Tuesday, May 30, 2017

Two takes, Coke and Pepsi


Announcer: Until recently many Americans had not thought of the rest of the world as their marketplace. Perhaps this can be expected because of the size and traditional importance of the U.S. However, while we were looking at our domestic market so was the rest of the world. Business competitors from around the globe targeted our relatively free and wealthy markets and American businesses found themselves facing foreign competitors,..especially from Western Europe and Japan. Such competitors as Mercedes from Germany, Shell from Holland, and Sony from Japan. And recently globalization of the marketplace has accelerated due to the advancements of telecommunications and transportation. We must respond to these competitive threats by seeing and seizing the opportunities in the world market. As we look to the global marketplace we will notice that by 1997, consumer s in 12 countries have higher incomes than we do. When we think of the U.S. as having only 5% of the world’s consumers, we can see the other 95% of the world’s population as an immense opportunity. Many U.S. firms are already in the world market, for instance McDonalds is a successful U.S. company that has been able to see and seize opportunities in Europe and Asia as well as the former Soviet Union. The question marketing managers have to ask is, what do we have to do differently to market goods and services internationally? First, because there are more than 175 different countries, and most firms have limited resources, we have to start with a global market assessment to match firm and product strengths with market opportunities in order to target markets with the best prospects. Next, we have to develop an understanding of which aspects of the 4 P’s can be standardized across countries and which have to be adapted for some or all countries. In domestic marketing we tend to focus on the managing the 4 P’s, price, product, place and promotion with less consideration of environmental variables because these are similar for our home markets. However, in the international markets the differences is in the political, economic or cultural variables from country to country may require the marketing managers to adapt some or all of the marketing mix. Observe how two familiar and successful U.S. corporations have responded differently to this issue of global standardization versus cross national adaptation. Coca-Cola is an example of a truly global company. Coca-Cola leads in sales of soft drinks around the world. IT outsells its closest competitor Pepsi-Cola by more than 3 to 1 outside the United States. For instance consumers in the United Kingdom, France and Germany have made Coke their most frequently purchased soft drink. Since Coke enjoys global appeal, it lends itself to a standardized global marketing strategy. For instance, Coke’s secret formula is used globally and its theme “Can’t beat the feeling” is now a familiar theme in many countries. While Coke is sold in most countries with few changes in its packaging, government legislation in Taiwan and Korea, require Coke to use the national language on all Coke products. The image on Coke’s products varies in markets. For instance, Coke uses the strategy in some countries which promotes the product as an “all occasion” drink to be shared
among friends and family. In others Coke uses a different appeal, [showing of ads here]. Sometimes Coke uses popular teen idols from the foreign country to promote its products in that country [shows ads here]. The Spanish TV ad features Angel Ferreira, while the second ad recently shown in Guatemala, features a Latin American star. Coke uses a very different approach in Thailand. Rather than stressing the familiar themes from other countries, their ad shows young people dreaming about a modern future for Thailand and themselves. The message at the end of the ad means, “from our hearts , Coca-Cola for Thailand”. Japan is also a major market for Coke. The company now has 70% of the Japanese Cola market with its flagship brand and 20% for Coca-Cola Light. Initially, Diet Coke did not sell well in Japan. Japanese women do not want to drink anything clearly labeled as a Diet product. Sales finally took off after Diet Coke was reformulated and repositioned as Coke Light. Contrary to what some people may think, American culture is very popular with young people in Japan. In this ad Coke offers its Cola as a link between Japanese youth and popular American culture. Many firms, such as Coca-Cola’s closest competitor Pepsi-Co Incorporated choose to form strategic alliances, such as joint ventures in international markets. They form these alliances with foreign nationals in order to gain local experience, to deal with different legal, political, economic and cultural environments. While Coke has much higher sales than Pepsi globally, the situation is reversed in Russia, where Pepsi has such an alliance. [Black and white news footage of then President Khrushchev and then U.S. President Nixon cutting an opening ceremony ribbon] Voice of announcer, “1959, the Moscow Trade Fair , Soviet citizens have their first taste of Pepsi-Cola, a soft drink from the USA [President Khrushchev drinking Pepsi at the Fair] among them Premier Nikita Khrushchev who finds Pepsi most refreshing. Donald M. Kendall, then Pepsi-Cola International President knew this event represented something larger. For the next 14 years he dedicated himself to establishing a new kind of bond between the Soviet and the American people. In 1973, the world press announces a unique breakthrough in International Cooperation, Pepsi and the Soviet Union signed an historic counter trade agreement. It opens the huge American consumer market to Soviet vodka exports and establishes the first production and sales of an American consumer product in the Soviet Union. From the Start, the Soviet Pepsi partnership has been dedicated to quality and technological innovation. Pepsi helps Soviet bottling plants arrange financing for the latest equipment to expand production, quality and quantity. [Speaker: Gulyam- Kadir A. Adylov- Bottling Plant Manager Uzbekistan on screen] Adylov (translation): “Pepsi helps us with quality control and we don’t let down the Pepsi trademark”. Pepsi product development experts and their Soviet partners are creating a full line of new soft drinks to meet consumer demand. Pepsi’s lemon soda, Fiesta, developed specifically for Soviet bottlers has become immensely popular with the Soviet public. Soviet bottlers have begun producing “Tanis” a new orange flavored soft drink with Soviet grown white grape juice as a key ingredient. Diet Pepsi marks the Soviet Union’s first production of a sugar- free soft drink. And Pepsi pioneered entertaining commercials on Soviet television. Translation of Anatoly Belichenko, First Deputy Chief of Food Resources in the USSR: “Pepsi has been very flexible, and has helped us with the problem of the non-convertible ruble [Soviet currency]. They worked with us to find products to export from the Soviet Union and they helped us build Pepsi production in the Soviet Union by exporting vodka to the United States”.
The Pepsi- Soviet partnership is a countertrade agreement which protects Soviet hard currency reserves.
Pepsi-Cola is imported as a concentrate for manufacturing into soft drinks by Soviet plants. And concentrate is countertraded for Stolichnaya Vodka, the first Soviet consumer product ever sold in the United States. And in the United States, where Stolichnaya is more commonly known as “Stoli”, consumer response to Soviet Vodka has been excellent. Stolichnaya sales have increased more than 800% since 1972 [until 1989 as shown on graph beginning in 1972 with sales of 20,000] and now exceed over one million cases a year. Donald M. Kendall, the man who brought Pepsi to the Soviet Union: 

