1 MGT 301 – Autumn 2014

Would you like some “Free” with that?

Posted on by jolan30131f14

freeburger

This just might be a possible question asked by a McDonald’s employee in the imminent future. Currently, the only reward you get for eating at McDonald’s is: well, the food itself. McDonald’s does not have a rewards card to attract customers to stop by because of additional points or freebees. Though, it sure can use one.

The traffic in McDonald’s in on a steep decline. Frankly, their forecast also suggests a continuing future decline. We have previously discussed in class the need to identify the reason for having a negative trend and making adequate changes and adjustments to avoid declining sales. This is exactly what McDonald’s is doing. They are reconsidering their strategy and trying to come up with a way to retain their clients, meanwhile attract more clients who can make up for the decline over the recent years.

To create this new traffic, McDonald’s designed what you can almost call a new product, a loyalty card, which it is planning to introduce in the upcoming days. Other food chains such as Panera, Subway, and Starbucks already have some form of a loyalty card, and they all have seen a greater rate of return after its introduction. People love when they get a good deal: a purchase made on sale or just a freebee. Therefore, people are choosing places that reward them for their loyalty with rewards-only deals, or accumulation of points which eventually leads to some discount. This also helps keep customers loyal.

The three major fast food chains: McDonald’s, Burger King and Wendy’s have yet to come up with a loyalty card. Being the first to introduce one can definitely be a competitive advantage for McDonald’s. This can help them further differentiate themselves from the other two.

In addition, McDonald’s market consists of people who are relatively small spenders, which is what brings them to McDonald’s, a food chain with fairly low prices. Introducing a loyalty card that can save them even more money or get them a better deal will definitely be something these types of customers are interested in. Another amazing benefit of a loyalty card is that companies can track client’s purchases. They can then use this information to customize their marketing with coupons and sales that are specific to your interests. Therefore, this is an ideal solution for the decreasing sales at McDonald’s. The loyalty card will keep clients from going to the other places, which do not reward them for coming in.

Although many companies focus on improving their processes through efficiency and cost cutting, without sales, there is no need for production at all. McDonald’s is currently in need of increased sales and traffic. And although investing in the design and creation of a loyalty card can be quite costly, I believe it will definitely pay off with increased sales and loyal customers.

 

Do you think the loyalty card will keep their clients loyal? increase traffic? increase sales?

What is your experience with loyalty cards?

 

http://consumerist.com/2013/10/01/mcdonalds-testing-rewards-program-for-customers-using-mobile-devices/

http://www.businessweek.com/articles/2014-11-03/mcdonalds-and-other-fast-food-chains-step-up-battle-for-loyal-customers-with-rewards

The Dark Side of Groupon

Posted on by sylvia30133f14

Everyone loves a great deal, whether it’s for a casual restaurant or luxurious spa. If you’ve been living under a rock, Groupon is a convenient online site that finds these steals for consumers without clipping coupons. It claims to help struggling local businesses gain new customers and sales, but merchants in the service industry must beware that Groupon may potentially hurt their business instead of improving it. The online site looks out for the consumer’s best interest and not the business.

Local businesses look to Groupon as an alternative to traditional advertisements. Groupon will draw in merchants by creating a promotional deal up to 50 percent off in which they promise sales increase and new clients. According to Huffington Post writer, Amy Lee, “one merchant proclaimed that signing up for Groupon was the “single worst business decision” she had made. Her story echoes other merchants who have claimed that Groupons result in unprofitability, administrative nightmares, and, to cap it all off, that they don’t result in new regular customers.” Groupon makes it hard for merchants to profit from these low deals. In some instances, businesses in the service industry end up losing money.

I’ve had the experience of working with Groupon at my current salon job. The company has been struggling so they thought it would bring great opportunity to gain new customers and increase sales of monthly memberships. I believe bringing Groupon into the company had the opposite effect. I’ve found that most of these customers already existed in our system and only handfuls were new. In addition, clients who seek bargains will wait around for the next deal to pop up on Groupon. I kept seeing the same, reoccurring customer purchase one Groupon deal after another. They would never sign up for memberships after their deal was used or expired as the company anticipated. After we would stop running the deals, majority of our clients would discontinue using our services and search for better deals elsewhere. In this case, I believe Groupon did not work in our favor and devalued our company even more than developing it further.

