Gold and Platinum Slide

It is important for many investors and the economy to be aware of current Gold, Silver, Platinum and other fine metal prices. It was published recently that all three have slid their price per ounce. Gold dropped 0.4% to 1,650 per ounce, Platinum slid almost 2% to 1,560 per ounce, and silver dropped to 31.27$ per ounce. This decline in rare metals can be attributed to a sluggish physical market as well as "turbulences in the global economy". For investors and recreational sellers and buyers, the price of these metals is important to keep record of. From personal experience, my Grandfather collects rare coins and gold pieces, while my uncle invested in Gold many years ago. These are sure investments because Gold is a "stock" that will rarely drop significantly. It would be wise to purchase these metals when they are selling low.

More information can be found at: http://www.reuters.com/article/2012/04/16/us-markets-precious-idUSBRE8390RW20120416

Goldman Executive Recieves Payraise

I wrote an article previously about the ethics and moral surrounding Goldman Sachs and they're business. I read and blogged about a former employee who saw changes within the company from a once consumer oriented business to one revolved around greed and maximizing profit at the expense of the consumer. It was released earlier this week that the Chief Executive Officer, Lloyd Blankfein, received a 15% pay increase since last year. This increase came in the form of 1.4 million in salary, and 3 million dollars in stock shares, including a 3 million dollar bonus. This is compared to the average american's annual pay increase of 3%. This pay package goes to show that greed and personal progress is the only thing on Goldman Sach's agenda. This is all occurring during a time of uncertainty; Goldman Sachs has shown weak performance, a loss of 1.1 billion dollars in revenue since 2011, and a share price decline of 46%. This also happens to coincide with the firing of thousands of traders, bankers, and staff in the previous years. This pay increase just widens the gap from employee and the top of command. Personally it is acts of greed and ignorance like this that make me question the idea of big banking firms. It is hard to trust a company with your money when the customer is of little concern to them. I find it particularly frustrating that during a time of economic crisis and banking crisis that the executive officers are only concerned of their own well-being.

More information can be found here: http://marketday.msnbc.msn.com/_news/2012/04/13/11183121-goldmans-ceo-gets-a-15-percent-pay-raise?lite

Solar Prices Drop

As an owner and supporter of solar power, I find the lowering of solar panel pricing to be good for the environment. Since the energy boom, many companies jumped on the solar bandwagon. This surge of companies created a surplus of panels and a lack of demand. Electric companies are paying less per kilo-watt hour now than previously. This was once a firm selling point, to sell excess stored electricity, now it is a mere byproduct of solar energy. Energy companies are buying back excess energy at 100$ per KwH, when they were once buying them for 1000$. Companies are currently fighting over the small group of supporters who are interested in installing solar panels. This fight for survival is leading to a price cutting war, almost to the point where companies are sacrificing profit in order to stay afloat. Panels are now selling at 80-85 cents per watt from a previous high of 95 cents in 2011. Stock has also been decreasing from an average of 2.71$ to 1.70$ for a Suntech, a major provider of solar energy.

Although companies are failing to show profit, solar panels and solar energy is very important to our economy and environment. It will continue to be vital into the future. With solar panels we can reduce our carbon footprint and rely less on fossil fuels. I truly believe the lowering in solar panel pricing will make this technology affordable and accessible to more families and companies.

More information can be found at: http://www.msnbc.msn.com/id/47043457/ns/business-going_green/#.T4uFKbMV1uw

Chinese Tourists Stimulate American Economy

It is no shocker that with China's strong economy, that they have money to spend. Fortunately for American luxury stores, they are primarily spending it in the United States. Chinese tourists prefer to buy luxury goods abroad because of China's high taxes. They can purchase luxury goods at approximately 1/3 of the cost. Luxury stores have taken notice of these increasing numbers and are beginning to cater to these wealthy clients. Many stores are introducing employees fluent in Mandarin and Cantonese in order to make wealthy tourists more comfortable. One store hosted a special after-hours event for wealthy tourists including drinks, appearance from notable fashion designers, and a private concert. This is all an attempt to tailor their message at the particular luxury crowd. This is a form of marketing at a special target market. To wealthy tourists the idea of exclusivity and authenticity is everything.

