How to make your company more effective? Is structure can be a solution?

Exploration means that an organization invests resources to develop the technology and skills that the organization has never engaged in. Exploitation refers to the situation that organization uses sophisticated technology and skills to improve the competitive ability and increase the efficiency in the organization. What exploration does is prepare for the future. In contrast, what exploitation does is increasing efficiency in dealing with everything now. Exploration and exploitation are both indispensable. The advantage of using structure in an organization is to resolve the conflicting points between exploration and exploitation and create a balance between these two activities. As a result, a good structure can make a company achieve the goal of balanced and sustainable development. How can we create a good structure? There are three important principles to consider: dividing groups by functional distinction; strengthening the interaction and coordination between groups; and a flat organization.

    First, dividing groups by their functional distinction can balance the exploration and exploitation functions in all kinds of departments. Division of labor is an important factor for organizational structure because through labor division we can accelerate the efficiency of transactions and maximize departmental functions. Since each department is responsible for different professional fields, larger companies will typically need to have an additional number of departments.

Evolutionary biologists have long maintained that the isolation of subpopulations can play a valuable adaptive role for a species. The ant is a typical example. There is usually only one egg-laying queen which takes responsibility for the long term survival of all ants in the ant colony. Other ants in the colony are divided into several groups in accordance with their functional contribution, including transport, feeding young ants, building nests, and so on. Ants create a sustainable life by division of labor. This is what we called “exploitation”.

We can apply the species concept to the structure of a company. Every department can use the features of exploration and exploitation to increase their competitiveness because they have different characteristics. For example, an insurance company is usually composed of many departments: product innovation and development; human resources; customer service; auditing; investment management; etc. The product innovation and development department will pay particular attention to the development of new products, using exploration. In contrast, there are many departments which focus on exploitation. For example, the role of audit department in the company is to encourage all departments in the company to work more efficiently and supervise all departments to ensure they follow company policy. This department uses exploitation in its activities.

After division into a variety of departments, strengthening the interaction and coordination between all groups becomes an urgent matter. In addition, resources in a company are fixed in the short term. Because every department is independent and equal, the company needs to create horizontal communication between all of these departments. If the audit department exceeds its annual budget and excessively uses the company resources, the other departments can only use the diminished remaining resources. But the audit department needs to immediately communicate this to the other departments. Though independent, the audit department is horizontally equal to, and not superior to the others. With this horizontal communication bridge, a budget problem can quickly be sent company wide.

The relationship between exploration and exploitation is the same; independent, but equal. Because the company resources which focus on exploration are equal to the resources which focus on exploitation, the relationship between exploration and exploitation don’t conflict with each other. And, since every department is independent, with independent goals, each department will try its best to use their departmental resources for the most gain. This sets up an internal competitiveness, and a win-win situation. Each department is independent and flexible to change, but also tied equally to the other departments.

A well-known story says that a mouse is more flexible than an elephant because an elephant has a larger body than a mouse. It is said that sometimes when an elephant injured its foot, the elephant won’t recognize the injury until the wound is thoroughly infected. That is why it is important that each department communicate well with the other departments.

 The next step is to create a flat organization. Since departments in a large enterprise can be many and complicated, the managers in the upper positions don’t always know about the situation in the lower positions. If messages are conveyed slowly, distorted during transmission or even intentionally falsified to hide errors, the lead manager can make a wrong decision. The purpose of flat organization is to reduce the distance from the bottom to the top positions. In this way, managers can not only fully understand the different characteristics of the various departments but also properly allocate the resources to every department and enable the company to achieve balanced and sustainable development.

Green products---protect our environment and increase company profits

After I finish my blue ocean simulation, I deeply believe that being a boss is not a easy job. Boss has to consider how to make the strategy? How to cut costs? How to price the products? How to promote products? Every company wants to find white space and catch customers’ eyes and heart. However, not everyone like Steve Jobs can always invent new products and new trend. Moreover, the blue ocean strategy is providing good-quality products and service with low price. How can we achieve The goal? Old products with new functions or design or new knowledge still will create new market. Green products are good example. Green products can protect our environment and decrease the costs of company. We can edit the life cycle of products and analyze it. Let’s take marker pens for example.

