Dell

Aybey Boran

DELL

Dell is among the world's leading computer manufacturers that has transformed and diversified into variety of business segments over the years. Products range from Dell PowerEdge servers, Power Vault, Dell EMC storage systems as well as PowerConnect switches for corporate clients. For individuals and professional customers products range from Dell Precision workstations, OptiPlex desktops, Dimension desktops, Inspiron and Latitude notebooks. Apart from these core products, the company also offer products and services range including printers, projectors, Axim handhelds, and other accessories. More recently, the company has announced intentions to explore LCD television/computer monitors as well as digital music players.

Spanning over 20 years, the company has always been associated with designing, manufacturing and customizing products and services to satisfy a diversified range of customers including individual customers to corporate and retailing businesses. The company's philosophy to deal with customers one-on-one has become a management model for other companies. Having gained the market leadership position in computer products and services, Dell's team has always been careful in sustaining its marketing strategy of providing standard-based computing solutions.

Dell's unique approach to manufacturing separates the different processes so that Dell is not reliant on singular production or supplier's chain for equipment production. Though there is no segregation of the different products and services but nevertheless in separating the components enabled it to target the customers based on the regions in which the products are manufactured. By assigning each regionalized production center particular component for production not only has diversified the risk of concentration of labor and production costs but also depending on particular infrastructure.

As you see from the chart, segment 1 prefers highly flexible PC’s. Flexibility refers in this situation to a PC’s ability to run several different kind of software, to be easily connected to printers and other peripherals, suitability for business as well as educational or game use. The brand nearest to segment1’s ideal point is HP but none of the brands really that close. Segment 2 which has the 50 percent of market size, seems to be satisfied with either IBM or Dell. Segment 2 likes High performance machines. Performance, by contrast, referred to speed of internet connection and internal calculations, support of the highest-end software programs, and reliability and accuracy of calculations. If we are talking about performance, Dell’s most serious competitor is IBM. Actually all brands have the same rate about the performance except IBM. Compaq and Hp seem more flexible than Dell. But still Dell is one of the closest brand to the segment 2(50% of market size).

According to our research, there is also the issue of global positioning. Dell's consumer base is not a typical American or Canadian but a wide range of customers from Asia, Latin America, and Europe as well each with distinct needs and requirements. The difference in corporate culture as well as professional attitudes towards IT products and services create a difficult need/requirement profile that would be challenging for Dell. As more and more consumers in developing regions like China, Brazil, France, and India grow to appreciate computerized environment, they also have complex needs. This way Dell would have a difficult time to incorporate a pervasive marketing strategy. Instead, it should maintain differential but integrative marketing strategy so that the company has a niche in each of the markets in which it manufactures products.

Nike in South Asia

Aybey Boran

Nike In Southeast Asia

Nike, which had been a victim of media offensive for quiet some time faced some serious criticism from media and human rights watchdog groups. Nike which had been subcontracting most of its manufacturing through its suppliers had to deal with issues ranging from workers’ physical and sexual abuse, underpayment of workers, unsafe and unhealthy work environment etc. But major issues among all of the ones mentioned above were substantially low wages paid to workers and physical punishments given to workers as a result of poor or slow performance. All these issues questioned the moral and ethical responsibilities that Nike must bear as one of the biggest and most profitable sports business in the U.S. and abroad. Essentially, Nike had no responsibility of any kind of workers who worked for its subcontractors. But since all these operations were maintained and operated solely for Nike, it bore responsibility for providing or pressurizing its suppliers to provide their employees and workers compliance with local government’s safety, health and wages regulations. The severity of criticism ranges from workers being made to work at minimum wages, in one instance, as low as $2 a day to physical abuse of workers up to a point where they passed out. In Vietnam Nike’s supplier made workers work for them without any pay increase for years and years until it was brought to government’s notice. All sort of physical and emotional abuse were reported including the extreme humiliation of workers. An example of that was beating of a 15 Vietnamese women by their forewoman on their faces by a shoe sole. Some critics even compared these practices to early 1900 sweatshop-era in United States. Also a leak memo from Nike’s internal audit revealed workers having respiratory problems due to poor ventilation system and level of harmful chemicals exceeding the standard set by government in Vietnam.

After all said and done, Nike tried hard both at international and local levels to regain its lost reputation. Although it is an overstatement to say that Nike lost its reputation, but this issue was big enough for Nike to implement some vital changes in its business practices and ethical standards in its manufacturing factories abroad. Even at its corporate level, Knight admitted that Nike was not prepared very well to deal with media offensive.

