How do you compete on cost?

Many companies make a point of competing on cost – making stuff cheaper than their competitors. One example would be an airline called Ryanair. Its CEO Michael O’Leary in this BBC interview has some interesting things to say about flying and his vision of what  air-travel should be.

He seems pretty determined to make flying cheaper, but also it seems that Ryanair’s model is actually to build revenues from the ground up. You start with a rock bottom price, say 1 pound for flying standing, but then you add fees for carry on, printed boarding passes, priority boarding, assigned seating, etc. In this respect another company, from a totally different industry, welding equipment manufacturer Lincoln Electric has a totally different approach. Continue reading

iPhone – jobs creator or loser?

Here is a fascinating video posted by New York Times about iPhone and how it helped to increasingly transform our economy from manufacturing to services. It is thought provoking and I do not entirely share author’s point of view. I agree, we lost manufacturing jobs and, indeed, service jobs create less supporting jobs around them. However, in my view, this particular example of iPhone is an exception from the general trend.

Consider all the app-development business that started, iTunes market, iCloud – I suspect that the jobs multiplier for iPhone is much bigger than 1.7! And why is the Apple worth more than Exxon? Because all of these generated businesses feed back into Apple. That’s I think is a genius of Steve Jobs and Apple’s strategy – to create an ecosystem that is closed loop but grows from within.

Will globalization help Ford manage inventory?

So here we go again – car inventory at Ford is growing, specifically, new Focuses and Fiestas. WSJ reported on this recently and so did my colleagues at Kellogg. The graph of inventory is indeed telling, so I’ll repost it here.

We know what such inventory stockpiles usually leads to – lower prices. This time, though, it can be different.

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Selling ‘opaque’ product

Since I mentioned Priceline in my previous post, it seems like the right place to resurrect one of old posts on the subject. Everybody knows how Priceline works: they sell you a product with certain characteristics, without revealing it at the time of purchase. So the product is opaque. In exchange they let you bid for the product and if the bid is high enough, it’s accepted and product is sold. Or is it?

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