Why did we choose markers? From the kindergartens to graduate schools, most of schools in United states use markers and white boards to illustrate lectures. As a result, there are more than 500 million marker pens manufactured in the world. Unfortunately, even though many people already recognized the importance of protecting our environment nowadays, we still don't have any specific institutions to collect our used marker pens and recycle them. Moreover, the companies selling marker pens in united states such as Crayola, Pilot, Sharpie don't have recycled plans and don't care about how their customers deal with the used marker pens. 98 percent of the marker pens will be thrown as a waste and bury into our landfill. However, 45 percent of a marker pens are made of plastic. If companies only care about reducing the costs and utilize undegradable materials to produce marker pens, those marker pens will stay in our land for thousands of years.

Before we analyze the LCA of marker pens ,we have to know how to make a marker and what are the components of marker pens.

Step 1 : First, heating the plastic resin then inject the molten resin into molding machines so marker barrels, caps and end plugs will be formed. Second, print the logo and other markings on the barrels before assembling the marker pens.

Step 2: The Hoppers will hold the empty barrels on the assembly line. One machine will build the whole process of assembling a entire marker.

Step 3: The reservoirs store the ink in the markers.

Step 4: Put the back plug into the barrels then seal with one end of the barrels.

Step 5: Pour Ink into the reservoir and fill it.

Step 6: Plug a nib, or marker tip into the other end of the barrels.

Step 7: The cap can protect the nib and prevent the ink from drying up. Then put different colors marker pens into a carton. Put 12 or 24 cartons into a box then ship them to the retailers by trucks, freighters or cargo aircrafts.

The components of markers includes

1.      Body including barrels, caps and end plugs accounts for 45 percent of a marker pen. The material made of body is plastic resin.

2.      Marker reservoir is made of polyester fiber.

3.      Marker felt tip is a fabric made from wool

4.      Markers require ink, and the pigments and synthetic substances used to make it. Toluol and xylol used to be common synthetics used as solvents in dye.

Increase the life of marker pens

As the ink in the marker pens does not contain toxic substances, we recommend that marker pen manufacturer could produce refillable marker pens and sell ink for refill at the same time. Producing refillable marker pens could reduce the use of plastics, wool where the most global warming potential came from in this LCA.

Recycle the used marker pens

Although all of the companies manufacturing marker pens don't have any plans to recycle the used markers, we still can find some group who care about our environment and they have some recycle plans. For example, Terracycle.com. People can send their reused marker pens to the company and gave 2 cents back. The company will collect all used marker pens, reuse the plastic resin and produce other plastic goods. Another non-profit company such as The Pen Guy also gathers the used marker pens too.

How can the company use the design to manufacture their products more sustainable?

Green industry and sustainability are two of most important directions in next economy. Companies can analyze life cycle of their products and try to reuse the waste to cut the costs. (I deeply believe that business men will care about our environment if what they did will benefit their business first….haa). As a result, the materials is very important. Companies can decide to use the materials with cheapest price or the materials more friendly to our environment. Besides the characteristic of materials, the design of products is also important. Excellent design not only can reduce the amount of materials using on the products but also can induce the opportunities that the materials can be reused by taking advantage of the feature of structure in the products.

For example, how does the biggest sport manufacturer, Nike, design their products and also take responsibility of their social duty? Nike sells about 225 million pairs of shoes a year. Since 2007, they have reduced nearly 15% emissions produced by our factories. They made a decision to focus on managing actual reductions. The commitments and investments toward:
-Eliminating toxics across the supply chain
-Driving sustainability through innovation
-Collaborating to accelerate industry change

The thoughts about sustainability start with design, considering new materials and approaches that may help design out unnecessary waste, chemicals, and energy.

“Nike Considered” is one of programs. To be qualified as CONSIDERED, the products must maintain 4 points:
-Must be made from recyclable materials. (i.e., 100% recyclable plastics or veg-tanned leathers.)
--Zero Toxins. Zero chemical adhesives. (no glue.)
---Using mechanics and engineering to put the shoe together instead of chemical solutions.
----Closed Loop Technology. (the shoe must be able to come back 100% as another shoe or something else. Nothing goes to waste.)

The design innovation can be seen in products like the "Considered" boot in 2005. The feature of the considered boot are:

-Lacing for woven vamp: Woven material serves multiple functions, reducing many materials need. The boot's single lace was woven between the leather and stitching to secure the upper portion to the sole, eliminating adhesives and making it an easier product to recycle.

