WestJet considers a “premium economy” class
By Chris Sorensen - Tuesday, February 7, 2012 - 0 Comments
Other airlines are profiting from giving passengers just a little more legroom, for a price
Economy with legroom
At a recent investor conference, WestJet CFO Vito Culmone said the airline was considering a section of roomier and more expensive “premium economy” seats on some of its Boeing 737s. It might seem risky to tinker with WestJet’s ultra-successful all-economy formula, but airlines around the world—including Virgin Atlantic, Delta Air Lines and Cathay Pacific—have identified a lucrative market: people who can’t afford to pay thousands of dollars for full-blown business class, yet can’t bear the thought of sitting in cramped coach. Ranging in price from a few hundred to $1,000 more than a standard economy class seat, a “premium economy” ticket usually guarantees more legroom and, depending on the airline, wider seats and a separate cabin, as is the case with Air France’s “Premium Voyageur” seats. The best part? Some airlines say their premium economy sections—which take up far less pricey cabin real estate than business class—are becoming the most profitable areas in their planes.
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The fall of the BlackBerry titans
By Chris Sorensen, Charlie Gillis, Cathy Gulli, and Richard Warnica - Friday, January 27, 2012 at 7:20 AM - 0 Comments
Strategic blunders, reckless pride and bad luck unravelled it all
Nathan Denette/CP
When Jim Balsillie and Mike Lazaridis, the former co-CEOs of BlackBerry-maker Research in Motion Ltd., cut their salaries to $1 last December, and asked investors for patience and confidence, most took that to mean the long-time partners were simply stepping up their efforts to halt RIM’s painful slide, and intended to stick around for some time. “We’re more committed than ever,” Balsillie said.
In reality, RIM was already a company in the midst of the biggest shakeup in its relatively brief but spectacular history. While they tried to reassure investors, the board of directors—including co-chairs Balsillie and Lazaridis—were already coming to some painful conclusions about what had been going wrong and were already considering a change of leadership at the very top.
“Mike and Jim” may have helped pioneer a global industry that’s expected to be worth US$150 billion by 2014, but in an age of iPhones and increasingly ubiquitous devices running Google’s Android software, investors had run out of patience, and pressure was mounting on the board.
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Stick shifts make a comeback
By Chris Sorensen - Wednesday, January 25, 2012 at 11:30 AM - 0 Comments
Even though cars practically drive themselves, old-fashioned manual transmission is on the rise
Photograph by Andrew Tolson
In a recent ad for the Cadillac CTS-V coupe, a well-groomed man wearing a suit speeds down a lonely road through the forest. As his hand reaches for the leather shift knob, a narrator asks: “Why did we build a 556-horsepower luxury car with a manual transmission? Because there are those who still believe in the power of a firm handshake.” Another recent ad, for the 2012 Chevrolet Sonic, also shows clips of the car being driven with a five-speed stick shift, amid images of young people listening to music and taking pictures of each other with their iPhones.
Meanwhile, Mazda and Mini are also talking about manuals in their ads, suggesting a resurgence in an aging automotive technology that, based on sales figures at least, appeared to be all but dead in North America. It’s estimated that only about 10 per cent of all vehicles on the road are equipped with manual transmissions, and that they account for as few as five per cent of new car purchases (although they remain popular in Europe). But dig a little further and it becomes apparent that the recent love affair with the stick shift may have more to do with marketing than changing motoring habits.
Michelle Krebs, a senior analyst at Edmunds.com, says there has long been an association in people’s minds between manual transmissions and performance. So while many CTS-V and Sonic drivers will end up buying cars with automatic transmissions for practical reasons—they are easier to drive in stop-and-go traffic while balancing a cellphone and Starbucks coffee—marketers know that they probably still like to think of themselves as Dale Earnhardt Jr. “Performance is about image,” she says.
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The end of the job
By Chris Sorensen - Friday, January 20, 2012 at 8:20 AM - 0 Comments
A world of freelancers and contract workers may be good for business, but bad for the economy
Beau Lark/Corbis
It’s just a few cents more than a large specialty coffee from Starbucks, but it turns out that $5 is still enough money to make otherwise sane-looking people do some rather odd things. The website Fiverr.com, launched in 2010 on the heels of the recession that cost nearly seven million North Americans their jobs, is built around the concept of allowing people to buy and sell services for just $5. The advertised offerings range from useful (“I will professionally review your website or blog for $5”) to the frivolous (“I will sing Happy Birthday or congratulate someone in my bubble bath for $5).
Meanwhile, on the contract-job posting site Guru.com, there is a more serious offer for someone to create ESL lesson plans. On Freelancer.com, a new bridal services company is looking for someone to design its logo, while a dental clinic is seeking someone to produce a flyer to attract new customers—just two of more than 1.3 million current postings on the site.
