SF Residents React to Highest Rent Prices in the Country

Living in San Francisco has never been more expensive and the rents continue to rise. According to a new study from the real estate website Zillow, rent in the Bay Area rose 14.9 percent in 2014 alone. The skyrocketing cost of living has created mixed opinions among citizens and business owners.

Some have profited,while others have been priced out to nearby cities, such as Oakland. To better understand the views of San Franciscans in these booming times, we interviewed several residents who were willing to share their opinions on the matter:

Alonzo, 45, a cable car operator, grew up in San Francisco but when he started to pay  rent he moved to Oakland.

“Here it costs too much, I live in Oakland!” He said. If he wanted to live in SF  he has to pay 1000 dollars more.

When there is no traffic jam, the cable car operator needs 20 minutes to come to downtown to work everyday. He doesn’t worry about tech industry but he said : “it’s good for San Francisco, not for me !”

John is a volunteer in the Maritime Museum. He grew up here and he was excited to talk about the high prices of San Francisco. “Yes, it affects my life in a negative way: We go to farmer market, buy couscous, and trade products with our friends. We grow lemon and cucumber in our backyard,” he said.

We asked him if he has ever thought about moving to another city. He said: “Yes, I have but my wife refused. Wherever she goes, she compares to here. For her, San Francisco is a nirvana.”

In his opinion, high prices are not the tech industry’s fault but the politician’s.

“Everybody thinks that the government should not do much as they supposed to do. They control everything and their ambitions are mistakes,” he said.

Since the Tech companies started moving to San Francisco, the rent prices have been rising dramatically. This is one of the main reasons why so many people is moving out of the city, searching for lower prices.The employees of these companies have bought the expensive houses that other people couldn’t afford. One of these people is

Bob, a young San Francisco guy. He works in a bike rental store in Fisherman’s Wharf. He spoke about the impact of rising rents because of the Tech boom.

“It’s crazy, ten years ago I paid $500, and now I have to pay $1500 for my two bedroom house, so I moved to Oakland,” he said.

He also said he doesn’t think this situation is getting better.

“I don’t think I’m moving back to San Francisco,” he said. “I would like less tech people and more artists, musicians and this kind of people in the city.”

“The problem is that the rich people are buying and buying new houses in the city. Even they start buying in Berkeley. I don’t know why they don’t live where they work, South San Francisco, next to their workplace.”

Finally he said, “It’s hard to adapt to the high prices, I can pay my rent because I got another job. This is one of the reasons that there are more and more homeless people in the Bay Area.”

Kyle, 30, who works at rent-a-bike place, said he didn’t live in San Francisco and shared his thoughts about the rising rents here.

“Actually I live in Oakland,” he said. ”But the rents are getting higher there as well. But friends from here had been forced to move away from here or be homeless or be living on other friend’s couches.”

He also said: “It’s cheaper in Oakland and I couldn’t imagine living here, it’s too expensive”.

When I asked my final question about his feelings about the Tech industry that has reached San Francisco he said:
“It makes me so angry that places I used to love disappeared. For example in Oakland my favorite café was bought up by some Silicon Valley company”.

Antonio, the Manager of the Waterfront Bakery, immigrated to the USA in search of a better life and he works currently in this bakery located in the heart of Fisherman’s Wharf, which is one of the most touristic locations in the city of San Francisco. Antonio talked about the impact that the tech industry has towards tourism.

“Nowadays, thanks to the tech industry we have more tourists that come to San Francisco not only for pleasure but also for business trips and that really helps our business”, he said.

This is an absolutely different point of view that the one I expected. I thought that small businesses would suffer from the elevated prices that came with the success in Silicon Valley, but I came to realize that depending on the location, you can actually benefit from this change in the city’s life.

“San Francisco is a good place to start. The weather is good; there are no prejudices against other people, and is a safer environment; more than Europe or other places, all of these things are really helpful for the business”, he said.

With that in mind, it’s not crazy saying that notwithstanding the fact that the tech industry has been portrayed as the enemy of San Francisco’s citizens, it is actually an engine that is pulling the tourism industry in a higher position, making out of the city by the bay a mandatory place to visit in the USA.

KODAK CASE

INTRODUCTION

Kodak, created in 1880 is a multinational corporation and a diversified photographic, imaging, equipment manufacturer and supplies, which include: chemical and health-care products, and information systems.
Widely recognized as a tightly managed company with superior international marketing, this company has been overwhelmed by disruptive innovation on its market and had to deal with the intensive competitiveness. Despite Kodak’s attempts to overcome this situation launching new projects, researches and investment, the company announced its bankruptcy in 2012.
Now Kodak has reborn with a new company name and has learnt how to deal with the mistakes that they committed in the past.
The purpose of this case study is to understand the company’s previous mistakes regarding the market tendency, the competitiveness and customer’s needs in order to find the best solution.

 

I/ BACKGROUND

 

1. Creation:

In 1880, a gentleman called George Eastman, of the Eastman Dry Plate Company, was busy inventing single-shot pieces of paper that were covered in a photographic emulsion. A fellow photographic expert, William Walker, joined Eastman’s company in 1883, and in 1885 they invented a holder for a roll of Eastman’s photo plates.

1. Foundation :

In 1888, Eastman trademarked the word “Kodak”, which was originally just the brand name of Eastman’s cameras, but the brand became so popular that the company name was eventually changed to Eastman Kodak.

1. First Camera:

– Accompanying the new trademark, Eastman released The Kodak Camera(1) in 1888. The camera came pre-loaded with a roll of paper film that could take 100 photos, and you had to send the camera back to Eastman to get it developed and re-loaded with more film.

– By 1897, a folding, pocketable camera had been invented.

– Then, in 1900, Eastman released the Brownie(2), an incredibly cheap, cardboard-box camera that was cheap enough to buy for $1 and operate, that it instantly became a mass market success; the first camera to do so. In essence, the Brownie was so cheap and easy to use that it invented the concept of a snapshot(3).

1. Eastman Death and Kodachrome(4):

– In 1932, because of a long illness Eastman committed suicide after leaving most of his wealth to the University of Rochester. The note he left read “My work is done. Why wait?”
– After Eastman’s death, Kodak continued pioneering consumer products, with color film in 1935 and developed Kodachrome, the first successful mass-market color film. Kodachrome came in just about every format and enabled the creation of color movies and rich color photos in print publications.
Kodachrome was actively produced for 74 years until it finally fell victim to the digital supremacy in 2009.
– Through the years, Kodak had led the way with an abundance of new products and processes that have made photography simpler, more useful and more enjoyable.

1. Film and basic camera:

– By the end of the ’60s, Kodak had the entire photography industry sewn up; it had sales exceeding $4 billion (close to $50 billion after inflation) and 100,000 employees. So the company decided to be faithful to their basic and most profitable products: film and basic cameras. Kodak also produced a camera used by the astronauts of Apollo 11 on the surface of the Moon.

1. Kodak’s diversification:

– By the late 1980s, Fuji Photo Film Co. of Japan had come out of seemingly nowhere to take over huge portions of Kodak’s market share in film. Kodak management began thinking about photography as a fading business – and decided to diversify by buying a big pharmaceutical company. Only a few years later, Kodak abandoned the drug company and, finally, began to invest in digital imaging products. Those were displacing filmed X-rays(5) in medical practice. And it started to push development of its 1976 invention, the digital camera.

1. Permanent innovation :

– In 1976, Eastman Kodak researcher Bryce Bayer created the Bayer color filter array(6). This filter transferred over to digital photography, however, and now almost every digital sensor uses an RGGB Bayer filter to capture images.

–  In 1979 Kodak was the first company to research and create an efficient organic light emitting diodes(7) (OLED), and in 1999, after 20 years of continued research, Kodak teamed up with Sanyo to produce the first OLED display.

1. George Fisher and his action:

-The second man to mark Kodak in a significant way was George Fisher, who took up the position of chief executive in 1993. The main fear was that digital technology would make its conventional film business obsolete. Its growth became slower, and it was burdened with huge debt.