“ Well, one thing about the Soviets which I think a lot of people don’t understand is that first of all when you are negotiating with them, they do their homework, so you better make sure you do your homework and better know what you are talking about and what you want to do. The other thing you will find with the Soviets is that they are extremely loyal to companies and people that they deal with. If you establish a long term relationship with the Soviets, they live up to those agreements and contracts. I fact there have been periods where we have operated in the Soviet Union where we had no written agreement”. 

Today, Pepsi-Co has 85 joint ventures scattered throughout the former Soviet Union and other communist and formerly communist countries. It is also a global company, rooted in the Pepsi- Cola international family, Pepsi’s local partners in 150 nations. 

We have seen that one key to success in international marketing is to understand that the environmental variables may interact with the marketing mix differently from country to country, thus requiring some adaptation. Conversely, in some markets, or with some products, similarities may overshadow local differences, allowing for standardization. For instance, Coca- Cola is able to use its secret formula in almost every country, leading to economies of scale. With more than 175 countries in the world, we cannot know in advance of all these environmental variables, and how they will interact with the 4 P’s in each market. But, based on the experiences of Coke and Pepsi, we see that marketing managers have to be sensitive to the important political, economic, cultural or other environmental differences affecting the marketing mix. Discovering the similarities and differences of people and nations around the world, makes international marketing a most interesting and rewarding career. If you are willing to grasp the complexities of the global marketplace, you will be able to help your firm grow, create jobs and make money and friends around the world.

