Costco Wholesale Case Study

Stakeholders invest money with the intent to gain return in the future. It is important for stakeholders to gain access to information and evaluate the firm’s performance before they put money in it. On the other hand, it is the firm’s management team job to make decisions that would maximize the long term value of the firm’s common stock. The intent of this paper is to analyze Costco Wholesale Corporation’s financial performance and to assess how efficient the business has been over a five year period as well as to provide recommendation for financial management strategy. The problem identified in this paper is the low margins in the industry. Because margins are low, the profitability of individual companies depends on high volume sales and efficient operations. Costco Wholesale Corporation is high-growth Retail Company. The company has experienced significant growth from 1997 to 2001, which has caught the attention of the competition. However, the numbers are decreasing because return on assets, return on equity, and asset turnover ratios have declined within the same time frame. Costco Wholesale Corporation has been a major player in the retail industry. It is the largest wholesale club operator in the US. â€Å"The company operates about 555 membership warehouse stores serving more than 53 million cardholders in some 40 US states and Puerto Rico, Canada, Japan, Mexico, South Korea, Taiwan, and the UK, primarily under the Costco Wholesale name. † (Hoover's, Inc, 2010) Costco’s strategy is low prices strategy. The management team has been able to pass savings to customers, keep low prices and maintain healthy margins at the same time. This has been a result of the company’s ability to become more efficient over time. The company saves on operation costs in order to provide low price while still keeping high quality products for customers. It has been constructing warehouses with inexpensive concrete floors. Selling items in bulk has allowed for operating efficiencies. Also, carrying less variety of products than other competitors has contributed to keeping inventory costs down. High sales volume and rapid inventory turnover are very important for a firm’s financial performance. Therefore, they should not be overlooked by investors. Costco’s inventory turnover ratio of 11. 7% in 2001 is the highest compared to its competitors. It is a result of operating principle that allows Costco to improve its working capital and operate much more efficiently than its competitors. For instance, Costco buys directly from manufacturers and routes purchases directly to customers in less than 24 hours. â€Å"Cross-docks never stored inventory, so all of the items delivered were reloaded and shipped that same day. † (Case study, p. 6) This has increased efficiency by ensuring the trucks are operating at full capacity. It also has allowed Costco to receive cash in hand before it has to pay for the original merchandise from the manufacturer. This has resulted in a very high operating cash flow for the business. Cash is important to any company’s financial performance. It allows the company to pay its bills and invest in the business without having to use debt. According to Torres’s Common Size Financial statement Interest expense has decreased from – 0. 35% in 1997 to – 0. 09% in 2001. This has demonstrated Costco’s ability to reduce its overall amount of debt during these years. For example, the fact that short-term debts have increased from 0. 46% in 1997 to 1. 93% in 2001 and long-term debt have decreased from 16. 74% of sales in 1997 to 8. 2% in 2001, relates back to the decrease in Costco’s interest expense. This is a representation of the management’s team decision turn on to short-term and move away from long-term debts. In addition, the decrease in long-term debt has helped reducing total liabilities from 53. 32% of total assets in 1997 to 50. 46% in 2001. Costcoâ €™s current ration in 2001 is 0. 94, which is below its competitors. This could be a sign for weak liquidity position. However, the high inventory turnover ratio analyzed earlier in this paper in combination with the low current ratio is an indicator for efficient assets management. The competitors’ higher current ratio might also be a sign for too much inventory that might have to be written-off or too many old accounts receivables that could turn into bad debts. Sears and Walmart’s account receivables are a way higher than Costco and BJs, confirming that there is no significant reason for considering Costco’s current ratio a weakness. Costco’s gross margin has been well maintained over the five year period. Their gross margin of 10. 4% is much lower than Sears’ of 26. 6% and Wal-Mart’s of 21. 5%. Only BJ’s has a lower gross margin of 9. 2%. Costco’s 2001 gross margin suggests ability to remain profitable and very competitive at the same time. The company has been able to provide goods to customers at a very low mark-up and at a lower per unit cost. According to the case study Costco’s management team has decided to reinvest net income back into the company instead of paying dividends. This decision has resulted in earnings retention ratio of 100% as shown on Torres’s sustainable growth model. Absence of dividends could lead to some investor dissatisfaction in the short term. The return on equity (ROE) also has been decreasing during the five year period. It has dropped from 18. 6% in 1998 to 14. 2% in 2001, which could also lead to investor dissatisfaction. ROE tells how well stockholders are doing in term of return on their money. Costco’s 14. 2% return in 2001 is consistent with the current average industry ROE is 11. 5%[1]. Costco’s ratio is consistent with the industry average, but appears to be on the decline. A look at Costco’s ROE since 1997 shows a steady decline. Consistent reinvestment into the company has occurred in the form of new store construction and efficient modifications of old stores during these years. Such capital investments would take time to generate profits. Even though Costco’s ROE in 2001 is lower than in 1997 it still remains a large positive figure. As long as Costco’s management team continues demonstrates ability to successfully reinvest and improve efficiencies, stock price would most likely increase in the future and stockholder would be satisfied with long term returns on their investment. Economic factors should be considered when determining the future of the retail business. Economic factors include the economic growth, interest rates, exchange rates and the inflation rate. Economic downturns have forced customers to cut back on expenses. . Any significant decrease to consumer spending has to be considered as a threat. In 2000/ 2001 tough economic environment Costco has shown the ability to persevere and continue growing their business. Passing cost savings to customers is even more important in times of economic slowdowns when businesses and individuals are trying to do more with less. Economic constraints play a major role in wholesale business by forcing companies to be more creative and come up with higher efficiencies in order to provide lower prices. On the other hand, economic growth provides opportunities not only to Costco but to other rivalry as well. Social factors influencing the retail industry include culture, population growth, age distribution, and importance of safety. Costco warehouses are located further away from residential areas such as cities and older suburban areas. This creates inconvenience for customers as they would have to drive further to shop at Costco than a local grocery store. Costco has overcome this with a much better customer environment, larger discounts on bulk purchases and various incentives through their membership programs. Ecological factors include ecological and environmental aspects. For instance, Costco has been offering boxes to customers instead of plastic bags. Such green initiatives are necessary to address environmental concerns. They could also contribute to increased market share. Other factors that should be considered are customer demand, cultural changes, and technology. Today’s advanced technology provides opportunities for higher efficiencies as well as cultural changes. For instance, the internet has been a great shopping resource lately. It gives retailers the ability to offer lower prices and customers the convenience of shopping from their own homes. Costco’s management team should continue to work closely with customers in order to identify their needs and behavior. Costco’s mission is â€Å"To continually provide our members with quality goods and services at the lowest possible prices. † (Costco, 2010). The management team should ensure that systems and processes are in place to carry on the mission. Ensure open communication channels between employees and management. Employees should be considered when the strategy is being implemented because successful strategy implementation requires motivation. The company should clearly communicate its vision and mission to all levels throughout the organization. Communicating the company’s vision and employees involvement in the decision making process would give them a stronger sense of job satisfaction. That would increase motivation and contribute to creativity enforce. Also to increase motivation the executive team should review management’s compensation and rewards. As part of trategy implementation the leadership team should develop support among stakeholders. One aspect of that is to establish global network of strong suppliers and ensure availability of strong partners who share technology, development cost, and speed to market Costco’s goal is to â€Å"Reward our shareholders. † (Costco, 2010) This analysis proves that Costco remains one of the industry’s leading players and there seems to be no reason for Torres to sell her shares. References Brigham, Eugene, & Houston, Joel. (2008). Fundamentals of financial management. South-Western Pub. Brigham, & Houston, 2008) Carpenter, M. A. , & Sanders, Wm. G. (2009). New Jersey, NY: Pearson Education, Inc. Costco wholesale corporation . (n. d. ). Retrieved from http://www. hoovers. com/company/Costco_Wholesale_Corporation/rkfjif-1. html Costco, Initials. (2010). Costco wholesale corporation. Retrieved from http://www. csrglobe. com/login/companies/costco_wholesale_corporation. html Jun, J. (2009, January 19). Taking stock in costco. Retrieved from http://www. oldschoolvalue. com/featured/taking-stock-in-costco/ ———————– [1] Data collected from Google Finance

