In Class...

My notes may be too long since it was an 80 min-business class.

In today’s business lesson (October 4), we started by discussing whether “profit” could be a business’ purpose. To make it more clear, Mr.Sen compared the food with profit and made a metaphor; he said that we don’t live to eat. We eat to live. Eating is not our purpose, however, we must eat to survive and reach our goals. Just like eating, businesses need to make profit in order to achieve their goals. They must make profit to keep their work going and to survive in the business world. After this metaphor, it was clear to me that “profit” can never be a business’ goal, it is only an essential element for the business to survive, and required as a mean to the purpose.

Moreover, we began analyzing the terms “long run” & “short run”. Mr.Sen said that businesses often have to make a distinction between what is happening in the short time and in the long time. For instance, by educating their workers and spending time on them, a good company knows that even though the way they acted decreased the profit in the short run, it will provide growth in providing service in the long run. In other words, companies should be prepared to sacrifice the loss of profit in the short run, since their efforts will provide them good opportunities and better values in the long run. I used to think that a company should never risk losing money, but now I understand that even though it may seem wrong and reduce the profit in the short run, it will eventually pay off and be worth taking that risk in the long run.

Furthermore, we began discussing how could a business be successful. The answer was to fit the opportunity with something the business wants to offer. It has to find an opportunity that fits not necessarily to their strengths and qualities, but to the strengths and qualities that they had access to. Again, to make the discussion more clear, Mr.Sen explained it metaphorically. He said it was exactly like “fitting a plug into a socket”. Then he held a Turkish plug in his hand and said, “Have you ever tried fitting this plug in an American socket?” The answer was obviously no. This example revealed that if a business tried taking the skills to a wrong market, it would fail. What I learnt from the discussion was that businesses should try to find the right market that fit their skills in order to be successful.

Then, the discussion shifted to entrepreneurs, who they were and which skills they had to have. I knew that entrepreneurs were the ones who organized and operated a business, and in order to do so, they had to take risks. So when I said they should be brave to take risks, Mr.Sen made me say it louder and wrote “RISK TAKING” in capital letters. I didn’t know it was that important, but the more we discussed about entrepreneurs, I learned that risk taking was the key point. Then, we made scheme that demonstrated the skills entrepreneurs had to have :

We said that an entrepreneur should be a brave, creative and innovative person who is also disciplined and patient. He/she should be able to bring together people and resources for a particular purpose. From this scheme, we can also see other people such as stakeholder, customer, partners etc and Mr.Sen pointed out that those people are as important as money and that one can’t only say “me, me, me!” and should consider about others too while running a business.

Moreover, we started discussing the term “creativity”. It was seeing something everybody sees and looking at it from a different point of view. It was the same rule with businesses; to spot an opportunity in the market counted as creativeness. Then Mr.Sen asked us what were some creative products we saw in Turkey. Even though at the time we couldn’t find much, we could think of “akbil”. All the world has pass cards for trains and buses such as akbil, however, in Turkey, akbil is available to use almost everywhere; in buses, trains, museums etc. So the creativeness in akbil was that, they adapted the standard pass-card into a more useful thing. We also mentioned web sites such as yemeksepeti.com, tatilsepeti.com which are also adapted from sites like ebay and amazon. Then, we talked about innovation and gave Sultanahmet Koftecisi as an example, which combined Turkish food with the fast food understanding and created a new notion.

Then, Mr.Sen asked a question; “If you were to look to the purpose of a company? Where would you find it?”. The answer was “the mission part of its website.” Then, we figured out that purpose of a business is the reason for its existence. Depending on your purpose, you do certain things and don’t do certain things; for instance, FedEx’s purpose is to post whatever you want on time. It thinks of different ways to help the customer. Also, we discussed why in a school’s mission it doesn’t write: “Prepare students for the OSS, SAT, IB etc”. The reason was that purpose always defined the “bigger picture”. All those details are included to the smaller picture. Mr.Sen also warned us by saying “If you lose the side of the bigger picture, the smaller pictures won’t make sense,” meaning that if we get stuck on the details, we will forget our mission and follow a whole different path. Additionally, Mr.Sen gave the example of a “quadratic equation”. It’s the smaller picture, there’s almost no meaning in solving them unless you’ll become a math teacher etc. He said that in a conference, the speaker asked “How many of you have solved quadratic equations in school? –Everyone raised their hands. Then he asked, “How many of you have used it after graduating from school? –Approximately 20 people raised their hands. And when he asked “How many of you have solved it in a non-educational context?” –Only one person kept his hands up. This example shows that by making the students solve quadratic equations, the system gets stuck on the smaller picture and doesn’t contribute to the idea of the mission –the bigger picture-. Mr.Sen also told us to question our teachers and ask them “Why are we learning this?”

