If CVS Pharmacy Can Say No To Smoking, You Can Too!

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Link to Article: http://www.forbes.com/sites/scottdavis/2014/02/06/cvss-decision-to-dump-tobacco-delivers-on-its-brand/

CVS Pharmacy has recently taken a large step forward in their industry by making the strategic decision to remove tobacco products from all of their stores in order to show how serious they are about being committed to the health of their customers. Also, for CVS customers that are smokers, they will begin offering free online assistance to help their customers stop smoking if they choose to do so. This was obviously a difficult decision and one that could potentially lose them a lot of money, but they believe that this decision will have the opposite effect, and will actually help them strengthen their brand, retain their current customers, and inspire new customers to come into their stores.

I think this directly relates to the material that we covered in class when it comes to the decisions that departments have to make together regarding the success/failure of their company. A decision like this is obviously not made overnight and is one that can only benefit the company if everyone in the company (all departments) is onboard. In class, we learned that a part of a company’s successful strategy is that “learning and continuous renewal are essential parts of a [successful company’s] strategy.” CVS is choosing to “lead the market” instead of “follow the market” and I believe this will really pay off for them. According to the author of the article, “CVS is “putting its money where its brand is” and has the first mover advantage.”

I also believe this article directly relates to the business simulation we did in class. I think the simulation really showed us how important it is for companies to make important thought out decisions and to not try to be something that they’re not. I also think it proves to us that even though at times it was hard to let go of a product that we have been making for a while, sometimes it was the best decision for the overall health of the company. While CVS could’ve remained successful being in the tobacco industry, they chose to differentiate themselves from their competitors and hopefully help them gain a competitive advantage.

Overall, I believe that this decision was the right one for CVS especially since none of its competitors have really done anything as of yet regarding selling tobacco in their stores (Walgreens?). I believe that in order to make these decisions CVS executives strategically evaluated all of their market segments and made sure to forecast so that in case their revenues did fall dramatically, the company would be able to bounce back. One thing that really stood out to me while doing this simulation is how important forecasting is and how important knowing your market segments are in order to be successful. I feel like my team had a lot of trouble with this in the beginning of the competition and this is what caused us to suffer later on. Knowing your products and knowing the market segments that those products are is extremely important and making sure that all of your departments are working cohesively is just as important.

Do you agree with CVS’s decision to remove tobacco from their stores?
What do you think it’s competitors will do regarding CVS’s decision? Will they drop tobacco products as well?
What else do you think CVS can do to set themselves apart from their competition?
Do you believe this will negatively impact CVS’s business?

Technology in the Workforce and the Rise of the Nontraditional Work Environment

Technology is changing the way people do business. With applications that create faster overall processes and improved communication, the key to success is often accomplished through the use of the right technology. Managers must be aware of what these changes are and how technology is facilitating them. There are a number of growing trends that demonstrate how the workforce is shifting towards nontraditional work environments and which technologies are being used to support these environments. Remote employees working in virtual work environments are becoming more commonplace in today’s workforce, whether it is through outsourcing work to other countries or US employees based in different geographic locations than their teams/managers. No matter which type of nontraditional work environment, it is clear that technology is a crucial key to success.

There are a number of different tools that a remote or virtual employee can use. Working in teams with people located in different geographic locations requires extra attention on communication. Managers must make sure that remote employees feel included and equal to their non-remote peers. In order to do so, there are a number of technologies that help bridge the geographic gap. Video conferencing allows individuals who are in different physical locations to interact as if they were all in the same place. Having a round-table meeting over video conference allows individuals to express themselves through gestures and expressions. It also creates a sense of familiarity amongst employees since it is a social environment. Another tool is web conferencing, which allows people on different computers to simultaneously view one person’s screen. This allows individuals to host a meeting where they can present to a large group and not have to send out loose documents. Another online tool that allows people in different locations to communicate is Instant Messenger. AIM (AOL Instant Messenger), Gchat (Google Chat) and Facebook Chat all allow you to communicate in real time via text with many other individuals simultaneously.