National Honors Society Essay Essay

If I had the power to change three things in my school or community, I would obligate all high school students to take a culture and religion class to educate students about people’s various beliefs and customs. Secondly, I would encourage students to take higher level academic classes instead of just the basics. We would send students into freshmen classrooms to and inform them about the benefits of taking some of the tougher classes. At the the same time we are trying to erase some of the misconceptions about the upper level math and science courses. Finally, I would encourage hosting more community activities. Living in the age of globalization, it is crucial for schools to offer a class that teaches global culture, including as well as the beliefs of various ethnic and religious groups. Offering such a class would be a crucial improvement in our school. We all are aware of the importance of obtaining a good education and the highest degrees in the latest and best technolog ies. In preparation for that we take the hardest classes in school and try to get into the most illustrious college and learn, but, alas, we forget the most important aspect of life: ______. We always forget that what is even more important than understanding the world in which we live in and how it functions and its sciences, is understanding each other and how we as individuals functions based on our beliefs and culture. In the real word, disagreement arises from the inability to understand someone else’s approach to something, especially if they come from a different background than you. On a bigger scale, disputes between countries due to our lack of understanding of others and their customs can often lead to war. So much unnecessary conflict arises from our ignorance and lack of education we receive from school. Therefore, making such a class mandatory for all students would also indubitably trigger healthy relationships throughout the student body, instead of the stereotypical malice that currently flows around. Secondly, I would encourage the student body to take more challenging courses. In high school, we all think about having fun and making the most of these four years, especially during our senior year. Nonetheless, we fail to realize how valuable our time is in high school. How we spend this time determines what colleges we get entry to, what scholarships you receive, but also our future career. Students often surmise that the higher level math and sciences courses are only for  Ã¢â‚¬Å"nerds† and fail to realize the benefits, including how much money it will save them in college. Therefore, I would like to create a program where students who have taken theses higher level courses go around the school during the two-week period when everyone is choosing courses for the next year and discuss the benefits of taking classes such as AP Calculus, AP Biology, AP Chemistry, and AP Physics. Furthermore, this would also clear up some of the appalling misconceptions created about some of these classes. For instance, during a personal encounter I had with a student who I was helping with math homework, she asked what math class I was in. To which I replied, â€Å"I am taking AP Calculus†. She immediately replied with comments such as, â€Å"Why bother, it’s a waste of time. No one ever use Calculus in the real world except if you’re a rocket scientist.† Obviously, she made an illegitimate claim. I had to explain to her that, in fact, the type of math most applied in any career is calculus, as it helps solve 80% of real-world problems and much more applicable than algebra or trigonometry. Reasons and encounters as such is what motivates me to create such programs so students can benefit from them and make the most out of high school. Finally, I would encourage hosting more community activities. We already have a town square where we celebrate the first Friday of every month with a small carnival. But with our small community size and our extremely diverse population, we could host annual picnics where people bring traditional dishes, stage a mixture of cultural performances, and, overall, just have a good time with each other. This kind of exposure is very beneficial for everyone, especially employees and their colleagues. Not knowing about your colleagues and their entertainment and food preferences could create unnecessary problems. One might accidently comment or reference something that is offensive to their co workers creating a spark that could potentially ignite a fire. There are many changes that can be brought to the community and school that would be very beneficial. But if I had the power to change three things in my school or community, I would obligate all high school students to take a culture and r eligion class, encourage students to take higher level academic classes instead of just the basics, and I would encourage hosting more community activities.

