Beantown, U.A.E.

Maybe you have a law degree but always wanted to be a baker, or you’re working as a banker, but really wanted to be a chocolatier, or a software engineer who wondered what it would be like to be an auto racing pit crew member. Most people would just be left wondering If only...

Until now. Brian Kurth, a 30 year old entrepreneur, recently launched Vocation Vacations to give people the chance to experience another line of work. Kurth was formerly a successful business executive, and realized like many others that it wasn’t really what he wanted to do. So he quit his job and took a six month vacation across the US and saw that there were so many other people out there who would all rather have been something else. That’s when it came to him; the business of letting people test drive another career. There was no other business like it. In January 2004, Kurth bought a domain name and signed on 10 mentors in fields ranging from horse ranching to wine brewing. By April, it was offering more than 200 vocations. The company builds on the idea that most people actually want to learn or experience something new during their holidays. So here’s how it works:

Kurth stresses that vacationers will do real work, not merely shadow a professional."This is not fantasy. It’s the real deal," he said. It is obvious that what Kurth has come up with is truly a Business Concept Innovation.

The Business Mission of the company is to allow people in burnt out professions, or those who are still unsure of what they want to do, the chance to experience what could someday become their career. It is like an internship for adults. The Product/Market Scope is as broad as most people’s imaginations. The company currently offers over 200 vocations across the US and is anticipating more growth in the years to come. It’s planning on expanding into Canada, and already operates in England, although business is slower over there, apparently because the British are more satisfied with their jobs. Kurth is also branching out into related fields, such as books and a reality show. VV’s basis for differentiation is that it operates in a field of its own. The business is a combination of tourism and job agencies; the two industries which would primarily be its competitors.

VV’s Customer Interface consists of:

At a time when airlines are going bankrupt because of soaring fuel prices, Virgin is not only doing well, but is even launching rockets into outer space. The company has always been known for its upbeat and innovative ventures, which seem to easily carry it through rough times. Sir Richard Branson, the head of the Virgin Empire, is nowhere near a typical businessman. His unique management style and creative genius make him an asset to the company and makes the company one of the most resourceful in the business. Applying Barney’s Resource Based Analysis to Virgin, shows just how it really sets itself apart from the rest.

The Question of Value: Virgin proactively seeks opportunities in the market. Although it encounters many threats from competitors, the company chooses to distinguish itself from the rest by sending out a message that it’s in it for the fun, just as much as the customers are, and that it’s not just trying to navigate a profitable business. Yet the company remains profitable, even when fuel prices are rising, and demand for luxury carriers is falling.

The Question of Rareness: Virgin is sidestepping the fuel crisis, by focusing on investments in other products, which means it can keep high load factors. According to Branson, “high load factors mean we can remain profitable in spite of the increasing costs”. They have set up Virgin Fuel to develop new technologies such as an environmentally-friendly cellulose ethanol which can be used in jet fuel. At Virgin Atlantic, they are trying to ensure that they have the newest fleet, which is compatible with the latest innovations in alternative energy sources. Other airlines are not as flexible as Virgin, and therefore rely on older, less fuel efficient fleets. Additionally, Virgin recently initiated Virgin Galactic, a space station which launches tourists on thrill rides to the edge of the Earth’s atmosphere. Although another company, Space Adventures also offers a similar service, Branson insists that Virgin Galactic is much safer than its competitor, that it has some of the best space engineers, and the absolute best technical team in the world.

The Question of Imitability: Other firms would definitely face a cost disadvantage in obtaining the resources which Virgin benefits from. Space Adventures has decided to build a space station in the UAE, one year ahead of Virgin Galactic, and is charging $100,000 per trip as opposed to Galactic’s price tag of $200,000. However, SA has not had nearly as many test flights as Galactic, and so Virgin is able to guarantee more safety than SA can before its launch. Also, ‘technological restrictions’ make it all the more difficult for other companies to imitate Virgin’s capabilities.

The Question of Organization: Is the firm organized to exploit the full competitive potential of its resources and capabilities? Virgin’s growth, its success, and of course Sir Richard Branson’s own quest to push the limits attest to the fact that Virgin is definitely organized to exploit the full potential of its resources, guaranteeing it a sustained competitive advantage and always keeping it at the forefront of business innovations.

Source: Virgin Aims to go Higher despite Rising Fuel Prices

Under the sweltering African sun, sparsely clad men and children spend the day digging with buckets and bare hands in the mines of Congo searching for gold. The mine is owned by AngloGold Ashanti but run by militants; who extort the miners and use the proceeds to buy weapons, in order to strengthen their control of the mining areas. AngloGold Ashanti allegedly provides the militants with financial and logistical support, yet states that it only operates in a way “consistent with [its] values and principles”. Some principles.

The miners themselves are not paid any wages, but for their labor are given three bucket loads of ‘mine muck’; basically dirt, which may or may not contain gold. As if that wasn’t bad enough, the miners are further extorted or at times killed by the militants, unless they hand over their earnings. AngloGold plans on expanding such unmonitored mining operations into a full-scale mine. Although the business is a lucrative one, it gives rise to a number of urgent non-market issues, which should be addressed before the company is allowed to expand.

David Baron emphasized the importance of the non-market environment, in this case, a war-torn poverty-ravaged African community, and outlined ‘4Is’ through which it should be seen:

1. The Issues: these are the problems affecting all those involved. In this case, the issues are that of labor exploitation, child labor, and abetting illegal militia action. AngloGold employs children at its mines, there is no minimum wage as miners are not compensated anywhere near adequately for all their toil, and the company is apathetic to the health and safety of its employees, who are vulnerable to militia attacks on the job, which itself is backed by the company.

2. The Interests: these are the groups with stakes or interests in the issue. The international organization, Human Rights Watch has intervened in this situation and published a report detailing AngloGold’s illegal backing of the militia. The company responded that it had been extorted by the militia and vowed to do all it could to prevent such a thing from happening again, and in the future protect its employees by immediately taking them out of there if there was any danger.

3. The Institutions: UN Peacekeepers have moved into the area to help protect the miners and ensure that the company keeps its word. Their presence has increased security, and as the militia has receded, and miners can now keep their earnings.

4. Information: it was the Human Rights Watch’s report which first made the international public aware of the situation and pressured the company to take action. It also awoke other stakeholders to what they were dealing with; the Swiss firm, Metalor Technologies has cut off all ties with the ‘tainted gold’ mining company until it cleans up its act.

Source: Digging for 'tainted gold' in Congo

How the PC maker's once-revolutionary sales strategy may actually be holding it back

Over the past 22 years, Dell has made its mark as the world’s top technology products retailer. Its direct selling business model was considered one of the most groundbreaking business innovations of its time. By selling straight to the end-users, the company was able to cut costs, lower prices, and draw in the customers. However, competitors such as HP are now penetrating Dell’s market by reducing prices and increasing productivity; giving customers almost the same thing Dell does, with the added benefit of being able to check out the items before actually buying them. Dell “broke the paradigm of how to run a computer business, but they haven’t been so great at finding the next paradigm”, and if the company doesn’t reinvent itself soon, it could permanently lose its edge.

Among the steps which Dell has planned are to loosen ties with Microsoft and Intel, the two companies most responsible for Dell’s dominance in the industry. It plans to install key search software from Google (in exchange for payments of up to $1 billion over the next three years) and build its PCs and servers on AMD processors instead of Intel as a result of rising pressure from customers who prefer the former, more up and coming manufacturer. Additionally, Dell is under scrutiny for its rigid management style which some say lags in creativity, leading to smaller budgets allotted to R&D. The lack of R&D in turn leads to a limited product range, which is another factor affecting Dell’s growth rates. Customer’s buying habits are changing; they’re spending less on PCs and more on alternative gadgets, less online and more in tech-savvy stores.

It is clear then, that Dell needs to do again what it once did best; develop a business concept innovation. It has taken steps to change its value network; by forming partnerships with more lucrative companies. The bargaining power of customers seems to be very high in an industry with so many choices available, since customers can put together their own PCs with parts from a whole range of manufacturers. Additionally, the threat of new entrants and substitute products looms high, as barriers to entry into the market are low and innovative new products are constantly emerging to replace PCs. Dell’s competitive advantage lies in its strategic assets; its strong brand name, distribution channels, and proprietary standards. However, according to Barney’s framework, this advantage is only temporary, as in time these valuable resources can be imitated. The question of organization is key to Dell sustaining its advantage as its strong business relations and strict control of operations are what kept it afloat all this while. It needs to use such strategic assets to its benefit, to help it think differently in the future, instead of relying solely on the past. The company needs to increase its R&D and become more innovative. Although it remains top gun for the time being, in the words of one analyst, “Dell is singing the same old song. Its time for them to change.”