The sites are all part of what may be one of the most dramatic shifts in the labour market of our time: the transition to a freelance economy where work is farmed out on a piecemeal, as-needed basis (often for relatively little money). The shift started out slowly in the 1990s as Silicon Valley companies discovered how to use the Internet to outsource dull computer-coding jobs, but has been picking up speed in recent years, particularly in the wake of the Great Recession, which left companies of all stripes battered and reluctant to hire new full-time employees. Microsoft, for example, used online testers in 2009 to find bugs in its software, while a year earlier Pfizer started allowing its employees to outsource bits and pieces of their jobs—making spreadsheets and PowerPoint presentations—to freelance firms.
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The Netflix thriller
By Chris Sorensen - Tuesday, January 17, 2012 at 11:20 AM - 0 Comments
Netflix’s recent roller coaster ride has been a particularly wild one
Mike Cassese/Reuters
After a steep plunge, its stock is suddenly hot again. Can it keep luring the subscribers it needs to survive?
Silicon Valley is famous for spawning overnight success stories—Twitter, Google and Facebook—and infamous for making losers out of former winners just as quickly, as anyone involved with MySpace will attest. But Netflix’s recent roller coaster ride has been a particularly wild one.
The popular Internet video streaming company, based in Los Gatos, Calif., enjoyed a nearly nine per cent jump in its stock to just over US$80 this week after it reported that its 20 million subscribers watched nearly two billion hours worth of movies and TV shows on its service during the most recent quarter. That’s roughly 33 hours of video watching per subscriber each month—more than four times the amount watched by users of Google’s online video behemoth YouTube, according to the website paidContent.org.
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Reliable, fuel-efficient cars are passé
By Chris Sorensen - Tuesday, January 17, 2012 at 10:00 AM - 0 Comments
At the Detroit auto show, automakers are pitching style, flash and sports cars
Brent Foster
Sirens wailed and guitar strings screeched as the 2013 Dodge Dart rolled onto a stage at this year’s Detroit auto show. Hundreds were there to see the first new vehicle spawned by the marriage of Chrysler Group LLC and Fiat Group Automobiles S.p.A. in 2009. They weren’t disappointed. The sporty small car, built using Fiat’s Alpha Romeo Giulietta platform, represents yet another attempt by Chrysler to reach into its rich past for an all-new vehicle—in this case, for the name of a popular sedan from the 1960s and 1970s—while shedding its reputation for building only powerful muscle cars and hulking pickup trucks.
The Dart is meant to compete head-to-head with the brisk-selling Chevrolet Cruze, sleek Ford Focus and popular Honda Civic by adding some attitude to the segment. Prospective buyers will have their choice from a long list of optional features, including LED accent lighting, an 8.4-inch touch screen and no less than seven different steering wheel choices. “The traditional ‘why buys?’ in the segment are price, fuel economy and reliability,” says Dodge president Reid Bigland, who chatted with onlookers following the unveiling. “But today those are no longer differentiators. They’re just simply the minimum barriers to entry. We wanted to do more.”
Chrysler wasn’t the only automaker flaunting a little extra flash at the annual industry gathering. Toyota Motor Corp. unveiled a Scion-badged rear-wheel-drive car called the FR-S, built in partnership with Subaru, marking the first time in years it will have a sports car in its lineup. General Motors Co., meanwhile, displayed a sportier version of its subcompact Chevrolet Sonic and two Chevy concept cars that attempted to combine the look of raw power with a frugal budget (with mixed results). For those who can afford the real thing, a long-nosed Lexus sports coupe concept was also on display, as was a low-slung Acura NSX “super car” concept.
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Target Apparel’s multiple targets
By Chris Sorensen - Wednesday, January 11, 2012 at 12:05 PM - 0 Comments
Recent newspaper ads for Target Apparel advertise a line of parkas that closely resemble popular Canada Goose jackets
Photograph by Andrew Tolson
Target Apparel is taking on Target, and taking cues from Canada Goose and American Apparel, too
Imitation may be the sincerest form of flattery, but it’s also lucrative if you know what you’re doing. Take Canadian mall mogul Isaac Benitah. The “cheap chic” retailer, who presides over Fairweather and International Clothiers, is embroiled in a high-stakes legal war with Minneapolis-based Target Corp. over the use of the “Target” name in Canada. And he is doing so while borrowing from other well-established brands at the same time.
Recent newspaper ads for Target Apparel, owned by Benitah’s Fairweather Ltd., advertise a line of Canada Weathergear “Super Triple Goose” parkas for as little as $79.99 that closely resemble popular Canada Goose jackets, which cost more than $500. That’s not all. Target Apparel’s logo appears at the bottom of the ads, complete with a font that closely resembles the one used by American Apparel, albeit with a maple leaf plastered on the end.
