From Oslo I attended an economic briefing from the Chief Economist of a major European bank yesterday. It was fascinating to hear the financial crisis and recession described from the perspective of the OECD, where the recession has been much worse than in North America. For example, Germany’s GDP fell 6.5% from its peak, with its manufacturing down 25% and exports down 26%. And despite massive European fiscal and monetary stimulus, his expectation for 2010 and 2011 is slow OECD growth, as is mine for the US economy. His most insightful comment was a quote from a UK central banker, “It’s about the level, stupid,” an analogy to Bill Clinton’s 1990’s campaign comment that helped him knock George Bush out of the U.S. presidency. The gap between actual economic performance and full-capacity economic performance is so great across the industrial world that the…
The Corner Gas (Book) Price Wars
Do you remember when gas stations offered auto repair and maintenance services and teenage male employees filled your gas tank without an extra charge? Then you remember the corner gas price wars in which two gas stations located opposite one another on a busy street corner used penny differences in the price of a gallon of gas to lure drivers to their shop. I always drove to the gas station with the cutest boys. My parents shopped price. Can the Amazon Business Model Retain Its Lead? Walmart and Amazon are engaged in the same war today. The first battlefield is best selling books, where the two on-line retailers are losing money for each “Top 10 List” hardcover book they sell and ship to customers. But the war will be waged on a much larger battlefield – leadership of on-line retailing, the consumer channel…
How Does Gourmet Magazine Reach Its Demise as Julia Child’s Cookbook Reaches #1 on the NYT Best Seller List?
Conde Naste is rebalancing its portfolio, with consulting firm McKinsey & Company at its side. The global strategy-guru firms (McKinsey, Bain & Company, etc.) are like the Big 8 (now 4 and counting) accounting firms that bring “credibility” to management’s decisions. If the esteemed McKinsey & Company said to get rid of Gourmet Magazine, it must make sense. But does it> A Business Model Framework Out of Step with the Times Some context: The Conde Naste business model is failing on the profit front for two reasons. First, Web 2.0 and now Web 3.0 is revolutionizing media. More important, the recession is shrinking advertising pages. Conde Naste’s strategy is to reduce brands in each content category, with the larger circulation brands surviving as they offer, at least in today’s dollars, more advertising revenue. So we will have fewer bridal magazines and one less…