Team Palm Bay

http://www.businessweek.com/magazine/content/02_38/b3800001.htm

This article talks about long term CEO’s that have built up withstanding and very successful companies and you have probably never even heard of their name. The article was written back in 2002 but makes very good points like mentioning the book Good to Great and the CEO of Costco. The article starts off by telling the store of Aramark Worldwide Corp and when they walked away from a acquisition deal that would have expanded the company internationally. The CEO took a closer look at the companies they were interested in and the books weren’t right. Even though the company had spent alot of time on the negotiations the CEO decided to walk out of the deal. The article also mentions the CEO/co-founder of Costco and how he is still with the company even after 19 years.

Overall I believe good CEO’s care not about their personal success but how successful they can make a company.  Most of the excellent CEO’s we have never heard of but they are the ones that build sustaining companies with solid foundations.

Katie Garner

Excerpt: How to Be a Good Leader – Newsweek Business – MSNBC.com

This article is an excerpt of Jack Welch’s book “How To Be A Good Leader.”  Jack discusses his own experiences with over forty years of experience.  He talks about a leader who is willing for his people to learn and to learn from his people.  As the book by Jim Collins, “Good To Great” it sounds like Jack Welch is using the mirror and the window technique.  Jack gives credit where credit is due, and takes responsibility of failures. 

One of the main traits I thought was very interesting is that Jack Welch believes that we need to celebrate the successes more, that we miss these important opportunities to lift those deserving, that a positive energy in the work place should be created.  While everyone is busy working, fun can still be a part of the business. Also, when the tough decisions need to be made that the leader should step up and make the decision.

Most importantly, leaders need to not only know the vision of the company, but they should live the vision.  The vision needs to reach everyone in the company.  Everyone needs to see that the vision is what everyone is trying to obtain from management on down. F. Pokorny

The following article, http://findarticles.com/p/articles/mi_m4070/is_n108/ai_17776267 covers the top 12 traits of today’s CEO.  These traits are:

1. Balance of strategic vision and operating experience
2. Leadership and team-building skills
3. A performance-driven personality
4. Good judgment anchored by prudent risk taking
5. A financial acumen
6. International/global experience
7. External focus
8. Credibility
9. A good communicator
10. Strong values
11. An ability to deal with change
12. Technological knowledge

This article makes a strong case for these points through real world examples and is evidence for the point that great CEOs are not “rock stars.” M. Markham

“Amazon is able to leverage the internet to significantly beat its competitors’ prices.”

Amazon uses the internet as the sole method for selling goods to its consumers. Amazon’s competitors, such as Barnes and Noble, and Borders use brick and mortar as their main distribution channel. This method of using many store fronts is extremely costly. Thus, Amazon’s competitors are at a disadvantage because their costs are significantly higher than Amazon’s costs, allowing Amazon to sell the same goods at a lower price. Amazon’s business model provides a competitive advantage because since there are no store fronts, the main distribution warehouse can be anywhere. In order to keep overhead low Amazon locates its central warehouse in an area where rent is cheap. When a company has such an advantage, it is able to keep costs low and transfer the savings to its customers in the form of lower prices. Although Amazon sells many products well below market price, they are able to generate profits from the high volume of goods sold. Amazon’s competitive pricing and good service has developed into a reputation that is hard for new online booksellers to compete with. The research on this site demonstrates how due to the internet and its recent boom, Amazon is able to maintain lower costs than its competitors, provide its customers with a more effective and cost-efficient way to shop for goods, and as a result maintain a competitive advantage over its competitors.

The increased book sales depicted in the above chart have been the driving force behind amazon’s business model.

Business Model

Amazon uses the internet as the sole method for selling goods to its consumers. Amazon’s competitors, such as Barnes and Noble, and Borders use brick and mortar as their main distribution channel. This method of using many store fronts is extremely costly. Stores such as Borders and Barnes and Noble have very high overheads because they pay premium rents to be in central locations, and must pay salaries to sales representatives. Amazon does not share this same high overhead, which gives Amazon a competitive advantage. This advantage is a result of the fact that Amazon’s business model allows for a central distribution center in an area where the rent is low. As a result, they are able to sell their products for a much cheaper price. As people become more accustomed to using the internet, they view ordering books online as a time-saving and cost-saving experience. Borders and Barnes and Noble are also at an extreme competitive disadvantage because their store fronts are not capable of holding as many books as Amazon’s warehouses. Amazon’s large central warehouse does not share this same space constraint, and thus Amazon holds a larger selection of books.
A recent trend for brick and mortar stores such as Borders and Barnes and Noble has been to make their books available online in an attempt to compete with Amazon. Amazon’s competitive advantage, combined with the good reputation they have established over the years has made it extremely difficult for such stores to compete with Amazon online. Jeff Bezos, the founder of Amazon, had great confidence in the World Wide Web even before the dot.com boom. He used the internet as the core of Amazon’s business model which proved superior to brick and mortar stores. Today, this website remains superior in comparison to the sites of its competitors. Amazon customers are able to search inside the book before buying it, read customer ratings on products of interest, and purchase products at prices far below those of other online booksellers.

 Amazon.com uses a cost advantage as the source of thier sustanable competitive advantage over it’s competitors.  They use a simple business model where they only sell thier products online.  This allows them to locate thier warehouses in the cheapest area rather than the best location.  This saves them so much money, they are able to pass the savings onto us, the consumer.  Along with their business model as part of their competitive advantage, amazon has their stellar reputation that helps give them a sustainable competitive advantage.  I absolutley love amazon.com as well as my mom.  They have the cheapest textbooks around because of their competitive advantage.  For a college student who is paying their way, amazon.com has won my service.  They are at least 50 % less than traditional and school bookstores.  I only wish I had found them sooner.

Amy

http://www.businessweek.com/the_thread/techbeat/archives/2006/03/amazons_newest.html?chan=search

This article talks about Amazon and its new product they are offering, storage. Amazon is offering unlimited storage aimed at web developers or groups like UC Berkeley team that runs NASA’s Startdust @ home project. Amazon is taking it to the next level and it is not just a retail site for books anymore.

I believe moves like this one is what gives Amazon its competitive advantage. Amazon was the first online retail book store and it has branched out into many different areas. I believe Amazon has  a low-cost strategy with the online retail section of the company and also in new areas, like the unlimited data storage. The article states that Amazon would offer a rate, like 15 cents per gigabyte of storage per month and that is cheaper then a lot of hosting sites. I think Amazon will continue to have a competitive advantage because they push the envelope to come up with new/cheaper ways of doing things.

Katie Garner

Corporate culture provides Wal-Mart competitive advantage

Wal-Mart has been in business since 1962.  The company now has 3200 stores nation wide and 1118 stores in other countries.  They never lost sight that their founder Sam Walton always looked to find lower prices from his vendors.  When negotiating prices with the vendors Walton would never allow them to say that the price is as low as they can go.  Walton believed in finding better ways to reduce costs.  He had the vendors looking at areas where to become more efficient, therefore reducing prices.  Wal-Mart has partnerships with many of their vendors.  They believe in keeping their vendor companies healthy, will yield more product, which will lower prices that can be passed along to the consumer.

Wal-Mart also looks in ways of driving costs out of the product.  They have distribution warehouses that run at capacity.  This is a key way of having a low-cost strategy that will sustain in the long run of their business.  If product could not be distributed in a one-day turn around from the distribution center, Wal-Mart would not build a store that could not be reached in a day.  Sam Walton believed that “cost-cutting can co-exist with a moral center, which operates on the principle that Wal-Mart can be the cheapest place to shop and the best place to work at the same time.” This is something that has been passed down to the corporate culture of Wal-Mart and is what is at the core of the Wal-Mart culture. F. Pokorny

The following article, http://www.fool.com/investing/high-growth/2007/10/03/will-you-recognize-the-next-apple.aspx, is on recognizing a company that is creating a sustainable competitive advantage.  The article uses Apple as an example of a company that has done this. The author credits a great product, namely the iPod, as producing great returns for the company.  He suggests that, “one way to consider if a company has a sustainable competitive advantage is to consider the trend of its return on invested capital (ROIC) over several years. 

The problem with this approach is if you are tracking the trends in ROIC and notice an increase, you are too late as far as anticipating sustainable competitive advantage.  The company has already established its advantage.  Looking at ROIC is only one factor to consider when evaluating a companies path to competitive advantage.  Another factor to consider regarding whether or not a company will achieve an advantage is the strength of the company’s competitive strategy.  To create sustainable competitive advantage a company must employ a solid strategy to be the low-cost provider, best-cost provider, niche provider or have a broad differentiation strategy.  A company that is clearly on one of these paths is your best bet for anticipating who will achieve a sustainable competitive advantage. M Markham

http://www.ethics.org/erc-publications/staff-articles.asp?aid=799 – 22k –

There will always be corporations out in our society like Enron.  Yet, there will always be corporations like TEOCO (The Employee Owned Company).  All employees are owners in the company.  Will Enron cared about the bottom line, some companies fall back to the leadership of the company and the culture.  If your CEO and executive officers don’t live by the code of ethics, how can you expect your employees to do the same?

TEOCO’s success has been consecutive for the past ten years.  They take pride in their company.  They have core values that everyone lives by.  Individual success and growth are tied into the success and growth of the company. One of the core values is “Acting with courage”, which allows the employees to make good ethical choices within and outside the company.  There is a value system that everyone has bought into that makes TEOCO a successful company. 

It goes to show you that there are companies that still live by the golden rule, who are ethically sound in their daily transactions.  Where being ethical is part of the corporate culture.  It is not all just talk and having words on paper. F. Pokorny

The following article, http://www.mccombs.utexas.edu/news/pressreleases/jennings_wrap.asp covers Marianne Jennings opinion on the post Enron ethical climate. Jennings is a professor of business ethics at Arizona State University and is considered one of the country’s leading experts on the subject.  Jennings says that, overall, ethical awareness has not changed much at since Enron.  Many companies have perfected the art of seeming ethical, with long lists of company ethical commandments, but if you scratch just slightly below the surface, these ethical fronts carry no weight.

I am not surprised at Jennings opinion.  I do not think that the Enron event will change anything.  The business environment is a cutthroat place.  Everyone is trying to win and there will always be cheaters.  I think the problem with Enron is that the cheaters got to the top and their “ethics” spread like a disease to everyone around them.  I do appreciate Jennings point that is noted at the end of the article that, “The only sustainable competitive advantage a company has is its reputation.”  I think that is true and shows how dangerous it is to gamble with unethical practices.  M Markham