Well, it's back to blogging....Why, because since our first term incumbent assignments, I realized I could use this blog to write freely....while limited to the scope of our Terms here at IE. A sort of journal to reflect. So, in retrospect, our first Term was exciting and intriguing. The catalyst to the rest of the year. Hungry of knowledge we learned a lot, and at an expedited rate. A few weeks into the second term, things have changed however: The workload has increased, reading has gone up, and we now know the system! Fortunately, tomorrow is the start of a nice three week break....To recharge, refresh, and eventually get back to business.
Friday, July 30, 2010
Monday, June 21, 2010
Casa del Libro and the dilemma of the 2 platforms
Ultimately the Casadelibro decision on which platform to adopt would depend on future market conditions. Despite the high maintenance costs and a faulted design, the original UNIX platform was evidently the industry standard. The second platform was cheaper (Microsoft technology and HP servers) in terms of maintenance and development costs. Much of the decision uncertainly could be attributed to the analysts, who did a poor job at projecting market stability.
If the market grows robustly, then it would make sense to stick with the first platform and spend the extra money to redesign. Lucrative market conditions would make maintenance costs endurable. However, if the market becomes bearish, then business would be slow and the parent company Planeta would most probably have to adopt the cheaper platform and minimize expenses. The draw back is that the Microsoft platform would have to be rescaled and redesigned in case the market grows and turns bullish. The question is how much would that cost?
In formulating a decision, I would have to take more information into account. A more accurate market forecast along with an estimated return on investment would be necessary. Consequently, I would evaluate the costs and benefits of both platforms separately, taking into consideration the forgone opportunity cost of the first platform.
Regardless, putting myself in this situation, I would most probably stay with the older UNIX platform. The assumptions are simple: What goes up must come down (and visa versa). Markets never stay bearish or bullish. Going along with that assumption, the website has extreme potential. Having the most complete and up to date database means that the business and website have a lot of room for growth. Going with the Microsoft platform would limit the growth of the website and would eventually incur more rescaling costs and design (once the shopping spree commences). Planeta should address the question: When will markets pick up again, and how much will it cost to fix up the UNIX platform vs. the Microsoft?In any case, the facts remain unchanged, Casa del Libro is the largest supplier of books, and consequently needs a platform that can support this growth-UNIX.
If the market grows robustly, then it would make sense to stick with the first platform and spend the extra money to redesign. Lucrative market conditions would make maintenance costs endurable. However, if the market becomes bearish, then business would be slow and the parent company Planeta would most probably have to adopt the cheaper platform and minimize expenses. The draw back is that the Microsoft platform would have to be rescaled and redesigned in case the market grows and turns bullish. The question is how much would that cost?
In formulating a decision, I would have to take more information into account. A more accurate market forecast along with an estimated return on investment would be necessary. Consequently, I would evaluate the costs and benefits of both platforms separately, taking into consideration the forgone opportunity cost of the first platform.
Regardless, putting myself in this situation, I would most probably stay with the older UNIX platform. The assumptions are simple: What goes up must come down (and visa versa). Markets never stay bearish or bullish. Going along with that assumption, the website has extreme potential. Having the most complete and up to date database means that the business and website have a lot of room for growth. Going with the Microsoft platform would limit the growth of the website and would eventually incur more rescaling costs and design (once the shopping spree commences). Planeta should address the question: When will markets pick up again, and how much will it cost to fix up the UNIX platform vs. the Microsoft?In any case, the facts remain unchanged, Casa del Libro is the largest supplier of books, and consequently needs a platform that can support this growth-UNIX.
TESCO: Loyalty through Tech-Innovation
Ever since Tesco’s establishment their main objective was to reach their customers through Value and Variety. Faced with cost cutting regulation and hurdles (in the 80’s CHECK) the grocery store pushed to see their vision fulfilled. Despite a fierce competitive environment, Tesco’s management focused on volume purchasing and higher market shares through sacrificed profit margins.
The innovation however was introduced with Tesco’s Club Card (a computerized version of the Stamp system they adopted). This is basically when Technology and Tesco forged their alliance. Initially an expensive endeavor, the new system proved to be Tesco’s biggest competitive advantage. Every time a customer made a purchase (above 10 sterling initially, and later amended) they earned redeemable points (good for future store purchases).