Strategic Management Case Study of Disney Paris Essay

Strategic Management Case Study of Disney Paris - Essay Example On the contrary, when the Euro Disney went on line, it was welcomed with both fanfare and protests by the French. France wanted to have Disneyland in their country competing with Spain. After satisfactory negotiations with French Government, Disneyland decided on setting up the theme park near Paris. In 1989 when the contract was formalised, the mood was upbeat and the country was contemplating on making large tourist money by drawing crowds to Paris. But once the construction work started and the employees of nearly 10,000 were called for interviews, it was found that the Euro Disney will continue to be more American than Europe or even French. The company started making record losses for the next five years before turning green. This case study is about the circumstances that led to this failure and the steps that were taken at that time. We will also discuss the steps that need to be taken in the future to ensure smoother and substantial progress in the working of the Paris Disney . Companies work as large distinct social systems adapting to the cultural background they develop in and thrive. National cultures are the major sources from which the corporate cultures evolve and develop (Frost et al, 1991). 1. Euro Disney's Plan and Actual The company had the following plans and targets in place with respect to the flow of funds and patronage for the company: 1. Tapping the large 16 million populations who lived with in a radius of 160 kms from the site was a major attraction for the management of Euro Disney. The Europeans received longer vacations and summer vacations compared to the Americans which should be resulting in better results. 2. The company targeted to get 11 million visitors in the first year of operation. 3. The company had an ambitious plan for capital investment. During the first phase of the construction the Magic Kingdom Theme park was done. Following this, Disneyland was to have its second theme park adjacent to the first one, the Disney-MGM studios. 4. The company targeted to have an average spending of USD 33 would be done by every guest. 5. Labour costs were expected to be maintained at around 13% of the sales figures. During the roll out of Euro Disney, the average daily inflow of visitors to the park was at around 30,000 visitors in the summer months of the inauguration. However, over the entire year the flow of people dipped down during the winter months and the company had only about 9.8 million visitors for the entire full year in contrast to their planned target of 11 million visitors. In most of the other Disneyland in Florida or in Tokyo there were a number of people who stayed back in Disneyland hotels. These were not the day visitors but 'period-visitors'; whereas in the case of Euro Disney there were more number of day-visitors than period visitors. This meant in addition to the number of people who are visiting Disney land being less, the amount of money each one of the visitors will be spending is also going to be less. It was found that it was almost 10% less than what was expected out of them. In addition, the labour costs that were estimated to be around 13% rose to over 24% of the sales figures. This also meant that the company was facing an acute financial crisis in less than one year of its operations. Most of the companies are expected

Patient Care And Influence On My Career Essay Example | Topics and Well Written Essays - 750 words

