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Citigroup: 'Internet banking' is a valubale but not a rare resource

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In today’s competitive world, and in particular in the banking business industry, banks are trying to deliver the best services to their customers so that they don’t stay way behind their competitors. Just recently, Citigroup bank, the US largest bank, has launched Internet bank hoping to better compete with such rivals as HSBC. But is this physical technology (internet banking) valuable? Is it rare compared to what competitors have? Is it difficult to imitate? And is Citigroup organized to exploit the full competitive potential of its internet banking technology? The following paragraphs answer these questions.

First, to answer whether the internet banking technology (resource) valuable or not, we should ask ourselves whether this resource enabling Citigroup to respond to the environmental threats or opportunities, as Barney refers to it as the ‘question of value’. Indeed, this resource is going to enable Citigroup to respond to the external threats wherein HSBC, which is one of the leading banks, has already this technology employed in its business. And therefore, by launching this internet bank service, Citigroup is trying to catch up and thus respond to those threats. At the same time, the launching of the internet bank enables Citigroup respond to opportunities in such a way that online banking is viewed “as both a source of new customers and a means to increase business with existing customers who prefer to bank through more than one channel”.

Moving on to the question of rareness, now that we have known that the internet banking resource is a valuable one, we need to ask how many competing firms already possess this internet banking valuable resource? Well to my limited knowledge, banks such as HSBC, Credit Suiss, and many others have already launched the online banking technology in their businesses and thus this makes the valuable resource not rare or in other words a common one.

In addition, since the online banking resource is a valuable but a common one, we can’t further say that this resource is difficult to imitate. Instead, we can say that Citigroup is not a strategic innovator because they are not in a position that they are able to conceive of an engage in strategies that other banks could not conceive of. In other words, Citigroup didn’t really gain the first mover advantages. As a result, Citigroup is not that organized to exploit the full competitive potential of its internet banking technology.

To conclude, Barney explains clearly that if a particular resource (or capability) is controlled by many competitors, then that resource is unlikely to be a source of competitive advantage. Instead, valuable but common resources and capabilities are sources of competitive parity. So, this valuable but common internet banking resource can help ensure Citigroup’s survival when they are exploited to create competitive parity in the banking industry.

Tameer announces the Business Bay Tower: VIRO Analysis

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Most of us know Tameer. For those who don’t, according to Tameer website, Tameer is involved in construction of outstanding real estate projects distinguished by a clear vision that relies on accurately selecting the unique location and then adopting innovative and non traditional designs, specifications and services for erecting buildings. Tameer has successfully concluded a number of real estate deals with the government of Sharjah and with a number of business people. Today, the firm's investment portfolio in the market totals AED 40 billion.

The fact that Tameer is going to build the Business Bay Tower in Sharjah, implies that Tameer has many resources and capabilities considered to be their strengths which allows them to compete and expand in the real estate industry. Two of these resources and capabilities could be the brand identity and the physical technology that would help them facilitate such a project. From the resources and capabilities standing point, Barney’s framework (VIRO framework) is highly related to this article.

Are these resources Valuable? Both the brand identity and the physical technology resources (capabilities), that Tameer is using in the Business Bay Tower, are valuable. It is valuable because it enables Tameer to respond to environmental threats and opportunities. This goes inline of how Barney addresses the question of value which asks whether a firm’s resources and capabilities enable the firm to respond to environmental threats and opportunities. To support, Tameer’s physical technology resource used in the Business Bay Tower enables it to respond to environmental threats such as the competitor’s expansion in the real estate industry, Emaar as an example. Furthermore, employing an outstanding technology plus their strong brand identity will enable Tameer to respond to opportunities as their website mentions, “[Tameer] now pursues plans to penetrate the UAE market and a number of other countries through large and distinguished projects within the framework of an ambitious contemporary plan for the future”.

Are these resources Rare? In my opinion, I think that the technology that Tameer is using to build Business Bay Tower is not a rare one because I think that there are other competing firms that already possess such a technology. Not only that, other competing firms also possess a strong brand identity. For example, Emaar (Tameer’s competing firm) possesses both the brand identity and the physical technology. Therefore, these resources are not rare.

Having said that those resources employed in the Business Bay Tower project are valuable but not rare will generate a competitive parity, as a competitive implication wise. In other words, Tameer’s economic performance in this project will be normal.

Intense Rivalry: Microsoft vs. Google

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Reading this article reminded me of Porter’s framework for the high linkage in terms and concepts between them.

It is pretty obvious from the article that Microsoft and Google are ‘rivals’. The fact that Microsoft asked a county judge to stop Lee from working at Google proves the existence of intense rivalry in a way that Microsoft doesn’t want its confidential information to be dispersed since Lee was familiar with them. This intense rivalry between them is related to some of the factors that Porter has mentioned in his framework which are: 1) Competitors are diverse in strategies, and 2) High strategic stakes.

First of all, Google as a rival (of Microsoft’s) is diverse in its strategies because Google has been trying to enter the Chinese market not forgetting that Lee, who is a senior executive familiar with the world‘s largest software maker‘s plans in China, could ultimately help Google succeed in the Chinese market. This is supported by the article where it affirmed that Google plans to open a new facility in China –at the end of 2005- to develop new technologies and attract computer science researchers. And as Porter said, “diverse competitors have differing goals and differing ideas about how to compete and are continually running head-on into each other in the process” and to me, Google has different goals and ideas of how to compete.

