I just completed several infographics and charts that illustrate the growth of international trade with Canada and the G8+5 countries.

Chart 1:

A chart that plots exports, imports, FDI in and FDI out as a percentage of nominal GDP for the G8+5 countries. The chart also includes a timeline of important global events that have had an impact on  international trade.

Chart 2:

A chart that plots Canadian exports, imports, FDI in and FDI out values in US$ and their percentage of Canada’s nominal GDP. The chart also includes a timeline of all the Canadian free trade agreements.

Source: IMF Balance of Payments Statistics (Yearbook 2008)

Executive Summary

Bibliography

• 2007 Canadian Travel Intentions. (n.d.).
• City of Toronto. (2008). City of Toronto: Toronto Overview. Retrieved October 22, 2008, from City of Toronto: http://www.toronto.ca/invest-in-toronto/tor_overview.htm
• Datamonitor. (2007). Hotels & Motels in Canada – Industry Profile. New York: Datamonitor.
• Habib, M. (2008, June 5). Business Travel: Belt-tightening need not be painful. Globe and Mail .
• Hotel Association of Canada. (2007). 2007 Canadian Travel Intentions.
• OECD. (2003). OECD Territorial Review of Montreal. Paris: OECD.

After 10 rounds of Markstrat, a realistic marketing simulation game, our group TNNE was able to maintain its lead and end in first place.Click here to see our final presentation which details our marketing strategy.

There is a famous English idiom that goes “Hindsight 20/20″. Urbandictionary.com explains this idiom by saying: “an individual has a realization about the event that should have been obvious all along, yet they didn’t catch on because they were acting in the heat of the moment.” The Honda A and B cases were written in hindsight of Honda Motors’ success in the United States. The Honda A case describes that success by citing a report written by the Boston Consulting Group (BCG). On the other hand, Honda B case describes the same success from interviews conducted by Dr. Richard T. Pascale with the founders of Honda Motors. In other words the Honda A case is from a consultant’s perspective and Honda B case is “straight from the horse’s mouth”.
One would think that BCG and Pascal would underline the same success factors. Though, it turns out BCG and Pascal did not agree on the success factors. Instead, they were too far apart. After reading the cases one can only conclude that Hindsight is not always 20/20, especially in the Honda A case. This paper will compare and contrast BCG’s perspective and Pascale’s perspective as to why Honda succeeded in the USA.
BCG’s case was written a thousand feet away from the action. The case was written as though Honda had a grand plan all along and that it was immaculately executing it. BCG supports its theory by providing numbers and diagram. They go into details about the Japanese selling and distribution systems and cost and price performance. Finally BCG concludes with “competitive strategy implications” as if to suggest that they have revealed a guaranteed recipe for success.
Pascal on the other hand details the story behind the story. Yes, Honda had great selling and distribution systems and cost and price performance. Though we need to stress that Honda did not start off with this or that. Instead, Honda started off with a failure, and a tweak to correct that failure. The tweak was followed by another failure, that failure was followed by a tweak, and so on and so forth. Each time Honda failed it grew stronger as it learned from its mistakes thus strengthening its knowledge as an organization. Honda also took advantage of external happenstances as though it had a “just in time” strategy.
We learn from Pascal’s case that Honda’s strategy in the United States was simply a goal. The goal was aiming for a “10% share of the US imports”. Its founders were so committed to their strategy that they were on the ground reacting to every road block that might hinder achieving that goal. We also learn from Pascal’s case that Honda’s selling and distribution systems were a result of Honda’s bad experience with its first exclusive distributor back in 1949. As for its obsession with market share, we can infer that it was the result of its 1940’s exclusive dealer limiting its sales to 80 units per month. Furthermore its cost and price performance was a result of knowing the business since a “50cc engine is 50% cheaper to make than a 100cc engine.”
To sum it up, from the first case we learn that consultants looked at the motorcycle industry’s raw data and saw certain patterns. Without a core understanding of the motorcycle industry the consultants falsely concluded that these patterns where the reason behind the success of Honda in the United States. From the second case we learn that these patterns were the result of Honda’s success in the United States and not the reason behind Honda’s success. We also learn that the real reasons behind Honda’s success were: First, Honda’s founders got their hands dirty by being there in the middle of the action reacting to changes in the environment and tweaking their strategy. Second, Honda knew the business inside out: from knowing how to build a motor to knowing the reseller that delivered the motorcycle to their customer. Third, as a learning organization Honda fed its failure back into its organization to help it with its future decision making.

