In the News

Ron Harbour
The Wall Street Journal (26 August) quoted Ron Harbour in an article about Ford's use of Wi-Fi technology to program custom features and options onto cars as they are produced. This allows individualized options to be offered - ranging from power-seat preferences to how quickly the transmission shifts gears - all without the auto maker having to spend money on variations of the same parts. Ron comments: "Auto makers always wanted customization, but they didn't want to pay for it."

Joris D’Incà
Handelsblatt (26 August) quoted Joris D’Incà extensively in an article about the takeover of the British bus and rail firm Arriva by Deutsche Bahn. For Deutsche Bahn, this acquisition means the expansion of market opportunities and of its European railway network. Deutsche Bahn is expected to enter other regions and growth markets beyond Europe as a next step. Joris says: "In the long run, the railway concern needs to try to get market access to markets beyond Europe. But for the new 'Bahn'-daughter Arriva, there is still some development work in Europe. The step into other markets will be made early enough if it's done in four or five years."

Peter Bosch
Spiegel Online (23 August) and Manager Magazin (25 August) quoted Peter Bosch in two articles related to the Moscow Motor Show and the recovery of the Russian automobile market after last year's sales slump. Peter says: "Due to its longstanding strong growth rates, Russia was and will remain the center of attention for many car manufacturers. Although the biggest driving force for growth is Asia at the moment, countries like Russia counterbalance the slower dynamics in the established and developed EU markets such as Germany, France, or England." Regarding the fact that the top-selling cars in the Russian market originate from the domestic production, Peter adds: "On-site production is an absolute must. The import works only in the case of luxury cars – and this especially from Germany."

Ron Harbour
The Detroit News (24 August) quoted Ron Harbour in an article about the late-2009 recall of Toyota cars. Ron says the quality problems don't seem to have been caused by sloppy manufacturing: "I don't believe there was any degradation in quality at the plants that led to this whole thing. My conclusion is that it was a supplier quality and Toyota design issue."

Sirko Siemssen
Handelsblatt (23 August) extensively quoted Sirko Siemssen in an article about German textile manufacturers who increasingly focus on establishing own shops. "Textile manufacturers should consider going into verticalization. But they have to be aware that they need to learn retailing," says Sirko. This is not a simple task. He adds: "Entering the retailing sector poses several challenges to manufacturers, for example the acquisition of locations, the set-up of logistics and new IT infrastructure and capabilities, and the acquisition, training, and retention of store personnel." Sirko concludes: "The step into the retailing sector only makes sense with a critical mass of own shops. A significant part of sales has to be generated through that channel."

Julia Hobart
The Financial Times (23 August) quoted Julia Hobart in a story about reducing the risk of departing fund managers. Julia says that, if an asset management house is relying on star managers, "it has to judge the risk involved in terms of the reward." She defines a real star fund manager as "one who delivers through time and is not just a flash in the pan."

August Joas
Automobilwoche (23 August) interviewed August Joas about the current rumors of Volkswagen's possible buy-in into Alfa Romeo – one of the brands of the Italian car manufacturer Fiat. August says: "Alfa Romeo is a very useful completion for the Volkswagen Group because the brand conveys – among other things – southern emotionality." The German press agency dpa-AFX as well as FTD Online quoted August.

Vikram Krishnan
Flight Global (19 August) published an article on the proposed merger of the Chile-based LAN and Brazil-based TAM airline groups. The new entity could potentially account for 35% of passengers carried and 40% of revenues in the Latin American region, changing the competitive landscape. But LAN-TAM will still face strong international and domestic competition. In Argentina, for instance, Aerolineas Argentinas has been rejuvenated with a new business plan. And according to Vikram Krishnan, “a benign duopoly with LATAM may be better for Aerolineas than a competitive situation with both LAN and TAM.”

Tony Hayes
American Banker (18 August) quoted Tony Hayes in an article on debit card rewards programs. Citing the Pulse 2010 Debit Issuer Study, conducted by Oliver Wyman, the article claims that most US financial institutions will continue to support their debit rewards programs, but only 17% plan to launch a program in 2010. Issuers, Tony says, “question the effectiveness of debit card rewards programs and whether they really drive incremental card use.”  But, he continues, debit rewards customers “have higher profitability, are more loyal, and less likely to close their accounts,” which may be why 36% of issuers in the study see rewards programs as a growth opportunity.

John Drzik
Bermudian Business featured an article based on an interview with John Drzik, President and CEO of Oliver Wyman Group in its August/September issue. Mr. Drzik was quoted extensively on cultural due diligence as a key to success for M&A and the unique challenges and opportunities for both the Bermuda and reinsurance markets.