The results of the system for Tesco were remarkable. They gained a competitive advantage in customer loyalty. At their height, there were over 20 million card holders (10 million active). Not only where more customers incentivized to shop at Tesco, but they shopped more; increasing their primary and secondary purchases. Tesco’s market share increased to 15%, overtaking Sainsbury as the number one grocery retailer in the country.
Their competitive advantages extended beyond customer loyalty and service. By investing in an NCR Teradata Warehouse, Tesco was able to keep detailed profile data on their 20 million customers enrolled in the card system. This led to other competitive advantages such as finding out customer preferences, sending them personalized mails (subscribed customers 8 million in 1998),discount vouchers, special offers and points.
Focusing on technology as a means to enhance sales, Tesco later took it a step further and introduced their online shopping website (TESCO Direct Service). By 2001 the website had over 750,000 registered customers and was the number one E-Grocer in the England. The website had many online features (such as the Lower Price Check and Club Card Account access) which made the service even more enticing to customers. They took the opportunity to expand in other non-grocery departments such as clothing, banking services (debit cards, ATMS), insurance, furniture, etc. Even though most competitors later followed suit, and had their own rewards system and online shopping website, Tesco always enjoyed the first mover advantage, where it managed to capture its market.
The innovation however was introduced with Tesco’s Club Card (a computerized version of the Stamp system they adopted). This is basically when Technology and Tesco forged their alliance. Initially an expensive endeavor, the new system proved to be Tesco’s biggest competitive advantage. Every time a customer made a purchase (above 10 sterling initially, and later amended) they earned redeemable points (good for future store purchases).
The results of the system for Tesco were remarkable. They gained a competitive advantage in customer loyalty. At their height, there were over 20 million card holders (10 million active). Not only where more customers incentivized to shop at Tesco, but they shopped more; increasing their primary and secondary purchases. Tesco’s market share increased to 15%, overtaking Sainsbury as the number one grocery retailer in the country.
Their competitive advantages extended beyond customer loyalty and service. By investing in an NCR Teradata Warehouse, Tesco was able to keep detailed profile data on their 20 million customers enrolled in the card system. This led to other competitive advantages such as finding out customer preferences, sending them personalized mails (subscribed customers 8 million in 1998),discount vouchers, special offers and points.
Focusing on technology as a means to enhance sales, Tesco later took it a step further and introduced their online shopping website (TESCO Direct Service). By 2001 the website had over 750,000 registered customers and was the number one E-Grocer in the England. The website had many online features (such as the Lower Price Check and Club Card Account access) which made the service even more enticing to customers. They took the opportunity to expand in other non-grocery departments such as clothing, banking services (debit cards, ATMS), insurance, furniture, etc. Even though most competitors later followed suit, and had their own rewards system and online shopping website, Tesco always enjoyed the first mover advantage, where it managed to capture its market.
Friday, June 18, 2010
To Adopt or Adapt an ERP?
In today’s fast changing and competitive business environment many companies have opted to implement an ERP (Enterprise Resource Planning) system. By definition “an ERP is an enterprise-wide information system designed to coordinate all the resources, information, and activities needed to complete business processes ”1 . Basically what the system does is integrate all the accessibility of information (within a company) into one efficient system. The benefits of such a system can be divided into two folds: 1) Core business management software: (Manages the core business functions of an organization) 2) Back-end management software: (Financial Accounting management software, HR & Payroll management software). While the system (depending on its size) is also expensive, companies such as Oracle, Microsoft, and even consultants have highly praised its cost cutting abilities. This can be done through the coordination of information and work automation (basically replacing technology with people).
Not to over simplify, but a lot of the success of an ERP system is in the implementation state. For the sake of this blog however, I would like to address the question at hand; Should companies adapt to ERP’s or visa versa. The first question any corporation must address is whether the ERP is the right solution/choice for their business. The size and timing of the business is also crucial. Many large successful companies (with a lot of cash and a drive for efficiency) usually opt to adopt such a system. The suggestion usually comes from the Chief Information Office. The unresistable benefits to a company make it hard most CEO´s to refuse. If a manager is travelling on business in China and needs to check inventory procurement levels at his USA office, all he needs to do is login and have the data at hand. Information that typically would of taken 24 hours to retain (time difference, etc etc.) has suddenly became instant. Thus, if a company is already successful, implementing such a system for convenience and efficiency, then the ERP must adapt to the companies normal business processes.
