Jaguar goes for NPD investment with £5bn plan
A terrific example of investment in new product development in the news - which links into many other core business studies topics too.
read more...»Tesco’s overseas strategy: next steps
You may have already taken an interest in Tesco’s strategy in the US and an article has come up in The Guardian in which it describes Tesco looking to overseas markets in order to make a ‘change of gear’.
read more...»Economic environment: Exchange Rates
Broad sterling effective exchange rate index Jan 2005=100, monthly from Timetric
No AS/A2 Business answer with an overseas dimension is complete without mentioning exchange rate change. Here’s a brief guide, and some accompanying links and issues.
read more...»CSR and Business Legislation - The Bribery Act comes to town
From the first of July, businesses will have another piece of legislation to deal with when the Bribery Act comes into law. This was proposed and passed in 2010 just before the election last May, and in the last year the government have been determining the precise way in which it should be put into practice. There are good reasons for it, to establish the country’s position as a global leader in the fight against business corruption – the UK currently holds a strong position in the World Bank’s rankings of economies for their ease of doing business. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm, and in June 2010 the UK was fourth on this register (behind Singapore, Hong Kong and New Zealand). London was ranked top amongst the Top 50 Cities for Doing Business, and the regulatory environment is a key aspect of this.
read more...»Private firms that grow big!
A big bank holiday hat tip to Mark Duncan for spotting a wonderful BBC article that should be placed immediately into any self-respecting SOW. The article is perfect for explaining some of the benefits of remaining as a private company rather than floating shares on a public stock exchange.
The key message is that being a private company doesn’t necessarily mean being a small firm. The article describes how the private firms featured have gone on to build a substantial presence in key global markets - all without the need to keep external shareholders happy!
However, the article works on many other levels. For example, it provides useful research evidence for students preparing for AQA BUSS4 questions on CSR. Do private firms take their social responsibilities as seriously as they might given that their activities are subject to less public scrutiny than their quoted competitors? The example of US giant Cargill is one to consider - Greenpeace don’t appear to be a fan!
Tesco - The right strategy in the US?
The world’s third biggest retailer, Tesco, has been open for business in the United States since 2007, trading under the brand name ‘Fresh and Easy’.
Tesco’s entrance into the US market was a long time coming, with the company studying US shopping habits for 20 years. The team even sent out researchers to live with 60 American families for two weeks to discover the products they bought and they food they ate.
Tesco is showing faith in the (currently) loss-making chain by announcing a store opening spree in northern California.
read more...»Triumph - A Classic Case of Niche Export Success
Many thanks to Allan Todd for spotting this superb article from the Independent which makes perfect reading for all our AQA BUSS2 & BUSS4 students in particular as they prepare for exams this summer. The article is about the boom in British motorbikes such as the Triumph and Royal Enfield Bullet who’s sales have defied the recession and growth in an ever decreasing market. BUSS2 students will latch on to the niche marketing and product range aspects with BUSS4 pupils being able to analyse the emerging market angle and the globalisation focus that is indicated in the article. A sample essay that Allan will practice with his pupils will be:
To what extent can successful marketing practices that Triumph, and any company that you have studied, defy a global recession or are other factors to be considered?
http://www.independent.co.uk/life-style/motoring/features/triumph-drives-brit-bike-boom-2269173.html
Export or Not? Cheesemaker in a Pickle
A year or so old, but still useful nonetheless. I came across this neat case study whilst reading through our OCR Unit 293 GCSE Business Studies toolkit for 2011, and the article is perfect for that exam!
Shepherds Purse Cheeses is a niche food producer that was set up as a classic diversification strategy by a Yorkshire farm and it has clearly been a success, with the product range of cheese being expanded. The owners face a challenge though. The business has become quite reliant on sales of cheese to the major supermarket retailers and is tempted to expand into the (potentially) more lucrative US market. That poses significant logistical issues for a product with a relatively short shelf-life. Should they go ahead? The business owners explain the potential opportunity and difficulties, before getting some interesting advice from the business advisers reading the case. Excellent evaluative comments that students can learn much from…
Japanese earthquake – business aftershocks
As Japan struggles to get to grips with the scale of the human tragedy and the long term damage to its infrastructure, you may be thinking through some of the more immediate impacts on business.
read more...»Barbie’s expansion problem
The Barbie ‘concept store’ in Shanghai has closed down after just two years. It serves to illustrate how hard it can be to transfer brands and business models internationally.
read more...»Which is bigger – McDonalds or Subway?
