Blog Archives

Business – You are what you say

It has happened to me a lot, and I bet it has happened to you too.

You are what you say, people judge you and build concepts of you from what you said, and maybe even how you acted in certain situations.

The same is true for companies. The way they communicate with you, the channels they use for this (email, phone, twitter), how they say it and when they say it are all relevant things from which you build up the image you have from them.

The only issue here is that you most of the time act and say things in one tone, with one objective and one mind, you are yourself. But the company is not itself. A company has different tones, different objectives, different motivations and different minds working in it, a company has as many minds as employees.

That’s where the importance of communication steps in. Employees have to know that whatever they say, do, even think while on the job, is what the company is saying, doing and thinking. Employees have to know that they are the company in front of the customer.

So a institutionalized communication policy is not only good for a company, it is vital for its success.

Today’s picture does relate to this in some way, focusing on the channels. If you want to be taken seriously as a company, please use a serious logo, serious banners, email address, website, twitter account and so on. And please, don’t be like this tourist transport company: (sadly the image is pretty bad, I took it with my phone while driving behind it)

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Business Friday – Do it or buy it

Welcome to “Business Friday – Do it or Buy it” or “The basic concept behind franchising”

So there’s an interesting concept in business planning and development called “do it or buy it”. Its a fairly simple concept really and nevertheless its the cornerstone of the franchising method.

Basically, when you want to build up a company, expand, reach out to new markets or even change some aspects of your business, you can choose between doing it by yourself, meaning you will be creating it from scratch or buying something an already existing, proven to work.

Lets do a quick example to make things clear:

I want to start selling my products in another country. So one aspects i have to make sure work for my expansion plans to be successful is the distribution. I can build it from scratch, buy trucks or planes, get warehouses and hire people, get things arranged to move my products around by myself. Or I can just “buy” some space in another companies distribution network. Let them distribute my products for a fee. Using their trucks, their warehouses, their people, and their knowledge.  (Technically, i could also buy their company, but lets assume i don’t have that amount of money).

Now if the other country is my neighbor country i might be willing to invest and make all the arrangements myself, but what if its far away, or i don’t really have much idea about how things work there, and cultures are very different. The beauty of this is, if i use another company for it, they already have the experience, are used to the countries cultural environment, know the people and how they have to be handled, know how to do business there.

So the franchise concept is built on this idea. I have something that works, I sell you the right to use it, so you save yourself a lot of work in finding stuff out. I give you all my knowledge, experience and findings in this business area, and you just pay me and go do it elsewhere or for someone else, where I would not go anyway. You on the other hand, add you local knowledge to it, your cultural background, your drive and passion for a new venture, and of course, your money.

So thats the way a lot of the big fast-food chains, coffee shops and clothing companies work. They sell you their idea, get a incredibly fast expansion rate and you put your coins into a working business concept.

 

Business Friday – Perception

This is going to be short, because it is all summed up in one simple sentence:

Truth is  a myth, perception is reality.

What does this mean? Well, lets say no matter how good your intentions are with your company, how great your product is, whatever the customers say about you will become the truth.

The fact is that customer trust other customers a lot more than what they trust you. So it does not really matter what you tell them, if they tell something else to each other you are in disadvantage.

Take the example from Coca-colas water Dasani, which (at least in Uruguay and Argentina) was called to be unhealthy and dangerous for children to drink. No matter what the company said, how many analyses they did just to show the public it was not true, the sales for dasani would not increase.

Peoples perception is whats dictates what is true and what is not in business terms.

Business Friday – Innovation

Today I heard a some news. Good news specially for our country, but good news for the rest of the world too.

Maldonado, Uruguay has seen the opening of the first School of innovation and business development in South America. Second in Latin America only to the “Universidad Madero” in Puebla, Mexico.

This is good news, because the concept of innovation and development has been taken too lightly for a long time in business schools. Innovation is a fundamental part of growing enterprises and markets around the world.

The university, located in Maldonado, about 120km from Montevideo, Uruguay, is offering a 4 year course that includes some very interesting subjects, like entrepreneurship, creativity and marketing in new environments, all very valuable concepts for a company.

No matter how big or how small, no matter if it deals in products or services, if they are b2b or b2c (business to business or business to customer),  innovation has to be on a companies prime cultural assets.

Heres the link to their site:

Business Friday – Group purchasing destroys markets

Group purchasing destroys markets
or also called why i hate group purchasing sites so much and think they should not exist.

I guess by now, everyone know what kind of sites I’m talking about. If not, heres a short description: These sites ask companies to offer their products or services at a discount rate for a one time deal, with the condition they will get at least a certain amount of purchases. Say the company would give their service at a 50% discount rate, but only if they get at least 20 purchases.
The group purchasing site now offers this deal to their “followers” and if 20 sales are reached, the deal is active and everyone benefits of it. Everyone can buy the service/product at a discount rate. If the deal does not go active, nothing happens.
Of course people follow these sites avidly. Getting stuff at less than 50% of what their original price is, must be great.

Companies offer this great discounts because of two reasons. First for their marketing campaigns, group purchase sites get to a lot of people, and this will help companies to “get their image out there”. Their name and deal will be seen and read by a lot of potential customer. Secondly they do it in the hope some of these customers will be returning to buy some more product, lets call this “acquiring some loyal customers”.

Up to this point everything is good. Companies get words out and get customers, sites get some money out of the deal and the consumers purchase at a discount.
Now here whats bad with these sites. Heres the problem: When the market is stable, everyone has their prices, and customers choose freely from whom they want to buy, sometime they prefer a better price, sometimes they choose higher quality. Now if one company sacrifices a lot of their gain to get to their potential customers, and this is an isolated event, it OK, but what happens when all companies do this? A price war starts. Everyone tries to offer their product at the lowest possible price so customers will choose them. Every company gets “their name out there” the same way and the “loyal customer” disappears and all customers are turned into “mercenaries” of whichever company has the lowest price tag. Customers benefit, but for how long?
Small companies can hold this competition up just for so long, after which they will have to close down. Bigger companies now will have the chance to get the whole market back, and charge the prices they want.

All in all, i see group purchasing sites as catalysts of an undesired market reaction, in which customers betray their regular purchasing principles to obey the price tag and by doing so, leaving no choice to the companies to enter a price war.