-Leather upper: ”Nested” patterning of upper materials reduces materials wasted in cutting process and simpler design makes for fewer production steps, including less stitching.

-Interlocking midsole : Mechanical locking design of the bottom middle unit requires less labor and energy to assemble and using molding of Phylon midsole produces less waste.

-Modular outsole: Outsole made from recycled rubber waste from our contrast factories and modular outsole uses mechanical introducing designs with no need for adhesives, making it easier to separate and recycle.

It took about 2 years to see the project become a reality. The Nike Considered Boot also earned a Gold Industrial Design Excellence and Best in Show award from the IDSA (Industrial Designers Society of America).However, the sales in the market was not great. This product cost 190 dollars and only sold several months. Why?

It is obvious that customers always concern about the price, the practicability, the appearance, then finally our environment. So company has to think about how to use the recycled materials to manufacture the products and also focus on the price and the appearance now. The Air Jordan XXIII is another example. It launched in January 2008 and based on the “ Nike Considered Design”.

Our education helps us to care about others. Now company starts to care about our environment, how about the customers?

(The source of pics: Nike website)

Food War

Last time we discussed about organic food and Whole Food Market, this topic makes me think about “FOOD”. Several days ago, I read a news told that the population in the world is rapidly increasing. According to the current estimates (by U.S. Census Bureau) , the world population reached 6 billion in 1999 and the new projections indicate that the 7 billion marker will be reached in 2012 and 9 billion in 2044. World population will increase almost 50 percent in 50 years. Can our planet handle it?

When world population continues to go up, how about our arable land? About 11 percent of the Earth's surface is used to grow crops, and about 27 percent is used to keep livestock and other food sources. Land that is used to grow crops is known as arable land, which is different from agricultural land. About 38 percent of the land in the world is agricultural land, which includes arable land, land used for growing fruit and land used for grazing livestock. There is only 12 million square miles (7.68 billion acres) of arable land on the planet. However, arable land is being lost at the alarming rate of over 38,610 square miles (24.7 million acres) per year. Twenty-four territories in the world have no cultivated land now, including Monaco, Macau, Greenland, Gibraltar and Christmas Island. More and more countries, especially developing countries, prefer industry to agriculture. As a result, is our food enough to supply all the human in the world in 10 years?

Food will because the most serious problem in this century. The country which can produce much amount of agricultural products will become more stronger country. New problems always can create new solutions and make new industry. As a result, I believe the next economy will come back to “Agriculture”.
There are two ways to increase the amount of agricultural produces. One is increase the amount of products per unit. We can improve our agriculture skills or transfer crop genes to achieve the goals. Organic farming skill also will increase the amount of agricultural produces. Other way is increase the arable land. Since the land in the world will not easy become bigger, we can take advantage of garden and all kinds of flowerpots to increase the arable land. I believe city farmer will become a emerging work. People can use their roof garden and courtyard to plant the vegetable and fruit. Planting not only can provide the opportunity to exercise but also help people reduce pressure.

Do organic foods really have more nutrition?

People nowadays all want to live more healthy to keep our body strong, at lease far away from hospital. I think this is why Whole Food can be so popular and make a profit in United State. However, do organic foods equal to the food with more nutrition? The answer is no.

Organic food is the food which made from organic materials. Organic vegetables and fruit have to produced according to certain production standards, meaning they are grown without the use of conventional pesticides, artificial fertilizers, human waste, or sewage sludge, and that they were processed without ionizing radiation or food additives. As a result, if people know how to wash and deal with conventional food, in the point of view on food nutrition, we don't have to spend more on organic food. So, is this viewpoint will affect the sales in Whole Food?

I hope it will not because organic food indeed helps us to protect our environment. Organic farms do not consume or release synthetic pesticides into the environment. Some of pesticides have the potential to harm soil, water and local terrestrial and aquatic wildlife. They will damage our surrounding permanently. In addition, organic farms are better than conventional farms at sustaining diverse ecosystems, i.e., populations of plants and insects, as well as animals. When calculated either per unit area or per unit of yield, organic farms use less energy and produce less waste such as waste such as packaging materials for chemicals.

According to the survey, the customers in organic stores or supermarkets have more income and higher education than the customers in conventional stores. I hope they will concern about our planet as well as their bodies so they will continue to shop in the organic stores. After all, the price of organic food is two times more expensive than the price of conventional food. But if they don’t think so or our economy continues to go down, the managers in Whole Food have to think different business model to attract their customers.

