Porter's Five Forces for Apple

Today I will take a look at Apple by implicating Porter’s five forces model. The Five Forces Model is a useful tool for understanding where power lies in a business situation. It purposes analyzing how the ability of a firm to generate or maintain a competitive advantage. The five forces are included threat of new entry, competitive rivalry, threat of substitution, suppliers power, and buyers power.

For the threat of entry, it is quite low as they put huge effort in research and development. Each product is very unique feature compare to same product that produced by other companies. Also, they have found a way to continuously differentiate its products from its rivals. They also have such wide-spread production that it can produce at a lower cost due to its economies of scale.

On the other hand, they do not have to worry too much about the threat of rivals. For instance, in mobile phone market, once Apple introduced iPhone, it quickly rose to the top and gained the advantage on rivals like Samsung. It is because Apple is used a separate system which is iOS, while all the other companies such as HTC and SONY are using android. In addition, they have their own apps like itunes and siri. They are offering something special to the buyers.

For the threat of substitutes, there is nothing can replace for a smart phone or computer. The next threat, the threat of suppliers, is also not so severe. They have a strong vertical integration so they do not rely on the third supplier so much. But they announced that they will use Intel” so they need to fight against with other competitors.

The final force, the threat of buyers, is really vital threat to Apple. Apples products are unique and differentiated, illustrating the power of buyers is lower.  Their target customers are emphasized on quality so they are willing to pay for a higher price. They has developed a high brand loyalty, as a result, the buyers will tend to return and purchase their products.

Hong Kong Business Leader

This week I learned about management theory, different person will have their own ways to management their organization. In Hong Kong, I am interested in a business person which is Shih Wing Ching. In 1978, he established Centaline Property Agency Limited, which is now one of the largest property agencies in both Hong Kong and China.

As he can able to create and lead a sizable, influential company, and remain firmly in this tension market competition, he must has his personal unique vision and perspective.
He said the philosophy of Sun Tzu has some impact to his administration. In this ideology, the concept can be used from ancient till now.
Sun Tzu had said that “politics, it is making people and the monarch share common goals with spirit, and enable people together through life and death without disloyalty to the emperor". Also, “society agreed the same value with the king” can be adapted in management, it is affiliated with the boss’s idea to be consistent. Therefore, Shih Wing Ching will use his own thoughts and ideas on a regular basis to share with employees, so that employees understand his theory. His company will hold monthly plenary meeting, he will express his management philosophy and the latest development. As a result, employees know the boss orientation and market situation. The staff will know how to handle their work without asked his opinion all the time. He believes that if the staffs are closed to the market, with the up-to-date market information, the staff can provide the best decision to him.
Under his management, the key factor is from the “Art of War”, it says “Ordering the many is like ordering the few. It is division and counting”. How to consolidate their power is more important than how to manage a group of people.
“Division” is crucial to an army as it must has good organizational structure. If the army compiled inappropriately, it is not easy to command, and cannot take good use of the advantages of a great force. In fact, in his supervision, apart from authorized strength, he needs to consider division of labor, responsibilities, autonomy and share the accomplishments.

Oh Fitch Please

In my London trip, I have bought some clothes from Abercrombie and Fitch. When my flatmate saw them, he showed me a video about this brand.

In the video, it is the interview of the CEO of this popular teen clothing retailer. He doesn’t want larger people shopping in his store, he wants thin and beautiful people. Also, He doesn’t want his core customers to see people who aren’t as hot as them wearing his clothing. People who wear his clothing should feel like they’re one of the cool kids.

Apparently, his business was built around sex appeal. If we have been to Abercrombie and Fitch in the last few years has probably noticed that they do not provide XL or XXL sizes of women’s clothing because they are not willing to let overweight women wearing their brand. Compare to us clothing brand, the largest pants for women available at Abercrombie are size 10, however, H&M goes up to 16 and American Eagle even goes more to 18.

We do realize that their target group is for charming and muscular men while girls need to be skinny and pretty. In the business side, due to their market strategy, they do not want to sell their clothes for fat people can be right but they should not say that they reject to sell them to ugly and obese people. This is totally damaged their image and let people refuse to buy their products anymore. Some of Hollywood famous stars are telling the public to burn their Abercrombie clothes after they were accused of discriminating against overweight customers and insisted to burn their clothes which are damaged instead of giving to poor and homeless people.
Nowadays, business ethics is an important issue in the business sector. It is not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer. For me, I will not buy their stuffs anymore and I do hate this brand because I used to be a little fat boy.

Arsenal

On this Saturday, I travelled to London for a one day visit. It does a really nice city. As a fan of Arsenal, I must go to Emirate Stadium. I wish I can go to there since I was small. My little dream finally comes true but I cannot watch a match in it that is the only thing that I can be blemished.

         Apart from the strong and brilliant players in the team, we cannot neglect Arsène Wenger who is the coach of the team. He has led Arsenal in a successful way since 1996. Some leadership methods and the implementation of economy policy  can be learnt from him. Most of the team like Manchester City FC will spend a lot of money to purchase the players. However, he earned a reputation for spotting young talent, and he has remained focused on developing a youth system. The club develops young players instead of buying expensive player.
          Arsenal is the only few top level clubs which obtains net profit around the world. He can strike a balance between the position of the league and the money making. He is not only showing a good game to us but also demonstrate the consistent motivation to football, business, anything you do in life. He believes one of the best things about managing people is that we can influence lives in a positive way. That's basically what a manager is about.
        Unfortunately, in football, there is more money than talent. For instance, he sold Van Persie to Manchester United for an initial £22.5 million, with an additional £1.5 million clause if United won a Premier League or Champions League title within the next four years. It is not easy to drop a player who remains one year contract by selling in this higher price. And Van Persie even made a speak that he would not renew his contract with the club.
       Lastly, the club faced a bad time in the last few years as they had not won any trophies. He is still maintained his own ideas against the results that is what a manger should do. Being tursted in himself for working in his own way.

First Business Lesson

Last Tuesday, I was having lesson with my friends. We had to make a new product by using three items which are a bag, a bank note and a CD. We decided to invest a product called 'music saver'. It aims for the children to develop the importance of saving money. So when they put money into the bag, it will play a song for them. If they can save the minium amount, it will renew the songs. Our target group is parents.