Besides, we went back to Friday’s lesson’s topic, which was “specialization”. Mr.Sen added that if you specialize too much, you can’t connect the field to other things. For instance, if an otorhinolaryngologist (ear-nose-throat doctor) specializes on his field too much, he may not see that patient x’ problem is with his lungs, not with his throat. It’s a proof of the liabilities of specialization if he can’t connect the problem to something else other than his specialization field. Specialisms have to connect in order to make sense.

Then, we talked about department formation. We figured out that departments only exist because you have specialization fields; the bigger the organization, the more you need specialists, and the more you need departments. For instance, Mr.Sen exemplified a small school in Afyon; since it’s not big, they don’t need any departments, the principal is the one dealing with finance and everything –with the help of an assistant-. He has to be the specialist of so many things. He doesn’t have the right to say “Well, I’m an accountant, not a principal.” Because the school is not big enough to make room for deparments. We understood that specializm has to do sth with SIZE (SCALE). Running the koc school, in contrary, has to have a financial department etc. Large scale organizations can often employ specialists because they find it cheaper to find specialists than to find generalists (everybody doing everything=chaos), that’s why it makes economically more sense. We also mentioned that families don’t have departments.

Then, Mr.Sen drew a “system” on the board :

Let’s think of this system as a “school”. The inputs(sources) are; buildings, students, teachers, books, finance etc. The outputs are physical things such as money, educated students etc. Feedbacks are a whole different thing. I learned that unlike outputs, the feedbacks are generally in form of information and all the outputs are counted as feedbacks. For instance, the schools the graduates went to, what they are doing are the feedbacks that then can become the input, they return back. Plus, we discussed the term value added. We saw that a business company’s added value is profit. However, I realized that determining the value added in a non business company is not that simple. You have to see whether the graduates make a big change in the world, in order to know if the value is added. And this process requires a long time to pass. Also, we said that the Pinar company’s primary purpose of accounting was to give feedback.

In the last 5 minutes of our lesson, Mr.Sen said that these blogs give him an idea about what is going on, whether we learn from our mistakes. He’s using this input to provide an output. We –as business students- have to add value to our blogs; write what difference does it make us think about things, what are we unclear about and so on. In our blogs, we should ask questions, say our confusions and reflect what is going on in our minds.

In Class...

On friday (October 1) in our business class, we talked about the terms "specialization", "efficiency", "productivity" and "quality". So far, it was our most beneficial business class, since our business teacher Mr.Sen was back to school after 2 weeks, and we got a chance to discuss our previous assignments face to face and understand our mistakes.

First of all, Mr.Sen made cl

ear what "specialization" really meant. I used to think that specialization could only be about a product, but I learnt that it could also be a process.

For instance, we discussed the specialization in school; there are specific teachers for specific fields (Math, English, Bio, Turkish etc) who are giving "services", which makes specialization a process.

Then, we talked about efficiency and learned that it is equal to output/input.

For instance, a car company's output is the number of cars produced and the input is the man-hour put into the work. So to be more efficient, this company should increase the amount of cars while also decreasing the man-hour. We figured out that efficiency can also be called "productivity".

Then, we began discussing whether specialization was an advantage or a liability. It was certainly increasing the efficiency, but what if someone was good in multiple fields, d

id he/she have to choose one of those fields to specialize at? If a teacher was as good in math as in literature, couldn't he/she become a literature and a math teacher?

Wasn't it boring to specialize in the sa

me field and do the same work over and over again everyday?

Of course having employes that are focusing on specific fields will help the development and the increase in profit of a company, but what about the employees? What if they get sick and tired of what they do and want to do other things and get out of control? Specializati

on could decrease the quality; the bored workers would need power and would start making waves.

So many questions such as these raised in our heads and we decided that even though specialization had it benefits, it also had disadvantages.

Then we started discussing what made a company, school, product "qualified", how could

"quality" be measured and who decided what "quality" meant. Since quality was a subjective notion, it couldn't have a certain criteria and be measured by applying surveys, questionnaires etc. Mr.Sen again gave the example of school. He said that if the school's reputation was high, if the students were learning interesting things, if the employee was happy and working hard, would

it mean that the school has a good quality?

