Taco Bell's Strategy... Under Attack!!!

As I read on KSL.com this morning, I found an interesting story about Taco Bell's law suit over their taco meat, claimed to be beef. The company was accused with using only 35% beef in their "beef," and is being sued to not advertise it as beef at all. The funny thing is, restaurants aren't even required to meet any level of beef content to even call it beef. Only food processors, like Taco Bell's supplier Tyson Foods Inc., are required to meet USDA standards for labeling products. Strangely, the class action lawsuit isn't asking for monetary damages, only for changes in the ad campaigns. Outsiders, including myself, believe this to be merely an attack on consumers' perception of the company, and thus Taco Bell's commanding position in the industry.

Applying to Porter's Five Forces, this directly affects buyer power. Taco Bell thrives because of extreme volume of sales. The primary driver in those enormous sales is price. However, whenever a consumer is face with a choice in fast food, price isn't the only consideration. Quality, at least for me, is a major driver, at least as important as price. If Taco Bell customers believe there is a problem in quality, market share will be lost.

Now comes the interesting part: Taco Bell's response. Taco Bell decided to, as we all know is necessary, spend lots of money to make money. This morning Taco Bell released full-page ads in the Wall Street Journal, USA Today, New York Times, and other newspapers, which obviously made it around the country riding in its own wake. As the article I found states, a full page ad in a single national newspaper could cost around $100,000, though Taco Bell didn't disclose the budget of the ad campaign. The ad states, "Thank you for suing us. Here's the truth about our seasoned beef." The point was to draw attention (which it obviously did), and to set the record straight. The ad states that the seasoned beef is actually 88% beef, not the accused 35%. The ad was intended to infuse confidence in Taco Bell's customers. I don't know what the results will be, but I do believe the campaign will succeed, even if the law suit doesn't (which would be absurd, considering the suit has little legal basis). Due to this aim of reassuring customers of Taco Bell's quality, Taco Bell's president Greg Creed believes this will actually help the company. My thoughts? I think he's right. This will actually strengthen Taco Bell's position in the industry, and could possibly build brand loyalty. This is, of course dependent on several things, including the results of the law suit. And, as always, this isn't an expert insiders view. It's only mine...
...From the Outside...

...take two... Netflix and Profit Pools

This morning I was listening to KSL news radio, and I heard an interesting example of how Netflix was utilizing its profit pools differently. Apparently, Netflix has experienced some stress due to high shipping costs. It sounded like a driving factor was the aspect of the user interface. As a solution, Netflix has made it less convenient to order an actual DVD to be physically shipped to you. The focus is becoming more towards online streaming. The business is huge and the gross margin per view would be enormous compared to the shipping costs associated with their traditional method.

This is an interesting strategic move for Netflix. It seems that it is becoming less and less differentiated in the market due to the deep profit pools associated with exclusive web-based viewing. It will be interesting to see if this strategy will be sustainable in the long term, lacking its differentiation. It is, however, interesting that they are willing to face the brutal facts in that their traditional model may not be the most profitable for the business. We'll see what happens...

...From the Outside

Shift in Google's Strategy... New Level 5 Leader?

As I was cruising around on the Wall Street Journal's homepage, I noticed an interesting article concerning the internet giant Google. Instead of relating this to Porter's 5 forces or the Profit Pools models, I decided this was an excellent example of Jim Collins's idea of a shift to a possible level 5 leader. As you can read in this WSJ article, long-time CEO Eric Schmidt will be replaced by one of Google's co-founders, Larry Page. The article then gives a brief description of this new CEO-to-be.

The writer describes Larry Page as follows:

Mr. Page is an introvert who keeps a low public profile and sticks to the product side of the business, taking the lead on the company's biggest product initiatives. Since the birth of a child in recent years, he has adopted an even lower profile outside Google, according to several Silicon Valley executives.

Read more: http://online.wsj.com/article/SB10001424052748704881304576094340081291776.html#ixzz1BgvdoMlH

This to me, remember, I'm clearly on the outside, seems like a classic description of a Level 5 Leader, as described by Jim Collins in his book Good to Great. Now I don't necessarily want to turn this into a prophecy, but if it's correct, I'll definitely call it such, but I think this could be a big step for the sustained success of Google. I'm not suggesting that Google needs to move from "good to great," by any means. I think most people would agree that Google is already a great company. I do think, however, that this is a move in the right direction to truly sustain Google's greatness, which would, by Collins's definition, make Google "Great." This is only my idea of what could happen, given this shift. Remember, I'm on the outside, using my perspective and resources, and merely interpreting what i observe.


From the Outside...

From the Outside...

In my life, I've observed many things. I think any story can be told in an infinite number of ways. The determining factor behind the differences is merely perspective. I don't claim to have insider information on almost anything. Given my perspective, From the Outside, is how I view the world going on around me. It's my best interpretation applied to an observed situation. My blogging efforts will not necessarily be regular. I just think this may be an outlet I can use for various outlet purposes, often including school assignments. Here we go...

I don't necessarily claim much of this to be accurate, but merely observed and interpreted from my perspective: From the Outside.