The world of blogging

The blog has definitely been an interesting and unique assignment for this class. I don't think there have been any other classes that required anything of the sort in my whole school career. I really enjoyed it in the very beginning when I had more time and when I had to write about challenging topics to examine myself and come up with plans. Those were extremely useful exercise that I am sure to benefit in the future. In general, this is my first real blog with weekly posts that I've been posting on consistently. It is nice to see my collective work in the end of the semester and I think I'll start my own blog after the semester is done.

In terms of the topics, I do feel like they were forced - blogs are usually more freestyle expressing my ideas first off. But I do understand that if we were to go about writing whatever we felt like the blog will not be educational in the least.

The blog surely offered an opportunity to communicate with others and understand other students much better. Judging people's inner thoughts, writing style and dedication to the assignment pointed out some interesting students in class that otherwise I might not have communicated with.

In terms of improving the assignment I feel like it might be worth to increase the amount of professor's posts and encourage students to blog on the same topic that professor has posted in addition to comments. Maybe a forum or some kind of group page might be useful to really facilitate group discussion. Comments are good but at times they are forgotten. Forums with their dynamic nature let you develop conversation and track all of the answers/questions. Plus, students will be more compelled to defend their points when they are challenged in front of the whole class.

Well that's about it for this blog unless I get some interesting management ideas and come back to the assignment. I'll post the next blog's name in the next post.

Cheers! It was a pleasure having you

Signs of strategic problems

When company suffers from strategic problems you will most likely be able to see the "lesions" showing up here and there. Poor customer service, inefficiency of operations, legal or employee problems are great examples of the outcome of poor managerial team and lack of strategical planning. I'd like to discuss too poor service/product quality and low R&D investment as indicators of strategic problems.


When company has too many customer complaints that is a direct indicator of either or both of the two: company disregarding customer feedback and poor level of quality and service. Either of these damages the image of the company and creates negative publicity and brand deterioration. No matter how much money you will spend on marketing the public will eventually catch up with realistic view of the company and will not use the product or switch to a competitor.

Low R&D investment compared to other companies is also a big problem. In order to be competitive and stay at the top companies have to maintain their edge. Therefore, they have to invest money into developing the product/services and better ways to produce them. Lower R&D investments would mean that a company becomes a laggard and will leap behind and it is only the matter of time that it will go into crisis or go out of business.

The company with a lot of customer complaints that serves a good example of poor strategic vision is infamous PayPal - an ebay payment processing company. Within the past 5 years the company has not been doing well in terms of customer service: dealing with technical issues and customer service inquiries. I personally know people whose funds have been frozen for over 2 years as a result of a technical mistake on PayPal's part and they have never refunded the money. You can find muliple complaints from general public on www.paypalsucks.com. As a result of this poor strategic practices there is lack of trust towards Paypal brand both from merchants and customers alike. Even though Paypal is trying to solve the problem by improving their system and customer service the stigma of distrust and low quality will stick with the company for years to come.

Speculation or Looking into the crystal ball

Heeeeey you - a loyal reader of this blog. You have stuck with me this far and I've got a treat for you - my thoughts and speculations on the mighty Apple corporation. Even though u might have expect me to pick Google I purposefully decided not to transcend their monopoly in the real world into my blog. Plus, I think Apple is an interesting company to discuss.

All in all company has a bright future in my opinion and I'd like to discuss two (currently three) product lines.

The first and most prominent at the moment is the line of iPods. Apple has done a tremendous job in infiltrating and taking over CD and mp3 players with their portable players. In fact, iPod nano is the most popular player that has ever been sold. You can see white headphones all over the city now - in fact I have 3 iPods myself. Despite their current success I believe that iPods as they are right now are going to be fading away and giving way to musical phones. Cell phone manufacturers are building better phones that integrate everything from cameras to music/video players to personal computers into cell phone. They are making phones with bigger memory capacity, better video quality and convenience ways to download music. That is why I think it is just a matter of time that people won't be using a separate device to play their music. I personally am not an early adopter but I go with the flow and common sense. Why carry around an phone and an iPod when I can have an iPhone (or smth similar). [probability of this happening is around 85% - just to be safe]

That brings me to the second product line, soon to replace the ipods in my opinion. The new iPhone offers all of the entertainment features that users are looking for and combines them with sleek design. And Apple introduced the product just at the right time. Thus it was swept from the stores in no time. I think that with a few modifications this product holds great potential. However, cell phone market is very tough because of tremendous competition. Apple is not experience in cell phone industry - this is in fact their first phone. With Google phone coming out and HTC, Nokia perfecting their product lines it will surely be a tough game. [ehh i'm not sure about probability for this one. I guess I can tie it in with Apple completely switching to iPhone and eliminating ipods at 85%].