Patient Care And Influence On My Career - Essay Example I used to work under the directions of Registered nurses and physicians in delivering patient care in the hospital. I made a huge contribution in bathing patients and assisting patients during their physical therapy sessions. I also provided basic bedside care services such as taking the vital patient disease signs such as blood pressure levels, pulse rate and body temperature. My patient care in assisting the patients relieve pain and discomfort through applying new dressings, applying ice packs and providing alcohol rubs enabled me to acknowledge the valuable work that nurses do in delivering high quality patient care. I appreciate the dignity of human life and need to handle all patients with respect and that is why I participated in feeding the patients, recording the fluid intakes, and assisting patients with their personal hygiene (Chang 12). I believe that my approach to patient care was holistic since carried out an ongoing physical, social and emotional assessment of the patients in the hospital and fostered the independence of the patient in making the decisions concerning the preferred treatment method. Accordingly, I participated in the development and implementing of patient care plans through collection of laboratory samples and performance of simple laboratory tests. Another aspect of patient care that aroused by interest in joining nursing school is the care of babies and the need to educate the mothers and families on hygienic and healthy baby care habits. In this regard, I participated in disseminating information on hygienic baby care procedures and monitoring of any illness signs on the young babies (Harrion 104). I believe that I will contribute immensely to the nursing profession after completion of my education. I am confident that I will gain practical skills that are capable of meeting the needs of the health care system. I will be in a position to understand the economic, political and social forces that have shaped the nursing profession. Accordingly, the demand for nursing care services is currently increasing thus I will be able to contribute towards delivering a patient-centered care. I am sure the nursing knowledge, skills and attitudes will enable me improve the patient outcomes and ultimately lead to a higher satisfaction level among the patients. I will provide physical patient care, make sure all patients complete the treatment prescribed by the physicians and document the patient’s response to the particular treatment. I will provide patients the prescribed medication according to the existing legislation and assist in the rehabilitation of patients. In addition, I will assist in post-operative care procedures such as nutritional management and dressing of the wounds (Chang 14). Accordingly, I will be capable of providing direct patient care such as administerin g prescribed medication, carrying out basic diagnosis, and providing emotional support to patients. The course will enable me adequately demonstrate knowledge of nursing techniques and principles through constantly monitoring the patients’ medical conditions and updating the medical records. I will be in a position to supervise junior nurses such as LPNs and midwifery students in order to foster the quality of health care. In this regard, I will adhere to ethical and professional expectations of the nursing profession through respecting patient autonomy, maintain cordial working relationships with my colleagues and providing the highest attainable quality of nursing care. I will remain committed to continuing nursing education through attending nursing workshops and participating in nursing associations in order to contribute in new nursing knowledge generation

Focuses on the process, progress, and prediction of your legislation Case Study

Focuses on the process, progress, and prediction of your legislation - Case Study Example The bill was introduced into the House on November 10, 2015, getting twenty-five percent progressions. Subsequently the bill was referred to the higher education committee on January 26, 2015. On March, the bill was introduced to the floor of the house before going back to the Senate Higher Education Committee. By June, prior to the house going for recess, most of the pieces of the bill had successfully been voted through awaiting their implementation on September first, 2015. An example of the pieces of bills that passed includes the SB 453 concerning the minimum scores needed for public schools students to get credit through an evaluation set through university-level evaluation programs. Others such as HB 1160 that relate to particular information reported to the Texas Higher Education Organizing Board by organizations of higher education for the objective of observance checking did get the majority vote (Texas Legislative Council). The supporter of education bills such as the influential k-12 advocacy group and the Texans for Education Reform were not delighted because of the delayed passage of the bill (Bilika 56). The supporter argument concerning the reforms in public schools was that accountability systems would make an institution performance simpler to comprehend and that it would aid more guardians to become involved in their childrens learning. It would also permit the state to target failing schools efficiently. Critics of the bill on the mother hand claimed that offering an institution a low grade would unfairly stigmatize the school and its learners. They also argued that improved grades would not take into explanation issue such as funding difficulties. I am of the opinion that the education bill is significant to bring transformations to the education sector in Texas. Thus, I support the bill because it will enable all persons in the Texas state to get access to higher education due to the act of

Organizations and behavior Essay Example | Topics and Well Written Essays - 1250 words

Organizations and behavior - Essay Example Formal organisation has clearly organised structures that have departmental divisions, authority levels, line of communication and responsibility. The other kind of organisations are the informal organisations, they don’t have any specified structure or divisions of responsibilities properly laid out (Ferrell et al, 2009, p.192) this organisation type can be observed in the formal organisations. The Geographic structure is the structure where single head office is in power to control operations of all departments, even the territorial and regional departments where they also have running of their production or the service. An example can be certain airline company, they would have a head office based in one country where as the departments will be in different places over the globe. These departments, regardless of the fact that which country they are established in will have same structure, like human resource, marketing, sales and finance. Thus, their workings will be identical, in this case of airline company; sale of flight tickets. Advantages of this structure are that each of the department has autonomy to make decisions that would meet local demand (Daft and Daft,  2010, p.113). For instance, a burger which is spicy maybe launched by fast food chain in Thailand and because their main courses usually are spicy it may be successful, in Italy on the other hand this spicy burger would not have chances of becoming too popular. Another advantage of using this structure is that the organization may get cost benefits due to low labor costs in for example Africa compared to those in Europe. There are also disadvantages associated with this approach. Original standard that was set for a certain product may not be identical among the regional departments. A fizzy drink for example may taste different when produced in one country than from the other, even when they use same ingredients. This could be

How Ford Motor Company Transformed From an e-business to an i-business Research Paper

How Ford Motor Company Transformed From an e-business to an i-business - Research Paper Example They provided individual PCs to all the employees to connect more closely with the consumers. In this way the company managed to regain their position with the help of e-business (Ford’s e-Business Strategy, 2000). Ford’s CEO Jacques Nasser has announced some e-business strategies to get closer to the customers. He has decided to build a customer services program powered by Information Technology to make the suitable car ordered by the customers instead of ending up with a car which could possibly not be sold in the market. He has also announced the launch of AutoXchange website for online procurement of car. Ford has planned to commence their database. Only their customer can log into that database using their password and there they can easily access their information previously saved. In this way their time can be saved (Ford Motor Company: E- Business and E- Commerce Strategy, n.d.). From E-Business to i-business: 1. Internet-worked Market: Internet can be easily us ed as a means of increasing business network. The companies can launch their website where they can campaign for their product, and make people aware of their new business scheme (Redgrave). Ford has already planned to launch their database and website for online purchasing for their customer.

