Archive for the business Category

Target publishes its Bangladesh Factory details

Posted in advertising, business, ethics, fashion, Marketing, packaging, sustainability with tags , on August 14, 2014 by marketingheart

Many moons have passed since April 2013 when the Rana Plaza building containing three clothing factories collapsed in Bangladesh taking with it the lives of over 1100 workers, and injuring countless more – locals say the building housed around 6,000 workers. Following the collapse, activists were able to enter the ruins and discovered labels from brands including Primark and Mango, indicating that they were sourcing from the factories. Rana Plaza also produced for a host of well known brand names including Benetton, JC Penney, C&A and Wal-Mart. This collapse followed the Tazreen factory fire in the same district that killed 112 workers five months ago, and the Spectrum Factory collapse of 2005 which caused the death of at least 64 workers. Pro-labor advocates blamed the disasters not just on a lack of regulations, but on a pattern of  violent suppression of workers’ organizing efforts. Although the US imposed trade sanctions on Bangladesh to pressure them to clean up their act, progress has been disappointing. Similarly the fight to get retailers to compensate victims is perhaps predictably mired with only a third of the $40 million total needed to compensate survivors and families of the dead for lost income and medical expenses  having been contributed 12 months after the event according to the Clean Clothes Campaign.

Half the brands associated with the building’s collapse have yet to put any money at all towards compensation — at least, not publicly.

Notwithstanding that, the disaster effectively pressured retailers to be more discriminating about their supply chain, and happily the latest to publicise the results of the clean-up is Target Australia which has just published its factory list. Kudos. Oxfam Australia’s corporate accountability and fair trade adviser, Daisy Gardener, said Kmart and Woolworths had aslo joined, “in being open and accountable about exactly where its clothes are made”.

Changing consumer attitudes towards fast fashion is another thing altogether.


Consumer kids; sponges and spikes

Posted in business, Marketing, advertising, ethics with tags , , , on May 2, 2013 by marketingheart

The past 30 years or so have seen an explosion of consumerism in the West with all that entails, good and bad. As it spills into new markets, the world has changed because of it,  physically, politically and sociologically.

Whilst economic activity has lifted millions out of poverty, there have been great costs. I personally think it’s valid to characterise the era in some respects as one of profits vs people. There have been victories on both sides but overall, profits have won. Look at wealth distribution as evidence of this – in the West, it’s never been greater (see video at end of this post).

A symptomatic front line in the profits vs people battle is online user-generated review sites, once touted to be the consumer’s best friend, now shown to have been infiltrated by corporate interests. The potential for the internet to truly democratise consumption by ensuring price transparency and giving consumers free voice has not – unsurprisingly – been embraced by business.

When I look at brands gathering hundreds of thousands of Facebook Friends, I wonder about gen XY and Z’s  mindlessly enthusiastic, utterly uncritical and apparently bottomless appetite for sponging up marketing. Tons of research shows how ‘marketing savvy’ kids are, but the amazing thing is that doesn’t stop them for one second. The idealism of Rock n Roll has been replaced by the rampant greed of hip-hop. “Get Rich or Die Tryin” sang rapper 50 Cent. And he nearly did – die tryin’ that is (he was shot nine times in 2000).

But not everybody is so complicit. Whatever you might say about its focus and effectiveness, the Occupy movement gave temporary voice to deep unrest. And if you look around, you will see lots of kids thinking a little more deeply about marketing, spiking and popping dishonesty and manipulation when they detect it. And sharing. Here’s an example I’d like to celebrate.

My personal conviction is that marketers carry enormous responsibilities, maybe more than politicians. People need to keep both kinds of bastards honest  for similar reasons.  Both have voting constituents (in the case of businesses it’s consumers exercising buying decisions) who need to be wary of being spoonfed the corporate line, and there needs to be as much informed debate around business as politics. Unfortunately that is simply not the case, so it’s good to see kids like this getting wise to the ways of the world.

Perhaps the new cry should be “Unhitch … or Die Buyin'”.

Dirty Deeds in aisle three? The funny business of supermarkets missionaries.

Posted in business, food, Marketing, advertising, ethics with tags , , , on March 25, 2013 by marketingheart

Back in 2007, Coles released a  booklet imposing what it called ethical business practices on its suppliers.

