Surviving a Global Financial Crisis
The tale of how a seventeenth-century word of mouth tulip craze led to the naming of New York illustrates the power of what is typically called word of mouth - product-talk between people - in both driving market demand and decimating it. Three and a half centuries after tulipomania, word of mouth remains a powerful influence on what people say, do and buy. Management consultants McKinsey & Co. estimate that two-thirds of the US economy is driven by word of mouth,2 and recent research has scientifically proven what businesses have known for some time word of mouth drives business growth - companies that stimulate high levels of positive word of mouth in their markets grow fast, whilst those that don't stagnate.3
Background NMS conducted online research on the perceptions of and responses to Royal Ahold's accounting challenges as soon as the news broke. The research revealed negative buzz focused on Royal Ahold's financial stability, plus concern that the accounting discrepancies reflected larger corporate problems. Analysis of these online conversations generated two primary responses (1) to assure all stakeholders that the accounting issues were an isolated incident and (2) to underscore that the mishap did not and would not impact Royal Ahold's long-term viability and valuation. A PR strategy was developed by NMS in keeping with this analysis, and strategic messages were successfully targeted to industry insiders and Royal Ahold's investors and consumers.
In the late 1970s and early 80s Savin Corp. used a very effective comparative advertising campaign to overtake Xerox and become the top brand of office copiers in America. With the help of small, inexpensive copiers made by Ricoh Corporation of Japan but sold in the United States under the Savin brand, the company caught Xerox off guard by running advertising comparing its products directly against the market leader. However, a decision to manufacture the copiers in-house at a new factory in Binghamton, New York, caused a severe financial crisis that ultimately led to Savin's filing for bankruptcy protection in 1992. A year after emerging from bankruptcy proceedings in 1994, Savin agreed to be acquired by Ricoh. Since being acquired, Savin is getting back to what it did best marketing copiers made by Ricoh under its own name primarily through its own network of dealers that sell directly to companies. And creative advertising has been an important part of its strategy for gaining...
As seen in Chapter 9, the first company in a market can usually demand a higher price, as its risk premium, and therefore earn a higher profit margin. On the other hand, companies that trail behind competitors and enter a market where prices have started to drop often end up in financial disaster.
Nations Asia 63, 178,196, 197, 244, 256 BMG case study 289-90 communication styles 63 export processing zones 245 financial crisis 2,18, 20, 21, 23, 28, 41-2 franchising 279 Internet usage 247, 248 sweatshop labour 245, 246 Tesco 7, 8 (ASEAN) 17, 29-31, 73 Attitudes 100,117, 118, 176 Austrade 317-19 Australia 28, 29, 52,177, 225 Asian financial crisis 20, 42 franchising 262, 268-72 management style 67 SMEs 108, 112,113,129 support for exporters 317-19 Austria 32, 33, 49, 66, 235 Avon Products 145 Azerbaijan 163
That reminds me that Microsoft learned the no rewrite lesson the hard way. They tried to rewrite Word for Windows from scratch in a doomed project called Pyramid, which was shut down, thrown away, and swept under the rug. Fortunately for Microsoft, they did this with parallel teams and had never stopped working on the old code base, so they had something to ship, making it merely a financial disaster, not a strategic one. SMS OK, Lotus
EMU see European Monetary Union Environmental issues 38, 58, 201, 206 Equatorial Guinea 35 Estonia 32 Ethics 37, 58, 246 Ethnocentrism 39-40 EU see European Union Euro currency 32-3, 235 Europe 2, 26-7, 28,160,181 case studies 291, 294-6, 310-15 culture 49-51, 65 economic growth 19, 20 franchising 273 gray markets 161-2 Internet usage 247 management styles 66-7 market entry 91 'New Atlantic Economy' 42 pan-European brands 159 SMEs 108, 111 European Free Trade Area (EFTA) 29, 33 European Monetary Union (EMU) 20, 32-3 European Union (EU) 9, 17, 32-3, 73, 235 Africa trade agreement 23 anti-dumping duties 168 Asian financial crisis 42 gray markets 162 SMEs 110 trade 26, 29
This isn't surprising when 91 of people would be likely to use a brand recommended by someone who has used it themselves.2 Indeed, word of mouth - brand-talk between clients, customers, or consumers - has long been considered the Holy Grail of marketers it is valued twice as much by people as an information source compared to advertising3, and 92 of people cite it as their preferred source of information.4 What's more, word of mouth is increasing in importance people value it today 50 more than they did in the 1970s.5 Management consultants McKinsey estimate that over two-thirds of the US economy is influenced by word of mouth.6
Management style 66, 67 managerial skills 122 newspaper distribution 53 payment problems 223 religious beliefs 58 sales promotion 177 SMEs 110,129 spatial distribution 52-3 support for exporters 316 United States (US) 9, 56,125,160,164 Africa finance program 35 Asian financial crisis 20, 42 consumer profile 178 credit agencies 225 cultural perceptions 55 dumping 168 e-commerce 247 economic growth 19, 56 exporting 78 factoring 230
Korean consumer electronics giant Samsung has used many of the challenger strategies to take on Japanese minulaclurers and begin outselling them across a wide range of products, many oHier Asian tOT-panics. Samsung used to stress volume and matte domination rather than profitability. Vet during lhe Asian financial crisis ol the laie 1990s, when other Korean ehaaWselapsed beneath a mountain of debt, Samsung took a dif-lesenl lack. II culcosls and, placed new emphasis or manufacturing flexibility, '.'.'hich allows its consumer elec-ironios goods to go rrom project phase to slcie shelves within sin months. It also began a serious focus on innovation, using technological leapfrogging to produce state-ol-the-art mobile telephone handsels Tat are big sel lers not on ly across Asia but also in E urope and the United 5tatcs.i7
Financial End Game
How to profit from the global crisis and make big bucks big time! The current global financial crisis has its roots embedded in the collapse of the subprime markets in the United States. As at October 2007 there was an estimated loss on the subprime market of approximately 250 billion. If you want to come out on top, you have come to the right place.