Friday, January 29, 2010

The Economy 2007-2009 / GDP / Wall Street Journal

GDP has gone up two straight quarters, rising 2.2% in the third quarter after a year of contraction. In all of 2009, GDP fell 2.4%, the biggest drop for an entire year since 10.9% in 1946. GDP rose 0.4% in 2008 and 2.1% in 2007.

Interesting to see that both 2007 and 2008 had positive GDP growth. The 2009 GDP drop seemed a lot deeper than 2.4%. The employment situation certainly was a lot worse for people that lost their jobs or had hours reduced.

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Thursday, January 28, 2010

Bloomberg: "Does the Apple iPad Make Strategic Sense?"

It's hard to bet against Apple. The two things I admire most about the company are its ability to think holistically about business models (iPod + iTues, iPhone + the App store, iPad + iBookstore) and its willingness to keep innovating. Imagine how different it would have been if Apple stopped at the first generation iPod, or just rode the iPod for as long as it could. Its willingness to step out and enter into new categories is an important lesson for all companies.

Apple is certainly one of the five most innovative companies today. They make consumer friendly products that do new as well as old tasks (email etc) for consumers. They have been seemingly able to raise the bar continually.

If one is not risking failure, one is not making the movements that lead to innovation. For the most part, it looks like Apple got past most of the challenges they came across in the development of the iPad.

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Startups In The News

In a sign that 2010 really is a new year, several new start-up "incubators" are slated to pop up around Silicon Valley in the next few months.

Incubators typically help nurture small businesses by providing space, services and mentorship to entrepreneurs, often for a fee or an equity stake in their business. Well-known incubators include Y Combinator and Plug and Play Tech Center, with many venture-capital firms also incubating start-ups.

As the economic recovery becomes more apparent, more people will be reporting on startups. Certainly business publications such as the Wall Street Journal and Business Week will feature them prominently in the near future.

It was not too long ago where the Wall Street Journal had a graphic indicating that every quarter about 200,000 new businesses are launched in the United States.

Link to startup graphic

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Tuesday, January 26, 2010

Coca Cola Bottle Innovation

Coca-Cola Co., under fire from environmentalists for using plastic bottles, has introduced a new packaging material made partly from plants. The container has "the same weight, the same feel, the same chemistry, and functions exactly the same way" as a regular plastic bottle, a Coke spokeswoman says.

Beverage manufactures are under pressure on multiple fronts.

Environmentalists want things like carbon removed from the CPG supply chain. According to the article plastic (PET) is not recycled at a high rate. Here in Michigan there is a ten cent deposit on beverages that are carbonated. The redemption rate on recyclable containers, including cans, is reported as between 95% and 99%.

The lighter beverage makers can make containers, the more that is saved on fuel costs that are part of distribution. It's a delicate balancing act. Strength must be maintained and the package must protect the contents from changing when exposed to environmental conditions that vary. Heat and light being two that may affect the contents.

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Saturday, January 23, 2010

Harley-Davidson: Tough Economy & Entry To India

One bright spot for Harley-Davidson has been its performance in international markets, where its brand has strong appeal. Last year, it announced plans to enter the fast-growing Indian motorcycle market and will introduce 12 models there this year.

Premium products were hit hard in the '07-'09 recession. Harley-Davidson is a premium product. It's rather amazing that HD was able to retain profitability for much of the recession.

It will be interesting to track how the HD entry to India progresses. The economy in India is growing very rapidly.

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Friday, January 22, 2010

The Wall Street Journal Reports on Foursquare

Tristan Walker, the head of business development for Foursquare, estimates current Foursquare app users to be around a quarter of a million. He says the company hopes to make money by working with “local mom and pop shops” as well as mid-sized retailers. For instance, he said, Tasti D-Lite recently launched a Loyalty Program on Foursquare, through which customers can earn and redeem points by tweeting or checking in on Foursquare while stopping by the ice cream chain.

Interesting article. Gaining the support of small establishments on the ground is hard. Perhaps they will have the mayors and super-users (currently there are three super-user levels) spread the word on how Foursquare can help.

Three forces for local to harness.
Visits - Who When and Where?
Loyalty - How often?
Word-of-Mouth - Is the message being spread? New levels of awareness are critical for sales growth.

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Thursday, January 21, 2010

Digital Content Moving From Free To Fee?

Many media analysts expect that Comcast Corp.'s plan to buy a controlling interest in NBC Universal would give it a significant say in the future of online video -- and accelerate Hulu's move to a subscription service.

It appears that we may be near an inflection point for online digital media. New powers seek to tilt the field in their favor (content creators and content distributors). You can't blame them for trying to get the full price the market is willing to pay.

What content has value?
What is the value of that content?
Is there a mix that increases total profits even if the most valuable content is seemingly under priced?

What is the optimal price to maximize profits? This is currently unknown and may remain that way for several years.

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U.S. Economy Is Recovering

Jan. 21 (Bloomberg) -- The index of U.S. leading indicators rose more than anticipated in December, a sign the economy will keep growing through the first half of the year.

The New York-based Conference Board’s gauge of the outlook for the next three to six months climbed 1.1 percent, the most in three months, after increasing 1 percent in November. The gain exceeded the median forecast in a Bloomberg News survey for a 0.7 percent rise.

This is good news. The economy is finally picking up speed and showing signs of forward progress. There are nice GDP estimates at the end of the full article on

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Wednesday, January 20, 2010

Kraft Foods & Cadbury Reach a Deal

After months of talks and stalled negotiations, Kraft and Cadbury finally make a deal.

Wall Street Journal:

On the takeover front, Kraft persuaded Cadbury to accept its sweetened $19.4 billion takeover offer.

Hershey made some movement to reach a deal with Cadbury while the initial gestures by Kraft were rebuffed. Perhaps the involvement by Hershey further emboldened Cadbury to hold out for a better deal longer than they might have have without Hershey’s interest.

The talks with Hershey provided Cadbury with extra leverage in negotiations with Kraft.  Hershey may have been successful in getting Kraft to pay more then they wanted to.  This deal will be worth revisiting several times in the next five years. Suggested time frames after the deal closes.

  • 6 months
  • 1 year
  • 2 years
  • 5 years


  • Are there reduced costs as a result of the merger?
    • Are there greater economies of scale in commodity purchasing (reduced costs/greater buying power)?
  • Are Sales increasing slower, the same as, or faster than competition?Are sales growing slower, the same or faster than category growth?
  • Are categories expanding or contracting?
  • Are new markets being entered?