It’s a veritable triple play. While some shoppers might be inclined to shake their heads, experts say the strategy can translate into big money in a country where copyright laws are weak when it comes to fashion, and trademark infringement is difficult—and expensive—to prove. “You’ve got two target groups,” says Alan Middleton, a marketing professor at York University’s Schulich School of Business. “People who might be fooled by the real thing and those who know it’s not the real thing, but don’t want to pay for the real thing.”
Meanwhile, in the case of Target, Benitah may also be set for a big payday. He won an early victory after a federal court turned down an attempt by Target, set to open stores in Canada in 2013, to make him stop using the name. Now Benitah, who could not be reached for comment and claims to have owned rights to the Target name in Canada for a decade, is seeking his own injunction against Target’s bid to sell clothing in Canada, with a trial set for the end of 2012. Jim Danahy, the head of retail consultancy CustomerLAB, calls it a clever tactic by a Canadian entrepreneur “with the ultimate aim of forcing the U.S. firm to pay up for Canadian marketing rights.”
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Rogers and Bell team up for the biggest play in hockey
By Charlie Gillis, Chris Sorensen, and Jonathon Gatehouse - Friday, December 16, 2011 at 9:40 AM - 0 Comments
How two of Canada’s fiercest business rivals, came together to buy the Leafs
Mark Blinch/Reuters
Before the tentative phone calls, the fevered courtship and the awkward consummation of a blockbuster deal, there were breakfasts between Ted and Larry. They lived across the street from each other in ritzy Forest Hill, home to Toronto’s ultra-well-monied. They talked about sports franchises in the way car buffs talk about their favourite set of wheels.
Ted Rogers had bought baseball’s Toronto Blue Jays in 2000 with the idea of boosting his company’s profile in southern Ontario. Larry Tanenbaum was chair of Maple Leaf Sports & Entertainment Ltd., the company that owned the coveted Toronto Maple Leafs and basketball’s Toronto Raptors. So once or twice a year, they noshed beside the Rogers family pool, talking pucks, bats and player salaries over scrambled eggs and orange juice. “Ted couldn’t tell you the latest scores,” recalls Tanenbaum. “He was more interested in the concept of sport as something that brought people together. But for as long as I knew him, he and I talked about the idea of one day hooking up and becoming partners in the Toronto Maple Leafs.”
Chances to buy into the crown jewel of Canadian sports and broadcasting don’t come around very often. For 16 years, the Ontario Teachers’ Pension Plan had watched the value of its interest in MLSE skyrocket, and was in no mood to sell. Moreover, any Rogers bid would surely meet a competing offer by Bell Canada Inc. (BCE), Rogers’ great rival in the cable, phone and wireless business (Rogers also owns Maclean’s). So when Teachers put its 79 per cent stake up for sale last year, the inheritors of Rogers’ corporate mantle quickly signalled their interest. Reports of a pending deal soon surfaced, and the coronation of Rogers Communications Inc. as winner of the MLSE sweepstakes seemed a matter of time.
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Canning it
By Chris Sorensen - Wednesday, December 14, 2011 at 8:10 AM - 0 Comments
Coca-Cola’s climbdown from its white holiday-can debacle has been awkward, to say the least
Photograph by Jenna Wakani
Coca-Cola’s climbdown from its white holiday-can debacle has been awkward, to say the least. The soft drink giant is already phasing out a limited edition white Coke can launched one month ago as part of a special holiday promotion with the World Wildlife Fund to protect polar bears (key figures in Coke’s Christmas marketing for decades). Confused consumers took to social media sites to register their displeasure, complaining that the snowy white cans were too difficult to distinguish from silver holiday-themed Diet Coke cans and, somehow, made the fizzy brown pop taste funny. Now, two weeks after putting up a bizarre “fact sheet” on its website to explain which cola was in which can, Coke is talking up the abrupt return of its “iconic” red holiday cans (“Phase II”) as though it were in the cards all along. A Christmas miracle!
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How Ottawa’s foreign ownership rules are causing big headaches
By Chris Sorensen - Friday, December 9, 2011 at 8:10 AM - 0 Comments
Critics say the situation has taken a turn for the worse under the current government
Michael Christopher Brown/Corbis
Anthony Lacavera arrived on Canada’s wireless scene with a sunny attitude and a promise to shake up the industry. But after spending the past two years bogged down in regulatory and legal proceedings, the once-optimistic CEO of Globalive Communications is beginning to sound like a different man. Though he remains “bullish” on upstart Wind Mobile’s chances, Lacavera says he’s been forced to abandon his original game plan as dark clouds begin to gather over Wind and other new entrants.
It’s been a long, see-saw battle: Industry Canada, which paved the way for new wireless start-ups by preventing giants like BCE Inc., Telus Corp. and Rogers Communications Inc. from bidding on certain licences during a 2008 auction, approved Globalive’s corporate structure only to have the Canadian Radio-television Telecommunications Commission reject it over concerns that the involvement of a giant multinational telecom and its Egyptian billionaire founder violated foreign ownership laws. Embarrassed, then-industry minister Tony Clement scrambled to have cabinet overrule the regulator and then promptly lost a legal challenge in federal court. The decision was later reversed on appeal and could possibly be overturned yet again if the Supreme Court of Canada decides to look at the case.