Second, again the fact that Google wants to enter the Chinese market proves that it wants to increase its strategic stakes. According to Porter, “a diversified company may place great importance on achieving success in a particular industry in order to further its overall corporate strategy”. Relating to this, Google wants to perceive a strong need to establish a solid position in the Chinese market to build ‘global prestige or technological credibility’.

But does Microsoft have the right to stop Lee working at Google? In my opinion, I think that Microsoft made Lee sign a contract which binds him legally to a year not working for a competitor. Therefore, I think that Microsoft have the right to stop him working for a competitor (at least for one year). I don’ think that Google’s defense of "He wanted to work for us" is sufficient to justify Microsoft’s claim!

GM - Keep it Up With More Investments!

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Barney divided the resources of a firm into four main categories which are financial capital, physical capital, human capital, and organizational capital. From the GM article I read, I found three resource categories out of the four which are worthwhile to be mentioned. Before that, it’s evident to note that General Motors Corp. is considered to be the world’s largest automaker.

Financial Capital
Recently, GM stated that it will hire nearly 300 workers and invest $545 million in five Michigan plants. According to Joe Spielman, vice president and general manager of GM's North American manufacturing operations, investments demonstrate GM's commitment to Michigan and to improving its products. The money resource that GM exploited in the investment was used to conceive of and implement strategies; therefore known as the financial capital.

Human Capital
GM today employs about 325,000 people around the world. People working at GM are considered to be the Human Capital in the firm. According to Barney, “Human capital includes training, experience, intelligence, and insight of individual managers and workers in a firm”. Thus, human capital is one of the main four categories of resources a firm has.
Moreover, GM plans to hire 280 people at the Pontiac plant, all workers who are currently employed at GM plants or have been laid off from their jobs. Even though these workers were laid off form their jobs, they were still getting most of their pay and benefits. These benefits they get from GM will let them come back to work with GM in the new investment since they were considered as valuable human capital.

Physical Capital
Physical capital includes the physical technology used in a firm, a firm’s plant and equipment, its geographic location, and its access to raw materials. Geographic location as a type of a physical capital is an important resource for firms. In regards to GM’s Michigan investment, it has targeted 12 facilities for closure by 2008, including four locations in Michigan that employ 4,751 hourly and salaried workers. These locations are considered to part of the physical capital.

In conclusion, I think that GM is employing “strategic flexibility” in regards to this Michigan investment. This is because they are trying to generate higher profits by staying perfectly tuned to the market and avoid getting trapped in dead-end business model. In specific, by this investment GM is applying the “operating agility” wherein its able to quickly refocus its efforts in better placed to respond to changes in demand and thereby even out profit swing.

Freedom of expression doesn’t contradict the fact that Religions should be respected.

The Danish products boycott has been escalated throughout the Muslim nations. As for the buyer power, it is evident that the Saudi market (buyer group) is powerful since it faces few switching costs. Not buying Danish products such as cheese and milk are not obstacles for them. They could easily switch to other alternative products of a non-Danish origin without facing high switching cost.

In regards to customer interface, pulling out Danish products from Panda’s supermarkets shelves was aimed to let people notice that Panda is with the boycott of the Danish products. By this, Panda supermarkets are trying to offer their customer ‘fulfillment and support’ through showing them the customer support it offers. Another customer interface element that was applied in this case is when the flagship supermarket in Jeddah took the initiative to empty its shelves when the news became common knowledge. Here, the flagship supermarket used the ‘information and insight’ element by giving a positive feedback from their customers to their own decision. This shows that the flagship supermarket had the ability to extract insights from the information it gathered and utilized this information on behalf of its customers.

In addition, SADAFCO tried to use its strategic resources to assure its investors that it does not import or sell any products from Denmark or Norway. In particular, SADAFCO used the ‘core processes’ element by explaining the methodologies and routines used in transforming inputs into outputs, and also by explaining what the people at SADAFCO own in order to correct the perception that SADFCO is a associated with Danish companies.

Commenting on the article as a whole, I think that freedom of speech doesn’t contradict with that fact that religions should be respected. What the Danish newspaper has attempted about the cartoons depicting the Prophet Mohamed (PBUH) is obviously observed as a ridicule and insult not only to Islam but also to other religions.

Google Is Destined To Fail In China

Yahoo, Netscape, MSN, and Lycos had tried to adapt to the Chinese market but none of them succeeded. As for Google’s entry to the Chinese market, existing competitors of internet companies are expected to respond forcefully to make Google’s stay in the industry an unpleasant one. This is what Porter refers to it as the “Expected Retaliation”. In fact, there is still fear among all Chinese Internet companies that they do not want to grow too big and become the sole giant in the industry. It seems to me that Chinese internet marketplace wants to maintain market shares to internet entrepreneurs. The only condition Google would enter the Chinese market without any barriers to entry is to accept to enter and be as equal as other internet companies in China which I don’t think it wants that.

There are two main factors that grabbed my attention of why Google won’t be able to succeed in the Chinese market. First, Chinese internet companies are not very open when it comes to press releases and movements within its firm which contradicts Google’s. This can be explained by Sina.com which got involved in a lawsuit that, if it were an American firm, would get it airtime on CBS's "60 Minutes". Second, in China rival internet companies have developed a relationship of mutual benefit or dependence whereas in North American no other company can currently top the three companies in their respective sectors which are Google rules search, Yahoo rules the Web, and Microsoft rules operating system.

As a conclusion, doing business in China, simply, is different than doing business in America. This is due to the cultural or norms differences between different countries. If Google would want to expand and enter to the Chinese market, it would have to adapt and adjust to the Chinese norms. However, this doesn’t really promise a potential success!