Nike’s image was tarnished in some circles or its brand loyalists, who had an impeccable image of it in their minds. It is quiet possible that Nike’s sales might have been affected due to its exposed business practices but overall Nike being such a big name and the largest producer of footwear in the world maintained a considerably good level of sales. It can also be considered another chance given to Nike by its consumer to improve the well-being of its overseas workers.

At national level, Nike established measures to improve its image in the eyes of its consumers, activist groups and government. Being harshly and bluntly criticized, it offered congress members to visit its factories. It also hired an accounting firm named Ernst and Young to do the audits of factories regarding safety and wage issues. Nike discontinued business with four of its factories that were allegedly paying less to their workers. It had its contractors signed a memorandum that abides them to comply with all the local and federal government rules and regulations. Not only that, but it also reconsidered increasing its public relations office staff. After so much scrutiny, Nike gave some serious thought to make some essential changes in its public policy and overseas manufacturing operations. Hiring Andrew Young, may have been a wise decision on Nike’s part but it didn’t appeal people generally. Although Nike sent him to his factories in Indonesia and Vietnam, it didn’t have much of an effect on its image. Andrew, hired due to his unique background, reported not much different from what Nike expected him to be. His reports which described Nike’s subcontractors’ business to be fair and ethical and according to health and safety standards, were published in almost all major newspaper to show the conformity with international safety laws. But this was just one effort to promote its image. Basically, it can be considered a countermeasure to nullify the effect of media offensive. At the moment and for the records it was a good effort but not that effective.

Phil Knight, a man who might have been under extreme pressure at the time, must have made this statement “ Nike can lead countries out of poverty” to blow off some steam. So far, we haven’t seen any good solid example where Nike or a company of equal size brought any country out of poverty. This is an overstatement. Nike probably won’t have changed its practices if it wasn’t brought into light. Still, its contribution made to those countries and surveys conducted by private groups differ a great deal. So it might not be what it seems like. If Nike really wants the welfare of its workers and laborers, it must start with wages that if not equal to U.S standards should be well above those countries’ local level. There is no denial in the fact that profitability is Nike’s ultimate motive. So it’s upto Nike to decide if it can afford to lose some of its profits.

As far as wages are concerned, Nike should let the international organizations,just any ones which are unbiased and fair, decide the fair minimum wage instead of relying on its own internal audits. Obviously, the wages need to be increased periodically to keep workers satisfied and happy with their work. Also, it shouldn’t just be about wages. It should also take measures to provide workers with improved job benefits such as affordable health insurance etc.. It is claiming to have increased wages but it should keep raising it every year to a considerable minimum level for its workers to survive the inflation and rising costs of living in those countries.

Nike learnt its lesson from its known or unknown mistakes. Nike has already made a great effort to reduce any future discrepancy. Still its unavoidable for it to avoid media and watchdog groups which make up for the large part of any scandal or scrutiny. Since we haven’t heard much since its last scandal, which means the issues were addressed, if not completely, at least to some extent which is a healthy sign both for its growth and prosperity. The best way will be to keep its workforce happy and especially strict laws and penalties should be imposed, should any subcontractor or factory owner mistreats or abuses his or her workers. It sets a good example for any other upcoming or large multinational corporations that workers’ safety, prosperity and well being are the top most priorities in its own prosperity and well-being.

E-bay and Database Protection

Aybey Boran

E-Bay and Database Protection

1. How important to eBay is the protection of its database from auction aggregators and other search engines? In what ways do auction aggregators harm eBay?

Ebay being the leader in online auction is entirely dependent upon online auction activities. Therefore, its database is its most valuable and precious asset. The information gathered by eBay from its online auction is its main source of success. This information is later integrated with other internet service providers. eBay auction being unique due to its convenience of use and other features such as serving as a largest online bidding site. An estimated of 15.8 million users are registered with its site. To protect such a large flow of online bidders it is must of it to protect itself from its data being copied and used by other auction aggregators. Database collected by eBay is due to its sole efforts, whereas the data used by auction aggregators is the one that is either copied or their users being diverted to eBay site once the search doesn’t show the required items or category on their respective websites. All these actions by aggregators not only undermine eBay efforts but also can also endanger its patent and its uniqueness as the only site to offer 4320 categories.