More information can be found at: http://www.nytimes.com/2012/04/15/business/global/american-brands-seek-favor-with-wealthy-chinese-tourists.html

Facebook takes over Instagram

To no surprise Facebook has purchased another media giant. In a little under 2 years from its start up Instagram and its 11 employee's was sold to Facebook for a mere 1 Billion Dollars. We could tell Instagram would be the next big sensation, hours after its launch thousands downloaded the application and caused the computer system to crash many times. At this time the co-founders phoned a veteran, Mr. Adam D'Angelo who had previously worked at Google and Facebook. Instagram is connected with many social media outlets, such as Facebook, Twitter, and even blogging domains. This purchase by Facebook marks another important milestone. This will allow Facebook a larger percentage of mobile phone users and mobile market share. I am positive this is not going to be the end to start up businesses cashing in on the social network, as well as it will not be the end to Facebook's media domination.

More information can be found at: http://www.nytimes.com/2012/04/14/technology/instagram-founders-were-helped-by-bay-area-connections.html?pagewanted=3

Big Buy Busts

Best Buy, the world's largest specialty electronics chain, has announced the closing of 50 stores throughout the United States. This move to close down 50 stores is part of a new remodeling plan by Brian Dunn. In the 1990's the "Big Box" formula made Best Buy very popular, but in the new age this formula proves less popular. Dunn plans to open up smaller stores to focus solely on mobile phones and tablets. This decision to close down stores coincided with Dunn's resignation due to "personal conduct" infractions. The company's board of directors launched an investigation into the misuse of assets by Dunn in an alleged relationship with a subordinate. This resignation comes at a very bad time for Best Buy and could lead to more bad news for the once leader in electronics retail.

I think this move to close the big box stores in order to make room for smaller, more focused stores is an interesting one. I do think that big box retail is showing less profit than online retailers which can provide cheaper products and larger variety. I think the move towards smaller retail stores will end horribly because their market share will be minuscule compared to the all ready established Apple, Verizon, and AT&T stores.

More information can be found at:http://online.wsj.com/article/SB10001424052702304444604577343884165564936.html?mod=WSJ_business_whatsNews

Is Facebook too Big?

Many people, including myself, have an excessive number of "friends" on Facebook, yet only really communicate with a few close ones. There have often been embarrassing links or pictures posted which are not meant to be shared with family members or certain friends. People have noticed these aspects of Facebook and have created smaller social networks to bring the intimacy back to social networking. Path is a smaller version of Facebook which caps its user's friends to 150. FamilyLeaf is a social network just for relatives and family friends. Pair is an even smaller social network that just links two people. These social networks include everything we have become accustomed too with Facebook like sharing pictures, links, and communication, but they add the benefits of security and intimacy. These start-up companies are gaining momentum and actually have wait lists for their users. Many of these smaller social networks are based only on smartphone devices. These new companies are showing us that intimacy and close relationships still are the overwhelming selling point. 

More information on these micro social networks can be found at: http://www.nytimes.com/2012/04/15/business/path-familyleaf-and-pair-small-by-design-social-networks.html?ref=todayspaper

Amazon's Pricing Strategy Upsets Publishers

There is currently a lot of news surrounding Amazon's business plan. Publishing companies are outraged at the low prices Amazon is charging consumers. Amazon is listing newly published books at a mere 9.99$. This online price is detrimental to physical book stores, and the publishing companies. Amazon's gross profit is not astounding, but they're aim is currently to force out the physical stores and gain a monoply on the publishing of books. They are eliminating competition because the publishing companies can not survive on a book listing of 9.99$. One company in particular, Educational Development Corporation is so outraged that they announced a discontinuation of their books to Amazon's shelves. Although this publishing company is not a massive blow to Amazon's worth, it could jump start a rebellion against the online giant. The low price and high volume of books  available to consumers benefits the customers but threatens to destroy the publishing companies. I find what Amazon is doing is immoral. Physical stores and publishing companies are unable to compete with this "Wal-Mart" of bookstores. Although I can benefit from saving money, I believe they're actions and methods to gain market share are detrimental, in the long run, to the business of literature.