“It’s a ridiculous set of events,” a weary-sounding Lacavera says. “And it was all very high profile. So now any investor thinking of investing in Canada sees that on the radar screen and would be saying, ‘Do I really want to risk my money?’ ”
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How electric cars got stuck in first gear
By Chris Sorensen - Tuesday, December 6, 2011 at 10:50 AM - 0 Comments
Electric cars are hitting showrooms, but people aren’t buying
Rick Bowmer/AP
On a recent autumn day, employees of Tesla wheeled their latest electrified creation, the Model S sedan, into the concourse of a bank tower in downtown Toronto. Over the lunch hour, a handful of curious passersby ogled the dark-red vehicle’s sleek lines, leather interior and giant touch-screen monitor.
The Model S is the second production vehicle built by the Silicon Valley-based carmaker founded by American entrepreneur Elon Musk. Its first effort, the US$109,000 Roadster, was launched in 2008 and immediately grabbed eyeballs—not only because it was the first production vehicle to use lithium-ion batteries like those found in laptops, but because it looked car-magazine cool and was capable of zero to 60 mph in as little as 3.7 seconds. Tesla, which has yet to turn a profit, built and sold only 1,800 Roadsters, but that was hardly the point. “We needed to build a proof of concept that put itself on the map pretty quickly,” says Ricardo Reyes, a Tesla spokesperson.
Mission accomplished—sort of. With Tesla leading the way and governments throwing money at “green” industries, electric cars have gone from auto-show concept vehicles to production models, seemingly overnight. There’s only one problem: consumers have so far shown little interest in vehicles that are perceived as expensive, time-consuming to recharge and having a limited driving range. “The buzz around electric cars in the marketplace is far greater than what’s actually being purchased,” says Michelle Krebs, a senior analyst for the car website Edmunds.com. “Electric cars are not catching on.”
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Compliments to the fry cook
By Chris Sorensen - Thursday, December 1, 2011 at 9:45 AM - 0 Comments
There’s a movement underway to convince customers their fast food is being cooked by someone other than teenage staff
CP+B, Luis Markovic
Just as marketers scrape bottom in the whole “artisan” trend (official low point: Tostitos Artisan Recipes chips), the fast-food industry is gravitating to a new wholesome sales tool: the white-jacketed chef. Whether it’s Burger King’s new “Chef’s Choice” burger or Domino’s decision to feature Brandon Solano, the pizza chain’s vice-president for marketing and retail innovation, in a chef’s uniform in television ads, there’s a movement underway to convince customers their food is being cooked by someone other than the teenage staff actually slaving away in the kitchen. As a recent article in Advertising Age noted, McDonald’s executive chef Dan Coudreaut is increasingly being made available to talk about new products, while KFC’s “chief chicken officer” was used as a spokesman for the chain’s cook certification program. Just don’t try asking for wine recommendations at the drive-through.
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Who’s going to pay for fuel efficient planes?
By Chris Sorensen - Tuesday, November 29, 2011 at 9:15 AM - 0 Comments
Why are some airlines shelling out tens of billions of dollars to scoop up the latest state-of-the-art planes?
Karim Sahib/AFP/Getty Images
Aircraft makers are racking up huge sales of fuel-efficient planes. But who’s going to foot the bill?
Airlines facing turbulent economic times have historically turned on the “fasten seat belt” sign and tried to ride out the chop, cutting underperforming routes and offering seat sales to boost others. With high fixed costs, the name of the game is preserving cash flow. So why then, with the economy looking so gloomy, are some now shelling out tens of billions of dollars to scoop up the latest state-of-the-art planes? It’s all about fuel.
With the price of oil hovering just under US$100 a barrel, airline executives are gambling that newer, more fuel-efficient planes will translate into huge cost savings down the road. Boeing, for example, revealed last week that it had signed the biggest-ever order in history with Indonesia’s Lion Air, which agreed to buy 320 Boeing 737s in a deal worth US$21 billion, based on list prices. Of those, 201 will be the 737MAX, outfitted with more efficient engines that burn up to 12 per cent less fuel than a regular 737 (Boeing also sold 50 of its 777 jets to Emirates Airlines for US$18 billion a week earlier). Similarly, Airbus’s A320 NEO, which has also been outfitted with more fuel-efficient engines, has proven to be the manufacturer’s fastest-selling model ever.