While these technologies have many benefits, a word to the wise is to be aware of everything that comes along with the use of technology in the workforce. On the positive side, technologies like video conferencing and web conferencing allow many different people to get together in one virtual location. Being able to type at the rate of a normal conversation (through an instant messenger program like AIM) also allows people from far distances to communicate. However, both of these positive benefits have the potential to be negative as well. Video and web conferencing can sometimes be difficult to set up and if the Internet is down you often lose access to many of those tools. Typing a conversation can also lead to things taken out of context because you lose tone and expression. Overall, technology can be used successfully as long as individuals are mindful of the potential roadblocks.

Have you seen nontraditional roles emerging in your work environment? What technologies does your company use (or have you personally used) to help you stay connected to your peers?

The Pinky and the Brain Couldn’t Do It, But Android Has… Over the World of Technology That Is!

As the title of the referred article suggests, Android really is everywhere… you just don’t realize it. Not only is Google’s Android the number one mobile operating system currently out there, but Android is in just about anything with a computer chip and is becoming the standard for operating systems in smart devices. As more devices with the Android operating system hit the market, Google is continually widening the gap between its competitors, Microsoft and Apple, and is making its home as the dominant software player in the tech device world.

So how does Google’s Android tie into quality?

source: www.giantbomb.com

One of the things that we learned in class is how important quality is to consumers. In the end, your product does not really matter. It all comes down to customer satisfaction and delivering on the fulfillment of their needs. In a sense, this is what Google has done through Android. This open source software can easily be manipulated by virtually anyone to get just about anything to do whatever they want it to. Users are not limited to certain functionalities already pre-decided by the makers of the operating system, but instead allow consumers to keep their freedom of choice and allow them to act upon them. In the end, consumers fulfill their own needs and end up with their own unique, customized product.

This not only allows for Google to keep its current customers from switching to competitors, but Google is also benefiting from expanding its consumer base to include individuals who like to experiment with technology. As more consumers join the Android community and take the operating system into their own hands by modifying its uses and capabilities, Google is getting developers to make their product better and its application vast. And it is all done free.

Android isn’t just popular with consumers, but also with hardware and software companies. As its popularity has increased and its dominance established in the market, Android is becoming a standard for devices. More and more hardware and software companies are becoming “Android experts” to ensure that their products are compatible with the software.

By allowing its software to be easily accessible and modified by anyone, it is no wonder that Google’s Android has risen in popularity so quickly and widespread.  Although many companies, such as Apple and Microsoft, strive to keep their product’s formulas secret in order stay ahead of the competition, Google has proven that doing the exact opposite can be done. Not only that, but that one can benefit from it as well.

Personally, I think that what Google allows to be done with Android should be applicable to other devices. As an Android user who took advantage of making my phone better to suit my preferences, I am a big fan. On the other hand, Apple’s I-phone has left me wondering why I ever made the switch.

What do you think? How will Android affect the future of technology and the way products are being deployed?

 

Source:

Vance, Ashlee. “Behind the ‘Internet of Things’ Is Android—and It’s Everywhere.” Bloomberg Businessweek. 30 May 2013. http://www.businessweek.com/articles/2013-05-29/behind-the-internet-of-things-is-android-and-its-everywhere#p1

Long Live Rock n’ Roll: How Heavy Metal Has Saved the European Cruise Industry.

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As we are all aware, the cruise line industry has been struggling recently. Between ships capsizing and passengers being stranded for days with no food or running water, the cruise industry has taken a huge hit. Recently, however, one European line has come up with a strategy to pique customers’ interests again.

After the 32 deaths that resulted from the Costa Concordia tragedy, European operations managers have been seeking to regain their client’s trust. Since these recent mishaps have taken place, passenger growth rates have decreased by 4, 9, and 18 percent in Germany, Italy, and Spain, respectively. TUI Cruises (which operates between TUI in Europe and Royal Caribbean in Miami) had an operations loss of $14.2 million as of March 31. Cost cuts have been implemented which could include dropping at least one of its five ships if things do not begin to improve.

In an attempt to broaden their client basis, Europe’s $48 billion industry has begun offering cruises targeted at special interest groups, ranging from nudists to food junkies. Among these new cruises is the Full Metal Cruise, on the luxury cruise liner Mein Schiff. This line features heavy metal bands on board including full-fledged mosh pits, rock concerts, on board tattoo artists, and after-hours heavy metal karaoke. German heavy metal band, Kreator, was among some 20 other bands booked by TUI. url.jpgAlmost 2,000 fans booked this rock n’ roll cruise, with most of them being first time cruisers, says company spokeswoman, Godja Soennichsen. The goal of this cruise was not only to generate income to make up for the recent loss, but also to gain publicity and counter the negative press. Managers also wanted to reach a demographic that may have previously never considered a cruise.