Sources:
http://www.bu.edu/today/2011/groupon-bad-for-business/
http://www.huffingtonpost.com/2011/06/10/groupon-merchants_n_874896.html
http://www.pdco.com/node/88470

More Money or More Free Time?

Posted on by michal30131f14

Which would you rather have: More flexibility at work or a higher salary? This is the opening line of the article, but a very critical question regarding our lives in the working world.  According to the survey by Citigroup and LinkedIn, 64% of people are more likely to get more flexibility at work than a pay raise. This seems fairly reasonable, but once the raise hits 20%, the people that want more flexibility decreases to about 47% and finally a 30% raise drastically decreases flexibility favorers to 28%. This article demonstrates how managers can create a happier work environment with a little more flexibility.

At my current job, my boss is extremely flexible as long as I am in on Fridays to do our weekly payables. I don’t have my own family to go home to, but my substitution for that is being a student. My boss offers me days off when midterms and finals are around because he understands the importance of school. I’ve seen some people at work needing to attend family issues without causing a negative atmosphere at work. My firm really does a good job in understanding what employees really value, and that could be a really big reason why we are constantly growing every year with a friendly vibe around the office.

However, overall it seems that people do feel that a work-life balance is desirable. This article then transitions to viewing woman and men and their views on a work-life balance. Apparently, more than half of men talk about a work-life balance to other men, while 78% of woman said they never heard a successful man talk about the difficulties with work and home. Both men and women want to have a work-life balance, but it seems that men don’t generally speak about these issues with woman. Perhaps this is some sort of patriarchal agenda men feel they have to uphold. Being in the year 2014, patriarchal mindsets are declining and more and more men are becoming more vocal. Max Schireson quit his job as a CEO from a billion dollar company to spend more time with his family.

I’ve noticed myself talking to both genders about working and being at school. I manage it fairly well, but when it comes to school it always trumps working. It really just depends on the person you are and especially your age. Coming out of school with a degree, I’m positive these young individuals will focus on their career, but as time progresses their views can change.

So this leaves this question: Would you rather have more flexibility or a higher salary? Does your age or gender lead you to choose one over the other?

 

Japan’s Car market conundrum

Posted on by anthony30133f14

In class, we discussed the idea that productivity is a measurement derived from how much outputs are produced over how many inputs are put into the production. Knowing how important production is, I decided to compare the math with the practice of making cars.

An article in the Economist discusses how large Japanese automobile manufacturers such as Nissan, Toyota, and Honda make money by large productivity. The article reports that many car makers believe that a firm must churn out at least 6 million cars in order to make money. This makes sense, as more production eventually becomes cheaper due to economies of scale.

However, the main purpose of the article was examining how market followers, such as Mazda, Mitsubishi, Suzuki, and Subaru are making a profit without the mass production. Being smaller firms, they do not have the means to compete on volume, as is the norm with the market leaders. To further emphasize their desire for independence, many car markers have thumbed their nose at merging with their larger competitors, instead focusing on exporting their cars to the US, and capitalizing on cheap labor from places such as India. So, through a mixture of tax breaks and the focus on improving efficient consumption of oil, smaller car manufacturers have been able to cling to their independence.

However, there are problems on the horizon. It is apparent that many of the large car manufacturers are focusing on new fuel mediums. This is due primarily to the effect oil pollution has on the environment. Pro-environmental pressures are making noise about continued development of oil-powered cars. In addition to these pressures, government officials add further strain by passing stiff taxes on the purchase of oil. It is known that the development of cleaner fuel will result in more jobs, but it also puts the smaller car manufacturers at a disadvantage.

In this market, it can safely be assumed that the market followers should have merged with the leaders. In this case, productivity is, indeed, an important component. In the current situation, these car manufacturers enjoy freedom from the sway of the big three. However, in the long run, the tax breaks and oil efficiency will be phased out, and once more, productivity will be the primary dominant measurement of success.