To clarify, by eliminating ipods I do not mean that there will not be a product that Apple sells called and ipod that looks like smth what we have right now. I mean switching the role of an ipod as a "walkman" player and handing it over to iPhone.

Another reason I think that Apple will succeed and be around for a while is because they have a loyal customer base. Apple has a very distinct style and they are always looking for innovations and approaching things from a different angle and perspective. And hey - what do you know! - the third product line, Mac Computers, comes into play. Recently Apple has made a brilliant move - offering Windows as an option for operating system of Mac computers. I think this is a great idea because Microsoft does dominate software and OS market right now and the only way Mac can push their computers is if they offer Windows as an operating system as well. Also, I really like their iMac - a sleek computer where all of the components are inside the monitor. That's right - no more annoying Desktop towers. while it offers limited flexibility this computer is an excellent option for consumers willing to pay top price for top of the line product.

As I'm getting tired and losing concentration i think it's time to end this post. True, there is much to say about Apple but I am confident that this company will thrive even if it encounters drawbacks and obstacles.

What does it take to stand out from competition?

Aha! I was reading professor's mind when writing my last post about competitive advantages. Maybe I should consider being a psychic... who knows. But anyways.

I bet that if you conduct a survey among business students or business owners about what a firm must do in order to succeed in business Competitive Advantage will be in top 3 for almost everybody. Now why isn't every company applying these principles to their business? Is it because people don't practice what they preach? Maybe... But most likely, and again stating the obvious, competitive advantage is not easy at all to achieve.

Since I am involved into internet marketing I have to touch on Google to examine its competitive advantage. They are a multibillion dollar market leader and are involved into so many projects that it is hard to count or state in this blog entry. But their main product and advantage is their search engine. They are by far the market leader - according to stats over 60 percent of all searches are conducted through Google. Yahoo follows with numbers close to 20 percent and MSN is in the 10s and the rest are traling far behind. The reason they were able to acquire such great results is because instead of focusing on getting paid off right away from displaying paid advertisement as free relevant search results they created a search engine that focuses on fast and accurate results. Multiple algorithms, checks and balances were and are being created as we speak to guarantee that users get the best and most relevant websites pertaining to what they are looking for. In order to maintain speed Google developed an intricated system spiders that scan your website and store data on servers all over the country. Once the system was developed and market share was acquired Google introduced a platform to monetize their search engine - Pay Per Click system: which at this moment is one of the most cost effective and relevant advetising systems.

Government protection can be applied to roads and utilities. It only makes sense that one company manages electricity in certail large areas in order to maintain an effective system and be able to handle emergencies in a more efficient manner. Even though it does make sense to me that this has to be done and government protection does provide competitive advantage to companies I do not personally like using it as an example because it is imposed rather than earned. Sure it takes time, resources and enormous amount of paperwork to apply and secure patents but once you get them nobody can touch you (at least for a certain amount of time). In a business world situation is much more dynamic and that's what I love about it.

That's all for now folks... come back later :)

The sweet smell of competitive superiority

I betcha that this term is in the minds of every successful businessman. How do I distinguish my business from competitors? What is needed to separate my brand from others and let the customer know that I am different? How do I determine my pricing and operation policies in order to effectively support the policy? These and many many more questions are being asked on a daily basis by CEO's all over the world. With all the books written on the subject one could wonder which of the three most prominent strategies - low cost, differentiation or focus - is the best. I personally don't think that one or the other is superior in general but it depends on a specific company and objectives that it's trying to achieve. The most important thing is to determine the strategy correctly and then show consistency. This will ensure that both the customers views and company operations are consistent and working towards the same goal.

Cost leadership strategy is a very obvious one where a company cuts all of the expenses to produce and deliver product to the customer and as a result is being able to offer products of cheaper prices. An obvious example of such company is Walmart and if you think that I will shy away and try to be original on this one - you are mighty wrong! Not because I don't want to be original but because I'm cutting my expenses and rather use this extra research time for my presentation so that i could differentiate on that one :) So, back to shamelessly abusing an obvious example: Walmart is focusing on providing customers with cheapest prices for the product and they are doing everything in order to cut costs on internal operations. They are doing it within reason though. For example, even though they are trying to cut on prices they still invest into advertising. However, they only invested 1/3rd or what their competitors did on average in 2005.