More information can be found at:http://www.nytimes.com/2012/04/16/business/media/amazons-e-book-pricing-a-constant-thorn-for-publishers.html?ref=business

Justice Department Sues Apple and Publishers

On Saturday the Justice department sued 3 publishing companies for colluding on eBook prices. These three companies were the Hachette Book Group, Simon and Schuster, and HaprerCollins. These three companies agreed to settle after their backroom business communications were uncovered. This price colluding scheme cost consumers an extra tens of millions of dollars. The collusion was a response to Amazon's attempt to promote there eBook device the Kindle by lowering there base price of new books to 9.99$. Apple's plan was to have book publishers sell through Apple while they took 30% commision instead of their previous wholesale model which publishers had been using previously. The wholesale model charged retailers 50% of the cover price for a book and then allowed retailers to set their own sale price. Apple's shadowy attempts to overcome Amazon's overwhelming market share and reduced retail prices breaks business ethics. This lawsuit shows that Apple is more interested in maximizing profit than providing the consumer with the best and most affordable product. From this lawsuit, "The publishers that have settled have agreed in principle to provide more than $51 million in restitution to consumers who bought e-books".

More information can be found at: http://mediadecoder.blogs.nytimes.com/2012/04/11/justice-files-suit-against-apple-and-publishers-over-e-book-pricing/

China Adjust Currency

China's economy is the fastest growing on the planet. With much international trading running through China it is paramount to acknowledge the changes in their currency. This past Saturday Chinese government announced that they would allow the Chinese renminbi, (6.3: 1USD) to fluctuate as much as 1% throughout the days trading. The central bank of China allowed this fluctuation against a fixed benchmark value. This increase int volatility, property of changing, was only allowed 0.5% since 2007. The increase in volatility will affect the international markets involved with trading in China. This change will effect foreign exchange rates, bets on currency, and will cause "exporters to demand more long-term contracts". In order to properly asses the changing in international commerce we must understand our competition.

More information can be found at: http://www.nytimes.com/2012/04/15/business/global/china-adjusts-currency-trading-rules.html?ref=business

America's Energy

One of the biggest concern across markets and throughout our economy is energy and oil prices. Although lately we have been struggling, the American ingenuity always prevails. We are finding nontraditional sources of energy; shale oil, shale gas, and even deep-water production in the Gulf of Mexico, and oil sands in Canada. This resurgence in american energy will greatly benefit our rising oil prices and remove a lot of pressure from our foreign dependence. North America accounts for 25% of foreign oil consumption. This dependency lead towards new sources of energy. These new sources of energy however are not agreeable on all accounts. Many environmental groups are protesting the shale gas removal process known as Fracking. Fracking is believed to contaminate ground water. This new age of energy sources will continue to play out in the coming years and have a big effect on the upcoming presidential term. Currently these new sources of energy are a lifesaving device for the United States economy. I personally find issues with drilling and fracking, but until research proves its dangers, I must admit this upswing in "homegrown" energy sources is quite beneficial for the country.

More information can be found at: http://www.nytimes.com/2012/04/11/business/energy-environment/energy-boom-in-us-upends-expectations.html?_r=1&ref=businessspecial2&ref=business

Obamacare

There is currently a lot of talk about Obamacare and the constitutionality of the mandate. The future of healthcare and President Obama's career are riding on this Supreme Court decision. Before me make or decisions based on the opinions of friends, collegues, and our favorite news station, we must first investigate where the idea for Obamacare came from and think logically about the situation we are in.

The fact of the matter is that many Americans are medically uninsured, which is detrimental to our healthcare ecosystem. Jonathan Gruber, an economics professor from M.I.T., is a leading expert in health care systems. His track record is quite impressive, helping Mitt Romney in Massachusetts, also helping with California, Delaware, Kansas, Minnesota, Oregon, Wisconsin, and Wymoing. To no surprise in 2008 Obama's team came to Dr. Gruber for help on our ailing health care system. He predicts that a nationally mandated health care is beneficial to Americans. He believes "Losing the mandate means continuing with our unfair individual insurance markets in a world where employer-based insurance is rapidly disappearing.” If health insurance isn't mandated the competitive market will continue to drive up premium prices since only the sickest would by insurance and the less sick would drop their insurance.

Opposition to his arguments are simple, they are relying on the rationality of people to buy health insurance if it is affordable and accessible. They also believe that if the mandate is passed Gruber is not taking into account "how hard it will be to enforce the mandate.". They believe he is overstating the approximated effectiveness.

Since Obama made health care the center of his campaign he is relying on the most researched and educated person on government mandated economics.