Overall, the strategy has been successful. The rock n’ roll themed cruise sold out, with the average passenger age being 39- which is significantly younger than the typical European cruise demographic of 45-65. The ships port, Germany, was also the fastest-growing market in Europe for 2011, providing desirable vacation-goers, because they spend more money on board than any other Europeans. Beer consumption on the metal cruise was also up from the average cruise, at 16 liters per person. This is six times more than your typical cruise.

The bottom line is that for whatever reason, the cruise industry seemed to be reaching the decline point in its product life cycle. However, through the use of differentiation as a product strategy, companies such as TUI have been able to counteract this decline and may be at the beginning of another growth stage.

Do you think that this strategy to gain new customers is one that will last over time or is it just a quick fix for a dying industry?

Is there a special type of cruise that you would like to go on or a certain special interest group that you think should be targeted for these types of cruises?

http://www.businessweek.com/articles/2013-05-23/heavy-metal-rocks-in-europes-cruise-market

Price Menu in Hospitals?!

Businesses try to implement various strategies such as differentiation, low price, and rapid response to stay ahead in competition and to attract more customers. But, when it comes to hospital industry, there is nothing much to do to increase profit other than improving internally such as adding new services, outsourcing some work, improve quality, increase profit margin etc. Most of the hospitals have successfully increase their revenue by charging higher amount to insurance holders and get away with it as not many people pay attention to it.

But, it may change soon. Steven Sonenreich, CEO of Mount Sinai Medical Center in Miami Beach, announced that he would bring transparency to industry by posting prices comparing to Blue Cross and Aetna. In early May, the center for Medicare and Medicaid Service released data from 3,000 hospitals that accept government insurance. According to this data, price of most of the treatments vary as much as by three times. And these hospitals get away with it because insurance companies have to pay that amount and patients pay fixed co-pay.

However, with increasing cost of Health care, insurance companies have changed co-payment plans from fixed co-pay to percentage of total billed amount. Therefore, patients will be more aware about how much they will be charged. Thus, availability of price information can benefit both hospitals and patients. After the announcement, Brian Keeley, CEO of Baptist Health in South Florida stated that the hospital industry is headed in that direction. Thus, in short time, all hospitals nationwide will follow the steps of Mount Sinai Medical center.

Now the question comes to mind is why Sonenreich wants to be first to be in industry where secrecy of price has been working out perfectly. If it were some other industry, being first to market would be smart move. Therefore, the reason for being first to market in my opinion is to build reputation and favorable word of mouth when every hospital at least in Florida has adopted this. Thus, their plan seems to attract more patients in long run.

Furthermore, as we have discussed in chapter one that measuring quality of services is much more difficult than physical products. And hospitals rely on attracting more customers by providing better quality services. Most consumers make purchases based on assumption that higher the prices better the quality, as we talked about in chapter 6. For example, more than 80% students chose Rolex as better quality where I think other watches were better quality for their price. Similarly, with availability of price information in hospitals, I think people with go to the hospitals that charges more. But, as Sonenreich stated that they are the lowest cost hospital in area, they might lose patients to competitors because of the price transparency. Thus, their decision of transparency might hurt them in long run.

Do you think the transparency in hospital cost will make us more conscious about where we go? And how will if affect the Mount Sinai Medical Center?

http://www.miamiherald.com/2013/05/14/v-fullstory/3397479/in-miami-more-hospital-prices.html

http://www.businessweek.com/articles/2013-05-20/a-hospital-ceo-promises-more-pricing-transparency-and-makes-rivals-squirm

Airline Industry Summer Strategy: Have lessons been learned?

“As an airline, if you’re not excited about summer, you’re in the wrong business,” said Mike Van de Ven, Southwest’s chief operating officer. In other words, if you cannot handle the heat get out of the kitchen. This summer, airport crowds are expected to be the largest in the U.S. since 2008. In 2012, all airline flights including regional had an average 76.1% on-time flight arrivals (flight stats analytics WSJ). That will not “fly” this summer.

image_security_linesWhat method of forcasting informed Airlines that airport crowds are expected to be higher than recent years?

