Monday, May 19, 2008

Cheers to a Successful Simulation!

When our professor mentioned the simulation portion of our project in the beginning of the spring semester, I thought to myself, “Great… how will my group and I ever survive this…” Well, fast forward 3 months later, my group came in 2nd place, with an A- ! Miracle? No… Luck? No… Great strategic plan? Yes!

In the beginning of our simulation, the goal of our company was to build up its facilities and infrastructure so it will be able to produce at a higher capacity at lower costs than the competition. We also planned on expanding into product 2 before everyone else did. Lastly, we wanted to reward our shareholders with a dividend on their stock shares. We envisioned our main stakeholder groups for our company consisting of the shareholders, employees, suppliers, and the customers of our firm. To us, shareholders wanted the maximum return on their investments; we provided them with our company that was able to post solid profits quarter after quarter resulting in higher stock prices and shareholder satisfaction.

External Analysis:

· In order to conduct an external analysis, Porter’s 5 Forces can be used to see if the dinnerware industry is attractive or not.

Ø Threat of New Entrants: Low, because the amount of capital takes to start a manufacturing company is relatively high. Also, human capital such as knowledge/ skills is required to manufacture these products.

Ø Bargaining Power of Suppliers: Medium-High because although raw materials are easy to obtain from new sources, it would be a strain on the firm if suddenly a supplier increases their price dramatically without any prior notice.

Ø Bargaining power of customers: High, because since there are many similar firms producing similar goods, we needed to establish ourselves by having the best available quality by having very low return rates.

Ø Threat of Substitutes: Medium-high because there is intense competition from overseas firms that have extremely low labor costs and overhead costs.

Ø Rivalry Among Existing Competitors: High because every quarter, firms look to undercut each other in terms of pricing on their goods to ensure that their customers would continue business with them rather than with the competition.

Although, there is a lot of room for growth and continuous profit, it is not attractive to enter. There is only room for a handful of firms because it is a difficult industry to compete in due to the intense competition within the firms, but also due to the customers having so much bargaining power.

· There were some changes in the macro-environment of the industry that had a negative impact on our company. During some quarters, the economic index was not favorable in resulted in much lower than expected profits. Also, during the peak seasons, we saw our revenues increase many times over. We also saw our competitors have similar sales trends during those seasons.

Internal Analysis:

· The competitive advantage that our company had was that we had the most knowledgeable salespeople which allowed us to have higher revenues. We also were able to price our products at a moderate price for our customers but still maintain some profits at the end. In order to do this, our team had to analyze what the pricing trends for the upcoming quarters would be like. We had to decide whether we had to undercut our competition or price our products similar to every other firm in the market. Our strategies that we used helped build on our competencies because our sales people were always paid well. As a result, they stayed within our firm and helped us expand greatly whereas we saw many of our competitors had sales people leaving their jobs. This showed that our company not only produced the best quality products, but we also had the superior sales force to reinforce that idea. However, in trying to do so come barriers as well. We had to make sure that the existing sales people are happy and making money and that there is enough money in our budget to hire and train new salespeople to adequately sell effective and efficiently. Our company did not only experience happy times, but difficulties (pertaining to adapting to changing industry conditions) as well. At one point, our company decided to under price the market and as a result, we had a very high amount of backorders. Another result was that we lost out on a lot of profits by selling products at a much cheaper rate than the going rate.

Business & Corporate- Level Strategy:

· ­Our company made sure to have a strategy of having a high percentage of customer satisfaction by offering top quality products at very reasonable prices. We made sure that our employees were satisfied and our shareholders were even happier with the performance of our firm.

Performance Assessment:

· Due to our very insightful corporate strategy, our company benefited tremendously in the market. We were able to beat out firms in revenues and profits as well as in stock price at the end of the simulation. We would not make any changes due to the fact we were doing extremely well in the market. We only need to continue doing what was working well for the company and if some reason the environment changes, we will make sure we will be the first to respond to the business environment by implementing new strategies.