On the other hand, if the company (large or medium) is not doing well, as exhibited for example by declining revenues, etc. etc. then it’s reasons for implementing an ERP system are different. The management realizes a need for change and implements the ERP system on that basis. In this case, the company needs to re-adjust and must adapt to the ERP system. Choosing the right ERP system for your company is another story, however by picking the right system and properly implementing it, the benefits can be huge.
Tuesday, June 15, 2010
Dell and the Blogosphere
It is no surprise that Dell’s stock price and ranking (as one of the top PC manufacturers) have been declining steeply since early 2005. Losing its top spot to HP, Dell’s major downfall has been its less than acceptable customer service. Jeff Jarvin took advantage of this declining ‘consumer satisfaction’ and launched an unexpected blog attack against Dell. This attack became a campaign as Jeff’s blogs gained momentum through immense support and comments.Was Jeff right or did people just need an excuse to vent their frustration out? What we see here from the blog storm is obviously the power of media, and its ability to casually erode a brands image.
In dealing with this case, in my opinion, most corporations would of reacted in this same manner. Jeff jarvins was neither a premium custom
er nor a media tycoon. As a result he was a blimp on the radar screen, and would never have been flagged by the customer service in a million years. They simply under estimated one bloggers’ ability to reach the media in a prolific way. Paying him off or offering him a job position is NOT an option, as it would only release an eruption of fantastic complaints.
er nor a media tycoon. As a result he was a blimp on the radar screen, and would never have been flagged by the customer service in a million years. They simply under estimated one bloggers’ ability to reach the media in a prolific way. Paying him off or offering him a job position is NOT an option, as it would only release an eruption of fantastic complaints.Having a strong online presence, Dell realized the importance of communication in acquiescing its customers. The ironic thing is had Dell sent Jeff a new laptop the very next day, Jeff would of probably praised Dell in his next blog.
In any case, Dell did eventually change this apathetic approach, and implemented a new communicative strategy. In July of 2006 Dell started its Direct2Dell blog, where Chief blogger Lionel Menchaca quickly assembled a task force to deal with complaining customers and negative publicity. They also launched IdeaStorm.com asking customers to give the company suggestions on what to do. One of the outcomes was the switching of Dell to sell Linux computers.
To conclude, I find the Jeff Jarvins situation fascinating; How he proved the effectiveness in harnessing the blogging power. What I do find a bit riducolous however, was the extremity of his complaint. He got a lemon, and eventually the company Dell reimbursed him. They should of done it sooner, but because of bad customer service and a busy agenda they didn’t. How many PC’s does Dell sell each month-millions. From a finance perspective, the company is obviously still highly valued by investors (PE of above 16X and market cap of roughly USD 25 billion). It is still fascinating how one blogger managed to dent the image of a multi-billion dollar company. The fact is, it was not him alone, he was merely trigger. My advise to Jeff would be to get over it, and stick with Apple.
Tuesday, June 8, 2010
The Facebook Saga
Launched in 2004, Facebook’s Evolution and growth have been remarkable. What started out as a closed networking platform between a bunch of Harvard students has grown into one of the most powerful online social networking tools on the planet. The interesting question is how they got to this point and what the future holds for the social giant.
I joined Facebook about 4 years ago. At the time, my friends and I joined it because it was fun; to organize parties, events, entertain ourselves and post interesting stuff. We realized the power we could harness by using a popular social network to organize and share whatever we wanted. From an analytical point of view this was Facebook at the time.
A friendly user interface made it simple to navigate, find friends, share homework or whatever. What started out as an exclusive network between U.S. schoolers became open to the public through an open source network.
A few years later, as more appealing applications were added, a new group of fans joined the network. Planned or unintentional but Facebook managed to tap this market. The audience was an older crowd: PR executives, bloggers, techies, and social interest groups. These people were typically older (40’s), and they used Facebook to promote their businesses, brands, organize political events, find like minded people, and even lobby. This was a whole new approach to using Facebook. Both group (20’s and 40’s) were also never really aware of the others intentions. The funny thing is that we only became aware of this when we had to make this transition from being a youth to a working professional, and thus used Facebook for different purposes. This market broadening, to me, marks the initial evolution of Facebook; from a fun friend seeking and exchange network to a platform that allows you to move people.