I have to confess, I am not a coffee drinker. By that I mean the last time I drank a cup of coffee was over seven years ago and even then I drank coffee once every other month. Since I do not drink coffee, does that imply that I have never heard about Starbucks and I am at a disadvantage here because I am analyzing a case about the biggest coffee chain in the world? The answer is no. On the contrary, I frequent Starbucks regularly. Contrary to conventional wisdom Starbucks’ main product is not coffee, instead Starbucks’ main product is the “Starbucks Experience.” The “Starbucks Experience” can be described as the “romance”, “theatre” or “uplift” that a customer feels once they enter a Starbucks store.

Starbucks Growth
In the 90’s Starbucks was growing at a rapid pace in the United States and Canada. With a Starbucks stores as a percentage of total possible stores at 33% of the top 100 US and Canadian Market, Starbucks was able to benefit from economies of scale. Though, I believe that this rather sporadic growth came at a huge cost. Not only did Starbucks cannibalize its own market with several stores on the same street, but it also diluted its brand name. As a result of this rapid expansion the “Starbucks Experience” was replaced by a rather fast foodish/commodity like expectation.
Starbucks growth should never come at the cost of its highest barrier of entry: “its product differentiation” represented by the “Starbucks Experience”. Anyone can open up a coffee shop, but not anyone can replicate that experience. The 90’s should have been a decade when Starbucks grew its store numbers at a slower pace thus enabling Starbucks to focus on enhancing the “Starbucks Experience”. I am sure that people can drive the extra mile or walk the extra block to get to a Starbucks, rather than being bombarded with a Starbucks everywhere.
Economies of scale allow Starbucks to save on the cost of preparing a cup of coffee. Product differentiation allows Starbucks to be a coffee cup price giver. The cost of a coffee cup could never go to zero, though on the other end, price of a coffee cup can tend to infinity. When given the choice of cutting cost or setting your own price, Starbucks needs to value the latter more than the prior.
Mr. Schultz should take the “Starbucks Experience” to the next level. By the next level I mean that instead of having an experience that is common amongst all Starbucks stores nationwide, this experience should be unique for each store. The “romance”, “theatre” and “uplift” should not be thrown out of the door. Instead the romance that a customer feels when entering the Starbucks in downtown Montreal should be different than that of their store in Laval or for that matter any other Starbucks store. Starbucks should know what its customers want from that specific location and customize its services, music and decorations around its local customer. For example the downtown Montreal store most probably is frequented by university students. Customize that location to appeal to university students. Why not offer free internet? Maybe decorate the store with bookcases filled with reference books. How about having specially designed tables that are more comfortable for laptop use? Maybe the Laval location is frequented by families. Customize that location to have children toys. This level of customized experience will set Starbucks’ product differentiation miles apart from its next competitor.

