Managing the Nation

"Get rich or Die tryin" is it the case with Whirlpool-Maytag ?!

2006-03-30T03:17:00.000-08:00

Referring to the article “Regulators OK Whirlpool-Maytag merger”, Whirlpool is having a bad time trying to merge with Maytag. Knowingly Whirlpool is the number one appliance manufacture in the US, while Maytag is the third behind GE consumer products. This merger was severely opposed by antitrust regulators: group of lawyers, who started operating after the Sherman Antitrust Act (1890), which is law designed to make illegal all trusts and other combinations that aimed to create monopolies in restraint of interstate commerce. Relating this article to David Baron’s we find the following:

Issues: The issue was derived due to Whirlpool potential merger with Maytag an aspect that allows the firm to control of almost 70% of the clothes washers and dryers besides half of the dishwashers demanded by the US economy. Moreover this merger is expected to decrease the competition for this industry and increase oligopoly (of which I believe would occur between GE and the new merger Whirlpool-Maytag leaving other competitors all the way behind).
Information: The information is basically under process; more studies are made by antitrust regulators, lawyers and Justice Department. As mentioned in the case “The department asked for more time to review the merger last month, prompting wide speculation that it was preparing to challenge the deal”, while the antitrust regulators commented “The antitrust division has been reviewing the proposed merger since September. The companies announced that they had signed a definitive merger agreement in August.” And executives from both companies declined to discuss how the merger would affect factories.
Interests: Interests include stakeholders of both companies. It was mentioned the Whirlpool and Maytag share’s prices rose by 27.7% and 7.1% respectively. This reflects our previous discussion that shareholders are optimistic that this merger would boost profits and decrease current competition. Other interests are the antitrust regulators and the Justice Department in the U.S. We could also add consumers as an interest group but am referring to antitrust regulator and department of just as the consumer’s representatives.
Institutions: As was mentioned in Baron’s framework, Institutions are regulators or in other words organizations having the authority to oppose new laws. In this case we find that the main authority is the Justice Department, although it ruled against the antitrust lawyers but the case isn’t settled yet as they requested more time to review some substantive matters. Another institution that’s not involved yet but I assume it will be involved as soon as possible is the Federal Trade Commission Consumer Protection.

In conclusion, I believe that this merger won’t be opposed or in other words it shouldn’t be opposed by the Justice Department because large retailers including Sears, Lowe's Companies Inc., The Home Depot Inc. Co. and Best Buy have alternatives available to help them resist any attempt by the combined company to raise prices. Not only this, but also competitors are numerous and almost equal in size such as GE and Frigidaire besides foreign competitors such as Samsung. And due to increasing demand those competitors could sustain their production units or simply increase their production.

Would Sony's PS3 delay break the barriers of Rivalry?

2006-03-16T03:37:00.000-08:00

Is Sony’s PS3 delay harmful? Would it give a better chance to its competitors Microsoft and Nintendo? Would it increase rivalry and decrease Sony’s PS3 shares? Emphasizing on this and referring to the Article “Sony’s Delay of Game” and relating it to Porter’s framework we find the following:
“Price cuts are quickly and easily matched by rivals, and once they are matched they lower revenues for all firms unless industry price elasticity of demand is very great” according to this statement in Porter’s framework we find that Intensity of rivalry among existing competitors does occur. Relating this to the article we find that Sony’s share prices fell by 1.8% in Tokyo Trading since it gave a better chance to its rivals Microsoft and Nintendo to increase their market share which is 70% acquired by Sony PS.