United had a terrible summer last year—only 67.9% of flights arrived on-time in summer months. Customer complaints soared. The airline blamed computer system problems related to its merger with Continental Airlines and an attempt to schedule planes and crews more tightly. The plan backfired because it created longer delays and widespread disruption when tighter schedules couldn’t be met. The use of Gantt charts to schedule turnover time is a simple strategy Airlines use. They are constantly coming up with new ways of speeding up this complex process. Southwest does not have to purchase many Airlines because of how fast they can turnover planes. They plan to use spare airplanes this summer to accommodate stuck travelers more quickly. Southwest plans to routinely keep operating late into the night rather than cancel flights on stormy days. This is a contributor to why Southwest is a leader in customer satisfaction.

What is a disadvantage to scheduling each project to tight with each other?

United says they are better prepared for summer because it has more staff and better scheduling. In addition, the airline has rolled out new graphics screens for its computer system to make it easier and faster for airport agents to use. United also is introducing new boarding lanes at gate areas. Five different boarding groups will line up in different areas, similar to how Southwest lines up customers by groups, so that each group will have a designated place to wait. A brilliant new seating system is set to take off. The coach cabin will board window-seat passengers first, then middle seats, and aisle seats last. With the “Wilma” system, as United calls it, seats fill faster because people already seated don’t have to get up as much to let a row mate in.  Now there are more reasons than one to get an window seat.

The industry as a whole have made changes that fliers should be aware of before making travel plans. Budget cuts in Transportation Security Administration overtime will likely lead to longer security-screening lines. Make sure travel plans are set in stone because domestic ticket fees change  to $200 from $150, and international change fees went to $300 from $250. United Airlines, Delta, American, and US Airways collected a total of $2.3 billion in reservation cancellation and change fees last year, according to the Department of Transportation.

Will higher change and cancellation fees persuade fliers to book with other airlines?

What may be the reasons Airlines raise these fees? http://online.wsj.com/article/SB10001424127887324659404578499162528986162.html?mod=WSJ_hpp_LEFTTopStories

Tesla vs The World: Revolutionizing The Car Buying Experience

Showroom

It’s beginning to look like Tesla Motors’ CEO Elon Musk’s vision of becoming the world’s first mainstream electric car manufacturer is coming to fruition.  “Tesla” has been the top buzz-word in the news covering financial markets for the past few weeks now, and it has not been losing any steam, especially following a 99% rating by Consumer Reports on its Model S.  Tesla stock has already soared by nearly 175% this year.  Due to Tesla’s successes, both investors and consumers are gaining more faith in Tesla and its products.  Along side its stock price, Tesla has also been experiencing increases in sales after winning Motor Trend’s Car of the Year Award, and introducing its own financing program in a partnership with Wells Fargo.

The successes of Telsa Motors is proving to be too much pressure for the conventional car dealership, indicated by a proposed North Carolina bill to ban Tesla Motors galleries in the state.  Unlike car dealerships that make their profits by purchasing their cars at wholesale prices from the manufacturer, and then marking up the prices for the ultimate consumer, Tesla uses a direct-sales method to get their consumers behind the wheel of their machines.  The bill, which has just passed the state Senate, would ban manufacturers from selling their cars without going through a dealer.  Now, if you want to purchase a Tesla car, you can go to their gallery showroom, meet with a representative, choose your configurations, and make the purchase on-site through their website. There are many reasons why these dealers might be pushing for the Governor’s signature on this bill, but I am confident that it has nothing to do with simply playing by the same rules that other dealers are playing by.  Currently, in North Carolina, it is already illegal for an automobile manufacturer to sell their cars without doing so through a dealer, so what would this bill change?  Under current legislation, Tesla still has the criteria of being considered as a car dealership.  The bill would declassify Tesla as a dealer, since it prohibits manufacturers from making sales “using a computer or other communications facilities, hardware, or equipment”.  Tesla is the only manufacturer that uses this as their sole method of selling cars.

Tesla’s products aren’t the only revolutionary aspect of their business.  This buying experience eliminates the need to sit at a dealership for hours, trying to get the price of a car down to a reasonable number, while the salesperson makes multiple runs to the coffee machine, AKA “the manager” during negotiations.  Instead, you go to the showroom, sit in the car, choose your options, and place your order.  Whatever price you pay at the showroom, is the lowest price you’re going to get. No haggling necessary. Is this simply an effort by conventional dealerships to rid Tesla of its competitive advantage, or is it a sign of their hope to have Tesla models in their own lots, and cash in on their growing successes?

Source: http://gma.yahoo.com/teslas-direct-sales-business-model-targteted-n-c-170402561–abc-news-money.html
Image:  http://global.networldalliance.com/new/images/article/tesla_2.jpg

 

 

Mercedes’ Management pulling in Wealthy Chinese again

After Daimler’s CEO Dieter Zetsche sat in the Mercedes S-Class, he realized it would not recline as far as a seat in an airplane did, and therefore not give the same amount of comfort that the wealthy individuals that would buy this car are accustomed to. This was especially an issue in China where the car-owner sits in the back a lot of the time as they have chauffeurs. Zetsche had his designers recline to 43.5 degrees to make it more comfortable and luxurious and therefore more appealing to the wealthy Chinese. When the backseat reclines, the front seat automatically moves forward a bit to give more legroom, and the seats even have a massage feature for ultimate comfort.

Mercedes Revamps the S-Class to Lure China's Wealthy Buyers

To be able to realize that this is necessary is very impressive forecasting while also looking at the past sales and realizing that something is wrong. For the CEO to go out and try the features of the Mercedes S-Class and help come up with solutions shows the dedication he has to the company, and shows good management as well. It is rare that you hear that a chief executive officer figures out the issue a company has and makes it a point to fix it.

Chinese buyers account for more than half of all the sales of the S-Class, which makes improving the sales even more important. With Mercedes operating profit margin down in comparison to BMW and Audi, it is important that the sales of the S-Class are improving again because the profit margin is 25% for these cars. Zetsche was also smart

in realizing that innovating and improving this car is important to the bottom line of making more money, as it is the most profitable.

China is a huge market as the sales of luxury cars are projected to go up 12 percent annually up through the year 2020. Clearly the operations management of Mercedes is of highest quality, because being able to put together all of the factors I have talked about and realizing that perfecting the S-Class is essential is rather impressive.

A Mercedes S-Class can cost as much as 486,000 dollars in China due to very heavy import levies. Due to the halo effect, Mercedes is able to generally charge more for its other cars as well. Mercedes sold about 20,000 more of their luxury cars than BMW and a little over 40,000 more than Audi’s luxury car, so clearly Mercedes is the best at perceiving an image of luxury and highest of quality. With this fact in mind, Mercedes’ management needs to realize that they need to improve the sales of their other cars to become the most profitable company in overall again in comparison to their biggest rivals of BMW and Audi.

What do you think Mercedes can do to improve their sales and become the most profitable company again? Are you impressed by the improved S-Class moves?

Comeback of the Orange

Home improvement retail companies profited when the real estate industry bloomed. However, the good times did not last long. The “housing meltdown” caused them to have large number of excess stock on hand that were not going anywhere. Needless to say, their year-end numbers did not look appealing to investors.

In the past years, Home Depot stood out, in terms of growth, as compared to their competitors, Lowe’s and Menards. In order to increase sales, the Home Depot decided to concentrate more on products for the interior of the house. These included household cleaning supplies, decorative goods, plants, and interior design products.  As mentioned in Chapter 2, you have to understand the market and learn to improve operations. Home Depot studied the market to understand it. They saw that consumers were not looking to build any more houses so they changed their direction to selling products that go inside the houses.

Home Depot’s mission statement is, “The Home Depot is in the home improvement business and our goal is to provide the highest level of service, the broadest selection of products and the most competitive prices.” Within their mission statement, they also mentioned their eight core values. Some of these include, “excellent customer service, doing the right thing, and taking care of our people.” They believed by providing the best service will bring in more customers and create a loyal customer base. Home Depot implemented many different services that their competitors don’t provide. Some of these include installation services, rental services, matching and beating competitors’ prices, and providing an order online, pick up in store service. They are competing against other home improvement retail companies by utilizing their uniqueness.

