Tuesday, June 28, 2011

Missed Opportunities for US Carmakers in China

As 2011 moves forward, it is turning out to be an extraordinary year for German auto manufacturers. Mercedes, BMW and Audi are experiencing record profits in the US. In China, Mercedes is about to sell more cars there than they do in Germany or the US. Are Ford, GM and other US car brands fully engaged in China’s automobile market? On the surface, it would seem they are, especially because GM just sold more vehicles in China than in the US. 

However, while GM is growing at 45% in China and 15% in the US, Mercedes is doubling sales in China and experiencing record profits1. Chinese consumers are hungry for high quality luxury items. As their wealth grows as a nation, it appears they are seeking to enjoy the fruits of their labor by purchasing the best. Still, as the market for luxury cars grows, American automakers lack products to compete.

Is there a reason US cars have sunk to the lower end of the demographic scale? There was a time when the US was synonymous with high quality. Now the highest priced GM vehicle is approximately the same cost for the lowest priced Mercedes. By not making high-end luxury cars, the US has given up the title of high quality without a fight when it comes to automobiles.

Think about it. How often do you hear someone say: I am trying to decide if I want the Cadillac or the Bentley? When you want the best car for your money and you can afford what you want, you buy German.

Most recently, the excuse has been that the affluent market was not large enough. With record profits by German luxury automakers and consistent, rapid growth globally, what more does the US need to know that they are missing the boat? Earlier this year I wrote an article on my blog and outlined the need for a luxury US automaker and why Chrysler should fill it. What do you think? I welcome your responses. 

In time, I assert, China will replicate Germany’s efforts to produce luxury cars. If you need proof, look at Japan’s Lexus and Infinity. When China joins the global competition for cars, especially luxury cars, it may be a matter of time before China bails out the US car makers. Maybe that will be the badly needed wake up call for the US to do things much differently. 

Wednesday, June 22, 2011

The Leader's Vision: A Big-Picture Take on American Politics Going Forward

It is amazing how so many people expect Presidents of countries to solve the nation’s problems like a magician. For example, my girlfriend is from a country called Suriname in South America.  The President, Desi Bouterse, was elected in August of 2010. The people of Suriname are complaining about high fuel prices and a bad economy.  Like President Obama, the Surinamese President was elected in the midst of a global recession. Yet, people expect instant results.

In both countries, people ask ‘when is he going to fix things?’  In both countries, people question whether the Presidents can do a good job since things have not gotten better. 

In the US, while President Obama has been quite ambitious, he needs to create a focal point. He has focused on banks, health care, jobs and the economy. Some think he is focusing on too much too soon which could result in mediocre progress. Some say he should choose one issue and do it well. Then move on to the next.  

There is another possibility. If you look at the Founding Fathers of the US, they focused on independence from Great Britain and included freedom and liberty in several areas. John F. Kennedy focused on sending a man to the moon with a big commitment to lead the global space race. While these leaders declared a possibility that seemed insurmountable at the time, their vision inspired people to come together to make the vision a reality. 

In fact, the success of many leaders like Martin Luther King and Gandhi have required many people to unite as one for a cause that was larger than the whole. In the face of a global recession and an interconnected world, it is essential for the leaders to come together for a cause that will inspire its citizens.

President Obama could still focus on the areas that he has deemed important. However, those areas are better served if they are components of a bigger picture. Take education. When Kennedy declared a man to the moon. The educational system had to produce the best mathematicians, engineers, astronomers, and computer scientists to name a few. Therefore, the US had reason to ensure the educational system was world class.

We are at a time of crisis. There is a quote which says never waste a good crisis. We have a huge opportunity to dare to dream and dare to come together as a nation and a world to accomplish something that has never been done.

What could be so enticing in the 21st Century that people of different races, cultures, religions, and social economic classes would come together as one? 

Wednesday, June 15, 2011

How Will You Stay Relevant in a Global Work Force?

Globalization is changing corporate strategy. For example, 20 years ago no one would have considered merging the NYSE with a German exchange. However, as exchanges of various countries consolidate, it may be imperative for the NYSE to be ahead of the curve. If the NYSE stands still, it may lose its relevance in the future as other countries continue to merge their exchanges. Besides, the merger gives the NYSE access to foreign markets in a way they could not have done as effectively on their own. In today’s world, he who has the greatest access to global markets will raise the most capital.    

In other industries, hospitals are facing similar questions of relevance as a result of President Obama’s healthcare plan. Hospitals are engaged in M&As to ensure their relevance and ability to effectively penetrate a wider market. In some cases, the merger does not afford all the normal economies of scale that is typically received from corporate mergers.  At the same time, it can increase a hospital’s core competencies by merging with a hospital that specializing in a different aspect of healthcare or surgery.

While it is easy to see the importance of an organization’s need to stay relevant, how important will it be to ensure the individual remains relevant? As citizens of the US, we complain that many jobs are being outsourced overseas. Instead of seeing this as a problem, let’s see how the US fully benefits from outsourcing and the role the individual plays to remain relevant.

There are only 300 million people in the US.  Therefore, there are only so many televisions, cars, jeans… that can be sold in the US. The global population is over 6 billion. At least 3 billion live in poverty. How will we sell them our products and services if they cannot afford them? When we outsource, we create new loyal customers. The lower paying jobs go overseas first. As a result, the training, skills and competencies in the US have to reflect a knowledge-based society, instead of a manufacturing society. 

As a nation, we have gone through this transformation more than once.  Approximately 150 years ago, 95% of the jobs in the US were agriculturally related. Now the number is reversed with 3% dedicated to agriculture. What would have happened if we resisted the transition from working on a farm to working in factories? We are just in another phase of a continuous transformation.

In the 1850s, people learned new skills and competencies for labor, manufacturing and management. It is the same now. There are tremendous opportunities to develop and position an individual to be more valuable. Even though it is important to have specific skills in a specific industry, the ability to transfer those skills and competencies to other industries and tangential job functions will increase your relevance in the job market. In addition, foreign language skills set you apart, especially in the US.

Before you complain about outsourcing, look at the trends of big business. They often foretell the demands of the individual. Remaining relevant will require more than hard work. It will require each person to increase the intellectual capital they possess and be able to use it various capacities.