P.S.I believe Whole Food Market already knows this viewpoint so their core values are not focus on ”Organic food makes you more healthy”.
Their core values are as blow:
• Selling the Highest Quality Natural and Organic Products Available
• Satisfying and Delighting Our Customers
• Supporting Team Member Happiness and Excellence
• Creating Wealth Through Profits & Growth
• Caring about our Communities & Our Environment
• Creating ongoing win-win partnerships with our suppliers
• Promoting the health of our stakeholders through healthy eating education.
(source: Whole Food website)

Do business in Taiwan

Do business in Taiwan
Because we don’t have enough time to mention about Taiwanese culture In the class, I want to add some Taiwanese different culture now and if you are interested in doing business in Taiwan or visiting Taiwan, you have to know about those.

Politics
Like many countries, there are two leading parties in Taiwan, KMT and DPP. In 1949, KMT drew off from China to Taiwan so the relationship between KMT and China is more closed. In contrast, DPP are composed by the people who have lived originally in Taiwan. As a result, people support DPP believe Taiwan is a independent country and if China wants to do business with Taiwan but wants Taiwan to scarify the right being a country, DPP would rather just do business with other countries. Another interesting phenomenon is most of people living in the north part of Taiwan support KMT and most of people living in the south part of Taiwan support DPP. People in Taiwan like to talk about politics even through TV stations have different political tendency. However, it is not a wise action to talk politics with other people especially if you want to do business with Taiwanese people.

Swarm effect
Taiwan is a small inland so Taiwanese people all have international perspective. Most of people had been to other countries. This is totally different from United State and China. As a result, we like a sponge which can gather all kind of different culture or information in other countries especially United State, Japan. People in Taiwan like novel things and food. However, we are also easy to lose the patience in new things or food. For example, several years ago, egg tart is so popular in Taiwan. You can see there are always a long line waiting for egg tart everyday because egg tart need a long time to bake. The egg tart stores appeared everywhere in the street. But after one year, people don’t like it anymore. Of course, those stores all closed.

If you want to do business in Taiwan, you have to know if your business is popular, many competitors will show off and share the markets in the short time. Moreover, people in Taiwan always lose the patience to a industry. How to sustain your business is the most important thing.

Culture VS Gourmet

Bubble tea..
Bubble tea, one of Taiwanese gourmet, is so popular in Taiwan. No matter during summer or winter, you can see many people in the street walking and holding a cup of bubble tea. Some people even drink a couple of cups a day. However, there is a store selling bubble tea in Chicago. The owner coming from Taiwan brought this unique snake with Taiwanese culture as same tasty as in Taiwan. This store has totally different fate. It located in a flourish area where there are all kind of restaurants from different countries such as Japan, India, Thailand…and so on. Most of the residents living here are young and can accept novel things. However, this store just opened one year and it will be closed. WHY? When my class talking to do business in Taiwan and my team treated every classmate a cup of bubble, many classmates who don’t come from Asian drink this in the first time and all classmates like it. As a result, most young people like the bubble tea but why the store selling bubble tea will be closed?

Food market s different from other market
If you want to export your local food to other country, the most important thing is if people in that country can accept unique flavor or not especially Eastern food culture is totally different from Western food culture. For example, people in U.S. like sweet food and cold beverages even it is snowing out. Moreover, food market is competitive. Local restaurant has their dominant position and there are also many competitors coming from the counties near your country. Do your store have any advantage such as low price which can attract people can try it? Company cannot use the same business model selling food in other countries.

The Market of Traditional Taiwanese Food
Taiwan open the door and welcome Chinese visitors in this month. People coming from China can travel independently to Taiwan and don’t have to go with a group.
Most of them like Taiwanese snake and traditional Taiwanese food so they will buy couples of pineapple cake when they go back to China. As a result, this humble golden cube creates 3.5 million income every year. Since pineapple cake is popular to Chinese people, why the businessman don’t want to open stores in China?