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Playing for Jeeps
By Chris Sorensen - Tuesday, November 22, 2011 at 10:30 AM - 0 Comments
Chrysler is hoping to cash in on the stampede to buy the latest version of the Call of Duty video game series
Chrysler
Chrysler is hoping to cash in on the stampede to buy the latest version of the Call of Duty video game series, Modern Warfare 3. At the same time the game went on sale, it released a 2012 Jeep Wrangler Call of Duty: MW3 Special Edition vehicle (complete with graphics on the front fenders, spare tire cover and logos on the seats, dashboard and floor mats).
It’s the second time Jeep’s marketing team has partnered with the video game’s publisher to have its vehicles appear in one of Call of Duty’s virtual worlds, while having elements of the game appear in the real-life vehicle. Whether there are enough Dorito-eating Call of Duty fans with an extra $36,495 lying around to move the needle on Chrysler’s sales is doubtful, but at least the MW3 special edition is cooler looking than Jeep’s 2003 effort: a Wrangler Rubicon plastered with bright orange Tomb Raider decals.
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Sport Chek’s plan to be a ‘cool’ brand
By Chris Sorensen - Tuesday, November 22, 2011 at 10:20 AM - 0 Comments
The sporting goods store looks to sharpen its image
Jeff McIntosh/CP
Landing Sidney Crosby as a pitchman is only the start of Sport Chek’s plan to be a ‘cool’ brand
With its black facade and red-slash logo, Sport Chek is a familiar sight in malls across the country. As Canada’s only big-box sporting goods retailer, it’s a convenient place for consumers to find everything from hockey skates and bicycles to running shoes and golf clubs. But, as its new owner is the first to admit, Sport Chek isn’t exactly known for being a “cool” place to shop—although snagging hockey superstar Sidney Crosby as a pitchman was a step in the right direction.
With competition from U.S.-based retailers on the rise, Canadian Tire (which purchased Sport Chek’s parent company, Forzani Group Ltd., for $771 million earlier this year) has tapped Montreal ad agency Sid Lee to do a complete brand overhaul of FGL’s flagship 139-store Sport Chek chain. “Our goal is to inspire our customers and define the purpose that Sport Chek has in their life,” says Duncan Fulton, the chief marketing officer of FGL. “And hopefully it’s more than a box in the mall where you can buy some stuff and then go out and be passionate about your sport.”
Sid Lee is the ad agency behind Adidas’s latest global brand campaign, its biggest ever, featuring soccer superstars Lionel Messi and David Beckham, the NBA’s Derrick Rose and singer Katy Perry. Amid pounding beats, the spots weave together heroic action from the soccer pitch and basketball court with gritty street-oriented sports like skateboarding and BMX, with a dose of fashion and music thrown in for good measure—basically all of the sports and “lifestyle” categories where Adidas wants to be recognized.
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How one man brought Greek yogourt to dairy cases everywhere
By Chris Sorensen - Thursday, November 17, 2011 at 10:40 AM - 0 Comments
Finally, something good from Greece
Photograph by Stephanie Noritz
Investors have understandably shied away from most things labelled “Greek,” as the debt-ridden Mediterranean country threatens to topple the eurozone and take the global economy down with it. But there’s one place where people seemingly can’t get enough: the yogourt section of their grocer’s dairy case. After years of focusing on making yogourt thinner, sweeter and laden with bacteria to improve digestive health, suddenly dairy companies are falling over themselves to produce so-called “Greek” variations that are thicker, creamier and tart tasting.
The sudden shift in direction is largely the result of one man. Several years ago, Hamdi Ulukaya, a Turkish-American businessman, spotted a market opportunity for a thicker, protein-rich strained yogourt like the yogourt he was familiar with back home (the straining removes excess liquid and sugar). Ulukaya’s first case of Chobani Greek yogourt rolled off the production line in 2007 and quickly tapped into an unfilled demand among Americans for a more substantial, but still good-for-you, snack. “Our goal was to reinvent the yogourt category,” says Kyle O’Brien, the vice-president of sales for Chobani’s parent company, Agro Farma, who has been involved since the beginning.
Reinvent it they did. Chobani is not only the dominant player in the fast-growing segment, which now accounts for 15 per cent of all yogourt sales in the United States, but it’s also the number one U.S. brand of yogourt altogether (it’s not yet officially sold in Canada, although some specialty retailers stock it in their stores). It’s the sort of disruptive innovation that one usually associates with technology, not foodstuffs. “It’s a success story that’s pretty amazing,” says Joel Gregoire, a Canadian food and beverage analyst for NPD Group, who notes that yogourt of all types is one of the fastest-growing food categories in North America, with consumption increasing by more than 100 per cent over the past decade in Canada alone.