2. What strategies should eBay adopt to protect its intellectual property?

So far the efforts made by eBay faced resistance due to incomplete Intellectual property laws and insufficient provisions in them. For example, according to CADP which is The Coalition against Database Piracy, “copyright laws only protects database to the extent that it is creative in the selection, arrangement or coordination of the facts. Copyright law doesn’t protect factual database from thievery.” Keeping in view such complications in copyright law the protection of its database from aggregators becomes very difficult. EBay used a very effective strategy by lobbying and legislating through policymakers and helping it bring its case to Washington and Congress, still the opposition to its cause and protection affected its purpose of stopping the data from being copied and used unfairly.

In the view of all these events, there isn’t much eBay can do to stop its data from being pirated or stolen. EBay’s’ strategy for working with auction aggregators is the best solution to this problem so far in which, for a small fee the aggregators were allowed to use its database but not copy it. Bidder’s Edge so far is the biggest pirate of eBay’s data. Some of the ways that eBay considered using was to establish intellectual property rights through courts to the data it generated from its websites or to use Computer Fraud and Abuse Act. Another option considered by it was to seek a preliminary injunction against Bidder’s Edge and other aggregators. But it realized that all these strategies are costly, time consuming and could divert attention of government and other related agencies toward its business and would affect it severely. It is difficult for eBay to come up with a perfect solution to this problem.

3. Should Ebay take legal action against Bidder’s Edge, if so on what grounds should it file?

Since eBay had different options for taking legal action against Bidder’s Edge. The basic grounds on which it could file a case against it had already been weighed and thought-over by eBay. One of the grounds was to establish through courts Intellectual and property rights but The Feist decision was the major obstacle in it. Another one was to use Computer Fraud and Abuse Act. Also it could seek a permanent injunction against it. But by doing all these things, it would jeopardize its own position. Government agencies could come after it due it size and its status as the largest online auction site. Government could raise issues of unfair business practices, the exercise of market power and use of courts to stifle competition. Therefore, whatever step it considers taking, it should always beware of the consequences of such actions.

4. Should eBay use technology to thwart the aggregators?

This sure is the best option for eBay besides all the legal actions it considered taking earlier. But there hasn’t been any such technology that would thwart aggregators. There was an option of using firewalls to stop its data from being stolen but it would also cause inconvenience to its users as well. This would fuel a race against overcoming those hurdles. Presently, the biggest aggregator against eBay, Bidder’s Edge was already using a robotic program to copy 80,000 pages every day. It is understood that the information it copied was obsolete but it for Bidder’s Edge it was serving the purpose.

5.What are the possible consequences for the Internet and electronic commerce of H.R.354 and H. R. 1858?

There are some upsides and downsides of both H.R. 354 and H.R. 1858. If H.R. 354 is enacted it would cause problems for a lot of online companies. For example, Yahoo, one of the biggest online stock analysis site would be impacted due to its inability to update the information periodically. The main opponents of H.R. 1858 were those in Commerce, who argued that this legislation would stifle the Commerce since it is dependent upon the information gathered from various sources. Search engines would specifically be impacted by H.R.354. Yahoo argues that although it does a great effort to gather information, disseminating such information is crucial to its business. The biggest fear among people opposing H.R. 354 was the monopolization of databases. Bidder’s Edge compares its position to that of Yahoo and Msn who it thinks are doing the same job. According to the provisions of this bill, the bill provides substantial protection to database companies and levies severe penalties for violating it.

H.R. 1858 on the contrary protects the users interests. It prohibited the copying of the data produced by database companies and selling of such database for the purpose of competition of other database. This bill was supported by companies such as Yahoo, American online, etc. Since most of these companies business was directly dependent upon the information they gathered and provided to their users, they strongly supported it. According to CADP, “H.R. 1858 only bars the thefts that result for duplicative processes”.

6. What specifically should eBay do to move H.R. 354 to move it through the House? Should it attempt to mobilize eBay community in support of H.R. 354?

