How well does our system work? You can use the numerical index to check our blogs from the last big recession.
Much of the world suffered a severe recession from 2008 to 2011. During that time, we wrote more than 250 blogs using publicly available information and our Strategystreet system to project what would happen in various companies and industries who were living in those hostile environments. In 2022, we began to update each of these blogs to see what later took place and to check the quality of our conclusions. To date, we have completed the first 175 of our original blogs. You can use these updated blogs to see how well the Strategystreet system works.
How can pricing hit zero? This has just happened with container freight rates on shipments from South Asia to Europe. Other rates are not much better. Container shipment fees from North Asia to Europe have fallen to $200, taking them below the shippers’ operating costs. $200 per container is bad, but how do you get to zero? Our previous blog (“Why Overcapacity Often Gets Worse”) discusses pricing in overcapacity. The price in a commodity industry is equivalent to the cash cost of the next person to enter the industry or the last person to exit.…
Read MoreThe global semiconductor industry is in severe overcapacity today. There are two causes for this current overcapacity: competitor expansion and a fall-off in demand. Competitors expanded rapidly over the last few years when demand was relatively high. New semiconductor capacity comes on stream in big chunks, produced in factories costing more than a billion dollars. Now, many of those factories are running at half their rated capacity as demand has fallen off in the last year. The situation is bad enough that, today, no company can make a profit on standard semiconductor memory chips. So,…
Read MoreThe fight is on in retail pharmacy. It started with Wal-Mart. In 2006, Wal-Mart introduced a $4 generic prescription for a one month supply of hundreds of unbranded drugs. This move attracted a lot of buzz and new customer volume. There are three major players in the retail drug prescription business: Walgreen, CVS and Rite Aid. Each of these companies have responded with their own drug plan. Walgreen started its Prescription Savings Club, which provides discounts on generics and five thousand branded medications, and rebates on Walgreen-branded products. CVS introduced a ninety-day supply of more…
Read MoreOvercapacity, where an industry can produce more than customers currently demand, is the result either of a fall-off in demand or the expansion of competition. During the 80s and 90s, three quarters of the industries that went into overcapacity did so as a result of expansion of competition. Industries such as semiconductors, airlines, mini-computers and even orange juice went into hostility as competitors expanded faster than demand grew. More recently, though, most of the industries going into overcapacity have suffered from a major fall-off in demand as the world-wide economy slips into recession. Any industry…
Read MoreAbout twenty-five years ago now, American Airlines introduced the first Frequent Flyer Program, which rewarded airline passengers miles for the “mileage” they had flown on the airline. These miles were convertible into airline tickets. This program spawned many copy cat competitors, including all the major airlines, hotels, car rental agencies, cruise lines and many other non-airline companies who wished to create a loyalty program. In many ways, the loyalty programs that the legacy airlines offered enabled them to keep their most attractive customers from falling for the blandishments of discount airlines, such as Southwest and…
Read MoreCharles Schwab Corporation is introducing the Schwab Bank Invest First Visa Signature credit card. This no-annual-fee card offers an unusual set of benefits. First, it returns a 2% cash rebate on all purchases, one of the highest rebate promises around, and it has no pre-set spending limits to start the rebate. Most other cards impose minimum spending hurdles before the rebates kick in. Next, there are no category (e.g. type of retail) restrictions on the spending with the card in order to earn the 2%. This benefit contrasts with most rebate card programs that require…
Read MoreI was struck by a recent article about statins. A recent study has found that these cholesterol lowering drugs reduce the heart risk in even healthy patients. That fact was not what struck me, though. What jumped out at me was the size of the market share for generic statins. The generics in the statin market make up 49% of total prescriptions. The well-known Lipitor is the leading branded statin, at 27%, followed by Crestor at 9%, Vytorin at 7%, and Zetia at 6%. But the generics dominate all of those branded drugs. (See “Low-end…
Read MoreThe Associated Press is a cooperative. This “non-profit” is owned by 1,500 newspapers. It employs its 3,000 journalists in 97 countries to provide news stories to these newspapers, as well as others in the media, including radio and T.V. stations and web sites. This company has been getting some significant warnings lately about its cost structure. Many of its customers are struggling in the new media world. Newspapers and radio stations, especially, are suffering from the onslaught of web-based advertising. The first warning has come from its customers, one of the two best consultants. (See…
Read MoreThe cell phone carriers are about to introduce a product innovation, called a femtocell, to improve cell phone reception within a home. These femtocells are about the size of a toaster. The wireless carriers will install these mini cell phone towers. The tiny tower will connect with cell phones inside the consumer’s home through a broadband internet connection to the telephone network. The wireless carriers hope that this innovation will increase the reliability of the wireless system to the extent that the consumer will be able to get rid of the $50 a month average…
Read MoreKohl’s Corporation is opening forty-six stores soon as part of a plan to gain market share as the busy holiday season starts in the U.S. Today, Kohl’s has something less than 1,000 stores open in the U.S. The company expects sales at stores open for a year or more to be down 2 to 4% during this year’s holiday season compared to last, so they are opening stores to make up for some of the sales fall-off. But that’s not all they are doing. The company is a middle market chain competing with the likes…
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