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jerryking : vertical_integration   6

Luxury Brands Buy Supply Chains to Ensure Meeting Demand
Nov. 15, 2018 | The New York Times | By Mark Ellwood.

The luxury markets are booming to such an extent that brands look to ensure they can meet demand by buying companies that supply their raw materials.

In the last six years, David Duncan has been on a buying spree. This Napa Valley-based winemaker and owner of Silver Oak Cellars hasn’t been splurging on fast cars or vacation homes, though. He’s been buying up vines — close to 500 acres in Northern California and Oregon.

It’s been a tough process, at times: He almost lost one site to a wealthy Chinese bidder. It was only when he raised his offer by $1 million that he clinched the sale at the last moment. At the same time, Mr. Duncan also took full control of A&K Cooperage, now the Oak Cooperage, the barrel maker in Higbee, Mo., in which his family had long held a stake. These hefty acquisitions are central to his 50-year plan to future-proof the family business against a changing luxury marketplace.

As Mr. Duncan realized, this market faces what might seem an enviable problem: a surfeit of demand for its limited supply. The challenge the winery will face over the next decade is not marketing, or finding customers, but finding enough high-quality raw materials to sate the looming boom in demand. Though there might be economic uncertainty among the middle classes, wealthier consumers are feeling confident and richer because of changes like looser business regulations and lower taxes.
affluence  artisan_hobbies_&_crafts  brands  competitive_advantage  core_competencies  future-proofing  high_net_worth  high-quality  luxury  raw_materials  scarcity  supply_chains  sustainability  vertical_integration  vineyards 
november 2018 by jerryking
Vertical media mergers are just so 19th century | Financial Times
June 21, 2018 | Financial Times | Anne-Marie Slaughter.

Media companies are falling over themselves to merge with one another right now. AT&T took the US to court over the right to buy TimeWarner, and Comcast and Disney are engaged in a bidding war for some of 21st Century Fox. Big looks set to get bigger. Yet according to our best thinkers on the future of capitalism, the corporate titans driving these decisions are heading firmly backward.

AT&T and Comcast are communications companies that are attempting to go vertical and control every layer of a media empire from underground cables to the creation of content....Andrew Carnegie was determined to own coal mines and railroads as well as steel mills. The goal was control from top to bottom, closed access and economies of scale.

But that is old-fashioned thinking, according to the current crop of books on the dramatic economic changes being wreaked in the next phase of the information age. They argue that vertical integration amounts to building silos in an era that will be dominated by platforms — owning in an era of renting — and looking for mass markets when customers want individualized products.

Hemant Taneja makes a strong case for “customised microproduction and finely targeted marketing” in his book Unscaled. An investor for the Boston-based firm General Catalyst, he does not question the value of having many customers rather than few. But he argues that fast-growing companies in sectors ranging from energy to healthcare and education are succeeding because they customise their goods and services to a “market of one”.

The rise of artificial intelligence and cloud computing allows these companies to “rent scale”, he writes. Small, nimble companies can now out-compete big ones in specific markets, adding scale as they need to.....Netflix’s market value exceeded that of Comcast back in May and it is now bigger than Disney. Its global headcount is 5,500, nearly one-fifth of Time Warner’s and one-50th of AT&T’s. Netflix does not have the size to build as large in-house AI capabilities. But a quick search for “media data analytics” reveals a score of companies. Why pay for that capability when you can rent it
Andrew_Carnegie  Anne-Marie_Slaughter  artificial_intelligence  books  cloud_computing  end_of_ownership  entertainment_industry  Netflix  platforms  scaling  size  vertical_integration  AT&T  Comcast  customization  Disney  gazelles  nimbleness  mass_media  personalization  mergers_&_acquisitions  21st_Century_Fox  Time_Warner  19th_century  microproducers  target_marketing  unscalability  silo_mentality 
june 2018 by jerryking
It’s Time for Apple to Go Hollywood - WSJ
By Steve Vassallo
June 20, 2017

Apple’s hires, however, appear to be another in a series of plodding steps. It’s been a wildly successful slough, but there’s a palpable sense that the company is losing momentum with its testudine gait—that it’s been taken over by bean counters and no longer has the nerve or verve to “think different.”

Apple could change that impression and supercharge its video play by doing something that would make the Whole Foods deal look like small potatoes: buy Netflix .

It would cost several times the Whole Foods deal to buy Netflix, but with almost $260 billion in cash reserves, Apple can afford it. (Full disclosure: my firm was an early investor in Netflix but no longer holds any shares in the company.)

Purchasing Netflix would give Apple three critical things it needs to succeed.

• Content creation. As Apple learned from “Planet of the Apps,” its failed reality TV series about iPhone app developers (really), producing original programming is difficult. With all due respect to Messrs. Erlicht and Van Amburg, simply adding a couple of studio execs probably won’t be enough. In acquiring Netflix—which has produced an endless string of award-winning hits, from “House of Cards” to “Stranger Things”—the iPhone company would gain instant credibility and proven expertise in creating premium content at scale.

• Vertical integration. Apple is the most successful walled garden in history. Taking video creation and distribution in-house would satisfy that longstanding business model.

• International expansion. Content providers now have to think and act globally.... Netflix is available in more than 190 countries. Buy it, and Apple owns the world’s first truly global TV network.

One more thing, to quote the man in the black turtleneck. In addition to content, another enormous asset Apple would get from buying Netflix is its CEO, Reed Hastings. Without a clear successor to Tim Cook on the horizon, it would be malpractice if Apple’s board didn’t have some names in mind.
Apple  Netflix  economies_of_scale  M&A  Hollywood  content_creators  vertical_integration  in-house  Reed_Hastings  international_expansion  think_differently  original_programming 
june 2017 by jerryking
What Detroit Can Learn From Silicon Valley - WSJ.com
JULY 13, 2009 | Wall Street Journal | By ANDREW S. GROVE.
Vertically integrated production is a thing of the past. Will the auto
industry's new overseers catch on?
silicon_valley  Andy_Grove  Detroit  automotive_industry  vertical_integration  layer_mastery 
august 2010 by jerryking
Moving On Up - WSJ.com
OCTOBER 25, 2004 | Wall Street Journal | By SCOTT KILMAN.
Agricultural firms are looking for a new growth model. They're hoping
it's vertical integration. From California pistachio farms and Iowa hog
farms to Florida orange groves, entrepreneurs are building businesses
that control all the processing steps between the farm gate and dinner
plate. By coordinating the processing, either through direct ownership
or contractual relationships, these firms are trying to put their own
stamp on commodities in order to create brands and new products.
agriculture  vertical_integration  farming  fresh_produce  commodities  data_driven  growth  branding  product_launches  brands  new_products 
february 2010 by jerryking

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