Decline of Camera Stores

As a shutterbug, I had always wanted to open a camera store, selling cameras and accessories. However, I notice that a couple of camera stores near my place have been closed down. I now wonder: Is the brick-and-mortar camera store a viable business?

In the film era, brick-and-mortar camera stores had 3 major sources of revenue, namely:

• Sale of cameras and accessories
• Sale of film
• Film development and photo printing

Now, in the digital era, sale of film is in free fall. So is film development. Digital camera is a hot-selling item, but camera stores are now threatened by mega stores and online retailers. Consumers can usually purchase digital cameras at lower price from the challengers.

Digital cameras are also facing stiff competition from camera phones. Camera phones with 3 or more megapixels are already available, so why buy a separate digital camera? Serious photographers will tell us that pixel count is no guarantee for good image quality. Sensor size, lens, flash etc. are important too. Unfortunately, pixel count is about the only thing a casual consumer knows.

How about photo printing? Common sense tells us that if digital camera users turn their images into prints, it should be able to offset the decline in ‘film printing’. Unfortunately, the picture is not so rosy.

Younger generation who are used to viewing photos on computers or cell phones often do not bother to print their images. According to InfoTrends Research Group, the number of digital images printed as a percentage of those captured fluctuated between 26 percent and 31 percent from 2003 to 2005.

Photo Marketing Association (PMA) tracks the number of digital prints versus film prints. Its statistics shows that digital prints are on the rise since year 2000, yet total volume – digital plus film – has gone downhill.

As we are aware, not all digital prints are made in the retail stores. Professionals and serious photographers like to do home printing because they want to have full control of the outputs. Casual consumers, on the other hand, print at home for convenience purpose. They usually don’t bother about color management, and often print on non-photo paper.

Making the thing worse is: we can now order printing online. We upload our images to the website of service provider, and they mail the photos to our doorsteps. Such convenience is unmatched by services offered in brick-and-mortar stores.

Ed Lee of InfoTrends pointed out that retailers must “think beyond the 4 by 6”. Larger size prints bring in more revenue, as do creative products such as custom-made calendars and photo books.

Back to the question: Is the brick-and-mortar camera store business still viable? I don’t know. But I gather that it will take longer to realize the dream of being my own boss.

Reference:

Scoblete, G (2006). Industry Figures: Digital Print Behavior Defies Expectations. TWICE Vol. 21, Iss. 1, 142-144.

Virginia Tech Massacre, Gun Control and Gun Culture

Shortly after a 23-year old Virginia Tech student, Cho Seung-Hui, carried out the deadliest mass shooting in U.S. history, the debate of gun control resurfaced. Not surprisingly, proponents of tougher gun control blamed easy access to firearms in the state of Virginia for the April 16, 2007 massacre. Gun lobbies, on the other hand, argued that if the students of Virginia Tech were allowed to bear firearms in the campus, they would have stopped the killer.

Before we go on to debate the pros and cons of tougher gun control, we ought to acknowledge that they are different kinds of killers, each act in different manner.

They are people who kill out of “moment of insanity”, perhaps after drinking or heated quarrel. I think there is a term for this kind of homicide – impulsive killing. The criminals do not plan in advance and would use any weapons in hand.

Another group of killers are “troubled” people who think that they have been victimized by the world. Cho fell into this group. Troubled killers often plan well in advance. Cho, for example, bought his first gun on Feb 9 and the second one on Mar 16. Virginia law restricts customers to buying one gun a month.

Finally, there are truly evil people who kill for power, wealth, or religions.

Tougher gun control is unlikely to stop the evil murderers, since they are going to obtain firearms illegally anyway. It does help in the case of impulsive killers. Things get more complicated in the case of troubled killers and I am not in a position to draw conclusion.

However, I deeply believe that easy access to guns in America has created a gun culture, whereby angry people think they can solve their problems by just shooting. Prior to the 1992 Los Angeles racial riot, an African American teenager was shot dead in a Korean-owned store for theft. If this incident happened in any other country, more likely the store-owner would call the police rather than assuming the role of law-enforcer. When the riot broke out, African Americans took this opportunity to vent their anger against the Korean community.

In another incident, a Japanese student who was on his way to a masquerade party walked into the wrong house. The people inside the house shot him on the ground of self-defense. Given that the student was unarmed, the house-owner should probably tell him to go away rather than firing at him. Unfortunately, the jury, so used to American gun culture, acquitted the defendant.

In the two cases described above, and many others, acquittal of the gun-owners has sent a wrong message to the public – it is OK to kill. This wrong message, in turn, has created a gun culture which influence mass-murderers in one way or another.

In short, I do feel that the United States should have tighter gun control. Given the strong influence of gun lobbies, however, I doubt much can be done. Perhaps a more possible approach is to rectify American gun culture. People must be educated on the ethics of using their guns, and they must be punished for firing improperly.

It is, of course, easier said than done. Nonetheless, Americans must do something before they mourn the next mass murder.

Management Lite & Ezy 33 – Aggregate Planning III

Please also read Part I and Part II.

Example

A DVD player manufacturer is doing an aggregate planning for July through December. The firm has gathered the following data:

Plan: The firm will use the strategy of constant workforce with overtime.

Armed with the data provided, we will work out the production level, labor hours, labor cost, inventory holding cost etc.

Production – regular-time

= (no. of workers x no. of hours per day x no. of days)/(labor-hours/DVD)

= (8 x 8 x 20)/4

= 320

Production – overtime (except July)

= Demand forecast – Inventory (beginning of the month) – (Production at regular time)

Labor hours

= Production x labor hours per DVD

= Production x 4

Holding cost

= Inventory (end of the month) x 8

Regular-time labor cost

= Regular-time labor hours x $12/hour

Overtime labor cost

= Overtime labor hours x $18/hour

References:

Jay Heizer & Barry Render, “Operations Management”, 8^th edition

Future CEOs and Entrepreneurs

My MBA classmates presenting their brilliant ideas...


