Filling The Gaps

If there would be a sentence I`ll always remember my “Network Economy” class with, this would be:

The only way a company could achieve a competitive advantage nowadays is through creating something that could not be copy!!!
Prof. dr hab. Piotr Płoszajski

We are trying to find out some ideas and solutions for reaction to the fast changing environment… And almost everything we come to has 3 main characteristics: it`s on-line based , it`s giving the customer an option for personalizing it and the major source of income for the business it`s not from the main product, but from the additional ones.

What I`ve heard today was also “Traffic is the king”…

Kevin Kelly: How does technology evolve? Like we did.

I guess everybody who`s a bit interested in what`s happening around the world and especially in Europe, could point out the top news from the last couple of days- the Independence of Kosovo.
It`s a quite contradictory issue. Some countries (USA, France, Germany,…) recognized it, some not (Russia, …). Nobody knows where this conflict will end, although the initial idea was to bring more peace and stability in Europe.
That`s a link to an article we were discussing, taken from the FT, but as you could probably be much more curious about the topic, just type “Kosovo” in the search box and you`ll find plenty of materials.

Russia warns EU over Kosovo recognition

The second article I`ld like to put your attention on is again from FT, but on a different subject-

Blair signals interest in EU`s top job

You probably know that till the end of this year there should be a new position in the EU . *I didn`t… * The most desirable one The question is who should take it… Most of the students said that T. Blair is the perfect candidate- having the right background, being quite well-known, outstanding, interested in the EU etc. However, the issue of Iraq could be against him, as it`s written in the article. What do you think?

Hey hey again

I know that I have forgotten this blog for a while, but as everything in life that has its simple reason…Two actually The moment I created this blog wasn`t really appropriated (1) and everybody needs rest after 9 exams (2). The good news is that I`m back, the second semester here just started and I already have plenty of interesting materials to share with you.

However, I`m starting with something really great… I just got this address today (and from what I understood, it`s made by 2 of my Erasmus colleagues here , great job guys! ) and although probably it`s better to keep it only for me and my best friends :p , I decided to share it with you…

If you dream for an internship abroad, you `ll love it Later just come back with a peanut butter cookie, pls

iTraineeship.com

“Around-the-clock business” (or around-the-globe activities/ operations/ companies and etc- they are plenty of ways the term could be used) was our presentation’s topic for a course named “Time-based management”. Actually I had quite different view of what the course would look like - I hoped that the focus would be rather on the personal time management instead of focusing on companies using such model of management (look at the bottom of the text) but it was still OK though . Honestly, in the beginning, I wasn’t familiar with the term, but later on I found some quite interesting articles related to the topic. Hope it would be interesting for you as well.

In brief:

As I said, there are several ways of describing “Around-the-clock-operations” (ATCO), but they all include certain key elements as the ability of an operating unit to work in 24h/permanently, thanks to the usage of different time zones along with new information technology.

The term “Around-the-clock-operations” is generally used in the service sector and deals mostly with two major economic issues:
- Offshoring as a part of cost reduction (through cheap labor cost, due to economies of scale and price differences for similar products in two different economies for ex.)
- Time-management

One of the most important activities, related to the topic, is the phenomena of private tutoring (or at least we focussed on that one) and India as rising hub of the on-line education. More you could read here. If I should offer a kind of summary- the process works quite easy: you have an Indian teacher waking up early in the morning (3-4 am), turning on his computer and starting to teach his Americans students (mostly) who has just came back home after school. There is a large number of subjects that the tutoring companies offer. You’re using a virtual white board, web cameras and some special softwares. One of the greatest advantages is first, that the sessions are relatively much more cheaper than a face-to-face lesson in the USA and second, you don’t need to go out of home (on that way you also save your time and your parents don’t worry if you need to go at a home of a teacher you don’t know so well ) Why India? Two crucial factors- the language (English) and the large numbers of teachers, not really satisfied with what their salary is and to whom the on-line tutoring is a source of higher income.

Another example of around-the-clock operations are the call centers. There is a new trend among them- call centers offering personal assistance services. There is quite funny example how and what for you could use your personal secretary in this article.

The last one I’m going to mention is the outsourcing of IT projects. You could find more information here. I was quite amazed how these “knowledge factories” work, especially concerning how they are “passing” the knowledge among the different shifts (you have 16 minutes to make yourself familiar with what your colleagues have made before you and what has taken them 16 hours).

Here comes the question about the advantages and disadvantages and is it worthy?