However, falling oil prices may stave off environmental watchdogs and provide a saving grace for the smaller companies, allowing them time to transition from oil to another fuel source. Also aiding these smaller companies is Japan’s history of supporting failing businesses. But it is uncertain whether or not this will be enough to prop up the smaller companies, as Japan has just exited a deflationary period, resulting in a weakened currency and a more expensive bailout bill .

Given all of this, what do you think that the followers should do to protect their business? Do you think that gas prices will afford enough protection? Will Japan continue their history of bailing out failing companies now that they have weaker currency?

“Lots of Oomph; Japanese Carmakers.” Economist 25 Oct. 2014: 68. Print.

“Replacing Oil: Alternative Fuels and Technology.” Replacing Oil: Alternative Fuels and Technology. Web. 10 Nov. 2014.

NFL Marketing for Redemption: Progress Analysis

Posted on by jack30133f14

In recent media, most people know who Ray Rice and Adrian Peterson are in a negative light, due to domestic abuse. For about a month, the NFL took a lot of fire for how the league was going to respond to the situation. The NFL since then, has taken multiple actions to show that they have remedied the situation and to raise their reputation amongst their female fans. One such action, first was taken by the league front office; in which commissioner Roger Goodell hired 4 advisors all of which are female to handle situations in regards to players and domestic abuse. This was quickly made public to show that the NFL was currently working on a policy .

The next action they took, was through extending the duration of their breast cancer awareness month. Every year, the NFL generally sets aside 2 or 3 weeks to honor breast cancer awareness month, and those women whom are survivors of breast cancer. This year, the NFL put aside a whole month towards breast cancer awareness in light of the the incidents regarding domestic abuse. During this time of the seasons players wear pink accessories to honor breast cancer awareness and this year the NFL teams went all out.

Certain NFL teams went all out in others ways, such as bars, clubs, merchandise stores and beauty clubs specifically for their female fans. On October 5 in Carolina was the debut of their style lounge for their female fans and they were open to using the service. Other teams that have such lounges located in their stadiums are the New England Patriots, Washington Redskins, Baltimore Ravens and Atlanta Falcons. By making this action, this showed that the NFL was really looking to tailor to their female fan’s for forgiveness of their players actions.

One way I saw the NFL contribute to this marketing scheme this past weekend was the commercial “NFL Player’s Say No More“. What the commercial is ultimately saying is to take action against domestic abuse, and if someone says something help them remedy it or point them in a direction to remedying it. Having the players as the main subject tells the public that they understand public incidents are unacceptable and that with the prestige of playing a professional sport comes your life being under the public eye.

As a result of all of these marketing schemes the results show that it has paid off. According to a random poll two-thirds of female fans and three-fourths of male fans were not affected by the incidents surrounding the NFL. However, most fans are not confident in their behavioral change policy.

Do you think the actions the NFL has taken has redeemed their reputation amongst female fans? What is your opinion on the actions of the NFL? Would there be anything different that you would do?

 

 

 

Sources:

http://www.sportsbusinessdaily.com/Journal/Issues/2014/10/13/In-Depth/NFL-marketing.aspx

http://www.sportsbusinessdaily.com/Journal/Issues/2014/09/22/Leagues-and-Governing-Bodies/NFL.aspx

 

Olympus Has Fallen

Posted on by francisco30131f14

I am currently taking a photography class at school to fulfill the “Arts and Literature” requirement.  On the first day, we were told that we could use any camera that we wanted to use to take pictures for class, as long as it wasn’t the camera from our phones. When I got home later that day, I started looking around my house to see if I could find the almost seemingly ancient relic that is the Digital Camera.

I kept looking around my house and never actually found one so I decided to hop on EBay and order one for myself. I decided to order an Olympus Camera for two reasons.

 1.) I vaguely remember that it was the brand of the most recent family camera that we owned (ages ago).

2.)On EBay, the Olympus brand had much lower prices than its competitor’s (like Sony, Canon, Nikon). I actually ended up buying the camera for $2.50(It was a 16MP camera, it worked, and the model is below).

