) in which a firm is making a return on capital of approximately 11%. We were wondering if that was a ‘good’ return or not. I’ve come across an article that directly answers that question, and raises some other points that offer a revealing insight into the health of Britain’s businesses.
read more...»What does Apple plan to spend $100bn on?
Some interesting finance news here, since Apple don’t plan to spend their famous cash mountain on a conventional purchase. Instead, they plan to raise dividends and buy back their own shares. Why?
read more...»‘Feel free to browse’ … for how much longer?
‘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...»Organisational Culture: The Frugal Billionaire who Founded Ikea
It is often claimed that the organisational culture of a business is formed and developed in the "shadow of the leader". And perhaps nowhere is this more true than the organisational culture of Ikea which was founded by Ingvar Kamprad.
Here is a some evidence which helps explain the concept and also tells us more about the core values that have been used to build the Ikea business.
read more...»Strategy: Ikea Diversifies into Hotels
Let's face it. Nearly all of us associate Ikea with flatpack, affordable furniture. The Ikea brand has become a global success and, as we reported on the business blog recently, the Ikea format is well-positioned to achieve further success in key emerging markets.
However, Ikea's business portfolio is not just about furniture retailing.
In March 2013, Ikea announced that it is to partner with Marriott International to open a chain of three-star hotels. The chosen brand name for this joint venture between Marriott and Ikea is Moxy Hotels.
read more...»Strategy: Ikea’s Global Brand & Local Knowledge Drives Expansion into Emerging Markets
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...»Strategy: Kazou Hirai’s First Year as CEO of Sony
Kazou Hirai took over as CEO of Sony on 1 April 2012 replacing Howard Stringer. Hirai inherited a business with many problems and experiencing heavy losses. What has he done in his first year?
read more...»Starbucks - Up Close and Personal with Howard Schultz
Lots of great information from Schultz here and insights into his business strategy. Many insights too into Schultz's personal background and his views on what it takes to be a successful entrepreneur.
Put simply, this interview has everything! Organisational culture; entrepreneurship; CSR; emerging markets; retrenchment; ethics.
read more...»Strategy: eBay bets on Mobile Payments and PayPal
Another fascinating interview with a tech CEO here. Some great insights into how technological change is providing opportunities for his business.
read more...»Luxury Cars and Emerging Markets = a Winning Product
A simply stunning video here from the FT which is perfect for students wishing to gather some evidence on industries, firms and brands that have thrived despite the prolonged economic downturn in developed economies.
read more...»Nokia: Has Elop Found Himself with a Problem Child and Dog?
Has Nokia got a problem with its product portfolio? The market seems to think so. Nokia's shares down 13% today on news of disappointing sales for the first three months of 2013.
Nokia has enjoyed some recent success with its Lumia smartphone range. However, sales of its traditional more basic feature phones are very weak and facing intense competition in emerging markets against low-cost competitors.
So, Nokia's smartphones are doing well, but Nokia has only a small market share in a fast-growing market. If we were applying this to the Boston Matrix, Nokia's smartphones would probably be considered to be "problem children" or "question marks".
What about Nokia's feature phones. A falling market share (once the market leader) but in a low-growth market. That looks like a "Dog" in the Boston Matrix - or at least on the way to becoming a dog (maybe a puppy?).
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Is Britain running out of workers?
That might seem an odd question to pose on a day when UK unemployment figures rose over 2.5m. Yet many of those people live in the ‘wrong’ place, or have the ‘wrong’ skills (and most, hopefully, will not be unemployed for over 6 months). So here’s a blog post to get you thinking along PEST analysis lines – such as how firms are affected by this economic problem. But there’s another interesting point if you’re thinking about social trends too…
Have you guessed where all these extra workers we need might come from?
read more...»Organisational Culture: The Business of Business is People - Says Herb
Here is one of my all-time favourite video clips for business studies, featuring one of my business heroes - Herb Kelleher.
Herb who?
You might not have heard of Herb Kelleher. However, I highly recommend that you take a little time to find out more about him and the business he founded - Southwest Airlines. It is a fantastic example of a business which has identified organisational culture as a source of sustainable competitive advantage.
Kelleher identified the need for an employee-centered culture at Southwest as the way in which his airline could deliver outstanding customer service. Put simply, Herb believes that the "business of business is people".
In this short, five minute video, Herb explains why putting employees at the centre of Southwest's culture is so important to him.
About a minute into the video, Herb demonstrates a superb example of "analysis" using a logical chain of argument. The argument goes something like this:
...If the employees come first, then they’re happy…. A motivated employee treats the customer well. The customer is happy so they keep coming back, which pleases the shareholders.
A simply stunning video, that stands the test of time.
read more...»Organisational Culture: How Partnership Works at John Lewis Partnership
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...»Revision Quiz - Product Trial and Repeat Purchase
This revision quiz tests knowledge of the role of product trial and gaining repeat purchase. The questions are particularly suitable for GCSE or other Level 2 students.
