Misalignment

For years, my father's retirement plan was to allow my brother to take over his business and in return my brother was to pay my father a small amount of retirement for the rest of his life. 

For a while I remember always hearing my brother talk about his grand plans for expanding our family business into something that would support many families. Finally, about a year ago my brother just gave up, he quit on my dad and moved to Texas. I thought about it a lot, wondering why would my brother drop everything that he had worked for, for so long. For a long time I believed it was simply because of other problems that he had caused himself by not managing his finances the way that he probably should have, but over the last couple of weeks as we have studied the 7-S Model and misalignment I have realized that there was much more to what was going on. 

My father built his business to be family owned. In fact just the other day we were talking about it and he told me that wanted his business to stay small and that by time my brother left he was almost grateful because he was so tired of my brother pushing him to expand when all he wanted was a small business, set up to support his family.

So I believe that the main reason my brother left was because the current CEO, my dad, and the future CEO, my brother, had such different understandings or the businesses style, culture, and strategy. This misalignment eventually caused so much frustration between the two that my brother decided to leave rather than always deal with the fighting my father to move the business in the direction that he believed was best. 

My Father's Strategy

When i was six years old, my father decided to make a leap and start his own business. It was a simple idea and for the first fifteen or so years he was basically the only company in Utah and Salt Lake County the focussed strictly on concrete removal.
At first his strategy was to both tear-out and replace concrete, but he soon changed his focus to tear-out in an attempt to gain the loyalty of the other concrete finishers that you can find everywhere; it worked and for almost 17 years he never had enough time to do all of the work that everyone was sending him.
At first, looking at it from the Porter's Five Forces:
Rivalry- there was none to speak of.
Supplier Power- no real power, they were happy to sale the machines for below MSRP.
Customer Power- none to speak of, who wants to remove a driveway with a sledge hammer? Or they could simply live with the inconvenience of a crummy driveway.
Substitutions - hardly any. the only to even worth mentioning was concrete lifters, but they were almost as much as a replacing.
Barrier to Entry- This is the only real risk he had. The only barrier was the $60,000 to get started.

Overtime the market changed, other contractors started to see haw quickly my father could earn his couple thousand and started to enter the market.
Recently, the rivalry changed.
Rivalry- is high, there are a lot of small companies that remove concrete for residential customers and most every large company has a removal division now days.
My father and I discussed the problem and sought a way to differentiate Ben-Crete from all of the other Removal companies. The solution was to integrate two separate industries: the removal industry and the trash dumpster industry.
By expanding to buy a heavy duty dumpster truck we were able to increase the amount of removal we could do to nearly 250%.
We recognized that most of our work day was wasted running the load of removed concrete to the dump, and waiting for the dump truck to be loaded. By expanding we were able to pull onto a job, drop the first bin and equipment, and run for another bin. Meanwhile the other worker would load the first bin and prepare either for the next bin or the next job.
This expansion also opened up a new revenue pool of trash, that many contractors loved because our bins were shorter, but could hold just as much as any other trash company, not to mention they never worried about the weight because the truck was legal for nearly twice as much as the other companies.
Today our investment of has paid off. the truck paid for itself in one year and now with the slow economy the trash has become nearly our main business each week.