Retail assessment Essay Example | Topics and Well Written Essays - 1000 words

Retail assessment - Essay Example This report compares the retail activities of both retailers compared to other well-known fashion brands and retailers. The business concept at H&M is straight-forward: â€Å"give the customer unbeatable value by offering fashion and quality at the best price† (hm.com 2010, p.1). This is accomplished by outsourcing all of their supply needs and reducing middlemen in the process of product procurement. The company also makes its purchases in higher volumes than other retailers, therefore receiving volume discounts that are passed onto the consumers in their pricing model. This is not common with other retailers in the UK, especially those that have built their brand based on diversity of offerings rather than volume inventories. Zara is a leader in areas of procurement and acts as a benchmark for many other fashion retailers. The company also offers low cost fashions, however their inventory replenishment strategy is significantly different from H&M as well as other well-known retailers such as Marks & Spencer. Zara works on a six week lead time under its fast fashion replenishment model, therefore it is able to sell virtually all of its merchandise at regular price without pricing reductions (Hardman, Harper & Notaney 2009). Other fashion retailers are only able to sell 50 percent of their merchandise at regular price due to diversity of inventory offerings and the speed of replenishment chosen to maintain exclusivity in fashion offerings. Zara is considered by its youth consumer markets to be a place where there is always a new and â€Å"fashionably exclusive† product offering as it maintains a lean inventory policy for this reason (Ferdows, Lewis & Machuca 2003, p.63). Larger retailers that have a more diverse collection of fashions or other home-related merchandise do not have this luxury of lean inventory and must regularly consider clearance merchandise to make room for newly arrived inventories. Zara also devotes a considerable amount of time into

Energy Drinks Introduction Essay Example for Free

Energy Drinks Introduction Essay Energy drinks refer to beverages that contain, besides calories, caffeine in combination with other presumed energy-enhancing ingredients such as taurine, herbal extracts, and B vitamins. They ? rst appeared in Europe and Asia in the 1960s in response to consumer demand for a dietary supplement that would result in increased energy (Reissig and others 2009). In 1962, a Japanese company, Taisho Pharmaceuticals, launched Lipovitan D, one of the very 1st energy drinks, which is still dominating the Japanese market. Lipovitan D contains B vitamins, taurine, and ginseng, which are all frequent constituents of mainstream energy drinks with the intended purpose of providing the consumer with sustained energy, and to reduce mental and physical fatigue (Taisho Pharmaceutical Co. Ltd. 2009). Energy drinks did not make their way into the U. S. market until 1997 when Red Bull was ? rst introduced, which originated and was initially launched 10 y earlier in Austria (Reissig and others 2009). Since the 1960s, the energy drink market has grown into a multibillion-dollar business which has been reported as being the fastest growing segment in the beverage industry since bottled water (Agriculture and AgriFood Canada 2008). Energy drinks have established a viable position in the beverage market as evidenced by their commonplace consumption in the morning, afternoon, and night, not only by the general consumer, but those of age 18 to 34 in particular (Lal 2007). Athletes initially were the primary consumers of energy drinks. However, as the energy drink market grew and expanded into various niche markets, athletes are no longer the primary target. Today, the majority of energy drinks are targeted at teenagers and young adults 18 to 34 y old due to this generation’s on-the-go lifestyle and receptiveness to advertisements for these types of products (Lal 2007). While the energy drinks and shots market may be a small component of the non-alcoholic beverage industry, it is perhaps the most dynamic market—growing 60% from 2008-2012 according to Packaged Facts estimates in the all-new research report Energy Drinks and Shots: U. S. Market Trends. In 2012, total U. S. sales for the energy drinks and shots market was worth more than $12. 5 billion. Intense competition surrounds the beverage industry as marketers seek to increase market penetration and consumption frequency through positive alignment as a healthy and/or functional beverage. Thirst quencher/sports drinks remain the most formidable competitor for energy drinks as this type of beverage attracts a large constituency of energy drink users. Energy drinks are subject to competition from other energy-boosting beverages such as coffee and tea beverages, as well as an increasing number of new product innovations that tap into the energy trend but are outside of the beverage industry. At present, energy drinks have the lowest consumption rates of any RTD beverage—a point which reflects the market’s relative infancy but also its growth potential. Experian Simmons analysis shows the growth trend of this market, with the incidence of energy drink usage among adults rising from nearly 13% in 2006 to 17% in 2012. In addition, there is a modest segment of heavy users: 5% of adults consume energy drinks 5-7 times per month and less than 2% drink energy drinks 10 or more times. Packaged Facts estimates that energy drinks account for some 78% market share, followed by 18% for energy shots, and energy drink mixes (roughly 4%) in 2012. A few select marketers dominate the energy drinks and shots market. This demonstrates the first mover advantage in each category. The result is a market that is highly dependent on a handful of key brands, namely Red Bull, Monster Energy, 5-Hour Energy, and Rockstar Energy.

