Archive

Archive for the ‘Blocher Ch 03’ Category

Did Google Arm Its Own Enemies With Android?

November 16th, 2010 Comments off

Photo credit: neeravbhatt.com on Picasa

Smart phones are one of the hottest consumer products these days.  Preferences change and technology advances seemingly overnight.  A piece I found today at HBR looks at the popular Android phones that run on the Google operating system of the same name.

What isn’t obvious is that Google’s strategy in developing the Android operating system for phones was to drive traffic to its advertising centered around its popular search tools since that is where Google makes its money.  In doing so, Google made their software open-source and, as such, allowed handset makers to use it free of charge and also allowed others (as is common with open-source software) to modify the software to suit their needs.  This has turned out to be a threat to Google instead of an opportunity.

The first signs of trouble brewing came out of China. Earlier this year, when Google looked like they were going to withdraw from China altogether, a number of Open Handset Alliance manufacturers realized they could be left selling smartphones in China without access to a number of key smartphone services that Google had traditionally supplied. So they started to look for replacements to Google’s services. The open-source nature of Android made that possible. More recently, Baidu, the internet search engine that has successfully challenged Google for ownership of the Chinese market, has taken an even bolder approach. It’s reportedly in negotiations with a number of smartphone manufacturers to remove all references to Google, and replace them with Baidu.

That was bad news. But what should really have Google concerned, however, is that there are instances of this fight being moved to domestic soil. Microsoft recently negotiated with Verizon that some of the Android phones that ship to Verizon customers will have Microsoft’s Bing, not Google, as the default search engine. And the manufacturers are getting in on the act too: Motorola recently released a new phone, the Citrus, based on Android, but shipping with Bing.

Time will tell whether or not Google can salvage enough from Android to benefit from the endeavor, but this may be a case where unintended consequences spell doom.  Highlighting and learning from botched strategy is as important as looking at the successes so this will be an important development to watch as things progress.

Read more:

Did Google Arm Its Own Enemies With Android? – James Allworth – The Conversation – Harvard Business Review.

Cut Costs, Grow Stronger

October 6th, 2010 Comments off

Money Bag in Blue
I don’t know how I managed to never post this here, but I’m getting a new computer and found the PDF version of this article on my Desktop while I was cleaning things up for the transition.  In fact, I think it was this article that first brought me to the strategy+business website, a great resource that I highly recommend.

This article focuses on cost cutting in the beginning, as evidenced by statements like this:

Dramatic cost cutting gives you a chance to refine or even reformulate your company’s overall strategy.

…but it quickly becomes a piece about strategy, capabilities, and execution as well:

On its own, for example, PepsiCo’s high-performing capability for launching new food and drink products might not amount to much. But PepsiCo also has a related capability: a world-class skill at retail outlet distribution. That capability has made PepsiCo one of the most successful food companies in the world.

There is much to be learned from this great article.  We are perhaps the point where most companies are dramatically slashing costs, but knowing what to do “next time” and focusing on the strategic issues in here are still important.  Keeping strategy at the center of any major decisions, such as which costs to cut, is important and because it at least gets everyone “on the same page.”

Cut Costs, Grow Stronger. To reduce expenses for the long term and lead the way to recovery, start by taking a strategic view of your capabilities. By Shumeet Banerji, Paul Leinwand, and Cesare R. Mainardi. strategy+business.  September 15, 2009

Groupon’s Success Disaster

September 19th, 2010 Comments off

There are some interesting strategic lessons in this blog post about a coffee shop’s brush with bankruptcy following a “successful” Groupon promotional campaign.  A couple that I’ll point out:

  1. Fixed costs are very real and need to be taken into account. High “revenues” are not a measure of success when the costs are even higher than the money coming in.
  2. Being a cost leader (or viewed as one — which is essentially the same thing) can be dangerous because all of the people that want a deal will buy — but only as long as they get a deal.
  3. In a related area, customers that search for “deals” will move on to the next deal when it comes along rather than becoming a long-term customers.

Read more at this link: Groupon’s Success Disaster | Redfin Corporate Blog.

Accountants on the Front Lines of Firefighting

September 17th, 2009 Comments off

WSJ_LogoFor some time now, the AICPA has maintained a website called Start Here, Go Places that emphasizes the fact that real-life accountants don’t all sit in boring, quite cubicles working on spreadsheets and methodically punching adding machine keys all day.  Those efforts are supported by a front-page Wall Street Journal article that details the importance of accounting/finance professionals to the fire-fighting efforts in California.  Managing/measuring costs are central aspects to nearly every industry and fighting wildfires is not exception.

Back at fire base camp, Mrs. Fork’s U.S. Forest Service team calculated the laundry bill. On Sept. 5, 1,914 pounds of clothes were washed, at a cost of $1 a pound, plus $2,150 a day for washers and dryers.

Mrs. Fork oversees a team of 13 who track every penny spent on the massive effort, from a rolling medical center ($2,900 a day), to an outdoor bank of 12 sinks ($2,600 a day). They also make sure every firefighter is paid. The bean counters live and work alongside firefighters in sprawling fire camps, sleeping in tents, waking before dawn and showering in a tractor-trailer.

“Long after the fire is out, you’ll still be dealing with the finance side,” said Station fire commander Mike Dietrich. “Bills have to be paid. And you have to figure out who’s paying.”

The variety available to people pursuing accounting work is seemingly endless.  If you are a person that “can’t imagine sitting at a desk all day,” an accounting career could still fit your lifestyle.

