Grubhub Grabs Profit by the Seams

GrubHub and Seamless have now merged into one company. Last year alone they collectively earned over $870 Million dollars in profit. GrubHub has Chicago origins while Seamless started in New York.  Mike Evans the co-founder of GrubHub and the newly combined companies COO said, “I’m excited about the expanded restaurant network that our diners will be able to use.”

The merge initially has many benefits, but over time there are very important executive decisions to make in order to optimize all dimensions of a quality service. One benefit is that combined they will operate in over 500 cities in the United States. They also decided to keep all 650 full-time employees. The former CEO of GrubHub Matt Maloney will remain CEO while the former CEO of Seamless Jonathan Zabusky will be president.  Both former companies have merged with much smaller organizations in the past. For example in 2011 GrubHub bought Dotmenu which gave them an extra 250,000 menu listings at different restaurants around the nation.

The company still has many decisions to make. One decision the company has yet to make is the name of the new brand. Perception is reality, and they should take very careful consideration of how to name the new brand. They have been heavy competitors in cities like Chicago for many years, and they have both built their own brands into what they are today. GrubHub did have more profit, and therefore it would be advantageous to keep that name over Seamless. Changing the name entirely is also an option. Since there whole process is derived from online use it is unlikely they will create a new name. For example if a family uses GrubHub or Seamless on a nightly basis, they will likely have the URL memorized or saved in their favorites. This means the new company needs to be very transparent and loud with their changes in order to retain the brand loyal consumers from both companies.  I have one recommendation if they decide to change the name of the company, and that is to buy a new website with the company name. Then link both former websites to the new website which on the surface seems like it would satisfice all the consumers. From there the new company needs to internally improve their servicing process.

After the merged company has chosen a conforming brand they should also merge the processes to optimize reliability. They can assume they will have a large impact in the market for online food ordering because separately they held large portions of the market share. It is likely that both former organizations had their own unique processes, but one standardized process would be most financially beneficial.

Do you think the new company should change their name? Or should they use GrubHub or Seamless as the new company name? Do you think they should standardize their processing systems? Overall do you think this merge is beneficial to the owners?

 Sources:

http://www.chicagotribune.com/business/breaking/chi-grubhub-seamless-20130520,0,4610644.story

Winner! Winner! Chicken Dinner!

starbucks_vs_mcdonaldsCorporate America is full of big successful companies who reward their investors nicely and have a winning management strategy. There are two companies that are consistently making progress, growing, and paying dividends. They go by the name of McDonald’s and Starbucks. Both of these companies success could be attributed to their management strategy.

As of late one of their management focuses is to keep their push on international expansion. Both companies have a great global presence and China remains a strong point for them. Starbucks recently opened 500 new stores in China, bringing the total to 1500 in the country. McDonald’s is currently working on diversifying their menus in top countries such as China.

Hiring great leadership and accountability are also two strategies that are strong in both companies. Starbucks company founder Howard Schultz continues to come up with innovative products to expands the company’s product portfolio. An example of trying to retain top talent and hold managers accountable was in late 2012 when McDonald’s let go of former head of US operations Jan Fields, as the companies earning were disappointing.

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Another strategy that is seen in both companies is the constant flow of product diversification. McDonald’s continues to broaden its product portfolio by offering high quality coffee and healthy drinks. They offer these products in their traditional restaurants and their cafes. Also, Starbucks founder Howard Schultz continues to introduce different products.

Year in and year out, McDonald’s and Starbucks are the most social companies in the world in the restaurant business. Recently it was said that Starbucks lost its position to McDonald’s as the most social company. The main reason was that in late 2012, McDonald’s put up a campaign of what goes down in behind the scenes and it also opened up to any questions from the public. Because of this McDonald’s social reputation and audience has been on the rise ever since.

