Apple Creates The Weak In A Week

Recently, a new form of payment has been introduced to the world: Apple Pay. This is a “digital wallet” which allows people to make purchases with a single touch on their mobile devices. Although this form of payment has been around, such as the Google Wallet, Apple Pay has already dominated the mobile payments market in only one week. What makes Apple Pay so special and why has it already become the most popular mobile payments platform?

appley pay into

 

There are numerous locations that provide NFC (Near Field Communication) payments, and Apple Pay seems to be the easiest to utilize. Unlike other methods, Apple Pay requires consumers to only hold their finger on the mobile’s fingerprint scanner called the Touch ID. There will be no more of reaching into your wallet and trying to find a piece of plastic. Comparing to the Google Wallet, individuals are required to take a few more steps to complete the transaction such as entering their pin number. Apple Pay seems to be more convenient where it outperforms its competitors.

More to Apple Pay’s popularity is their secured system. According to NBC News, “The tokenization system built into Apple Pay is considered one of the most secure, fraud-proof ways to make payments, because it keeps consumers’ actual credit card data from ever entering a retailer’s point-of-sale system”. Furthermore, Apple Pay requires biometric verification to continue with the transaction. Security is an important aspect that grabs consumer’s attention. Since the hacking incident on CurrentC, one of Apple Pay’s competitors, people are starting to be very cautious on using the NFC payment method. Apple Pay is known to include a secured server that may even be safer than using credit cards. These key features of Apple Pay have brought its service on top within one week of their release.

As appealing as Apple Pay sounds, other NFC payment platforms provide more features that do not exist in Apple Pay. For example, Google Wallet is able to accept any type of major credit and debit cards. Apple Pay does not accept discover which limits their target market. Also, Google Wallet is also available in both iOS and Android devices. Using Google Wallet, individuals are able to send and accept money from others. With other digital wallets capable of much more features, Apple Pay still beats its competitors. Its feature of being highly convenient and secured has boosted up their amount of users. You now can understand how quality improves profitability.

Fulfilling customer expectations with the services Apple provides can gain additional sales. Apple Pay has also boosted up iPhone 6 sales, as it is only compatible with that type of device. Not only has its features bring in more users, but help generate more sales in the market. It’s clever to see how Apple Pay is also used as a marketing strategy. The creation of Apple Pay may be the beginning to a generation of solely mobile payments.

Do you believe that Apple Pay will remain on top of its competitors? How much longer?
As an Apple user, I may come out biased on over-crediting Apple Pay. Do you believe their service is superior to others?

Sources:

http://www.nbcnews.com/tech/gadgets/can-apple-win-mobile-wallet-war-n240011

http://bgr.com/2014/10/28/apple-pay-vs-nfc-competition/

Quality Matters

Quality is a factor that can affect what a consumer purchases. As consumers, we do not want a product that will fall apart the next day. We don’t want a car that will blow up if we get rear-ended. If a company produces products or services that consumers do not deem to be good, this can affect sales and also the company’s reputation. Because of this, quality is an important part of operations management. Our text defines quality as “the ability of a product or service to meet customer needs.” (Heizer 209.) This definition might seem vague, but in reality, quality can mean different things to different consumers, such as reliability, durability, or even performance. The textbook mentions that two ways quality can improve a company’s profitability are creating sales gains and reducing costs (Heizer 208.)

An example of how quality comes into play in management is the situation going on in the auto industry and the handling of vehicle quality and safety. Recently, Audi and Honda have recalled certain vehicles. The Wall Street Journal reported that Audi’s recall was a result of an air-bag deployment glitch. “Audi’s action is the latest in an industry burdened by recalls. There have been tens of millions of vehicle recalls issued this year, costing…billions of dollars and denting the reputations of executives the companies they run.” (WSJ.) This highlights the fact that when a company’s product or service is perceived to have bad quality, it will cost the company money and will impact the company’s reputation. In addition, not only will recalls affect customers’ perception of a company, but they can lead to government investigations, fines, and lawsuits, all of which will impact the company’s operations management. The article mentions that Honda is reforming its quality assurance structure and will create a new job to oversee the safety changes the company will implement.

Personally, I believe quality is a vital part of operations management. I prefer to buy and spend more for products that I know are not going to fall apart a right after purchasing them. With all of these vehicle recalls, I believe the auto industry really needs to look at its quality standards. Companies need to look at where quality ranks in its operations and consider improving the system. Quality can help a company gain a competitive advantage over others, which will lead to higher profitability and a better reputation. As the textbook mentions, quality can reduce costs and improve sales, which are two features that all companies want. For instance, a product made of higher quality material will have a lower warranty cost for the company. Also, if consumers know a company produces high quality products, they are more likely to buy from that company.

