Diet Coke Overtakes Pepsi-Cola

During this semester we've spent a lot of time analyzing and learning about the Cola Wars. Because of that, I felt it was appropriate to write my newest entry on Diet Coke. As we know, the top two rankings for Cola products have historically been a battle between Pepsi-Cola and Coca-Cola.  However, U.S. sales of Diet Coke overtook those of Pepsi-Cola for the first time in 2010, making the carbonated soft drink the number 2 drink in the country behind Coca-Cola. In fact, last month, Pepsi-Cola's market share fell 0.5% points while Diet Cokes just slipped 0.1%.

So why the sudden decrease in market share by Pepsi-Cola? Well, we know that all orginzations are perfectly  desgined to get the results they get. Also, that building alignment requires two following fundamental ideas: first, an understanding of the system as it is today and second, the knowledge and skills to make it work better. As we learned in class, we can rely on the 7-S model to help us understand whether a firm is in complete alignment, or disalignment.

Strategy

To answer the question above, Pepsi-Cola decided to try a new advertising campaign. They made a HUGE gamble to not post any Super Bowl commercials in 2010, dramatically hurting the marketing segment of the company.  Instead, Pepsi-Cola decided to launch the Refresh Project, an online program that disbursed $20M in donation to charities. In essence, the companies strategy of competing with Coca-Cola was misaligned. Even though Pepsi-Cola had good intentions to help charities (which is probably the moral act to accomplish) it lost its vision on becoming the industry leader in U.S. soft drinks.  Ulitamtely, I think it was a foolish idea to switch to a new system of marketing.  Why change something if it's worked for a number of years? There's been no paradigm shift in the industry and the Super Bowl is one of the most promising way's to market for a company.

Structure

Also, one may think that Pepsi-Cola's brand is to prestigious and that a commercial wouldn't hurt the company financially.  That may be true, which is why Pepsi-Cola was also misaligned structurally (adding to the loss in over market share). Pepsi-Cola spent billions of dollars on bottlers to change the basic grouping of activities by bringing products to the shelfs of stores more quickly.  All in all, this process has not financially been succesful, and Pepsi-Cola reportedlyhas  not been able to cover the costs of the bottlers with there revenues.

To conclude, I believe Pepsi-Cola should have kept there original strategy and structure.  They were doing just fine in the Cola Wars, competing neck and neck with Coca-Cola. However, with the recent evens in Japan, this may eventually help Pesi-Cola.  The money they raise could become a great capital contributor for the families in Japan, which would provide fantastic marketing opportunities. But for now, I believe that Pepsi-Cola should focus on old strategy and structure ideas to overtake Diet Coke and become the 2nd largest soft drink firm in the industry.
http://online.wsj.com/article/SB10001424052748703899704576204933906436332.html

What happened to Blockbuster?

According to a new report, Blockbuster (the former iconic movie rental store) has decided to put itself up for sale. Last year, Blockbuster filed for chapter 11 bankruptcy in an effort to restructure debt.  This year, however, sales have been low leading to an effort to raise more money. All in all, Blockbuster is no longer a giant in the movie rental business.  In fact, the leading contendor to win Blockbuster is Monarch Alternative Capital who gave Blockbuster $125M for the 2010 turnaround (which obviously didn't help).

So, what happened to Blockbuster? Well, you really only need two words to answer this question; Redbox and Netflix.  I wouldn't say these companies originally stole the movie rental business, they were just smarter at the game.   Both realized that individuals don't want to rent a movie for 4 days at a time with a charge price of $5. They've targeted what the customers want.  Focusing on minimal rental time at lower cost.  Not to mention, allowing movie lovers to stream live movies to there homes for a monthly charge.

Redbox and Netfilx took a very similar strategic approach as Cirque du soleil, who tweaked the rules of the circus industry. Cirque du soleil knew that by focusing on certain areas, they could take over the traditional circus.  These areas included no animals (which decreased expenses), yearly production (increased revenues), story or theme (which intrigued customers) and many more.  In the end, Cirque du soleil just built upon the small principles that the traditional circuses created and made it into a better show that was targeted toward the customer.

Blockbuster, like the traditional circus, didn't follow the paradigm shift.  By not strategically advancing, both companies/shows we're left in the dust by other smarter, well designed businesses.  If Blockbuster would have simply focused there attention on the new advances in the industry, they wouldn't be looking for buyer today.

http://www.afterdawn.com/news/article.cfm/2011/02/11/blockbuster_in_talks_to_sell_itself

Google eyes Southeast Asia

There are many reasons why Google is such an incredible company.  One of those reasons is explained by Jim Collins in his best selling book, "Good to Great." Mr. Collins explains that great companies are more like hedgehogs - simple, doydy creatures that know "one big thing" and stick to it.  With over 80% of the search engine market share, I'm pretty sure it's safe to say Google has figured out its "one big thing" and has stuck to it.

Google has decided to increase its industry dominance by targeting Southeast Asia, where internet traffic is rising and the use of technology is gaining speed.  In fact, Malasyia's internet penetration is around 60% and its mobile penetration is around 100%, meaning almost everyone carries a cell phone. Ultimately, this means that most of the internet users in Southeast Asia will be accessing the internet through mobile phones rather than PCs. 

So what does this mean for Google?  Well, as we learned in class, Amelio described the company Apple as a boat with a hidden treasure on board.  However, this boat also has a hole in it and everyone on board is rowing in different directions. If Amelio used the boat analogy with Google, I'm pretty sure he would say something like this,  "Google isn't a boat with a hole in it, it's an aircraft carrier with planes, helicopters and rafts (all of which have multple treasure chests on board).

Yes, Googles seach engine is great (aircraft carrier), but it's expansion to Southeast Asia also explains its creative strategy (plane).  This is also evident in its Android products (raft) and Google TV (helicopter). By expanding to other niches, Google has and will continue to create future profit pools that will again, increase its industry dominance.
http://online.wsj.com/article/SB10001424052748703293204576105652105764250.html

Time to start selling shares of Apple?

I generally prefer to analyze companies that aren't incredibly popular to the public eye, but this story has intrigued me.  Steve Jobs, Apples beloved CEO has decided to take his second medical leave of absence in the last two years. The timing of this announcement is interesting, as it came the day before quarterly profits were announced to the public.  Profits surged 78% during the 1st quarter to $6 billion as consumers clamored for iPhones and iPads.  However, the fabulous news of the company’s profits was overshadowed by the announcement of Steve Jobs.  In fact, Apple's shares dropped well below 3% (1/18/2011) to roughly $325. 

Should investors be worried about the absence of Steve Jobs?  No. Think about the timing of this announcement (which helps prove Steve Jobs is a level 5 leader). Just one week ago, Verizon announced the long anticipated arrival of the iPhone.  Analysts believe that the iPhone's market share will increase from 25% to 36% of all smart phone users.  Also, as stated previously, the announcement came a day before quarterly earnings were publicized. Net Income has rocketed up to $6.43 a share while sales soared above 71% to $26.74 billion. The statistics prove that Apple continues to sell merchandise based off its different and broad scope.  Steve Jobs obviously cares more about the overall success of the company than himself and has put the company in good hands with Tim Cook.  I personally believe this “worry stage” of Steve Jobs will likely come to a hault, as the company’s numbers will  soon overshadow his temporary absence.  As for now, I would recommend holding onto my shares of Apple.
http://www.washingtonpost.com/wp-dyn/content/article/2011/01/19/AR2011011900080.html