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REVIEW: One Click: Jeff Bezos and the Rise of Amazon.com
By Chris Sorensen - Wednesday, November 16, 2011 at 11:10 AM - 0 Comments
Book by Richard L. Brandt
Amid the flood of tributes to the late Apple co-founder Steve Jobs, it might seem like an unfortunate time to come out with a book about Jeff Bezos and his online retailing giant, Amazon.com. But in some ways, Bezos’s achievements are just as impressive, and perhaps more instructive for would-be entrepreneurs. For one thing, Amazon is one of the few dot-com companies that not only survived the tech crash, but cleverly reinvented themselves over the years. Named for the mighty river, Amazon began in 1995 by selling only books, and quickly expanded to everything from appliances to patio furniture. Amazon was also among the first to achieve success in tablet computers with the 2007 release of its Kindle e-reader, and is becoming a major player in streaming media and cloud computing, taking on companies like Google, Netflix and Apple in the process.Brandt details Bezos’s early days in the financial services industry, and the entrepreneurial drive that led him to create what he dubbed the “world’s largest bookstore,” even though Amazon initially stocked fewer titles than most neighbourhood shops. Like Jobs, Bezos is frequently described as “brilliant” and maniacally devoted to providing the best possible customer experience (people initially thought he was crazy for allowing negative book reviews on the site), although he comes across as less of a dreamer and more of a methodical empire builder. Bezos chose books because they offered the greatest Internet potential in the mid-1990s, when people were still wary of conducting transactions on the Internet. Books, he reasoned, had widespread appeal, were easy to ship, and lent themselves to being searched on a website (and titles already had a unique ISBN number, making it relatively easy to create a database).
Yet, despite Amazon’s frenetic growth, the company didn’t post a single quarterly profit for its first seven years. Bezos firmly believed that keeping customers happy was ultimately more important to Amazon’s future than satisfying Wall Street, once quipping that Amazon’s reputation was “worth a lot more to us right now than money.” It paid off. Amazon earned US$1.15 billion last year. Bezos may never achieve Jobs’s cultural icon status, but his story will be studied in business schools for years to come.
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CP’s railway to riches?
By Chris Sorensen - Wednesday, November 16, 2011 at 11:10 AM - 0 Comments
With a big U.S. investor on board, CP faces a boardroom battle as it rushes to catch rival CN
Todd Korol/Reuters
Canada’s two national railroads are as much a part of the country’s landscape as the Rocky Mountains and Great Lakes. Powered by bright red locomotives, trains operated by Canadian National Railway Co. and Canadian Pacific Railway Ltd. snake their way through the green valleys of the B.C. Interior, chug past wheat fields in the Prairies and lumber into yards in the manufacturing heartland of Canada and shipping ports on the East Coast.
But despite their long history in this country (CP was founded in 1881 to physically link Canada’s populous eastern provinces with the West), it’s only been recently that the rails have also been viewed as a vehicle for deep-pocketed investors to make carloads of money. Railroads, which haul everything from grain and iron ore to automobiles and refrigerators, offer exposure to the overall economy, not to mention a rare opportunity to invest in a near-monopoly business (you don’t hear about many new railroads being launched). The largest shareholder of CN, the bigger of Canada’s two railways, is none other than Microsoft co-founder and former CEO Bill Gates, who owns about 10 per cent of CN’s stock. And two years ago, Warren Buffet paid US$26 billion for Burlington Northern Santa Fe, the second largest railroad in the U.S.
Now it’s CP’s turn. New York hedge fund Pershing Square Capital Management LP recently revealed that it had taken a 12.2 per cent stake in CP, which has lagged other North American railroads’ performances in recent years—particularly CN. Led by Bill Ackman, Pershing has a reputation for taking stakes in underperforming companies and working with their management teams to bring about changes. Pershing, which pressured Wendy’s to spin off Tim Hortons in 2006, said in its filings that it intends to “engage in discussions” with CP’s management, board and other stockholders about the railroad’s business and its future.
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Knocking people off their feet
By Chris Sorensen - Wednesday, November 9, 2011 at 11:30 AM - 0 Comments
The latest in geriatric research looks at slips, trips and tumbles
Sunjoo Advani
Visitors to the basement of the Toronto Rehabilitation Institute’s new 13-floor building on “Hospital Row” could be forgiven for thinking they had unwittingly stumbled upon a super-villain’s subterranean lair. Several floors below the ground, technicians monitor computer consoles perched above a deep chamber that houses three giant fibreglass pods—each with an interior about the size of a spare bedroom. A claw-like system dangles from the ceiling, waiting to hoist one of the pods off the ground and carry it along a track into a neighbouring chamber, where it is placed atop a set of giant hydraulic legs bolted to the cement floor.There are, however, no plans to take over the world with this high-tech equipment, part of the institute’s new Challenging Environment Assessment Lab, or CEAL, a computer-controlled motion simulator system similar to those used to train pilots and astronauts. Except these simulators, part of a $36-million initiative to make Toronto Rehab a leader in geriatric and neurological rehabilitation research, will be used to replicate more mundane environments like icy sidewalks and household staircases—both of which are responsible for a staggering number of injuries among elderly and disabled Canadians every year. “We take on the big problems,” says Geoff Fernie, the vice-president of research at Toronto Rehab, as he levels his gaze over the glasses perched on the end of his nose. “Stairs kill and maim three times as many people as car accidents.”