– But by late 1997, when Mr. Fisher’s contract was running out, Kodak was again in a financial mess. The company was suffering from a strengthening dollar and growing softness in overseas markets; there was a manufacturing high-cost, and its growing portfolio of digital products was losing hundreds of millions of dollars annually.
However, Mr. Fisher made numerous mistakes:

– A software business he bought has never made money.

– In November 1997 he unveiled the restructuring plan to save $ 1 billion, in part by cutting 19,900 jobs.

– And they say that Mr. Fisher pumped money into far too many digital products.

1. Digital Camera:

– In late September 2003, the 122-year-old company announced that it was going to concentrate its efforts on digital cameras for consumers, on digital imaging products for medical care and commercial industry. There was irony on the announcement, because Kodak holds patents for inventing the digital camera in 1976. The company just never got around to develop the technology, because they though the money to be made from its traditional business based on old-fashioned photographic film was so much bigger.

1. First strategies and problems:

– Mayor investors met to discuss completely different “strategies to maximize shareholder’s value”:

-One would be to forget about the digital investment, restore the dividend to its high level and continue enjoying the cash

flow out of the fading film business.

-Other Shareholders have raised the idea of splitting Kodak into separate companies, for consumer, medical and commercial products.

– Mr. Carp argued that trying to capitalize on the film business would only accelerate Kodak’s decline as many of the retailers, photo shops, and radiologists Kodak supplies would abandon it for suppliers better able to help manage the transition to digital.
But he waited until the last minute to embrace the digital change: Kodak’s rival Fuji Photo Film Co. started sooner, had better camera technology, and focused more on minilabs, which were expected to dominate the processing market.

1. Carp and his action:

-Mr Carp ran the company for the long ride down. Confident about the company’s growth strategies he insisted that the company was on the right track: the stock bounced up after he revealed his plan: he expected by 2006, revenues from the digital business would account for 60% of Kodak’s revenues, overcoming traditional 40%. However, the revenues did not do that well.

1. Financial strategy:

– Focused on generating cash to support the underlying value of the company, pay down the debt, and enable prudent investments for growth.
– In the process, they bought back 7.4 million shares of Kodak stock. During 2002 there was a worldwide workforce reduction, with the final phase to be completed in 2003.

1. Kodak’s attempt to succeed :

– Digital camera: Early 2004, Kodak announced the cameras sales termination from the advanced photo system(8) (APS introduced in 1996)
– Termination of photo paper: The end of 2005 Kodak quit the production of black and white photo paper.
– By 2008 Kodak reduce 12.000 to 15.000 of the 60.000 jobs at this time.
– Agreement with Sakar: In March 2009, Kodak entered into a license agreement with Sakar International, which will commercialize camera, photo and computer equipment under the Kodak brand.
– In 2009 ceased the world’s production of the Kodak Kodachrome after 74 years and decades of success.
– Changes and notice: Until 2010 Kodak launched during the digitization of photography, several restructuring, sales of business sector and strategic redirection behind. On that process the number of employees fell dramatically and Kodak focused on the professional photo-finish and printer range.
– In December 2011, the Kodak’s stock was under a dollar, and the company got threatened with exclusion from the NYSE and so the loss of subsequent investors. Bankruptcy rumors pointed Kodak back as speculation.

1. Bankruptcy :

– The 19th of January 2012, Kodak filed bankruptcy protection in the United States District Court according to Chapter 11 for the Southern District of New York.

– In February 2012, Kodak announced that it would cease making digital cameras, pocket video cameras and digital picture frames and focus on the corporate digital imaging market.

– In August 2012, Kodak announced the intention to sell its photographic film (excluding motion picture film), commercial scanners and kiosk operations as a measure to emerge from bankruptcy.

1. Action and changes:

– In January 2013, the Court approved a financing plan to help the company to emerge from the bankruptcy by mid-2013.
– Kodak sold many of its patents for approximately $525,000,000 to a group of companies (including Apple, Google, Facebook, Amazon, Microsoft, Samsung, Adobe Systems and HTC) under the name Intellectual Ventures and RPX Corporation.
– On September 3rd, 2013, Kodak emerged from bankruptcy having shed its large legacy liabilities and exited several businesses.
Foundation Kodak Alaris:

– Kodak Alaris( established in London) arise from the acquisition of the personalized imaging and document imaging of the Kodak’s bankruptcy for 650 million US-dollar. As a part of this acquisiton 4,700 people from 30 countries should switch to Kodak Alaris. They expected annual sales of 1.3 billion US-dollars.

– Only the photo-paper is directly produced from Kodak Alaris, the photo films are prepared by the former parent company Kodak in the US and only distributed by Kodak Alaris. Kodak Alaris has received a perpetual license to use the brand name Kodak. On the same day left the former parent company Kodak the bankruptcy proceedings and will focus now only on professional printer business.
2014 Kodak        
-The Board of Directors of Eastman Kodak Company has elected Jeffrey J. Clarke as Chief Executive Officer and a member of its Board of Directors.

II/ Case Analysis

 

A/ Kodak’s market

It is essential to compare Kodak’s evolution to its market, so a company can decrease its market share or profits, as long as the market decreases more than it. Even though the company is able to testify an average growth its economy can be in trouble, as the average market growth increase more or faster. Before analyzing Kodak’s market share evolution, it’s important to introduce the market structure.
1° The market’s structure

Let’s remind that at the beginning, before the bankruptcy, Kodak was focused on the consumer film, printing and cinema activity: the « photography » market (un-professional customers).The average growth rate of the US photo market is 2% annual unit since 1970.

But it is appropriate to analyze this market structure deeply, and the several submarkets that it involves such as digital and film cameras.

This graph determines three main points in camera’s market:
– Film cameras (and film itself) peaked in roughly 1998-1999.
– Digital cameras were slowly adopted between 1995 and 1999, but 1999 represented a sharp growth inflection for the technology (this is likely due to the rise of the broadband internet from 1999 and forward).
– Stand-alone digital cameras peaked in 2007 – the year the iPhone was announced.
è Globally, we can conclude that there was a tendency towards digital cameras which replaced traditional films.

2°The consumer tendency:
In order to determinate the market, it is essential to analyze the consumer tendency:

– From the late 90s until 2008 (which is also the year when the phone’s camera became mainstream), the digital camera market in the U.S. grew from 4.5 million units shipped in 2000 to 28.3 million units in 2007.
– Specifically, digital grew and the revenues drop as photo printing went to digital: while the cost production is higher for digital, consumers have shown a clear preference for it.
èTendency to digital

3° The market share

– During the 1980’s, Kodak faced intensification of Japanese competition in photography and a continuing decline in product demand as Fuji, Konica, Polaroid, 3M company  and others challenged Kodak’s dominance on the market: these lower priced brands such as Konica and Fuji were gaining market share faster than Kodak.
– Although Kodak tried to focus on digital image instead of film, printing photos and movies, the advance of its competitors and the arrival of Canon and Nikon, in 2006 on the digital market, have not allowed Kodak to recover its 76% share of the market, in 1986 fell under 70% and in 1995 to end at 8% in 2010.
èKodak loss of market share

B/ Kodak’s financial report

Kodak, which is strongly linked to its buyers’ bargaining power, who have different product options according to the lowest price, had to deal with more than 100 years with potential new entrants in the market and with substitutive product. As the following financial statement reveals: “Kodak was unable to defeat the intense market competition”.
Exhibit 1: Evolution of the Income statement

 

-The gross profit reflects the volume of business generated by the current activity of the company and allows the reader to appreciate the dimension:

àThis exhibit highlights the culminating power of Kodak in 1999 and its unavoidable bankruptcy in 2012.