Although it drew some smirks since many vendors felt they had been unethically treated by Coles for years, the initiative seemed to have merit. In his introduction, CEO John Fletcher called it “a set of values and behaviours that provide a framework for how we do business.”


Illustration by B&T Magazine

Last weekend  Fairfax’s Business Day revealed how Coles used a labyrinth of corporate structures including a $10 company in the British Virgin Islands to buy a shopping centre in the upmarket Sydney suburb of Neutral Bay where arch rival Woolies has been turning over $75m pa as the tenant of some 18 years.

The story has now been widely reported and I’m struck that although some commentators have noted the almost absurd levels being reached in the supermarket war, few have discussed the ethical dimension of Coles’ actions.

The structure that  Coles used to pay $40 million for the property –  30% above market rates and probably a record price – was hardly business as usual. The Sydney Morning Herald explained that the company which made the purchase – Sino Ace Investment Pty Ltd – had been registered just days before by one Bernard Chiu* which it described as a wealthy Sydney lawyer, and is owned by a company of the same name set up in the British Virgin Islands tax haven – preventing Woolworths from knowing the identity of its new landlord.

The true identity of the owner as Coles was only uncovered by The Herald from internal board papers – don’t ask how it got them but from this and other Fairfax reports it’s clear Fairfax has a well-placed deep throat in Coles!

Similarly, the terms of the sale were equally mysterious. The Herald found records showing that Sino Ace Investment bought the property from Vanbridge Pty Ltd which had purchased it in 1992 for $12.7m. Vanbridge is owned by Phun Lim and six members of the Mok family who list their company address in Sydney’s Pitt Street but home addresses in Hong Kong. The relationship between Sino Ace Investment and Vanbridge is not known.

Who is that masked man?

If you thought there must be some winner here, perhaps its Bernard Chiu, the man who registered Sino Ace Investment. Four months after the Neutral Bay deal with Vanbridge, he listed  the ludicrously palatial 7 bedroom home shown above for $13 million.  Trading up perhaps?

I’d like to reveal more about this ‘prominent lawyer’, but unfortunately I can find almost nothing about him. Could he be behind Bernard Chiu Legal & Business Solutions, the trading name of  Bernard Hang Man Chiu … a sole trader entity with no website or other web presence whatsoever? Is he the Bernard Chiu listed on LinkedIn with absolutely no other information. Another approach: a Financial Review property feature says Chiu bought his house ‘through his Berneva Consultancy company in 2005 for $9 million’. Berneva Consultancy was registered as a company in 2005 (the year the house was purchased), only registered for GST in 2009 and has no web presence at all – not even yielding anything in  a Google search.

And that’s it. No legal history, no public addresses, no awards, no big business deals, no splashy donations no business activity apart from buying and selling a multi-million dollar property with its Teppanyaki bar and kitchen and its ‘porte-cochere’.  Who is the masked man behind this $40m property deal?

Extravagant corporate squabble or dishonest and unethical practice?

This is not the first time a war has erupted over leases. Woolworths evicted Coles from a centre in the Blue Mountains town of Katoomba in 2012 after buying the site in 2000. So perhaps this could be explained as tit for tat, a petty squabble between massive wallets, and the covert aspect simply  business strategy being kept secret from competitors in the normal way. Perhaps.

Whilst presumably legal, Cole’s structure was clearly designed to hide the true nature of the deal. In 2011 Michael D’Ascenzo Commissioner of Taxation wrote “Proper governance should ensure that large public companies do not use tax havens for concealment purposes… We are in fact seeing dealings by large business that may involve related companies in tax havens and we will be reviewing such arrangements.”

For me, not just does this deal transgress reasonable and acceptable business practices, there is something else besides: under the terms of Neutral Bay lease, Woolies has to show its landlord its sales data.

To supermarkets, data is everything. Recently I’ve been working with a major national retailer that actually runs its marketing at a profit. How? By selling customer sales data to its vendors. Data is gold.

Using a concealed and devious means to extract critical intelligence from your direct competitor seems only one step away from corporate espionage. This is not seeking a competitive advantage through fair means – this is going to any extent to win by fair means or foul. This is the corporation as psychopath, working that gray space between what society accepts and what it clearly outlaws, the space that a book tellingly entitled Hardball: Five Killer Strategies for Trouncing the Opposition, labelled  ‘so rich in possibilities.’

