Apple moves to widen Mac Appeal

“Who would have thought we would see Windows running on a Mac with Apple’s blessing?” says Graham Barlow (Editor, Mac Format) in his article Apple moves to widen Mac Appeal. Apple has just released a new utility – Boot Camp – which makes it easy for anybody to install Windows XP on to a new Mac. It will only work for anyone with a Mac running one of the new Intel processors but not for the older G5 and G4 Macs.

The move, though it is still early to comment much, ‘is a clever way to encourage Windows users to make a switch to Mac’ comments Barlow. Is it then safe to assume rivalry in the computer industry will intensify? To some extent yes, since there will soon be no switching costs, ‘if a Windows user is nervous about switching to a Mac, they now have ultimate security blanket’ and more of programs (from Mac) than what s/he had in Windows alone. This dual boot system should make Apple’s product more attractive, but will this be the case? Time will tell!

It is still debatable whether existing Mac users care, Barlow thinks that most of them are happy without Windows and are unlikely to install it now. In addition Boot Camp brings with it issues of ‘security vulnerabilities that Windows users take for granted, but Mac users seldom have to worry about’. Nonetheless Apple’s dual system which can later kill the difference in Mac users between a PC and a Mac, poses a threat of entry to PC industry through the product development. ‘Will we one day even see OS X running on PCs with Apple blessing too?...probably not any time soon’ comments Barlow ‘but suddenly everything seems possible’. As of now the move is innovative and will allow Apple to enjoy competitive advantage for a while.

Understanding IKEA : How a Swedish Company Turned Into a Global Obsession (II)

From Jay Barney’s framework on Gaining and Sustaining Competitive Advantage, IKEA has a competitive advantage over its competitors and has sustained it for a while. This advantage can mainly be attributed to its resources and capabilities namely human resources, brand and IKEA concept

Ingvar Kamprad (IKEA founder) though retired is still a cheerleader for the practices/concepts that define IKEA culture. He emphasise egalitarianism (equality of mankind), where IKEA regularly stages ‘anti-bureaucracy weeks during which executives work on the shop floor or tend the registers’. Steely competitiveness among IKEA shops is emphasized where weekly tracking of sales growth, naming the best-performing country markets and identifying the best selling furniture are done. Cutting prices is another message that comes across loud and clear among IKEA operations. IKEA aims to lower prices across its entire offering by an average of 2 percent to 3 percent each year. Lastly frugality (cost obsession) is as deeply ingrained in the corporate DNA as the obsession in design. In the article IKEA billionaire founder proud to be frugal Kamprad said “People say I am cheap and I don’t mind if they do. But I am very proud to follow the rules of our company”. Apart from the founder and the concepts, IKEA managers, designers and staff have embraced the culture and passed it to its customers, adding to the value of its human resources. Since managers were trained and groomed by Kamprad and are personally devoted to the founder analysts worry that IKEA’s culture may start to fade once direct links with Kamprad disappear.

Targeting middle class customers who shares buying habits; providing similar experience the world over; stocking sheer number of items – 7000 from kitchen cabinets to candles; making store visit more of an outing than a chore; seducing the customers with one touch after another within the shop; offering other services like restaurant, kids area and the like; flat-packed nearly all big items to save shipping cost and allow shoppers to haul their own stuff and many more, makes IKEA concept of its own kind and as a results boost its image (brand)

These resources are valuable (enables the firm to respond to environmental threats and opportunities) but each on its own is not rare and hard to imitate. IKEA’s ability to combine these resources in the way it has done (creating IKEA world), makes the whole experience rare and non-imitable. As a result IKEA enjoys and sustain a competitive advantage over its competitors

Understanding IKEA : How a Swedish Company Turned Into a Global Obsession

Kerry Capell of Business Week online together with other six people in his article Understanding IKEA: How a Swedish Company Turned Into a Global Obsession reports on how IKEA has attained global cult status. Looking at the report from Gary Hamel’s framework on business concept innovation (capacity to imagine dramatically different business concepts or dramatically new ways of differentiating existing new concepts), IKEA is considered to be innovative in the following ways:

The essence of how the company competes (core strategy) is well designed to allow its current status as a global cult. IKEA created its own world that revolves around contemporary design, low prices, wacky promotions and an enthusiasm that few institutions in and out of business can muster. IKEA targets (product/market scope) middle class citizens of different countries in which it operates, Capell comments that ‘as long as consumers from Moscow to Beijing and beyond keep striving to enter the middle class, there will be need for IKEA’. Its ability to successfully penetrate globally (226 stores in Europe, Asia, Australia and US) is something that other mass-market retailer like Wal-Mart hasn’t been able to match. In general IKEA differentiate itself by providing ‘one-stop sanctuary for coolness’ (stocking 7000 items from kitchen cabinets to candle sticks); making customers emotionally involved with the company (providing customers with similar experience all over the world); making store visit more of an outing than a chore; design its stores circular to allow general view as one walks in one direction; wide isles to allow inspection of merchandise without holding up traffic and many more.