-Net income reflects the profit and loss of the company:

àKodak financial result
Exhibit 2: Evolution of the balance sheet

-Net current asset is one of the most important indicators from the balance sheet: Current asset – current liabilities, it determines whether the company’s balanced resources are sufficient to finance the investment cycle. When a surplus is generated it is possible to finance a portion of current assets, that is to say, the working capital needs to be generated by the activity. Therefore, the more score, the more the company demonstrates a better financial situation:

àThis reinforces the Kodak’s financial lift and seems to exclude the potential business closure.
It is true that market developments didn’t make the task easy to Kodak, and to advise it in the best objective to recover from its fall, it is essential to find out why it fell to learn from the past:

1. C) Failure theories:

1° Kodak’s location:

The analysis of Rich Karlgaard argues that the failure of Kodak can be related to its Rochester location:  When you study the history of great American companies that stumbled and failed, or only partially recovered, you see how difficult it is to overcome the mindset of your immediate surroundings. Businesses located in places where success is the norm, and innovation is built into the ecology, have a better improvement chances. According to Karlgaard, that was, and is, easier to do in Silicon Valley, where laid-off can more readily find new jobs, than in a small city like Rochester, whose population is now at 210,000 plus. Indeed the impact on a small city and the multiplier effect of lost jobs, axed all at once, could turn into a civic disaster.
2° Disruptive Innovation:

Clayton Christensen in his book “The Innovator’s Dilemma”, which is subtitled “when new technologies cause great firms to fail”, show that once-successful companies went under not because their managers made bad decisions, but because they kept making the same kind of decisions that had kept their customers happy for decades.  In doing so, they overlooked products that other kinds of customers might one day want, thereby missing untapped opportunities that eventually turned into industry-transforming ones. Christensen estimates that Kodak was “a global company that completely dominated its industry and was destroyed by a disruptive technology: digital imagery”.
3° The Marketing Myopia:  Poor market listening

Conventional wisdom suggests that good management involves staying close to your customers. And that is what management at Kodak did. Rather than allocating resources towards the internal development of a risky, digital camera that their mainstream customers had little interest in, the company funded projects that enhanced its position within the lucrative film market. Management at Kodak was constrained by the needs of their established customers. That is fine when making incremental improvements to existing products, but it is fatal when dealing with disruptive technologies:
During 80-90’s years, we entered the digital age. Film and photo prints on specific paper were much rarer: the consumables sales drop is staggering. Kodak then develops its first digital camera, but prefers to stay focused on its core products. The company does not really know how to approach the digital switchover: is it a fad or a real transformation of the market? The group’s leaders think it’s a fad that will not last. They prefer then play the “security card” rather than analyzing their market to understand this “digital revolution” in depth. Kodak does not take the digital revolution, “They had gold in their hands, but do not know how to use it,” declared the former director of Kodak France. Thus begins a long and perilous descent into hell for the Kodak group.
4° Kodak’s failed business strategy:

“When there is a disruptive technology, firms are often unable to capitalize on the invention for fear of cannibalizing existing product sales. Kodak’s primary strategy was to sell high margin film. Known as the razor blade strategy, the company developed inexpensive cameras as a means to an end: their purpose was to facilitate lucrative film sales. In summary, its digital camera innovation was held back because of management’s concerns about the negative impact on film sales. When Sony launched a filmless digital camera in 1981, fear permeated Kodak’s executive suite. Specifically, over the next decade, Kodak invested approximately “$5 billion—or 45% of its R&D budget—in digital imaging,” according to a 2005 Harvard Business School case study. Unfortunately, with disruptive technologies such as digital cameras, the first-mover advantage is too great for late entrants to overcome. By the time Kodak realized that their razor-blade business model was dead, the horses were already out of the barn. The company was unable to catch-up to the competition.” Source obtained from businesstheory.com the article “Lessons learned from Kodak’s fall”.

 

1. D) Leadership evolution and impact

 

Relevant CEO in Kodak’s history achievements and characteristics:

1. The very first one: Henry A. Strong (1884-1919), was a photography businessman.
2. Father and promoter: George Eastman (1919-1925), was an innovator and entrepreneur who founded and popularized the Eastman Kodak company. He was also a philanthropist contributing in many different ways to help the American community.
3. Best market share, almost monopoly: Walter A. Fallon (1972-1983)
4. Richest time ever in the company: George M. C. Fisher (1993-1999)
5. Path to an imminent bankruptcy: Daniel A. Garp (2000-2005)
6. The dodged bankruptcy finally steps on Kodak: Antonio M. Peréz (2005-2014). Now a days, Special Advisor to the Board of Directors. Mr. Perez was Chief Executive Officer of Kodak from 2003 to 2014. Mr. Perez worked for 25 years with HP, where he held a variety of global leadership positions. After HP, Mr. Perez was President and Chief Executive Officer of Gemplus International. Mr. Perez has been special advisor to the Board since March 2014. He is an optimistic person, passionate and based on innovation.
7. New name, new time, new opportunity: Jeff Clarke (March 2014- Present). His combination of strengths and experience in technology, transformation, finance, operations, and international business is precisely what Kodak set out to find in the next leader of Kodak. Because those personal characteristics can lead the company to success. His past leadership positions have included businesses selling hardware, software and services, and printing – with B2B customers as well as consumers. “We feel extremely confident about Kodak’s prospects with Jeff at the helm,” said James V. Continenza, chairman of the board. “I thank Antonio Perez for his excellent leadership of Kodak through its complex and successful restructuring, and for solidifying our relationships with our valued customers since that time”.
8. E) Kodak situation after bankruptcy

The New Kodak
-Kodak has based his commercial markets in a two-year restructurating. The plan is to keep reducing costs and erase non-core business, such as spin offs like the new Image of Kodak that operates as Kodak Alaris controlled by a new owner.
-Today, Kodak is leaner, financially stronger and ready to grow. The company is prepared to take advantage from the digital transition. Kodak is working in the growing demand for graphic communications around the world, especially in emerging markets; and dynamic growth in the market for printed electronics, sensors, fuel cells and other printed products with functions beyond visual communications.
Imaging Innovation for Business
-Kodak has transformed itself into a technology company focused on imaging for business. Today’s Kodak provides:

-World-class R&D, based on Kodak’s unique strengths in the materials, imaging and deposition sciences.

-Breakthrough products enabling customers to achieve transformational improvements in quality, productivity and sustainability.

-A broad solution set across graphic communications, product goods packaging, functional printing enabling.

-Software and professional services businesses use to redefine information flow and security.

Building on a Technology Heritage
–Kodak’s current portfolio is based on deep technological expertise developed over the years in science materials and digital imaging science.
-Using this expertise, the company that delivered the first film roll is now delivering leading solutions for today’s business customers. These include: Digital Offset Plates that reduce or eliminate the consumption of energy, water and chemistry Flexographic systems that make packaging more vibrant and eye-catching for shoppers. Continuous manufacturing processes to mass-produce touch screen sensors / Printing plates that reduce environmental impact by eliminating use of chemistry and processing.

Kodak Alaris:
-Kodak Alaris consumers products and services: Kiosk, consumer films, single use cameras, Mobile Apps, and Tips and projects Center
-Kodak Alaris business products and services:
-Document Imaging: enable customers to capture and consolidate data from digital and paper sources, understand and extract
valuable insight from the contents, and deliver the right information to the right people at the right time (scanners, services…)
-Event Imaging solutions (expertise, technology).
-Professional photographers & Labs (Professional film & products)
-Retailers and photofinishers (thermal printing, innovative papers…).
–Kodak Alaris with Insight:
Kodak Alaris made a partnership with Insight Health care, which is a company based in providing solutions and services to the old population :
Document Scanners: capture and convert vital patient Health information with speed, efficiency and reliability.
Info Insight: reduce information management costs with exceptional classification and handling it is a flexible and capable artificial intelligence.
Info Activate: obtain and organize information to streamline you healthcare team’s share point information and workflow.

 

Early results        
It is too early to know if Kodak’s new business plan will succeed. The company ended 2013 still in the red zone. Kodak’s overall sales for 2013 came in at $2.35 billion. Revenue for the most recent quarter came in at $607 million, down from $739 million a year earlier. Sales, which fell 12% at the company’s graphics, entertainment, and commercial films business, were not enough to prevent a net loss of $63 million.

On the good side, net loss is $402 million less than a year ago. 2014 is a key year for the company, and investors should monitor both revenue and profitability figures in detail. The company is not forecasting a major turnaround, and it forecasts sales volume for 2014 are in the $2.1 billion-$2.3 billion range.

 

 

 

 

 

 

 

 

 

 

III/ Kodak’s Problem

How Kodak can learn from its mistakes and wrong decisions to make a strong come back to the market?