CADP already did the job of releasing a public opinion in favor of H.R. 354. As it is discussed earlier that eBay involvement into this matter directly could jeopardize its position in the eyes of government and other related institutions so it should avoid being too prominent. Of course, public opinion matters a lot to policymakers but it still would again raise the issue of monopolizing the market. The approach that eBay adopted by collectively opposing the issue of database piracy is the best approach. As far as moving H.R. 354 through House is concerned, this effort had already been made and didn’t turn out to be too effective. Since H.R. 1858 was also introduced to counterbalance H.R. 354 its effectiveness was reduced. Net Coalition and other major online commerce industries backing H.R. 354 would make it extremely difficult for eBay to enact this bill. The best way for eBay is to wait and to try to gain more support from other online industries whose business is directly related or dependent upon such database businesses. Businesses such as NAR, National Association of Realtors, which favoured H.R. 354 and opposed the database piracy are a good example of such a effort. In order for eBay to move this bill through the House it would need more support from other database companies, its online users’ opinion matters a lot too but in order for its proposal to be effective it would need a joint effort by all its supporters specifically companies.

7. Would enactment of H.R. 354 establish monopoly rights to information and limit the availability of information to Internet Users?

H.R. 354 would not completely impair the usage of internet. Of course there will still be information available to other users but only some users such stock analysis companies will be at disadvantage. If there is some middle ground found on this issue, it can solve the problem for both database industries and internet users. The companies opposing this bill are basically the ones that have a fear of losing the information available to their users through internet. Database companies can gain an advantage or monopolize such markets as stocks and stuff. But since the motive of eBay is to stop the business that is already in the same field to copy the data compiled and collected by it, it wouldn’t have a too much damaging effect on the normal users.

Exchange Rate

Aybey Boran

In a floating exchange-rate environment, the exchange-rate responds to many factors. According to me, there are two types of factors long term factors and short term factors.

Long term factors are, production and consumption, trade balance deficit, trade balance surplus, productivity, government dept and government deficit, national savings.

Production and consumption; When a country has some real growth in production, normally it should not increase its money supply. But, this is the very time governments need money the most. Only few can stop the impulse to print a little extra to tide them over. If a government does not control to guarantee that no money is produced unless some production takes place, that currency will definitely fall in value compared with currencies that are based on more productive.

Government dept: Governments has to pay for public sector projects and governmental funding. Nations with large public deficits and debts are less attractive to foreign investors. A large debt encourages inflation, for example, if inflation is high, the debt will be eventually paid off with cheaper real dollars in the future. Government may try to print money to pay part of a large debt, but increasing the money supply causes inflation. And, if a government is not able to service its deficit selling domestic bonds, then it must increase the supply of securities for sale to foreigners which means lowering their securities prices. Finally, a large debt may cause worry to foreigners if they believe the country risks defaulting on its obligations. Foreigners will be less willing to buy securities in that country’s currency if the risk of default is too much. Thus, the country's debt rating is an important factor of its exchange rate.

Trade Balance: When two countries trade with each other, it is not possible that the sum of the imports and exports between them will add to zero. A deficit in the trade balance shows the country is spending more on foreign trade than it is earning, country requires more foreign currency than it receives through sales of exports. The demand for foreign currency lowers the country's exchange rate until domestic goods and services are cheap enough for foreigners.

National savings: If a nation is composed of individuals who save a greater proportion of their earnings than other countries, this adds strength to the currency of the country. National savings can be used to finance debt instead of borrowing abroad. National savings which are deposited in to the banks provides capital for the economy.

Productivity: Productivity is the amount of gross national product per person. This is one area in which the U.S. is still very strong. Somehow, productivity in Japan is very low. Exporting productivity in Japan is very high but I can’t say the same thing for farming and domestic distribution in Japan.

Short term factors are inflation, interest rates, real return on investment, velocity.

Inflation; Inflation occurs when the rate of money growth in an economy is higher than the rate of growth in real GDP. A country with a steady lower inflation rate exhibits a rising currency value, as its purchasing power increases relative to other currencies.

Interest rates: Inflation and interest rates are all correlated. Higher interest rates offer lenders in an economy a higher return relative to other countries. Therefore, higher interest rates attract foreign capital and cause the exchange rate to rise. The impact of higher interest rates is mitigated, however, if inflation in the country is much higher than in others, or if additional factors serve to drive the currency down.

Real return on investment: Knowing the real return within a currency can help you understand the real profit you have made in your own spendable currency and real returns can help you choose currencies in which to invest. One of the short term factors of a strong currency is having a high real return.

Velocity: The velocity of a currency measures how rapidly the currency is currently strengthening or weakening. This velocity calculation can help us measure future tendencies of strength or weakness in currencies. A currency's current velocity is self fulfilling because investors tend to invest in currencies that are rising in value. Thus if a currency is rising, it is more likely to continue to rise.