Then we decided that, when it comes to quality, criteria violence the differences. That's why, every company, organization, school etc had to have a certain unique criteria to determine whether it has a high quality. But then again, since it was impossible, we figured out that measuring the quality of a non-business organization is almost impossible.

At the end of the lesson, my perspectives about specialization absolutely changed.

Business Models!

This time, we were asked to evaluate a text about business models and to observe Alex Osterwalder’s business model.

a) i) Don’t other types of organizations except businesses have to make profit in order to fulfill the purposes for which they were formed? In our text, it says the opposite, it claims that only business organizations aim to make profit and that it’s the only way to fulfill their purpose. But what is “profit”? Does it always have to be money? Can’t a non-business organization’s aim be a spiritual profit? For instance, is it meaningless to say that the American Red Cross’ profit is less violated people and increased awareness about violence? That was the point where I had comprehension difficulties.

ii) If the output is something like a service or a campaign, what is the input in that case? Can input be the spent effort or energy put into work? If so, how can the value of it be measured? In the text it says that the value of output that customers are prepared to pay has to exceed the total value of the inputs paid by business. But what if the inp

ut was not only about the money? In that case, who/what determines the price of these values?

iii) It says in the text that value proposition means the way the outputs of the business are presented to the customers in the target segments. However, in the diagram, the “distribution” comes after the value proposition. The problem that occurr

ed in my mind is that shouldn’t distribution logically happen before the output is presented to the customers? Because only after distribution takes place, the customer can reach and see the product. It did not make sense to me how customers could see the product before it’s distributed.

b) The Osterwalder template might be useful since it divides the business into 4 different sections according to their usage and therefore helps an organization to plan its business better. Also, with this model, even a random person can understand the business functions, the relationships between the sectors, the revenue generation and the step-by-step processes. A negative thing about this model can be that since every part is connected to each other, if a sector makes problem, each of them will be affected.

c) This template can definitely be applied to non-business organizations since they also have business running systems. For instance, let’s say that a non-profit organization is donating blood. It will still have customers –people in the need of blood-, core capacities –to provide a healthy and a technologic atmosphere during blood taking from donors-, value configuration –but this time creating benefits only for the customers-, and revenue streams –the value from the service it gives-. Even though they do not aim to make economical profit, the non business organizations also need such a business model to run their business better.

ANALYZING THE KELLOGG'S CASE

In our lesson, we were asked to read the Kellogg's case study, answer the following questions and add a discussion of our own. So here's my work!

1. Name the three sectors of the supply

chain. On what occasions could certain sections

of the primary sector operate as retailers?

The three sectors of the supp

ly chain are; the primary sector, which provides raw materials, the secondary sector, which manufactures and constructs finished and usable products, and the tertiary sector -also known as the “service sector”- provides service to private and corporate customers.

Generally, the businesses in the tertiary sector operate as retailers; however, in some cases, certain sections of the primary sector can operate as retailers. For instance, if a customer requests for an unmanufactured product, he/she will obtain it -the raw material- from the primary sector; enabling this sector to operate as retailers. The raw material will be taken from the suppliers, this trade making the suppliers who belong to the primary sector operate as retailers without the need of the tertiary sector.

2. Give three examples of how Kellogg’s demonstrates good supply chain management. How can Kellogg’s make improvements both for its business and for the environment?

Kellogg’s is able to balance each section of the supply chain successfully and has built good relationships with each sector. First of all, Kellogg’s chooses the products to be manufactured according to its customer needs based research, therefore makes sure that the product is right. Secondly, its “just-in-time” system makes the supply chain better since this system includes computer-based systems, which provide efficient stock inventories. Third of all, since their storage is 1 mile away, Kellogg’s diminishes the transportation cost while natur

ally increasing the distribution rate. To sum up, the reason why Kellogg’s has a good supply chain is that it can choose the right product, keep stocks in the lowest level while keeping the distribution and customer satisfaction at highest levels.

Moreover, Kellogg’s is a company that can both make profit and realize the importance of its environment at the same time. Therefore, to make improvements in these fields, Kellogg’s should achieve its aims by reducing the energy to manufactured products, producing recyclable packaging, lowering overhead sand unit costs and reducing its carbon footprints. By performing these actions, Kellogg’s will be making improvements for its business and the environment.

3. Why is it important for Kellogg’s to build good relationships with businesses in the tertiary sector?

Since it’s the tertiary sector that will promote and sell Kellogg’s products, it

is essential that Kellogg’s has good relationships with them. The tertiary sector is where the retailers are

, is the one that will determine its profit rate. Having a high esteem, permanent and strong relationships with the retailers will contribute to Kellogg’s and increase it’s sales proportion.