My opinion on the subject is biased and under-researched. I don't nearly know enough information on the state of our health care to give a justified answer. Think logically however, I know we must make a change to our current situation and I believe that if there were a person to help us out, it would be the one man who has researched it his whole life.

Change is a scary thing, especially when it is change to this degree. We have only known one type of health care system; the one we are currently living in. I believe if this mandate is passed it will only lead to good things for our Country. If the mandate is passes and seems to be failing we are always able to make corrective legislature and amendments to be more fitting to our economic situation. It will be interesting to follow this story over the next couple weeks.

-BW

FedEx Settles in Discrimination Lawsuit

Statistical analysis by an auditing company found FedEx to be discriminating in their hiring process which affected nearly 22,000 applicants. They're analysis found that Hispanics, African Americans, Native Americans, and women were rejected for positions based on their sex, race, or country of origin. Studies showed that "of the 21,635 rejected applicants covered by the settlement, 61 percent were female, 52 percent African-American, 14 percent Hispanic, 2 percent Asian and 1 percent Native American. " The women were often automatically ruled out because of the need for heavy lifting.

FedEx settled for 3 Million dollars although they admit no wrongdoing. They understand a more lengthy trial would be more costly. The result of this settlement will also open up 1,700 new jobs, upon the opening of the position, to these once rejected applicants.

I have a difficult time believing FedEx did anything wrong in their hiring process. There are certain standards which must be met like physical capabilities and time requirements. The article does not divulge the extent of their research, just the facts that more white men were hired than black, Hispanics, and women. If all grounds were held equivalent, number of applicants, physical and social demeanor, I believe the percentage of hired applicants would be much more even across the spectrum.

More Information can be found at: http://www.nytimes.com/2012/03/22/business/fedex-agrees-to-pay-3-million-to-settle-a-discrimination-case.html?ref=business

Greg Smith Resigns from Goldman Sachs

Greg Smith publicly resigned from Goldman Sachs investment firm earlier in this week. Since his resignation he wrote an Op-Ed piece about his reasonings behind his departure. The story follows Greg Smith, a genuinely ethical and more person caught up in an increasingly immoral wall street environment. He wrote in his paper about the companies continuing neglect for customers and clients while their main...rather only focus, was to make the most amount of money. This excessive greed is not new to investment banking firms, but they are focusing more on short term greed "from" their clients, not the traditional long term money making they earn with their clients. He states that this change has come primarily from the investment banks moving from private business to publically traded where clients look for the cheapest deals and investment firms look for the most clients. There seems to me that there is a great disconnect now between business and consumer in the investment banking world. Greg Smith saw this and was upset. The company he joined 12 years ago no longer held the same moral and ethical standards that he did.


More information can be found at: http://www.nytimes.com/2012/03/15/business/a-public-exit-from-goldman-sachs-hits-a-wounded-wall-street.html?ref=opinion


-BW

Jaguar's New Marketing Plan

Longtime British luxury car dealer Jaguar, and previous subdivision of Ford motor corporation was purchased along with Land rover in 2008 by the Tata Group of Mumbai. Tata Motors is re-branding Jaguar. They have altered their font, logo, and appeal. They are also planning an 18 city tour for their upcoming line of luxury cars. Their ad campaign is also planning a media blitz of their new cars and product line. Along with TV and internet advertising they are releasing digital and outdoor print in the United States, Europe, Africa, and Australia. They hope this re-branding will grow the brand significantly since their 2011 figures seem to be sliding. The centerpiece of their Ad is a TV spot where in a world of old technologies and machines comes on that, “There is one machine, so instinctive, so seductive, it’s as alive as we are. It doesn’t click or buzz, it roars. Jaguar,”.

They are playing on the unique emotional character of the car. They are asking their buyers if  they are alive, like the Jaguar XJ. They are aiming at people in their 40's-50's with a high disposable income. There are many skeptics as to how the public will receive the new ad campaign, saying the commercials are not clear or disciplined. However Tata Motors believes this expansion into new markets and increased advertising within those markets will generate and increase in sales and production.

more information can be found at: http://www.nytimes.com/2012/02/27/business/media/jaguar-ad-campaign-highlights-its-wild-side.html?ref=business

Changes in J&J

Johnson and Johnson is a major producer of health products and pharmaceuticals. REcently their former CEO William C. Weldon stepped down and announced the promotion of Alex Gorsky. Gorsky has extensive experience within the sales of pharmaceuticals and medical devices within Johnson and Johnson. "As is typical for rising stars at large corporations, Mr. Gorsky held many jobs after starting with the company in 1988, including running Johnson & Johnson’s pharmaceutical businesses in Europe, Africa and the Middle East.". The company has placed a lot of responsibility and confidence in Mr. Gorsky.