Martin Kon
All Things D (16 August) ran a column by Peter Kafka focusing on research that Oliver Wyman conducted for Next Issue Media. The study found that interactive media could lead to $1.3 billion in incremental revenue for magazine and newspaper publishers by 2014. Survey participants indicated that they are willing to pay print prices for digital editions – if the digital versions are truly interactive. Martin Kon stresses that consumers must feel they are getting something different. “If it’s a PDF replica of the print version, there’s no value add…. But when consumers see that there’s something more valuable, then suddenly they think about it in a different light.”

John Romeo
Financial News (16 August) ran an article on the state of European stock exchanges that cites John Romeo. The main exchanges have lost market share to competitors like Chi-X Europe and Bats Europe, which aren’t regulated as exchanges but offer similar trading services. One area of opportunity for traditional exchanges is post-trade services. John says, “An exchange that owns a clearing house [could] buy an interdealer-broker and put the combined exchange-traded and over-the-counter volumes through the clearing house.” The business logic for that approach is strong, but it would require “dealing with two very different cultures,” he cautions.

Tony Hayes
Digital transactions (13 August) reported on the 2010 Debit Issuer Study finding that 35% of financial institutions offered instant issuance of debit cards in 2009, up from 28% in 2008. “That is definitely one of the things that seems to be a hot topic, and growing,” says Tony Hayes. 22% of financial institutions say instant issuance is one of their top three growth opportunities in 2010.

Ron Harbour
The New York Times (12 August) quoted Ron Harbour in an article on GM’s strong quarterly earnings and the automaker’s naming of a new chief executive. Edward E. Whitacre, Jr. will step down on Sept 1 and will be succeeded by Daniel F. Akerson. Since GM’s reorganization in Chapter 11, GM has been solidly profitable. Says Ron, “When you look at all of the changes made, if they have some decent product on the market they can’t help but make money.” GM is now preparing to file for its initial public offering.

Jonathan Cohn
Reuters UK (10 August) ran a story about wealth managers who routinely offer clients discounts on fees and commissions. Although many large US brokerages set price schedules, managers often approve deeper cuts in order to keep brokers and clients from jumping to rivals. Jonathan Cohn explains that these decisions add up to big losses. “It’s done in the heat of battle and the adviser doesn’t think it’s all that material…. But it’s death by a thousand cuts and they end up leaving a lot of money on the table.” Ironically, the article points out, “discounts rarely stop clients from leaving.”

Bradley Kellum
Pensions & Investments (9 August) quoted Bradley Kellum in an article on the trend for insurers to tap outside investment managers. After the market meltdown, even the largest global insurers turned to outsourcing some of their investment operations. Will this decision pay off in the long run? According to Bradley, the jury is still out. He says that larger insurers are dipping their “toes in the water”—outsourcing $1 billion of $5 billion of their portfolio—but still keeping a large chunk inside to see how the new relationships work.

August Joas
Dpa-AFX (6 and 8 August) interviewed August Joas in a news brief on the positive half-year results achieved by German premium car manufacturers. August expects the trend to continue: “I think that there will be great growth opportunities for German manufacturers in China also in the future, and the markets in Europe and Northern America will regain their stability, too.” He points to several reasons for their success: “On the one hand, the mega groups benefit from exports. On the other, OEMs have systematically done their homework – for example by reviewing their product range and their costs. If the manufacturers want to achieve a return on sales of about 10% in 2012, they will have to continue these developments.” Automobilwoche, a leading German automotive magazine, and numerous news sites quoted these statements in their news coverage.

Niko Herrmann, Andrew Watterson, and Scot Hornick
Aviation Daily (6 August) reported on the recent Oliver Wyman/IATA air cargo CEO survey. Executives believe they are “out of the worst,” but only 7% expect a full recovery this year. Survey respondents were far more optimistic about their own business: 90% expect their business to be better or much better by volume this year than last. The article references Niko Herrmann, Andrew Watterson, and Scot Hornick, who cautioned in the report that “the current upswing could be short-lived in the global economic engine sputters again this year.”

Matthias Bentenrieder
Handelsblatt Online (4 August) carried an interview with Matthias Bentenrieder on the challenges car manufacturers face due to product recalls. Matthias states: “Expensive and image-damaging product recalls can be avoided through integrated quality management.” Companies should encourage a “zero-error philosophy” among its staff. If an error with a high-risk potential occur does occur, Matthias says, communication is critical. “Customers, car dealers, and the public need to be informed. It is important to…communicate as openly as possible, explaining how the problem emerged in the first place and why it will not happen again in the future.”

Sirko Siemssen
Handelsblatt (2 August) quoted Sirko Siemssen in an article about the German drug store model and its profitable expansion abroad. Sirko explains why leading German drug stores have been so successful: "The companies understood market demands very well. They focused on product range, innovation, and their own brands. Especially in Eastern Europe, these strategies have created strong demand for the drug store’s product line."