Olympus 16MP Digital Camera
Olympus 16MP Digital Camera

During my search, I began to notice a constant theme, which was that a simple “Digital Camera” search on EBay resulted in the majority of cameras being sold were of the Olympus brand. This intrigued me and I decided to do some more research on the company.

With the rise of camera phones, the only companies that have a firm grasp on the camera market are Nikon, Canon, and Sony (likely because of their vast resources, brand names, continued innovation, and they can sustain losses better than smaller companies).  With the rise of camera phones, this is no longer a market that can sustain a “cheaper” alternative camera company. Olympus has less than a 7% market share and has failed to generate a profit from its digital camera segment in the past three years.  In terms of digital cameras, the three corporate camera giants has seemingly been able to produce small profits/get by with losses in the digital camera segment because of their brand name and also because their huge profits from their optical premium lens cameras allow them too.  Olympus’ decline has caught management off-guard, so much that their actual sales were less than 2/3 their forecasted sales in their most current year.

Olympus’ biggest advantage was that they once had many patents revolving around having “light-weight” cameras and were held in very high regard in the market in the 2000s. This advantage has quickly disappeared with camera phones also being “light-weight” cameras. A current great advantage is that one of their premium optical lens cameras, the OM-DE-M10 Company Camera  (not a digital camera) is regarded as a great, cheaper alternative to the pricier Nikon, Sony, and Canon cameras.

Olympus OM-DE-M10 Company Camera
Olympus OM-DE-M10 Company Camera

Their greatest current disadvantage is that they do not have the deep pockets that the huge corporate giant camera companies have. This is important because these companies continue to reinvest and spark innovation, something Olympus has seemingly failed to keep up with.  

 According to 24/7 Wall Street, who releases a speculative report annually that lists companies that are most likely to disappear during the year, listed Olympus as their 6th company most likely to be gone in 2014.

 There is no doubt that the company is in the decline stage. The EBay search alludes to an over capacity in the market. Their cameras also do not have a high product differentiation like the huge camera companies.

 Would you agree that they are in the decline stage? What advice would you offer Olympus so that they can prevent disappearing by the end of this year? Do you own a digital camera? Why or why not? What impact have camera phones had on the digital camera market? Knowing that even the huge corporate camera giants have problems sustaining profits in the digital camera market, what advice would you give to them?

Sources:

http://247wallst.com/special-report/2013/05/23/ten-brands-that-will-disappear-in-2014/3/

http://www.ukessays.com/essays/marketing/decline-stage-of-the-product-life-cycle-marketing-essay.php

 

 

 

 

 

 

Trader Joe’s: Customer magnet?

Posted on by shahzaib30131f14

I always try my best to shop smartly when going to grocery stores. I try to pick up the cheapest brands and with good quality. While in college who would not want to save an extra buck? All the stores near DePaul are super expensive. At first it was Dominick’s and now its time for Whole Foods to run its monopoly. When I was living on campus, there was one place where I always use to get my groceries from, even if that meant walking an extra mile. And that place WAS ‘Trader Joes’. And here are the reasons why.

 

Many people criticize Trader Joe for its lack of variety but I feel that having a smaller store and fewer choices keeps consumers happy and also saves their time. Have you ever been to Target and seen the 40 different types of Jam and kept wondering which one should you go for? Well not at Trader’s joe.

 

Trader Joe pays its employees well or you can say well above the minimum wage level if you work for them for a longer period of time. Moreover, according to a report “TJ’s contributes 15.4% of employee’s salary to tax-deferred retirement accounts.”There is no questions as to why their employees are so happy and willing to help. Unlike, Walmart which not only pays its workers a minimum wage but also treats them poorly. There have been so many misconduct cases at Walmart which have made headlines all over the US.

 

TJ is not like any other departmental store. It aims to keeps its customers happy and meet their ever growing demand therefore it tries to open up locations by paying close attention to demographics like education, transport system available, nearby shopping stores etc.

In addition to this, TJ like keeping its food line simple also keeps its distribution simple. It buys directly from the manufacture cutting the cost and fees of the middlemen and therefore gives back to the community in terms of lower cost of the products. It also sells fresh produces on per unit basis rather than weight to simplify the checkout process.