However there has been much discussion about the appropriateness of this promotion. Gorsky was the leading executive on the artificial hips that J&J produces and many have not passed inspection. Although there is much concern with this appointment they feel Gorsky is fit for the position. Their primary responsibilities and challenges facing Gorsky are, "fixing the problems at the plants that make over-the-counter products, ensuring that there are lucrative prescription drugs in development and addressing a global dip in consumer use of medical services".

More information can be found at:  http://www.blogger.com/blogger.g?blogID=266412629036522626#editor/target=post;postID=5208647846852848374

Proctor and Gamble

Proctor and Gamble has released its plans to cut 5,700 jobs by June of 2013. Their goals are to save over $10Billion by June of 2016. This jub cut is primarily due to slow sales in the United states as well as high packaging and fueling costs. It is still spending money on developing initiatives to grow as a company. This amounts to roughly 10% of the company's non-manufacturing work force. They will continue to expand in foreign companies and even continue to hire. Their stock shares have also risen $1.98.

This demonstrates the ever present need to continue developing growth strategies, reallocating money, and developing product/market penetration.

More information can be found at: http://www.blogger.com/blogger.g?blogID=266412629036522626#editor/target=post;postID=8809785250900167779

DO NOT TRACK

Within the age of technology and information sharing there has been one taboo word; Privacy. With the growing number of ways information can be tracked, used, and bought it is becoming increasing difficult to be private and respected. Mozilla Firefox and Internet Explorer and later Apple added a "do not track" button to their web browsers so users felt respected and knew there inquiries were not being tracked. However this was not written in law and many organizations didn't always keep their word. Google and other internet giants are agreeing to sign a bill to embed this "do not track" button to their search engines and would be required to "stop using the data about people's Web browsing habits to customize ads, and have agreed not to use the data for employment, credit, health-care or insurance purposes". They will still be allowed to use information for product development and market research. hopefully within the next 9 months this internet legislature will be passed by congress.

We have been talking about market research, product development, and how companies find and use information to develop marketing strategies and grow their company. This act if passed will give consumers back some control over their internet usage and buying habits, something we have been missing as of late. With all of the scandals involving Facebook and other internet giants this is a positive step for both companies and consumers.

More information can be found at: http://online.wsj.com/article/SB10001424052970203960804577239774264364692.html?mod=WSJ_business_whatsNews

University of Penn Sues Sloan-Kettering

The university of Pennsylvania is Suing Dr. Craig B. Thompson, the head of Sloan-Kettering cancer research for stealing research information and starting his own company from the cancer research wing at UPenn. The statement is: "Dr. Thompson violated the university’s patent policy and the terms of his employment “by failing to disclose to the university research and discoveries that he instead provided to a for-profit corporation and ultimately publicly disclosed in international journal publications, both to the detriment of the university.”. The research was published in 2009 and 2010 and before they were Thompson's start up company Agios Pharmaceuticals had patented the invention. The damage is recorded at $100 million and could exceed $1 Billion in revenue for the school.

In class we have talked about business ethics and moral responsibility. We have also discussed patents and legal documents regarding inventions and products.

More information can be found at: http://www.nytimes.com/2012/02/23/business/dr-craig-b-thompson-head-of-sloan-kettering-is-sued.html?ref=todayspaper

Google Goggles

Google is planning to release the Google Goggles. These goggles, or thick framed glasses are practically wearable technology. These glasses are comprised of a computer which when worn will stream images and information across the lenses. They will be able to give related information to landmarks, restaurants, as well as virtual reality games, GPS systems, and in time facial recognition software. These glasses will also have audio and video inputs. The one drawback as it seems is streaming advertisements present within the lenses. This is obviously a huge leap in the world of technology and "smart" products, but if any company is to make this giant leap it would be Google. The difficulty in passing this technology is with peoples privacy, both in advertising and facial recognition. It will be difficult for the government to regulate what is being seen behind these glasses.

