By Kevin Meyer
It's time to clear out some thoughts on an eclectic mix of articles I've been reading, so please pardon the potential mental whiplash.
So what does your company do to keep an eye on competitors? Perhaps it's informal through the sales department, or perhaps there's a database of some sort. If you're GM, you of course create a committee. Seriously.
GM forms committee to keep eye on Tesla. General Motors dwarfs Tesla Motors in virtually every way — number of cars made, sales and profits. But that doesn't mean GM isn't worried about the upstart electric car maker.
GM has confirmed that CEO Dan Akerson has formed a task force within the company to look at the impact from alternative automakers. The only alternative car company it named: Tesla.
Mark Graban reminded me that this is exactly what the "old GM" used to do – to the amusement of their nemesis Ross Perot. As he put it back in 1988:
At GM, if you see a snake, the first thing you do is go hire a
consultant on snakes. Then you get a committee on snakes, and then you
discuss it for a couple of years. The most likely course of action is —
What's old, is new…
A couple days ago there was an article in The Wall Street Journal asking whether engineering students should be charged higher tuition than those in the liberal arts.
Why does a student majoring in English have to pay the same tuition as an engineering student with much higher earning potential? In a new working paper published by the National Bureau of Economic Research, one economist suggests looking at differential tuition—the practice of varying tuition costs across areas of study.The rationale behind differential tuition is that fees for majors should align with program-specific teaching costs and post-graduation income potential.
So, since engineers will presumably make more dough, they should be charged more. Hmmm… what about secondary effects?
The share of degrees awarded in engineering and business decreased
within three years after putting in place the differential tuition
But of course. So, is the purpose to extract more moolah from higher income folks, or is it to encourage more people to go into fields where there is a strong demand and that often create even more jobs? Perhaps tuition should be inverse to demand, instead of being linked to income potential? Oh, wait, that would be market-based…
Finally, a large winemaker just destroyed $145 million of the nectar of the gods.
One of the world's biggest vintners [Treasury Wine Estates] has a roaring hangover from poor
U.S. sales, leading it to destroy thousands of gallons of wine past its
This is particularly troubling to me as I live within 30 miles of over 250 wineries on California's central coast. Strangely, these nearby wineries are not suffering. In fact, U.S. demand is higher than ever.
Treasury Wine's struggles set it apart from the broader wine industry in
the U.S., which is posting record sales after 19 straight years of
volume growth and an increased thirst for imported labels. U.S. wine consumption rose 2.2% last year, reaching 345.1 million
9-liter cases, and rose 3.6% to $32.3 billion in retail sales, according
to Technomic, an industry tracker.
So demand is up, but somehow one of the world's largest winemakers still screwed up. Why?
Much of Treasury's U.S. sales are in low-priced wines at a time when
American tastes are turning more expensive. U.S. store sales of wine
bottles priced between $3 and $5.99 edged up just 1.5% and bottles
priced $6 to $8.99 dropped 3.3% in the 52 weeks ended May 25 in volume
terms, according to Nielsen. By contrast, volumes of bottles priced $9
to $11.99 and $12 to $14.99 rose 13% and 9%, respectively, and those
above $15 increased more than 6%.
So many lessons… chasing cheap instead of quality, focusing on illusions of volume instead of demand.
And demand is down because friends don't let friends drink cheap wine!