4. Evaluate the benefits of large manufacturers like Kellogg’s handing over the logistical side of their business to specialist companies like TDG.

By handing over the logistical side of their business to specialist companies such as TDG, Kellogg’s can transport, distribute and store its products much more easily. Also, because it has a more efficient distribution system, Kellogg’s can focus on its merchandise better, and therefore, be more successful. Additionally, the specialist companies such as TDG which ensure that the shelves are always full and that more products are being transported at the same time, provide Kellogg’s to keep stocks to a minimum and help contribute to its environment by reducing the co2 emission since there are less vehicles carrying the products. Companies such as TDG increases Kellogg’s profits and contribute to the environment.

My point of view:

Before reading this article, I looked at Kellogg’s as only a cereal box. After reading it, I discovered a whole new side of this huge company. I’ve depicted a picture in my mind of how a good company should be managing the sectors, having good relationships with its retailers while caring so much about the environment. At first, I was surprised to see that such a big company needed other companies’ help. But after reading the whole article, I saw that without the help of different companies in each sector, Kellogg’s could not manage to become the biggest and most successful in its field. I realized that even a great company needs support and consultancy, which actually made it become great. Thereby, with this method, every company can focus on its expertise area and by combining these skills, the most profits can be made.

Besides, before reading this article, I knew that because of global warming, most of the companies were trying to contribute to its environment. But I was a little bit surprised seeing the extra efforts Kellogg’s was making, such as stocking its products in a close area to reduce the energy use, or using lean production to eliminate the waste. I understood that even one company could make a difference in this world, which made me more hopeful about the future of the earth.

Article Focus

How to Build Strategic International Relationships

Just learning how to shake hands doesn’t make you culturally aware. A few learned copy-cat mannerisms and a couple opening lines will not put the global executive into the good graces of their regional leaders. It used to be fine, considering the small amount of time that leaders spent abroad. But more and more, as we see top-level local management strategies that have transparent relationships with each other for alignment and success, building relationships that are strong and solid are absolutely essential in today’s highly competitive marketplace.

In Japan, during the 1980’s boom years, foreigners

were falling over each other to grab some of the success that Japanese businesses had created. Many managers learned a little bit of the language, how to eat soup, etc., but they missed a great opportunity to build real bonds. Unfortunately, those bonds could have also helped the Japanese businesses during the ‘90’s.

Today, we are in the midst of a series of dynamics such as, rising new economies, immediate access to customers and speed decision making, so creating and nurturing long lasting connections is a must. Maya Hu-Chan of the Global Leadership Development Center so correctly states, ‘In my work with multinational corporations, my global clients have often pointed out that building partnerships is one of the most important competencies for global leaders of the future’.

To develop powerful partnerships and prevent problematic situations, integrate these five pieces of advice.

· Have a real interest in other cultures and learn about them through food, the arts and music, literature and the areas that give uniqueness to their place the human experience.

· Build partnerships wherever you go with ease. You never force a friendship. You develop it. Become an open access point of assistance to your host reports, superiors and especially those horizontally. Encourage others to do the same.

· Listen, Listen, Listen! This may be one of the great challenges for human beings, but it is an essential skill for trust. Don’t just listen with your ears, but apprehend the individual with all of your faculties. Go beyond their special behaviors and reach for what they are trying to communicate.

· Never be patronizing. This may be very difficult for some cultures that have been taught they are the best. Be careful not to appear paternal or on a higher level than other people. Also pay close attention to how you phrase comments about their culture. This is also true for spouses of expatriates.

· Get out of your shell. The higher you go up in an organization, the more insulated you become. Mingle with different people with different interests and you will be well prepared to meet the exciting challenges of interacting with all types of personalities from all over the world.

By putting these five points into action will give you a basis for working in all environments and with all cultures. Of course, each culture has unique aspects that give them their own perspectives on business and life, and we are all unique individuals with unique behaviors, but having a real sense of how we can make deeper connections profoundly helps us move forward together.

by John Astor

John Astor's main purpose in this article is to reveal that it is essential for global executives to interact with all types of personalities around the world and learn their cultures in order to build profound, solid and long-lasting relationships with their regional leaders. I think all of today's future global leaders should follow his advice and get in touch with as many people as possible, get to know their cultures, so that they can make permanent connections and be able to work in all kinds of environments.

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