More information can be found at: http://www.nytimes.com/2012/02/23/technology/google-glasses-will-be-powered-by-android.html?_r=1&hp

High End Retailers Report Strong Profit - Stephanie Clifford

Reports were published about the sales and profit margins of Bloomingdale's, Saks fifth Ave, Macy's, Home Depot and Walmart. All retailers showed profit from this quarter but surprisingly the higher end retailers showed much better results. Walmart accomplished there success by drastically lowering prices and increasing its volume, while the high end retailers, who targeted consumers with a larger disposable income, showed great profit margins. Terry J. Lundgren, CEO of Macy's was quoted, "making decisions between filling up their gas tank or buying shoes or a handbag, that consumer certainly is more impacted.” on the subject of why they netted more profit. Walmart's target market encompasses all levels of income, but primarily low income families. These families are effected much more by the weakened economy, while the wealthier classes are not and can continue to buy luxury goods. Macy's net income rose 12% from a year ago, and credited a lot of success to their promotions and free shipping to online purchases. Saks  sale of luxury items net income was increased to 48% to $37 million. Home Depot's net income increased 32% to $774 million while sales rose 6% to $16 Billion. All companies showed profit. 

This report shows how low income families are being effected by the economic state we are experiencing and how demographics and target markets are capitalized on by high end retailers.

More information can be found at: http://www.nytimes.com/2012/02/22/business/wal-marts-quarterly-earnings-down-4-2.html?_r=1&ref=todayspaper

How Companies Learn Your Secrets

In class we have focused on how firms obtain and use consumer information. This article discusses Target's strategies for finding information. It follows Andrew Pole and his goal to target women in their second trimester of pregnancy. To stores like Target, all-in-one superstore, expecting mothers are the "holy grail". Their previous buying routines, some across multiple stores, begins to decline because of pregnancy and newborns. Target wants to intervene and make their store the only store an expecting mother uses. They find information by tagging each customer with a "Guest ID" and every purchase and visit is logged. From this information Target can analyze the buying habits, and to some degree determine the "Guest's" demographic and even if they are likely to be expecting mothers. This is termed Predictive Analysis, and it analyzes shopping habits and behavior. Target is one of the smartest and leading companies in this type of information analysis.

The scientific research behind this idea of analyzing the habits of people began at MIT with rats in a T-shaped maze. In the beginning these rats searched and figured out where the chocolate was. After repeated trials the rats became accustomed to the maze and the chocolate, and in turn decreased the amount of brain activity; essentially this maze became a habit, and less of a thinking activity. They call this emerging habit as "chunking" process combined to create a habit. This habit forming process has 3 steps: a cue which triggers the reaction and habit, a routine, which is the emotional or physical act, and finally a reward which makes the routine worth remembering, it is positive reinforcement.

This habit forming loop was introduced to marketing upon its public reception. One notable company that employed it was Proctor and Gamble for their product Febreeze (c). They went about advertising the wrong way, by trying to introduce a new habit, instead of working upon old habit routines. They added to spray of Febreeze to the end of a consumers cleaning routine where Febreeze was the reward and not the routine. this turned a dead product into one leading a market comprising of $1Billion a year in sales.

Target then started to employ this strategy by targeting the vulnerable moments in a person's life where their buying habits change, or at least are open for persuasion. These times are marriage, divorce, new homeowners, and the arrival of a newborn. Pole constructed a list of 25 items that frequent pregnant shoppers and compared all female guest shoppers at target and could rate them on the probability that they were expecting. They then focused these women with coupons and emails to buy newborn essentials at target. Once shopping at Target they would push for groceries and other products that these mothers would buy at Target, where previously they would have purchased other places.

These are just a few ways large companies are attaining information and using it to promote sales and increase value to their store. Target was a forerunner in this information analysis and their sales show, between 2002 and 2012 their sales grew from $44Billion - $67Billion.

