http://www.bbc.com/news/business-34524807

Australia’s Treasury Wine Estates, one of the world’s biggest publicly-listed winemakers, has recently announced to purchase the majority of Diageo’s wine business (includes Diageo’s UK based Percy Fox businesses and its US-based Chateau and Estate Wines) for $552.

In August last year, TWE had a difficult period that it had annual loss due to slower sale in China and oversupply in the US. In order to boost the selling of wines in these regions, this year, TWE decides to buy Diageo’s wine businesses. Owning famous brands such as Johnnie Walker, Smirnoff Vodka and Guinness, Diageo can help TWE to transform TWE’s US business into a larger player of scale.

However, from my perspective, the decision that TWE plans to purchase Diageo’s wine business is not proper. First, it is unnecessary for TWE to expand the brands and production line since TWE has more 80 brands and more 11,000 hectares of vineyard. Second, as I mentioned in the second paragraph, TWE oversupplied the US market in the last year, and thus created a big loss. At this point, TWE should focus on increasing sales rather than owning more production lines. Therefore, the purchase of Diageo is unwise.

Image sources:

http://everything-pr.com/treasury-wine-estates-pr/52517/

Amazon will stop selling Apple TV and Google Chromecast by Oct. 29th ,since these devices cannot work with Prime Video, Amazon’s in-house streaming video service. Amazon will continue to sell other companies’ devices, as long as these devices are compatible with Prime Video.

Richard Windsor, an analyst at Edison Investment Research, disagrees with Amazon’s behavior. He said that Amazon was narrowing customers’ options, thus customers might be dissatisfied with Amazon’s services. The value proposition of Amazon could diminish. Under that situation, Amazon might backfire and weakens its competitiveness.

In the opposite, I consider that Amazon’s action towards Apple TV and Google Chromecast is insightful. By banning the sell of Apple TV and Google Chromecast, Amazon prevent users from accessing services which are from its competitors. In this way, Amazon actually becomes more competitive. Also, it is better for Amazon to limit these devices which are incompatible with Prime Video, because Amazon cannot make profits from hardware services and content services of these ‘incompatible’ devices.

Whether the decision made by Amazon is good or not, I think time will tell.

Sources:

1. http://www.bbc.com/news/business-34421804
2. http://www.techhive.com/article/2988560/home-players/amazon-wont-sell-apple-tv-and-chromecast-hardware-bans-marketplace-partners-from-selling-them-too.html

Recently General Motors announced that it planed to produce self-driving cars in the next year as it was developing a new technology related to autonomous cars.

In order to get ahead in the field of autonomous car, General Motors has partnerships with several companies such as Mobileye, to open up the new technology together. Also, it starts a three-year cost-cutting plan to cover the expense in manufacturing and administration.

From my point of view, General Motors holds a lot of opportunities to exploit this new product line. As I mentioned in the second paragraph, it has already found key partners and constructed a reasonable cost structure for its new products. In addition, the autonomous car itself is a marketable product. It has an important value proposition, which is convenience. It provides the chance for disable people to ride in a car alone. Everyone is able to drive a car without any driving skills. Since the price of autonomous car will not be too low or too high, it can target towards large segments of customers, such as middle class, young people, disable people and auto rental companies.

Meanwhile, General Motors faces lots of competitive pressures. Strong competitors like Tesla and Google also have sophisticated plans for their autonomous vehicles. The participation of General Motors gives on edge to the competition of autonomous car.

Since no one solves all the technologic challenges, it is hard to say who can take the lead in the competition. I hope General Motors can be the first in autonomous car competition in the future.

Sources:

1. http://www.bbc.com/news/business-34410690
2. http://www.digitaltrends.com/cars/red-with-envy-gm-shows-off-next-generation-of-chevy-branded-autonomous-en-v-pod-car-in-china/

As we all know, the price of a certain good or service usually remains unchanged. Sometimes it may change, but the premise is that financial departments of firms have to collect data and figure out there is a new price can be set. In contrast, Shayne Greer, the owner of Focus 4 Development Company, comes up with his unique way to set the price, which is ‘pay what you think it’s worth’.

In his business, Greer basically lets his customers to pay what they want by determining the value of his work. Through this model, Greer believes he can participate more with customers and build better customer relationships. Therefore, he can gain more profit in the long run. There is also some discordant sound towards this price setting method. Most people argue that company cannot make profit in long term since customers tend to pay less in this situation.

As far as I am concerned, ‘pay what you think it’s worth’ is worth experimenting, because it can appeal to more people. Since the price is not fixed and people can pay the amount of money they want, everyone is able to afford the cost of such services or goods. The traditional principle of supply and demand is broken. Taking further step, I admit there are some problems in this model, such as hard for companies to record revenues and companies receive the revenue which is less than cost. With more explores, I believe problems can be solved.

At the end, I forget to tell you that Greer had already begun his new price setting strategy in car wash. The outcome was pretty good and customers paid an average of $22, which is about double the going rate. This is a nice beginning. I hope this approach can be adopted by other companies and test it in different ways.

Sources:

1. http://www.cbc.ca/news/canada/calgary/pay-what-you-think-it-s-worth-is-calgary-businessman-s-new-motto-1.3245145