Thursday, May 25, 2017

Managerial Ethics in Finance

Managerial Ethics in Finance

Management and leadership can have a direct effect on market performance of their company. This can be in the form of good and bad decisions of management. Obvious choices would be those that surround the products or services that are offered. If management pushes for a good product, markets will most likely react positively. Leadership can also have an effect based on their ethical decision. Investors react to the companies’ earnings disclosures and these reactions can be influenced by the type of disclosures companies do. Managers are responsible for choosing which information to disclose and sometimes they do not promote transparency. Managers bend the information according to the needs of the company and investors can usually detect this kind of behavior (Dinis & Soukiazis, pg. 29, 2016). When this is detected, it acts as a deterrent for investment as one would question why the company is attempting to hide certain aspects.
There are numerous regulations that exist to prevent the unlawful or unethical behavior by publicly traded companies. The Sarbanes-Oxley Act is one of these and lay out specific things that corporations must do in addition to conducting business ethically. Rather than prevent, these regulations are more apt to deter, as many companies still choose to bend the rules. Ethics are not cut and dry as the ideals differ for each individual and business. What one company may consider unethical, another may consider it common practice. For companies to stay competitive in a global economy the temptation is there to bend rules in order to stay at the top. Additionally, unethical and unlawful are two different things. It can be difficult to prosecute companies for unethical behavior. Because of the rarity of repercussions, many companies do not feel an overwhelming need to conduct 100% of their business in a completely ethical manner.
There are steps that can be taken to change an unethical culture into one that is an example of good business ethics. In a survey of managers on how to improve ethics within the organization, there were four common responses on what steps should be taken. Those responses were: ethics should be taught in school, there should be organizational codes of ethical conduct, improve monitoring and reporting, and hire people with integrity as a driving quality (Cordeiro, pg. 270, 2003). Teaching ethics in school is a good start. People should be aware of what ethics are, understand the importance, and be prepared to follow ethical guidelines. It should go beyond this and ethics training should be a regular occurrence within an organization. Leadership should set the example for everyone to follow. It is far less likely to have unethical behavior when management acts ethical and expects the same from employees by creating an atmosphere of shared values. Routine internal audits are another way that companies can curb unethical behavior. Having oversight and acting upon findings shows a company's commitment. The last recommendation regarding hiring honest employees can be difficult. It is hard to know with certainty that someone is honest. It can be conveyed to potential employees, however, that integrity and ethical behavior is a pillar within the organization. There are numerous ways in which a company can lessen unethical behavior and each solution requires commitment from the organization as a whole.
References
Dinis, D. S., & Soukiazis, E. (2016). The links between the companies’ market price quality and that of its management and business quality: A system panel data approach. International Journal of Financial Management, 6(1), 28-38. Retrieved fromhttp://lib.kaplan.edu/login?url=http://search.proquest.com/docview/1772607071?accountid=34544
Cordeiro, W. P. (2003). The only solution to the decline in business ethics: Ethical managers. Teaching Business Ethics, 7(3), 265. Retrieved from http://lib.kaplan.edu/login?url=http://search.proquest.com/docview/211840858?accountid=34544

Ethics in Financial Management

 Ethics in Financial Management


           Financial management pertains to how effectively money is managed. Organizations have financial departments that manage the financial impacts of the organization. These impacts are based on how the department has made financial decisions against the needs and goals of the organization. The behaviors of the organization’s leaders can influence the market value and the price of stocks. The market considers capital budgeting to be a major component when determining market value (Investopedia, 2017).
            When an organizational leader or manager chooses to raise the business’s debt level to finance investment needs, this is considered to be risky and unfavorable (Investopedia, 2017). The Sarbanes-Oxley Act was put into place in 2002 and is one way to control the level of risks an organization can make (Amadeo, 2016).  Organizations could no longer loan monies to executives and prevented whistleblowers from losing their job simply based on their informing of unethical actions (Amadeo, 2016).  
            Although the financial ownership of loans and expenses taken by the company is solely the company’s responsibility to repay, this Act holds the CEO personally responsible for any accounting infractions (Amadeo, 2016).  Some of the relevant activities that a corporation can do to decrease overall unethical practices is to blend several areas of business standards. Create standard policies and practices to unify the organizations expectations (Douglas, 2012).  Provide proper training and the development of the employee understanding of what is unethical and how to utilize violation reporting (Douglas, 2012).  Putting controls in place that will allow the risk management team to provide regular audits will reduce the unethical opportunities (Douglas, 2012). 
Reference
Investopedia. (2017). What are the different ways a CEO could influence stock prices? Retrieved from http://www.investopedia.com/ask/answers/010915/what-are-different-ways-ceo-could-influence-stock-prices.asp
Amadeo, K. (2016). Sarbanes-Oxley summary: how it stops fraud. Retrieved from https://www.thebalance.com/sarbanes-oxley-act-of-2002-3306254
Douglas, E. (2012). 7practices to prevent unethical behavior. Retrieved from http://blogs.edweek.org/topschooljobs/k-12_talent_manager/2012/10/7_practices_to_prevent_unethical_behavior.html