Calmed and steady...


Full of actions, and enthusiasm...


Speaking from her heart...


Well-groomed, and good-mannered...


Problem-solver...


These two budding entrepreneurs are discussing their business plan, and hairdos...

Management Lite & Ezy 32 – Aggregate Planning II

Part I is here.

Example

A TV manufacturer has developed monthly forecasts for the 6-month period from July to December. The forecasts are presented in the table below…

Various costs involved are given in the table below… (Click for larger image.)

Plan: The factory will maintain a constant workforce throughout the 6-month period, no overtime, and ending inventory = 0:

To achieve zero ending inventory, we will need to compute the average requirement.

Average requirement

= total expected demand/number of production days

= 6,200/124

= 50 units per day

We will then work out the production level, inventory, labor cost and inventory carrying cost, using the formulae given below…

Production = average requirement x number of production days

Monthly inventory = production – forecast

Cumulative inventory = inventory of this month + inventory from previous month

Labor cost

= total units x labor hours per unit x pay rate

= total units x 1.6 x 5

Inventory carrying cost

= cumulative inventory x inventory carrying cost

= cumulative inventory x 5

Jay Heizer & Barry Render, “Operations Management”, 8^th edition

My Nephews

Sebastian (left) and Jovann...

Management Lite & Ezy 31 – Aggregate Planning I

Aggregate planning is the process for determining the most cost effective way to match supply and demand over the intermediate future, often from 3 to 18 months. This is achieved by adjusting production rate, workforce levels, inventory levels, overtime work, subcontracting rates, and other controllable variables.

Before we go into the strategies of aggregate planning, we shall examine a few concepts:

• Production Rate: Output per unit of time, such as units per day or units per week.
• Workforce Level: Number of workers required to provide a specified level of production
• Inventory Level: The surplus of units that results when production exceeds demand in a given time period.
• Backlog (or Stockout): The deficit in units that results when demand exceeds production in a given time period.

When generating an aggregate plan, there are a few questions an operations manager should ponder:

• Should inventories be used to absorb changes in demand during the planning period?
• Should changes be accommodated by varying the size of workforce?
• Should part-timers be used, or should overtime and idle time absorb fluctuation?
• Should subcontractors be used on fluctuating orders so a stable workforce can be maintained?
• Should price or other factors be changed to influence demand?

There are a few strategies an operations manager can adopt:

Chase Strategies

Matching the production rate to exactly meet the order rate by hiring and laying off workers as the order rate varies.

Level Strategy

Maintain a stable workforce working at constant output rate; absorb demand variations with inventory, backlogs, or lost sales.

Stable Workforce – Variable Work Hours

Varying output by varying the number of hours worked through flexible schedules or overtime.

We will examine a few examples in the upcoming posts.

References:

Jay Heizer & Barry Render, “Operations Management”, 8^th edition

Lecture notes of Dr. Wong Kee Luan

Formula 1 is back

Malaysia's Sepang International Circuit will be holding Formula 1 race on Mar 6-8. Roadshows were organized in a few locations of the country to promote the event. Here are a few photos taken in the roadshow...


Race car of BMW Sauber...


Need I say more? Red-hot Ferrari...


Champagne, to be opened on the podium...



The organizer certainly understands the ancient philosophy of Yin and Yang. Car racing is masculine and therefore has to be balanced up with something feminine. A number of beautiful women have been called up to be the "ambassadors" of this event. Here are two of them...

A&W Malaysia’s Operations need Overhaul

I never quite understand why, in A&W, the burgers and hotdogs come in small boxes. When I am eating my Mozza Burger, pieces of lettuce spill over my hands and onto the table. In contrast, burgers in McDonald’s and Burger King are wrapped in paper. All I need to do is to partially unwrap the Big Mac or Whopper when I am eating them. It is a lot more convenient, and my hands don't get dirty as easily.

(I am referring to operations of the A&W in my country, Malaysia. It could be different elsewhere.)

Needless to say, I use a lot more napkins in A&W than I would in McDonald’s and Burger King. In other words, A&W is not environmental friendly.

A&W is also less efficient than its competitors. When I walk into a restaurant and order a “Combo Meal”, usually what I would get at the counter are the fries and rootbeer. The A&W staff would tell me, “Please take a seat and we will deliver the burger to you shortly.” It could be up to 3 minutes before the burger is served. Occasionally, I even need to wait for the fries to be delivered to my table.

I believe, in A&W, food is made-to-stock, so why the long wait? A few years ago, when I worked in the United States, I often dined in Jack in the Box. Slogan of Jack in the Box read, “We don’t make it till you order it”. In other words, Jack in the Box employed a made-to-order strategy. Despite that, I didn't have to wait too long before I got my food.

(Jack in the Box doesn’t have a franchisee in Malaysia, and I didn’t go to A&W in the States, so I can’t make a direct comparison.)

Customers could be unhappy for having to wait a few minutes, but there is more to that. Food that is not ready for collection at the counter will have to be delivered by the staff, so dining in A&W is not exactly self-service. Every A&W outlet may need to hire a few extra employees just to do the delivery job. This increases operating cost.

Long waiting time in A&W also points to another possible problem: the kitchen staff can’t prepare food fast enough to serve the customers. This, in turn, has an impact on the sale volume.

A&W opened its first restaurant in Malaysia in 1963. McDonald’s arrived in 1982. Today, there are more McDonald’s outlets in this country.

Mozza Burger tastes as good as Big Mac, if not better. Why is A&W not as successful as its competitors?