In Canada, one out of three people over the age of 65 has a slip or a fall every year, and they are responsible for nearly 20 per cent of injury-related deaths and two-thirds of all hospitalizations among the same age group, according to the Public Health Agency of Canada. And falls break more than just brittle bones. They also shatter confidence and can often mark the beginning of a rapid decline in health and quality of life among the elderly, a growing national health issue for an aging Canadian population.
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GM’s betting big on Chevy
By Chris Sorensen - Monday, November 7, 2011 at 9:40 AM - 0 Comments
The automaker hopes global buyers will fall for the ‘made-in-the-U.S.A.’ brand
GM; Car Culture/Getty Images; Photo illustration by Lauren Cattermole
Late-autumn baseball is a nostalgia-filled time for Americans. So it makes sense that General Motors would wait until Game 1 of this year’s World Series to roll out a patriotic TV ad celebrating the 100th birthday of its flagship Chevrolet brand. The 60-second spot shows people holding up historic photographs of Chevrolet vehicles and their owners in front of the same stirring American backdrops—windswept plains, craggy mountain peaks, idyllic suburban homes and gritty roadside gas bars—as they appear today. And, just in case a few heartstrings were left untugged, Ray Charles sings America the Beautiful in the background.
It’s well-worn marketing territory for Chevrolet, but it represents only part of GM’s aspirations for its bestselling nameplate. Though the bow tie has historically been synonymous with burly pickup trucks and throaty muscle cars, these days a “Chevy” is just as likely to refer to a Sonic subcompact or its sleek Cruze small car—vehicles that are designed to be sold all over the world, including fast-growing markets like China and Russia.
Through Chevrolet, GM is rebuilding its global footprint after going through a painful restructuring under bankruptcy protection two years ago. “Ford has been much more of the global player of the American carmakers in recent years,” says Alan Middleton, a marketing professor at York University’s Schulich School of Business. “I think GM is not only looking for cost savings, but is shifting its positioning to become more of a global brand.” So far, it appears to be paying off—in its third quarter, Chevrolet reported sales of 1.2 million vehicles globally, a best-ever performance for the brand. It was also the only major automaker to grow its global market share this year, with 60 per cent of sales now coming from outside the U.S.
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The recovery: Gone in a flash recession
By Chris Sorensen - Monday, October 31, 2011 at 8:00 AM - 0 Comments
If you have a tough time telling the difference between the plodding U.S. economic recovery under way and the dark days of 2009—you’re not alone
If you have a tough time telling the difference between the plodding U.S. economic recovery under way and the dark days of 2009—you’re not alone.
Tom Porcelli, chief U.S. economist at RBC Capital Markets, recently coined the term “flash recession” to describe brief periods like last August, when the sputtering U.S. economy appeared to completely go off the rails. “You had essentially zero job growth and you had virtually no consumer spending—that’s a recession,” Porcelli said during an interview earlier this month with Yahoo! Finance. While Porcelli acknowledged one month of negative economic growth doesn’t meet the traditional definition of a recession, he argued that the current recovery is being driven more than usual by rising and falling consumer sentiment, while longer-term indicators like unemployment, stuck at around 9.1 per cent in the U.S., refuse to budge.
That would also explain September’s sudden spike in positive data—rebounding auto and chain store sales—as a flash recovery. And if Porcelli is correct, gauging the health of the U.S. economy just got a lot tougher. That’s because it now requires figuring out what’s going on inside the heads of millions of jittery U.S. consumers at any given moment.
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Has RIM lost its way?
By Chris Sorensen - Thursday, October 27, 2011 at 8:10 AM - 0 Comments
A major network outage and investor unrest has Research In Motion vowing that it will fight back
Reuters/Robert Galbraith
With confidence in the BlackBerry platform waning and calls for a management shake-up growing louder, the last thing Research In Motion Ltd. co-CEOs Mike Lazaridis and Jim Balsillie needed earlier this month was a network meltdown that left subscribers across five continents with spotty access to email for more than three days. It was perhaps a further bit of bad luck that the source of the outage was traced to RIM’s European headquarters in Slough, a dreary suburb of London that also happened to be the setting of the BBC TV series The Office, a sitcom about the pitiable lives of employees of a second-rate paper company toiling beneath a hapless manager played by Ricky Gervais.
Though RIM, based in Waterloo, Ont., is no Wernham Hogg (the name of the fictional paper firm in the TV series), the scramble by Canada’s tech superstar to diagnose, correct and explain the biggest network outage in its history left many observers shaking their heads. The disruptions began on Oct. 10 and immediately impacted users in Europe, the Middle East, Africa and South America. RIM said the following day that the problem had been resolved, only to suffer more disruptions that eventually found their way to North America. The company later revealed that it had suffered a core switch failure in its network operations centre (a sort of central sorting facility for BlackBerry email), and that its backup systems had failed, too.
