Blog 7: Chipotle Mexican Grill

The company chosen for this blog is Chipotle Mexican Grill, Inc. It is a restaurant chain in the U.S., which prepares specialty Mexican dishes such as salads, burritos and tacos. In addition to its home market, the company also enjoys significant customer footfall in its restaurants located in the U.K., France, Germany and Canada. It operates a total of 1,595 outlets in these countries. It was founded in 1993 in Denver, Colorado. It earned total revenues of $3.2 billion and profits of $327 million in the financial year 2012-13 (Annual Report, 2013; Chipotle.com, n.d.). The company was ranked 20^th in its list of most innovative organizations by Forbes magazine in 2014 (Forbes, 2014). The restaurant is a popular choice among different segments of customers due to its varied menu and fast service.

 

 

The particular case of ‘misuse’ of social technology by Chipotle that is being considered here is a fake “hacking” of its tweet handle in 2013, later acknowledged to have been orchestrated by the company executives themselves. Immediately prior to this event Chipotle had launched a 20 day treasure hunt campaign, called “Adventurito”, at some of their restaurants. In order to garner more publicity for the campaign, management thought that they would post related tweets from their tweeter account (having 200,000 followers at that time) that would show the account as having been purportedly hacked.

 

These tweets, which were in the nature of treasure hunt directions and responses, were posted on 21^st July, 2013 (the 20^th anniversary of Chipostle), and were retweeted 12,000 times. The account added 4,000 followers in a day, compared to an average addition of 250 followers on a normal day. Many other tweeter users immediately suspected something wrong – a number of users questioned whether the account was indeed hacked or whether it was merely a corporate attempt at manufacturing attention on social media (Huffington Post, 2013). Later the Director of Communications at Chipotle, Chris Arnold, admitted that it was a preplanned campaign and a fake “hack”.

 

In terms of marketing and publicity, the event was neither a success nor a failure. Although the company managed to add several thousand more twitter follower, its Facebook account neither gained nor lost many users as a result of it. While there were a few angry user comments, a majority of social media users ignored the event. However, there were many comments from online commenters and journalists that it was wrong for Chipostle to have launched such a campaign (Tobin, 2013).

The incident can be prevented in future by the company defining a clear social media policy as well as its marketing goal. Chipotle positions itself as a restaurant that sells “food with integrity” and one that stresses on transparency and clarity in its customer relations. Since branding on social media platforms is a long term process, just as branding in traditional media, the company should understand that it risks losing customer confidence through such staged “hacking” of its own marketing channel. This would ultimately be viewed by customers as an unethical activity, and they would as a result lose trust in the company (Wilms, 2013). Following the eight ethical principles outlined by Simon Rogerson, it appears that the action was neither honest nor fair – it violated the trust of unsuspecting twitter followers (Brinkman & Sanders, 2012). Since the incident did not add substantially to Chipotle’s social media followers, it should realize that all publicity is certainly not good publicity and therefore should refrain from such campaigns in the future. 

 References

Annual Report. (2013). Chipotle Mexican Grill, Inc. Available at http://ir.chipotle.com/phoenix.zhtml?c=194775&p=irol-reportsAnnual

Brinkman, W. & Sanders, A. (2012). Ethics in a Computing Culture. Retrieved from http://www.cengagebrain.co.nz/content/9781133990932.pdf

Forbes. (2014). World’s Most Innovative Companies. Retrieved from http://www.forbes.com/companies/chipotle-mexican-grill/

Huffington Post. (2014). Chipotle Faked Its Recent Twitter Hack, Confirms Company. Retrieved from http://www.huffingtonpost.com/2013/07/25/chipotle-faked-twitter-hack_n_3652534.html

Tobin, A. (2013). Social Justice: Chipotle’s Pathetic Misuse of Social Media. ARCompany. Retrieved from http://arcompany.co/social-justice-chipotles-pathetic-misuse-of-social-media/

Wilms, T. (2013). The Fake Corporate Twitter Hack #Fail. Forbes. Retrieved from http://www.forbes.com/sites/sap/2013/07/26/the-fake-corporate-twitter-hack-fail/

Blog 6: My Return On Investment (ROI)

 Enterprise 2.0 tools, including wiki pages, blogs, video feeds, and a variety of other social networking technologies have been employed by many businesses recently. These tools are used for better employee management and increased employee collaboration, resulting in increased efficiency and competitive ability (Huddle, n.d.).

In this blog I shall consider a fictitious company that employs almost 50,000 people across the nation. It has introduced Enterprise 2.0 using IBM collaboration tools and auditors want a perspective on ROI of the project using a framework developed by Forrester Research (Forbush, 2010). The analysis will be performed considering both tangible and intangible benefits for the company.

The tangible benefits can be grouped into four principal categories. The first is revenue generation from products that were the result of, or whose designs were benefited from, generation of ideas through Enterprise 2.0 tools. The Forrester Research report stated that collaboration tools would typically increase new ideas by 0.5%. If the company generates revenues of $20 million from its new products, then this translates to revenues of $100,000. 

The second category is lower time-to-market. The report estimated that 1% of all products are benefited from this, and let us assume that the corresponding revenue benefit to the company is $100,000.

The third category is revenues from incremental sales. This occurs because the IBM collaboration tools allow sales executives to post their best practices on their portion of the intranet and link these to demonstration videos, thus leading to improved sales performance from the entire team. We shall assume that the company experienced increased sales of $900,000 and it operates at a margin of 25%. Therefore, the sales revenue increased by $225,000.

The fourth category is saving due to staff productivity. The collaboration tools are designed to disseminate knowledge faster and this helps employees at all levels access relevant information more quickly to improve their efficiency (Razmerita, Kirchner, & Sudzina, 2009). The Forrester report stated that an employee can save 10 minutes on average every time she accesses the intranet instead of going to the library. Considering factors such as employee strength and hourly remuneration for each employee, let us assume that this translates into an overall saving of $1,000,000.

Increased revenues from tangible benefits of Enterprise 2.0 for the company are a sum of the four categories discussed. This is $1,425,000.

There are a number of intangible benefits also, such as greater employee engagement, lower employee turnover, diffusion of good ideas across departments and hierarchies, and quicker and more informed to customer issues (Wong, Bosua, Kurnia, & Chang, 2013). Let us assume, conservatively, that these benefits transform into a revenue generation of $500,000. Then the total increased revenue from tangible and intangible benefits is $1,925,000.

Let us assume that the company initially invested $1,000,000 for purchase and installation of the system, and that it has a recurring cost of $200,000.

The formula for ROI for each year is total benefit minus total expenses expressed as a ratio of total expenses till that year, multiplying by 100 (Newman, Thomas & Ebrary, 2009).

 

Using this formula, first year ROI is ([1925000 – (1000000 + 200000)]/(1000000 + 200000))*100 = 60%.

The second year ROI is ([2*1925000 – (1000000 + 2·200000)]/(1000000 + 2·200000))*100 = 175%.

The third year ROI is ([3*1925000 – (1000000 + 3·200000)]/(1000000 + 3·200000))*100 = 261%.

The strength of my ROI analysis is that I have considered a number of tangible benefits according to an accepted framework and I have also considered intangible benefits. The weakness is that the intangible benefits are difficult to enumerate. In addition employee performance is dependent on a number of factors, social technology being only one of these. Therefore, the figures mentioned are only rough estimates.

References

Forbush, N. (2010). Total Economic Impact^TM of IBM Social Collaboration Tools. Forrester Consulting. Retrieved from ftp://ftp.software.ibm.com/pub/lotusweb/Forrester_TEI_IBM_Social_Collaboration_v20Sep10.pdf

Huddle. (n.d.) Communication & collaboration in the Enterprise 2.0 world. Retrieved from http://www.huddle.com/files/white-papers/Huddle_white_paper_-_Collaboration_-_Communication_and_collaboration.pdf

Newman, A., & Thomas, J. (2008). Enterprise 2.0 implementation. New York: McGraw-Hill Professional Publishing. 

Razmerita, L., Kirchner, K., & Sudzina, F. (2009). Personal knowledge management: The role of Web 2.0 tools for managing knowledge at individual and organisational levels. Online Information Review, 33(6), 1021-1039. doi:10.1108/14684520911010981 

Wong, D., Bosua, R., Kurnia, S. & Chang, S. (2013). Leveraging Enterprise 2.0 for Knowledge Sharing. 24th Australasian Conference on Information Systems. Retrieved from http://mo.bf.rmit.edu.au/acis2013/215.pdf

Blog 5: Target Corporation

In this blog activity, social media has affected many companies and retailer corporations around the world. One of the global retailers is Target Corporation, which is an international discount retailer that has adopted a number of social technology measures. Target is located in Minneapolis, Minnesota by and established by Doug Dayton and his brothers in 1962, and it is the second largest retailer in the U.S. behind Wal-Mart (Target Corporation). Then, it has expanded to be more than 1220 stores located in about 47 states, then reached to Canada and Australia (Target Corporation). These stores carry a range of clothing and some non-perishable grocery items; some stores also sell electronic items, sports accessories, furniture and other products.

Two store variants have been introduced during the last ten years – one is PFresh, selling perishable food items and groceries; the other is Super Target, which is essentially a hypermarket selling a very wide range of products. According to the annual report (2013), Target Corporation earned total revenues of $72.3 billion as of 2013 and had net earnings of $1.9 billion. A quarter of this revenue was generated from sales of household essentials (Annual Report, 2013).

 

Target has a prominent and active presence on almost all social network platforms/channels. It has been suggested that social network properties and the use of technology by individuals can be well synchronized to design an effective selling organization (Chung & Hossain, 2010). Target uses this philosophy well in its online communications. For example, it maintains multiple hashtags on Twitter corresponding to different customer requirements and keeps announcing exclusive deals and offers through these hashtags. This means, every hashtag is used for a specific purpose to meet users’ needs.

For example, #TargetDeals is used for the clearance and hot deals, so the customer can be updated via Target website or twitter to get the deal. Here, we can see how they bring all offers in one place to the customer, and the customer can check that easily.

 

Also, there are #TargetStyle and Facebook that used for the latest fashions for customers, so the customer will might not miss the newest models and styles. We can see here how they use the social media tools in marketing and sales functions, and these might include interaction, marketing and social commerce levers that McKinsey published in 2012. Additionally, there is a popular hashtag that is related to bring the latest events, news, partnerships and collaborations, #TargetNews, and Bullseye View website is an official magazine used for the same purposes. Here we can apply the operations and distribution functions that published by McKinsey.

 

Another hashtag, #AskTarget that is used for customer support/care via Twitter as a function of McKinsey’s levers, and it is used to reply to consumers and answer their questions. Target replies quickly to many customer posts on Facebook and other social media sites, and also manages its public relations through these sites (Hitz, 2014). Similarly, they regularly post videos and images on Facebook, YouTube, Pinterest and Instagram, and link these posts with each other.

Furthermore, Target has an “app” called Cartwheel that allows customers to use their smartphones as barcode scanners during checkout, and also share activities on Facebook in term of communication with others. It is evident that Target takes a serious interest in social technology.

 

References

Annual Report. (2013). Target Corporation. Retrieved from https://corporate.target.com/annual-reports/2013/financials/financial-highlights

Answers. (n.d.). Target Corporation. Retrieved from http://www.answers.com/topic/target-corporation

Chung, K. S. K. & Hossain, L. (2010). Towards a social network model for understanding information and communication technology use for general practitioners in rural Australia. Computers in Human Behavior, 26(4), 562-571.

Hitz, L. (2014). Target on Social Media: How the Retail Giant Markets to a Social Audience of 138 Million. Simply Measured. Retrieved from http://simplymeasured.com/blog/2014/05/19/target-on-social-media-how-the-retail-giant-markets-to-a-social-audience-of-138-million/