The Cultural Dimensions Between The Us And Netherlands Commerce Essay

The Cultural Dimensions Between The Us And Netherlands Commerce Essay Culture is program of human mind which distinguishes two different human groups one from the other. Culture according to sense is a system of collectively held values geert hofstede Culture is a level of basic assumption and the belief that has been shared by members of an organisation, which operates unconsciously and is defined as taken for granted style of an organisation view of its self and environment -Edgar schein Culture is some thing which is differentiated between in groups, out-group of people. Now that the growth of the organisations are developing internationally there is much relation existing between the international companies to work together, these interactions occurs differently in different countries there develop the cultural difference which indeed effect the organisations. These cultural differences have been discussed and analysed by hofstede analysis in detail. Hofstede also defined culture as software of the mind which guides us with our daily interactions. Culture is a collective phenomenon of thinking, feeling, potential acting, which are acquired in early childhood .to change these acquired characteristics and establish and develop in new ways of thinking, feeling, acting is more difficult for the first time using the analogy in which computer are programmed the patterns of thinking, feeling, acting are referred to software of mind. Culture is a collective programme of mind, which has the ability to distinguish the members of one group of people from another. Hofstede did studies on IBM in 72 different countries and identify 5 different types of cultural dimensions HOFSTEDES CULTURAL DIFFERENCE BETWEEN UNITED STATES AND NETHERLANDS SOURCE: http://www.geert-hofstede.com/hofstede_dimensions.php?culture1=95culture2=62 A. Power distance Power distance is used to measure how the subordinates usually respond to their power and authority according to hofstede they are high power distance an countries and low power distance countries in high power distance countries The subordinates are scared of the bosses, the bosses tend to be very autocratic and demanding over the employees, in lower power distance countries the subordinates are more friendly with the bosses who can even challenge them at work, the bosses usually tend to use a consultative management style. United States Us has the lower power distance ranking (PDI) (40), when compared to worlds average of 55 according to hofstede cultural dimension in a country with low power distance is an indicative of a great quality between societal, government, organisation and families. this shows the cooperative interactions across all power label and these creates suitable cultural environment, this low power distance shows that there is friendly relation between bosses and employees which helps the companies to stay stable in many situations. Netherlands Netherlands have the power distance (PDI) (44) which indicates that there is good understanding between the higher officials and the employees yet they might be some differences in some situations. B.Individualism Individualism is a level of independence in a community or organisation; there are two types of individualisms, high individualism and low individualism, low individualism according to hofstede is described as having low interaction and dependence for another work with other persons, in high individualism there is more involvement with the organisation and work responsibilities rather than the immediate family, a high individualism is expected to be more respectful and dedicated towards the work in the organisation. United States US ranks high in the individualism, which would indicate that there are more Individualistic attitude less bonding between direct family members and others Usually the members in the individualistic society concentrate more on the work and themselves and very close members. Individualism is expected to look after themselves, on the collective side we find people who are strongly bonded and connected with in groups and extended families which has exchangeable loyalty collectivism has no political meaning it refers only to group and is extremely fundamental one. Netherlands Netherlands has high individual ranking which is almost similar to us this also have loose bonding towards the family and others in this place people are expected to be more individualistic with the work they do, they usually care take of themselves and close family members where as in the collective society people are bonded to relations and are expected to work with each other in the organisation C.Masculinity By hofstede analysis it is said that mens goals are different from womens goals and these can be differentiated as masculine and feminine. Wherere the feminine values most strongly with the relationship at work they tend to work with people who cooperate well with each other living in an area where they are comfortable with the families and tend to have a security that they can work in particular organisation as long as they want to. Where the masculine is high, people have attitude of respecting for high earnings, getting recognition, which they deserve while doing good job, to look for opportunity in higher levels jobs challenging their work. United States In hofstede dimension us ranks 62 in masculinity, When it is compared to the worlds average of 50 they shows that united state has large gender difference, male domination in the society, usually male s are considered as important because of their roles play in the society this generates the female population become more competitive with woman trying to shift into male roles. Netherlands: Netherlands has the lowest hofstede dimension in masculinity at 14 they shows that there is a very low level of discrimination between the genders female are treated equally with males in the society this low masculinity ranking in the society displaces an open society D.Uncertainty avoidance: Uncertainty shows the level of uncertainty among people and uncertain situations they are two types of uncertainties high uncertainty and low uncertainty where an uncertainty is strong the culture tends to develop unknown situation as threats and people will tend to avoid them in places where uncertainty is low people feel very less threatened by the situations by these people tend to be more opened and innovative. United States United states ranks 46 in hofstede dimension of uncertainty avoidance when compared to the worlds average of 64 low ranking of uncertainty avoidance in a society is known to have very few rules and regulations and they do not attempt to control the outcomes and results this type of society is always opened to new ideas thoughts and beliefs. Netherlands The uncertainty avoidance of Netherlands is 53 when compared to worlds average of 64 this shows that Netherlands have moderate score for the uncertainty avoidance which indicates that cultural tenancy to minimize this shows the reduction level of uncertainty within the population with rules, laws, policies to overcome most of the situations. E.Long-term