Blogging

So I decided to start blogging. It seems like an interesting idea and it could become fun!

Assignment #3: Business Analysis Report

Business #1: H&M
H&M is a clothing store that focuses on providing customers with great fashion and quality at the best value. The business was started in 1947 by Erling Persson in Vasteras, Sweden. Currently, H&M have over 2200 stores across 41 markets. The business's industry is multinational. Their products include affordable clothes, accessories and footwear. They target families and teenagers with potential. Their target market also depends on the location of their store. H&M is cost conscious and they have an advantage because they efficiently distribute their products. The reason that H&M have been so successful is because they have affordable clothing and they always have an attracting atmosphere. Some weaknesses include quality of jeans and low supply of sizes on products.

Business #2: Seattle's Best Coffee
Seattle's Best first started in 1970. Their main products was coffee. They target coffee drinkers that want the best coffee out there. Pricing of Seattles has to include inventory, labour, building costs, and advertising. There are five stages of production. This is an overview:
§ Ranking their coffee in levels:
1: mild, light, and crisp
2: bright lively, easy drinking
3: balanced, smooth, full flavoured
4: rich, elegant, complex
5: bold, dark, intense
§ Growing:
-Work with coffee farmers to ensure quality standards are met.
-Responsibly grown and ethically traded coffee
-Coffee cherries are grown on trees and contain 2 beans
§ Sourcing:
-Obsessively taste dozens of coffee bean shipments
-Beans are tasted a minimum of 3 times a day so they match up to a level
§ Blending:
-To balance Level 3, the best beans are sourced and then blended together before roasting.
§ Roasting:
-Each level requires its own finely calibrated roasting curve
-The gentle roasting process coaxes the flavour out of each bean while producing the signature Seattle’s Best Coffee.

Business #3: Starbucks
Starbucks is an multinational industry. Their main goals are to inspire and nurture the human sprit, one person, one cup, and one neighbourhood at a time. They started in 1970 where the first Starbucks in Canada opened on March 1st, 1987 in Vancouver, B.C. The name "Starbucks" came from Herman Melville's novel "Moby Dick." Currently, there are over 6,000 locations in over 30 countries. In country, there are over 785 company-operated stores and over 266 licensced concept stores. Employees at Starbucks are called "partners." Starbucks main products are coffee, coffee beverages and pastries. Their main competition include Second Cup and Tim Hortons. Starbucks has an advantage over their competition because employees are friendly, food is fresh, service is fast, and coffee is never served more than 30 minutes when it was brewed.

Business #4: Cora
Cora is a licensed chain restaurant that started in may 1987. The chain was started by Cora Mussely Tsouflidou who bought her first diner in Montreal. The main goal of Cora was to change the generations eating habits and to promote the importance of breakfast. Currently, Cora has expanded over 120 franchised restaurants. Their main products are breakfast favourites such as omlettes, waffles and crepes.

Business #5: Ikea
Ikea is a furniture store that was founded by Ingvar Kamprad in 1926 in Smaland, southern Sweden. Ikea's vision was to provide well designed furniture at low prices so that they could create a better life for people. Ikea has over 280 stores in 26 countries. Sales revenue were at 23.1 billion annually. Ikea's business idea was based on their relationship with the customer. They start off by working with manfacturers and then their buyers look worldwide for suppliers with the most suitable raw materials, then they buy bulk materials on a globe scale to get the best deals and the lowest price.

Comparing Market Structures

https://docs.google.com/spreadsheet/ccc?key=0Au5cuYUXsI63dHctaTREWUZud0M2Z3FoVzZQTzQ0MlE&hl=en_US#gid=0 - this is the graph, you can access it through your SAIT email

Defining Oligopoly and Game Theory

Game theory is the act of analyzing firm behavior that highlighrs mutual interdependence among firms. It was developed by John Neumann & Oscar Morgenstern. They came up with the idea to analyze strategic behavior. The payoff matrix is the figure of the outcome of if Aman and Omar keeps their aggreement for trade. It also shows the possibilities of what would happen if one of them cheat and the result for the other party. Cartel is where sellers act in unison.

Source: Textbook, Chapter 11 (pages 387-394)

Competing as Starbucks

Starbucks can be considered to be part of a perfect competition market because compared to other companies, they are one of the top successful. With their friendly "partners" (employees), great training, fresh products, variety of merchandise and over 10 different types of coffee beans to purchase, compared to the competition, I would choose Starbucks. Starbucks would realign their business practices mainly to satisfy the average customer. For example, Starbucks has changed the height of their bar and their espresso machines so that customers were seen. This is to provide the partners a chance to connect with their customers. Starbucks also wanted to change recipes of their products to meet quality expectations.

Starbucks had to close down stores because they were unprofitable due to the fact that another nearby Starbucks were taking all their business. Starbucks is planning to close down 5% of U.S. stores. The reason being is that they are trying to boost its stock prices. Starbucks would have lost profits due to store closures. Long run costs to stores would be advertising, and inventory costs.

To compare to Starbucks for me is easy. This is because I am currently working as a shift supervisor. As an employee, I still think that our products are expensive. At least once a day, I get a customer saying that a product is too expensive. But they have to know that we need to cover inventory costs, equipment and labour. I once had a customer tell me that Starbucks is too expensive that they are the reason people are on welfare. I think this is unfair because we are not forcing people to be our customers, we are just known to provide a excellent experience to customers. I think that if Starbucks were to lower prices, demand would increase and supply would decrease, maybe causing a slight shortage.

Sources: http://starbucksgossip.typepad.com/_/2007/02/starbucks_chair_2.html

http://www.cbc.ca/news/business/story/2008/07/01/starbucks-closures.html

http://seattletimes.nwsource.com/html/businesstechnology/2008028854_starbucks02.html

Long Run Costs and Economies of Scale

I have looked at Andreas blog, but I did not find a business idea of hers. Sorry about that.

Law of Diminishing Returns

The article that is being expained is about tobacco legislation. It explains reasons as to how tobacco leads to many causes of different types of diseases. The reason that the debate for tobacco legislation is lessend is that remaining smokers are usually ones that value smoking and need higher disincentive before they quit smoking and also that those smokers that were easily persuaded to stop smoking have already quit.
I think the point of diminshing returns is that too much information on health problems of tobacco consumption is spread and consumers are inelastic to the information. Currently, cigarette consumption is smuggled between 6-8.5 percent in the world· To lessen diminishing returns on tobacco, increasing regulations & taxes would need to come into effect. Currently, the supply and demand are both equal for tobacco. Sin taxes are taxes that are applied towards proscribed goods and services. Examples include tobacco, alchohol, soft drinks and candy. In terms of sin taxes, if the sin taxes increased on tobacco, it still would not affect the consumption of tobacco. Instead, it increases the consumption of tobacco.