More information can be found at: http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?_r=1&ref=business

Google's Growth Strategy

An ‘Entertainment Device’ Is Expected From Google - David Streitfeld

In class we have been discussing different growth strategies. The four we have talked about are market penetration, product development, market development, and diversification. Market penetration is increasing sales of an existing product within an existing market. Product development is introducing new products in an existing market while market development is the reciprocal; introducing an existing product into a new market. Diversification is introducing a new product into a new market. The article is investigating Google's plans to introduce and finance an "entertainment device". Since Google predominantly makes its money from the internet and its search engine they understand that "as computing detaches from the desktop and laptop, the company cannot afford to be marginalized". This means they need to find entry ways into new markets and new products. They plan to enter into the hardware technologies. We have seen these attempts previously with the introduction of their Google phone, and attempt to create the Google TV. These are attempts at product development. They are building new products and introducing them into the current tech market. With the recent purchase of Motorola Mobility (c) we witness Google's attempt to generate new products and become a competitor in the hardware market. The only information released on this "entertainment device" is that its goal is "to connect everything in the home to the Internet, including light bulbs, speakers and TV sets"

More information can be found at:
http://www.nytimes.com/2012/02/10/technology/google-at-work-on-an-entertainment-device.html?ref=business

-BW

What Can We Expect for Social Networking in the Future?

The last article I posted mentioned two publicly traded social networking companies who will be growing extremely popular in the next few years so I decided to follow up and investigate these two new companies. I was extremely surprised to find out that these social networks belonged to Toyota and Pepsi.

Toyota plans to offer a private social network to Toyota users which connects the customer with their car, the dealership, and with the company. The user would receive personalized messages from the car and dealership in the same fashion as tweets. The network is called "Toyota Friend". It will link maintenance issues and communication from car to consumer. It is also compatable with Facebook and Twitter. This is Toyota's attempt to stay ahead of the technology curve and lead the auto industry into the future. After reviewing the stocks for both Toyota (ADR), NYSE:TM and Salesforce (CRM) it would be a mistake not to buy now. Stocks are trading at roughly 80$ per/share and are expected to rise to 130$/share by 2013. Toyota Friend is currently being tested and released in Japan initially with Electric Cars and plug-in Hybrids.

Pepsi is also going Social. They have invented and released prototypes of social vending machines. They are used to send "gifts" and personalize drinks to its customers. It allows customers to "pay it forward" and even attach a video message with the drink. It will also allow inventory and delivery to be monitored remotely by operators. These vending machines are fully touch screen. A few are being released in April around Chicago. This is just another attempt for competitive companies to stay ahead of the social curve.

More can be found at:
http://pressroom.toyota.com/releases/toyota+friend+social+network.htm
and, http://www.ramanmedianetwork.com/how-to-get-connected-with-social-pepsi/

-BW

Facebook Going Public at Peak Valuation: NIA

Since 2004 Facebook has steadily achieved compound annual user growth of 191%. They are currently valued at 100 Billion USD. They are currently planning to go public trading shares in May. The National Inflation Association has filed reports stating that this move to go public is very risky, "The American public needs to realize that Facebook at a valuation of $100 billion has far more downside risk than upside potential.". Facebook's growth will continue to decline over the next few years while the overall social networking industry will grow by 61%. The NIA fears the same end result of MySpace will happen with Facebook. Their reasons are that the Price/Sales ration and Price/Earnings ratio are to high of a premium. Ways stated to help with this premium and continued market penetration is to expand in Europe and more importantly into China. However Chinese officials have blocked access to Facebook.

We are finding there are many risks and rewards associatied with Facebook's plans to go public. I hope to continue to follow this story as it develops.

-BW

More information can be found at:
http://bx.businessweek.com/facebook/view?url=http%3A%2F%2Fwww.rmndigital.com%2Ffacebook-going-public-at-peak-valuation-nia%2F

Wal-Mart Names New Chief Executive for China - Laurie Burkitt

Wal-mart is an ever increasing enterprise both within the United States and internationally. Recently the President and CEO of Wal-mart China, Ed Chan, resigned from the company. Wal-mart has named Greg Foran as the new CEO and president of Wal-mart. Wal-mart is going through a difficult time in China resulting from negative public relations. They were accused and cited for mislabeling regular pork for organic pork among other "deceptive pricing" discrepancies. This mislabeling landed 2 workers in jail, 35 detained, 13 store closings, and over 500,000 USD in fines. With a change in management Wal-mart expects to scale up in China and increase the sales. They currently operate "370 stores in 140 Chinese cities".