orientation This is the last hofstede cultural dimension, which was established in 1990, this refers to long-term and short-term tradition and values. Long-term orientation has a respect for the status of relationships .in short-term orientation there is sense of security and stability keeping up reputation, to respect the tradition. United States Us ranked lowest in the long term orientation as 29 when it is compared to worlds average of 45 they shows that society has the cultural traditional according to rules and regulations Netherlands: When compared to united states Netherlands have the high long term directions as 44 when compared to worlds average it shows that country have great level of social obligations, stability, reputations tradition are well followed 3. Sony Corporation of America: Sony corporation of America based in city of new York(united states of America) is a subsidiary of Sony head quarter in Tokyo Sony is a leader in manufacture of vedio,audio and communication and information technology products for the consumer and professional markets Sonys television ,computer entertainment, online business., music and its motion pictures makes Sony one of the most wide spread entertainment companies in the world Sonys us businesses include Sony pictures entertainment,sony electronic,sony computer entertainment America and Sony music entertainment the company recorded an annual sales of approximately 78.9$billions for the year 2009 Sony employees 1,71,300 people worldwide. Sony American is one of the leading music, audio visual electronic and information technology in united states and worldwide it is also said to be code developer of the CD, DVD and SACD.to its credit it is the first developer manufacturer and marketers of the play station .it is also inventor of vast range of consumer audio ,video products Sony has always manage to dominate the competitive electronics market within the united states .the company has almost seen a constant growth ever since its start in 1960 throughout this time In the us it has introduce a varied no of products that has revolutionise the electronic industry the walkman personal stereo and the Sony Trinitron televisions have become industrial leaders there are even more products on the horizon such as VIAO,CLIO AND SONY LINE OF CAMERAS . 4. Managing innovation and creativity For developing and producing these products Sony employees 21000 person work force the Sony mainly encourages these employee work forces to innovate take risk and to exceed customer expectation they work done by talented individuals lead to nearly 14 billion dollars in sales in the recent years a poll conducted among leading 2000 companies, in America Sony was recognize as number 1 brand name beating out cocola,ford and Disney Sony mainly invests greatly in the community and relationships with both their employees and customers every day at Sony corporate ethics play major part the company has develop ethics and action programme which is designed to train all levels of workers of Sony how they remain trust worthy, honesty and fair. 4.1SONY COMPANY innovation practices Changing management structure to remain innovative. The shift from analogy to digital technology and growth of it have been continuous at the 50th anniversary of Sony it was embarked as the start of new digital age by recognising its management structure to improve its decisional company system in order to respond more fast to the market change and to generate a structure e that encourages development of new business the Sony has now reconstructed their corporate structure from a vertical system to horizontal system for first time 50 year history in order to speed up market responsiveness and decision making Sony puts itself into strong position in fulfilling its goals by internalising much of the technological advances by being prepared to change and adapt from itself, 4.2. Establishing new ventures for innovation In the year 1995 Sony has made in long-term technology agreement with Intel Corporation, which is largest manufacturer of microprocessors for computers in US. Sony strengths of any software and hard ware are now combined with Intels strengths of computer technology and semi conductors. Since these agreement Sony has introduce the revolutionary DVD player and DVD anticipating with innovation(digital dream kids)digital dream kids shows the Sony strong commitments in realising their dream to digital technologies the digital Dream kids are analyse as future customers, at all the levels of Sony the employees become dream kids to continue generating new products that will satisfy meet the expectations of future customers to connect the potential of digital technology, Sony will identify dreams of young and digitally educate to create unique fun products and applications the Sony uses dream kids format in union with market research to regularly keep in touch with customers future dreams pio neers of market in the process of constant technological innovation marketing plays a vital role the Sony has always standardized the view that a very good marketing always involves pioneering the market ,which comes down to market creation in the long run there will always be a failure by simply producing the goods that meets market current needs rather than having react to changes Sony has been able to become proactive force by driving markets forward innovation research and development 4.3Future innovation programmes Sony has set few continuous challenges to face in coming future 1. Sony has plan to further strengthen its leading position in the AV while developing it business 2. To secure a firm foot hold in the entertainment industry it will promote a deeper understanding among the company employees and management 3. To integrate an entertainment business and electronics in order to create totally new business opportunities 5. Sony innovative research and development as a leader in innovation Sony electronics is a company that majorly focuses imagination than manufacturing in the past manufacturing hardware has been major drive of the business it is now currently taking newer and different paths to the future the companies majorly focussing its research and development on integrating the broadband and finding the synergy between contend and hardware the main aim of the Sony creative centre is that the engineers are thinking of the ways to touch the heart of consumers foreseeing future trends is the Sony main method of developing new product this really means that Sony is majorly trying to getting tune with what the consumers want and majorly what the consumers are willing to accept another major issue Sony currently faces is timing that is reducing products ahead of markets ability to use them in a recent fortune article emphasizing on happening of Sony electronics and development future wonders has a TV display with thickness of not more than fe w sheets of paper, granting light valve -a high definition video projector that turns entire walls into film screens ,digital chopsticks appointer that allows a user to pick a particular folder and transfer it directly to another screen beside, The companies R and D has been described as the future toy factory buy few of the open minded employees and engineers Sony.com indicates that Sony s vision is not necessarily about refrigerators talking to toasters .its about bringing to market products that capture imagination of consumers and enhance their life in the process. 