Wells Fargo Cutting Costs by Reforming Sales Practices

Ethics in Business

I found an article from the CNBC that I thought would be a good example of how managers and leaders behaviors and actions can influence the market value and price of stocks. As the headline states, Wells Fargo management wants to cut costs. Announcing cost reductions and providing a strategic plan can help attract shareholders and influence the price of stocks. Wells Fargo is trying to cut costs by reforming sales practices and improving financial performance. The actions by management show that they are serious about cutting cost and have numbers ready to provide to the audience at the bank’s investor day. Cutting cost always attracts new shareholders and therefore influences the market value and price of stocks of a corporation. Another action that can improve the price of stock and influence the market value of an organization is corporate social responsibility disclosure (Jizi, Nehme, & Salama, 2016). Voluntarily revealing information and enhancing its content to raise certainty leads, according to Jizi, Nehme, and Salama to improve in stock price because investors place larger orders.
In my opinion, no system will ever keep people from being unethical. Especially in the financial sector, someone will always be greedy and try to find a way to manipulate the system that is in place. I also think that besides greed, the intense pressure on executive management leads to unethical behavior. The pressure of showing increasing performance and maximizing shareholders wealth can cause people to act unethical in order to keep their prestige, accountability, and their position. Unethical behavior includes, but is not limited to: bribery, illegal payments, and insider trading (Long, Wann, & Brockman, 2016).
I believe the best steps a company can take are to value their employees and give their executive management shares of the company instead of a bonus. Showing the employees that they are valued and appreciated will create increase job satisfaction and create a sense of belonging. This will lead to employees being happy and pushing them to give one hundred percent at all times. In order to create a balanced and ethical culture management might have to take severe steps like laying-off the people with a negative attitude. Another strategy is to connect the executive managers with the revenue of the company by giving them shares. This will lower the chance of managers behaving unethical in any way and then leaving the company. Giving them shares means they own part of the company and are negatively affected if the company makes negative news. The commitment increases and managers can feel a sense of ownership. 
                                                 
CNBC (2017, May 11). Wells Fargo management expected to woo shareholders with new cost cuts. Retrieved May 11, 2017, from http://www.cnbc.com/2017/05/11/wells-fargo-management-expected-to-woo-shareholders-with-new-cost-cuts.html
Jizi, M., Nehme, R., & Salama, A. (2016). Do social responsibility disclosures show improvements on stock price?. Journal Of Developing Areas, (2), 77.
Long, D. M., Wann, C., & Brockman, C. (2016). Unethical business behavior and stock performance. Academy Of Accounting And Financial Studies Journal, (3), 115.

Improving Ethical Behavior

           Ethics in Business


           Leaders and managers can under report expenses and/or over report sales figures. Either of these would have the effect of making the company appear to be in a healthier financial position than they are actually in. These same people can also suppress information on anticipated litigation where the company has significant risk of being levied with financial penalties or being barred from certain markets due to regulatory non-compliance. Any of these actions can drive higher stock prices until they are exposed.
            One of the key reasons why unethical behavior occurs in financial management is that it tends to be rewarded in one form or another. Employees, managers, and leadership at many companies have a portion of their compensation tied to financial results. Even if compensation isn’t tied to financial results, continued employment often is. Given these pressures it isn’t hard to understand how some people may give in to the temptation to realize personal gain at the expense of the long term financial health of the organization. In some cases unethical behavior is a symptom of widespread cultural dysfunction, while in other cases it can be limited to isolated individuals or departments.
            There are several things that companies can do to improve ethical behavior. The first is to clearly communicate what the behavioral expectations in terms of code of conduct, anti-corruption and ethics training that goes beyond the 15 minute annual training that hasn’t changed since 2000 that so many companies offer. When companies take that approach to ethics training it is often motivated by the desire to claim plausible deniability when employees acting unethically are caught by authorities or exposed in the media. The second thing is to lead by example from the top down. Leadership and management must be seen to be acting ethically even when it is not in the companies or their personal best interest. This will help to build a culture of ethical behavior. The third thing is to stop rewarding unethical behavior. Compensation and promotions need to be based on a system that is fair, transparent and auditable. Finally, companies can hold individuals responsible for their behavior. If unethical behavior is consistently punished with demotion, termination, or handing the offender to authorities, employees will quickly realize that developing a strong ethical compass is in their best interest.