Source: Dell vs. the Dell Way

Once known as the gadget king, Sony has been facing one setback after another in recent years, losing its rein to other manufacturers such as Apple and Phillips, who seemed to be more willing to take business risks and launch new products ahead of Sony. However, in an article recently published by Businessweek, Sony announced its plans to unveil a portable e-book reader; the iPod of digital books. The new device will allow users to store and view digital books, much like similar devices launched by other companies in the past. However, in a market worth $230 million, according to the director of the International Digital Publishing Forum, “no one has created a device compelling enough to have mass appeal”. Sony says its new innovation is up for the challenge.

Although Sony has revealed few details of the product, its strategy is similar to the Apple iPod's approach of seamlessly linking content and hardware. Sony has set up an online store and formed partnerships with leading publishers to exclusively sell their e-books through Sony’s store. Users can then download the books onto their readers, similar to how they can download music onto their iPods through Apple’s iTunes. Additionally, Sony has an edge over other manufacturers because its reader will make use of E Ink technology, which has not been introduced to the US market yet. Unlike the liquid crystal displays currently used in readers, the new technology makes use of black and white capsules on the screen, without backlights, making the experience more like reading off paper. Although the technology is available to competitors, analysts estimate that they will not be able to utilize it until 2007, giving Sony a competitive advantage thanks to preemption. Sony felt that the time was now right to launch its reader in the US because many major companies from Google to Microsoft are digitizing books, and by forming alliances at this point with publishers, it can gain a strong foothold in the market, and sidestep the copyright issues it was facing in Japan. Additionally, by being the first to launch in the US, Sony can charge its anticipated market of innovators and early adopters based on skimming pricing, and thus keep its price-tag of $300-$500, which was considered too steep in Japan. Famous for being proprietary, Sony is also changing its strategy of locking-in customers with its devices. Users of its reader will not be required to purchase Sony’s memory sticks in order to store books, but will be able to download files through USB ports. Also, Sony will not restrict its users to download only Sony e-book files, but will allow them to work with as many formats as possible. Thus Sony is moving towards making its products more flexible in attempt to broaden their appeal.

We can see how Sony’s strategy ties in with Hammel’s business concept innovation framework. Sony’s new reader is set to be revolutionary in the publishing industry, providing publishing companies a new outlet to launch their books, and readers a whole new means of reading them. Sony has changed its core strategy; it’s looking to replace existing mediums and shift users’ focus to its new digital readers. It is also altering its product/market scope, from selling in Japan to the US, first because it faces less competition there at this time, and secondly because the alliances it has formed in the US are crucial to its strategy. Sony’s value network, which consists of its suppliers (E Inks Corp.), and its partners (major US publishers such as Random House, Simon & Schuster, and HarperCollins) is another source of business concept innovation. Finally, Sony’s strategic assets including its powerful brand name and the innovative technologies it is utilizing, combined with its first-mover advantage are set to make the new Reader a success. For the time being at least.

Source: Curling Up with a Good e-book.

Many people believe that Google is being hypocritical in its refusal to allow the Department of Justice to monitor searches on google.com , while on the other hand allowing the Chinese government to track and restrict searches on google.cn. Although other big companies in the industry, such as Yahoo, AOL, and MSN have conceded to the DoJ’s request, Google insisted that it would “do no evil” and that such a move would go against its policy of providing "unbiased, accurate and free access to information."

In the case of China, however, Google insists that the reason it is restricting access to certain information is because part of its policy is to comply with a nation’s laws and customs. Although it insists that it is not compromising its ethics for profits, we can see from Porter’s competitive forces model that Google probably did what it did because a) the Chinese government’s policy of slowing down and blocking google.com in the country was posing as a barrier to entry for Google into the Chinese market, and b) the bargaining power of Google’s buyers (in this case China; which represents a fifth of the global population, and being one of the fastest growing economies has a huge demand for Google’s services), was very high.