As we can see, management strategy plays a big role in both of these companies as both them continue to grow and show profit. New product innovation is huge for both of these companies. McDonald’s rolled out the McCafe in order to compete with store like Starbucks and Dunkin Donuts. In my opinion, this was a great success. I have many friends that actually prefer McDonald’s coffee to Starbucks and Dunkin Donuts. The day I found that out, I was in utter shock, as I did not think people would be going to McDonald’s for their morning coffee over companies such as Starbucks and Dunkin, where coffee is their specialty.starbucks

The question that comes into play is do McDonald’s and Starbucks have what it takes to keep up in their industries, continue to introduce a wide range of products, and produce at such a high level? In my opinion, there is no doubt that both of these companies will continue to succeed on the same as they are both industry leaders. What are your thoughts on this subject?

 

Refrences

http://www.forbes.com/sites/panosmourdoukoutas/2013/04/25/starbucks-and-mcdonalds-winning-strategy/

http://www.forbes.com/sites/haydnshaughnessy/2013/02/21/how-mcdonalds-toppled-starbucks-from-the-social-top-spot/

http://www.marketwatch.com/story/4-strategies-for-mcdonalds-management-2012-11-21

 

Amtrak Alert!

AMTRAK LOGOAmtrak service is disrupted due to a different transportation service. Since I have relied on Amtrak for about 4 years now, I would be worried if I lived in the New York/Boston area. While Amtrak is more of a long distance passenger service for commuters, many still rely on the service on a weekly basis. Now, because of a collision between two Metro trains in the New York/Boston area, Amtrak service through out this route is limited for an unknown amount of time. Amtrak offers transportation to areas that many other public transportation does not. Therefore, this collision has created a conflict for Amtrak that is currently out of the company’s control at this time.

Through reading Business Week’s article, “Connecticut Commuter Crash With 700 Passengers Curbs Amtrak (2),” readers are able to see that the reasoning of this crash remains unknown. While the service disruption of train transportation was of course not caused by Amtrak, the demand of their customers may stray beyond the halt of the rail line. Since the investigators of this situation are still deciding the reason for this crash, many customers may be worried that this rail line is an unsafe one to travel on. While Amtrak offers alternate routes, their service alert page mentions that those customers who feel uncomfortable to use the services are available for a refund. Therefore, the lack of demand for Amtrak goes beyond the disruption of their services. Is Amtrak under a threat due to safety of their customers?

Focusing on how the collision affected Amtrak as a company required me to think about the bottleneck in project management situations, as the term was even mentioned in the article! The Metro train accident served as a bottleneck in Amtrak being able to operate between two different locations. As discussed in class, when there is a bottleneck situation, there is a backup in the process of creating a product or continuing a service. In the case of the Metro train collision, Amtrak is currently not able to operate between New York and New Haven. Therefore, not only is the business affected financially, continuous customers of Amtrak are required to reroute their trips and may find a new means of train service. While the situation was out of Amtrak’s control, this bottleneck brings Amtrak’s quantity and efficiency to a lower level. While the train company and its customers have already been greatly affected, the article also mentions that investigations similar to this train accident take several months to come to a close. Do you think Amtrak will be affected until investigation is over? Will customers be hesitant to take this route through Amtrak until investigations are over?

As mentioned earlier, more information on this collision and its affect on Amtrak can be found here.

Best Buy Questions Whether New Management Strategy Can Steer the Company Back on Track

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Best Buy has to rethink it’s management plan because it is losing business. From a sales perspective, it has not been doing as well as it once was, and in this economy, it is really taking a toll on the business. The number one reason for the drop in sales is due to inexperienced sales associates who can not adequately tend to customer’s questions and needs. One retailer analyst, Gary Balter, referred to the franchise as “that blue and gold store where the salesperson usually can’t help you.”  This does not send out a good message to consumers nor help to turn this around. So what is Best Buy going to change in it’s operation strategy? Clearly, what they are doing now is not working.

One possible solution is that the Vice President is trying to turn this around by starting to implement product knowledge education into the company. If the number one reason for lack of sales is the sales people, then that is where the VP should start. By training the employees properly and quizzing them on the products, they can be more helpful to the customers who are asking the questions. Giving incentives for reaching sales goals is another great way to boost sales and invigorate energy out on the sales floor. Scheduling the strongest employees on weekends, when Best Buy stores are at their busiest, is another smart approach that the company has begun to implement.

One problem that Best Buy faces is it’s online competition. Twenty percent of Best Buy’s business comes through online purchases, but it’s competitors have a one-up on them. Running online operations is costly, far higher than other websites because of the high labor costs and long-term leases that come along with the fourteen-hundred existing retail stores. Another issue that pops up with the retail locations is the fact that many of the people that walk in the door are “browsers,” not “buyers.” Many will seek out different products yet resort to purchasing online or not at all, causing some stores to go out of business. There has been no improvement with store closures yet, but with the new strategy implementation taking place, customer satisfaction has gone up a bit recently.

Amongst other problems, staff turnover is higher than ever, historically speaking. The average staff turnover to date is about sixty percent, increasing from thirty five percent in previous years.

It is always a sad thing to see American companies go out of business. Hopefully, the VP’s plan works because as we’ve learned, understanding the marketplace and customers needs, wants, and demands is a crucial element in the success of maintaining a business. Operating costs are a key factor to take into consideration as well. Do you think Best Buy has a chance?

References:

http://online.wsj.com/article/SB10001424127887324743704578444733449436900.html

http://www.google.com/search?hl=en&site=imghp&tbm=isch&source=hp&biw=1440&bih=686&q=best+buy&oq=best+buy&gs_l=img.3..0l10.822.2889.0.3173.8.7.0.1.1.0.148.471.6j1.7.0…0.0…1ac.1.14.img._SW2SohCc8k#imgrc=sCo_DVyj7x89mM%3A%3BJu5F4ITQI9zFAM%3Bhttp%253A%252F%252Fwww.savingadvice.com%252Fimages%252Fblog%252Fbest-buy.png%3Bhttp%253A%252F%252Fwww.savingadvice.com%252Farticles%252F2007%252F06%252F28%252F101581_12-tips-for-getting-the-best-price-at-best-buy.html%3B800%3B551

Automation, Good or Bad?

Many of you have probably heard about a company called Foxconn, they do the manufacturing for various products, such as the Iphone and Xbox. They have been running into a problem recently, and that is achieving profitability for the company. In 2010 there was a huge outbreak of suicides at their Chinese plant, because of horrible working and living conditions.This prompted the company to give employees a raise increase to $325 per month from $195.It also spurred Foxconn to speed up its pursuit of automation. The company’s president, Terry Guo, said in 2010 that it would produce 1 million Foxbots, a mechanical arm researched and developed by Foxconn to perform dull and dangerous jobs. The robots would be implemented from 2012 to 2015 to increase the rate of automation and productivity. Foxconn had hoped that by replacing humans with robots, production would become much cheaper and make the company profitable again. However, they soon learned that automation might not be the answer.

“The transformation from workers’ manual labor to using the robots means the models of production will be changed and the changes are complicated,” said Xu Fang, director of the Center Research Institute at high-tech company SIASUN Robot & Automation Co. Ltd. Since some jobs at Foxconn require workers to use their judgment and even though the tasks appear simple, robots cannot be used to perform them because they lack decision-making ability. Another interesting situation with Foxconn is that they dont design the products that they manufacture, the product is already designed when it is brought to them. As Yang Zhiqiang, editor in chief at automation website gkong.com, said. “After all, Foxconn is a manufacturer for other companies’ original equipment and its clients have already completed the product design, so if a company wants to use robots to make products, at the beginning the company needs to consider the robot design in order to fit the production line.” This whole scenario proves a couple things to me, number one although automation may seem like the route to go in the technology filled world we live in, it may not be the most sensible. The other thing this story showed me was that maybe if managers treated employees with a greater level of respect and compensation for their work, there would be no need for buying the expensive equipment involved with automation. If you employees are not happy, there is no way around it, your company will fail, and it is managements job to make sure this does not happen.