Walmart Strategic Surveillance Control System

Strategic surveillance is designed to observe a broad range of events within and outside an organization that is likely to affect the track of your organization's strategy.Wal-Mart relies on strategic surveillance to track inventory from its suppliers to its warehouses, and then to its individual stores (Greenspan, 2017).  Walmart continues its surveillance by using removable tags on garments as well as tracking sales and avoids being out of stock of popular items.  It can assist Walmart in determining when a new order needs to be placed to keep particular products in stock and assist in determining which items may not be as popular as they initially expected.
By utilizing RFID technology to prevent theft by having the RFID tags determine whether it has been scanned for purchase or leaving the store without having been paid for.  I am not sure of the tech aspect of it but it would be beneficial in saving the company money by implementing an all in one tag already on the item, instead of having to add an additional tag like the plastic ones that release dye or rips the clothing when they are removed without the devices at the checkout counters or thesquare stickers that are placed inside most expensive electronic item boxes.  They would only have to tag once, instead of twice and word would get out that the tag is deactivated only once scanned lowering the amount of theft. 
A special alert control is the rapid reassessment of an organization's strategy due to the occurrence of an immediate, unforeseen event. Walmart uses special alert control to quickly modify their approach with unexpected scenarios (Adams, 2017).  When a natural disaster hits a community,  Walmart can choose to alter their business momentarily or even organize a donation fund for those affected.
Danielle
References
Adams, D. (2017). What Are the Four Types of Strategic Control?. Smallbusiness.chron.com. Retrieved 12 May 2017, from http://smallbusiness.chron.com/four-types-strategic-control-14720.html

Greenspan, R. (2017). Walmart: Inventory Management - Panmore Institute. Panmore Institute. Retrieved 12 May 2017, from http://panmore.com/walmart-inventory-management

RFID Technology as a Strategic Control System

Technology has provided a multitude of conveniences not just for individuals but for corporations.  One of these advances is the Radio Frequency Identification technology also known as RFID. This microchip is being used in a variety of manufacturing and inventory control applications today.  Walmart became an early user of the chip to improve their vast distribution network.  Inventory control is vital to every organization and the use of smart technology and RFID helps provide better and more accurate inventory control in very large operations.  Walmart can track their products from any one of their 150 distribution centers to the shelf of the store.  It helps the store control the levels of inventory to have what the customer is wanting and it helps the distribution center keep proper inventory of product that the stores are selling.  They can watch the inventory levels and know what sells and what doesn’t.  Then they can take action to increase or decrease inventory at any level. 
RFID technology has caused concern for many consumers who believe that they are profiled or that their home can be scanned from a distance and know what is inside.  RFID chips are being inserted into almost everything including our driver’s license, passports, credit cards and more.   Many feel that this invades our privacy and is easily hacked by thieves.  I do not see this technology going away any time soon as it is too valuable in inventory applications. 
Recommendations to the COO of Walmart would be to continue use of RFID technology and to keep equipment in good working order and up to date.  Training for all levels would be a constant issue to ensure that all employees understand how the technology works and its importance in the management of inventory.  The days of inventory manual counts are becoming less frequent and used to make adjustments to the electronic inventory levels.  Walmart could work with inventors to see if they could develop a reader that could scan and account for all items that leave the store and give a secondary look at inventory.  This would help to account for products that are stolen from the store and make inventory adjustments less frequent.  It would also help to know how much product gets stolen and maybe help to find ways to stop it.  Reducing theft at the store level should improve profits and help inventory control.  This should also help to keep the cost of product low due to less theft.  

Mary
Hyde, R. 1/18/2015 How Walmart Model Wins With “Everyday Low Prices” Investopedia, Retrieved from:  http://www.investopedia.com/articles/personal-finance/011815/how-walmart-model-wins-everyday-low-prices.asp
Walmart – Our Business, Retrieved from:  http://corporate.walmart.com/our-story/our-business
Pearce, J., Robinson, R. (2016-01-02) Strategic Management, 13th Edition. [Kaplan] Retrieved from https://kaplan.vitalsource.com/#/books/0077807634/