There was

An Apple Strategy

So, I read the Harvard review article from yesterday, "Apple's Greatness, and its Shame." As I read my mind kept returning to the fact that this is a prime example of the weakness of the suppliers power and Porter's five forces.
I thought, there are two ways to look at this situation. First, was to take the view of the author, and say that Apple has the power to dictate to companies what they do and how they do it. Somehow inferring that because of Apple's size, they should take full responsibility for the actions of their suppliers half way around the world. Was the author making a plea for the Chinese labor force, the Chinese people? Or was he looking to make Apple raise it labor costs from $10 an iPhone to $30 an iPhone. At which point taking shipping and taxes into account would it be more feasible for Apple to return its labor force mainly to the US. Or would it simply open up a competitive advantage for other hardware producers, not held to so high a standard to get an edge into the market. In which case, this humanitarian plea for the Chinese worker could possibly hurt the very workers it is trying to help.
Or secondly, I believe that Apple is like most every other business in the world. They look fo what can produce the most profits. So I believe that the responsibility should not be put on Apple, and it should not be put on the consumer either. The responsibility should be left where it rightfully is "IN THE HANDS OF THE SUPPLIERS THEMSELVES!" Why? Why do people, Americans particularly, believe that they can push responsibility to those that they believe can afford the weight of the responsibility. We all deserve to, and should have the right to claim accountability for our actions. The suppliers should be held responsible, the workers should be held responsible and no one else. The author was looking at the Chinese working condition from his own viewpoint. Obviously, if the worker's lifestyle wasn't increasing at all they would revolt, which eventually through the natural course of things, they will. And they will be stronger because of it. I believe that the American people are weak because we feel entitled, because everything has been given to us from the hardships of our forebears. It would go completely against all business strategy to demand that suppliers increase their labor cost to charge us more.
I believe that it is not Apple's responsible to force their suppliers into action. They are responsible to find a strategy to make money for themselves, that is business. Apple strives produce high end, innovative hardware with the highest posible margins. Without such margins, how could Apple afford to spend million's every year in R&D.

Increase Profits

Earlier this week I read an article on the Bloomberg website explaining how the perfume company who creates and markets scents after different celebrities, "Parlux," was in the process of being bought out by one of the companies that they sell to, something like "Perfumania."
There are several reasons why I chose to talk about this article. First I saw Perfumania's move as a way to enter a new profit pool, but then I thought that maybe they were creating a entry barrier to competitors by controlling some of the branded perfumes that many companies like to carry simply because of the celebrity name that is on the label of the perfume. I guess only time will tell as to what strategy they will ultimately use as far as those to go. They could either continue to sell their newly acquired scents to their competitors or they could stop selling them altogether to them. If it where me I would definitely go with the latter seeing as  there are many scent knock-offs and I would rather take part in some of the profit and build my company name at then same time while letting someone else spend their dollars to do it.
Another thing I thought of was discussed in class yesterday. There are many companies who are looking to create a bigger gap between what a consumer is willing to pay and what it costs to produce the product. This is mostly what the strategy part of the article referenced. It was brought up that by acquiring Parlux, Perfumania would be able to reduce much of their cost seeing as something like 80% of the perfumes they market are created and sold to them by Parlux. After reading it I have thought several times about Good to Great and his comments about how mergers seldom create a great company.
Also after I read the article, it was entitled "Paris Hilton Scent Gets 218% in Likely Parlux Takeover: Real M&A." I found myself thinking of different way to get some extra cash so that I could by some of the stock. I thought to myself that if I only had $1000 that I was willing to give I might be able to sell the stock in a couple months and get $218,000 in return. Then it hit me, do companies pay the media to write article such as this one. I mean with a title like that who wouldn't go out and want to buy some of Parfumania's stock. And with the increasing price of their stock, it was mentioned in the article that it wouldn't take long for Parfumania to reach a value where they could get the funding to buy Parlux. Was the entire article part of a strategy to increase public awareness and get investors to send their dollars toward Parfumania?

About Me

As you read through this blog you come to find out that I am simply a man struggling to learn what to do and what not to do in my world of business.

I come from a self-employed family and have always seen myself as an entrepreneur.  At twenty-three I broke away from the family business and got involved in several different business ventures of my own. I experienced several successes and failures. Ultimately my biggest success turned into my biggest failure when my "honorable" partner changed, taking half a million from my family. I was job hunting, but had no degree to validate my experience.

This sent me on a search not only to get a degree, mostly as a security blanket, but also to find out what I didn't know; leaving me vulnerable to the mal-intentions of other people.

My goal is to gain enough knowledge to make myself valuable to possible employers and my future businesses.