Competitors are numerous or are roughly equal in size and power: I believe 3 competitors could refer to numerous since this could eliminate monopoly or oligopoly. Although Microsoft is the biggest in size, but its gamming department is somehow equal to Nintendo’s and Sony’s PS size. Microsoft’s gamming department doesn’t produce games per se, but they research and develop to arrive to a better game support performance that’s compatible with computer games manufactures. As for the power I believe Sony’s PS is the greatest with 70% market share in the gamming industry.
Industry growth is slow: “Slow industry growth turns competition into a market share game for firms seeking expansion” Which totally contradicts our article since the industry growth is fast. And as was stated in the article “not everybody thinks being late is a huge liability” a period of 3 month would still keep Sony’s PS at the lead.
The product or service lacks differentiation or switching costs: Referring to the article “When completed, the PS3 will play all PlayStation games, old and new, as well as high-definition movies. It will let users surf the Internet via a broadband connection and sport a 60-gigabyte hard drive to store downloaded games or music, a wireless antenna to link to other Sony gizmos, and a tiny camera for chatting with friends over a video hookup.” All of this proves that Sony’s PS has maintained huge differentiation and low switching costs not only because of the technology but for its loyal customers.
Capacity is normally augmented in large increments: “He said he plans to prepare 1 million PS3 consoles for the worldwide launch and have enough capacity to roll out another 5 million through the end of March, 2007” For the first Sony would offer 6 million consoles which means 0.01 console to each individual on earth. I believe for the first year this is a big number! Accordingly the supply is being offered in large increments which would urge other competitors to cut prices.
Exit barriers are high: Obviously “Strategic Interrelationships” is one of the most competitive disadvantages in Sony’s core business. Since the PS business unit is highly correlated to Sony’s image as a whole this causes the firm to perceive high strategic importance to being in the business.

In conclusion I believe this delay won’t affect Sony’s PS manufacture since it has a competitive advantage that eliminates any rivalry at least for the Short Term.

To all Bloggers watch out Google's Blog Search

2006-03-09T04:45:00.000-08:00

Google's Lackluster Blog Search

Is Google the potential competitor in terms of Bloggers? Would Google gain market shares after they were successfully distributed among market leaders Technorati, Blogpulse and newcomer IceRocket? Let's discuss the article from Porter's point of view. Although some of the critics would take the case as rivalry among existing competitors, since Google is a well known search engine that could invade search engine markets anytime anywhere and easily attract customers given that Blog search engine is to be offered as a complement to Google's main objectives. But I'd prefer to be more logical and discuss Google's perspective as a potential entrant in view of the fact that the three market leading Blog search engines are considered specialists in this field of interest.
I believe the biggest potential hump that Google would face is in terms of "Bargaining Power of Buyers", relating it to this case "Bargaining Power of Blog Surfers".

Purchases are large in volume relative to seller sales: As a matter of fact Blogs and Blog Surfers are increasing tremendously in this time horizon since it attracts surveyors, news reporters, students and many other slices of the economy due to its short written analysis, opinions of fact and different criticisms; allowing this product to be well differentiated from old traditional long compositions discussing every single detail that are sometimes proposed to professionals and presented in newspapers. Relating this issue to the case we know that Google has lost a great market share to old established competitors.

The product it purchases from the industry are standard or undifferentiated: As products are hardly to differentiate and existing competitors are available anytime to offer high quality services, Google must be able to differentiate its services by conferring a high quality of service and user-friendly interface.

It faces few switching costs: As I mentioned earlier Google should start considering this service as a complement for its well known products and thus gain and attract existing customers by offering other services like Blog surfing.

The product it purchases from the industry represents a significant fraction of its cost or purchases: As a matter of fact buyers barely pay a significant amount of dollars to access or use Blog search engines, so buyers are less price sensitive which makes it more challenging for Google to attract current customers, unless as mentioned earlier this product was offered as a complement for Google's current customers.

Finally I believe Google should offer more than just Blog search engines, but to reserve the rights to practice more power on its biggest free blogging service as it was stated in the article "Google already runs the biggest free blogging service in the world, Blogger". For example decreasing the efficiency of the leading search engines by applying certain codes for word search among articles.

Nokia to its rivals: "Be Ware of Us"

2006-02-16T04:33:00.000-08:00

According to the article "A New Message from Nokia" Nokia has finally launched its 770 Internet Tablet, which is a $539 pocket-size computer that allows users to surf the Web from the palm of their hands via Wi-Fi or a Bluetooth connection through a nearby mobile phone. The new innovation from Nokia has met tremendously high demands reacting positively to previous expectations.

As to analyze organizational strengths and weaknesses of Nokia after launching its new innovation, I will criticize this article by referring to Barney's framework.

1. The Question of Value: This question could be answered by referring to the definition of performance presented in Barney's Framework: "A firm's resources and capabilities are valuable if, and only if, they reduce a firm's costs or increase its revenues compared to what would to what have been the case if this firm did not possess those resources" relating this issue to the article we find that it certainly increased Nokia's revenue as eager customers snatched every single unit in the markets and orders are placed for 3 following weeks. "Overall, Nokia's multimedia products group, which includes the 770, saw fourth-quarter sales rise 59% from a year earlier, to $2.4 billion".