External and Global Environment

Anytime you are considering developing and starting a new business you must take a number of factors into consideration. A very helpful way of beginning the process is through the Five Forces Method of analyzing industry competition. The Five Forces Method discusses five major factors to consider; Threat of New Entrants, Bargaining Power of Suppliers, Bargaining Power of Buyers, Threat of Substitutes and Industry Rivalry (Pearce & Robinson, pg. 98, 2016). All of these factors must be carefully examined against the ability of the business to operate, turn a profit and serves its customers or clients accordingly.
One industry I have always been interested in is Facility Management mainly because I have been working in the industry for over 10 years and understand what works or doesn’t work very well. This is an industry full of local and national vendors that supply maintenance and construction services to various businesses across the country. There are a lot of vendor options out there but most of them fail because they try to undercut costs to gain business and lose sight of the customer service aspect of the relationship. When looking at the five forces method and applying it to this industry you would get the following results:
    • Threat of New Entrants - New businesses are always looking to gain entry into this segment. At the minimum, entry into the market can be gained on a very small capital investment. Utilizing a support call center and small office resources, a new company can begin operations. There are insurance requirements and of course much more detail in getting it off the ground but from an investment standpoint it is manageable for a single investor.
    • Bargaining Power of Suppliers When operating a national facility management company, subcontractors (suppliers) can drive up the cost of work depending on the demand of a particular city. The lower the demand for work, the lower the costs typically are and the national facility management firm stands to gain more profit margin. In high demand cities such as New York City, profit margins are smaller. Newer facility management firms typically start businesses in a region with a healthy mix of high demand work and low demand work.
    • Bargaining Power of Buyers - Within the Facility Management industry, buyers have the most bargaining power out of all players in the process. As corporations scale back on preventative maintenance programs to reduce costs, facility management companies lose revenue but must maintain less business from their clients at a more efficient rate. With a solid company model geared toward working with clients to save repair and maintenance costs, a company can succeed and hold business for a long time.
    • Threat of Substitutes - Demand for repair and maintenance needs will always exists for businesses. They might scale back on preventative programs or look for ways to extend them as long as they can but leaks, floods, store damages, security issues, etc. will continue to happen. 
    • Industry Rivalry - The Facility Maintenance Industry has a very intense rivalry amongst each potential supplier. Suppliers are always contacting businesses that perform work for competitors trying to pry away a piece of the market share. In the long run, a good company with competitive pricing and a great customer service program will always win out over the lowest cost.
References
Pearce, J., Robinson, R. (2016-01-02). Strategic Management, 13th Edition. [Kaplan]. Retrieved fromhttps://kaplan.vitalsource.com/#/books/0077807634/

Internal Analysis and Long-Term Objectives

Value Chain Analysis (VCA), Resource Based View (RBV) and SWOT (Strengths, weaknesses, opportunities and threats) analyses are all ways for a business to develop a sense of who they are, how they operate in their particular environment and set themselves up for sustained success in the future. VCA is an analysis that separates the business into different types of assets from inception or received inputs and follows the analysis all the way through to the end product and customer value (Pearce & Robinson, 2016). This analysis is broken down into primary and support activities where primary activities are the activities performed to actually create the service or product such as logistics, manufacturing, service, etc. Support activities are activities that assist the operation of the company providing the infrastructure for success such as human resources, research, technology, etc. By performing such a detailed analysis on an entire business, a company can learn what might be working well and what might be lagging behind the rest of the industry.
“SWOT is an acronym for the internal Strengths and Weaknesses of a firm, and the environmental Opportunities and Threats facing that firm. SWOT analysis is a technique through which managers create a quick overview of a company’s strategic situation” (Pearce & Robinson, 2016). This analysis is widely known and used for a number of different applications ranging from a personal insight level all the way to a major corporation. Firms can use the analysis to understand where they stand on a particular process or asset in relation to the industry or a particular competitor as well as looking internally on areas to pour more resources in developing. For example, if a company has been outsourcing design for a number of years but through analysis find they have more than enough capability to manage design internally, the firm might find it beneficial to increase resources internally.

The last analysis discussed is Resource Based View (RBV). This analysis is much like a SWOT analysis but looks at resource allocation and assets of a business while putting them up against the industry looking for benchmark opportunities (Pearce & Robinson, 2016).  Understanding how another competitor is allocating resources is especially important when looking for competitive advantages. Companies that operate too many manufacturing facilities might find a competitor doing as well or better with less.

The book mentions Ford Motors as a great example in reinventing themselves through hard economic times. Personally, I find it very interesting that they looked at Toyota’s advantages and found ways to do it better than them coming out of a recession. However, I love discussing the rebranding example Target completed in the late 90’s that also applies in this conversation as well. When Target was looking internally to find ways to separate themselves from the rest of the competition such as Walmart and K-Mart, they struck deals with high end designers to sell lower end versions of their clothes (Business Insider, 2011). This essentially took Target a level above other department stores and created their own niche. Before Target decided to do this, they likely looked at the businesses around them through analysis and found ways to develop the competitive edge needed to succeed.
References
Pearce, J., Robinson, R. (2016-01-02). Strategic Management, 13th Edition. [Kaplan]. Retrieved fromhttps://kaplan.vitalsource.com/#/books/0077807634/
Aquino, J. (2011). The 10 Most Successful Rebranding Campaigns Ever. Business Insider. Retrieved 17 May 2017, from
http://www.businessinsider.com/10-most-successful-rebranding-campaigns-2011-2/#rget-was-just-another-low-brow-discount-store-now-its-the-favorite-of-the-yuppie-class-6

Wednesday, May 24, 2017

Real estate know your product

One of the primary responsibilities of a Realtor is to know their product.  The Realtors product are homes and properties.    With technology, one can view homes with a click of a button from the comfort of your home or on a smartphone or tablet.  Yet nothing compares with actually going to see the property in person.  It is the Feet-on-the-Street observations gained with experience.  Just doing a drive by tells volumes about the nature of the neighborhood and house. 

Another strong aspect of inventory knowledge involves prospecting for future business.  When viewing homes a professional Realtor can think of someone in their database who might be in the market to buy a home in that area or with those specifications.  Furthermore if you have past clients in the area it is a great "warm" call to pop by and touch base and gain opportunities in inquiring if they happen to know anyone in the market to buy or sell.

The actual knowledge of inventory keeps the agent current on the market and with comparables.  Professional Realtors upgrade their knowledge, skills and abilities to stay abreast of the market and industry changes when they have their Feet-on-the-Street.

There will always be business for Realtor's who are true neighborhood specialists and posses strong market expertise.

PREVIEW HOUSES TO STAY KNOWLEDGABLE ON INVENTORY AND FOR BUSINESS DEVELOPMENT !

Beating the Highest Offer

It is not illegal to ask for a copy of the highest offer but it is Unethical and Unfair  for the listing agent to provide the copy of this offer.  We all want to have an advantage with our offers, and it's frustrating to be in a multiple offer situations,  But we must all remember we have all taken the "Code of Ethics" and we MUST all conduct our business in professional and ethical way.   Realtors do not attempt to gain unfair advantage over their competitors.    Be fair and eventually it will work to your customers best interest. 


Read information copied and pasted from the Preamble of the Code of Ethics.


REALTORS® urge exclusive representation of clients; do not attempt to gain any unfair advantage over their competitors; and they refrain from making unsolicited comments about other practitioners. In instances where their opinion is sought, or where REALTORS® believe that comment is necessary, their opinion is offered in an objective, professional manner, uninfluenced by any personal motivation or potential advantage or gain.

The term REALTOR® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal.

In the interpretation of this obligation, REALTORS® can take no safer guide than that which has been handed down through the centuries, embodied in the Golden Rule, “Whatsoever ye would that others should do to you, do ye even so to them.”

Successful agents are masters at being visible when needed and
 available when called upon

Negotiating with multiple Offers

In Florida, we are encountering many multiple offer situations in the market we are in.  This information will give you a leg up in the negotiations. It will give you an opportunity to set your offer apart if we find ourselves in a situation where we are competing with other offers.
Our first instinct in this situation is to offer OVER asking price, but this may lead to appraisal and financing issues.  Instead, if your clients really like the house and a lot of people are looking at it because the seller has priced it aggressively, you should be prepared to use one or more of these strategies to make your offer stand out:
1. Offer a large deposit. This proves to the sellers that you are serious and you’ll be less
Likely to walk away if little issues arise.
2. Get your financing pre‐approved and submit a commitment letter with the offer, so it is as strong as a cash offer.
3. Offer to buy a home protection plan warranty to protect both you and the seller in case of major mechanical failure. It will ensure the seller has no major expenses before closing should something break down.
4. Offer to pay $500 (or another amount) on closing towards the seller’s moving expenses. (ILO going over asking price)  They can use a moving company of their choice.
5. Offer to pay a percentage (1%) of the seller’s commission to their real estate agent. It doesn’t inflate the purchase price, but puts more money in the seller’s pocket.  (Not very customary but if the buyer is willing to go over the asking price – it makes no difference where that extra money is allocated)
6. The seller is responsible for paying title insurance; the buyer can offer to pay for it on the seller’s behalf. This will reduce their closing costs, putting more money in their pocket.
Chances are, none of the other offers you are competing with will include these incentives, so your offer will stand out head and shoulders above the others.


