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.
Enterprise Rent-A-Car is an astute, well managed company. They have grown to the number one position in automobile rental by using their management skills to beat the likes of Hertz, Avis and National. Now they are starting to close the door on a growing low-end, Price Leader, set of competitors. A Price Leader is a competitor or product that offers below industry-standard performance for a very low price. More than 50% of a Price Leader competitor’s total unit volume is usually sold at price points below the Standard Leader product. This low-end, Price Leader, part…
Read MoreCogent Communications sells inexpensive, all purpose, digital connections to the business community. Today it carries 17% of all internet traffic. This is comparable to companies like AT&T, Verizon and Level Three Communications. Its revenue this year is on pace to grow by 19%. That all sounds good until you realize that the company expects to lose $25 million this year on the $220 million in revenue it expects. What is the problem? Cogent is a low-end competitor. (See the Symptom & Implication, “Low end products are gaining share of the market”, on StrategyStreet.com.) We have…
Read MoreFor once, the airline industry Standard Leaders, the legacy airlines seem to be improving their positions compared to the Price Leaders, the discount airlines. In our system of analysis, a Standard Leader is a competitor, or one of several competitors, or products that set the standard for performance and price in an industry. A Price Leader is a competitor, or product, that offers below industry-standard performance for a very low price. So far, none of the legacy airlines has gone back into bankruptcy. On the other hand, a number of Price Leader discount airlines have…
Read MoreHighly cyclical industries can be very difficult places to compete. The US housing market is a cyclical industry. It is also growing slowly. How does a company thrive in that kind of industry? Well, it helps to have solid underlying demand. But the real secret is to increase your market share to create and exploit economies of scale that your smaller competitors simply don’t have. These economies of scale provide you with opportunities for both attractive products and pricing for customers and attractive returns for your shareholders. In this blog, you can see that secret…
Read MoreWhat product Price Point would you like to specialize in during a Hostile market? Sometimes, it seems like competitors offering premium products are in the best situation. Their product prices and profits seem high and comfortable. Think of the high-end of the automobile business in the 90s. In other markets, it seems like the low-end competitors have a long-term advantage. Think of the airline business in the 2000s. In most markets, the middle reigns. There are four typical price point competitors in an industry. Here is an illustration of how three of them compete in…
Read MoreCompanies who are not ranked in the top two positions in their industries can prosper providing they follow a highly disciplined strategy. Here is one of those smaller companies. At first, it made several strategic mistakes and sought to leave the market in disappointment. After some time, it reentered the market where it followed a better strategy. Fortunately, the industry was relatively comfortable as it reentered. The industry is just as comfortable today, but there are clear warning signs for the market leaders just over the horizon. Posted 6/23/08 Deutsche Post AG is surrendering in…
Read MoreOver the long term, most industry leaders are likely to fail. You can see this in analyses of the Fortune 500 or the S&P 500 over 20 to 30 years. Think of companies like GM, Sears, Howard Johnson’s, GE and others. You may wonder how this happens. Here is a story of how one dominant industry leader has failed. Posted 6/19/08 Recently, Intel announced the Atom chips. These chips are inexpensive, built for ultra-cheap desktop or portable computers called Nettops and Netbooks. The Atom chips for Nettops cost $29 each, while those for the Netbooks…
Read MoreHere is an interesting case. The gaming PC market has grown faster and to a far larger size than we see in most industries. The regular PC market is much less attractive as a place to compete. The PC gaming leaders do very well. Here is an explanation of how that has happened. And the hats off to Dell for a job well done. Posted 6/12/08 Two years ago, Dell bought Alienware, the leader of the game-oriented personal computer business. Game-oriented PCs are the high-end of the market. They usually sell for several times the…
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 More