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.
Posted 7/7/08 We have two domestic industries in overcapacity: the automobile and the airline industries. We call these industries Hostile markets because returns for most of the players in the industry are low and price competition is intense. Over the last twenty years, we have studied and worked in many of these Hostile markets. In about three-quarters of the cases, market hostility is caused by the expansion of industry competition, especially expansion by low-cost competitors. Hostility in both the airline and automobile industry is the result of expansion by competitors. In autos, the expansion of…
Read MorePosted 8/26 Southwest: The Full Lifecycle of a Next Leader Southwest Airlines was a Next Leader (Pattern: a competitor offering much better performance for a low price to a specific customer segment, made possible by a lower cost structure) with a long history. Southwest didn’t win on better product Function (Pattern: the features and characteristics of the product itself). It won by getting customers there on time and making it easy to book, board, and rebook — while staying thin on amenities and cheap on fare. That’s a Next Leader playbook, and Southwest ran it…
Read MoreEver since deregulation, the airline industry seems to have been in overcapacity (Pattern: a condition in which competitors in an industry can supply more than the market demands at the current market price) and Hostility (Pattern: an industry with low average returns and annual sales growth below 20%, marked by intense price competition). Masses of low-cost carriers entered and challenged the legacy airlines. It has been a 40-year war. There have been apparently good companies come and go. Many original carriers failed and disappeared. But it appears that the war has ended. There are four…
Read MoreEver since deregulation, the airline industry seems to have been in overcapacity and Hostility. Masses of low-cost carriers entered and challenged the legacy airlines. It has been a 40-year war. There have been apparently good companies come and go. Many original carriers failed and disappeared. But it appears that the war has ended. There are four major players who have survived: American, Delta, Southwest and United. Every day, Southwest, the leading low-cost carrier, looks more like the three other legacy airlines. That should not surprise us given how well the three legacies have climbed to…
Read MoreCan an industry leader remove capacity in order to induce a price increase? Many people believe that they can. Here is a story where it seemed to work. It didn’t work for long. The industry leaders were unable to prevent others from stepping in where they had withdrawn. A trend we have seen in many industries. Posted 6/26/08 I am surprised and confused by the airline industry today. All the legacy airlines have announced substantial capacity reductions, in some cases by more than 20% of capacity. For example, United Airlines plans to ground 100 of…
Read MoreA leader may be dominant in its industry and still fail. There have been many examples in recent years, including Sears and GM. The RV industry has seen a dominant leader, doing many things right, fail outright. Fortunately, a new set of leaders emerged who did even more things right. Here is the tale. Posted 6/9/08 The RV market is in hostility. A hostile market sees low returns on investment, even for the industry leaders. One of the largest players in the market, Fleetwood Enterprises, has seen five straight years of losses. Another leader, Winnebago…
Read MoreTwo strong industry leaders, both highly successful in other markets, decide to combine their subsidiaries in one market in order to gain market share and improve economies of scale. This made some good sense a few years ago. It didn’t turn out quite the way they hoped, though. We cover the story and four separate blogs, numbers 23 – 26. Posted 6/4/08 This entry is the last in our series of four entries on the HP/ED deal. The Setting Hewlett Packard has proposed a take-over of EDS, in order to improve its services, revenues and…
Read MorePosted 5/1/08 Low-end competitors don’t think like industry Standard Leaders. As a result, they often blow big holes in the leader’s plans. For twenty-five years, from the early 70s until the late 90s, the color television manufacturing market was one of the worst places on Earth to compete. Those companies who did survive, and there weren’t many, became hard-bitten competitors with no illusions about the inevitability of success of even the largest companies. The two largest U.S. competitors, RCA and Zenith, are now nearly-forgotten names. GE was another titan victim of the inexorable pressure of…
Read MorePosted 4/28/08 The automobile insurance market has seen price declines since 2006. During this declining-price period, Allstate has done well, gaining market share by offering innovative pricing. The company instituted a program called “Your Choice Auto”. It launched this program in 2005, just before industry prices started to fall. This Your Choice program offers drivers a specific benefit in return for a slight premium in the cost of their insurance policies. One option in Your Choice offers a 5% rebate on premiums paid by drivers who remain accident-free during the term of the insurance. A…
Read MoreA Price Leader lives on one thing: a big price gap. It has to price about 25% below the Standard Leader to win customers who will give up Function and Reliability to save money. In 2008 Aloha, ATA and Skybus shut down because the legacy carriers had cut their costs enough to shrink that gap, and fuel took the rest. Even Southwest felt the squeeze. Once the gap closes, the discounter has little left to sell. This post was first written in April 2008. The Update below shows how the story played out. Posted 4/10/08…
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