Some of the advantages (in general, with no focus on a specific sector )are:

1. Great opportunities for development of the sector ( 100-150% growth rate estimated in 2007)
2. Time difference once seen as a drawback now seen as an advantage
3. Companies can build their strength on the multinational teams, different background of members and diversity of perspectives. In this way the services and products are more appealing to the global economy and more universal.
4. General cost saving (better positioning on the market)
5. Very short response time.
6. Access to expertise that is not available in the home country for two reasons: too expensive or general lack of it etc.

Some of the disadvantages (again in general) are:

1. Not convenient time schedule for employees in developing countries. People have to work in 3 shifts system or be able to work when there is a demand.
2. The quality of services can be lower than expected, as the ‘quality’ term is understood differently all over the world
3. Time zones differences makes everyone deregulate their biological clock as it requires:
Managers to travel to the ‘outsourcing centers’ frequently
People to be able to work in an unnatural times of the day
People who are managing the overseas operations to be able to work according to the time of the other country (compare US and India – 7 p.m. in US it is 7 a.m. in Bangalore)
4. Communication, cultural differences and language difference (the latter is a barrier, but not a gap). See this.
5. Lack of human contact can result in lack of motivation, misunderstandings; lack of team coherence… etc

Some of the main (positive) conclusions we made concerning ATCO are:
- It enhances the interdependence of the countries
- It build bridges among cultures
- It brings investment and development to developing countries
- It brings new technologies to developing countries and supports them in their development
- It makes people more flexible

At the same time there are many negative outcomes to be faced:
- People are being exploited and have to work against their biological clock
- Workers in developing countries are being underpaid (according to e.g. U.S. standards)
- The expertise is being drained form developing countries

In the end - that`s how our agenda was structured:

1. Introduction: Definition and Historical background.
2. The offshoring process. Inventions & Offshoring. Global time management & service offshoring
3. Example of activities: on-line tutoring, call centers, IT projects overseas
4. Advantages, Disadvantages and Challenges.
5. Conclusion.

Here are some more links, if you are interested in. Now the question is: Would you like to be one of them?

ProactiveNet E-Business Around-the-Clock, Rapid Response e-Transaction Management
U.S. firms move IT overseas
Yes, you can outsource your homework to India
India and the United States: An Emerging Global Partnership

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We were discussing Harvard Business School case studies as “People Express”, “Zara” (as ex. of fast fashion) “Honda today”, “Toyota”, as well as time based strategies (zero time: a conceptual architecture for 21st century enterprises), time management in supply chain, time in R&D area

Tomorrow I have a presentation about Luxury Cars Market, structured using the agenda mentioned in the previous post. If someday you need to make a similar presentation choose something much more broad (“new cars market” for example) as especially about the luxury vehicles market is a bit hard to find what you are searching for. (like separate data)

I`m not going to put the whole presentation (I`m not so good :)) but just some passages (a total mix ) which could be interested for people who don`t have knowledge in this area, as me for example /a typical girl / At the end I `ll put some links to articles one may find interesting.

Characteristics of the market

–> Bigger emphasis on comfort, appearance, and amenities such as technological upgrades and higher quality materials

–> Produced in smaller numbers than more affordable mass-market vehicles (e.g Ferrari, Lamborghini, Porsche)

–> Combination of price, design, comfort, and prestige that can be used to help define the term

–> It is difficult to well define what is ‘luxury car’; many vehicles (such as Yukon or Chevrolet Suburban) are moderately expensive even if they haven’t many of the amenities of other luxury vehicles. As well, some vehicles meet the characteristics of prestige and price but they don’t offer enough degree of comfort (e.g. Chevrolet Corvette)

Manufacturers

• Jaguar, Audi, BMW, and Mercedes-Benz are the traditional luxury manufacturers, but manufacturers such as Saab, and Volvo are now considered by many to fall into this category.

• Lexus has met with limited but growing success across Europe even though it is a top selling luxury carmaker in the United States

• At the top of the segment, Bentley, Maybach, and Rolls Royce are generally considered more prestigious than any other luxury car ands

• Aston Martin, Porsche, Maserati and Ferrari belong to the particular segment of sport luxury cars

Some good trends:
- aging and more wealthy society (“ baby boomers” entering their top earnings stage for instance)
- globalization (factor that probably you could put everywhere with its advantages and disadvantages)
- trends, fashion, possibility f “personalization” of a luxury car (design, extras etc. )
- new technology
- development of economies

Some bad trends:
- licenses and regulation
- growing prices of raw materials
- shortage of oil and gas
- pollution regulations ( EU new emissions)

European leaders: (cars in general)

Volkswagen Group: VW, Audi, Bugatti, Lamborgini, Seat, Skoda and VW commercial vehicles

BMW Group: BMW, Rolls- Royce Motor Cars

Daimler- Chrysler: Mercedes- Benz, Daimler trucks, Daimler Buses, Mercedes- Benz Vans

• VW: 10,3 % growth, 2007
• BMW: 7,7 % growth, 2007
• Daimler- Chrysler: 2 % growth

Ultra luxury and ultra fast cars (Bugatti, Lamborghini) compete through offering low number of exclusive products

Some important entry barriers:
- brand consciousness
- environmental regulations
- competition
- taxes and duties and etc.

