The Hair Shop blog

Virtual office

Having your home base for business operations as a virtual site, pretty ingenious.

For a marketing firm that is spread across the world you are going to be doing quite a bit of video meetings and net meetings; so why not make a virtual office. You could even go as far as Crayon PR did and create an entire island for you company head quarters. As far as normal businesses like manufacturers I am not sure how this would go over, but for a PR firm filled with people that are in to media and always looking to be creative and think of new ways to reach people this would be a great idea. You can meet regularly on a net conference by you get to stretch you imagination and become familiar with a new resource that could benefit your customers.

As for Coke-Cola and the campaign on the virtual machine, I like the idea that is spits out something other than a standard soft drink. I think it should be based on your character. So if you are a homeless person it could be a bowl of soup of a hot meal, for a half bird person it could be a box of birdseed or a can of fresh clean air, a yuppie could get a plate of sushi. For each virtual personality it would be whatever that persona would find refreshing. Well that is my thought on the subject, how do you feel about it?

Road to the top

It is only a matter of evolution that the fast track program that used to require stints in Marketing, Finance, Sourcing and Manufacturing now includes at least on International assignment. No, not every company will go global by selling product outside the US, but the odds if you do not you will probably by materials from an international source.

Being able to show that you can work with or effectively negotiate with a foreign company or country is not a luxury any more. It is a necessity. Jeff Immelt was hired at GE and with in seven years became an officer of the company. He was put on the Fast track program to move him through the required jobs to insure he has well-rounded experience in all job aspects. Is this program responsible for him becoming the CEO of such a large company in his mid to early 40’s? No his skill in all the aspects of the jobs did. When you are looking for your best candidate to run you business you need to compare apples to apples. You cannot do this unless you have seen everyone function in similar roles, and that is what these programs do.

The Price is right

How do you price your product? Do you use the old spaghetti approach where you throw it against the wall and if it sticks its good, or do you use the Goldilocks approach? This price is too high, this price is to low, but this price is just right. I know it is a little more scientific than that, but I like spaghetti and after last week I have been thinking about how to get a nursery rhyme in.

Lets look at Prada for an example. Is there really a Hand bags that is worth $1000 dollars or more, really a purse that cost more than my first car? How do you justify pricing something that you will wear two or three times per year like a pair of Shoes ? Does $400 or more sound like a fair price? Well if there are people out there that will pay for it then the answer is yes these are fair prices.

I know with GE it comes down to profit margin. If a product or a business unit is not making 25% or more after SG&A (Selling, General and Administrative Expenses) then they consider it not profitable enough and generally sell it off.  Take the plastics division that had over six billion in sales last year and had around a 15% margin after SG&A. What happened to them, well they are being sold off. Right or wrong I do not know, but I can say that I would take a business that is generating $900 million in margin every year, but GE is one of the most successful and admired companies in the world so maybe they know what they are doing.

Pricing is key, you can price it to high and no one will buy it or you can price it to low and miss out on a lot of margin. So whether you have a product and you need to know where to set you price so you use price bench marking or set it by your desired margin. Maybe you are thinking about a new product line and you reverse engineer it by bench marking a price, subtracting your desired profit margin and coming up with a total cost (after SG&A) per unit you have to work with. However you decide it is the key to maximizing profits and sales so get it right the first time, or for small businesses there may not be a second time.

Bo Jingle

To expand your business and grow to feed your desire,

Then to international sales is the channel you should aspire,

But before doing business in Italy or Japan,

You must understand how to deal with the Middle Man,

For they buy to fill their daily plates,

Not their pantry’s like we do here in the states,

You must have a license to export by boat or by plane,

So you need to get hocked up with SNAP, ERIC, STELA or ELAIN,

They will help by facilitating the process,

And keeping you from getting bogged down in the mess,

Boycotts, Quotas and Standards seem like contradictions,

But they are just a few of the restrictions,

Their understanding you must glean,

If you wish to do business on the international scene,

When your message is viewed the masses, what kind of punch will it pack,

It could be a knock out if you use the process involving encoding, decoding and feedback,

When you are there and ready to make it go,

Motivating your sales team takes skill because it is not always about dough,

Most of all understand the people in the market and what makes them tick,

If you can do that all will tie together and your business will click,

But before I go I have one word that might sound simplistic,

Your business will no go with out the word logistic,

For how many times will the product be touched and how many docks will it see,

These must be accounted for because each will incur a fee,

Talk about economic considerations

An article in the Star-Telegram gives a prerfect example of looking at the economic and govermental aspects of a foriegn market before entering it.

In Zimbabwe, a country that used to be prosperous is now suffering from Inflation of over 1,700 percent. The Inflation link will take you to the acticle in which they state that to rent a basic car is costing $2,760 dollars a day plus a deposit of $100,000. If this is accurate in my wildest dreams I could not imagine paying that much to rent a car.

But I say if this is accurate becasue on the following links it quotes a much different price for rental cars.

AfricaPoint car rental

Zimbabwe Car rental

Did Star-Telegram not do their home work or are these prices miss quoted.

Either way when doing business in areas such as Zimbabwe you must take in to great consideration the governmental and political stability. I wonder what my boss would say if i came back after two weeks with a T&L report of $30,000 just for rental car and gas? I wonder how bike rentals are doing?

Quality

When we talk of quality, in general we all have a similar take on what it is. But for a loaf of bread what is quality in Japan, Germany or Italy. Is it the same as what you are producing and selling successfully in the US? In general it is the same thing in all countries I would assume, getting good value for the money spent.

So when entering in a market you must understand what they perceive as value. It could be the texture, color, smell or packaging size. Italians like to buy their bread daily, so would you try and sell them packaged loaf bread buy one get one free; probably not a good idea. They consider value freshness and proportion size (enough to feed the family that day) and purchase accordingly. Value is learned and with new product introduction there is a learning curve, as it states in Chapter 12 that cell phones that do not roam will not sell in Japan but will sell in China. This has created a new market for low-end cell phones, but is this not just a short-term market. As the Chinese market advances the quality of cell phone service will advance as well, pushing out the lower end devices. Another important fact to remember from this example is that what makes a quality product is an ever changing definition in every market in which you do business.

Tortoise or the Hare

In chapter 11 there is an example of the Nestle and how global ther are, but there are a lof of global companies. So the question is why am I blogging about them, well because of the part that talks about the investment in the Middle East.

This is a perfect example of adapting the fast paced American philosophy to the region in which you want to do business. Not only is there turmoil that is hindering the market, but the tortoise approach is the one you must use in this region. Nestle has done an outstanding job at changing their business models to fit the countries in which they are expanding. Whether it is the slower intergration, marketing or the product; you have to adjust to the way business is conducted.

In every market you enter there are examples of successful businesses, whether it is a company from the host country or another company expanding internationaly as you are seeking to do. This is where bench marking would be a great idea to see what has been successful and what has failed befor taking the plunge. The speed of intergration is a huge consideration before entering a market, and how you prepare and adapt could be the key to success of failure.

Nestly UK

Nestly Malaysia