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Author: winn

Open Source Code – Reducing Technology Costs

Online retailer Flipkart is looking to cut down on technology refinement costs by opening its technology platforms to software coders.  Making its source code open source allows firms or individuals to freely create new applications for the entire ecommerce industry.  The company made its product “Phantom” open source three months ago and just recently made “HostDB” open source.  Contributors to open source code do not receive payment their work, which greatly cuts down on costs.  Companies do not necessarily benefit from contributors’ work, but often small improvements can be implemented into their programs.  Allowing the public to create this new code reduces risk and cost to minimal values. 

Oligopoly and Mergers: American Airlines and US Airways Group

American Airlines and US Airways group have recently negotiated terms with the US Justice Department which allow the two entities to merge.  In order to follow through with the merger, American Airlines and US Airways the airlines have to forego a combined 104 flight slots at Ronald Reagan National Airport and 34 flight slots at LaGuardia Airport.  The airlines were further required to give up gate rights in O’Hare International, Los Angeles International, Boston Logan International, Dallas Love Field, and Miami International. 

Apple Enters Streaming Radio Market

According to a recent Bloomberg article, Pandora has not suffered from Apple’s entry into the internet radio market.  In fact, the current market leader’s market share has grown: hours of listening increased by 9 hours since September.  Further, 92 percent of consumers who have used iTunes Radio still use Pandora.  More evidence of Pandora’s strength is consumers tend to spend 75 percent less time on iTunes Radio than Pandora.  Pandora’s recent growth is consistent with the company’s long-term trends, as the number of listeners is up 18 percent from one year ago.   

Harley-Davidson and Globalization

Harley-Davidson is hoping to break into untapped markets in a big way by offering a small and lightweight motorcycle.  Countries like India, Italy, Portugal, and Spain are primary countries targeted with the bike’s release.  The bike will sell for either $6,700 or $7,500 depending on engine capacity, which makes “The Street” the company’s least expensive motorcycle.  The Street is the Harley-Davidson’s first new bike platform in 13 years, and while it is going to be sold in the US, it is geared toward an international audience.  The company is projecting a 15 percent increase in international sales from 6 years ago, resulting from a proliferation of dealerships outside of the US. 

Kellogg and American Cereal Producers Look to Expand Profits

A recent Bloomberg article describes Kellogg’s plan to reduce costs by letting go of 7 percent of its labor force.  The inspiration for these cost-cutting measures is largely derived from decreased demand that stems from higher unemployment and decreasing income.  Another issue facing Kellogg is increased competition; the company is losing ground to competitors who offer healthier alternatives like yogurt and oatmeal bars.  To compete with rival firms, the company is developing cereals that offer a greater nutritious balance, as opposed to tastes.  Competitor General Mills is following a similar strategy and is focusing more on organic goods in its yogurt in order to maintain success.

Mattel and Hasbro Cope with Changing Market Demand

The toy industry is quickly learning how to best respond to a changing market.  The main issue cited is that women are starting families later in life and having fewer children.  Further, the medium for children’s toys is changing: physical toys are being replaced with electronic versions.  The changing market occurred faster than Hasbro and Mattel could respond, resulting in Hasbro’s year-on-year operating profit down 11% and Mattel’s net income down 24%.  The Economist  points out that despite the two companies’ losses, “global sales growth for all traditional toys and games was 5% in 2012.”  This further underscores the market shift toward a technological medium.  Smartphones and tablets have directly reduced the toy industry’s market share.

How Will the Fishing Industry Deal with Future Increasing Demand?

A recent article in the Economist depicts the current market structure of the fishing industry.  As the costs of production – i.e. high oil prices – increase, the sale prices increase at a parallel rate in order to maintain profit.  Another facet of the current industry’s condition is increasing demand.

Increasing demand has been perpetuated unevenly between two types of fish production: “capture” which consists of catching wild fish and “aquaculture” which is fish farming. 

Britain’s Retail Banking Oligopoly

A recent article in the Economist describes how a newly revived bank – TSB – is hoping to dampen the detrimental oligopolistic effects the British banking industry experiences.  Analysis of the banking industry in 2000 pointed to market inefficiency as a result of prices and profits that were above perfect competition levels.  Increased concentration levels further underscore industry inefficiency: in 2008 the four largest firms controlled 65% of the market, which quickly increased to 75%.