Concerning country choice as a place to invest, you could compared some crucial factors for the industry and compared 4-5 countries. We choose Germany as the birthplace of the automotive and as a country which is leader in producing high-quality vehicles. In one of the listed articles at the end of the post it was mentioned that every 1 out of 3 cars in Germany is from premium quality. For comparison with USA – there every 1 out of 10 is a luxury one.

Actually even though experts forecast that the market will grow, the new EU C0.2 emissions are quite big problem, standing in front of the German`s producers of luxury cars because the latter are not fuel-efficiency cars, but big and powerful ones and that`s where Germany has always be leading (country of origin).

I don`t know what should be done. I read that somebody from the executive body of Porshe has said that Porshe could not fit the new regulations and will not able to do it at all. However, with more efforts in R&D sector, there should be something companies could make. Anyway in my opinion German`s luxury cars producers should change a bit their strategies. Of course that a buyer of a new luxury car is more quality than price-sensitive and so far there`s market for luxury vehicles as it`s not also the technology, but also the prestige they give you, but I would like to beleive that soon it will be more important not the prestige and the life style but the society and what could be done more concerning the global warming process, the pollution etc.

Sources you could find more information:

The Economist- Germany`s car industry: The big car problem

BBC News: German car firms corner luxury market
AUTO spectator: home page plus Mercedes-Benz Cars Posts Best Sales Year Ever, BMW Group Increases 2007 Worldwide Sales by 9.2 Percent,
Automotive Industry- overview
BBC: The German Car Industry
German Auto Industry Calls EU’s CO2 Diet Unworkable
German Association of the Automotive industry- VDA

That`s an agenda we were provided in a course named Strategyc Analysis of European Markets and which I guess it`s applicable for structuring a paper on whatever sector you want. Even if you have a better idea it could serve you really good as a brainstorming, to get used and familiar with some topic.

I. Introduction to the market
1) basic information about the sector
2) short history
3) products
4) technology
5) position in the value system

II. Analysis of the global market
1) size of the sector and its dynamics
2) profitability
3) global leaders
4) structure of the sector and the degree of concentration

III. Analysis of the European market
1) macroenvironment analysis
2) economic profile of the industry
3) driving forces
4) comparative analysis

IV. Analysis of the national level
1) Porter`s 5 forces
2) KSF (key success factors)
3) competitive profiles of companies in the market
4) entry barriers
5) foreign investments in the country

V. Answers to investors’ questions
1) Is the sector worth investing in Europe?
2) If the sector is worth investing which country and which development mode to choose?
3) Which groups of investors may be interested in the entry and what entry barriers will they have to surmount? What would the cost be?

*That`s an easy to follow guide how to make analysis using the Porter`s 5 Forces Model of Competition. More about the model here. (I could not describe it better) For those of you who already know it by heart, sorry of taking your time. For those of you who haven`t been using it so far, if you are studying something related to economy, one day you gonna need it for sure.

1. Rivalry among competing sellers
a) market size and market potential
b) present and expected market growth rate
c) degree of concentration
–> number of participants
–> market share of participants
–> market shares of leaders
–> joint market share of 3 to 5 leading companies
d) strategic Groups Map
e) methods of competitive rivalry

Force assessment:

2. Competitive force of new entrants
a) barriers to entry
b) present and future industry`s profitability
c) stage in life of the sector
d) possible entry candidates

Force assessment:

3. Competitive force of substitutes
a) present substitutes
b) percentage of the customer demand being satisfied by the present substitutes
c) future substitutes and their potential danger for the sector
d) possibility of starting substitutes` production by the companies from the examined sector

Force assessment:

4. Competitive force of suppliers
a) supplied items` significance to the production process
b) uniqueness of supplied items
c) cost and problems connected with a change of supplier
d) portion f production costs made up by supplied items
e) the possibility of starting production of the final product by the suppliers
f) suppliers` sector degree of concentration
g) competition in the suppliers` sector

Force assessment:

5. Competitive force of buyers
a) bought items` significance to the production process
b) uniqueness of bought items
c) cost and problems connected with a change of the supplier of the bought item
d) portion of production costs made up by bought items
e) the possibility of backward integration
f) buyers` sector degree of concentration
g) competition in the buyers` sector

Force assessment:

Overall 5-forces assessment: