Industry competitions Essay Example for Free

Industry competitions Essay As per the case provided by Lencioni (2005), the industry was faced with a 30 % excess capacity and too many companies were chasing fewer customers. The global economy experienced a sharp downturn in 2001 and this lasted will into 2003. Equity prices had fallen and this combined with concerns of oil supplies had created an atmosphere of uncertainty. Sales of automobiles had declined in almost all the markets. BMW was listed 6th in the largest manufactures list and had a sold 1. 12 million vehicles in 2003 with sales of 41. 52 billion Euros while General Motors which stood first had sold 8. 5 million vehicles and had sales of 157. 19 billion Euros (p. 735). Please refer to the following illustration for details. Figure 2. BMW and the Five Major Companies in 2003 (p, 735) There was bitter rivalry among the manufactures and they indulged in price wars and the bid to lower the price, while costs were rising were hurting the finances. All the manufacturers made good quality cars that had less than 53 defects per 100 vehicles and clearly the cars lacked unique differentiators and customers had little way of knowing which was what. Clearly only cars that had very good designs and looks were favoured. All the companies wanted to reduce costs and a few companies had shifted the base to China and India. BMW with its reputation for excellent German engineering and good designs had a slight edge (p 735). Suppliers The suppliers of the industry included the hundreds of vendors, job workshops, parts suppliers and so on. They did not have much of an advantage or bargaining power since the car manufacturers were themselves in trouble and they could easily switch suppliers if a need arose (p. 736). Potential Entrants The treat of potential entrants was not very strong as new manufacturers could not scale to the global level quickly. But companies such as Toyota had created a strong brand awareness for quality, fuel economy and service and cars made by Toyota had become increasingly popular, at least in the mid class of cars. Potential entrants would have to devote enough resources for the engineering and then again spend on advertisements and companies were spending up to 50 billion USD on advertising and marketing and this worked to $ 2, 900 for each car sold. BMW had already created an image for excellent quality cars that were powerful, had good design and also very less problems (p. 737). Buyers It was a totally buyers market and there were hundreds of varieties of cars made by leading manufacturers and they could demand excellent quality. In addition, the buyers also demanded discounts, free insurance, zero percent interest loans and many other services. BMW cars were priced at the mid and the upper levels and in this category, buyers were extremely brand conscious. BMW has new versions such as the X5 and Z6 models along with other brands, but it was seeing declining sales. Research conducted in 2003 showed that consumers based their indirect and direct experience measured different brands performance against the criteria of brand excellence and cost of ownership (p. 736). Substitutes The problem with the automobile market was that the customers could not make out any difference between the cars since all the manufactures gave an emphasis on quality and had dedicated design engineers. In the low and mid class segments, the problem was much worse but BMW did not operate in this class (p. 737). Future Changes The future changes as described in the case and with reference to BMW is the distinctive identity that young and affluent European professionals had a desire for. Most drivers perceived high performance saloon automobiles as synonymous with BMW and it was a sign of affluence to own one of the vehicles. There was a pressing urgency to control costs and BMW had manufacturing bases in countries such as China were skilled labour was available at lower costs. It had plans to produce 1,50,000 cars by 2008 from its plants in China and was planning to invest 480 million USD by 2005 (p 738). Figure 3. BMW Growth and Performance Figure (p. 738) However, there was pressure to reduce the costs and orders to divest the expensive and ill Rover acquisition that was bleeding talent and money. There was pressure to sell the expensive models in China since Europe was saturated with high brand vehicles. Q 2. WHAT DIRECTIONS AND METHODS OF STRATEGIC DEVELOPMENT DOES BMW APPEAR TO FOLLOW? Lencioni (p. 740) has pointed out that that BMW was in a tight financial position. In spite of the great sales talk, it still lacked the big money required to get the better of the big companies. The company was still a niche player and did not have the large volumes required and it had only a few models. Also the size of the company was modest and the future lay in the hands of the Quandt family that had propped up the company. They were vulnerable to acquisition if the Quandt family decided to dispose of the company or sell of their shares. The company was actually operating in the niche segment and in 2002, it decided to roll out a new model every 3 months and the models would range from the mini size to the Rolls Royce Class of vehicles. There were certain risks as increasing the output at the level planned by the company could threaten the very reason for BMWs great success, a strong but simple theme summarized by the line the ultimate driving machine. The company had been able to exploit this brand identity very profitably and globally wherever their niche could be found. The brand could be extended but there was a fear of diluting the brand. Also there was a fear that by introducing too many closely positioned brands there was the fear that one brand would cannibalise the other. Also by increasing the production of smaller cars could have the effect of reducing the historically high margins enjoyed by BMW as moving into the smaller cars meant earning lesser margins. Competitions in this lower segment were volume driven and operated with much lesser costs. Another issue was quality and with pressure on costs, the risk of quality lapses was bound to increase. The consequences of quality defects in the premium segments could be very heavy. Another route was outsourcing of components but again this meant a compromise on quality (p. 741). REFERENCES Lencioni Valeriano. 2005. BMW Automobiles. (eds) Exploring corporate strategy, by Johnson, Scholes and Whittington. pp: 734-741 Mc Donald Malcom, 1996. Strategic Marketing and Planning. Cranfield Management Series. ISNB 0749420960.

Positive Effects of Conservation Tillage Essay -- Agriculture Farming

Positive Effects of Conservation Tillage For centuries farmers have used plowing as a tool for weed control, and in some cases to promote plant growth. At first man had used animals to pull plows and other equipment, with the invention of the tractor work that would normally be done with animals could be done more easily and quickly. Although plowing has been a common and widely used tool for managing weed control, there are many negative impacts associated with this method. Conservation tillage is a method where some of crop residues, if not all of crop residues, are left on the surface of the soil. Conservation tillage methods have become popular in many areas around the world, and while many of the effects of conservation tillage are still under research, many farmers have found that it helps to not only protect the health of their fields, but also that it saves both time and money. Research shows that conservation tillage has many beneficial effects such as the reduction of soil compaction, increases in biodiversity, higher crop yields, decreases in erosion, reductions in fuel requirements and other capital inputs for machinery, and up to a seventy percent reduction of preharvest labor. Researchers are not the only ones that are noticing that conservation tillage has a promising future which combines low labor requirements with low erosion rates (Giere, 2002). In America, eighteen percent of crop fields are managed using conservation tillage methods, and in Paraguay ninety percent of fields are managed with conservation tillage methods (Karasov, 2002). Though the percent of conservation tillage in the United States may not be as high as other areas in the world, it is projected that nearly eighty ... ...2004, October). To Plow or Not To Plow: Balancing Slug Populations with Environmental Concerns and Soil Health. Agricultural Research, 16- 17. Durham, S. (2003, March). Drought Survival with Conservation Tillage. Agricultural Research, 22. Giere, J.P., Johnson, K.M., & Perkins, J.H. (1980). A Closer Look at No-Till Farming. Environment, 22(6), 15-20, 37-40 Karasov, C. (2002, February). Spare the Plow, Save the Soil. Environmental Health Perspectives, 22(2), A75 Machado, A.F.L., Jakelaitis, A., Ferrriera, et al.(2005). Population Dynamics of Weeds in No-Tillage and Conventional Crop Systems. Journal of Environmental Science and Health, B40, 119-128. Runion, S.B., Prior, S.A., Reeves, D.W., et al.(2004). Microbial Responses to Wheel Traffic in Conventional and No-Tillage Systems. Communications in Soil Science and Plant Analysis, 35, 2891-2903.

Netflix Risks Essay

Netflix was founded in 1997 and is headquartered in Los Gatos, California. Netflix is a company that provides online movie rental subscription services in the United States. The company offers its subscribers access to a library of movie, television, and other filmed entertainment titles on digital versatile disc (DVD) and Blu-Rays. Its members can get DVDs delivered to their homes and can instantly watch movies and TV episodes streamed to their TVs and PCs. It also partners with consumer electronics companies to offer a range of devices that can instantly stream movies and TV episodes to members’ TVs from Netflix. Netflix entered the rental entertainment industry at a time where Blockbuster was king and renting movies required the consumers to drive to the store. However, Netflix realized that through innovation there was a much more efficient and cheaper way to provide the same service than the typical brick-and-mortar companies of the time. Customers of Blockbuster and other store rental places were attracted to the new features (monthly subscription, no late fees) provided by Netflix. Through innovation Netflix basically â€Å"changed† the way movie rentals were done and eventually became the leader of movie rental industry while Blockbuster and many other companies eventually became bankrupt. Netflix’s story of success is also one of caution as Netflix realizes that they will continue to face many risks throughout their business cycle and if they don’t anticipate and/or respond correctly, they too could face the same result as Blockbuster. As of December 31, 2009, Netflix served approximately 12 million subscribers. Currently, Netflix claims on its website to have over 20 million members, making it the leader in rental movie industry. However, Netflix faces many competitors that provide similar services: Comcast, Redbox from Coinstar and even Amazon is planning on also offering streaming services to its prime members. Therefore, if Netflix is to remain as the industry leader and continue its earnings and membership growth it will have to continue to innovate with new ideas. Generally, innovation requires a huge investment from companies in their Research and Development departments. These investments can come out from the companies own cash flow or from issuing loans. In order for a Company to decide if an investment is worth the money it uses either Net Present Value or Internal Rate of Return techniques which basically state that if the return on the investment is greater than the cost, then the company should go ahead and invest. But what is the cost of the investment? If Netflix plans to borrow money, then the cost will be the prevailing interest rate at the time of Issuance of the loan plus a spread premium for specific characteristics pertaining to Netflix. This poses a financial risk on Netflix, more specifically this is called interest rate risk. Interest rates tend to be volatile and there are many different theories (expectations theory, liquidity theory, preferred habitat theory, market segmentation theory) yet nobody really knows 100% for sure if interest rates are going to go up or down and by how much. However, based on the expectations of Netflix’s analysts they have a few choices on dealing with this risk depending on their expectations. If they expect interest rates to go up, then they should issue a long term bond or note now, because if they wait and interests rates do go up then it will be more costly for them to borrow the money they need which might end up affecting the Net Present Value of their investment project. On the other hand, if Netflix expects rates to go down then it will not be a good idea for Netflix to issue out a long term bond or note because if rates eventually do drop then Netflix be essentially borrowing at a higher rate than the prevailing market rate. So what Netflix should do instead is to issue short term debt such as commercial paper and continue to roll it over until they expect that interest rates have reached the lowest and then issue a longer term bond or note depending on their investment project. Finally, the other option for Netflix is that, if they are not sure if interest rates are going to go up or down, they can still hedge against this risk by issuing a long term callable bond so that if interest rates do drop significantly Netflix can call its debt back and reissue at the lower rate. Another way that Netflix has been and plans to continue expanding its membership is by offering its services abroad. In fact, Netflix has already entered the Canadian market and is in the process of offering its services in the United Kingdom. Obviously this is great news for Netflix shareholders however going international also brings additional risks. One of the major risks that we foresee would be exchange rate risk. For example, when Netflix starts to offer its services in the United Kingdom, it will have to decide on what it will charge its British customers a month. However, it will have to do so in pounds, which is the local currency. If for example, we assume that Netflix charges its U. S. customers 10 dollars a month for its services and that it wants to charge the same real value to its U. K. customers, if the pound/dollar exchange rate is . 5 pounds for 1 dollar then Netflix would have to charge its U. K. customers 5 pounds a month. However, interest rates are constantly changing and if Netflix doesn’t do something about this risk then its cash flow would be constantly changing. For example if the pound depreciates against the dollar to . 75 pounds for 1 dollar then the dollar value from its U. K. customers’ 5 pound subscription will now be only worth $6. 67. Netflix could deal with this cash flow loss in two ways, a good way and a bad way. The bad way would be to constantly adjust the prices up and down to its U. K. customers so that the real dollar value remains about the same, however we feel that customers wouldn’t appreciate this price volatility and Netflix would potentially lose many U. K. customers. The good way for Netflix to hedge against exchange rate risk would be to enter the futures market on currencies and lock in on a pound/dollar exchange rate that way any future volatility on the exchange rate wouldn’t affect either negatively or positively on Netflix’s international cash flows. Netflix also faces several nonfinancial risks. Netflix began its ground-breaking entry into the movie rental industry with its mail order system, but the mail order system is not the sole source of its success today. In fact, Netflix’s CEO Reed Hastings has admitted that a lot of Netflix success has been due to do their online streaming content. As an actual Netflix customer myself, I admit that I spend a lot of time streaming movies and shows online, in fact if Netflix were to only offer its mail order system, I would stop being a customer. If other Netflix customers’ value their online service as much as I do then this signifies the important value that the movie streaming services has for Netflix. But what if, something happens (virus, human error, etc†¦) and Netflix’s servers go down and they are unable to operate its streaming function for a couple of days? A couple days may seem trivial however it could potentially mean an enormous amount of lost profit due to unhappy customers. In order to avoid this type of scenario of ever happening, Netflix should think of ways to confront this operational risk. One idea would be to spend money in acquiring backup servers so that if the main servers were to go down for whatever reason, Netflix would be able to switch to their backup servers and therefore customers could continue to stream their favorite movies and shows online while Netflix worked on fixing the problem with the main servers. Even though Netflix is headquartered in Los Gatos, California, it has many â€Å"warehouses† around the United States that deliver movies to customers near their locations. Because of this, Netflix faces many different types of â€Å"pure† risks depending on the location in which their warehouse is situated. Pure risk is a type of risk that involves either a chance of loss or no loss. An example for Netflix would be an earthquake in Los Gatos California, or a tornado in its warehouse in Omaha, Nebraska. Pure risks have tremendous abilities for loss because they cause both direct and indirect losses. If for example, a tornado destroys the Netflix warehouse in Omaha, Nebraska, the direct losses would be the costs of the destroyed warehouse, but at the same time there would be indirect costs such as the costs of perhaps losing customers around the Omaha area because now their movies have to ship from a different warehouse which could potentially take many more days to arrive. Unfortunately, there are no ways to prevent catastrophes such as fires, earthquakes, tornadoes, etc†¦ However, these high severity, low frequency situations are part of life and therefore a part of Netflix’s business risk. The best way for Netflix to deal with these types of risks are either to self insure by saving a certain amount of money each month or they can do an insurance transfer and pay insurance premiums but not have to worry about these pure risks. As shown in the movie â€Å"Mind Over Money†, human emotions play a major role in driving the market. Netflix should pay attention to such matters as the company could be affected by the irrational decisions people make. Investors have recently been talking about Netflix prices being over priced and it depicts a bull market. Bull markets are characterized by optimism, investor confidence and expectations that strong results will continue. It’s difficult to predict consistently when the trends in the market will change. Part of the difficulty is that psychological effects and speculation may sometimes play a large role in the markets. Therefore, similar to what is shown in the movie people will make irrational behavior and it could lead to the sudden collapse in the market for Netlix. This can be a major risk to the company. Netflix started as a mail order movie rental company in 1997 and through much innovation it was able to not only establish itself in the movie rental business but actually be a leader. Throughout its path from rags to riches, Netflix faced many types of financial and nonfinancial risks and was obviously able to overcome them to reach where it is at today. However, the risks don’t stop now and Netflix is facing strong competition from other movie rental companies and in order for Netflix to stay on top it will have to continue to be innovative and also continue to properly deal with any forthcoming risks.

