I have read an article a few months back in The Entrepreneur magazine (Nov 2011 titled “Fab forward.” The article focused mainly on how one company called Fabulis changed it’s name to Fab.com and it’s core ideas and went from being in the red to making profit in the very first month.  The author of the article, Jason Daley, then wrote a piece on the steps and how a company can make a change of reinventing itself and going in a different direction to be so successful like Fab.com.

The first step that a management should decide is the timing and knowing when to make a change. The company must prepare itself and know when to make a change in the direction and know why. There are many factors that come into making a change, so you must weigh pros and cons.

The next step the managerial team must make is to decide what exactly it is that they want. Questions you should ask yourself are such as do you want to enter a new market or do you want to become a luxury brand? The team must decide what they want.

Once the company decides which direction to go in, the next and most critical step is TO FOLLOW THE PLAN! You might not be successful during the transition phase, but making a change requires stubbornness and you can’t just abandon ship and decide that it won’t work. There is a lot of time and hours and money that goes into changing, so you don’t want to waste any of it. Just FOLLOW THE PLAN!

Next, once you are in the transition stage, determine when the right time to switch the company’s vision is right and take your time.  Many times, when making a change, the management might be responsible for running two separate businesses. You must have a exit strategy for your original company and follow through with iot. You can’t just wake up and say, “O.K. team, today we are no longer in business of selling shoes. We will sell cars now.”  It takes time to make a switch.

Finally, once everything is in order, the management team must mentor and manage their employed workforce. The mentor ship is the most important as your new company’s direction and products are not the same and require different skills than your previous company’s direction. In the end the process of reinveting your company might be rough, but todo it correctly is just as hard.

Changing the direction of a company in form of reinventing itself takes a lot of time, money, and resources. Follow these steps, and your new company might end up just as profitable and successful as Fab.com!

Groupon just recently went public, as most of us know. However, the management did not just stop there. I have recently read an article in Bloomberg  BusinessWeek how the management has even bigger plans for Groupon. The management has carefully been devising a plan to introduce Groupon and it’s operations to Europe. As a result, they have already found one willing partner in Deutsche Telekom to be able to provide Groupon’s services in Europe. After learning many things about management in class, I believe that Groupon has a quality managerial team which has a quality product and is always being innovative in expanding its’ markets.

Being an effective manager of a huge company such as Groupon takes a lot of skill. I believe to the already success that Groupon ha achieved, their managerial team is capable of expanding their market. The fact that they just recently did an IPO helps even more as the company is a good investment if it ends up being successful in foreign markets. It seems that the managers of Groupon are very well experienced and have a plan. Those kind of managers with such success are very hard to find. It would be nice to work for such managers i.e. ones who know how to lead a company and maintain their goals and vision of a company. Good luck Groupon in Europe!

Here is the link to the info on groupon and Telekom :

http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-201201100500BIZWIRE_USPRX____BW5684-1&params=timestamp||01/10/2012%205:00%20AM%20ET||headline||Telekom%20and%20Groupon%20Form%20Strategic%20Partnership%20to%20Accelerate%20Local%20Commerce%20Offerings%20Across%20Europe||docSource||Business%20Wire||provider||ACQUIREMEDIA&ticker=NFLX:US

Have you ever had a poor experience at a store, restaurant, or your own workplace, where you thought you could do it better?  Did it take too long for you to get your food from McDonald’s?  Maybe the clothes at Macy’s were unorganized? Or maybe you think your boss is incompetent, and you could manage yourself better?  I know I have on countless occasions, and in a sense this is what private equity firms do.  They buy businesses that are under performing or mismanaged, increase profitability, and then turn around and sell them for a steep profit.  In order to determine prospective investments worth, PE firms will forecast companies’ future earnings present value as well as the business’ expected re-sale value.  Before the recent financial crisis, financial engineering was a primary driver behind private equity returns. Now, private equity firms must utilize a wider set of strategies to see similar gains.

Their use of debt to buy businesses and re-sell them had once created massive profits, but as leverage becomes less obtainable (due to the recent financial crisis) – so do their profits.  Firms are not as easily able to quickly turn around and sell investments for “outsized” profits through delevering alone. Firms now are increasingly having to rely on rises in earnings through improved operations to generate similar returns.  As a result, these finance-driven firms are building, expanding, and focusing on in-house operations managers.

