An Interesting Article...

   In previous classes, especially together with the presentations we did, we talked about how businesses keep their customers coming back to them or earn new customers. We pointed out that in some cases some firms keep their companies with their liabilities, by constantly inventing new products or sometimes even tricking their customers to buy their products.
Below is an interesting article, from LA Times, that gives a different point of view and a "warning":
This article also shows understanding of consumers. Businesses also need to understand consumer phycology, wants and needs. This understanding will eventually help them with their products and identifying opportunities in the market.

Buyer beware — of how you're being coaxed into spending

Stores' music, lighting, 'deals' and pricing ranges can all influence what you buy. And if you want to spend less, pay in cash so you can see what you're losing.

Chances are, given the time of year and all, you're about to go shopping (and shopping and shopping and shopping and shopping).

But beware. It won't be just a walk in the mall. Shopping is a far more complex undertaking than you probably realize, according to researchers who delve into the intricacies of consumers' buying habits.

"We have a difficult time controlling our shopping behavior," says Alexander Chernev, associate professor of marketing at the Kellogg School of Management at Northwestern University in Evanston, Ill. "It's influenced by lots of forces we usually don't take into account."

We take account of some of them below.

The five senses

"Everyone in the world of retail is trying to get you to spend in their location," says Paco Underhill, author of "Why We Buy: The Science of Shopping" and "What Women Want." "They try to engage you with all five senses."

What you see: Retailers work to present their merchandise in the best light — literally. "They use lighting to make something that looks good look even better," Underhill says. "Everything tends to look better in the store than it does when you get it home."

What you hear: If you like the music a store plays, chances are you'll like the products it sells — and vice versa. That, at least, is the message many stores hope to send with their soundtracks. For example, the strains of Justin Bieber crooning "Someday at Christmas" are pretty much a shout-out to young girls that this is the store for them. Middle-aged nerds? Not so much. "The music can tell you either you belong or you don't belong," Underhill says.

Just as music can attract people into a store, it can help to keep them there, or hurry them out the door. That's because customers respond to the tempo of a store's music, says Deborah MacInnis, professor of business administration and marketing at the USC Marshall School of Business. "Studies show that the slower the tempo, the slower people walk through the store, so the more they put in their baskets and the more they end up buying. If the tempo is faster, people walk faster too. They don't stop to look so much, and they don't buy as much."

What you smell and taste: The sweet aroma of roasting chestnuts. Free samples of Christmas cookies. Like music, those are effective ways of inviting customers into a store and making them feel welcome.

Well duh, you may say. But smell and taste can serve another subtle function too, Underhill notes. "They get your saliva glands going, and that makes you hungry. And when you're hungry, you're more apt to buy anything, not just food."

What you touch: Signs encouraging customers to touch the merchandise are far less common in stores than signs imploring them not to. But research shows that retailers may be missing a rather lucrative boat. "There are three ways that touching an object can make you willing to pay more for it," says Joann Peck, an associate professor of marketing at the Wisconsin School of Business in Madison who has conducted a number of studies analyzing the role of touch in shopping behaviors.

One way — the most obvious — is by giving shoppers information they can't get otherwise, such as how much the object weighs, how soft or hard it is, how rough or smooth it feels. A second way is also quite intuitive. You may be willing to pay more for a cashmere sweater or a small, sleek smart phone just because you like how it feels.

More surprisingly, Peck says, apart from any information or pleasure it gives you, simply touching an object can make you feel a certain sense of ownership. "And you'll pay more for anything you feel like you own."

(Sometimes a lot more. In an experiment at Duke University, researchers asked students who had won tickets for the Final Four basketball tournament how much they'd be willing to sell them for — the answer, on average, was $2,400. They also asked students who had entered the lottery but not won how much they'd be willing to pay for tickets — in that case, the average was a measly $170.)

There are big individual differences in how much people like to touch things, Peck says. But the rule of thumb should probably be, "If you don't want it, don't touch it."

Impulse buying

Suppose you go to a store to buy a new USB cable for your camera. That's all you need. That's all you want. But it may not be all you buy. For while you're standing in line at the cash register, all set to pay and go home, what to your wondering eyes should appear but "The Hair Traffic Controller — the world's greatest pet hair remover"? Now, it just so happens that you own the world's shedding-est sheepdog, and, well …

It's not merely random good fortune that you should find this fantabulous product — on sale, no less! — where you do. Retailers often identify potential "impulse buys" and stock them at the ends of aisles and close to the checkout stand. Shoppers may not plan to make these sorts of purchases, but stores do plan to make these sorts of sales.

By Karen Ravn, Special to the Los Angeles Times

November 22, 2010

Business Lesson 22.10.2010

Today, due to Can Kaya’s absence, our class was held in 321 F, the two business and management classes together. It didn’t make quite a difference though because not a lot of people talked anyway.

Mr. Sen started by reminding us what SWOT stands for. As I already mentioned in my previous posts, we do 7s and steeple analyses in order to determine Swot that later affects a businesses strategy.  You can check if your business has achieved its goals by revising(going back to) your strategy and seeing if you have been able to achieve what you have planned.

There are two types of businesses. Some businesses try to monopolize the market (these are financially strong) others try to act together.

Also there are different types of markets. Monopoly is a market where there is only one supplier. Also sometimes there are a lot of different sellers and buyers, this is called a competitive market . When there are a lot of buyers but a few markets ,it is called a oligopoly.

Mr. Sen also pointed out the point that when competition occurres, companies dont reduce their prices and this is a misconcemption of most beginning business students.

Below you may see the questions that occurred to me and my notes on our new topic:

Who regulates the market?

How do we distinct the public and private sector?

Pubic sector: businesses in this organization are owned by the government.

Private sector: individually owned businesses. (can also be a institution or a corporation.

Institutions or corporations are usually found in large businesses. For example Banks, shipping companies, airlines companies are owned by people called share holders.

Also we must nor forget that there are also corporations in public sector.

Privatization is when the gouvernments sells some of its shares.

Large corporations are owned by other large companies.

Proprietorship or sole proprietorship. They are the same thing. These terms mean when a business is owned by only one person.

Towards the end of the lesson, We did a short case study and I noted some important facts:

Public sector organizations are usually burocratic

If you want to make an impact as an individual it is rather hard and this is what sometimes causes partnership.

(seed capital) because it is meant to act like a seed that grows. Also when this metaphor is further examined we can see that just like for a seed, the environment and the “soil” in which a business is “ planted” also matters.

You expect the owner to put into money and then go to sleep : is called a sleeping partner: when one just puts the money and then ‘goes to sleep”

Equivocated profits come from the business its self. The stupid things to do with profits take it and use it their selves. Then there is no opportunity for the business to grow. The sensible thing to do is keep some of the profit for yourself but invest rest of It to the business.

Public good : national security is a public good.

As opposed to a private good, when you consume a private good there is less available for another person to consume.  This does not happen with public goods.

For example your enjoyment of the beauty of a certain city that was decorated doesn’t affect other peoples enjoyment of the same beauty.

Some Misconceptions I had

Matrix : dictionary meaning, the tissue between the cells

In terms of business,it can be related to structure.

What values do we share? Friendship, respect, honesty

Negative values: prejudice, hate, intolerance, selfishness

Style : koc school: how do people behave? What things are tolerated and in tolerated

Kadikoy Anadolu Lisesi : is it the same spirit as koc school? The way people talk to each other is different

Shared values shape up the other elements

Structure in an organization: departments, sub departments

Relate to the organization itself : top 3 = they are created by the people in bottom 3

The systems are created because people decide that they are needed

Technology : internal systems, external factor: provides us with the resource : what makes the technology available to us

Data management systems in our school : ara karne, e-okul system,

Generate strengths and weaknesses = by looking at 7 –s and how they’re related to each other and if its powerful.

What makes the piles build the building ? The 7 – S Matrix

More than just a pile of bricks, every single organization is more than just a collection of people

Strategy of school = improve the performance of the students in

The goal is wrong = it should be the future life, not the report card

THE 7 S MATRIC IS INTERRELATED

the openings of the 7s matrix are below:

Strategy: analysis of environment, competition, customer needs and ones own strengths and weaknesses, leading plan or course of action

Structure: salient features of the organization chart. Alternatively a description of how the separate entities of the organization and tied together

Systems: proceduralised reports and the routinised processes On the intangible side, includes routinised processes such as meeting formats and norms of conflict management.

Staff : characterization of the major groupings of  people within the firm by education, functional discipline or work background.

Style: description of behavioral patterns

Shared values

Skills

SWOT Analyses Part 1

Today in our business class, we were asked to do a swot analyses of a school. I will only talk about one part of this swot analyses because we haven’t talked about the 7S matrix that forms the SW (strengths and weaknesses) of a business.

QUESTION :Identify steeple factors for the opportunity and threats for a school.

The Koc School

Social

 It can be both an opportunity and a threat.

Opportunity:  The koc school is a prestigious school and the parents backgrounds are high standard. They have sufficient incomes opposed to the workers in a factory.

To convert threats into opportunities, and improve the opportunities, the koc school can help educate the families in the east and try change their ideologies.  Also the school can organize educational seminars knowledge and awareness.

Technological

It can both be considered as an opportunity and a threat.

Threat: If the school stores all its important important in computer system ,if a system failure occurs, all the  data base could be destroyed. There is also a change of the school network being hacked.

Opportunity: In the Koc school there are special student websites like moodle, naviance and personal page in order to keep students updated about their grades and organize them.  These websites provide easy and fast access which can allow time to be used efficientle.

Special codes and passwords are given to parents to inform them about their children.

Kocscholl should store its data also in other hard disks and improve the security systems by obligating password change every few months. Moreover the access duration should be increased in order to prevent students from being interrupted.

 Mr Sen told us : Be carefull, STEEPLE IS A TOOL USED TO MEASURE THE CURRENT ENVIRONMENT NOT THE HYPOTHETICAL SENERIO. He also said remember, Social factors include demographic factor.

business Lesson 18.10.2010

Today, we had our first business quiz. It contained 5 questions that Mr. Sen wrote on the board.  Below are the notes I took on the answers we discussed in class.

The service sectors of an economy can be considered as the tertiary and quarternary sector.  The service that the quaternary sector provides to consumers isn’t related to the process of using natural goods. Google is an example of a business in the  quaternary sector.

The service sector (tertiary sector) is related to a process from bringing a product to customer.

The mission of a business can be defined as providing the needs and wants of people.  The mission is clarified in the mission statement of a business. The mission must also answers the question  ‘why do we exist?’ for a business.

A business should take action according to the external factors. External factors are essential in planning actions.  One can only look ahead and decide what he will do if he knows where the business is now. 

After we discussed our quiz answers we were introduced to a new topic called SWOT. At first this term was unfamiliar but then, as we talked more about this term, we noticed that it actually contained the external factors of a business ( STEEPLE ) that we had already went over.

Basicly  for business and non business organizations

7S+ STEEPLE = SWOT   There are SWOT= strengths, weaknesses, opportunities and threats.

7s is internal, Steeple is external factors that affect a business or non business organization.

The external environment is divided into STEEPLE. 

In order not to mix these two different “factor groups” for a business or non business organization we should know that The 7s matrix tells one where his strengths and weaknesses come from and The steeple analysis tells one about opportunities or threats.

All the negative things in an environment can be considered as threats. Opportunities are positive.

In further detail, Swot analyses is the analyses of where businesses are now. It is the first step in planning.  Planning is essential for a business to continue functioning. Planning containes the four main questions below;

1-where we are now,  ( swot is the technique to identify the first question)'

2-where do we want to be at a particular time in the future,  (objectives, targets, goals are used to answer this question)

3-what should we do to get where we want to be,  (strategy is needed for this question to be understood and fulfilled)

4-how do we know we are getting there? ( control is used to verify the firm is getting closer to its goals )  ( this question can sometimes be defined separate from planning ) 

Time x =  the Horizon should always be considered when planning, answering the questions above.

For example : if you want to walk to Ankara : how far are you from Ankara now, when will you get to Ankara, how will you get to Ankara? can be considered as your planning.

Business Lesson 15.10.2010

Sooooo Mr. Sen said: Let's get down to business.


Our first question was " What is STEEPLE "? 
Nobody in the class could remember.  


Even though steeple 's dictionary definition is a church tower and spire.
• a spire on the top of a church tower or roof.• archaic a tall tower of a church or other building.   when considered as a business term it means different factors that may affect a business in different ways.  The S stands for Social and cultural opportunities , T stands for Technological opportunities , E stands for Economic opportunities, the second E stand for ethical, P for Political opportunities , L for Legal opportunities and the final E stands for environmental factors that may affect a business. The importance of each of these and different factors and their possible threats may cause a lot of different changes in a business. All of these factors need to be considered through-outly in order for the business to have a long and healthy working period.
Certain examples for each of these factors are below:

Socially, Gazi Osman Pasa and the Koc School have different students with different family backgrounds.

One of the social factors in a school are the expectations parents have for their children because the school has a certain reputation.

What is the demographic profile of the families of the children in a certain school ?   could also be a social investigation to be held. Also suppose that the ministry decides that Jewish people can’t go to school. Then that would be a social change in the schools students.

Social and Economic factors were misunderstood between our classmates. So how do you distinguish a social and economic factor?

Social factors have to do with ethnic identities with religion with social class with democracy and with occupations.  Economic factors are the factors related to economy and cash and income and so on.

Some Economic Factor examples are:  Turkey -2001 – a lot of parents woke up one day and say that they no asserts left due to the crisis . This is an economic factor that negatively affected families. Another example is if The dollar goes very week it can be a good thing for imports. If your company has a loan of 1 million dollars and if dollar weakens it is a good thing, you will pay the same amount but it will mean less value.Economic factors, like all other factors that affect a business can either hurt you of be to your benefit. It depends on the aspect you look at.

Political changes can be related to the ideologies of people and the government. For example according to the ideologies of children and their parents, in a certain school, the school may need to change its certain aspects of perhaps certain classes.  In our country(and many others) politics and education has never been separate. The programs of the ministry of education are always interrelated with the political issues. And we can clearly see that politics interferes with education.

A little business everywhere...

Two days ago in our business class with Mr. Sen, we talked about business organizations and non business organizations. We discussed how everything in life resembled these organizations in ways like their functions ( to provide customers with their need and wants is the purpose of business organizations when  a mother works to provide her child with food and toys ), their labour division ( a mom managing the money in a family while the father works ) and so on.
Today in our Environmental Systems, science class, we were talking about the terms NPP and GPP that are related to the net productivity and the general productivity of a producer in a certain food chain. ( these terms can be easily comprehended when a plant and the amount of it's photosynthesis is examined ). At first I couldn't understand the relationship between these two terms so my teacher explained it once more and wrote down the formula: GPP = NPP + rate   
When I still couldn't get it he asked me if I took Business. I replied yes. Then he said : GPP is the price you sell your product for. Rate is the value added and when you subtract rate from GPP you get the costs of your inputs. Now understand? I replied once more: YES

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Business Lesson 4.10.2010

 Our first two periods today were business. We continued going over our past assignments in order to learn from our mistakes. We went over several different points of businesses. My class notes and the main points of the discussions held in class are below 

SYSTEM: we use the words system to describe a collection of certain things.

Qualified: having the ability to do something, it doesn’t mean –kaliteli-

Profit is not the main purpose of a business but it is essential for them to keep going on.

Expense: example: giving allowances to laborers.

In the long run!!

Businesses often need to make a distingsion about what is happening in the short run and what will happen in the long run.

Scanning the market and finding an opportunity that fits your skills

Not only your skills, the ones that you are able to reach

The skills a leader has to have

Creativity is about spotting an opportunity in a business.

In the long run one must have discipline and patience. As important as money are people

Inventory: the stock of stuff one has.

If you know the purpose of a business you know the reason for its existence.  The purpose should always define the big picture. You may live your daily life in the small picture but you should never loose sight in the big picture.

Too  much specialization in your own field isn’t good

DEPARTMENTS:

You have departments because you have specialized functions.

The bigger a company gets, the more specialization occurs that results in more departments.

Specialism has something to do with scale-size

Large scale organization can often employ specialists because they find it cheeper, this also results in more departments because things can be run more organized with the departments.

You don’t need departments to run a family but koc school has to have a financial department.

Business Lesson 1.10.2010

       After two weeks, Mr. Sen was back today. It was a bit exciting to properly meet him. I understood that he is like a university teacher, trying to push everybody in class to think. 
We went over some miss consumptions that we did in our previous assignments. We started with the comparison of profit and non profit organizations. We choose one of the groups(ours) assignment and went over it. 


My class notes are below:


Specialization : What is the Mercedes Benz company's specialization?
 The company doesn't specialize on only cars it specializes on trucks, cars, motorcycles and more.
Mr. sen pointed out that specialization isn't only something to do with products but it can also be in the form of a service. For example the teachers that work in a school. they provide us with the 'learning service'.
  If a company has specialized laborers the rate of productivity will increase but also this will have negative affects like the laborers getting bored of doing the same things everyday. "and believe me, you don't want a bored laborer" said Mr. Sen. Another negative affect might be the inflexibility of laborers.


 Efficiency is the same thing with productivity (!!!) and it is measured by dividing the outputs to the inputs. These measures can be different, it will still make sense.


What is quality? we were asked and there were a lot of different definitions from the class. At the end of the lesson I understood that quality is very hard to measure because it is subjective. In order to measure and compare quality, one has to have many different criterias.

Business Models

 On a text I read today, about Osterwalder's  business model description, as my class assignment, there were certain questions that occured to me like;

1-Why don’t businesses only aim on earning money, profit?

This question occurred in my mind because I don’t understand why a business’s main purpose isn’t profit. The text mentions that profit is an important part but it doesn’t say that it is the main goal of a business. People work in order to gain money but yet a business’s main purpose isn’t to gain money. This is nonsense. If I ran a business (I hope I will own one some day) my main goal would be to gain money, not provide certain services or make customers happy.

         2- If a certain business had a lot of partner networks, wouldn’t it need to compromise with their needs and wouldn’t that result in them gaining less profit?

This question occurred in my mind due to a page in a business magazine I read yesterday.  It said that the more partners a business had, the harder it was to make profit. In our texts it says that it is good to have partner networks. I know having a partner and a partner network aren’t the same things but still, doesn’t it affect profit?

         3- Will it affect their customer satisfaction if a company uses cheaper inputs for it’s products?

I know that companies want to satisfy their customers so that the customers continue being customers , but they also want to maximize their profit. So if they use cheaper inputs for producing their goods or services will  this affect their customers loyalty and satisfaction ?

B)

Osterwalder’s business model is useful when managing a business because it is very detailed. It describes very clearly all the steps and different parts of a business model. Also this model can help us understand how the business relates with its suppliers and customers, its process of production and manufacturing and how it generates revenue.

C)

Non profit organizations also have a system and a business model. They also need to be managed. The differance is that they don’t aim to make profit. If they have their revenues exceed their inputs they have a surplus which is used in the organization, and cant be distributed.

Business and Management Kellogg's Case Study

Questions

1.            Name the three sectors of the supply chain. On what occasions could certain sections of the primary sector operate as retailers?

   The supply chain has three different main sectors that are primary, secondary and tertiary sector. These sectors have different roles in the supply chain and they need to work together in order to provide an efficient system for the company.

    The primary sector changes natural resources into primary products. Some examples of industries in this sector can be given as agriculture, mining, forestry, fishing etc. Products of this sector make up the resources of other sectors. Primary industries are important in the industries of underdeveloped and developing countries.

   The products are then sold to secondary sector in which the products become manufactured, and turned into finished. Goods. Some examples of companies in this industry can be car manifacturers of cars, buildings, food and drink manifactures.

   The tertiary sector is the final starge of the production chain in which mostly the services are provided. Some examples can be given as insurance and banking companies, delivery and transport companies, health and education services and   retail industry.