Customer Service VS Outsource

Customer service department is a very important department in every company because the people whom customers contact with the company in the first time are always customer service specialists. They provide any information about the company and products. They have to deal with any complaints and requests from customers. They also present the image and culture of a company. However, such important department is no longer part of a company in many companies. Why? Because most of companies in developed countries want to save the human costs, they outsource their customer service department to local companies or some companies in developing countries which specially dedicate to customer service business, especially in tele-customer service. Company don’t have to recruit employees and spend much money and time to train them. Professional customer service companies have more experience to deal with all kinds of customers with lower costs.

source:http://www.i4cp.com/productivity-blog/2010/06/09/should-companies-outsource-hr-to-be-more-strategic-or-to-save-money

Many U.S. companies will outsource customer service department to the company in India. The reasons are as follow. First, English is the national language. Most of Indian can speak fluent English. Moreover, Indian people like American movies, music and TV shows. So they also know some American culture. How do Americans talk to each other, what kind of words Americans will use. Second, human costs in India is so low. Compared to the living standard in India, the living standard in United state is about 7-8 time. For example, people spend 5-6 dollars for a happy meal in McDonald in US but it costs only less than one dollar in India. Average salary in customer service industry in India is 6000 dollar a year but that in United State is 60000 dollars. Company spend the same amount of money which can hire ten people in India but only can hire one person in United State. Of course, company will chose India. Finally, employees in customer service are easy to be trained. Customer service doesn’t like R&D need very long time to train a person having professional knowledge. Company can teach employees what the products are and how to talk to their customers. Normally, there is a SOP in customer service. Employees only follow the rule to deal with all customers’ need.

The same situation happened in China. Many companies whose customers speaking Chinese outsource their customer service department to China. Additional, most of their target markets are in Asia, the same time zone. Companies can care less about different time will bring some trouble. Since outsourcing in emerging countries are so popular now, If you want to create a customer service company in emerging countries, what should you pay attention to? First, pronunciation. Even though speaking the same language, it is easy to distinguish the native and the foreign. Most of customers will feel weird and don’t trust the customer service specialist coming from other countries, especially coming from the countries with lower living standard. Fortunately, customers can’t see specialists’ faces and only hear their voice. As a result, only customer specialists can be trained like the local person and know about local language words, most customers will not discover their specialists coming from other countries. Furthermore, understand people’s working habit and culture in emerging countries. Management is a professional knowledge. It is difficult to manage a team especially the team members coming from different country. There is a old saying that the key to manage a person is manage his heart. In order to understand what your subordinates are thinking, you have to know about his/her culture and personality.

Next time, when you call the customer service and the people answering you are coming from other countries, you don’t have to feel uncomfortable. This is popular and with the globalization and the development of internet, there is no boundary between every country.

What is BricK??

If you want to expand your company, you have to know what is Brick?

    BRIC is a grouping acronym that refers to the countries of Brazil, Russia, India and China, which are all deemed to be at a similar stage of newly advanced economic development.The acronym was coined by Jim O'Neill in a 2001 paper entitled "Building Better Global Economic BRICs.

    Goldman Sachs has argued that, since the four BRIC countries are developing rapidly, by 2050 their combined economies could eclipse the combined economies of the current richest countries of the world. These four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population and hold a combined GDP (PPP) of 18.486 trillion dollars.

    These four countries are among the biggest and fastest growing emerging markets. China and India, respectively, will become the dominant global suppliers of manufactured goods and services, while Brazil and Russia will become similarly dominant as suppliers of raw materials.

    According to a new report from Goldman Sachs, China might surpass the US in equity market capitalization terms by 2030 and become the single largest equity market in the world. By 2020, US GDP might be only slightly larger than China's GDP. Together, the four BRICs may account for 41% of the world's market capitalization by 2030, the report said. Due to contraction of Japan's GDP in Q4 2010 by 1.1 percent from the previous quarter, so China's GDP surpassed Japan's GDP by $5.88 trillion and $5.47 trillion respectively and make China as Number 2 in Economy. Based on Forbes report released on March 2011, BRICs countries for the first time has surpassed Europe in count of billionaires by 301 billionaires or one billionaire ahead over Europe. It was the significant increase by 108 more billionaires than the previous years.

So do you have friends coming from Brazil, Russia, India or China??????

Lesson one

---Business starts from social network...so making friends is very important..
---Create an international company and expand your industry domain internationally....makimg friends all over the world is more important...
---It is very difficult to understand the diversity of culture in every countries in the world...but if you have different friends coming from different countries, basically you can understand their language, their culture and their habits...or you can find a partner who also want to operate a business in their country and you can cooperate with each other...
So....make friends before you begin your business.....