This change in focus amongst PE firms reminded me of an example from class, where the most efficient means of increasing our bottom line was reducing COGS by 30%.  An industry fueled by structuring debt and leveraged buyouts has returned to its foundation of improving operations; although, it seems to make perfect sense.  As mentioned in several previous comments and posts, operations management is anything but restricted to manufacturing.  PE firms are some of the most diverse, and with every business they purchase, they hope to generate revenue through better operations.

For some reason the WSJ seemed to look down on this change in the industry, “Today, the buyout business has become downright mundane.”  I happen to feel the exact opposite.  No longer can PE firms simply take advantage of easily available credit to turn a profit.  They have been forced to evolve and focus on improving operations to promote growth and long-term success for their investments.

Operations management is often the cause of success, or failure in any endeavor.  To stay profitable, private equity firms have been forced to return to their roots of business, and focus on operations.  Can you think of any business, or even daily activity that could improve operations using a strategy mentioned in class?

Main article derived from: http://online.wsj.com/article/SB10001424052970204331304577142911094483628.html

 

 

Drop that chocolate-dipped Twinkie and give me ten push ups! In Tokyo, Japan, companies are now regulating and figuring out a way to control their employees’ diets. Japanese lawmakers have set the max waistline size to 33.5 inches, for anyone 40 and older. If these employees fail to meet the waistline requirement, they will undergo mandatory counseling with a physician.

By controlling the food in the cafeteria, companies predict that their healthy 600-calorie count meals will slim down their employees’ waistline during the annual weigh-ins. For every obese employee, the company gets punched with a fine that could rack up to 19 million dollars. The theory of this new law is that the less overweight people you have, the lower the health care costs.

Companies encourage employees to take the stairs in lieu of the elevators. Some stairwell floors even have a wall with measurements to encourage employees to jump. Twice a day, music will begin playing in the office, which signals it’s time to get up and stretch. Looks like the only project these employees will be crashing is their diet!

 

Do you think a system like this would work here in America, where one third of adults are either overweight or obese? Do you think companies can forecast their employees’ diets to avoid the massive fines?

Shopping is essential and apart of our society.  Some shop for the necessities and some for luxury.  Regardless, both women and men especially the youth are constantly the “target market” for major corporations and growing business.  Located in the Western Asia Turkey is well known all over the world for its traditional garments, textile fabrics, jewelry and spices. It is also one of the most peaceful and liberal Muslim countries in the world. It is true that the current democracy in Turkey has been a victim of propagandas and conspiracies attempted to over throw the current government but the country’s thriving force of youth is not letting negative speculations hold them back. They have decided to experience the life at its fullest just like us across the globe in the western world.

The modernization and the liberalism of modern Muslim country have resulted in surprising economic boom. According to the article posted on January 19^th, 2012 on Bloomberg.com, Turkey has shown a 8.2 percent increase in the Gross Domestic Product due to a rise in private consumption. The economic strength proven by recent numbers have gained confidence of several corporations to invest in shopping centers and malls. As a new emerging European economy, Canada Pension Plan Investment Board controlled by Multi Corp has chosen Turkey over Russia and Ukraine which have been the backbone of Europe’s  economy for the past decade.  This is evident that the Turkish youth too is developing more interest towards the glamorous world of fashion and apparel.  Currently, there are some amazing shopping malls in Turkey such as Istanbul’s Istinye Mall which is a very Modernized shopping center with many luxury retailers like Prada, Gucci and according to many one of the most amazing food courts.  This is all great but a draw back is that there is too much competition and the market can get tight.  According to Mike Rodda, Cushman’s head of European retail capital markets, in order for Turkey to continuously grow they must focus on differentiating there shopping centers.

“It’s an emerging market, so it has its bumps,” said Wenzel Hoberg, the pension board’s head of European real estate investment.

With the rising demand there is definitely a “need” factor in terms of more shopping malls; increasingly, there was a rise of 35% last year in the retail properties.  A systematic and well managed solid business plan for the next 10 years should be developed in addition to extensive market research for Turkey is essential.  Appropriate micro and macro project management is crucial.  This is just my thoughts for Turkey’s growing economy.  What do you think would be a good starting point or focus point?  What are your thoughts?

