Monday, May 25, 2009

Factoring In Deflation: It's Still About The Customer's Needs

We, as a nation, are finally to the point where we have a long list of factors that led us to this depression-like economy. Many tactics have been deployed to stop the decline and hopefully spark some signs of growth. As it stands now, the verdict is still out on how these things will play out in the near future. I've been waiting to hear a little about one possibility, which can be called, The Age of Reality and Accountability.

During one of my last few classes of my MBA program, I introduced the concept of deflation to the professor. It was around October, so it was far from the radar of most business-minded people. However, after some debate and thought, my professor agreed that this could be a possibility. Now, I'm hearing a few analyst begin to make an ever-so-slight mention of this by using words like plateau, lull, and other signals of hope, which is a good thing when as it relates to confidence. But here's another angle on not using the "D" word, it hurts the businesses that are basing their model on things going back to "normal". I've placed the word normal in quotations because normal equates to a consumer who saves less and spends more on credit. This applies to B2B sectors as well. Thus, most businesses aren't adjusting capacity, forcing extreme measures of cost-reductions, or mapping out where their customers of tomorrow will be in the marketplace. Instead, they are waiting for the boom in the economy again. If you've never seen a market downturn like this one before, then what makes you think there actually is a recovery in this thing?

Here's the definition of deflation - a contraction of economic activity resulting in a decline of prices. My theory is based on how capacity and demand estimation is factored in by most companies. Credit is a normal and natural thing, but only if income remains steady, and hopefully increases. The cost of living has steadily increased, while incomes have just been steady (an increase or decrease is in question at this time). If you factor in growing unemployment, you can easily see how consumer buying power has been reduced dramatically. If this is the case, at least two things have definitely changed for businesses - price elasticity and price equilibrium. Thus, there must be a change in capacity, product mix, or other components that make up a business model, which supports an overall business strategy.

I hope this is not the case, but I don't think it's wise to wait for something to happen. The current winners in this economy (McDonalds, Home Depot, and Dollar General) are making the adjustments necessary to MEET THE CUSTOMERS NEEDS. A few analyst are throwing around the inflation scare in the market, but I don't really see how inflation works in this type of economy. Okay, gas goes up to $4 again. It will just mean that the economy will tank even further, and the OPEC gang will realize the error in their greed. But's that's another topic.

Finally, my professor added that deflation included a devaluation in the currency. All I can say is $2 trillion. I told a friend the other day, "Cash is truly king", and I mean that. This economy is all about playing within yourself. If you have the ability to make some moves, make them. Just remember, there's nothing wrong with 10% annual growth. That was the one thing people forgot, which is part of the reason we are where we are today.

Thursday, May 21, 2009

My Coffee, My Inspiration, My Girls

I know this is all about branding, but it would be wrong if I didn't, every once in a while, give a shout out to my two daughters. They keep me going. I'm excited about them, and for them.

THANK YOU GIRLS, for the pick-me-ups every day when I get up in the morning, and every day when I get home.

Monday, May 18, 2009

Web 2.0 Movement or Are We at Web 3.0

For some strange reason, I've been doing a lot of writing and research on matters related to Web 2.0. It seems the development of social media has progressed faster than expected. Additionally, the current economic condition has opened the door for new cost-effective opportunities and ideas.

It seems that technology is reaching another critical point in business and society. Mobile technology is, for the most part, ready to take the next step. Social networking has fleshed out the once sterile environment of the web. NetBooks, combined with web applications, have introduced a new way of personal computing. Mix Google and a few other players in the mix, and it's not hard to see that something will be born in technology, which means something will have to die.

I ran across an interesting article concerning the evolution of blogs. Just as hardware eventually becomes a commodity in the marketplace, apparently so does software, which includes the concept of blogging. Overall, I think it's a good thing, and I'll explain this a little in my next entry.

Wednesday, May 13, 2009

Making the Most of a Moment

The most interesting part of this video is when they agreed they were lucky to be a part of the technology movement. This same energy, risk-taking, and entrepreneurial spirit is needed today. Where is it? Who has it? What's coming around the corner?

The Starbucks Plan for Target?

I have nothing against Jim Donald. I'm questioning the new Target strategy to take on Wal-Mart. I understand the need for growth, but what was wrong with Target's current strategy. Someone help me out. I know I'm missing something.

By the way, notice how he says, "Starget".

The Value of the NY Times

It's no secret that newspapers are struggling to find a sustainable position in the new economy, much less a purpose. Apparently, Geffen has an interest in the New York Times. Obviously, there's something worth investing in, but what exactly is it?

- your thoughts

Sunday, May 10, 2009

YouTube: A Good Idea For Google?

When Google first acquired Google a while back. The chances for success seemed very slim to me. However after understanding the power of their integration platform, I quickly became a believer in the decision and the strategy.

I'm not sure how they will make YouTube profitable, but I think they have the circumstances necessary to meet this goal.

Sunday, May 03, 2009

Yum: A Yummy Brand

I received an e-mail today about Yum Brands. So that I won't mess up their position on the matter of Yum, I'll share a little from the e-mail.

"They are usually recognized as one of the best citizen/community based companies by Fortune, and I believe they have also been recognized as one of the best companies for diversity by other publications on multiple occasions. Considering their size, their turnover is also unusally low. There is also a book out there "Customer Mania" that tells the story of Yum Brands and their company culture. Most interesting to me is the concept of the fast food giant sponsoring the derby. I think initially everyone thinks commercial spots! If you really think about, they get double the result. The derby audience or viewer (based on what I've read) usually has an annual household income of $100,000 or greater.....I'm sure very fitting of the ideal investor profile. So, commercials and sponsorship= new customers and investors, yes?"

Many of you may not know, but I'm a big fan of companies that are aggressively taking on the global market - especially American companies. After all, the marketplace of the future will be void of boundaries and other obstacles factored into today's business models.

I have to say, I totally agree with my friend's point. Yum Brands is an outstanding company, with a product arsenal that is well-positioned to succeed in the future. I have a flaw in my valuation process for a company. I normally fail to account for the company's efforts to be socially responsible or proactively involved in socioeconomic public policy. Yum, from what I can tell, has gone far beyond my requirements for excellence. Obviously, the new marketplace doesn't have to be void of social responsibility.