This tussle may be the tip of an iceberg. Woolworths recently floated a $1.5 billion property portfolio on the Australian Securities Exchange and some industry observers believe the Coles/Woolies fight will shift to property. The supermarket giants have been put on notice about their aggressive property strategies, with the ACCC looking into whether two recent proposed acquisitions by Woolworths in the ACT and NSW could ”substantially lessen competition” in the market.

Should we care about one chest-beating corporate slogging it out against another, dirty tricks or no? In recent years both Coles and Woolworths have moved beyond food into liquor hardware, pubs, pokies, petrol, clothes, loyalty cards and more.  How they behave has the potential to affect not just countless other businesses, but almost every Australian consumer in one way or another.

The Mission Position

With a warm avuncular purr, Coles’ website says its mission is “To give the people of Australia a shop they trust”. Parent company Wesfarmers punishes punctuation to promise it “adheres to four core values: integrity; openness; accountability; and boldness.” Woolworths simply simpers “We strive to be open, honest, fair and transparent in everything we do.”

For the record, Enron’s mission statement included “We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don’t belong here.” Maybe Pulitzer Prize-winning author Dave Barry had it right when he said “A mission statement is a dense slab of words that a large organization produces when it needs to establish that its workers are not just sitting around downloading Internet porn”

Adopting the Mission Position on websites is easy. Shafting suppliers and the competition is at odds with such statements. Let the supermarket Missionaries be judged on their actions.

Coca Cola brand Mt Franklin cops a mountain of criticism for opposing recycling initiaitive. Social media overdrive response.

Posted in business, Marketing, advertising, ethics, sustainability with tags , , , , , on February 18, 2013 by marketingheart

Often things look a bit, erm, off kilter in the remote wilds of the Northen Territory, but this time it’s the city slickers not making any sense. OK a quick summary of where we’re at with this:  The Northern Territory recently established a 10 cent recycle refund on bottles and cans, an approach which has been helpful in other States in reducing pollution. Sounds like a bonza Coca Cola though its bottled water brand Mt Franklin, says not.

In what might prove to be an ill considered response, Coca Cola through Mount Franklin is opting to sue the Northern Territory government for establishing this “cash for cans” scheme. NT Chief Minister, Terry Mills, said the Government would fight the legal challenge in the interests of consumers, the recycling industry and the Territory as a whole.

“Today Coca-Cola has followed through with a threat it has made since the Container Deposit Scheme was first introduced in the Northern Territory – I have instructed our lawyers to prepare immediately to fight this challenge in Court,” Mr Mills said. “ Territory families now utilise it daily as a means of reward-based recycling…More than 35.5 million containers have been processed through the scheme since 3 January 2012”.

Let’s let the venerable Crikey lay it all out in their usually tongue deep in cheek style:

You get the idea…unsurprisingly Coca Cola’s action has not exactly endeared it to those of us who actually prefer their planet a little less strewn with plastic waste. And there a quite a lot who feel that way…over 11,000 so far according to a social media campaign being run through the platform. Witness the response on the Facebook site of Coca Cola’s bottled water brand Mt Franklin – it’s quite something…when I logged on about three hours ago there were hundreds of messages criticizing the company for its stance…so many that I simply could scroll through them all. I looked for an official response posting, or indeed any posting from the corporation, but either there was none, or it was completely overwhelmed.

Boy those angry consumers can get busy. But so can the corporates. When I logged onto the Facebook site just a few hour later, all the old messages had gone!  Those poor poor people at Mt Franklin’s social media agency must be wearing themselves ragged trying to stay ahead of the necessary deletions….they’d been busy adding happy positive posts about anything but recycling, however the new posts were again being swamped by new protest posts. Watching this fascinating power struggle unfold in real time made me wonder how the drones in the social media agency will sleep tonight knowing they have been actively quelling the validly concerned voices of their clients customers…much in the spirit of any totalitarian response to free speech.

What irony given that Mt Franklin created an admirably thinner plastic for its bottles (the lightest 600mL water bottle produced in Australia) which, in keeping with it’s ‘pure, green(washed)’ brand values is heavily featured in its site and on youtube. Exactly what’s so threatening about the NT’s recycling program that Coca Cola would do so much damage to one of its brands remains somewhat obscure.