Sunday, May 4, 2008

It's Sad to See Some Go...


During one summer night when I was walking on Bowery Street in lower Manhattan, I realized that the man walking right in front of me was Mike Myers! (Austin Powers, Dr. Evil, Fat B*stard, and among other characters) I quickly opened my purse, grabbed my digital camera and snapped a couple of paparazzi shots of him… well actually of his back. Living in the city, everyday is a possibility of running into celebrities, encountering once in a life time moments or just capturing priceless memories. Digital cameras have certainly made our lives much easier. In this era, companies are continuously improving their products and services to meet the technological demands of consumers. However, certain companies are not catching up …

“Shake it, shake it like a Polaroid Picture, shake it, shake it” – Outkast, “Hey Yall”

Polaroid is a company well known for manufacturing instant cameras that print out “Polaroid” shots right after you capture a picture. It was introduced in 1948 and became the first instant camera and film to the public. Polaroid became such a household name that it became part of the American culture (shaking the “Polaroid”). Although it had such a big influence in the photography industry, Polaroid was unable to keep up with the evolving technology. One of the symptoms that indicated they were experiencing a strategic problem is:

They are slow to introduce new products-

In this fast paced world, Polaroid needs to change and be in sync with their consumers. Socio-cultural changes have revolutionized the way people take pictures. Consumers are no longer lugging around cameras that run on film, but rather using digital cameras. As digital technology replaced instant photographs, their market for instant photographs was lost. Although Polaroid entered the digital camera industry around 2001, they are considered late entrants into this market. While other companies such as Canon were re-inventing their company by changing their strategic plan to move along with changing consumer demands, Polaroid were implementing poor management strategies.

Another symptom...
They have outmoded, depreciated technology and experienced debt-

According to an article in The Boston Globe, in February 2008, Polaroid shut down 2 of their remaining film manufacturing facilities in Massachusetts. Their instant photography products made them successful in the years after World War II. However, in the 1980’s the company was in debt to prevent a hostile takeover from another company. Rather than investing their financial and human capital in the digital camera market, they were wasting their money on products that failed. Because they were late entrants into the digital technology, they did not have the right manufacturing facilities to accommodate for the production of digital cameras. As a result, they were forced to close their instant film manufacturing facilities that made them successful. In 2001, Polaroid was forced to declare bankruptcy. In 2005, Petters Group Worldwide of Minnetonka bought Polaroid’s remaining assets. With the shut down of their two big facilities, 150 employees were laid off and they relocated 150 executive and administrative employees to their headquarters. By doing this, they hope to shift their focus from outdated print photography to more modern day technology such as digital camera printers, digital cameras, etc.

These symptoms have caused major strategic problems for Polaroid. This is pretty sad because they are considered a part of the American culture with their instant Polaroids. I also remember having a Polaroid i-Zone pocket film camera 9 years ago (boy, time flies by fast). It worked like a Polaroid camera, but the photos were stickers when you printed it out! How cool was that? (Well, at least back then it was cool) The bad thing about it was that the film was extremely expensive, around $20 for a pack of 10 sticker films. It is sad to see Polaroid struggling, some things are inevitable, but they should have implemented a better strategic plan in the beginning.

Thursday, April 10, 2008

Let's Be #1 ... and keep it that way!



STORY #1:

This Christmas, I received a Tiffany’s lock charm sterling silver bracelet from the Return to Tiffany collection. Speaking from a girl’s point of view, I guess it is important to have a piece of Tiffany jewelry sometime in a girl’s life. Tiffany & Co. is most known for their sterling silver collection (yes, that charm bracelet with the heart that every girl has) and for that aqua colored box. When you receive a gift in an aqua colored box, you immediately know it’s from Tiffany’s. Tiffany & Co. was established in 1837 by Charles Lewis Tiffany and John B. Young. This makes the company 171 years old! This alone shows that Tiffany has competitive advantage that allowed them to be around for so long and also stand out from their competitors.

As I was on Fifth Avenue one Saturday afternoon, I saw a bunch of tourists gathered around Tiffany grasping for air from the sight of the store. I started to wonder, how do these people, who look like they’re from Minnesota (no offense to anyone from there) know about Tiffany’s? How is it that people immediately attribute that aqua colored box to Tiffany’s? What gives Tiffany & Co. such a competitive edge among other jewelry stores?

There are three ways that Tiffany & Co. follows to ensure a competitive advantage over other jewelry stores:

1) “We were here first!”

According to their website, www.tiffany.com, Tiffany became the first company in the United States to use the 925/1000 sterling standard, which was adopted later as the United States Sterling Standard. Since their sterling silver jewelry collection is the most popular among consumers, Tiffany & Co. was the first firm in the United States to use a sterling standard in their jewelry. They were also one of the first companies to market their elite image effectively through the eyes of the consumer (hence why Tiffany is recognized worldwide).

2) “We are unique!”

Through their product/service differentiation, everyone recognizes the aqua colored box. This color symbolizes the company’s reputation as being known for their craftsmanship and quality of their products. Their products itself is marketed effectively where it helps Tiffany & Co. establish a reputation for luxury and fine jewelry. This is why people would pay extra just to have Tiffany & Co. engraved on their jewelry piece. Only Tiffany can charge $200 for a sterling silver bracelet whereas you can practically buy a white gold bracelet for the same price at small local jewelry stores. People are willing to pay money for their products because they perceive Tiffany & Co. jewelry to be better than jewelry from regular stores based on Tiffany’s reputable image.

3) “We have the most market share!”

(Information courtesy of http://www.smu.edu) According to J.P. Morgan analysts Sagra Maceria de Rosen, Brian Tunick and Robert Samuels, the jewelry sector is the largest in the luxury goods industry with sales that total $150 billion a year. A writer of Forbes, Richard Heller says that Tiffany has a 19 percent market share of the $50,000+ jewelry industry. Other competitors in the jewelry industry such as Cartier, has 11% market share while Bulgari has 3.5% market share. Having said this, Tiffany clearly has a strong market position, giving them a competitive advantage/strength in the jewelry sector compared to its competitors.

STORY #2:

Who just doesn’t love shoes?

This brings us to our next company who has secured a competitive advantage in the women’s shoe industry through cost leadership.

A couple of months ago, I was chatting with a friend of mine who happens to be a fellow BPL classmate as well. We were talking about our significant others when I looked down and saw her adorable black leather boots adorned with patent leather on the tip of the shoe and on the heel. I interrupted our conversation and asked, “Where did you buy your boots because they are simply beautiful! I have to have it! She replied, “Nine West.”

Of course, being me, 4 hours later, I was at home searching for the boots online and found it on www.piperlime.com (started by parent company Banana Republic and great site by the way). Within 3 days, my boots arrived in perfect condition and I became a proud mother of my black leather boots.

Nine West Group Inc. is the parent company of Easy Sprit, Bandolino, Enzo Angiolini and Pappagallo. Their most popular brand, Nine West, carries shoes, handbags, accessories and now apparel as well. Their products are carried in their own retail stores, online and in department stores such as Macys.

According to an article in Business Wire titled “Fashion footwear leader Nine West Group selects MicroStrategy’s decision support technology to improve business processes”, “Nine West Group Inc., with 1997 revenues of 1.9 billion, is a leading designer, developer, manufacturer and marketer of women’s fashion footwear and accessories.” Their shoes are moderately priced, where even the most expensive pair of shoes retail for around $200. This is still a lot cheaper compared to high end brands such as Christian Louboutin and Manolo Blahnik where on average, shoes retail for about $700 a pair.

Nine West is able to use a cost leadership strategy to maintain a competitive edge against its competitors. Based on the U.S. Industry Profile of Women’s footwear on answers.com (Business & Finance), “the publicly-held firm quickly attained a place of distinction by sourcing out many of its manufacturing tasks to factories in foreign counters, which enabled Nine West to offer fashionable products at extremely competitive prices.” By reducing their economic costs below competitors through outsourcing production overseas, Nine West was able to develop strong brand recognition from the public, giving them competitive sustainability.