According to Forbes article “TJ non-conventional culturally-tailored approach and attitude is one that is deeply embedded in the roots of their business model:  from their packaging, product selection, store layout and graphics, to their vendors, employees and management.  The Trader Joe’s brand is diversity on steroids.”

Do you agree that the TJ differentiates itself from its competitors only on the basis of cost or their are other factors that come to play?

Should customer satisfaction be a priority for any grocery/departmental stores or should they only focus on minimizing their cost ?

 

Work cited

http://www.cbsnews.com/news/10-secrets-to-trader-joes-success/

http://archive.fortune.com/2010/08/20/news/companies/inside_trader_joes_full_version.fortune/index.htm

 

http://archive.fortune.com/2010/08/20/news/companies/inside_trader_joes_full_version.fortune/index.html

 

Bad managing means no future managing

Posted on by florentino30133f14

In the summer of 2013, a group of friends and I experienced a horrible restaurant experience that will never leave our minds. After a long day of playing football with my friends on a Saturday, hunger struck us all. None of us had a certain craving s we drove around until we found something that seemed suitable. After about twenty minutes we found a nice looking restaurant in the Burbank area. When pulling up into the parking lot it seemed quite empty for a Saturday, but that didn’t stop us from trying to feed out hunger. We went in a got seated next to man on the phone that did not stop shouting at whoever was on the other end of the line. We waited about twelve minutes before a server attended us, a little weird at the moment because only about 25 percent of the restaurant was filled including us; we placed our orders and began talking about the rest of the plan for the day. I looked at my phone and 20 minutes passed without receiving anything, not even our drinks! At this point everyone was getting upset about the service and talked to our waiter about what’s taking so long. He mentioned they’re trying as best as they could and our food will be ready in no more than five minutes. Ten minutes have passed and that was the final straw, I got up to talked to our waiter and asked if we can cancel our order because service was just horrible. At that moment the man sitting next to us got up mentioned he was the manager and asked what was the problem? I could not believe that this guy was the manager; he was literally sitting next to us this whole time on his phone and not even bothered to make the service better. Anyways we discussed our problem with him and how the service was horrible, he just said “oh, well thanks for coming”, we left the restaurant angry that time was wasted and our stomachs still empty. So we went to our usual restaurant were the service is very much appreciated. What makes the restaurant so great is quick service and the manager often walks around and greets customers, creating a happy environment. The restaurant that had horrible service is no longer open for business, while our usual restaurant still gets packed every weekend. Being a manager that makes sure everyone is doing what they are supposed to being doing makes the business run better, being manager with no concerns means no future.
Do you think managers that have no concern about the customers, will have a successful future?

Six Sigma vs. Sports

Posted on by brenna30131f14
yudarvishpitches
(Click Image for Pitch)
Yu Darvish has nearly perfected his pitch delivery by treating each pitch as a process, evident by the same release point for each pitch.

We commonly associate Six Sigma and the DMAIC approach with improving the processes of manufacturing or certain service companies, but what about more unconventional industries? Professional Sports leagues are some of the largest businesses, yet they are hardly mentioned in regards to Six Sigma. Is it possible that athletes and coaches alike can use this quality management approach to improve their performances? Tennis star Steven Falk wrote “Six Sigma Tennis” where he explains how coaches and players can reach their maximum potential.  Falk analyzes a tennis player to find areas that can be improved using DMAIC. After the improvements, the player has minimized his unforced errors; thereby reaching his highest ability. Falk focuses on individual sports like tennis, where it is easy to identify success and failure based on points won or loss. However, the mainstream sports in America like football, basketball, etc. present a harder situation to use Six Sigma.

penspowerplay
(Click Image for Play)
The Pittsburgh Penguins have created the best power play in the NHL by treating each play as a process, reaching a high level of efficiency.

Focusing on hockey as an example, new statistical measures are being introduced to the game every season like Corsi and Fenwick now measuring puck possession.  At the core of each new stat introduced is a desire to improve a team’s performance. So why can’t Six Sigma be used along with Corsi or Fenwick for improvement?  Since Six Sigma results in 3.4 defects per million operations, essentially  a forward could expect to miss only 3.4 shots for every million he shoots. A goalie could expect to save all but 3.4 of a million shots he faces. Unfortunately, these two scenarios cannot coexist—exemplifying the issue with Six Sigma in sports.