Innovation: why it’s so damn hard and what to do about it.

Posted in business with tags , on January 14, 2013 by marketingheart

What’s obvious is this: it’s a rapidly changing world and businesses have to change accordingly. And yet change does not come naturally to most businesses.

‘In many respects, innovation is seen as the opposite of efficiency, because it is not routine and has unpredictable outcomes,’ argues Ajaz Ahmed in “Velocity: The Seven New Laws for a World Gone Digital”. ‘This can create an environment in which there is no investment into future revenue streams because of the short-term impact on margins. As a result, the established business becomes resistant to innovation because it feels threatened by it, creating forces that actively discourage new thinking.’

I have seen this myself far too many times.

In his latest book, Clayton M Christensen, professor of business administration at Harvard Business School, says that every time an executive in an established company needs to make an investment decision, there are two choices on the menu. The first is to use whatever already exists – it’s cheap and, besides, the team already has its hands full doing its current job . The second is to bear the higher cost and effort of making something completely new.

It’s understandable that the low-cost, low-effort and apparently low-risk options almost always win, with innovation being suffocated as a result. However, as Christensen observes, in an environment of change and competition, companies taking the easy route often end up paying dearly for it – because they lose their competitiveness. Compare and contrast this approach with that of Google, where engineers are allowed to spend one-fifth of their time on their own projects. Perhaps the real risk is in not taking the risk that innovation entails.

Now the economic downturn has become the new reality, it’s time for corporations to stop using it as a catch-all excuse for lack of investment.  The recession isn’t going anywhere fast in 2013 and those brands that continue to hope that their business will ‘bounce back’ on the basis of an increasingly elusive economic recovery stand little chance of survival.

Innovation today may require a structural loosening-up. In “Adapt: Why Success Always Starts with Failure”, economist Tim Harford writes that many corporations persist with a level of centralisation created for an era dominated by logistics and scale, which becomes an anchor in an era dominated by innovation and creativity. This is particularly true in marketing, where global marketing arrangements deny local markets the ability to engage with local suppliers to drive fast and adaptive innovation.

Businesses must accept risk as a necessary part of success and cannot let a challenging business environment reduce their stomach for failure. To paraphrase Shakespeare, it is better to have tried to innovate and failed that not to have innovated at all.

Bad Apple? Computer giant shows its not so lovely side.

Posted in business, Marketing, advertising, ethics, Uncategorized with tags , , on June 26, 2012 by marketingheart

The other day, lovely, shiny beloved Apple got into big trouble by misleading Australian consumers on the capabilities of its new iPad tablet. The Federal Court slapped Apple on the hand to the tune of  $2.25 million – or a little over a day’s profit.

Unfortunately when Apple implied the newest version of the iPad could connect with fourth generation cellular networks in Australia, they, ah, did a boo boo. It can’t.

Innocent mistake? Hmmm, well back in March Apple had been instructed to refund customers for the blunder and at that time, it agreed to display a statement saying the iPad is not compatible with current 4G networks. But somehow this subsequently slipped Apples mind, prompting Justice Bromberg in his ruling to note that “the most concerning aspect of Apple’s contravention… is the deliberate nature of its conduct”. Justice Bromberg pretty much accused Apple of deliberately ignoring the consumer watchdog, commenting that “global uniformity was given a greater priority than the need to ensure compliance”Image

The ACCC didn’t miss the opportunity to stick the knife in, chairman Rod Sims sounding just a little shrill “The $2.25 million penalty reflects the seriousness of a company the size of Apple refusing to change its advertising when it has been put on notice that it is likely to be misleading consumers.”

One is left wondering whether somebody at Apple made the decision to ‘stuff ’em, let’s see what we can get away with’. Lovely, shiny Apple with such friendly store staff.

What would Steve say?

Don’t be like Groucho…. listen, innovate, create, survive.

Posted in business with tags on January 15, 2012 by marketingheart

Seems to me we here in Australia have been given a ‘get out of jail’  opportunity NOT to get dragged into the global recessions. But we have to grasp the opportunity and make something of it. My observation in a lifetime of working with corporations i that too often a climate of uncertainty provides the excuse NOT to innovate.

Well, uncertainty is the new norm, and only the brave, the creative, the innovative will prosper. This is not the time to think like Groucho: