Week 9 Challenges Facing Consumer Goods

The consumer goods industries include food and beverage, apparel and footwear, nonfood consumer packaged goods, consumer durable goods and consumer electronics, which occupy a large portion of consumer expenditure, but they are not as profitable as they seem.

Developing successful consumer goods require the same process as other products: information collecting, market analysis, research and development, and post launch management. Therefore, different challenges may occur at each step. One specialty of consumer goods is that it does not depend on R&D as much as the electronic products. In other words, although consumer goods occupy the most shelf space, they are not so different in function, they may just have little different in appearance and quality. However, most consumer goods company indicated that they had little difficulty generating product ideas, less than 20 percent of those ideas resulted in products considered to be highly innovative. I doubt that it is because most of the new ideas of new product just have some tiny detail based on the existing products. On the other hand, consumer goods usually does not emphasize so much on R&D, thus as a real innovative idea comes up, the company’s current technology is not enough to support it.

Week3: Triz40

At first glance, the interface of this website looks simple and out of date. I can't find a lot of information about what TRIZ 40 is and how it works. However, I believe that almost each of us ever face some kind of contradictions in the work or study, like the balance of limited resource and quality assurance. This creativity tool provides us some practical solutions to this kind of contradiction. For example, I input speed and quality of substance in the blanks. This system gives me four solutions to solve it.

Week 10: The Age of the Consumer-Innovator

Innovation exists not only in the company but also comes from individuals. The understanding of the new product development originating from the company is fundamentally flawed because the customer is the final user of product, who knows about what he really needs better than the company. We all know that one method can't fit everyone. Today customerization and personal design can be found no matter in physical products like commodities and cars or in service. So the customer is the center of new product development. Sometimes the product meeing customer's particular need actually doesn't exist in the market so the only solution  is to design and matreialize the product. It's the history of skateboard and dishwasher cited in the article.

Week 8: Leadership Style

 I took the leadership quiz and the result shows that my leadership type is both participative and delegative and what I lack is authorative style. I know that good leaders utilize all three styles depending on the situation. At the end of quiz, it has given me some guideline about which situation leaders use suitable style.

• Use an authorative style  if an group member lacks knowledge about procudure.
• Use a participative style with group member who understand the objectives and their role in the task
• Use a delegative styel if the group member knows more than you do about the task. 

In reality, I rarely use authorative leadership style because I think that it will push my teammember too much and build a gap between us. I hope to buile a cooperative relationship with my members and I know that we should learn from each other in the work. I firmly believe that creative thinking always comes from a happy working atmosphere.

Week 6: Inbound & Outbound marketing

In my opinion, I think that a company is able to survive on inbound marketing, relying on come up of Internet technology and other new technology. However, companies have rarely done like this. I'd like to say that even though outbound marketing is getting less and less effective over time, it doesn't need to be abandoned.

The main difference between inbound marketing and outbound mareting is relationship between a company and customers. Traditionally, marketing focuses on getting customers from mass market through excessive and inappropriate advertising and promotion. The new idea of inbound marketing is focusing on getting found by customers. It seems to be surprising how we have known about these companies before we want to get their products. The Internet has changed and promoted the way we communicate in daily life. We go through forums, company official websites, and other social media like facebook and twitter on which many companies post their new types of products and activities earliest. Inbound marketing is not only cost effective but also comforts customers. The customer has greatest option to get these information when they want. On the contrary, outbound marketing is also considered as interruption marketing because a person uaually gets hundreds of bulk mails and advertising on TV and radio. I am personally bored with them and try to block them out because I don't need them completely.

The reason why I don't support get rid of outbound marketing is that it helps to build brand recognition. Under strong outbound marketing, we definitely hear and see some brands again and again. I believe that these brands will have a deeper impression on your minds than those without outbound marketing.

Week 5: The business model behind Apple’s iPod/iTunes

I think the value proposition of Apple's iPod and iTunes is to provide an integrated entertainment experience of music, video, books, and apps to mass market. Unlike other products targeting a narrow market, iPod and iTunes have a very broad target market, a global market no matter where you are or how old you are.

I strongly think that one of the most significant factor of success is Apple's relationship with its customers. As we have seen, Apple has a wonderful after-sale service and advertising always impresses us much. Those purchasing Apple's products have a strong brand loyalty because hardware design and mareketing are quite distinctive so that switching cost should be very high. I believe that Apple is implementing a differentiation competitive strategy since price and cost are not advantages of Apple. Sales channels are very wide from apple stores, apple.com to retail stores but price is completely uniform. I think this kind of pricing helps to reduce inbound competition.

 Key partners are music & video producers, publishers, application developers, and hareware OEMs. Apple also keeps a good relationship with them and establishs a win-win situation. Revenues come from large hardware revenues and downloading revenues from Apple store. Employees salaries, manufacturing costs, and marketing & sales compose of Apple's cost structure.

Week4: Discuss Porter’s 3 competitive strategies

1. Cost Leadership

In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.

2. Differentiation

In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.

3. Focus

The generic strategy of focus rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.

Week 4: I-MOS Semiconductors

- Would you invest in this business? Why or why not?
From this business plan, it looks that investing in this business is quite prospective. However, I must to investigate this field and potential market further before I make the decision. Turning to a consulting company may be the first step for me because I need more useful information about this field that I am not familiar with.

- How strong is the company's industry position?
The company has achieved a breakthrough that solves a problem plaguing the semiconductor industry for the past 30 years. This technology offers a 1000x reduction in static power dissipation and a 30 percent increase in chip performance, contributing a lot to development of semiconductor industry.

- How clear is the value proposition?
The company is dedicated to solve the Static Leakage Problem faced by semiconductor industry for past 30 years. The I-MOS solution not only dramatically reduces static power consumption and increases chip performance, but it does so without increasing semiconductor fabrication costs. The I-MOS solution is cost-effective, by working in conjunction with standard CMOS processes, and increases manufacturing efficiencies, due to lower device variations.

- How targeted in the customer base?
As we see, the company is intended to commercialize this technology by licensing it to three main target customers, which are integrated device manufacturers, fables semiconductor companies, and semiconductor foundries.

- How unique is the business model?
This business model looks not so unique. The company derives multiple revenue streams from each licensing arrangement: the manufacturers pay I-MOS an upfront license fee and a per chip royalty fee, and the foundries pay a per wafer fee. This model should be kind of universe in this hi-tech industry.

- How protected is the IP?
IP is well protected because they hold the patent right. But the company is not the only one to hold IP.

- How experienced is the management?The management seems to be well experienced. Especially, the marketing team knows how to launch the technology to the market.

Week 3: Strategy and the Internet

At the first glance, most people think that the Internet brings more benefits than negative effect to the industry strusture.In the article, the author holds a different attitude toward this proposition. He states that most of trends the Internet has brought about is negative. It's during my undergraduate study that I learned Porter's five force model for the first time. So I am not unfamiliar with the idea. This model helps us to anaylze the current situation of industry.

As for the first factor "the intensity of rivalry among existing competitors" in the model, the Internet is an open system, enabling competitors access to offerings the company is providing. Thus, it eliminates proprietary offerings and  intensifies the rivalry among competitors. The use of the Internet also tends to expand the geographic market, bringing many more companies into competition with one another. In the end, competition focuses on price mainly.

The second factor in the model is barrier to entry. I think that appearance of the Internet reduces barrier to entry sharply because the Internet technology makes access to channels and physical assets easier. Moreover, the Internet creates a new sales force. As for the threat of substitute products or service, the Internet makes the overall industry more efficient by expanding the size of the market. At the same time, it also mitigats the difference between offerings.

No matter for bargaining power of buyers or suppliers, the Internet still has more negative effects on them. The Internet shifts bargaining power to the end consumers and reduces switching costs of consumers. The Internet provides a channel for suppliers to reach end users, reducing the leverage of intervening companies. Internet procurement and digital markets tend to give all companies equal access to suppliers, and gravitate procurement to standardized products that reduce differentiation. Reduced barriers to entry and the proliferation of competitors downstream shifts power to suppliers.

Week2: Hirshberg's concept of "Creative Abrasion"

Hishberg's unusual management philosophy "hiring a divergent pairs" is really profound and meaningful to the succuess of Nissan Design International. As we see, these two different people Semple and Flowers working together will spark certain unexpected reaction called "creativity". I think the concept of "creative abrasion" is both quite simple and extremely difficult to achieve in the company. 

There is no doubt that most of people don't think about matters divergently but straight. That's why inventors and scientist only account for a very small portion. However, hiring a divergent pairs is an interesting practise that helps to bring in a divergent thinking. One of key factors to perform "creative abrasion" successfully is the business culture that forms disciplines under which the company is run. Let's imagine a different situation: Hirshberg is an opponent of hiring a divergent pairs. This idea must have been stifled in the cradle if someone had raised it at that time. Just like what Hirshberg said, anyone in this pair need to have a pretty secure sense of self when the other person working on the same project as you has an entirely different set of priorities. So this kind of secure sense is the other key factor.

Befor I pursued my graduate study in WPI, I had three months' internship experience in American President Lines (APL) in Shanghai. Unlike Nissan, APL is a moving business forwarder. One of main functions of APL is to audit freight and surcharge and I worked for this audit department. At the first glance, "creative abrasion" seems to be unrelative to this kind of industry but we can't define creativity so narrowly. On the contrary, divergent thinking is absolutely necessary when we want to solve the problem. For example, we often find difference of total amount between APL's system (it should) and e-order generated by salesmen (it actually). Sometimes the reason why this difference comes up is not straightforward. Discussion or even controversy over the matter is essential when linear thinking by self doesn't work. When a divergent pair work together, abrasion will spark thinking in depth each other.