Questions for the reader:

How do you define quality? Do you think its has a big effect on operations management? What are your thoughts on the continuous product recalls?

Sources:

Heizer, Jay, and Barry Render. Principles of Operations Management. Upper Saddle River. 2013. Print. 208-209.

Pfanner, Eric, Boston, William, and Megumi Fujikawa. “Audi, Honda Swept Up In Concerns Over Safety.” online.wsj.com. The Wall Street Journal, 2014. Web.

http://online.wsj.com/articles/more-auto-makers-act-on-quality-defects-1414081212 

Quantity versus Quality

quantity

Every day I encounter the question, “what is better, quantity or quality?” Should I buy a shampoo from L’Occitane of 8.5 ounces for $20 or should I purchase a shampoo from the brand Suave of 12.6 oz. for $3.49? Should I pay $4 for coffee from Starbucks or should I just go to Dunkin Doughnuts and pay half of that for a coffee? Recently I have experienced the other side of the quality vs. quantity debate, no longer as a customer but as insider. The questions that I ask myself are no longer “should I buy this or should I buy that? Should I spend a few extra dollars in the organic restaurants or will McDonalds do?  Instead they have become questions such as, Is the company that I work for working towards providing the best quality service possible or are they just choosing on having more quantity and leaving the quality in the backburner?

I worked for a small catering company who specialized in wedding, house parties and corporate events. If you were an employee from that company you knew that quality was always the top priority. I guess you can say we lived by the motto “the customer is always right,” and “there is never such an answer as a no.” To other people who work as servers like me, who knew about the company, they knew that not only were the customers would be treated with the outmost quality but that the staff will be treated the same way. The quality given went from the food to the service provided.

A few months back that same company was bought by a much bigger company who specialized in event planning. Their goal is to gain market share in the catering business, and possibly become one of the biggest catering and event planning business in the city.

The strategies used by this company in the overtaking was to let go of the personal and bring new and innovative minds. New workers were hired for less, without being properly trained or told what the company stood for. Old employees were left to train new employees on procedures and principles that were not in place any longer and that new ownership had yet not communicated.

As we saw on our first day of class with the activity paper puppets, sometimes certain activities take so long to accomplish or we are just so focused in reaching that goal in the fastest possible way that we sacrifice the quality put into a product. In paper puppets, some of the paper that was damaged, passed through the line of workers completely unnoticed.

The questions presented are:

Do you have to sacrifice quality in order to obtain quantity? Can there be a balance?

Does hiring cheaper labor means sacrificing quality?

Is ten thousand replicas of a Picasso painting worth more than a real Picasso?

 

Budget or quality? Or can we have both?

We all know and understand that all projects are not always successful.  There will always be projects and initiatives that will not have an expected positive result.

Chapter five discusses in detail about estimating project times and costs.  It discusses how it is important to understand the timeline for a project and understand the costs involved prior to heading into the project for it to be successful.

I work in an environment where the clients want tier 1 quality work but they only have budget for tier 3.  Often I hear the frustration from our sales staff that they had to decline a project at work because the expectations the client had, we could not meet with the budget they were playing with.

One would think that the client should know and understand the budget based on market rates.  However in the real world that is not the case.  The client wants the quality of the top company but will use the price estimates from a company that does not specialize in it.

For example, my company, Production Resource Group for many years partnered with NFL in providing the audio, video and lighting for the Superbowl halftime events.  The relationship between NFL and PRG had been really good as both sides were happy with the output.  In 2013, due to some budget constraints, NFL did not want to spend as much on the halftime show but expected a similar product as previous years.  After months of discussion back and forth, PRG determined they were going to decline the project as it was not possible for us to put on a high quality event with the given budget and PRG refused to provide a low quality output as PRG prides itself in the final product produced.

End result of the project was that 20 minutes after the halftime show ended the Superdome stadium where the Superbowl was being held, lost power.  When PRG goes into large project such as these, they often use the top companies in the industry to partner with.  Such as a power provider we use cost much more than what the budget allowed for.  Because the NFL went with multiple vendors to provide the audio, video and lighting for the halftime show, instead of PRG who is an all-in-one shop, there was a miscommunication between the vendors which resulted in a power loss.

Super Bowl Football

Chapter 5 talks about Strategic Misrepresentation where promoters underestimate the cost of a project and overestimate the project benefits in order to win approval.  This is likely the case that could have happened in this situation where the NFL was satisfied with the promises made by the vendors not realizing the consequences.

My question for everyone is that, when is the quality given a higher preference over cost?  Every day at work, all of us get opportunities to make decisions with this dilemma.  How do you determine whether to go with a proven partner vs. going with a new comer to save cost?

 

Superbowl Power Outage Article – http://www.huffingtonpost.com/2013/02/03/super-bowl-power-outage-superdome-ravens-49ers_n_2612757.html

Six Sigma, gone Bad.

SixSigma

“What do weight-loss plans and process-improvement programs such as Six Sigma and “lean manufacturing” have in common?” They article starts off with this quote, referring that diet plans and six sigma plans do indeed fail at one point or another. The companies that use Six Sigma normally start of with huge goals and aspirations of putting these plans into operation, but just like a failing diet these companies tend to go back to their old ways. Many companies around the world embrace this business management such as Six Sigma; however, a recent study shows “that nearly 60% of all corporate Six Sigma initiatives fail to yield the desired results.”  This is where we begin to ask ourselves if it’s actually worth investing in a plan if 60% of the companies who do it aren’t coming up with the results that they wanted. The articles diagnosis this problem into three stages, “stretching, yielding, and failing.”

So let’s start off by talking about what they call the “stretching phase.” The process can be defined similarly to a metal spring analogy. “When a metal spring is pulled initially, the material stretches to accommodate the increase in pressure.” They compare these metal spring to people in a business process. Initially people at any process in the business will bend and stretch to make things happen. I also agree with this because when you are new to a job or trying a new process you are initially willing to do whatever it takes to try and make it work. Most teams in any business are generally excited and willing to learn the new process, such as Six Sigma. Normally at this stage in the process managers will implement a “to-do” list will let employees know what is exactly expected out of them. When the employees reached all of their goals on the “to-do” list they were rewarded and the project is normally ruled a success. I believe this is where we can see one downfall. Rewarding employees can be successful, but if you keep doing it over and over and don’t increase the expectations or continue to manage you teams, I believe failure is inevitable.

The second phase the article is called the “yielding phase.” The phase can be defined as, “If a metal spring continues to be pulled, there will come a point when the material yields as it struggles to support the increase in pressure. Though still intact, the spring becomes permanently deformed, stretched out.” They compare this to management at a company switching from one project to another. When management switches to another project more times than none the team that lost the management from the Six Sigma managers slowly begins to lose site of their goals and begin to slip back into their old ways. At this point in the phase teams begin to loose sight of the end goal and being to focus to much on their individuals efforts. The teams that lost the Six Sigma management slowly began to crack under the pressure.

The third and final phase in this article is the failing stage. Using the metal example this stage is defined as, “Over time, pulling will cause the material in one area of the metal spring to narrow, creating a neck that becomes smaller and smaller until it is unable to sustain any pressure at all. At this point breaks into pieces.” When the Six Sigma management team leaves, employees at company’s becomes discouraged and eventually begin performing poorly and than fail returning into their own ways.

After reading this article, I begin to wonder if the Six Sigma program is actually worth it? What do you think?

Should a company invest money into this program, if 60% of the companies end up returning to normal ways?

How could companies prevent this program from failing?

http://online.wsj.com/article/SB10001424052748703298004574457471313938130.html

http://www.isixsigma.com/new-to-six-sigma/getting-started/what-six-sigma/

Beer Can Fan

Have you noticed over the past couple years all the innovation that has been swirling around beer cans? It all started with Coor’s Light and their vented can and their mountains that turned blue when they were just chilled enough to get consumed. At first, Coor’s Light caught some flack for introducing such innovations to their beer can, but it seems that competing companies such as Anheuser-Busch and Miller Brewing Co. are also trying to get in on the mix.

Coor’s Light started this innovation craze by introducing their “vented” and “cold activated” can. Recently they have introduced their new double vented can which is quite hilarious. It seems that Coor’s Light is even aware of this hilarity as they put out commercials that are seemingly mocking their new innovations. Not to be left behind, Budweiser is introducing the latest innovation with their “Bow tie” can. It is designed with a kink in the middle of the opening to allow for easier drinking. The interesting thing about this can is that it actually holds less beer than their traditional can. Another smaller competitor, the Boston Beer Company ,which brews Samuel Adams, reportedly spent over a million dollars in trying to design their own innovative can.

It is interesting to see all these brewing companies investing so much into providing so many innovations when in reality it does not change the actual product that is being consumed. Beer seems to be a product that is defined simply by consumers choosing it for its user-based and value-based aspects of quality. There is no secret to why people buy beer. Top executives at Anheuser-Busch are claiming that with their innovations they are trying to target consumers who are “trend-setters” and like to be ahead of the curve. Surely the companies realize they they are not changing the product, but instead trying to differentiate it by adding to the experience of drinking. By adding certain innovative features to the can, companies are trying to add quantities to their product attributes. In reality, the actual beer is the primary product and its primary characteristics are not being changed or altered by the changes being made to all these different beer cans. If anything, the changes to the beer cans appeal to the dimension aspect of quality since they are creating additional secondary characteristics for a simple can. Adding features that supposedly allow for easier, faster, and colder drinking does not change what the end result will be from consuming beer out of these innovative cans.

Next time you find yourself ordering a beer, keep in mind that the new can you might have in your hand has been designed to help you with your beer drinking experience.

 

 

http://business.time.com/2013/05/11/my-beer-can-is-better-than-yours-aluminum-can-ovations-for-better-beer-drinking/

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

KFC China: Straying too Far from Kentucky?

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Bloomberg Business Week featured KFC, a Yum brand restaurant, in two recent articles focusing on the brands Chinese storefronts. KFC, a household name in US fast food chains, has been suffering in several different aspects. Originally tied with the name “Kentucky Fried Chicken”, KFC has evoked feelings of unhealthiness with US consumers for years, and has suffered sluggish sales. However, the chains crowning glory has been KFC China which has been a start for Yum brands and been increasingly profitable.

Recently, however, KFC China has suffered from image issues and quality problems, and therefore there sales in China have been dipping. For KFC in the past, unhealthiness was not as much of an issue for its Chinese counterpart, because it brought a unique competitive advantage: its traditional American menu. KFC China took a different approach that may have ruined that competitive advantage, by trying to adapt the menu to the Chinese audience and adding traditional Chinese fare. So far it appears that this was not a wise choice, and consumers are left wondering what happened to their beloved American food. KFC needs to reassess their product design to match the wants of the Chinese customer base.

On top of this reconstructed image issue for KFC China, what may have been even more damaging was quality control issues. A history of poor quality issues can be severely damaging to a brand, especially one associated with the food industry. Consumers take extra precautions with what they are putting into their bodies, so when news of KFC chicken containing “unacceptably high levels of antibiotics” the chain suffered. This on top of already high concerns dealing with avian flu, made Chinese consumers even more skeptical about consuming this product. This illustrates, how damaging a quality issue can be for a brand, as discussed in Chapter six.

KFC China had been so successful in the past, that Yum has considered completely selling the United States stores in order to focus on those abroad that were growing at a much faster rate. However, if they continue to have these image and quality issues in China, getting rid of US stores may be a poor choice.  If KFC abandons its US stores, does that destroy its image of being a classic American restaurant even further? Only time will tell what happens to this brand, but it is crucial that Yum and KFC managers assess this project.

What are your thoughts on KFC and KFC China?

Questions for discussion:

1. Should KFC focus on one brand or the other? Or continue with both?

2. How should a major fast food brand adapt to international markets? Maintain their original image, or add traditional food, specific to the location?

3. Where to you see Yum and KFC moving in the future?

Article Links:

http://www.businessweek.com/articles/2013-05-16/kfc-loses-its-touch-in-china-its-biggest-overseas-market

http://www.businessweek.com/articles/2013-05-14/should-kfc-rethink-its-china-strategy

 

Elimination of Enrollment Bottleneck: Graduates Who Don’t Do Science.

Bottleneck
Source: xda-developers.com

In class, we learned that a bottleneck is the longest activity that is the limiting factor in operations management. Managers want to match capacity and design while still maintaining the greatest efficiency possible.

Education is no different as it follows basic business rules. Schools increasingly want students to graduate, get jobs, and eventually donate back as alumni. Universities across the country have a problem with so called “bottleneck courses,” which prevent students from graduating. California State University (CSU) reports about 30 such courses that have a high rate of failure, including math, science, and history. Those courses distract students from their major studies and often cause failing or withdrawing, if not dropping out of college altogether.

science-lab
Source: brightlandcollege.in/

CSU wants to address the bottleneck courses by providing science labs online and moving away from traditional in-person classes, especially for students who do not major in science. CSU does not have sufficient capacity to match demand for bottleneck classes due to limited lab space. Virtual labs are a way of offering more lab sections and thus increasing enrollment and moving more students through the system (increasing the rate of graduation).