Did you know that the web companies like Google, Facebook and others make billions of dollars by collecting data about us (the consumers)?  I was browsing through the new articles on Business Week and I came across this article in regards to data safety and privacy.  What if a company was created for “web surfers” like you and me to actually be able to manage and save our own data and than at your discretion the data will than be sold to a third party. For example, this is a similar process to our conventional banks that we store our money in either as a “cd” or in a savings account where the bank than turns around and lends out that money to other companies; benefiting both the bank and the consumers.  Any digital information about me or you can be very valuable to another so being able to view and control who is using it would definitely be a privilege.  Since, Privacy and theft identity is a rising issue and people, more than ever before, want to make sure their information is secure.  The web is growing and our information is also floating around the internet; I don’t know about you but I would sure like to know what kind of information these web companies have collected about me.  This article introduced “SWIFT” ( the Society for Worldwide Interbank Financial Telecommunication), which is also a nonprofit global that supports wire transfers between financial institutions and now SWIFT offers the service to store and manage your own data.  Our online shopping, favorite hangout spots, food, clothes, and entire social life is being viewed and utilized by major advertising companies.  People started to send several complaints to the Federal trade commission and due to the high volume of concerns, now facebook has agreed to first obtain the users permission before releasing their data.

 

Furthermore, imagine being able  to “trade your data” rather than money.  SWIFT gives users the option to possibly trade their data to third party’s that may offer them discounts as a “return” or money.  Banking institutions have information like our health records and financial activity, so SWIFT wants to create the opportunity for the banks to set up “digital asset accounts”  that will enable users track all their information.  This is a great idea and may do really well in the current market and definitely a very innovative idea.  The only drawback is that SWIFT will probably require a monthly service charge to keep the account open and to be able to continuously manage it.  I’m not surprised, after all, “there is no such thing as a free lunch right?” and as long as the service charge is an acceptable market price, I can’t see why this won’t work can you?

 

I love reading about innovative ideas like this to further stimulate the economy as well as giving the consumers more control over their privacy.   SWIFT is known to do an exceptional job with market and development research prior to actually launching any ideas, they are definitely known to be trustworthy.  This “data trading network” will probably not officially take off for at least another five years.  Please see the below link to the article.

 

http://www.businessweek.com/magazine/who-do-you-trust-more-with-your-data-facebook-or-a-bank-01122012.html

Commodities Trader Loses Exec.

Glencore is the biggest commodities trader in the world.  This article discusses the first significant transition of an executive position in the groups history since its initial public offering last year.  Why this interested me was because this corportation which has done great in the past year due to highly inflated commodities prices is piloted by a 13 executive board.  (one of which they just lost) The position in limbo right now is the seat of the aluminum trading head executive.  Aluminum, which is currently trading at its lowest point in over 18 months, is speculated to continue to drop because it is considered an industrial metal and industry in the grand scheme of things has slowed on a global level. 

Losing a senior executive is detrimental to any company regardless of size.  Losing a senior executive responsible for a highly volitile commodity that is not doing well is even worse.    The stock is currently trading 23% lower than its IPO and if Glencore’s current executives and take on the issue head on they may be able stop the bleeding, if not the stocks price will plummet.  Now what leads me to question is that, because aluminum is not selling due to a dismal global manufacturing market who is not to say that this exec didn’t abandon ship before it tanked?  And if so how does this reflect on the corporation? It will likely result in trust lost in the stock temporarily, but what are the long term ramifications?

 

Article derived from:

http://news.yahoo.com/glencore-executive-first-key-departure-since-ipo-report-045611772.html

Forecast is something we revolve around on a daily basis. It is around us so much, that sometimes we forget how big of a role forecasts play in our lives. For example, a weather forecast could mean very little to an individual before he/she steps outside the house however, on the other hand it could mean a lot to a company who has spent over $100,000 to organize an outdoor event.
When we look at a specific trend in the market, we will predict the future. This prediction leads to a forecast. In most cases forecasts are far from what actually takes place however, in some cases they are accurate and close to accurate.
I believe that forecasts should be done considering all the factors. It does not always have to be positive which is why being too optimistic about the future can cause problems for a company. I worked for a retail company last year where some important decisions were made based on forecasts. One of such decisions included how many people to schedule for work on a particular day. For example if the sales on Saturday were forecasted to be high then more employees were called that day to work but on the other hand if sales were forecasted to be low, less employees would be working. An advantage of that for the company was saving cost however, the biggest drawback was that forecasts are not always accurate. On a Monday, they forecasted fewer sales and only a few employees were working but more customers showed up and it got difficult to manage for those few employees.
Companies make daily decisions based on forecasts. These would include how much inventory should be kept, how many employees should be hired. These decisions are more crucial than they appear. If the company is not prepared for the “what if’s”, then they are at big disadvantage, especially if they are in a competitive environment.
We are living in a technological world where forecasts play a huge role however, with the high advancement in technology, things are more unpredictable than they seem and the forecasts tend not to be very accurate. For example an article on www.bloomberg.com , “HTC Cuts Sales Forecast on Competition from Apple, Samsung”, talks about how the sales forecast had to be changed, in this case lowered, because Apple and Samsung had growing sales and had forecasted higher growth. Like I mentioned earlier we live in a world of forecasts. One forecast is based on another. In this case, HTC’s sales forecast was affected by the sales forecast of Apple and Samsung.
The question I would like to ask you is, have you ever been in one or more situations where you based a decision on an inaccurate forecast? How did it affect you?