Launch Revision Quiz on Product Trial and Repeat Purchase
Revision Quiz - Branding & Differentiation
A new revision quiz here with 10 multiple-choice questions on branding and product differentiation, with the questions particularly suitable for GCSE or other Level 2 students.
Launch Revision Quiz on Branding and Product Differentiation
Revision Quiz - Product Life Cycle
This revision quiz has 10 multiple-choice questions on the product life cycle, with the questions particularly suitable for GCSE or other Level 2 students.
Launch Revision Quiz on the Product Life Cycle
Is there a Business Opportunity from Your Digital Afterlife?
What happens when we pop our digital clogs?
I'd like to think that my collection of Tweets and Blogs might be acquired by the British Museum and placed in a special room that you could all visit. My collection of fascinating photos on Facebook are surely destined to become a national treasure - possibly.
Or possibly not.
But what happens to everything you do online once you've passed to a different kind of social network in the cloud?
There are an increasing number of businesses who spot an opportunity here. And now Google has decided that it has the ability to offer services to help people manage their "Digital Afterlife".
read more...»Can Healthy Fast Food be Turned into a Global Success?
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...»An Organisational Culture of Trust - Insights from John Lewis Partnership
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...»Strategy in a time of austerity & poverty - three retailers tell their story
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...»Are supermarket economies of scale beginning to fade?
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...»Shopping: The new tactics to get you spending
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?
The Chinese Suppliers Who Make Discount Retailing Possible in the UK
"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...»Innovation: Google Glass - the Computer Your Wear
Will Google make a success of Google Glass? We're about to find out as more details of Google Glass emerge - including the two videos below.
Google Glass is a wearable computer with a head-mounted display (HMD). Google Glass displays information in a smartphone-like hands-free format that can interact with the Internet via natural language voice commands.
Would you like a pair? If so, why?
read more...»Are Businesses Too Slow to Change?
This is superb stimulus material for any business lesson strategic change and change management. The short animated video reports back on a recent Economist debate about whether businesses are too slow to adapt to change. It features some of our favourite examples and case studies, including Kodak and HMV. Some great quotes and simple, powerful ideas here.
read more...»CSR and Starbucks - Meet their Chief Community Officer
An interesting, though obviously positive perspective here on Starbucks' approach to corporate social responsibility in urban America. CEO Howard Schultz also features - as you might expect.
read more...»Low Contribution & High Fixed Costs - the Problems for Nintendo’s Wii U
A classic example here of how earning a low contribution per unit can lead to big problems for a business if it does not sell high-enough volumes - particularly when fixed costs are high.
Nintendo's new "next-generation" console retails in the key US market for a selling price of $299. However, the (variable) cost of the components used and assembly are pretty close to the selling price, which leaves little if any scope for Nintendo to make a contribution on each console unit sold. Don't forget, it also needs to allow its retail and other distributors to earn a satisfactory margin too.
Of course Nintendo can recoup much of the cost back through lucrative royalty payments from games-developers who are licenced to develop for the new console.
But the big problem for Nintendo would be if the Wii U fails to sell in large quantities. The early indications of consumer demand do not look good...
This excellent short video from CNN takes a look at the variable costs of making the Wii U.
read more...»Is the return of Pot Noodle further evidence of the decline of outsourcing?!
Perhaps we’re all guilty of picking up on ideas or stories that support a particular view that you feel is right. Ever since I began reading about doubts over the benefits of outsourcing and offshoring I’ve seen more stories on the same theme. There was Bob, who had outsourced his own IT job to China. Then came a special report in The Economist that asked some searching and detailed questions too (you can read more here).
And now the definitive proof - the "Nation's Noodle" is coming home. Golden Wonder's pot noodles are currently made in China and shipped 10,000 miles to the UK, but the 191-year-old British company that makes the product has cancelled its Chinese contracts in favour of making its own noodles in Leeds.
read more...»Political Risk: Global location and PEST analysis
Sometimes students get a bit stuck on the politics part of PEST analysis. How are businesses affected by politics? Lots of examples come up on the T2U Business blog. Firstly, politics is the law, and business legislation has a dramatic impact on firms. Then comes a bewildering array of regulations and tax implications. If you think that's complicated, consider the difficulties of making international location decisions. (I was wondering what might have brought BMW to the UK last year).
read more...»WOW examples for BUSS4 - CSR at Unilever
Teachers who remember CSR as the research theme for Section A will remember Unilever's Project Shakhti as one of the key examples for that research. At the current round of tutor2u BUSS4 Revision Workshops, one suggestion for Section B is that students might research Unilever again to get some WOW examples for essays about CSR.
Students may not be familiar with the Unilever name at first, but will soon find that they are very familiar with many of the vast range of brands in the Unilever portfolio. They will also find that a Sustainable Living Plan is a core part of the Unilever culture, and applies to every stage of their supply chain; I know from one of my former students who is currently on an industrial placement with Unilever during his Business degree, that this starts at the heart of the business by establishing processes and habits in their offices and factories which reduce environmental impact, getting all staff to focus on reducing waste and recycling as much as possible.