Low cost of such classes coupled with high demand means more money the school will earn and able to re-invest. However, CSU’s solution to bottleneck science courses raises concerns over the quality of education given. In-person classes are especially important for science labs; a biology department chair at CSU, Jeffrey Bell, says, “my biggest concern, especially with freshman classes is you don’t want students seeing reality as a video game—a key thing in science is we investigate reality.”

Before we can argue about the quality of such courses, let’s ask ourselves: “what is the real value of education?” The content that is learned in science classes is available online. Therefore, the content is not the sole value of education, but rather a college experience: the ability to interact with the professor and peers on one-to-one basis. But just how important is the experience for non-science majors who just want to pass the class to graduate?

mc900439404
Source: biofluff.files.wordpress.com

CSU’s demand far exceeds school’s effective capacity, mainly due to struggling students repeating the class. School’s solution to increase the capacity through online sections to match enrollment demand is one way of managing the problem. School could also manage demand by increasing capacity—building new science labs and hiring more professors. This long-term solution would ensure that struggling students are offered adequate in-person help, rather than let them pass without a sufficient knowledge of science.

CSU’s tactic for managing bottleneck science lab courses is rather new, thus raises concerns about its quality, especially in the time when U.S. students lag behind in science and math compared to other countries. Is removing this bottleneck sacrificing or improving the quality of science lab courses? Will this decision eventually lead to graduates who do not have sufficient knowledge of science or scientific thinking? Can you think of other solution to tackle the bottleneck course problem?

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Source: www.scpr.org
Sources:

Reebok: Using CrossFit to Fire Up the Intensity

reebok

Many of us have heard of the fairly new workout brand CrossFit that has been sweeping the world for the past decade or so (2000). Some of you may even participate in the ultra intensified fitness regiments at your local CrossFit gym, or “boxes” as the growing cult has come to call them.  For those of you who are unfamiliar with CrossFit, it is an exercise program that advocates a mix of aerobic exercise, body weight exercise, gymnastics, and Olympic weight lifting that requires an individual to “to keep up the intensity, each and every time.” What does CrossFit have to do with total quality management within a corporate conglomerate you ask?

Well it just so happens that Adidas recently purchased Reebok back in 2006 and the company has been struggling mightily ever since the latter lost its decade long contract to outfit the National Football League last April to its biggest rival, Nike. This loss will reportedly cost Adidas an estimate of upwards to $250 million in lost revenue annually, a crushing blow to a company that was already being scrutinized for its purchasing of the floundering organization that had become Reebok. Reebok has also suffered heavy losses from lawsuits regarding their falsified health claims of their new “toning” shoes that deceived consumers. These allegations were brought forth by the Federal Trade Commission and required Reebok to pay nearly $25 million in total refunds. To top it all off, there has been turmoil within the infrastructure of the organization as an investigation has been prompted relating to alleged fraud by two former executives. However, there may be a silver lining yet for this once promising business transaction as Adidas hopes that sponsoring CrossFit using their newly affiliated business partner Reebok as its representative will not only reverse the current trend of posting a decline in sales the last three of five years, but also restore the brands image as a major powerhouse in the industry that is a force to be reckoned with.

adidas

Adidas continues to stand by there decision to purchase Reebok and hopes that their new two year deal with CrossFit will help them accomplish their goals that they set for themselves prior to their recent setbacks. In hopes of reaching the $3 billion objective for 2015, Adidas believes that their sponsorship of CrossFit will help speed up the process and provide them with some insurance they desperately need. The rapid growth of the CrossFit health craze is most certainly a positive sign for pulling Reebok out of the gutter as more than 3,000 gyms have popped up worldwide. The cult-like fitness routine seems it will continue to grow in popularity in the future as people gravitate towards the infectious atmosphere of the contagious motivation/energy and the promise of a complete workout in under 20 minutes. Will Adidas end up regretting their decision to purchase Reebok in the future? Or will the new addition of Reebok and the sponsorship of CrossFit pay off in the long run?

 

Source: http://www.businessweek.com/articles/2012-06-21/how-adidas-is-whipping-reebok-into-shape