 

Above article taken from http://www.bloomberg.com/news/2011-11-23/htc-cuts-sales-forecast-on-competition-from-apple-samsung-1-.html

In class we discussed the product life cycle. When I first heard about the 4 Steps, which include the Introduction, Growth, Maturity and Decline of a cycle, I automatically thought of a job I used to work for being a cable company provider. I was selling cable TV, phone and internet. The company I worked for was being offered in new locations and I had to go around door to door selling the product for commission.

In the beginning, or in other words, the introduction phase of the job process, was overall okay since it was a new company in the area and nobody really had much knowledge on the company so a few sales were made. People would not take the time to open the door and listen to my pitch. When some people did want to start a conversation, I would have to explain the company in great detail because no one has heard of it.

Then, as time passed in the growth phase, there had been some knowledge of the company spreading around and residents started to get intrigued by the idea of this cable provider so more than a normal amount of sales were made. Less people said, “no thank you” or “I already have cable” and stayed to listen to my explanation of this growing company.

In the third phase, the maturity phase, word had gone around that this company is good and for the amount of money to be saved verse the competitors the residents couldn’t refuse the offer. So as you can imagine, after all the neighbors talked about the company and shared more knowledge of the company and a little extra information by me the sales were being made more than ever. My boss was obviously happier during this phase because more sales were made overall.

Unfortunately, in the next phase, there is a decline, in the decline phase. After a numerous amount of sales, there were no more residents that would have wanted the product offered. So as you can imagine there were less and less sales being made after time.

As you can imagine, any kind of company could go through this problem. Do you believe that there is any way to expand the maturity phase and to avoid or delay the decline phase?

The components of conducting business are continuously changing. So most, if not every, business uses the forecasting tool to assist in formulating the future result of countless business decisions. Therefore, by making accurate decisions based on important information helps companies prevent losses.

Last class we learned about forecasting. It dawned on me how the company I currently intern for actually uses this instrument. As an accounting intern, I assisted a CFO/CPA in preparing a forecasting budget for this year. The company I currently intern owns dozens of bars across the U.S. Our goal was to get an idea of what the company might expect to earn in the fiscal year. So what we did was take last year expenses, have them remain constant, and then include any new expenses that we might expect to occur. Furthermore, increase sales by 5% from food and liquor plus projected growth, and then subtract the expenses. As a result, we were able to come up with a projected revenue. This tool proved very useful because it allowed our general managers to accurately modify operations in order to secure the greatest profits. We also created a projected cash budget to ensure that the company is able to meet future obligations such as expanding to new locations. Thus, providing us precise figures on how much money will the company need to borrow and how the borrowed funds will be repaid.

Now that I think about it more, I’ve noticed how often and important forecasting is used at my job. For example, every time a new product or service was being considered to be incorporated at our bars, we needed to determine whether it would be successful or not. We would look into certain things such as developing, manufacturing and marketing. From my personal experience interning here, most products/services were rejected. This is why forecasting is so beneficial because it can prevent the company from spending time and money if the product/service were to fail.

I’ve also implemented forecasting in my own personal life outside from work.  As a college student, being broke seems to be a problem for most us attending school. Therefore, it almost seems obligatory to look for a job in order to make ends meet.  Although I do work, I happen to be very good at managing my money. In fact, I created a projected budget of my own in order to see if I can somehow be able to buy a car. This projected budget I made concluded that it was very well possible for me to get one. But at that very moment, the same question I asked my boss, I began asking myself. Now I would like to as my classmates. How much of any information of a forecast can you reliably depend on?