The answer to that question depends on how you measure size.
read more...»Sources of finance for an export-led strategy
Many thanks to Mike Slark for suggesting this useful resource which links two important topics for A2 business students - growth into international markets, and financing a more complex business. The article in the Telegraph explains how the Government has launched a series of finance and insurance products to help small business exporters grow sales overseas. There has been some evidence recently that SMEs in the UK remain reluctant to develop their export revenues and one reason (though not the most important one) is the perceived financial risk of selling to customers overseas. Will these government initiatives prove effective?
As Mike also points out, the government needs to be seen to be doing all it can to support its objective of rebalancing the economy (away from financial services and towards manufacturing). Encouraging more exporting by UK firms has a key role to play in meeting that aim.
What are the secrets of IKEA’s success?
I should think you will have visited the store at least once and will have formed some ideas about the firm’s winning business formula. The business continues to grow rapidly. The Economist has an article discussing this point and identifies several key components of their approach, outlined here.
read more...»British exports - what does the government do to help?
Following on from Jim’s blog on Wednesday about exports (Exporting – no thanks – we’re British, there have been some interesting reports in the last couple of weeks emphasising the ways in which government tries to encourage exports, which could be the source of some investigation work for students around the the theme of The Relationship between Businesses and the Political Environment, and political decisions affecting trade and access to markets.
read more...»Exporting - No Thanks - We’re British
Here’s an interesting stat which students might use in an exam answer on growing a business through international trade. 70% of UK businesses don’t export - and nearly all of those have no intention of trying! The data comes from a survey of 8,000 UK firms reported by the Telegraph. According to the article, most of the firms which have rejected exporting explained that their products and services were unsuitable for consumption overseas, while a fifth were quite happy living off their existing sales (i.e. demand from the domestic market).
The survey indicates that a reluctance to export might also be a cultural issue for the Brits. That suggests an inertia that is harder to change. With the government trying (and needing) to encourage an export-led economic recovery, the survey findings must be disappointing news.
Business Strategy: next steps for the budget airline industry
It’s amazing to think how over just 15 years, Europe’s budget airlines have soared to account for a third of all air travel in the region. But their growth is slowing. Here are a few ideas and a link to an article which outlines some of the approaches the industry might take in the years ahead.
read more...»Corporate Social Responsibility priority? Increase profits…
This of course was the view most famously expressed by one of the 20th century’s most important economists, Milton Friedman. A battle has since raged between those like Friedman who think that “the social responsibility of business is to increase its profits” and other groups taking a wider view, including many top firms (and the UK parliament in 2006 who passed the Companies Act).
read more...»Burberry bounce back from a damaged brand
Fashion is one of the UK’s premier exports: according to a recent article in The Economist newly prosperous foreigners will probably want at least a few things that Britain supplies better than most: higher education, financial services, popular culture and fashion: the country boasts influential street stylists and vibrant chain-stores (such as Top Shop), plus some coveted luxury brands, such as Burberry.
Yet a few years ago the Burberry brand looked catastrophically damaged – but it has bounced back with a 27% jump in revenue to £480m for the last quarter of 2010. How has it managed the turnaround?
read more...»More UK product recalls: why?
The number of products recalled in the UK because of faults or health risks reached a new high of 229 product recalls in the 12 months to November 2010. Recalls are made after a health and safety risk or a major design or production flaw has been discovered in a product.
This is clearly bad news for customers, but what does it tell us about the production processes behind the recalled products?
read more...»How to find an export market
The main topic of this story on the BBC website is a new report by the British Chambers of Commerce, which says that while the UK’s service sector is suffering domestically, many manufacturers are enjoying an export-led boom. It gives a great example of clockmakers Smiths of Derby, who were suffering from a lack of domestic demand in the recession for their expertise in renovating and maintaining clocks around the UK from St Paul’s Cathedral to Arsenal’s Emirates stadium.
read more...»What strategy should HMV employ next?