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The role of Business culture in business turnarounds
This week's edition of The Bottom Line, hosted by Evan Davis on Radio 4, is about business turnarounds. The three guests this week have all been involved in rescuing companies and they share
their experiences, in which the culture of the organisation feature heavily. For those who are picking up on the tutor2u 10 companies to study, it is particularly useful as the first of these is Adam Crozier, Chief Executive of ITV
(and former CEO of Royal Mail). Different scale is offered by James Eden, Chief Executive and owner of
clothing brand Private White VC, and Nick Sanders, Head of Portfolio at
private equity firm Better Capital. Well worth getting students to listen and to write some compare-and-contrast notes.
Growth strategy - Tesco’s “Related-diversification” into Family Restaurants
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...»Researching the Royal Mail - A Great Case Study in Change Management
Royal Mail is fast becoming a must-cover case study for advanced business students. Royal Mail is now well into a significant transformation programme under the leadership of CEO Moya Green. The business is preparing for and approaching privatisation and faces intense competition in the profitable parcels business.
So I thought I'd dig out a few links which might help students get started with exploring the Royal Mail case study.
read more...»Will Toyota’s I-Road Change How we Travel?
A fascinating example here of product innovation which the world's largest car manufacturer hopes might revolutionise the way we travel (well, short journeys at least).
Toyota's new I-Road concept car was revealed last week. The video below shows it in action. What do you think? Might it take-off?
The three-wheeled i-Road is targeted at urban commuters and has a maximum range of 30 miles. It can be fully charged in just three hours using a domestic socket - which sounds a fully-charged I-Road lasts about as long as my fully-charged i-Phone!
If we all start using the I-Road (or the inevitably similar models that will appear from competitors if demand rises strongly), then one benefit might be less congestion on our roads. Toyota claims that four i-Roads can fit in a single parking bay.
The i-Road features a stability system called 'Active Lean', which allows the i-Road to lean into corners like a motorbike. Driver and passenger are completely enclosed so don't have to wear helmets. The i-Road's turning circle is just three metres. I'm not sure how much luggage the I-Road can carry: probably not a lot!
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Some great insights into how technology is transforming the high street
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...»Culture and Strategy: A Selection of Company Vision and Values
The stated mission, vision and values of a business should (in theory) provide a key insight into the strategy and culture of a business. Of course, it's not always the case that stated vision & values are consistent with the way a company does business (think...Enron). However, for many successful businesses there is a clear and sustained link between the two.
Set out below are a selection of web links that provide insights directly from the featured businesses into their vision, values and culture.
You'll recognise many of these from our BUSS4 Section A Revision Toolkit and we've also used some of these companies in our Exam Coaching Days for BUSS4 students.
read more...»John Lewis staff celebrate bonus of nine weeks’ pay
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...»The importance of ICT and electronic banking services
Many AS Business candidates are asked about this question, and perhaps one of the most helpful ways of looking at this topic is seeing what happens when things go wrong. The latest headache was a short disruption only this week at RBS, and is covered by the BBC and The Guardian.
read more...»Bureaucracy
Bureaucracy. It’s a pretty unloved word these days (not least because it’s quite tricky to spell). It suggests red tape, barriers to action, paperwork, process, and lethargic responses to change, with petty jobsworths hindering progress. It’s anti-innovation, it’s a means of state control, it’s a Kafka-esque, rule-based system ignorant of common sense. We talk of companies that have become too slow and have a deeply entrenched bureaucratic or role culture, and need slimming down to become more responsive to the market. We’re told it’s a bad thing.
Or is it?
read more...»Sony sells iconic office block as part of turnaround strategy
Sony has sold part of its heritage and culture as part of Kazou Hirai's dramatic turnaround strategy with the sale and leaseback of one of its main buildings in Tokyo for 111.1 billion yen (£794m)
According to Sony's official press release regarding the property sale:
"Sony is transforming its business portfolio and reorganizing its assets in an effort to strengthen its corporate structure. This sale was conducted as a part of this reorganization."
This isn't the first time that Sony has opted for the use of sale and leaseback as a way of raising finance. in January 2013 Sony raised $1.1bn from the sale and leaseback of its corporate headquarters in New York.
The asset sales are designed to generate cash and repay Sony's high debts, which in turn are part of a major restructuring programme introduced by Hirai. He came into the job in Spring 2012 stating that "Sony must change: Sony will change".
Would you pay $10,000 for a smartphone?
A great example here of premium-pricing in action. Most of us have to stretch our budget to afford around £500 for a high-end smartphone. So a price tag of $10,000 for a Vertu smartphone is well out of reach for the vast majority of potential users.
So what goes into such a premium product and which operating system does it use?
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