   On special occasions the primary sector can operate as retailers supplying their products straight to the customer. I have seen fisher boats who have gone fishing, and have caught fish pull up to the shore and directly sell what they have caught, in this case fish, to people on the coast, who are customers.

   Similarly if a bee keepers who is in Marmaris sell his product, honey, straight to the people who live in that area, or who are tourists passing by, he will have served his primary product straight to final customer.

   A person living in the east of Turkey, raising live stock, comes to Istanbul for the purpose of Kurban Bayram, religious Muslim tradition,  and sells his animal straight to the customer.

2.         Give three examples of how Kellogg’s demonstrates good supply chain management. How can Kellogg’s make improvements both for its business and for the environment?

a) Kellogg’s uses ingredients which are produced in many different countries.So they took the decision to situate the production and manifacturing sites close to their channels of distribution. They have moved their storage depot at Warrington to Trafford Park which is very close to their production plant. This has saved them energy and cost.

b) Kellogg’s have been concentrating on identifying and reducing their waste. They are using the inverntory system called Lean Production which enables them to streamline and eliminate waste. They work on reducing waste constantly by studying their production processes. This helps them to be more competative with proces and reduce their overhead and unit costs.

c) Kellogg’s is a member of the FDF. They have signed agreements with 21 other big companies which will help them use less water and less energy for their operations, reduce their waste and cut carbon dioxide emissions. This has reduced their bills by sixty million pounds each year. This has helped their competability and has increased their profits

Kellogg’s could make improvements by using solar energy for it’s production instead of other fuel energy. They could also use reusable/ recycleable material for the packadging. If they used recyclable paper derivatives they could save cost and help the environment.

3.            Why is it important for Kellogg’s to build good relationships with businesses in the tertiary sector?

   Kellogg’s is company operating in the secondary sector. They are very experienced in what they do, and they have won the trust of communities, customers and governments by acting responsibly.

   As they are doing what they are doing best, efficent production, they need to be collaborating with many companies of the tertiary sector in order to run their business successfully. They need services from banks, insurance companies, lawyer firms national and international, advertising companies and may be most importantly transport companies such as TDG, and the supply Chain of supermarkets and other retailers in order to be able to sell their products to the final customer efficiently.

   In the case that the retailers who sell Kellogg’s products aren’t happy, they can immediately change their suppliers and this would cause a decrease in the profit of Kellogg’s. Kellogs needs to work with a good transportation service company, and to keep good relationship with them in order to deliver their products to their customers in time.

   If Kellogg’s can’t maintain good relationships with its transporters, it can’t get good prices on transportation or might even need to change the company it works with. In order to make most profit, Kellogg’s needs to build good relationships with its  tertiary sector.

4      ) Evaluate the benefits of large manufacturers like Kellogg’s handing over the logistical side

   For Kellogg’s to be competative in the market it has to have a competative price as well. So they have to be very carefull about managing their costs as well as thinking about the hazards of their operation to the environment.

   Big retailers want to reduce their costs of warehouse and stocks.They prefere to keep less stocks but want to sell many pieces. In this case they need good management of their stocks and frequent deliveries of items sold. This means Kellogg’s have to make immediate deliveries of pieces sold. Lorries which are not full meant high costs for the company and inefficent use of resources for the environment.

So Kellogg’s has made the collaboration with the transport company TDG. This has helped them to minimize the unit cost of transportation. TDG keeps the warehouse costs low as they work with computerized heating and they are more specialized in transportation.

Kellogg’s decision to work with a specialized transport company and share costs with another producer (Kimberley Clark) has a positive effect on the environment as it reduces the waste and the fuel is used. This helps reduce costs as well. Kellogg’s customers are happy with the replenish of products in time, and this generates into more orders for Kellogg’s and their profits rise as they sell more pieces at a lower cost.

     

 Discussion :

            While I was reading the Kellogg’s study case, some questions occurred to me.

1)   Kellogg’s is specialized and known for some food products. It is a globally known and respected brand. I asked myself why it didn’t diversify and enter into other sectors of the food sector to increase its sales and profits ?

2)   Kellogg’s has policy on lean products and as the organic food demand is increasing, is Kellogg’s planning to produce organic cereal?