Friday, December 11, 2015

Loyalty and Branding

In reading the Ben and Jerry's article I could not help but to think more about the relationship between loyal and branding. This ice cream company with very little effort has surpassed its competitors in revenue just based on the loyalty of existing customers.
This within itself can be a risky gamble given that it depends solely on the reliance of loyal and trust of your customers.
This relationship an be hard to define, much less strategist in a competitive effort.
In evaluating my own relationship with Ben and Jerry's I find it very interesting that I myself have been loyal to their brand without knowing it. This clearly has been a great measuring tool for success along with "creative names for their products. Along with this the social causes that this ice cream company has been involved with has been a point of engagement with its customers. For myself this is something that I have connected with and has caused me to buy more Ben and Jerry's ice cream.

From reading this article I found it interesting that Ben and Jerry would be in such financial conflict. Before reading this article I found automatically assumes that finances was not a element of concern since the popularity of the brand was well know.  In this same light, I could not help but think that having their milk come exclusively from Vermont cows was a strategy that was did not serve the company well. Though this may appease the customers in New England this face was not very well know, and thus may have contributed to the lack of finances in the company .

Fun flavors have also contributed to the customers loyalty to the company. With 44 flavors Ben and Jerry's have become a culture within itself.

Thursday, December 10, 2015

Societal Value creation should be the focus of Business

The article "Creating Share Value" outlined how important creating societal values is mutually beneficial for both companies and communities that are somehow involved in the business operations for such companies. Enabling such communities to involve in a more productive manner, had advantages for the businesses both in terms of cost reduction and societal impact.

In the era when capitalistic economies began to emerge, they provided a solution to the drawbacks of aristocratic economies and overall created a value to the society. Even while the focus was on the profits and wealth generation, one way or other they provided a solution to the society. The socialist and communist economies models focused only on the welfare of the society as a whole. These were the branched economic models that set out to solve the problems of the society in some other manner. The main point that i want to stress here is, economies and business in those economies arise out of the needs of the society. I would boldly state that anything that doesn't satisfy the needs of the society is doomed to fail in the long run.

Somewhere along the line, businesses aimed only at profit generation and now we have come to point that creating societal value is additional activity for businesses. Due to this we have seen only the growth of a particular demographic and the others left of this. Now businesses want to cover all demographics for their growth and some of the issues they find is that certain demographics can’t give their anticipated profits. Growth of the society as a whole is going to benefit businesses, organizations, governments and the society overall.

Now with the Societal changes happening, people focus more on the value of their well-being rather than their wealth. The healthcare industries have started riding on this wave to provide value in form of health and they benefit more because they focus on the impending need of the society. These models have their strategy based on value creation to the society. In some cases we can see how certain companies marketing strategies only aim on how much of an additional value their products can provide, apart from the necessity of their products to the consumers.

 The present generation focuses on the products that can add more value to their life, than just satisfy a specific need. Internet of Things is an idea that had its evolution because of this trend. The business that focus on creating values to the societies are the ones that are going to be huge players in the next wave. In one of my earlier blogs i discussed how Resource sharing is an emerging trend. Now i can clearly understand how importance of values is connected to the emerging trends. Instead of having corporate social value as one other activities in the strategy, social value creation should be the integral focus of strategies in the coming years.

Wednesday, December 9, 2015

What makes a successful emerging market growth strategy?


For every company that wants to remain competitive, growth in third world emerging countries is significant. Brazil,Russia, India, China, Mexico, Turkey, and Indonesia—are expected to contribute about 45 percent of global GDP growth in the coming decade.Emerging markets will represent an even larger share of the growth in product categories that are highly mature in developed economies.

While multinational companies have historically used emerging markets primarily to reduce costs, organizations are increasingly looking to these markets as a platform for revenue growth through 2014 and beyond.

There is no one-size-fits-all strategy for capturing consumer growth in emerging markets. But clearly traditional country strategies and other aggregated approaches will miss the mark because they can’t account for the variability and rapid change in these markets. In this fierce competitive landscape, it is clear that emerging-market consumer shifts into higher gear, companies that think about growth opportunities at a more granular level have a better chance of winning. Driving growth in emerging markets has fundamental implications for a company’s business strategy, operating model, and risk management capabilities.
The companies surveyed found the greatest success in emerging markets, came to understand the special requirements of customers in each emerging market and then designed offerings to meet their needs at market appropriate prices. A key ingredient in success was to establish company-owned production, service, distribution, R&D, and other operations in emerging markets to become closer to customers and part of the local business community.

Following are some of the successful emerging market growth strategies in the recent times:
     Opportunities remain in the BRIC :  were most likely to expect revenue increases of 25 percent or more over the next three years in Brazil, India and China.
    Bigger the better: Companies had revenues of $5 billion or greater—those larger companies were more likely to have exceeded their sales revenue goals in emerging markets over the last three years, while small companies were the least likely to have done so.      
    Go local:  Having Local operations may provide advantages such as greater knowledge of customer needs and buying habits, greater brand awareness in the market, and more experience in navigating government approvals and procedures.In addition, some successful strategies were using local sales/service centers, employing company-owned sales and distribution, and employing a company-owned supply chain
·  Know your customer: Designing products specifically for customers in the local market and offering a different value proposition were considered as among the most successful strategies. One of the top emerging market challenges  studied was to provide products/services that meet customer needs at prices they can afford.


Don’t Underestimate the Public Sector in Emerging Markets

In this week’s readings, it was clear that one of the key methods for ensuring that companies undergoing international expansion efforts in emerging markets are successful is related to a thorough understanding of public sector dynamics.  Indeed, the article “ Strategies That Fit Emerging Markets” clearly places significant emphasis on the need for companies to have a clear understanding of the political and social systems of emerging markets in which they are pursuing new operations and expansion.

When considered in specifically as related to Lincoln Electric, this need was illustrated in the difficulties that Lincoln Electric faced in China. Because of a lack of understanding related to both the complex system of government agencies, as well as the dynamics that are present within a political system in which the state operates to a significant degree, Lincoln found itself up against a number of obstacles in an unfamiliar market environment that had little to do with the quality of its products of organizational operations. In line with this, perhaps the most glaring mistake made by Lincoln, one that can be seen in a variety of other international business expansions into new territories, is the flawed assumption that the social and political landscape will function in similar ways in different markets.

This assumption could not be further from the truth. For example, the social norms and tendencies of the talent pool in the United States is radically different than those found in the Chinese marketplace. By not understanding how the government and political landscape influences the social structure of a new market, companies run the risk of misapplying methods that, while successful in some markets, are not necessarily the best routes to be pursued in markets subject to starkly different socio-political systems.

Greed is not good! : What we want is shared value.

                The mantra for 20th century corporations was one powerful statement. “Greed is good!” Thus capitalism was born. Markets opened up in the western world, free trade was the norm and globalization was the goal. Governments encouraged industries and corporations. Often free land grants were provided and economic zones were set up to encourage and grow businesses. Governments in the 20th century realized that industrialization was a powerful tool to reinforce their nations GDP and growth. As corporations grew, more jobs were generated and people benefited from them. More jobs meant decrease in unemployment, decrease in unemployment meant more buying power, more buying power meant more consumers; more consumers meant more demands in market and further space for industries to grow and make profit.  This worked very well until the end of 20th century because it created some kind of benefit for everyone.
                Once 21st century began, science and technology boom took place and it benefited the industry in unprecedented ways. The invention of automation, control systems and computers took the necessity of human labor out of the job. Industries and corporations took “Greed is good” to a completely new level. Their motive to create jobs decreased, globalization resulted in change from nationalist to profit making mindset. Throw in few economic meltdowns and a couple of world wars. The entire world economy suffered and the companies only wanted to survive. How? The only way is to make profits. This soon became the standard. Firms adapted to this style of functioning. Over the course of 21st century, many corporations grew with the only motive of making profits and shareholders happy.
                This came with a price. Cost to society. Firms plundered natural resources, polluted environment and abused human labor. This started hurting the economy and government constructed laws that inhibited competition and imposed high corporate tax. When there was no competition in a market the industries perceived the market as inert and stopped investing in them.  This cycle has become our society’s problem. The firms think in terms of short-term profit and governments do not realize that supporting the weak alone results in economic slump. This vicious circle results in the law of diminishing returns. If this trend continues, what we will leave behind a world that is highly unsustainable for future generation. The law of diminishing returns will catch-up until the society has nothing to get in return.
                The only solution to this problem is, corporations and governments should think in terms of society as a whole and provide services and products that lead to sustainable growth that benefits everyone. Greed is not good. What we need is creation of shared value.

Real value to shared value

Shared value strategically reminds us that we are accountable for our actions. We collect the outcome of what we conceived and nurtured in the past. This is a logic in most social and economic aspects. If an industry throws its disposals out in the rivers, then we’ll have polluted streams and oceans. If a factory decides to outsource all of its main production overseas, and explores the land and natural resource of a small town, then that factory will not be contributing to the local society, instead, it will be harming the local resources and causing labor stress. The key takeaway from this is, we are accountable for our surrounding in our actions and decisions.

The concept of the shared value strategy leads companies to create business value by embracing social problems that come across that business. A competitive business should aim to be in an environment that promotes economic growth, inclusion and sustainability. Under the shared value spotlight, companies interact directly with civil organizations, governments and society, creating opportunities and addressing economic and social problems.

In their article “Creating Shared Value”, Michael Porter and Mark R. Kramer point out that shared value can be created by reconceiving products and markets. It also comes from redefining productivity in the value chain. If you review your suppliers and re-think your market strategy by addressing the social and environmental stresses in the value chain, you may increase your productivity. Shared value can make you more productive and competitive.

Also, companies can create shared value by having a strong and supportive environment surrounding the company’s locations. Clusters strengthen competitiveness in regions and allows social and economic development to take place. The grouping of companies in a territory, attracts universities and related institutions that have a vocation to work in synergy to perform economic growth projects on innovation and social development.

However, we can’t always rely on the productivity increase and regional prosperity to assure that true value has been created. When thinking of shared value, global issues ought to be addressed. When we operate in a globalized economy, clusters must scale their shared value strategy to greater innovation and social progress. The concept has gone beyond corporate responsibility. It is addressing straight forward issues on child labor work in southeast Asia, or carbon emissions from industrial plants, for example. These are global issues that affect global society. An open dialogue on emerging development challenges is vital to engage global society in addressing true social impact in order to create real value for companies and their surroundings.