The saga continues however, and only becomes more prolific. Not to sound too dramatic, but it was during this time that many countries (including Iran, Pakistan, Syria, China, Vietnam, and others) realized the potential threat of this dangerous weapon against their precious government. The danger brought about by organized collusion (by the people) had compelled these governments and others to sporadically block the site.
On the lighter side, a third group of people found interest in the social network and joined. Once again, I we have all experience this new phenomenon. When you receive a friend request from your Aunt Cindy (or Uncle!) sends. Wow, I’m sure this has happened to all of us ALOT. Suddenly there is a dilemma, what do you do? Expose your alter ego (which they know nothing about), or have them question you at every single lunch. It’s a catch 22, basically you’re screwed either way. The good news however, is that this group is the least harmful (in terms of moving the masses of course). They chat, send messages, find old friends, and basically discover the fun and excitement of using the internet.
Having scrambles the first part of my blog (how did Facebook become what it is today), we move on to the next question; Where is Facebook going? The obvious speculative response on everyone’s mind is that they will probably go for an IPO. According to Mark Zuckerberg however, this is not part of their business strategy. They prefer to keep the business private, and have resisted many offers to sell. Their only equity offering was a meager 1.6% to Microsoft in preferred shares, basically eliminating any possible of voting rights. In exchange Microsoft was granted exclusive banner ads on Facebook.
In term of their financial standing and future outlook, Facebook needs to re-examine their revenue streams. While the company has finally reported a net profit (an upside from their continuous streak of losses), their future financial stability is still looking bleak. Banner ads, referral marketing, and casual gaming advertisements are certainly not going to cut it. Their business model needs to be revised, and they know it. The trick is innovative marketing (what Google did with Adwords), and they still haven’t found it yet.
Another speculative alternative would be for Facebook to monetize on its source crowding abilities. This suggestion however is predictably risky (diminishing consumer confidence, privacy issues, etc.) and would have to be done in an extremely innovative and discrete way. A recent article I stumbled upon mentioned a Facebooks Data Team, which is constantly collecting information on users and monetizing this information through graphs, charts, demographics, etc. Not to bring in too much conspiracy theory, but based on an internet marketing research company (Comscore.com), they estimate that Facebook collects as much data from users as Google and Microsoft. In anycase, it’s not too far fetched, with appox. 400 million users and a privacy policy that is becoming more permissive, the Social Giant has certainly captured its market, and looking forward to make use of it.
I joined Facebook about 4 years ago. At the time, my friends and I joined it because it was fun; to organize parties, events, entertain ourselves and post interesting stuff. We realized the power we could harness by using a popular social network to organize and share whatever we wanted. From an analytical point of view this was Facebook at the time.
A friendly user interface made it simple to navigate, find friends, share homework or whatever. What started out as an exclusive network between U.S. schoolers became open to the public through an open source network.
A few years later, as more appealing applications were added, a new group of fans joined the network. Planned or unintentional but Facebook managed to tap this market. The audience was an older crowd: PR executives, bloggers, techies, and social interest groups. These people were typically older (40’s), and they used Facebook to promote their businesses, brands, organize political events, find like minded people, and even lobby. This was a whole new approach to using Facebook. Both group (20’s and 40’s) were also never really aware of the others intentions. The funny thing is that we only became aware of this when we had to make this transition from being a youth to a working professional, and thus used Facebook for different purposes. This market broadening, to me, marks the initial evolution of Facebook; from a fun friend seeking and exchange network to a platform that allows you to move people.
The saga continues however, and only becomes more prolific. Not to sound too dramatic, but it was during this time that many countries (including Iran, Pakistan, Syria, China, Vietnam, and others) realized the potential threat of this dangerous weapon against their precious government. The danger brought about by organized collusion (by the people) had compelled these governments and others to sporadically block the site.
On the lighter side, a third group of people found interest in the social network and joined. Once again, I we have all experience this new phenomenon. When you receive a friend request from your Aunt Cindy (or Uncle!) sends. Wow, I’m sure this has happened to all of us ALOT. Suddenly there is a dilemma, what do you do? Expose your alter ego (which they know nothing about), or have them question you at every single lunch. It’s a catch 22, basically you’re screwed either way. The good news however, is that this group is the least harmful (in terms of moving the masses of course). They chat, send messages, find old friends, and basically discover the fun and excitement of using the internet.