In other words: How can the company ensure its existence in the current business with the changing industry trends? What should Kodak do to maintain its competitiveness in order to effectively compete with existing and potential competitors?

 

IV/ Kodak’s Option

-Hire expert in managing conglomerate company.
-Create control mechanism to motivate executives to improve their divisions’ performance.
-Introduce nutritional supplement product in order to capture the growing opportunity in healthcare industry.
-Partnership
-Implement cost cutting strategy among all divisions in order to enhance company efficiency.
-Develop training program in order to become more market oriented.

-Close the business.

V/ Criteria

To purchase the best option, Kodak has to consider:

– The market competitiveness and competitors.
– The economical purpose: keep making profits.
– The actual « Photo market », the disruptive technological innovation.
– Involving customer’s needs.
– The image of the company.

 

VI/ Conclusion and Action plan

-Discontinue unprofitable product.
-Change middle to high-level management.
-Launch new and innovative product

-Innovation: focused in imaging innovations and business, the result is an extensive portfolio and differentiated.

-Stewardship:  responsibly managing all company’s assets, including Kodak’s people, facilities and the products and services it sells. Contributing to a culture of sustainability with movements like Kodak Cares, Corporate citizenship, and Global diversity.

-Engagement: looking beyond company’s direct sphere of influence, reaching out to a variety of stakeholders and participating in the larger arena to explore long term opportunities for Kodak and the world community.

-Move to another business segment such as movie and entertainment
-Focus on high potential products (Kiosks and mini-lab; online services such as photo printing and sharing): Kodak could have become a social media powerhouse if it had successfully convinced consumers to use its online service to store, share and edit their pictures. Instead, Kodak focused too much on devices, and lost the online battle to social networks like Facebook.

-Emphasize on niche market: medical market and professional.

-Transform executive and management teams: slowly eliminate poorly performed executives and who don’t fit with company’s divisions acquired; replace with people who have expertise and industry knowledge.
-Decentralized decision making authority to each division: conduct preliminary analysis to get the most efficient flow of information between divisions; shift decision making task from centralized manager to each division manager then evaluate its effectiveness in responding to the competitive threats and changing trends.

 Sources and links:

http://businesstheory.com/

http://www.kodak.com/ek/US/en/Home.htm

 

 S S, C G, M P

The downfall of Blockbuster.

Blockbuster LLC

Prepared for: Case Study

EF Education First Business case study

Prepared by: Jonathan, Manou & Lillian

Monday 8 December 2014

EXECUTIVE SUMMARY

Introduction

The rise of the Internet created a whole new generation of business, information gathering and advertisements. Companies who were able to adapt themselves like Apple and Netflix had driven a large number of others like record stores and video rental stores to go out of business. This case study will focus on Blockbuster, a video rental store whose main business was based on physical rental stores and had to compete with streaming and mailing platforms.

Blockbuster history

The first Blockbuster opened in 1985 in Dallas, Texas. Founded by David Cook, a computer programmer who had programmed Blockbuster`s information collecting software to track inventory and consumers preferences, enabled Blockbuster to provide the movies that costumers wanted in its

EF Education First Business case study

individual stores. Wayne Huizenga purchased a controlling interest in Blockbuster with two colleagues in 1987, for $18 million and drove Blockbuster expansion period by either opening franchisers or buying the competition. At the end of 1987 the company owned eight stores and franchised eleven, in the next year it already become the biggest video chain in the world and by 1991, Blockbuster owned 1654 stores in the United States alone.

In 1994 Viacom purchased Blockbuster for $ 8.4 billion. However, under Viacom`s guidance the company lost almost half of its value by 1996, a big part of this downswing was due to Viacom prioritising more than just renting movies. Viacom tried to use Blockbuster stores to sell Paramount and MTV merchandise, books, toys, and clothing.

In 1997, Blockbuster changed its CEO to John F. Antioco, who refocused on its video rental business, resulting in a brief upswing in profits. But the company made a series of bad investments regarding new media and new competitors which drove Blockbuster to be in a loss of $984 million despite its $5.9 billion in revenue.

Another of Blockbuster problems was the emerging of the Internet and of subscription services. Its biggest competitor, Netflix, started as a DVD by-mail subscription service in 1997. Netflix charged a flat monthly fee without late fees. In 2004 Blockbuster started a by-mail subscription service called Blockbuster.com, and removed its late fee program, but by that time Netflix had already acquired part of Blockbusters customer base.

Blockbuster spent the turn of the century expanding its video-game rental market, by purchasing competitors like Game Station. By 2002, Blockbuster had video-game sections representing all the major gaming platforms in 90% of its stores and it continued this venture even after splitting from Viacom in 2004.

After a failed bid to take over a failing rival, Hollywood videos. Financier Carl Icahn had gambled on this deal by owning a substantial number of shares from both Blockbuster and Hollywood Video and launched a proxy fight (a stakeholder opposing against the management) to displace John Antioco after the takeover failure. Carl

EF Education First Business case study

Icahn had suffered great losses and disagreed with John Antioco on how to revive profit at Blockbuster. The financier believed in reinstating the late fees and removing investment from Blockbuster.com,. John Antioco resisted these measures and lost the proxy fight which led to him being replaced by Jim Keyes. Blockbuster approved the cuts de-emphasizing the online service in favour of an in-store, retail-oriented model, which temporarily boosted the value of the shares. But blockbuster wasn’t able to keep up with its competitors and on March 2010 Blockbuster`s accounting firm issued its audit opinion with substantial doubt about Blockbusters ability to keep its business after a few years Blockbuster had to declare for bankruptcy.

Business Model

Blockbuster established its retail channels through physical stores in the United States and abroad. On August 29, 2010, Blockbuster had 3,306 operating stores. The company believed that its competitive advantage relied on its ability to access newly released movies while other competitors would not have access for the initial 28 days of release.

In 2009, Blockbuster started a vending kiosk to increase its distribution channels and it had approximately 6630 kiosks operating under Blockbuster Express Brand in the United States. Additionally, Blockbuster made its products available through mail and digital distribution channels. Blockbuster promoted its by-mail channel by launching a marketing partnership with Comcast Cable Corporation (Comcast) while Comcast would offer its customers Blockbuster By-mail service as an additional service within Comcast packages. Blockbuster would offer to its customers the opportunity to learn and sign up for Comcast services in Blockbuster kiosks.

To establish its digital channel, Blockbuster purchased Movielink from a consortium of movie studios in 2007, which allowed customers to download and watch movies on their personal computers.

Blockbusters distribution used an outsourced party for distributing merchandise from its main distribution center in McKinney, Texas to its domestic stores; along with it Blockbuster had 39 additional distribution centers across the EUA to support its by-mail subscription program. Also Blockbuster had 2333 stores in 16 other countries. Blockbuster was aware of the fact that physical stores weren’t able to compete in the twenty-first century, but despite of its efforts to expand into new retail channels, Blockbuster wasn’t able to compete with its competitors, and had to file for bankruptcy.

Events that lead to the downfall

An inability to adapt to a changing market paved the way into bankruptcy for Blockbuster. Jeffery Stegenga, Chief Restructuring Officer attributed Blockbuster decline to five main events:

• Increased competition in the media entertainment industry;
• Technological advances changing the landscape of the industry;
• Rapid grow of the new competitors;
• Changing customer preferences;
• General economic environment.

Along with these changes Blockbuster had a high level of financial leverage (debt) that the business incurred during periods of lower competition and higher performance.

Particularly, the rise of new competitors using alternative distribution methods were a huge obstacle. They cut into Blockbuster’s Customer base, and consequently diminished its recourses. Even with Blockbuster trying to invest in other channels of distribution the revenue and profits from these channels weren’t enough to tap the hole created by the reduced traffic to its store-based channel.

For Blockbuster the timing couldn’t have been worse, as the economy was struggling to recover itself from the 2008 recession. In response to these challenges Blockbuster took a number of steps:

• Reduce of administrative expenses resulting in a $333 million decrease;
• Close unprofitable domestic stores;
• Reduced investments internationally;
• Refinancing transaction (act of paying a debt by doing another loan) extending debt maturities and amortisation schedule;
• Secured cash through letters of credit relating it to a historical lease guarantees (a bank acts as guarantee to a third party for a specific fee, in exchange of a set amount of money and a set period of time).

In 2009, Blockbuster reached out to Rothschild, Inc. who would serve as investment banker and financial advisor to help evaluate its capital structure and financing alternatives. Worried about not being able to secure more credit, Blockbuster reached out for an amortising term loan (a loan with scheduled periodic payments of both principal and interest), but the amortisation schedule reduced significantly the available liquidity and consequently constrained operations.

In October 2009, Blockbuster successfully completed the issuance of the Senior Secured Notes (a type of loan that is backed by the borrower`s assets) to refinance itself ahead of the scheduled amortisation payments, that were to take place in 2010 and 2011. This action would provide an extension of maturities (time until a company should pay its loan) and additional liquidity.

With the secured credit, Blockbuster invested heavily in its inventory levels to prepare for the 2009 holiday season. Even with the issuance of the Senior Secured Notes, the fourth quarter of 2009 was extremely difficult for Blockbuster. During this quarter, Blockbuster faced the rapid expansion from key competitors like Netflix, suffered from discount sales of new-release titles by Big-box retailers, and failed to secure the anticipated 28-day window advantage on key titles ahead of the holidays. Consequently the operating results and period-ending liquidity for the final quarter of 2009 fell significantly short of the projections. This year, Blockbuster reported a loss of $558.2 million and a decline of 15.6% decline in its USA sales.

In the beginning of 2010, Blockbuster sought help from legal and financial advisors in order to try a new infusion of capital by the Senior Secured Note holders, (creditors from the first Secured Note) and organize the company finances according to the bankruptcy code through a recapitalization of Blockbuster`s assets.

Later in July 2010, the New York Stock Exchange sent Blockbuster a notice, suspending the company from its stock market. On September 2010, Blockbuster missed a $13.5 million payment on the Senior Secured Notes and Filed its official Bankruptcy.

References:

http://www.businessweek.com/chapter/chap0009.htm

http://content.time.com/time/magazine/article/0,9171,2022624,00.html  

http://www.businessinsider.com/blockbuster-admits-bankruptcy-is-a-possibility-2010-3

http://trace.lib.utk.edu/assets/Kuney/BlockbusterBankruptcy/nytimescompanynews.pdf

http://trace.lib.utk.edu/assets/Kuney/BlockbusterBankruptcy/wwwgamesindustrybiz.pdf

http://trace.lib.utk.edu/assets/Kuney/BlockbusterBankruptcy/Hopkinscharasmaticfounder.pdf

http://trace.lib.utk.edu/assets/Kuney/BlockbusterBankruptcy/Altanerwearemovingtodallas.pdf

http://trace.tennessee.edu/cgi/viewcontent.cgi?article=1010&context=utk_studlawbankruptcy

http://trace.lib.utk.edu/assets/Kuney/BlockbusterBankruptcy/Lippmanblockbusterbuys236retail.pdf

http://trace.lib.utk.edu/assets/Kuney/BlockbusterBankruptcy/Connblockbusteragreestobuy.pdf

http://trace.lib.utk.edu/assets/Kuney/BlockbusterBankruptcy/HyattHeBeganBlockbusterSoWhat.pdf

http://research.gigaom.com/2012/11/following-the-money-what-carl-icahn-sees-in-netflix/

http://www.ign.com/articles/2004/06/22/viacom-blockbuster-split-up

http://www.entrepreneur.com/article/197648

 

 

 

 

 

Important articles:

http://www.bloomberg.com/news/2013-11-06/blockbuster-video-rental-chain-will-shut-remaining-u-s-stores.html

Blockbuster Video-Rental Chain Will Shut All U.S. Stores

By Alex Barinka Nov 6, 2013

Blockbuster LLC, the video-rental company owned by Dish Network Corp. (DISH), will close its remaining 300 U.S. stores, ending an era for a chain that was once a ubiquitous part of American shopping centers.

Blockbuster will shut the outlets by early January and discontinue its DVD-by-mail service by mid-December, Englewood, Colorado-based Dish said today in a statement. Each Blockbuster store has eight to 10 employees, so the move is expected to cost about 2,800 jobs. Dish will keep the licensing rights to the Blockbuster brand and use it to sell other services.

“People were waiting for the death knell for that business for many years,” said Matthew Harrigan, an analyst at Wunderlich Securities Inc. “With everything happening on the digital distribution side, it has been long overdue.”

Dish, which acquired the chain out of bankruptcy in April 2011, had already divested Blockbuster’s international assets, including operations in the U.K. and Scandinavia. The company has been gradually shutting down the 1,700 stores it acquired.

“This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” Dish Chief Executive Officer Joseph Clayton said in today’s statement. “We continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.”

Blockbuster was once so dominant in the home-video market that it was sued by independent video retailers, which claimed in 2001 that the company’s revenue-sharing agreements with movie studios hurt competition. The lawsuit was later dismissed.

Netflix Streaming

When the company was spun off by Viacom Inc. (VIAB) in 2004, it operated about 9,000 locations — before streaming video services such as Netflix Inc. (NFLX) devastated the industry. Blockbuster filed for bankruptcy protection in September 2010.

Dish took over Blockbuster the following year, aiming to use the stores to sell mobile devices that could stream Blockbuster movies. The plans broke down when U.S. regulators didn’t immediately approve a waiver allowing Dish to use its satellite spectrum for terrestrial data and voice transmission.

The Blockbuster brand will continue at Dish through the Blockbuster @Home and Blockbuster on Demand options, which stream movies and videos to televisions, computers and other devices, Dish said.

Dish shares were little changed today in New York, closing at $48.84. The stock has risen 34 percent this year.

While the demise of the Blockbuster chain is symbolic for the industry, it won’t have a big impact on Dish’s prospects, Harrigan said.

“It’s certainly an end-of-an-era type thing, but in terms of that affecting Dish’s stock, it doesn’t have any particular importance,” he said.

http://www.businessinsider.com/blockbuster-admits-bankruptcy-is-a-possibility-2010-3

Blockbuster Admits Bankruptcy Is A Possibility

Blockbuster filed its annual report to the SEC today. In it: Language admitting that Blockbuster could go bankrupt in some situations, including as part of a stock exchange it’s planning, “or any of the other strategies we are pursuing.”

Here’s some of the relevant sections from Blockbuster’s 10-K:

We are in the process of developing and initiating certain operational and business strategies to attempt to maximize our cash and cash equivalents over the near term. One initiative we are pursuing involves an exchange of all or part of our senior subordinated notes for Class A common stock. We also may seek certain modifications to the senior secured notes from the holders thereof. Consistent with this approach, the holders of the senior secured notes and the senior subordinated notes have been contacted and have formed respective note holder committees, have retained advisors and are conducting due diligence. Assuming that we can reach agreement with such holders on the terms of an exchange, we will seek to implement an exchange during the latter part of the second quarter or early part of the third quarter of this year, depending on the timing of SEC clearance of the exchange documentation and when we receive, if necessary, shareholder approval. In connection with pursuing an exchange, we will also be involved in discussions with holders of our Series A convertible preferred stock regarding the possible conversion of such Series A convertible preferred stock into our Class A common stock. We can give no assurance that we can successfully execute an exchange and preferred stock conversion strategy or any of the other strategies we are pursuing and our ability to do so could be significantly impacted by numerous factors including changes in the economic or business environment, financial market volatility, the performance of our business, and the terms and conditions of our various debt agreements and indentures as well as the certificate of designations governing our Series A convertible preferred stock. It is possible that a successful and efficient implementation of an exchange or any of the other strategies we are pursuing will require us to make a pre-packaged, pre-arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code.

If we are unable to successfully implement our operational and business strategies, if we are unable to reach agreements with our debt holders to restructure a sufficient portion of our debt, or if the major studios tighten or eliminate credit terms, we may voluntarily seek relief under the U.S. Bankruptcy Code.

We are currently experiencing significant liquidity constraints and have sizable amortization and other debt service requirements. Should we not be able to generate sufficient cash flow from operations and should the studios tighten or eliminate credit terms, we may determine that it is in the Company’s best interests to voluntarily seek relief through a pre-packaged, pre-arranged or other type of filing under Chapter 11 of the U.S. Bankruptcy Code, including prior to the time we would otherwise be required to do so in an acceleration event. Seeking relief under the U.S. Bankruptcy Code, if such relief does not lead to a quick emergence from Chapter 11, could materially adversely affect the relationships between us and our existing and potential customers, employees, suppliers, partners and others. Further, if we were unable to implement a plan of reorganization or if sufficient debtor-in-possession financing were not available, we could be forced to liquidate under Chapter 7 of the U.S. Bankruptcy Code.

For the full year 2010, we will continue to take actions to improve liquidity. We expect to further reduce general and administrative expenses by over $200 million, continue to rationalize the domestic store portfolio and work to divest international assets. In addition, our 2010 global capital expenditures will remain at maintenance levels of approximately $30 million and we will aggressively manage working capital. We will also continue to explore a variety of strategic alternatives to strengthen our capital structure to position us for success in our transformational efforts. We are in the process of developing and initiating certain operational and business strategies to attempt to maximize our cash and cash equivalents over the near term. One initiative we are pursuing involves an exchange of all or part of our senior subordinated notes for Class A common stock. We also may seek certain modifications to the senior secured notes from the holders thereof. Consistent with this approach, the holders of the senior secured notes and the senior subordinated notes have been contacted and have formed respective note holder committees, have retained advisors and are conducting due diligence. Assuming that we can reach agreement with such holders on the terms of an exchange, we will seek to implement an exchange during the latter part of the second quarter or early part of the third quarter of this year, depending on the timing of SEC clearance of the exchange documentation and when we receive, if necessary, shareholder approval. In connection with pursuing an exchange, we will also be involved in discussions with holders of our Series A convertible preferred stock regarding the possible conversion of such Series A convertible preferred stock into our Class A common stock. We can give no assurance that we can successfully execute an exchange and preferred stock conversion strategy or any of the other strategies we are pursuing and our ability to do so could be significantly impacted by numerous factors including changes in the economic or business environment, financial market volatility, the performance of our business, and the terms and conditions of our various debt agreements and indentures as well as the certificate of designations governing our Series A convertible preferred stock. It is possible that a successful and efficient implementation of an exchange or any of the other strategies we are pursuing will require us to make a pre-packaged, pre-arranged or other type of filing for protection under Chapter 11 of the U.S. Bankruptcy Code. See “Liquidity and Capital Resources” below for further discussion of our operational plan to preserve liquidity.

OhBoy

OhBoy

Marketing project 3

By Victor Severijns, Jonathan Kenji & Liangyi Ye (Lillian)

4th December 2014

Our target as a company is to provide a convenient, healthy and innovative way of eating, while growing effectively and efficiently together with our customer base.

Our logo realizes a clear reference to San Francisco, a modern and vibrant city much like our product and target audience. We believe OhBoy will be appealing to a large group of people, especially teens and young adults. They will embrace the taste of change immediately. Afterward, we want to focus on the working class, as they will benefit from our product the most during hasty lunch breaks.

Ethos

The Aristotle theory chosen to persuade our target audience is ethos. By applying the authority figure of the International Health Corporation we create a sense of credibility to our potential customers; this health approach was chosen because of the new health trend among the population. People are no longer satisfied with any kind of food. Thus, we advertise OhBoy as an organic product. The Health Corporation is mentioned to eliminate any further mistrust. Apart from ethos we also used pathos. We did this by showing a situation that people can easily relate to: we all get agitated when we spill our food, especially in public, So we used people‘s emotions to make our product desirable to the public.

In addition to the ethos and pathos approach we used the narrative paradigm. In order to influence our target audience through narration, the main benefit of the product is explained in a subjective way. Also, the explanation of how to use the product and what the disadvantages are of not using it provide good reasons for the viewer to try the product without saying it directly. We also think the narrative paradigm is a good approach because of the nature of the product we’re advertising. It’s simple. Therefore, the commercial is simple and, more importantly, relatable. We show a common problem and advertise a simple solution. Another reason to use the narrative paradigm is that OhBoy is a brand-new product. This means that for our first commercial our top priority is to let people know what OhBoy is and in what situation it can help you. Later on, once we’ve gained more customers and more brand recognition, different advertising strategies will most likely be used.

Aside from advertising through commercials, our current marketing strategy also aims to invite people to try OhBoy, see what they like about our product and what they would like to improve. We also encourage them to share their experiences with OhBoy on the social media (using the hashtag #OhBoy) in order to gain brand recognition. We already have a contract with Walgreen’s and at the same time we are working intensively with Subway and Chipotle to see if and how soon OhBoy can be introduced to their customers.

Link to our commercial:

https://www.youtube.com/watch?v=lskBKnEt1gY

OhBoy

Ediable tape OhBoyThe creation of a brand is the subject of this this marketing project. Therefore we are proud to present OhBoy, a fresh and innovative startup that will change your lunch break forever. OhBoy is an edible strap the can be wrapped around your burrito, taco or sandwich to make sure every ingredient stays in place. That means no more waste and a way much better lunch experience.

By Jonathan, Victor & Liang

OhBoy is organic, functional, innovative and above all incredibly tasty.  So far we have created 3 flavors. The first one is completely tasteless. But for those customers who are a little more adventurous we also have OhBoy Hot and Spicy and OhBoy Green. In the future, of course, we would like to expand our selection of flavors.

We are convinced that our project will take the food world by storm because there’s nothing like it.

Our target as a company is to provide a convenient, healthy and innovative way of eating, while growing effectively and efficiently together with our customer base. 

Our logo employs a clear reference to San Francisco, a modern and vibrant city much like our product and target audience. We believe OhBoy will be appealing to a large group of people, especially teens and young adults. They will embrace the taste of change immediately. Afterward, we want to focus on the working class, as they will benefit from our product the most during hasty lunch breaks. 

We aim for a business to business sales plan which will bring immediate brand recognition with it. Several food chains such as Subway and Chipotle have already shown great interest in our product. Once our product has been successfully implemented in those businesses, we will start selling it directly to the customers via supermarkets such as Safeway and Walgreen’s opening up an entire new market. During the entire process we will use the four P’s (product, place, price and promotion) as our guideline; while also applying Ansoffs Matrix and SWOT^_ to determine our future marketing strategies.

Our current marketing strategy, however, is to invite people to try OhBoy, see what they like about our product and what they would like to improve. We also invite them to share their experiences with OhBoy on the social media in order to gain brand recognition. At the same time we are working intensively with Subway and Chipotle to see if and how soon OhBoy can be introduced to their customers. 

To protect our brand and product from being copied we will register for patents in Europe, USA and other potential markets. To be able to adapt our product to other countries with cultural barriers and language barriers we would engage in a joint venture with another company that is dominant in the food industry in a specific country, by then we can earn trust from the costumers. 

Because we are a new brand launching a new product earning people’s trust is absolutely vital. Therefore, it is important to make them aware of our CSR (Corporate social responsibility) For instance our headquarter in San Francisco runs on 100% green energy and everything that goes out of our fabrics is recyclable and environmentally-friendly. On top of that we also donate to the food banks across the nation. We are also cooperating with The International Health Corporation to help the world to be a better place. By buying our product you are helping to feed America. 

Coca-Cola’s Social Media

COCA-COLA is a brand established around the world and it is the third largest global brand. Also almost the whole population of the world knows how a can of Coca-Cola looks. So it is easy to recognize this brand only with the red labeled can. The cause of this is the work of at marketing and year after year of hard investment on marketing.

Coca-cola partnership with Brazil

Coca-Cola invests its money on marketing in many ways. But one with better ROI is partnership. Like the American company did last summer with the World Soccer Cup in Brazil.

The target of the well-known company is a huge range of population, without boundaries of age, race, country or sex. But actually the range that buys more coke is the Latin American population at the age between 15 and 25 years old. Although those numbers Coca-Cola is investing in new products and niches to grow its revenues year per year. And the social media marketing is a tool to multiply marketing results.  Lately Coca-Cola used social media tool to increase the result of “share a coke” marketing procedure. This is the second year that the soda company uses this slogan and marketing strategy.

EXAMPLES OF MARKETING STRATEGIES:

1.- FIRST DAY OF COLLEGE HELPS PEOPLE, GIVE A GOD WAY OF LOOKING TO THE BRAND COCACOLA LINK: https://www.youtube.com/watch?v=t9cmoT_wb0A

2.- SHARE A COKE, CAN OF COCA COLA WITH PERSONAL NAMES AND NICKNAMES.

Coca-cola social media strategy

3.- COCA COLA LIFE, LESS CALORIES MADE OF NATURAL PRODUCTS.

Coca-Cola new product: Coca-Cola Life

“Coca-Cola Life is our newest innovation that provides consumers with an option with less sugar and fewer calories and that is sweetened from natural sources. It has been really well received in Argentina and Chile, and we think that consumers in GB will love it too.” Coca-Cola Company

GROWING NICHE:

Coca-Cola is not shying away from soda market, indeed is investing double and a addition to 1 billion in advertising through 2016. Even though Americans are drinking less these days, Coca-Cola’s big bet might not be a bad idea.

If it can get its marketing right, Coke expects forthcoming low-calorie products sold in smaller sizes and using new sweeteners will appeal to people who’ve been avoiding soda. The company is already selling a stevia-sweetened Coca-Cola Life, launched last year in Chile and Argentina. That might be enough to bring recent soda abstainers back to the vending machine.

Soda Market Sales Forecast

RESULTS OF MEDIA MARKETING:

A Coca-Cola Co. study finds online buzz has no measurable impact on short-term sales, but online display ads work about as well as TV, said a company executive in a presentation at the Advertising Research Foundation’s think 2013 conference in New York today.

It’s a stunning admission for a company whose flagship brand has 82 million fans, more than any other brand on Facebook. But Eric Schmidt, senior manager-marketing strategy and insights at Coca-Cola, is not giving up on buzz problem.

Now Mr. Schmidt said Coke is looking to refine how it measures buzz. In example, by getting a better idea of how many people buzz actually reaches rather than, just counting the raw publicly available comments from sources such as Facebook, Twitter, blogs and YouTube.

Coca-cola social media effect

One problem Coca-Cola has is determining whether buzz is actually positive or negative in the first place. “When we say it’s positive, the machine about 21% of the time says it’s negative,” he said. Machines have the most trouble judging sentiment in longer posts such as those in blogs or Facebook and do much better on Twitter, he said.

But the good point is what Coca-Cola as a brand learns from their strategy:

• Build central campaigns
• Crowd-source, involve consumers
• Interact directly with costumers
• Embrace new mediums
• Measure success

Is there evidence this strategy is working or will work in the future? Provide examples.

Coca-Cola has 2.4 million followers worldwide at Twitter. In the last month, @cocacola has Tweeted 1,994 times. It means more than 60 Tweets per day and created over 1 billion potential impressions the last 30 days.

Examples provided (campaign “share your coke”): The results across every medium show the campaign to be wildly successful. Those who saw the TV adverts are seven per cent more likely to consider buying Coke than the general population. Consumers who saw the campaign on Twitter are eight per cent more likely to recommend Coke to a friend. Those exposed to the campaign on Facebook are 18 per cent more likely to have a good impression of the brand than other Facebook users.

Through our online focus groups we found that the main reason Share a Coke worked so well is because it reached out to consumers as individuals, but at the same time didn’t exclude anyone. Some participants expressed disappointment at not finding their names on Coke bottles, but they could still get excited about the campaign by finding the names of their friends and family.

Coca-cola revenue per year

But comparing 2013 Ad result with 2014 now it is not working anymore. Coca-Cola’s definition of “Share a Coke” strategy:

“The concept of the ‘Share a Coke’ scheme is to bring friends and family together during social event over the summer. Have people been sharing the news about the personalized Coke’s comeback? Their Recommend score in 2013 started at 2.1 and ended up with an average score of 7.9 until the end of the scheme. However, we see a different pattern this year. Its score dropped from 3.6 on 15 June to -5.0 on 19 July, averaging at -0.9. Similarly, Diet Coke averaged at 7.9 in 2013’s campaign but figures dropped to -0.9 since 14 June”.

How can we apply their strategy to a small business or a blog like The Hyde Street Journal? Provide examples.

We could apply Coca-Cola strategy to a small business or our blog doing work at social medias as Facebook, Twitter, Instagram and Pinterest. We will advise to our followers every time we have new posts in our blog. Or ask for their interests and do a basic newsletter one time per week or month.

Besides this, the best idea in one-to-one marketing is to be close to the costumer, like Coca-Cola does in Twitter. This tactic is employed both as a customer-service method, and to show some love for fans that show love to the brand:

Coca-Cola’s onte to one in Twitter

RESOURCE:

Brand index: http://www.brandindex.com/article/has-share-coke-gone-flat

Coca-Cola: http://www.coca-colacompany.com/stories/online-social-media-principles

Bloomberg business: http://www.businessweek.com/articles/2014-04-10/four-reasons-why-coca-cola-will-stick-to-sweet-sodas

 SSB

SOURCE COPIED FROM THE WEBPAGE

COCA-COLA COMPANY COMMITMENTS

The Company makes certain commitments concerning how we interact with the public and each other, and these commitments apply to interactions that occur on social media platforms as well.  We expect the same commitments from all Company representatives, including Company associates and associates of our agencies, vendors and suppliers:

Coca-Cola will be transparent in every social media engagement.

Coca-Cola will protect our consumers’ privacy in compliance with applicable Privacy Policies, IT Security Policies, and laws, rules, and regulations.

Coca-Cola will respect copyrights, trademarks, rights of publicity, and other third-party rights.

Coca-Cola will be responsible in our use of technology and will not knowingly align our Company with any organizations or Web sites that use excessive tracking software, adware, malware or spyware.

Coca-Cola will reasonably monitor our behavior in the social media space, establish appropriate protocols for establishing our social media presence, and keep appropriate records of our participation as dictated by law and/or industry best practices.

COMPANY AND AGENCY ASSOCIATES’ SOCIAL MEDIA ACTIVITIES

The Company respects the rights of its associates and its authorized agencies’ associates to use blogs and other social media tools not only as a form of self-expression, but also as a means to further the Company’s business. It is important our associates and our agencies are aware of the implications of engaging in social media and online conversations that reference the Company, its brands, or its business, and that they recognize when the Company might be held responsible for their behavior.  Our expectations for personal and professional/official use of social media are set forth separately below.

PERSONAL USE OF SOCIAL MEDIA:  OUR EXPECTATIONS

Whether you are an authorized Company spokesperson or not, when you’re talking about our Company, our brands, or our business on your personal social networks, keep in mind that:

Our Company’s Information Protection Policy, Insider Trading Policy, and other policies still apply.

You are responsible for your actions. We encourage you to get online and have fun, but use sound judgment and common sense.

You are an important ambassador for our Company’s brands, and you’re encouraged to promote them as long as you make sure you disclose that you are affiliated with the Company.  How you disclose can depend on the platform, but the disclosure should be clear and in proximity to the message itself.

When you see posts or commentary on topics that require subject matter expertise, such as ingredients, obesity, the Company’s environmental impacts, or the Company’s financial performance, avoid the temptation to respond to these directly unless you respond with approved messaging the Company has prepared for those topics.  When in doubt, contact your local Public Affairs and Communications director.

Be conscientious when mixing your business and personal lives; be sure to know your work group’s policies regarding personal use of social media at work or on Company devices.

Samsung knows about Social Media!

Founded in 1938 in Korea as a trading company for food before its work with electronics, Samsung Corporation was listed in 2012 as the world’s largest information technology company measured by revenues. Its value in the market is so impressive that if Samsung were to be an individual country, it would be the 35th richest with a revenue of US$ 212 billions in 2012 alone.

Such success is followed by high innovation, powerful presence in the technology field, and the an engagement with the public focusing on a goal of providing a variety of technological devices affordable to everyone.

Social Media marketing by a Korean Company

When the subject is marketing on social media, Samsung is considered a masterpiece. In 2013, reaching the number of 25 millions fans on
Facebook, Samsung reached in Europe the mark of brand no. 1 by numbers of fans. In the same year, according to Starcount, which compiles information from Social Networks, Samsung was the most popular social-media brand worldwide with 18 millions new followers among different Social Networks and 86 millions of views on YouTube.

Its strategy in the last years has showed how important are the community participation and the consumer engagement, what brings over three points that Samsung is looking forward to approach by cultivating its social currency: consideration, brand loyalty and brand awareness.

“Social media has always been about engagement, listening and responding and that’s what we strive to achieve. Our fans are invaluable to us.” says Suzy Lloyd, European Head of Samsung´s Social Media Marketing.

Moreover, the Korean company invested in an innovative and socially enabled website focusing on a direct link between the consumer and the brand by adding new features such as Facebook and Twitter buttons and quick consumer reviews. The new interactive experience suddenly and incredibly boosted the traffic on its site and the brand mentions online, keeping a short barrier between the consumers that now share their experiences on the website.

Some Individual Social Medias

Twitter:

Samsung nowadays has over 9 millions followers on Twitter and its account is based in quick informations about new launches and customer support.

A famous campaign made on Twitter was in a moment of advantage, which, however, was a boom: the Oscar’s Selfie. Samsung took advantage of the selfie had been taken from a Samsung Mobile and promoted the tweet. So far, such picture was the most retweed Tweet ever.

Facebook:

With 39 millions of fans, Samsung is the 4th largest brand on Facebook and the 2nd with the fastest growth. One of its goals is the community participation and spread its brand awareness among the online world.

In 2011, trying to reach new fans, Samsung made the successful campaign “Like it, Reveal it, Win it”. To take part, people had to like their Facebook page and recommend the content for their friends in order to reveal pieces from a product image hidden ,with the chance of earning weekly prizes as far they reveal the whole content. The number of new fans weekly was over 12 thousand and besides, it easily generated a close relation to the consumers.

Analysis

By reaching new fans Samsung is doing well since they are expanding their range of interaction and has been present on the online media. The customers base from its company is varied since they have a wide range of prices for its products and distribute technological devices more affordable than its biggest competitor Apple. However, the targets on Social Media aim more to young and “connected” people. Not focusing on the business field, which is still also one of the strong costumer bases for them.

Samsung teaches the lesson that companies – start-ups or established – should adapt to the new online world since their costumers are being part of it. So that, these businesses can boost its range of clientele and create loyalty. For example, The Hyde Street – journal from EFSF – can receive by far more awareness of its existence as long as each student publish or share the new articles on Facebook because such articles are written by people with the same age as the public on their page. Moreover, doing so with small companies is a great approach to receive a feedback from their customers and reach new public since the companies would be connected more personally with them.

Therefore, according to the present facts, Samsung knows how to deal the online marketing. For sure, it’s a prove that old and stablished companies can and should put social media to work.

http://mashable.com/2013/12/22/top-10-social-media-brands-2013/

http://www.socialbakers.com/blog/1944-samsung-reaches-25m-facebook-fans-becomes-no-1-brand-in-europe

http://www.socialbakers.com/facebook-pages/brands/

http://m.huffpost.com/us/entry/5042513

http://www.intelligenthq.com/social-media-posts/global-digital-social-media-strategy-at-samsung-mobile/

The economy of Norway.

Norway is one of the wealthiest countries in the world and has a booming economy mainly because of the petroleum industry. Since the discovery of North Sea oil in 1965 and the opening of the Ekofisk field in 1971, Norway has become the seventh largest crude oil exporter and the third largest natural gas exporter in the world. Up to this day, Norway has produced only 42% of their resources so there is still a huge potential for value creation.

Since the Russian ban on food imports from Scandinavia and the EU, Norway’s seafood industry has started to decline. Russia was one of the biggest importers of Norwegian seafood, which could lead to major profit and job losses in the industry. But it is not the first time the industry had to face Russian food bans. Every time this happened, the US and EU started to open up their own markets to buy more Norwegian seafood. Norway could probably sell its seafood to its allies.

Norway’s modern manufacturing and welfare system both rely on a financial reserve produced by the exploitation of natural resources, particularly North Sea oil. The Ekofisk field is one of the largest oil fields in Norway and the production will continue until 2050 after that the economy in Norway will have a question mark because the petrol industry is the most important one Norway. Though Norway made a promise to become carbon neutral by 2030 and already made significant contributions to develop the infrastructure of the international carbon credit market. They entered this market as major buyers of carbon credits and this might act as a catalyst for further market development.

M.L.

INDIA AND ITS ECONOMY

1. Fastest growing industry in India
One of the fastest growing industries in India is the petrochemical industry. It grew at a rate of 11% in 2010-2011 and is expected to keep on growing at a rate of 11-13% over the next five years. The petrochemical industry basically produces chemicals such as Ethylene, Propylene, Benze and Xylene. Those chemicals will either be used as ingredients for medical drugs or as raw materials to produce Nylon, synthetic fibres, Polyester, etc., so basically other chemicals. The high rate of this industry can be explained by the average consumption of plastic per person. While the average consumption is at about 7 kg in India it is almost at 46 kilos in China and 65 kilos in Europe.
Another industry which is growing enormously is the “Telecom” industry. India has already 850 million phone subscribers, 15% of which have smartphones. This will not only lead to an enormous rise of this special industry but also to a significant rise in employment.

2. Fastest declining industry in India
One of the fastest declining industries in India is the handicraft industry. Between 1995 and 2010 the number of handloom weavers and ancillary workers decreased by 2.2 million. Good quality handmade goods are becoming more and more rare in times of mass production and automation. Moreover, people usually tend to buy the cheapest products, but handmade products aren’t cheap at all anymore. Economies of scale have led to lower prices. New materials have been developed that are not necessarily cheaper but more durable and easier to handle. The phenomenon of the ruination of the Indian handicraft industry even has a name. It is well known as the “Deindustrialization”.

3. India in about 35 years (Future outlook)
“Citigroup” expects India to be the World’s biggest economy before reaching 2050, they said in a 2011 interview. Between the year 2010 and 2050 they expect India’s per person GDP to grow at a rate of 6,4% (Between 2010 and 2020 at a rate of 7,2%, between 2020 and 2030 at a rate of about 7,7%, and over the last five years at a rate of about 5,2%). Thus, they predict India will overtake China and the US by 2050, becoming the largest economy in the world. But not only will India become the largest economy, it is also expected to become the most populous country by 2030. Furthermore, temperature will rise by 3,2 degrees by 2050. The climate change will have most visible impact on the sea level and change in underwaterresources. It is expected to lead to serious consequences for the fishing industry, tourism, as well as agriculture and forestry.

The Great Panama

Economic Review
Panama has one of the economies in Latin America with the best GDP growth rate: 10,7% in 2013; a great number compared to countries as Mexico (3,9%) and Brazil (0,9%). The main reason is based in the well-developed service sector, which is still the fastest growing industry in Panama.

Banking; the Colon Free Zone trade; tourism; construction; ports; logistic; and the Panama Canal (which connects the Pacific Ocean with the Atlantic) are some of the services that make up more than 75% of the GDP and are receiving not only state investment but also foreign investment in the last few years.

Undoubtedly, such investments are due the strategical location of Panama and its canal facilities in the world trading, which in 2012 alone provided the income of U$ 1 billion. Most of that money came from its greatest partners dependent on the Canal: China and USA.

Fastest Declining Industry

The manufacturing industry in Panama has been suffering a significant declining. According to datas, its participation in the GDP fell from 11,9% to 7,2% between 1996 and 2003. Studies also say the small size of the local market, high labor costs, low technology, and the lack of investment from the government are reasons for that decline.

Predictions

The outlook for the next four decades shows great expectations. The country is viewed as a important center for Latin America and its canal is in a phase of expansion to double its capacity, being more profitable and a better facility in a global scale. Moreover, it’s expecting a higher GDP per capita (U$ 18,000) and a increase in the GDP of about 95%. Such increases give Panama and its citizens more recognition and turns it into a field for business in a international scale.

Sources:

Click to access King%20Michael_Panama.pdf

http://www.forbes.com/places/panama/