McDonald’s Enters the Market, So we Panic
In late 2007 McDonald’s entered the flavored coffee market. How should Starbucks react to this news? Again, Starbucks’ unique competitive advantage is its product differentiation, and should keep its focus on improving that. Besides, McDonald’s can replicate Starbucks’ economies of scale in a heartbeat. Furthermore, Starbucks should not become McDonald’s. For that reason Starbucks should stop making breakfast, your customers didn’t ask for that change, and close your drive-thru windows because you do not want to be perceived as a fast food joint.
One can comfortably infer that customers that frequent Starbucks typically do not frequent McDonald’s. This is made clear in the Wall Street Journal article McDonald’s Takes on a Weakened Starbucks. Two points stand out in that article. First, McDonald’s customers are being educated about lattes. Second, teenagers are now being seen at McDonald’s after school. A Starbucks customer surely knows what a latte is, and a teenager would not even think twice about entering a Starbucks. In other words McDonald’s is not taking customers away from Starbucks. McDonald’s is introducing a whole new type of customers to specialty coffee. Starbucks’ value proposition to those new McDonald’s customers should be: “Now that you’ve had a taste of specialty coffee at McDonald’s, we are sure that you’ll be able to move up to better coffee and a better experience at Starbucks.”

Baristas Know Starbucks More than Starbucks Managers
Starbucks Managers should solicit feedback from their baristas and stop reacting to news and making decisions in a vacuum. It seems that Starbucks’ Baristas know Starbucks more than their managers. The Starbucks Barista that faces customers must be one of the biggest untapped resource Starbucks has. The person behind the counter in Starbucks is different than that of McDonald’s and Dunkin Donuts. The barista tend to be in either a college or university, while competitors’ customer facing workers are either in school or at most only have a high school diploma. Thus, Management should talk more frequently to its baristas and learn on how to improve the Starbucks experience. After all, the baristas are educated and will give useful recommendations.

For better or for worse, ordinary citizens expect more from public and high profile figures. Not only do they expect more, but they also forget that these figures are mortals and want them to behave as infallible gods. Once a public or high profile figure steps out of line, the masses shout: Foul! There is a whole industry that thrives on public and high profile figures stepping out of line. You will see it and read it all if you tune into Entertainment Tonight on CTV, or flip through a tabloid such as the National Enquirer at the supermarket’s checkout isle. Luckily these media outlets report on Hollywood Boulevard celebrity mishaps that typically do not affect our way of life, investments, pensions and savings. That said the masses should be more concerned about Wall Street, Bay Street and Downing Street “celebrities” mishaps that make it to the front page of the Financial Times and Wall Street Journal. When political and business leaders step out of line the ramifications of these events are much dire. Our readings, which included cases about Conrad Black, Brian Mulroney and the Sub Prime Fiasco, are all mishaps and disasters that made it to the front page of the Financial Times and Wall Street Journal. This paper will enumerate and discuss the main issues highlighted in our readings and what we should learn from them.

Where is the Line in “Stepping out of Line”?
We previously mentioned the term “stepping out of line” several times. Though, where is the “line” that cannot be crossed? We learn from our readings that the higher you rise in the corporate ladder the more thought you have to give about your actions. From our readings we learn that the pundits are split on whether the actions of Conrad Black and Brian Mulroney are legitimate or illegal. That said the pundits seem to agree that their actions were questionable. “Crossing the line” for a public figure or leader is doing anything that might be considered as questionable judgment. Leaders should not only avoid questionable actions, but they should also distance themselves from anyone who carries out questionable actions.

Ensure that your Dealings are Ethical
Public figures should be expected to be scrutinized at any point in time. For this point, all their dealings should pass the “sunshine test”. The sunshine test can be described as: “if my decision or action would become known to other people, would it cause embarrassment?” If the answer to this question is “yes”, then that decision or action is most probably unethical. Had Brian Mulroney asked himself this question he would have not accepted to receive the cash payments he received.

Your Credibility is Your Biggest Asset
Leaders should not forget that their credibility is their biggest asset. Once your credibility is compromised it is never fully regained. The fact of the matter is that Conrad Black is not only serving a “6 year 6 months (sentence) at a low-security jail in Florida,” but a life-time sentence in the eyes of everyone that once trusted him. The same applies to Brian Mulroney. Peter C. Newman highlights this point when he says: “although he says he (Conrad Black) hopes to re-emerge as an investment dealer, it defies gravity to believe that many people will want to place their money with him.”