Ladies, with graduation about a month away, it is time to: a) shop for new shoes and b) tell families and friends that your graduation gift is registered at Tiffany!


Monday, March 24, 2008

Cosmetics & Toiletries Industry asks "Am I Attractive or Not?!"


Last Saturday, while strolling in Soho with my mom and sister, we stopped by Sephora to pick up some lip gloss and perfume. For those unaware of what Sephora is, Sephora is one of the fastest growing retail chains best known for carrying makeup, fragrance, hair care, skin care and beauty accessories as well. They have over 750 stores in 21 countries and they launched their online site in 1999, available in 9 countries.

With their marketing offices located right here in New York City, I began to think about how competitive the cosmetics and toiletries industry was. This was where good old Michael Porter’s 5 Forces come in to play. As suggested in the name, there are 5 forces that determine an industry’s attractiveness: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products and rivalry among existing competitors. With the mix of these forces, it can be used to explain why some industries are more profitable (attractive) than others.

In relation to the cosmetics and toiletries industry, Porter’s 5 Forces can be applied in the following ways…

One of the forces that affect an industry’s attractiveness is the threat of new entrants. There are new competitors constantly entering any industry and with that, they also bring the need to gain more market share leading to more intense competition. There are many companies right now that are entering the cosmetics and toiletries industry. Because this is not an industry considered to have high barriers, it is not seen difficult for a new firm to step into the industry, therefore, it makes the threat of new entrants high. In fact, there are so many new makeup and fragrance companies such as Elf makeup, celebrity branded makeup, etc. that have entered the market the last 2 years. In relation to economies of scale, since makeup and perfume are usually produced in large volumes, there is probably low relative cost per unit. As a result, many firms would see this as an advantage to step into the industry. Also, because not much relative capital is needed to become a player in the cosmetics and toiletries industry, it makes it easier for new firms to enter the industry which lead to increased competition. (UNFAVORABLE)

Another force is the bargaining power of buyers which is when the customers of an industry are constantly on the look out for reduced prices, added services (which can affect a firm’s competition) and good/improved product quality. Another way to look at this is if buyers in the cosmetics and toiletries industry fairly loyal to a particular company and if they have the ability to switch around to other brands. This is not applicable in the makeup and toiletries industry because customers do not always stick to one brand of makeup or perfume. This means that buyer power is high. Yes, there are people that only swear by Chanel No. 5 or M.A.C (makeup) products, but the majority of people own a variety of different brands of makeup and perfume. This also allows customers to shop for favorable prices and products. (UNFAVORABLE)

The third force is the bargaining power of suppliers; otherwise, how much influence do suppliers have in this industry? I would believe that suppliers have a little, close to no amount of power in the makeup and toiletries industry. The cost of switching suppliers is not high because there are many makeup companies that manufacture and create their own makeup using minerals and their own ingredients. There are even books that teach you how to make “at-home” makeup. I would assume that the materials needed to create makeup and perfume is not hard to attain at all. (FAVORABLE)

The fourth force is the threat of substitute products which is extremely high in this industry. Let’s use me, for example. When I need new eyeliner, I buy the same brand as the one I previously used 50% of the time. But the other 50% of the time, I browse the selection of eyeliner in Sephora and buy a new brand. I am not speaking for every woman out there, but for me, I like to switch makeup brands around because I get sick of using the same old thing. Substitute products affect the profitability of an industry by limiting the prices a company can charge. So for those who don’t want to spend $25 on a Christian Dior lip gloss, they can opt for an L’Oreal lip gloss with a similar shade at Duane Reade for $4. Perfume is the same too, if you don’t want to spend $60 for Cartier Delices de Cartier, you can spend $25 for a bottle of CK One. Even though these scents don’t smell the same, their function is the same; the purpose is to make you smell good. (UNFAVORABLE)

Finally, the last force is rivalry among existing competitors, which is relatively strong in the cosmetics and toiletries industry. There are a large number of small firms in this industry, where there is no particular dominant firm that exists. Also, as mentioned before, it is easy for the customers to switch from one company’s makeup or perfume to another. Another thing to keep in mind is that in this industry, there is little product differentiation where most makeup is relatively the same and the same applies for perfume, where scents smell similar. (UNFAVORABLE)

So after analyzing the cosmetics and toiletries industry, I realized that 4 out of the five forces are unfavorable while only 1 is favorable. This made me realize that…

THE COSMETICS & TOILETRIES INDUSTRY IS NOT AN ATTRACTIVE INDUSTRY TO ENTER AT THIS TIME

By entering this industry right now, there is little profit that can be made.

Tuesday, March 11, 2008

What is our mission here?

Last week, at our usual girl’s night out dinner, we discussed the usual- boys, school, work, and nonetheless, fashion. In particular, we were talking about hand bags. We were comparing each other's handbags to see the difference in quality, the material, the price, etc. My girlfriends were complaining about their Gucci handbags and how over time, the threads on the G logos were beginning to unravel (P.S. They are authentic bags). I was carrying my Louis Vuitton Damier Duomo, which I had since June of last year. I told them how durable my bag was; it has trekked through the snow, rain and sleet with me and has experienced some beautiful sunny days as well. I told them that I have not encountered a single problem with any products from Louis Vuitton because they are hand crafted with precision and care.

Louis Vuitton is owned by its parent group, LVMH Moët Hennessy, the world’s largest luxury conglomerate. Their mission statement is found on LVMH’s website and it states the following:

The mission of the LVMH group is to represent the most refined qualities of Western ‘Art de Vivre’ around the world. LVMH must continue to be synonymous with both elegance and creativity. Our products, and the cultural values they embody, blend tradition and innovation, and kindle dream and fantasy.”

After reading this mission statement, I said to myself, “Wow, that mission statement pretty much summarizes what comes to my mind when I think of Louis Vuitton.” This made me think about the important role a mission statement played in a company. I then came up with the following on what questions should be answered in a good mission statement:

· What kind of products or services do we offer?

· How will our customers remember us?

· What gives us a competitive edge over our competitors?

· What kind of problems, needs or wants do our products solve for customers?

In the case of LVMH’s mission statement, their mission statement answers these questions. LVMH offers avant garde luxury goods that distinguish itself from other high fashion companies. Through their innovation and creativity, they fulfill the wants and needs of customer that are looking for exquisite luxury goods. In my opinion, Louis Vuitton’s mission statement goes hand in hand with their vision of their company, their products and their customers.

After our long dinner, my girlfriends and I bid our farewells to one another. As I was leaving, I could still hear them in the back complaining about their Gucci handbags. I looked down at my Louis Vuitton handbag, smiled and whisked away with Louis on my arm.

Monday, February 4, 2008

Hello to all !

My first post deserves a little 411 for the audience = ) I was born and raised in New York City; I'm a true New Yorker at heart. I went to elementary, middle, high school and now college in the city and when I find a job after graduation, I hope to continue to stay in New York City. This is currently my last semester as a college student at Baruch College and I am excited yet nervous. Excited that I no longer have to stay up studying for finals, worry about paper deadlines, or stress about scheduling issues with group members on class projects. But on the flip side, nervous, particularly about the job market hunt since New York City is the home of extreme competition. There are college graduates from all over the world flocking to New York City to get a piece of the action. Nonetheless, I am looking forward to such a competitive and challenging experience.


Other than my anxiety about landing my dream marketing job, I am happy and content with my life right now. I have a wonderful family who is loving and supports everything I do, wonderful friends and an internship I enjoy very much at a B2B marketing company. On my free time, I enjoy walking my five year old dog and spending some quality time with friends. I think this wraps up the important points about me, so until then, ciao~