Want a yogurt with that Venti Latte? Starbucks and Danone to join forces

Many of us probably start our day with a Starbucks coffee and/or maybe a yogurt from home.  Now Starbucks is joining forces with the French powerhouse Danone to offer a new branded yogurt called Evolution Fresh in Starbucks stores.  Not only is Starbucks going to sell the new brand in their coffee houses by 2014 but the two companies plan to expand into grocery store aisles by 2015.   Starbucks proved they could get the American public to pay $4 for a coffee but can they have the same success with yogurt?  Both Starbucks and Danone are betting yes that they can.  Both companies are looking to take advantage of a thriving yogurt market in the US.  Although their is a lot of competition and even less dairy shelf space available at grocery stores the yogurt industry continues to grow in the US.  Experts say that yogurt is growing in popularity because of the convenience and health benefits.  Danone and Starbucks are hoping this new lanch will put them  in a position to take more market share.

Currently Americans consume on average 13lbs of yogurt per year, a large number but only a fraction of the amount of yogurt that the Europeans currently consume.  For example the French consume over 75lbs of yogurt each year.  Combine that with the pace at which yogurt is growing in the US and the 70 million consumer who currently eat, drink or shop at Starbucks and both companies are hoping they have a recipe for revenue.

Although both Starbucks and Danone posses brand loyalty and recognition both companies have agreed to brand the new yogurt under the name “Evolution Fresh”.  Is this a good idea or just another complication in what will prove to be a very difficult project to manage over the next 12 months?  Starbucks is offering yogurt because they see their customers flocking towards healthier alternatives and Danone is joining forces with Starbucks because they desperately want to be the leader in the American yogurt craze, but can two mega companies work together and tandem to produce a success?  If you ask me this is going to be a very difficult project to manage and Starbucks and Danone have their work cut out for them…What might prove to be most difficult for this new venture is the vast differences in cultures between Dannone and Starbucks and the French and American businesses, only time will tell if Starbucks and Dannone can make beautiful yogurt together.


Can Lenovo Do It?

While the majority of us receive email, surf the web and text message on our Apple Iphone’s, Samsung smart phones or even blackberry’s we rarely think about or identify with the number 1 maker of computers in the world.  After a very successful acquisition of IBM’s money losing PC business in 2005 Lenovo a Chinese company has asserted themselves as the leaders of the PC business.  While more traditional PC powerhouses like HP and Dell are faltering Lenovo is beefing up their supply chain, making acquisitions and setting the stage to dominate the mobile phone and tablet business as well.

Lenovo is perhaps one of the most unique Chinese firms and possibly the world.  Lenovo has made itself a truly global organization.  They have dual headquarters in Beijing and North Carolina along with top executives stationed in 7 different countries.  In addition Lenovo still handles all manufacturing and R&D in house versus outsourcing.  Lenovo’s CEO Yuanqing Yang believes that Lenovo’s strategy of production and R&D has allowed them to move quicker than the competition and as a result they are gaining market share far faster than any of their competitors.   Just last year Lenovo picked up 13% of the PC market share in the US, a number that by far outpaced HP and Dell.

Every year Yuanqing Yang, known around Lenovo as YY hosts a dinner at his estate with all of his top lieutenants to discuss the upcoming year and growth strategies.  What started as a simple toast years back has turned into a tradition where each business head holds a glass of wine in their hand and sets a goal for their own business unit.  This year many of the toasts centered around a rise in Smartphone’s or retail growth.  Lenovo is focused on overtaking Apple and Samsung in many categories.  Lenovo is slowly creeping into the retail and Smartphone sector like Apple did years ago.  Lenovo is currently offering Smartphone in Asian countries where they have more brand recognition and expanding their retail stores into new countries.  Instead of making a big splash and entering every market Lenovo is slowly building up their reputation and dominating the markets where their presence is already known.

What struck me as extremely interesting and well thought out is Lenovo’s current growth strategy.  Instead of just trying to jump into the Smartphone market in North America they are starting slowly where Lenovo currently has the brand awareness of an Apple or Samsung in the US.  In addition Lenovo has a very good feel for the retail industry and what type of stores/outlets to have in what areas.   For example Lenovo has a very high end Apple type store in Beijing but just a few miles away they have a smaller less flashy store in the local electronics market.  After reading this article I do not think it will take that long for Lenovo to transform itself from the PC you get at work to a household name on a number of devices for everyone.

Do you think Lenovo has what it takes to dominate these competitive sectors in the US and do they have the right strategy to build their global brand?



Facebook’s Mobility Challenge

Facebook’s Mobility Challenge

Facebook has announced its inability to monetize the more than 400 facebook members who access the site via a mobile device.  As part of their public offering facebook had to reveal risks that the company faces in the upcoming years and one that they highlighted is their inability to generate meaningful revenue through mobile devices.  Overall spending on mobile advertising in the US is expected to jump 80% next year to over $2.6 billion and facebook needs to find a way to capture a large chunk of that spend if they want to continue to be a powerhouse in the tech industry.  Although a large number, the mobile advertising industry is still very immature when compared to TV, print and online advertising.  The inability to generate significant revenue on mobile advertising is not unique to facebook as other large companies are struggling as well.  Although facebook has listed their inability to generate significant revenue from mobile devices as a risk many believe that facebook is deliberately delaying ads on mobile devices, similar to their strategy with the traditional facebook website. 

This article brings up several interesting points about the mobile advertising market.  This market is poised to grow over 80% in the upcoming year; however marketers still do not know how to fully capitalize on this market.  According to the article and several other experts consumers are not yet ready for advertising to appear on their mobile screen.  In most cases mobile screens are much smaller than those on traditional PC’s and consumers do not want to see clutter on their phones and they do not want anything to jeopardize the speed at which they pull up content on their mobile devices.  Google is currently the leader in mobile advertising however they are still not fully capitalizing on the vast potential that this market offers.  Another interesting point that this article brings up is the other ways that companies like facebook can make money on mobile devices.  Currently Google allows developers to great apps and games and offer them on their android platform free of charge while companies like Apple and facebook charge a percentage of app sales from each developer.  This is one reason why facebook was reluctant to create and Ipad app for facebook because now facebook needs to share revenue from faecbook apps with Apple.

With the current model and fight for dollars in the mobile market there are several battles going on within the war.  For instance many believe that facebook deliberately created their Ipad app with bugs so their members will just access facebook via the web directly versus the apple app.  This would be a very interesting strategy especially because facebook openly admits that over half of their users access their website via a mobile device.  It is obvious that there is still great potential to be reached in the mobile market and facebook is testing models with streaming advertisements that are attached to a member’s friend.  The question that still remains is facebook’s current mobile strategy one that will make this segment profitable?  Facebook must make a lot of strategy decisions in the upcoming months and two of the most critical strategies will be how much resources to devote to mobile and how to attack this segment.  If you were facebook how would you attack this segment?

You can access this article at the link below.

In Mexico Auto Plants Hit the Gas

While the US has been heavily promoting manufacturing and trying to boost the manufacturing sector of the economy, it is our neighbor to the South that is making waves and building a strong economy from an industry that was born in Detroit, MI.  Just six short years ago Mexico was 9th in the world in auto manufacturing and today they are the 4th largest manufacturer in the world only trailing Germany, Japan and South Korea.  Now Mexico is forecasting that they will pass all of the countries ahead of them within the next few years because more and more automakers are building plants in Mexico.  Volkswagen, GM and Daimler have all announced new plants in the past year putting Mexico on pace for their lofty goal.

The question becomes why is Mexico all of a sudden the most attractive place to build a car versus the traditional powerhouses like Germany,Japan and the US?  The global shift towards smaller more fuel efficient cars has cut small margins even smaller in the auto industry.  Car makers are attracted to Mexico because of the currency advantages, the ability to operate plants 20+ hours per day and the skilled labor force that already exists in Mexico.  At first car makers were concerned quality would suffer in Mexico but they tested cars built in Mexico versus those built in Japan and cars being produced in Mexico are passing with similar scores to those automobiles that are produced in Japan. 

Mexico is forecasting huge growth in the sub compact auto industry not only because of the slumping global economy but also because the US government continues to push efficiencies in mileage and fuel economy.  The higher demand for these smaller cars has forced car makers to adjust how and where they produce their automobiles. In addition to the labor savings and higher demand for subcompact cars Mexico is extremely appealing because of its close proximity to the US.  In addition to ease of delivery Mexico has a number of free trade agreements with over 40 countries. Mexico’s free trade policy is a stark contrast from other countries like Brazil who has mostly shut down free trade.  Car companies can now make cars at a cheaper rate Mexico and have them delivered to the US in a number of days versus the weeks it takes to ship a car across oceans from Asia or Europe. 

The fact that Mexico is rebuilding their economy around the auto industry and that early entrants such as Nissan have seen huge success off of their investment in Mexico,  is a nice reminder that we truly live in a global economy.  Every day companies are faced with tough decisions on where to manufacture their products in order to achieve the highest quality at the most efficient rate.  When improving margins or developing a new product a major business strategies are made on where to manufacture and it is bringing new opportunities to countries all over the world.  The US will have to continue to reinvent our economy and image on the world stage in order to compete with up and coming countries like Mexico.