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Subscription Charging Plans for Electric Cars?

May 27th, 2011 Comments off

Th!nk City electric cars at a test drive event, Washington DCOn Monday, The Wall Street Journal ran a special section about transportation in the future.  The thing that caught my eye, though, wasn’t the predictions about futuristic high-speed rail networks or the fact that new fuels would replace oil-based products.  What I found interesting was that as charging networks are built-out across the country for electric cars there is a high-likelihood that a subscription-based model will take hold.  Similar to mobile phones or health-clubs, the price someone pays will be the same each month regardless of how much they use the service. In the context of what we’ve been talking about with regard to variable and fixed costs this is an important idea.  To be sure, it is a huge investment to install the equipment at very high fixed cost before many people need the equipment, but companies that do so are hoping for a payoff in the future.  Signing up customers at fixed prices (via a subscription model) will allow them to lock-in revenues rather than be subject to changing volumes over time.  I guess we’ll have to wait and see if the subscription model is really the one that comes to be, but it is interesting that it is the leading candidate right now.

Tomorrow’s Transport (A Special Report) — Charge It!: If electric cars take off,they will need a network of charging stations; but how will people pay? Mike Ramsey. Wall Street Journal. (Eastern edition). New York, N.Y.: May 23, 2011. pg. R.7

Target tests “green” refrigerant at 11 stores

May 18th, 2011 Comments off

As mentioned in class, companies are taking a close look at environmentally-friendly initiatives and sustainability.  Management accountants can help with this by identifying opportunities and measuring performance against environmental criteria.  In a local example, Minnesota-based Target was featured in a Star Tribune piece this week as testing a new refrigerant at 11 stores with the idea that it could be expanded to other stores if it is successful.  This new material is supposed to result in fewer leaks and, ultimately, reduce operating costs though I’m sure Target will play up the fact that it is using “green” chemicals and processes as well.

The bottom line is that the gas is a “high temperature” refrigerant less prone to leakage and more energy efficient. It is also used in automobile air conditioners.

“These are very complex systems,” said Target’s Dan Riley of the coolers and freezers in the chain’s “PFresh” food sections. “In each Target store there are many, many miles of coils. At every junction there is an opportunity for a leak. These [existing] gases are very leak prone. They are under pressure.”

In December, Target announced its commitment to sustainability and the GreenChill program fit into the chain’s intention to use resources responsibly and reduce the company’s carbon footprint.

Ultimately I don’t think many companies will do things like this if they don’t see a benefit in terms of reduced costs or marketing opportunities, but those opportunities exist and the planet and society can benefit as a result.  Management accountants need to be prepared for this role and to seize the opportunities.

Target tests green chillin’; The retailer is trying a new, more energy-efficient refrigerant in 11 stores around the country as it tries to go green. By David Phelps. Star Tribune. Minneapolis, Minn.: May 15, 2011. pg. D.4

Wal-Mart sharpens low-price focus

April 11th, 2011 Comments off

Here is a piece that looks at Walmart’s efforts to move back the clock to a time when they were more closely aligned with Sam Walton’s vision.

Powerful snow blowers seem like a key item to keep in stock in Minneapolis, where residents need to uncover their driveways and sidewalks from about 50 inches of snow each winter.

But a couple of years ago, Wal-Mart decided to take some snow blowers, ice-fishing gear and other goods out of its Minneapolis-area stores.

Eliminating that merchandise was part of an effort the world’s largest retailer kicked off in late 2008 to get rid of items nationwide that were not top sellers and promote deep discounts on other more popular goods.

 

Wal-Mart sharpens low-price focus | Reuters.

Hulu Reworks Its Script as Digital Change Hits TV

January 27th, 2011 Comments off

Like music and telecommunications before it, the digitial revolution is set to hit TV hard in the next year or two.  One player that has emerged is Hulu, a joint-venture owned primarily by the companies that control the legacy broadcaster Fox, ABC, and NBC.  What is interesting is that NBC is now controlled by cable TV giant Comcast and Hulu may end up being a big threat to the cable TV industry.

Even before now, the culture of Hulu that has made it successful has clashed with the culture of its owners:

The partners hired Mr. Kilar, former general manager of Amazon.com Inc.’s North American media business, giving him autonomy to chart a new course. Mr. Kilar, 39, was determined to create an independent corporate culture closer to the tech world than the tradition-bound television business.

The company built a Silicon Valley-inspired startup in a low-slung office park in Santa Monica, a few miles west of its Hollywood owners. In the break room, engineers modified a refrigerator to house a beer keg, cutting a hole in it to fit a special tap in the shape of Hulu’s logo.

Mr. Kilar gave new hires a culture manifesto, an 1,100-word document that paints Hulu as a frugal meritocracy where “Fruity Snacks boxes hold up our monitors,” but where everyone has a “neurotic focus on quality.”

In an office expansion, Mr. Kilar and senior managers gave up their offices to sit at desks in an open floor plan among hundreds of employees, underscoring Hulu’s egalitarian approach.

It wasn’t long before the new venture clashed with owners’ established ways.

What is interesting to me is that Hulu may need a certain kind of culture like the one it has created but that may be prevented by those clinging to the past. Ultimately some company or group of companies will write the future of what TV looks like…the legacy players need to decide if they want to be part of that ride or not.  There has already been upheaval at Hulu (read the rest of the article linked below) as they bring in people with cable/satellite backgrounds to manage operations instead of people from tech/startup backgrounds that were running things initially.  This is a great example of how culture can impact a business, possibly negatively.

Hulu Reworks Its Script As Digital Change Hits TV. Sam Schechner, Jessica E. Vascellaro. Wall Street Journal. (Eastern edition). New York, N.Y.: Jan 27, 2011. pg. A.1

Simon Sinek on Leadership

January 26th, 2011 Comments off

This is the video we watched last week in class that spells out a simple model on leadership and looks at why some companies and individuals succeed where others (that are seemingly in a more advantageous position) fail. To see an HD version or to download the complete file to view later, visit TED.com.

Bill George: Corporate Responsibilty Extends Beyond Profits

January 24th, 2011 Comments off

Bill George, former chair and CEO of Medtronic and current Harvard Professor, is one of the nation’s most outspoken leaders when it comes to the role corporations play in society.  I discovered his recent opinion piece in the Star Tribune when I read a rebuttal by Howard Root to it in today’s newspaper. 

Bill George:

A short-term focus on shareholder gains has substantially increased the velocity of stock market trading. In the past 25 years, holding periods for stocks have fallen from eight years to six months. CEOs focusing on meeting the demands of short-term investors have led to the destruction of many once-great companies, including General Motors, Sears and Enron. This culminated in the 2008 global financial meltdown, when over-leveraged financial institutions collapsed as they tried to maximize short-term value.

Howard Root:

 But George conveniently inserts the words “short-term” into Friedman’s philosophy. Contrary to George’s assertion, to maximize profits does not mean to focus only on today and ignore long-term growth. To maximize profits also does not mean to make poorly designed products (as GM did) or to fail to adapt to the popularity of the big-box retail concept (as Sears did). Friedman did not advocate short-term thinking, but rather that a corporation’s only constituency, both on a short-term and a long-term basis, is the shareholder, and that management’s favorite societal causes are irrelevant to its business goals.

I think both authors make excellent points througout their pieces and I think in an odd way (for writing and having seemingly opposite viewpoints) they can both be considered “right” when it comes to this argument.  Root conveniently uses extreme examples just as George conveniently leaves out pieces of what MIlton Friedman believed. 

Read both and draw your own conclusions.  Regardless of how any of us feel, I think this idea of corporate social responsibility is one that will grow in the coming years.  I’m not sure whether it is important if it grows because business are pursuing profits (i.e. giving customers what they want) or if it grows because they feel a responsibility to society.  Drawing from Kant and Machiavelli, the ends may justify the means. 

Bill George:

Howard Root

Why Can’t Kmart Be Successful While Target and Walmart Thrive?

January 14th, 2011 Comments off

In simplified terms, we can think of Walmart as a cost leader and Target as a differentiator.  What does that make Kmart?  Can companies get “stuck” in the middle and suffer as a result?  I’m not sure it is that simple, but certainly companies that are not able to either identify their core competencies or that are unable to capitalize on them have a hard time competing.  Kmart seems to be a company that is lost, and they have seemed that way for many years.  Consider this quote from an HBR blog post (link at the bottom of this post)

We believe that all successful companies — Walmart and Target included — know precisely how they provide value for customers. They make a deliberate choice about their “way to play” in the market, guided primarily by what those companies do uniquely well: their distinctive capabilities. We define capabilities not as “people capabilities,” but as the interconnected people, knowledge, systems, tools and processes that create differentiated value.

The blog post goes on to mention the factors that are unique to Walmart and those that are Target’s strengths.  Kmart seems to be unfocused in comparison and the market punishes them as a a result.  Read more at the link below:

Why Can’t Kmart Be Successful While Target and Walmart Thrive? – Paul Leinwand and Cesare Mainardi – The Conversation – Harvard Business Review.

Twin Cities on Target’s short list for urban small-store expansion

December 31st, 2010 Comments off

I posted  about this several months back, but here is an update about local plans for smaller-format Target stores in the Twin Cities.

Twin Cities on Target’s short list for urban small-store expansion | Minneapolis / St. Paul Business Journal.

Outsmarted by Apple: Nokia Looks to Recover the ‘Magic Dust’

December 23rd, 2010 Comments off

It seems like certain industries like airlines, automakers, and mobile phone companies get a lot of attention in strategic management accounting.  This is with good reason as they each tend to highlight several things we discuss.  In terms of the mobile phone companies, the timelines have become so compressed between product introduction to obsolescense that we get to see things happen in months that in the past would have taken decades.  Think about the most recent mobile phone you have purchased…is there any chance that the same model will be on the shelf a year from now?  Doubtful.  Fortunes change quickly and none have been impacted more than Nokia.  Faced with game-changing competition from Apple and Google, this Finnish company is attempting to stay relevant and the next year or two are going to be critical in terms of whether the company will once again dominate the marketplace. 

German magazine, Der Spiegel, does a nice job outlining the challenges faces and the path Nokia has taken to arrive at this point.  You may read more at this link: Outsmarted by Apple: Nokia Looks to Recover the ‘Magic Dust’ – SPIEGEL ONLINE – News – International.

The Atlantic Turns a Profit, With an Eye on the Web – NYTimes.com

December 15th, 2010 Comments off

A great example of a complete revamp of corporate culture that has allowed a print institution to thrive in the digital age, when so many others have failed  Read more at: The Atlantic Turns a Profit, With an Eye on the Web – NYTimes.com.