6. Philips company profile Royal Philip electronics situated at Netherlands is a diversified health and well being company mainly focus on improving peoples life through their timely innovations it is a world leader in health care lightening and life style .Philips combines technology and design into peoples solutions based on simple customer needs and the brand promises of sense and simplicity the Philips head quarters is situated in Netherlands and employees approximately1,21,000 employees more than 60 countries around the world the company had sales of 26 billion Euros in year 2008,it is market leader in cardiac care and home health care and acute care it also leading provider of energy saving lightening solutions and new lightening applications along with life style products with personal wellbeing .it also has the pleasure by being a strong leadership position in flat TV grooming ,male shaving ,portable entertainment and oral health care 7. Philips innovative campus (PIC) This is a division of Philips electronics India limited situated at Bangalore and owned 96 percent by royal Philips electronics Netherlands it was established with a vision to been an innovative hub creating next generation solutions and products of life style and health care the pic comprises of the industries finest professionals using platforms including real time system and state of art software engineering paradigms ,component based software engineering and multi threaded architecture to drive the creation tomorrows services and products the pic has adopted an open innovation strategy which leverages the partnering companies for joint innovative power and researches in order to bring more innovations in the market faster and effectively 7.1Philips innovations On the fortune list of global top corporations royal Phillips electronics is in the 10th position the company active in its 60 different business varying from domestic appliances to consumer electronics and semiconductors to security systems they are said to be world leaders in digital technologies for wireless communications ,video compressions ,televisions and displays optical products and underlined semiconductor technologies that makes these break through possible the company plays leading role in shaping the worlds digital electronics by bringing meaning full technological innovations to people most of those innovations find their routes in the labs of Philip research the company is majorly dedicate to innovations that are environmentally sound in the terms of its products how it takes them .in the company, the traditionally design discipline are included with skills from the human science and technology from multi disciplinary research based approach that makes possible to gene rate new solution that convince and satisfy peoples needs and aspirations they call these new enriched design as high design 7.2Innovation at Philips Philips mammon trak system is develop for breast screening and diagnosis and biopsy application combination with mri system (magner resonance tomography) this application improves patient comfort, work flow and simplify the processor for biopsy this creation was done keeping in mind the cost and time wasted during the diagnosis of different breast cancers in women this innovation was result of increase of rate of breast cancer patients every year and demand for mammography procedures 8. Managing innovation and creativity At Philips design they think that they can full fill only people needs and desires when they truly understand what they are for these reason they always begin with getting information as much as possible about their targeted audiences, their values ,their priorities ,likes and dislikes with theses approach their international multi disciplinary and diverse design team is able to bring out truly applicable solutions that predict peoples needs enhance their customers business success by exceeding their expectations this is why the Philips is said to be one of the largest organisation in the world with around seven studios in north America ,Europe, Asia the Philip design wins a minimum of 50 plus design awards each year it comprises of a creative force of 400 professionals representing over 35 nationalities with a varied client list of 60 fortune 500 companies 9. Recommendations As both the firms are very large multinational firms, these firms have used quite very varied types of creative tools. The tools used by both the firms vary in final outcome but the tools used are generally the same. When taking the Sony America company, this company majorly emphasises on using the creative tools for the outcome of products related to the entertainment sector like televisions, music systems and other accessories. So, they majorly need to use the creative tools for making the life of human more comfort and more luxurious and easy. But when coming to the Philips they majorly work on healthcare like operating and scanning machines and other health products. They do even produce electronics like televisions music systems and other gadgets but not as the way Sony does. This company uses creative tools that give an outcome relating to bringing down the medical costs for a person. They are also majorly involved in semiconductor industry. Both the firms have very large group of people working in their own R and D centres using much of the creative tools. Even thought there are a numerous Sony products coming up every day, the company is lacking behind the Philips in the electronics sector. This can be said because Philips wins 50+ awards every year for its innovation achievements. Even though sonnys working on innovations there has been not much results compared to Philips. So we recommend that sent to use all the varied types of creative tools and techniques to even get better results. Philips has even mentioned that whatever new innovation it does it also does in way that is environmental friendly. 10. Conclusion Managing of innovation and creativity is a very important aspect for any organization in any country. For any firm to compete and sustain in this fast moving world it should majorly emphasise on using the creativity and innovation tools to get innovative and creative ideas. Hofstede methodology of cultures will help in better understanding the effects of culture on innovation. It will help in studying the cross cultural dimensions and help in growth of the firms eventually. For both multi- national firms it has been important that they manage the innovation and creativity centres well. As these are very large firms both Sony and Philips are managing their innovation centres well by spending lots of amounts on these centres. Both the companies are using varied tools for generating the innovative ideas. So by this we can conclude that both the companies are using and managing the innovations and creativity very well to gain more profits and lead the market.