MBA Geek

Some interesting facts and figures surrounding the current ash cloud crisis in Europe and the cost it is causing to business. Here are some numbers:

• British Airways: £15m to £20m a day in lost business
• TUI Travel: £5m to £6m a day
• IATA: Industry costs of up to £165m a day

Some of the numbers mentioned are staggering, but it does give an indication of what a devastating effect natural causes can have on a business. You can expect to insure against this sort of eventuality, but the premiums would be astronomical. And then bring to bear the human cost of what could happen once companies start failing and jobs are lost and you begin painting a really bleak picture. It may not be as bleak as the current mesothelioma survival rate, but it still pretty ugly.

Have you been affected by the volcanic ash?

You know, there are many things that can help market your product, but when the chief of the NSA calles it “wonderful” you know you’re on the right track. This is exactly what happened to Apple when Lieutenant General Keith Alexander, will will be leading the U.S. Cyber Command, went on record speaking highly about the iPad. When a company launches a new product they take a massive risk, and to get a high profile recommendation like that can be a very powerful tool.

It looks like the iPad launch actually went better than iPad planned, it looks like supplies are tight because they underestimated the US demand. The thing about a new product is that you can hardly turn the outdoor lighting on it and see how brightly it will shine. Things have to be kept under wraps while the product is being developed. When Apple announced the iPad, it was already being produced and the amounts to make would already have been agreed.

Still, they can always make more huh?

Great post on Seth Godin‘s blog entitled “Firsts and Never” talks about firsts and great and exciting, never being harder to accept and how revolutions change everything. There are a couple of great thoughts in there, particularly how the Internet is changing the way we transact with companies, the way we talk to each other and the way we perceive value. It doesn’t matter whether you’re in the business of selling ballet shoes or the cheapest car insurance on the block, being first is important, but moving the goalpost by innovating and coming up with something new i much more valuable .. both to you and to the rest of the world.

One of the great things about the Internet is that it provides a great marketplace where traders and customers can meet. And it’s really effective at providing a steady stream of custom for niche markets that wouldn’t survive otherwise. If you deal with specialised products, like WordPress themes or gold coins, you wouldn’t survive unless you had a way to tap into a steady stream of customers. And one such market is industrial valves.

Valves Suppliers UK is a company that specialises in industrial values, a pretty specialised market where customers number in the thousands rather than in the millions. They sell products like the Stainless Steel Dual Plate Wafer Check Valve that retails for around £500. You won’t be buying one of those every day, won’t you? Anyway, the Internet lets them get in touch with customers all around the globe, offering their products to any potential customers regardless of where they are in the world. They also have a selection of technical documents on the website and a user forum that helps them prove their authority in the field.

Any other niches you can find online?

It’s been interesting to watch Apple’s stock price over the last few days and over the last few hours since the iPad has been announced. Yesterday was characteristed by a steady increase in price, probably as the market started to feel the anticipation around the product launch. As the product was being announced the market dipped as it didn’t seem as exciting as everyone thought. However, when the price point was announces; a price point that would certainly make the product was very attractive to consumers; the price rose once again.

Product announcements can make or break a company. You can imagine what would happen if a company announced it had a cure for Mesothelioma cancer, only to be exposed as a fraud a few days after. It would probably be quite hard to recover from something like that. In the meantime, we’ll keep an eye on Apple and see what happens to their stock over the next few days, as the industry starts to get their hands on the initial devices.

I’ve had a flight cancellation with RyanAir recently and it got me thinking about how much low-cost companies actually save by removing the service element from their offering. Traditionally, companies have always sought to minimise costs and increase efficiency; whether it’s by reducing product complexity or using call center outsourcing, but doing so by removing the service element was a pretty bold move. The fascinating thing is that the net result has been the usurping of the incumbents and the emergence of a completely new model for flying.

It does turn the whole game on its head and opens the door to a rethinking of other sectors. More importantly, it raises an interesting question:

Is the customer still king? Or are cheaper prices more important?