Challenge Your Assumptions
The sub-prime fiasco teaches us to challenge the underlying assumptions. The models that were used to value subprime mortgages were built on false assumptions. These assumptions were overly rosy and were based on the early years of the housing boom, where the default rates on all mortgages were unusually low. Investors never stopped and challenged these assumptions. Had investor banks challenged these assumptions they would had either not gotten into the subprime mortgages all together, or had charged a rate comparable to the risk they were taking.

The Age of Rubber Stamping is Over
Do you want business to be more regulated? If your answer is “no,” which is most probably the case, then expect to ask or be asked tough questions. The role of the board member keeps on getting more and more complex. Prior to Enron and Sarbanes-Oxley, a board member’s job was to rubber stamp managements decisions. This is no longer the case. Corporations should embrace a culture that allows board members to be skeptical of management decisions and allow them to ask tough questions. Board members are not responsible for a company’s day to day operations, but should ensure that management does not step out of line, deals ethically, maintains its credibility, and challenges assumptions.

This report was compiled to provide KPMG with guidelines to handle scenarios that were outlined by Mr. Colin Sharman, UK Senior Partner at KPMG. These scenarios include What KPMG might do if:

1. it were to become obliged to formally separate the accounting function from the consulting function
2. consultants demand more work/life balance

Following the suggested action plan will ensure that KPMG maintains its position as a major enterprise in a swiftly changing global business environment.

Click here to download the report

Something intriguing happened to me the other day, while I was browsing the Internet I saw the huge void between the Western and Middle Eastern cultures. I was browsing cbsnews.com, an American news Website, and my eyes were glued to the streaming video of the Iranian president’s interview on “60 Minutes ,” a television newsmagazine. The interview was filled with political rhetoric, though behind all of that was the void. In the right hand corner was the CBS reporter grilling the Iranian president with his American style investigative journalism. In the left hand corner was the Iranian president starting his interview with a Persian poetic tone by saying: “It’s in the afternoon of an autumn day. We’re in the open air in a garden. And the air is pleasant. And fall, little by little, is settling in, mixing with the summer breeze.” Both the president and the reporter were a perversion of two distinct cultures that when put together only differences could be noticed. From our reading material, one can say that the interview would have had less of a sparring tone had both sides been close to agreement or one of the sides crossed over and behaved in accordance to the other side’s culture.
Can one easily change cultures? Can culture be situational where a person can switch to another culture in an instance? In this paper, we will explore these questions and more in a context of an organization and learn more about culture and when to change it.

Effective negotiation skills are an essential tool for any business person in today’s global environment. Despite the abundance of available research, many experienced business people rely on their instincts and innate qualities, which often combine both effective and ineffective techniques. Mr. Anthony Chamy correctly identifies preparation as an essential component to a successful negotiation. Anthony also identifies his BATNA and reservation point; however, he lacks a little in the area of identifying interests, positions, targets for both himself and the other parties and BATNAs and reservation points of the other parties. Anthony correctly identifies the importance of building trust and a strong relationship through the use of knowledge-based trust techniques. Further, Anthony employs effective techniques when dealing with negative emotions from the other parties. By adding the techniques described herein, Anthony can generate more value and more positive outcomes in the negotiation process. The negotiated outcomes will allow Anthony to fully realize his interests and priorities while at the same time creating value for the other parties.

In the case “Organizational Transformation in a Taiwanese Company” Eva Chen, the agent of change, has a huge task ahead of her to transform YUAN Group’s culture into one that makes it a serious global competitor. From the case one can deduce that the YUAN Group is an organization in its midlife that embodies the personality of Mr. Pan, YUAN Group’s CEO. Mr. Pan’s personality is that of a “father figure” that “cares for his employees very much”. YUAN Group’s culture focuses on human interaction and compassion amongst employees. For example, management was always present at employee’s functions and employees would mingle in the company’s annual outing. (continue reading…)