Having scrambles the first part of my blog (how did Facebook become what it is today), we move on to the next question; Where is Facebook going? The obvious speculative response on everyone’s mind is that they will probably go for an IPO. According to Mark Zuckerberg however, this is not part of their business strategy. They prefer to keep the business private, and have resisted many offers to sell. Their only equity offering was a meager 1.6% to Microsoft in preferred shares, basically eliminating any possible of voting rights. In exchange Microsoft was granted exclusive banner ads on Facebook.
In term of their financial standing and future outlook, Facebook needs to re-examine their revenue streams. While the company has finally reported a net profit (an upside from their continuous streak of losses), their future financial stability is still looking bleak. Banner ads, referral marketing, and casual gaming advertisements are certainly not going to cut it. Their business model needs to be revised, and they know it. The trick is innovative marketing (what Google did with Adwords), and they still haven’t found it yet.
Another speculative alternative would be for Facebook to monetize on its source crowding abilities. This suggestion however is predictably risky (diminishing consumer confidence, privacy issues, etc.) and would have to be done in an extremely innovative and discrete way. A recent article I stumbled upon mentioned a Facebooks Data Team, which is constantly collecting information on users and monetizing this information through graphs, charts, demographics, etc. Not to bring in too much conspiracy theory, but based on an internet marketing research company (Comscore.com), they estimate that Facebook collects as much data from users as Google and Microsoft. In anycase, it’s not too far fetched, with appox. 400 million users and a privacy policy that is becoming more permissive, the Social Giant has certainly captured its market, and looking forward to make use of it.
Monday, May 31, 2010
Simple, But Complicated
Google Inc, the company which effectively owns Google is considered today a growing empire among its peers. The company which started out as a search engine has branched beyond the realm of a software engine and has exploited the depths of the industry. What I find most interesting about Google is the way it presents itself; a beacon of Simplicity. The paradox however is in the complexity of the company, and its compounded strategic expansions.
Below take up three issues which have "bloggled" me.
The first fascinating topic on our agenda is the Google Adwords scheme. Untill late 2005 Google was almost functioning as non-profit enterprise, that is until they knocked off the Adwords scheme. A very simple by effective advertising revenue generating machine, Adwords auctions off essentially prime real estate space on it's site. By allocating space for paying (click per cost) customers they have revolutionized the business model for search engines and started a market trend among its competitors. Today advertising accounts for 99% of Google’s profits. My only bone to pick with Google’s Adwords system is that it seems as though (at times) it might be benefiting Google more than the paying customers. Working in the tourism sector for a few years, my experience with Adwords as a marketing tool revealed that while it drove traffic to our website, it was more profitable for Google corporation, and did not really improve our bottom line profits. Perhaps just our companys' website or the services offered, but overall our conclusion was that it worked better for multimillion dollar companies with a multimillion dollar advertising budget.
Regardless, Google is praised for its creativity and online innovation; A leader in its industry. The question however, which I would like to present as the second topic of this blog is whether Googles' transition from a search engine to a conglomerate of IT services is the ideal strategy. In my opinion this expansion marks the innovation and stamina within the company that many others lack. The alternative would be another Microsoft, simply living off it's proceeds and it's previous victories.
Regardless, Google is praised for its creativity and online innovation; A leader in its industry. The question however, which I would like to present as the second topic of this blog is whether Googles' transition from a search engine to a conglomerate of IT services is the ideal strategy. In my opinion this expansion marks the innovation and stamina within the company that many others lack. The alternative would be another Microsoft, simply living off it's proceeds and it's previous victories.
Currently, Googles projects include a new upcoming operating system, tons of free software applications, development of an open protocol system (voice communication), the Android phone, and even the development of a Google Office. Wow, are they streching themselves too thin.
The 3rd Issue I would like to draw your attention too is the one that stirs up the most controversy; The privacy rights issue. While Google has so far been labeled as a fairly net neutral company, its magnitude as a net force is almost intrusive. Maybe not for the time being, but their source crowding ability is immense. Just imagine if they every decided to make use of this information for any reason. A recent flaw with Google Buzz made almost everyone’s address and private information public overnight. Not to be too far fetched, but Google in essence be a greater assest to the United States governement than the CIA. Just consider gmail and the number of subscribers which have voluntarily given out their private information. For the time being however, Google is our major source Seeker Of Information (whether ours or others). For the time being however, one thing is for certain, Googling is always our priority.
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