The most recent financial reports on HMV are pretty grim. As The Guardian reports, its like-for-like sales in the music stores fell 13% in the last five weeks of the year and snow explains only a few percentage points of the decline. The problem is basic: HMV has too many shops and too many fierce online competitors.
read more...»Small firms are embracing exporting - but still put off by “red tape”
Growth strategies involving international expansion are widely covered in the existing business studies specifications, albeit the textbooks often assume that international expansion is mainly the preserve of larger businesses. So a new report from the Federation of Small Businesses on export activities in the SME sector provides an encouraging insight into how international markets can benefit small firms.
read more...»Video case study - Harris Tweed prospers through innovation and international expansion
A super little video here from Sky Business News which describes how luxury brand Harris Tweed has enjoyed a significant boost in revenues as a result of product innovation and focusing on growing demand for luxury items from consumers in emerging markets…
read more...»Q&A - Evaluate the benefits and drawbacks of international expansion options
The four main methods of expanding a business into international markets each have their advantages and drawbacks. Some of the key issues are summarised below:
read more...»Business ethics: tax evasion
Here’s another business ethics example to think over. It’s attracted lots of media attention (not all of it justified) in recent weeks. But it’s worth reflecting that on average, over the last few years, there have been 250 annual prosecutions for benefit fraud (which costs about £1bn a year). There have been roughly 50 annual convictions for tax credit fraud (which costs about the same) but there have been precisely 0 convictions for tax evasion using offshore accounts (which costs vastly more than all forms of social security fraud put together).
Do UK firms have an ethical case to answer?
read more...»Schultz on Starbucks Growth Strategy and the China Opportunity
Howard Schultz talks in the video below about how Starbucks has performed strongly during 2010 and about his objectives for Starbucks’ growth in China.
You may remember the launch of Starbucks Via - the brand’s first entry into the instant coffee market. Via has proved a great success, conributing to 15% revenue growth for the firm in the USA and even stronger growth (21%) overseas.
Starbuck is aiming to triple the number of stores in China within the next 5 years - an incredible growth rate, if it can achieve this objective. Schultz admits that growing the brand in China will not be easy (the business has already been trading there for 12 years). Still, it looks like a tremendous opportunity
read more...»Outsourcing and offshoring explained
This four-minute radio interview on BBC R4 provides a terrific explanation of the difference between offshoring and outsourcing - two concepts that students (and some teachers!) sometimes seem confusing. Well worth a listen.
Productivity calculations in the car industry
Car industry watchers will know that Fiat is one of the few car companies who have enjoyed a relatively successful decade. Fiat cars will be back on sale in America for the first time since 1983. Fiat’s return to America is the first visible result of what is intended to be an ever closer union with Chrysler, agreed on last year when the American giant was in bankruptcy (Fiat managed to grab 35% of the business). There’s an interesting article in The Economist, but if you read on you might like to mainly focus on some industry figures on productivity, which I’ve presented as some simple calculations.
read more...»Globalisation and Indian Coffee Houses
India is one of the emerging markets which is being targeted by the multinational coffee chains. But the likes of Starbucks will face intense competition from state-subsidised coffee houses, as this excellent video below demonstrates. Some cracking business studies concepts in there.
From the BBC intro:
The Indian Coffee House in Kolkata has been an institution for more than 50 years. It has been a place where politicians, activists and intellectuals have come to converse over a cup of coffee. But as the number of modern western cafes increases, it is feeling the squeeze of competition.
The foods that make billions
A quick plug for a programme to be shown on BBC2 at 9.00 tonight - The Foods that make Billions. In the first of a 3-part series this is looking at the industry in selling bottled water - a market that didn’t exist until the 1980’s and is now worth billions of pounds a year - yet why do we pay so much for a product that we could get free (or virtually free) from the tap? Why do we pay for water that has been packaged in a plastic bottle made of an oil-derivative - thus combining two of the world’s scarcest resources? How could we justify paying up to £2 for half a litre of a resource which more than a billion people in the world struggle to get enough of to sustain their lives?
According to one commentator in the programme, we are buying choice and freedom, when we buy a bottle of water. The market was opened up thirty years ago by Perrier, with an advertising campaign that created the image of sophisticated, trend-setting, up and coming young business executives - and the campaign raised sales from 12 million bottles in 1980 to over 152 million by 1990. Would it work as well now, in our age of environmentalism, austerity, and fairness? Maybe not - but that is not the point, as now the product is established to the point that, if we worry about the logic of buying plastic-bottled water, we can salve our conscience by choosing a brand that supports clean water projects in the developing world and so feel our consumption is doing some good. A supporting article about this Liquid Gold gives some of the data and facts about the industry, and the programme looks worth watching or recording - if you miss it tonight it is being shown again overnight on Wednesday 24th at 23.20.