2. The Question of Rareness: Up to this point all Nokia's rivals are still working hard to attach MP3 players besides live digital TV phones. While Nokia had successfully left this open end circle to move and attain 100% new market's shares by introducing its new 770 Internet Tablet.

3. The Question of Imitability: It depends how Nokia will manages its competitive advantage. An important point to stat, Nokia had prolifically used Linux software and ignored others like Microsoft Windows for mobiles (previously used by Motorola). Since Linux is an open source software programmers could freely download, implement and reengineer software and distributing it with barely mentioned costs. So the question here, would the next step Nokia is going for is to Patent its software?

4. The Question of Organization: I believe Nokia is lucratively shifting rapidly between software, for example they shifted from simple programs to Symbian Software to the Linux operating system. Moreover Nokia is the largest mobile company in the world in terms of market cap, and the question here, would they effectively market their new complementary products to lower shifting costs between their customers?

In conclusion this company has met Barney's framework in a positive manner, although this product is highly criticized among analysts, I believe if Nokia aggressively maintained its competitive advantage then the 770 Internet Tablet will become one this century's fads.

Effect of Danish Boycott Patchy

2006-02-08T03:07:00.000-08:00

http://www.arabnews.com/?page=1§ion=0&article=77011

Published by: Roger Harrison & Maha Akeel, Arab News

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No No No for Danish products! A phrase widely repeated among Muslim buyers replicating the huge dispute between Denmark as a country and Islam as a religion. What Denmark’s government has failed to understand is the tremendous buying power of Muslims towards their products. As government officials refused to apologize and humiliation by other newspapers continued to emerge, switching costs became so low due to the Islamic ideology to their God and Prophet (peace be upon him). Furthermore Denmark supplies more than 30% of its products to the Islamic world so the recent situation of boycotting will severely affect their products, as buying power increases whenever purchases are intended to be in large volumes or consists of a large volume. Moreover as more and more Muslims are looking forward to defend their prophet Danish products became unimportant compared to the quality and services pertained by the manufacturers in Denmark and other countries all over the world. However as competitors like (Anchor, Nido) raised their product’s prices by almost 20% this could increase switching costs between competitors since high quality Danish products are still sold on lower prices. But as I stated earlier Muslim’s ideology towards their religion is not affected by pricing structures, so this aspect could still be debatable.
While relating Hamel’s framework to this article, we find that the Danish manufacturers have failed to meet the requirements of “Customer’s Interface”. As manufacturers fell short by not using their economical pressure on their government to apologize, the “Fulfillment and Support” a component of customer’s interface (which mainly discusses the way a firm reaches and supports its customers) was not met. Besides that, Danish manufacturers have also failed to meet “Relationship Dynamics” (component of customer’s interface) by not interacting with its customers in a proper way.

I believe what could’ve been done by the Danish manufacturers is as follows:

1. Exert economical pressure on their government. As posted by a Danish newspaper earlier this month if this situation continued for one steady year the unemployment rate in Denmark would increase from 15,000 to 50,000.
2. CEOs, Board of Directors, and Market Makers of the Danish manufacturers could use the media as an intermediary to reach their customers in a positive way.

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The Real Cost of Google's Sellout to China

2006-02-01T03:06:00.003-08:00

Published by: Thomas Lipscomb

http://www.editorandpublisher.com/eandp/columns/shoptalk_display.jsp?vnu_content_id=1001918977

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Applying Michael Porter's analysis to the article "The Real Cost of Google's Sellout to China" I believe this article should be criticized by the bargaining power of Suppliers. As Google is the second largest technological firm acquiring almost $80 billion of market capitalization and operating on a worldwide basis including China we've got to know the firm isn't facing a market entry barrier. In my opinion it's a well established firm that's facing a bargaining power from suppliers or in other words from the Chinese government. On one hand Google is being opposed by vast regulations imposed by the dictatorial rule in China, which limits its operations towards one of the largest populations in the world, and at the same time allowing substitutes like Yahoo and MSN to operate liberally, acting on increasing Google's costs and expenses on operations in China. On the other hand Google is permissible to act freely within the democratic statute in the U.S, in which this government "Supplier" exerts equal power on all competitors; forcing Google to act on an ethical basis by rejecting all appeals requested by the U.S government to use surveillance, enabling it to track every U.S citizen surfing the net, and in turn threatening their anonymity.

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Test Post

2006-01-22T07:04:00.000-08:00

Test Post for MGT 406 at AUS