Successful agents are masters at being visible when needed and
 available when called upon

Verbal script

Here is a verbal script when you have concerned clients frustrated about not finding a home.  Remember "People don't care how much you know until know how much you care"  Once you have demonstrated that you truly understand their particular situation and how they feel about it, often they are open enough to hear about possible solutions.

1st Repeat their concerns and state that you understand why they may might feel that way.  Next, tell them about somebody who has felt the same way.  Close by sharing what other people have found worked for them.

Script -  I know you feel frustrated that there are not many homes available to buy that meet your criteria.  I've had other buyers who felt the same way as well. What these other buyers have found is that by adjusting their criteria and expectations, we were able to find something that met their needs.

The reason this style of communication works is that by empathizing with how clients feel, they believe you are on their side and hearing their concerns.

ARE YOU ALL IN ???

ARE YOU ALL IN ???   

To be "All In" as a Real Estate Agent means to commit to complete consistently those activities that are known to lead to business.  It is evident when an agent is working because there is production on the books, business in their pipelines and abundant source of engaged leads.   It's just like when people say they want to lose weight and get in better physical shape, their behavior is evident for all to see.  You only cheat yourself, your not fooling anyone; everyone is quite aware of what is really going on, the same holds true to Real Estate Agents.

Being "All In" means giving the business everything you've got, even when things are difficult and even when you don't feel like it.  

Being "All In" also means to close off all the exists.  When one truly commits to the profession of Real Estate, there is passion and singleness of purpose.  There will always be shiny distractions that take away an agent's attention from the true activities that lead to success in the business.  It is the true professional who is "All In" and stays focus.

The most common trait found in all successful people is that they have the conquered the temptation to give up.  That's another aspect of what it means to be "All In" to achieve and sustain success in Real Estate.

COMMIT TO BEING "ALL IN" AND TRULY WORKING YOUR BUSINESS !

WE CAN & WE WILL BE SUCCESSFUL !!

The mind is a powerful tool.  Our minds help us develop our strengths and/or our weaknesses.  If we constantly focus on the positive outcome of all our dealings we can develop a more powerful mind geared towards our strengths.

Use this tool to help you develop Self confidence, Motivation and Will.  If you set your mind to the "I Can" or the "I Will" part of the brain you will always be able to see the positives of every outcome.

"I Can" send out 100, 200,300 emails and "I Will" receive at least 1 positive response.  "I Can" pick up the phone and call 20 people because "I Will" get at least 1 person that will have a conversation with me.   "I Can" show 5-10 homes, because "I Will" get one person to put in an offer.

If you dwell on the negative outcomes you develop your weaknesses and you FAIL 

  WE CAN & WE WILL BE SUCCESSFUL !!

Are you average?

The definition of "Insanity" is continuing to  do the same thing over and over and expecting a different result.  Hmmm, where are your expectations?  Do you expect your business to succeed?  Then, you need to realize that some things need to change.  UP YOUR GAME!

The mindset of our Insanity comes at us from many directions, but one example I see far to often when working with Real Estate agents is they fail to bring successful ideas into their business, that's definitely insane.   CHANGE IS GOOD ! 

The changes we need to make need to come from areas where you have never thought to look.  The decision you have to make is if You Are going to be Content with Low Expectations? or if You Are Going to Challenge the Status Quo? and find a better way.

This is where accepting being average is "just fine"  winds up destroying far to many agents.  Average is not something anyone should aspire to.  Prospects aren't looking for average, they want to excel.  The only agents whom prospects want to work with are the ones that share their same drive.

Get out of your comfort zones, change things up, be creative and step it up.  Follow the 3 C's of successful agents - Choices, Chances & Changes.

YOU MUST MAKE A CHOICE TO TAKE A CHANCE OR YOUR BUSINESS WILL NEVER CHANGE !

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