While reaching the Six Sigma level of efficiency is nearly impossible in sports, DMAIC can still be applied to improve the process. Taking the hockey power play as an example—a time when the offense should be able to capitalize on its advantage—coaches can take each play as an individual process. First, they will define the weakness in the play, perhaps the lack of shots being taken. Then, experts can measure the amount of shots during the power play, and analyze it by comparing league averages and past results. Players improve the process by increasing the amount of shots taken, and control it by maintaining that shot level throughout the season.

Sports certainly can be subject to DMAIC application, but do they need to be? The most entertaining moments in sports and the traits that make them so appealing often center on the anticipation of what will happen next. With Six Sigma and DMAIC, there is less unknown. Every golf shot should be a hole in one, and every batter should hit a home run each pitch.  Gone would be the underdog victories or crazy upsets. Would near-perfect athletes be as entertaining? Even the Sidney Crosby and Tom Brady’s of the sports world make mistakes or bad plays. Perfect athletes throughout the leagues would be too predictable.

Do you think implementing this type of process control would change sports?

Should players and coaches actually take the time to improve their processes or is it dependent on the sport?

Sources: http://www.qimacros.com/lean-six-sigma-articles/six-sigma-sports/

http://www.siliconbeachtraining.co.uk/blog/six-sigma-sport-training

Avis takes a page from the airlines.

Posted on by andy30123f14

avis

For years the airlines have been perfecting the art of filling seats using algorithms and now Avis, the car rental company is doing the same. The car rental business has been a murky one and company’s have resorted to discounting their services to appeal to customers. Avis saw this as an opportunity to increase profits by improving upon their pricing tools. Now Avis has its own software, referred to as the “demand fleet pricing tool,” adjusting rental prices based on local data, past pricing, and other factors in 110 major markets. Airlines have been using similar technology to maximize revenue on air flights based on types of fares offered on that specific flight.

 

Top car rental companies Enterprise and Hertz have been less aggressive on their price increases. Nelson told analysts on a conference call. The pricing tool “accelerates and streamlines the decision-making process well beyond the capability of manual action.” Translation: Software is far more adept at extracting higher rental rates than humans, just like in the airline industry. According to a revenue airline manager under anonymity conditions says,”Each airline has a complex computer system based on algorithms that can maximize the profit on each flight based on the types of fares offered on that specific flight.” Airlines know that the system can use all available data to maximize profit. Information that cannot be predicted or computed by the algorithm requires the hand of a revenue airline manager, which is in charge of going into the system to adjust for events at certain destinations or weather conditions.

 

Avis saw a record breaking quarter this summer and forecasts predict to have a record breaking year. The more dynamic pricing for Avis is responsible for a 3 percent increase in prices which has generated 2.5 billion last quarter. Avis says each 1 percent increase in price represents $33 million to the company. Avis realizes that car rentals are part of travel expenses and is taking advantage by adjusting their pricing based on what is going on in the travel sector. Similarly to airlines that adjust seat prices based on the market, for example the a ticket price to Brazil in summer 2013 was not the same as summer 2014 when Brazil hosted the World Cup, Avis is using a similar approach.avisthailand.com

 

The increase in price for a car rental is hardly noticeable in the traveler’s overall trip expenses, less than a $2 increase in a typical four day trip. The ability to charge more for cars in North America, including for rentals made as part of corporate contracts, plays the largest role in Avis Budget’s improved financial performance. Avis is not revolutionizing anything, they did not reinvent the wheel all they did was improve on the systems in place and incorporate a new pricing tool, one that the airline industry has used for decades.

 

Can you think of other industries that can use this pricing tool? Have you used car rental services and was the price reasonable? Do you think this is a good idea to charge more for the same services? Do you think the increased profits will continue? Why or why not?

 

 

http://www.businessweek.com/articles/2014-10-30/avis-prices-rental-cars-like-airline-seats-and-youre-paying-more

http://www.foxnews.com/travel/2011/12/08/confessions-airline-revenue-manager/