Home Depot made a strategic decision by providing the service, meet and beat competitors prices. They are willing to match the competitors’ price and give an additional discount to make the customers feel good about shopping at the Home Depot. This service will help them create a loyal customer who will come back to shop. Personally, I have some previous experience working at the Home Depot and providing great customer service is the value that Home Depot management stressed upon. Every associate is given a certain dollar amount that they are able to discount to make the customer satisfied with their purchases.

It seems like their strategic decisions and services that differentiate them from their competitors are working well. Some will say that this company was “rebuilt to last .” Recently, Home Depot reported a 32% increase in profits during their fourth fiscal quarter. Their overall sales increased by 14%. In addition, the company also saw an increase in their installation services.

Do you agree that this company is “rebuilt to last?” Have you shopped at The Home Depot recently? Did you notice the changes mentioned in the article? Which other companies have you noticed recently that experienced immense growth?

 

Sources:

http://finance.yahoo.com/blogs/breakout/3-retailers-rebuilt-last-173649575.html

Cheng, A. (2013, Feb 26). Home depot profit jumps. Wall Street Journal (Online). Retrieved from https://login.ezproxy1.lib.depaul.edu/login?url=http://search.proquest.com/docview/1312448910?accountid=10477

http://ir.homedepot.com/phoenix.zhtml?c=63646&p=irol-faq#37549

Picture:

http://arthurparadiso.com/wp-content/uploads/2011/09/hd-main-logo-en.png

 

You Get What You Pay For.

Is the long dreaded statement, “You get what you pay for” true? Or is it just a coined phrase that consumers overuse?

The recent numbers for the business quarter were released by Wall Street Journal and Costco’s numbers were nothing less than impressive while Walmart’s numbers were nothing spectacular. Costco experienced an 8% increase from last year’s benchmark and a 5% increase in same-store sales. These impressive numbers that Costco released may reveal that consumers are sick of receiving a shoddy service from corporations such as Walmart.

This grocery superstore (Costco) does charge a member fee; however with the 8% increase this quarter it doesn’t seem to be stopping anyone from coming and ditching Walmart. Walmart is known for its unbelievable cheap prices and record-breaking deals, but are these numbers revealing that consumers may be sick of it and switching to Costco?

The article suggests that the reason for this downfall at Walmart may be related to the minimal wage it pays its employees. On the other hand, Costco pays its employees a decent wage where they can afford even the extra remedies in life. Where a Walmart employee can barely afford to take their kids to the doctor. Even if the average employee at Walmart finds a loophole to squeeze a little more pay out of the company Walmart Corporation won’t hesitate to cut that stores employment roster by nearly one and a half percent.

As a result of these minimal wage efforts to their employees their quality of service has significantly decreased. Employee moral is down because there is an extreme lack of motivation between workers when they know pay is extremely low. Inventory remains pilled up in warehouses around the country and customer services line are metaphorically speaking “running out the door.” To add to another fall back Walmart is experiencing, is that when customers do want their products, they are nowhere to be found.

Walmart is experiencing these sales hit and we can see that they may be directly related to poor compensation received by their employees. Staff and salary cuts at Walmart have been occurring since the recession while customer service continue to drop. Yet Walmart still continues to open retailers around the world.

With the decrease in the quality service that Walmart is providing maybe it is time to revamp some of their strategies and move away from extremely low prices. They need to invest some of this money into paying their employees properly because with low wages we can see employee turnover and sales are at a low.

Personally, I have experienced Walmart’s poor quality service and am not a firm supportive of how they treat their employees; however I do enjoy their extremely low prices.

Will following Costco’s employee wages support team moral and inadvertently improve company sales at Walmart?

What quality tools can Walmart use to design a new business model to ensure this won’t continue to happen?

You get what you pay for; do you think Walmart provide shoddy quality service?

 

http://www.forbes.com/sites/rickungar/2013/04/17/walmart-pays-workers-poorly-and-sinks-while-costco-pays-workers-well-and-sails-proof-that-you-get-what-you-pay-for/
http://hbr.org/2004/12/outsmarting-wal-mart/ar/1
http://www.costco.com/employee-website.html