An excellent example of differentiation is Mercedes Benz. They have invested significant amount of money into portraying an image of an exceptional car for exceptional people. Mercedes Benz promotes their image as a premium auto maker and they are differentiating themselves from other car makers. They spend significant amount on research and development to make cars safer, more reliable, luxurious and comfortable. At the same time, they make sure that cars have the latest gadgets and invest into design to make their cars look beautiful [if you don't think CL63 AMG is a work of art then u r just a prejudiced against Mercedes, u Mercedes hater!] . Because of this differentiation of course the customer is willing to pay a higher class. In addition to technical/design innovations, Mercedes established their brand to be an indicator of a certain style and even class - another important step toward differentiating the car. (as I have written this I noticed we were only supposed to describe department stores - whoops!)

In terms of focus strategy - and speaking of beautiful - Victoria Secret definitely qualifies. They are focusing on Women's clothing and in particular underwear (not exclusively though) - a very narrow product line. In this market they are differentiating their product from other underwear manufacturing focusing on quality and the image of sexy. They invest into sponsoring and arranging fashion shows, employ gorgeous models to wear their underwear in front of cameras and appealing not just for women to buy them but for men to get their underwear for women. That is an extremely smart idea because a lot of times when it comes to men thinking "sexy" they lose a sense of "stingy" and are willing to dig into their wallets - after all who doesn't want their woman to look like a Victoria Secret model at least once in a while [don't kid yourself - YOU DO! and no offense to women reading this post - personality and connection are extremely important too]

So here you go - I have masterfully described these brands and now it is up to you and leave cool and insightful comments - GO! GO! GO!

Porter's 5 forces

The model definitely makes sense in my opinion for mulitple reasons. Well first of all I do believe that for analysis of any kind one needs to come up with a systematic approach. Parameters and guidelines that you are going to be judging an industry have to be strictly defined. Well... sure that alone is not enough. If I just come up with random parameters and guidelines on how to evaluate effectiveness of space program with a key parameter being whether I am participating that's probably (most definitely) not going to be enough. Parameters and guidelines have to be chosen so that they realistically reflect the subject matter and provide a current, unbiased and effective view of key characteristics. In order to make judgements about such broad field as the industry as a whole this approach should also be flexible, artbitrary and should make sense for a broad range. Porter's 5 forces definitely fit these requirements in my humble opinion. From using Porter analysis we are supposed to be able to see whether industry is attractive from the point of view we are approaching the questions: whether we would like to invest, open a company or buy an existing one in the industry.

With all of the buzz going on around alternative energy sources and high oil prices I had little choice but to pick Oil and Gas exploration Industry to explain difficulties to enter. An obvoius one is capital requirements to enter the industry. Huge investments are needed in order to purchase drilling equipment, do required R&D, employ hundreds of workers and various other expenses (such as employing a legal squad to make sure you follow massive regulations and trade agreements). Competition in the industry is high and offshore drilling companies are a big threat to US drilling industry. Supply is limited and new sources of oil are much harder to find and require new technologies (once again huge R&D costs). The industry is very hard to enter. However, since demand for oil is huge and oil is vital for operation of major world economies companies that have established themselves in the industry ar reaping the benefits.

Sugarcoating my goals

Hehe... well this post is definitely taking my management skills and initiatives to the next level. I guess that in the back of my mind I always had some kind of mission statement and values but always very general. I have never quite formalized or put them on paper. While I like writing my thoughts/objectives/goals out because it helps me define and crystalize my thoughts I never got to writing this particular one out. The main reason for that is because I always thought, and I am pretty sure you can relate, my mission statement is so innate to me that there is no need to put it on paper. Multiple books and papers state that I should do otherwise. However, being persistent, opinionated and at times simply stubborn I refused to do so . But now even my professor urges me to go ahead and write the mission statement out. That must be fate because not in a million years I would think I'd have to do something that is actually this relevant to my life as one of the tasks for a class in college - if you took Econometrics 4000 you can surely relate.

I have decided to choose a bit broader goal of succeeding in my career as a salesperson in order to create the mission statement. I thought that picking just one of the goals I provided would not be quite enough for a couple of reasons. The plan in my previous post is very career oriented and way too specific (if you don't know what i'm talking about go back immediately and read my previous post)

MISSION STATEMENT OF ALEKSANDR LUKASHOV

TASK
(What Alex Does)

I am a sales person continuously working on improving my qualifications and satisfaction of clients that I am working/dealing with.

VISION
(The Future Toward Which Alex is Moving)

I will be the top sales person in whichever company I work for and will consistently exceed the goals set for me by management.

I will lead the company that I currently work for to 400% or more increase in revenue by the end of 2008.

VALUES
(Ideals to Which Alex is Committed)

I value persistence and determination.
I value punctuality.
I value positive attitude and optimism.
I strive to achieve excellence at everything I do.
I value balance between work and life.


GOALS
(The end-results Alex Wishes to Reach)

I will become a successful educated professional and leading organization I work in to the top while utilizing my full potential through sticking to the goals and adhering to highest self-imposed standards.