-BW

More information can be found at:
http://online.wsj.com/article/SB10001424052970204136404577207723629587432.html?mod=WSJ_article_MoreIn_Management

Markets Edge Down After 5-Week Rally

Since October of 2008 the stock market and the overall economy of the United States has been anything but outstanding. Starting around October of 2008 the Standard and Poor 500, or S&P 500,  showed a great decline in its stock index and reaching its lowest point in march of 2009. In little over a year it dropped from roughly 1425 to 672, by more than 50%. However, since the bailout we have seen steady rises in the S&P 500 along with other stocks. Three years after the stock market crash of 2008 we are still not back to where we started but steady growths are being seen. Recently, in the past 5 weeks we have seen the S&P500 stock steadily increaseing. 60% of the 190 companies have reported quarterly results that surpassed expectations. S&P500 expects the stock index to reach 1400 by the summer.

We are still not completely out of the financial sinkhole of 2008 but we are showing great signs of improvement. More information can be found at:

http://www.nytimes.com/2012/02/07/business/daily-stock-market-activity.html?_r=1&ref=todayspaper

-BW

One Positive Sign for America's Economy

Ford Posts Third-Straight Annual Profit - Nick Bunkley

Since the economic downturn the United States has little to be proud of or shown many drastic results from President Obama's Bailout. This is not so, Ford Motors posted its third straight year turning a profit. After continually bleeding money to their competitors and within there company (too many costs and not enough revenue) in 2006, they shifted their goals towards more consumer oriented cars and environmentally efficient products. This was the main place they were losing to competitors. Japanese motor companies were producing cheaper and more efficient cars that Ford and GM could not compete with. This year: "the company earned an operating profit of $6.2 billion for the year...the net profit was equal to $4.94 a share, up from $1.56...revenue increased 13 percent to $136.3 billion." However they did show a loss in profit overseas. This was attributed to securing jobs for workers, changing there focus to efficient and less expensive cars, and cutting unnecessary overhead. Between 2006-2008 they lost a reported 30.1 billion USD. Since 2009 they have recovered approximately 29.5 billion USD. This article demonstrates some things we have been talking about, competition, global markets, macroeconomics, product orientation, and production. In the face of economic disparity the American ambition and perseverance prevailed, and showed that we are still able to compete with the global market.

More information can be found at: http://www.nytimes.com/2012/01/28/business/fords-posts-third-straight-annual-profit.html?ref=business

-BW

Not Quite Smart Enough - by Andrew Martin

In class we have been discussing different methods for reaching consumers, competency, utilities, and production. It seems that in the 21st Century many companies are heavily focused on technology while at the same time simplifying the world we live in. The biggest contributor to this is the move to "smart" gadgets. We were first introduced to smart phones, then smart tablets, and now its stemming all the way to televisions and household appliances.The question consumers are asking themselves is "...if I pay an extra $200 for an appliance, show me the payback." What they are referring to is how much these smart gadgets are worth to the individual. To some being able to control the dishwasher or dryer is a must have, others its just a fancy and more expensive appliance. This relates to what we learned in class with the Value proposition; do the benefits adequately deserve the price. Another idea presented in class is competency and utility. There is a distinction between these "smart" gadgets and other standard one, and it is these differences which are marketable. The utility aspect is time and ease. Smart gadgets simplify life and allow the consumer to pursue other interests and worry less about if they left their oven on. These marketable differences are the advancements which create competition and spark innovation.


More can be found at: http://www.nytimes.com/2012/01/24/technology/not-quite-smart-enough.html?_r=1&ref=todayspaper

-BW

The Pregame Show (of Commercials) Begins - by Stuart Elliott

After the dramatic finish of Sunday's NFC championship game it got me to thinking about the Super Bowl commercials. The Super Bowl is the most heavily watched program on television, last years estimate was 111 million people tuned in to watch the Green Bay Packers. With this much traffic to one program companies are paying large quantities of money for commercial air time. The average cost for a 30 second commercial is 3.5 million dollars...yes 3.5 million dollars for 30 seconds of advertising. Many might think this price is astronomical, but at the cost of 0.03 cents per person to have your product reach their television it seems like a worthy investment. Many things we discussed in chapter one can relate to this article. For one the idea of ROI, or the amount of money made compared to the investment. We also discussed the value chain. One step in the value chain is allotted money to marketing and advertising. The Super Bowl is both the most prestigious of games and prestigous of advertising. As excited as I am to see the Super Bowl, I am equally as excited to see if these commercials are worth the pretty penny.

More can be found at: http://www.nytimes.com/2012/01/24/business/media/marketers-tease-super-bowl-commercials.html?ref=todayspaper

-BW