By the time Lazaridis appeared in a low-tech Web video (standing before a drab beige background) to issue a rare apology on Oct. 13, critics had already characterized RIM’s response to the crisis as inadequate. “The worldwide outages we experienced last week were unfortunate,” Lazaridis told a crowd of developers earlier this week at a BlackBerry conference in San Francisco, where RIM unveiled its new, next-generation BBX mobile platform. He added that RIM is studying what went wrong and is focused on “making this right” with customers.
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The life and times of Steve Jobs
By Chris Sorensen, Jason Kirby, and Michael Friscolanti - Monday, October 17, 2011 at 8:00 AM - 4 Comments
How an LSD-using college dropout, who was a horrible boss and hard to like, made magic and changed the world
John G. Mabanglo/AFP/Getty Images
Theo Gray was at the wheel of his car when he learned his friend Steve Jobs was dead. The call from his assistant came as a shock, not because Gray didn’t know of Jobs’s failing health—“I had some information about how bad he was”—but because it was difficult to comprehend a world without the legendary Apple co-founder. Jobs not only built one of the world’s most successful companies, with a market value of more than US$350 billion, but he elevated technology into the realm of the magical and gave us our first true glimpse of its potential. “I don’t know, maybe I was repressing the knowledge,” says Gray, who has known Jobs since 1988 and whose software company, Wolfram Research, has worked closely with Jobs and Apple for the past two decades. “I hoped maybe he would have another year or something.”
One more year. It boggles the mind to imagine what a digital dreamer like Jobs could do with 365 more days on this planet; the wonders he might conceive, or even the little annoyances of the mobile age he would inevitably solve. Jobs reshaped the world and how it communicates more in his 56 years than almost any other person of the last century.
It was why, moments after Apple Inc. confirmed Jobs’s death on Oct. 5, tributes began to pour in on sites like Facebook and Twitter, by the tens of millions. A few hours later, makeshift shrines popped up outside Apple stores throughout North America, Europe and Asia. President Barack Obama was moved to write: “Steve was among the greatest of American innovators—brave enough to think differently, bold enough to believe he could change the world, and talented enough to do it.” Steve Wozniak, who co-founded Apple Computers with Jobs in the 1970s, put it even more simply: “It’s like the world lost a John Lennon.”
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Canadian Tire’s baffling strategy to sell you everything
By Chris Sorensen - Tuesday, October 11, 2011 at 11:30 AM - 34 Comments
It breaks every marketing rule, but it’s paying off
Colin O'Connor/Maclean's
The Canadian Tire store on Yonge Street at Davenport Road in downtown Toronto—a few blocks from where brothers John and Alfred Billes opened their first store in 1922, and the location that became the main Canadian Tire store in 1937 (complete with roller-skating stock boys)—is not a very welcoming place these days. Prospective shoppers are greeted by a queue of frazzled-looking customers clutching humidifiers and extension cords at the service counter. They must then negotiate a pair of waist-high turnstiles before browsing aisle after cluttered aisle of merchandise as varied as Canada’s seasons: kitchen utensils, vacuum cleaners, caulking guns, drill bits and sprinkler attachments. Upstairs there’s hockey gear, camp stoves, some toys and cans of tennis balls. Downstairs, auto parts, oil-slicked service bays and, finally, a wall of all-season tires.
Newer stores, located in towns and cities across the country, are brighter and more airy, but largely house the same eclectic inventory—none of it particularly cheap and none of it terribly aspirational either. Customer service, meanwhile, varies wildly from store to store, the result of the company’s independent—and bureaucratic—dealer ownership model.
It all seems like a recipe for retail disaster, particularly as an army of well-oiled U.S. big box chains—Wal-Mart, Home Depot and soon Target—continue their relentless march north of the border. Yet somehow, Canadian Tire remains standing, earning profits of $453 million on $10.3 billion in retail sales last year, which was up three per cent from a year earlier (Canadian Tire Corporation Ltd. also makes money through a banking operation, Canadian Tire Financial Services). “People have been calling for Canadian Tire to fold under the pressure of new competitors for 20 years, and it hasn’t happened yet,” says Jim Danahy, the chief executive of CustomerLAB, a retail consulting firm. “They seem to have a unique relationship with their customers.”
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Steve Jobs, dead at 56
By Chris Sorensen - Thursday, October 6, 2011 at 12:54 AM - 3 Comments
From the iMac to the iPad and everything in between, Jobs was a visionary
Steve Jobs, the tech visionary whose company gave the world the personal computer, iPod, iPhone and iPad, has died at the age of 56.Apple Inc. revealed the news late Wednesday, barely a month after Jobs stepped down as CEO and handed the reins to Tim Cook, Apple’s former chief operating officer. Jobs said at the time that “I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.” Continue…