A Study On Public School Teachers - 3507 Words

Chapter One Introduction of the Study A lot of things contribute as to why one person becomes satisfied on his job. There are also a lot of factors by which one prioritizes and eventually will result into something that might be in his favour or might be the other way around. In line with how human resources are being handled by management, the ones who decide should weigh a lot of variables before one becomes hired. As for the situation of public school teachers in Asia, it is imperative to note that how these teachers perform somehow depends on how much the government is willing to spend on them in order for the school children to get quality education through the expertise of the teachers. With this, it is only forming a cycle in which one depends on the other which another entity depends on it. According to Yee (Yee, Yeung Cheng, 2008), companies strive to become better in order for them to reach their goals and objectives. This is also the main reason why the public or the government sector is continually developing and innovating strategies which will give the employees that sense of satisfaction in improving their performance. He also added that having satisfied employees who do their work, present a higher probability of behaving and doing their job more efficiently. By innovating ways on how employees can feel satisfaction on their work, it is also a way by eradicating factors that can cause dissatisfatction. Job performance has been defined by CampbellShow MoreRelatedHigh Levels Of Teacher Turnover Negatively Affects Student Achievement1596 Words   |  7 PagesIntroductory Statement: According to studies like those done by the Harvard Report, research has shown that high levels of teacher turnover negatively affects student achievement. 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