In Fighting Wildfires, They Also Serve Who Keep the Books — Mrs. Fork’s Band of Bean Counters Lives, Works In Firefighter Camps; ‘Mommy, Nana’s at a Fire’. Tamara Audi. Wall Street Journal. (Eastern edition). New York, N.Y.: Sep 16, 2009. pg. A.1

Cutting Costs & Growing Stronger: Strategy is the Key

September 15th, 2009 Comments off

sb-t-sb_logo_mainOne of my favorites sites lately is the one for strategy+business magazine.  Today they posted a rather lengthy piece called Cut Costs, Grow Stronger that relates to so many parts of our class that it really is impossible to capture them all here.  The main theme of this article as I see it, is to reinforce the idea that cutting costs simply for the sake of cutting costs is not a good idea.  Rather, cost cutting should be a action driven by other factors that pushes us to refocus the company’s strategy while looking for opportunities to save costs.

Dramatic cost cutting gives you a chance to refine or even reformulate your company’s overall strategy. After all, you’re never just cutting costs. You’re making a decision that something is no longer strategically relevant, and that other things are essential to keep. Yes, you may have to lose some product lines and activities, and perhaps some of your employees and customers. You also, however, have the opportunity to help your company grow stronger in the process.

It is important to keep corporate strategy central to all decisions including cost cutting initiatives or there is risk that a company will become weaker by cutting the “wrong” costs.

Another reason to keep strategy in mind is that it helps to focus company personnel on their company’s unique capabilities as opposed to playing follow-the-leader trying to emulate competitors.  Trying to do what the competition does can mean lost focus in areas in which a company excels at the very time they need that focus to remain competitive.  Seldom do two competitors even in the same industry compete in the same way — that is the core of differentiation strategy: finding things that you do better than everyone else and emphasizing that differentiation to the marketplace.

The best definition of capabilities, in our view, reflects this essential quality: Capabilities are the interconnected people, knowledge, systems, tools, and processes that establish a company’s right to win in a given industry or business. The right to win, in turn, is a clear path to sustained profitability, higher market share, or both, supported by the critical set of capabilities that will make a difference in that market.

It might seem that companies in the same sectors would need the same capabilities to win in the market, but that is rarely the case. Apple and Dell both compete in the computer market, but their capability sets are completely different. Apple’s success depends on continued product and service innovation combined with a deep understanding of the way in which people interact with technology; Dell’s success depends on rapid delivery, low-priced customization, and high-quality customer service.

There are many great examples in this very relevant article.  Check it out when you have time and refer back to it as we cover different concepts in class.  I believe that doing so will make it easier to identify with and understand the material that comes from the textbook and our in-class discussions.  Articles like this are why I maintain this blog…I hope that you find this one particularly helpful.

Note that the links reference below may require registration to access.  In my opinion it is well worth doing so.

Cut Costs, Grow Stronger. To reduce expenses for the long term and lead the way to recovery, start by taking a strategic view of your capabilities. Shumeet Banerji, Paul Leinwand, and Cesare R. Mainardi. strategy+business.  Autumn 2009.

GM Ending Joint Venture with Toyota

June 29th, 2009 Comments off

The NUMMI joint venture between Toyota and General Motors will end as a result of the GM bankruptcy.  We discussed NUMMI back in chapter 2 because it was the subject of a (rather dated) textbook problem.

GM to cut ties with Toyota venture. By Shawn Langlois, MarketWatch

NUMMI – Joint Venture of General Motors & Toyota

June 1st, 2009 Comments off

A couple weeks ago in Ch 2 when discussing direct/indirect and fixed/variable costs we had a problem that referenced a company called NUMMI (New United Motor Manufacturing, Inc.) that made Geo Prizms and Toyota Corollas.  Obviously (since Geo hasn’t been around for 12 years) that is a dated problem, but NUMMI is still alive, if not well.  Given that half of the partnership is comprised of now bankrupt General Motors (the other partner being Toyota) the status of NUMMI is kind of up in the air.  Also, the only General Motors car being built by NUMMI currently is the Pontiac Vibe and GM previously announced that the Pontiac brand is going to be eliminated.  The plant still makes Corollas and Tacoma pickups for Toyota.

Some NUMMI Links:

Behavior/Culture & Information Overload

May 19th, 2009 Comments off

An interesting piece about how behavioral and cultural influences of the process of information impact productivity in organizations was posted today at MarketWatch.  Some companies have a culture of “the person that sends the most emails wins” that drives people to try to “keep up” with the prolific emailers, for example, and that causes productivity to fall throughout the company.  Instead, companies should set up reward systems and/or compensation plans that are based on actual outcomes and not on perceptions that actually are detrimental to the company performance.  Of course, this is easier said than done.

One thing companies could do: Tell employees their productivity isn’t measured in number of emails sent. Currently, “people need to maintain a certain communication noise level to keep up with everyone else,” said Tony Wright, founder of Seattle-based RescueTime, maker of a tool that measures how people manage their computer time. That’s a cultural problem “that businesses need to attack,” Wright said. “It’s honestly lazy management, in my opinion, to let that be part of your culture.”

Are we overwhelmed yet? Workers face huge influx of information, but they’re on their own in dealing with it. By Andrea Coombes, MarketWatch. 5/18/2009.

The Cost Accountant is Dead

April 19th, 2009 Comments off

This article discusses the new role that Cost Accountants are filling in organizations.  In fact, it replaces the term “Cost Accountant” with “Business Process Analyst” instead to reflect better the role that is being filled and the skills that are needed to succeed in the new environment.  Strategic Finance is a publication of the Institute of Management Accountants so realize that they are in the business of promoting Cost/Management Accountants and their role in organizations.  The IMA is the organization that administers the CMA (Certified Management Accountant) credential.

The Cost Accountant Is Dead; Long Live the Business Process Analyst.  Hannon, Neal J.  Strategic Finance; Dec2005, Vol. 87 Issue 6, p59-60, 2p