IKEA knows that middle class citizens want affordable contemporary design (core competence) and so its 12-full time designers and 80 freelancers work hard to identify the appropriate materials for their products and least costly suppliers. Simplicity, a tenet of Swedish design, helps keep the cost down. Its brand (strategic resource) awareness ‘is much bigger than the size of our company’ says CEO Anders Dahlvig. That is because IKEA is far more than a furniture merchant. It sells a life style that customers around the world embrace as a signal that they have arrived, that they have a good taste and recognize value.

McDonald’s Facing Lawsuits Over French Fries

MSNBC.com through its associated press reported under the title McDonald’s Facing Lawsuits Over French Fries on Feb 20th, 2006 that McDonald’s Corp is facing at least three lawsuits related to its disclosure [the previous] week that its french fries contain wheat and dairy products. Until recently, the company had said its fries were free of gluten and milk or wheat allergens and safe for people with dietary issues related to consumption of dairy items. The corporation has been sued/accused for misleading the public and so got sued by first, Debra Moffatt (a celiac disease patient) whose consumption of gluten triggered gastrointestinal symptoms; second, Mark and Theresa Chimiak, claiming that their 5-year old daughter has intolerance for gluten and third, Nadia claiming she is a vegan and would have not eaten the fries if she had known they contained dairy products.

McDonald’s declaration of wheat and dairy contents in its fries can trigger several negative non-market issues (interactions between the company and individuals, interest groups, government entities and public [Baron]) for the company. The company has portrayed an image of unconcern for its customers by lying to what it offers them. Though McDonald customers have information that its foods are not healthy, they do not expect to be lied to with the contents of what they are given to eat. Though only three people sued McDonald (which may cost the company a sum of its cash), the impact on its business can go further in affecting its image in the society and government.

Nokia entering VoIP Market!

“Nokia is introducing new mobile phone handsets that will enable users to make calls over the internet” reports BBC News under the title Nokia Launching Net Call Handsets. Two Nokia phones (6136 and N80) will be equipped with the technology initially. They are expected to have dual use: calls being routed through net link if the phone is within the range and calls return to standard mobile phone network when the phone is outside the range. Since Voice over IP [VoIP] technology uses same wires used to browse the internet, calls are expected to be cheaper than when using standard phone networks. Nokia made this announcement at the showcases of the sector’s latest technological developments. Is Nokia’s business concept innovative?
VoIP has been around since mid-1990s with personal computer to personal computer phone calls (Belanger, Slyke) to internet phones (PC to regular phones). Nokia’s VoIP enabled handsets seem to be a new way of differentiating its existing business concept by adding the usage of internet to its standard mobile phone network. Though already beaten by BT with its [VoIP] mobile phone version – BT Fusion, Nokia is still among the first movers into this market. But does this concept provide potential for wealth? Some analysts believe that users are unconvinced by the latest 3G phone services (VoIP handsets included) since these services are complicated and require extra payment from users. If what analysts think is true, then Nokia’s VoIP handsets though valuable and rare for the time being might not allow the company to benefit from the competitive advantage it tries to build with its business concept.
Moreover, since VoIP has been there for a while, Nokia or BT’s mobile phones can easily be imitated by competitors since the technology is available for everyone. Rivalry is also intense within the industry since mobile phones lack differentiation or switching costs. In addition personal computers are already

Retailers Must Do More To Stay On Top Of Competition

“Retail outlets need to deliver experiences, not just basic goods…and those who don’t maintain market buoyancy may be left behind” says leading retail analyst. According to McArthur, Director of Leasing and Marketing at Dubai Festival city, recent developments in Dubai are expected to intensify competition in retail industry in terms of doubling leasable area and putting pressure on current retailers to continually raise the standards of their services. Dubai Festival City is considered as one of the ambitious development and an innovative management technique in that it focuses on offering retailing, entertainment and hospitality. But, is offering strong family entertainment, multiplex cinemas, large food and beverage components and theme parks at the same spot/area, innovative?
Hamel defines a business innovation concept as “capacity to imagine dramatically different business concepts or dramatically new ways of differentiating existing business concepts” he further added that innovation is about “build[ing] a business model so unlike what has come before, that traditional competitors are left scrambling”. By this definition Dubai Festival City has expanded the current business concept of shopping centre/mall of everything falling under one roof by extending the normal spatial use but not differentiating the basic concept. Most shopping centres/malls have family entertainment, multiplex cinema, food and beverages courts and attaches experience to these services. Dubai Festival City may decrease the market share of other competitors but not leaving them scrambling for the idea is still the same and some customers will still prefer to obtain the same services at shopping centres/malls as a result of loyalty, distance, time and many other reasons. The uniqueness or innovativeness may be slight seen in the fact that this is a city and not a shopping centre/mall but as far as Hamel is concerned innovation has not been reached in this case.

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