 

Work Cited

Xuena, Li. “Why Foxconn’s Automation Hasn’t Been Smooth.” Market Watch. N.p., 14 May 2013. Web. <http://www.marketwatch.com/story/why-foxconns-automation-hasnt-been-smooth-2013-05-14?pagenumber=2>.

 

Is Caterpillar’s Labor Management Leading To Its Demise?

Recently manufacturing employees at Caterpillar plants in Illinois and across the world suffered significant pay cuts as well as cuts to some of their benefits. Now Caterpillar is experiencing a backlash from its employees. At an Ontario plant, workers were locked out when they refused to accept a 50% pay cut. In response, Caterpillar moved production to Muncie, Indiana where workers were willing to accept the lower wages. In May of last year, Caterpillar threatened to cut health care and other benefits for employees at a plant in Joliet, which resulted in a three month strike. Workers were finally forced to accept the cuts and returned to work. Caterpillar is also currently in a dispute with workers at a Milwaukee plant.

On the contrary, Caterpillar’s earnings would not indicate a need to cut employee wages. The company earned almost $6 billion in profits this year from a record-setting $66 billion in sales. In addition, the average salary of executive at has increased by 56% in the last six years and CEO Doug Oberhelman’s salary has risen by sixty percent since 2011. He made $22 million last year. His rationale behind Caterpillar’s hard line on labor is that they have a need to stay competitive. He says the only reason executive salaries rose so greatly is because people in these positions are going to find other work if they don’t receive a competitive wage. Whether such a steep increase is justified depends on who you ask. At the same time, he believes he has no reason to raise employee wages when he can just easily open a plant in a Southern state, where workers would gladly accept lower wages. He also contends that workers these days are less skilled and thus don’t deserve more money.

Oberhelman has received opposition on both of these points. Opponents argue that the only reason workers seem less skilled is because too much is demanded from them for too little pay. They also say that manufacturing employees at nearby rivals Cat and Komatsu plants are paid $3-$4 more per hour for the same work. However, people in these positions have much less mobility because there are a lot less manufacturing jobs today.

Caterpillar needs to resolve this issue with its employees before serious damage is done. Their reputation is on the line, which could ultimately affect their bottom line. Constant conflict with its employees could result in reduced productivity and quality from them. I believe they should just pay their employees wages that are comparable to nearby competitors. If the company is profitable and executives are experiencing pay bumps, shouldn’t lower-level employees experience them too? Who do you think is right or wrong in this situation? Do you think Caterpillar’s ongoing conflict with its employees is going to hurt the company in the long run?

http://www.businessweek.com/articles/2013-05-16/caterpillars-doug-oberhelman-manufacturings-mouthpiece#p4

 

Rugby to the NFL

The NFL hopes to capitalize on New England’s strong Irish roots when it partners with Premier Rugby League to bring the London Irish to Gillette Stadium this summer. (image via S&B Media)

 

 

The NFL is hands down the most popular sport in the United States. From lucrative media contracts and billionaire dollar stadiums, the NFL is also one of the most professional and forward thinking businesses in the U.S. With that being said, as of recent the NFL has teamed up with the Premier Rugby League to create a professional rugby league here in the U.S. Accordingly, scheduling has already been made to have an exhibition game played at the New England Patriots stadium, which will be televised on the NFL Network in August.

 

Not surprisingly, rugby ranks as one of the top sports in the entire world. Seemingly crushing American football in a popularity contest. Consequently, with the heightened growth of the sport in the United States, mainly at the collegiate level, NFL management saw this as an opportunity to capitalize on the market share and potential media assets. For many, this partnership did not come as a shock because in 1970 NFL owners invested in a soccer league, which eventually grew into what is now Major League Soccer (MLS). Essentially, the MLS investment gave birth to the idea of creating this rugby league.

 

What’s even more intriguing about this is the NFL’s plan to use the empty professional stadiums not utilized during the offseason. More or less exploiting already NFL owned properties to pursue the growth of a professional league. While the NFL is by and large a mogul in the marketing department, this would be a crucial time for not only them, but management as well. The issue lies at two decisive parts, which could affect the new founded partnership. First off, management would have to ensure that the quality of play is legitimate for fans to watch. Secondly, they would have to garner television contracts with the likes of FOX and NBC so common people could watch. That being said, getting those contracts won’t be especially hard due to the NFL’s popular track record. However, by just showing rugby on the premium NFL Network channel management may lose potential fans.

 

All of the above issues can be resolved with carefully strategy planning. However, if proper steps to grow the sport are not taken than the NFL with ultimately lose the partnership and potentially the cost to its own market share. Surely then the question arises at wondering whether or not this is a step in the right direction for the NFL and Rugby. Should management have pursued this partnership instead of investing the time and money on developing a larger worldwide audience for the NFL? What other issues can you see with this partnership? In due time we will all find out if this panned out well for the NFL and rugby.

 

 

 

Source:

http://www.forbes.com/sites/jasonbelzer/2013/05/17/nfl-plays-offensive-with-move-into-rugby/

 

 

 

 

 

 

 

 

 

 

 

“Bring the Taxes On!” An early Christmas or Nightmare?

Conline-shopping(1)urrently, online sellers are only required by law to collect tax on the states they have a physical presence in. Online only businesses are not required to charge sales tax and consumers who don’t pay sales tax on purchases they make online are supposed to pay that tax to their state. But, that rarely happens. Only 1% of consumers actually follow that law and the rest get away with it.

Consumers enjoy the concept of buying online to avoid tax and this may be coming to an end soon if the bill for internet sales tax law is passed.  Some say, that the bill passing will be an early Christmas for Retailers that have a physical presence.  In a survey taken by an advisory firm (Alix Partners),  30% of online shoppers said they would stop shopping online and shop more at retail stores that have a physical location if all online business started taxing.  The other half of the people surveyed said the sales tax would not affect their online shopping habits. Management for retailers need to figure out the pros and cons of the sales tax online.  Some will be affected while others will not be.

Companies like Amazon were against the online sales tax bill passing at first. After years of opposition, Amazon also is supporting the bill because they are already collecting sales tax in nine of the states where it has warehouses.  While Amazon is supporting the bill now, many other online retailers are opposing the bill saying that it would hurt their business and it would be an administrative nightmare because they would have to manage to determine tax rates for different states and locations at checkout. EBay another large online retailer like Amazon, has a slightly different opinion on the tax law.  John Donahoe, the CEO of EBay  says that if congress does pass the online sales legislation, small businesses with less than 50 employees or less than $10 million in annual out of state sales should be exempt from the sales tax law nationwide.  EBay is not completely opposing the legislation, but they are saying that it should have some exemptions to it.  Americans for Tax Reform, an anti-tax group also strongly opposed the bill as well as other online retailers.

The law would only apply to online sellers that have at least $1 million in sales and do not have a physical store or warehouse.  If the bill is passes it is estimated that more than $12 billion in additional sales taxes will be collected from online purchases each year. The only concern of the bill passing is its affect on online businesses. This could be a possible nightmare for them and really hurt their business. The bill has the full support of retailers including Best Buy, Target, Wal-Mart, and Barnes and Noble because they already are required to charge tax online because they have physical presence in most states.

What could be possible techniques for online business to keep running despite them charging online tax?  Do you think that retailers with physical presence will benefit from this bill passing?

http://www.cnbc.com/id/100716012

http://money.cnn.com/2013/05/05/news/internet-sales-tax/index.html

New Technology in the Workplace

 

http://www.memetics.com/business-computer-monitoring/

 

How satisfied would you be if you compared the time you spend being productive on the computer to the time you spend distracted on the Internet or other computer programs? Auto-analytics is new technology that allows individuals to track daily activities and collect data. The technology can be especially beneficial if used in the workplace. After analyzing and collecting data, the employee can use it to improve his or her performance at work. This technology ranges from computer software and smartphone applications to wearable gadgets. The information gained from this technology gives employees insight on the factors that affect their productivity at work.

Auto-analytics are being used more frequently in the workplace. For example, a software called RescueTime can measure how much time you spend on a window on your computer and how long you are idle. The collection of data is then transformed into charts, so that you can readily see your productivity. The software also allows you to set alerts to help you stay on task. An employee, a programmer, believed chatting online was distracting him during work. The employee looked at how much time he spent chatting online during certain times and then looked at how much coding he wrote during that period. He found that the more he chatted online, the more coding he wrote. Chatting with colleagues actually increased his productivity, which he may not have known without using this technology.

Another program is called Luminosity, an online system that has games employees can play during their free time at work. The games can improve memory, thinking speed, and improve problem solving. Employees can play games that focus on specific skills or abilities that they believe need improvement.

Wave2 is a tool that monitors your pulse. Employees can use this to see what situations cause anxiety and increase their heart rate. The program can also recommend ways of reducing stress and anxiety, such as breathing exercises that can reduce heart rate during stressful situations.

Although these programs can be beneficial in a work setting, as mentioned by Wilson, “many workers might be reluctant to track what they do if they think the company might get access to the information, or use it against them.” Management can emphasize that the software often has privacy controls. Employees may also be more likely to use the new programs if they understand that it is intended for personal use and may not be monitored by the company.

Companies can increase job performance if employees track their own activities at work. Because of this, management should encourage the use of the programs, so that employees can willingly experiment with the program and improve their performance. Demanding the use of tracking may discourage employees and seem invasive. Ideally, management encouraging the use of the software would cause a desire in the employees to measure and improve their individual performance.

Would you be willing to track your activities using these new programs? Do you think many employees would be reluctant to try it? Do you think these programs will significantly improve job performance?

 

Source: Employees, Measure Yourselves

Increasing Profitability by increasing worker autonomy

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A big question that managers and employees alike are always asking is “how can we be more profitable?” Researchers have begun to examine that same question. Specifically, they are investigation the impact of increased inventory levels on productivity. Productivity is directly related to profitability For the purpose of this study, productivity is defined as the number of work units successfully processes in a given period of time. It has historically been assumed that the average processing time per unit is solely driven by the task requirements when the type of units and a given production system remain the same. Therefore, the average processing time per unit should be constant across multiple units of the same type.

However, recent studies have revealed that the average processing times are more directly related to worker autonomy. High worker autonomy causes the employees feel empowered to modify the set of work tasks performed on a unit, and the speed with which these tasks are performed. Therefore, if an employee notices that a particular task takes twice as long as another task, the employees can work together and assign two people to the task that takes twice as long to complete. Because the employees are observant of the work they are doing, they are able to avoid system flaws that may cause a bottleneck effect.

Another common error of managers who are not very mindful of the worker autonomy is increasing inventory in a set system without increasing the staff. A mistake such as this could potentially impact productivity by decreasing yield rates while increasing product flaws. If workers feel that their work is being rushed, they are more likely to make mistakes, which will affect the quality of the final product.

If we consider our finger puppet operation that was conducted in class, we will remember that nearly have of the finish products were sub-par quality according to our judges. I believe the sub-par quality of the puppets was a direct result of the pressure our workers received from their manager. Furthermore, our employees did not feel empowered to help their fellow workers when they noticed a built up of inventory.

Had the workers felt empowered to improve they assembly line structure, worker one may have helped worker two with her duties. This would have reduced, or even eliminated the bottleneck conflict. Also, worker one would have been making better use of her time by avoiding sitting idle.

After observing the finger puppet demonstration in class, would you agree that high worker autonomy is a smart practice to follow in all assembly line operations?

Why would a manager a not want to increase worker autonomy?

Are there some operation systems that work better with high worker autonomy?
What are some examples?
Why would these systems be better with high worker autonomy than others?

http://www.hbs.edu/faculty/Publication%20Files/13-052_9f53ef83-7e71-4c84-9531-18c2ba82ebf9.pdf