What YGCC is Reading

What YGCC is Reading #298

Foxconn, a Taiwanese electronics contract manufacturing company, plans to establish a joint venture with the Italian-American carmaker, Fiat Chrysler, to manufacture electric vehicles and first target China’s market. This plan was devised because although China’s electric car market is large, sales of electric cars have decreased due to the slowing economy and the government’s decision to slash subsidies for manufacturers. The competition in the electric vehicle space is very intense as several carmakers, like Tesla, Volkswagen and Ford, have already invested considerable money and effort in the market.

  • Estimate the electric car market size in China.

  • What are risks that Foxconn and Fiat Chrysler should consider in light of the reduced demand and high levels of competition?

 

Read more: 
iPhone maker Foxconn could work with Fiat Chrysler on electric cars (CNN)

What YGCC is Reading #297

Lime, the electric scooter sharing company, has announced that it is cutting 14% of its workforce and leaving 12 markets. This move comes amidst growing concerns about the lack of profitability of electric scooter sharing businesses broadly; Lime is currently not profitable, and neither are competitors like Bird and Lyft’s scooter business. Lime hopes that cutting costs will move the company in the direction of profitability. 

 

  • In addition to cutting the number of employees, what are other ways that Lime could decrease costs? 

  • What are some risks associated with Lime leaving markets that it currently operates in? 

  • What factors should Lime consider when deciding which markets (i.e., cities) to enter?

 

Read more: 

Scooter Startup Lime Exits a Dozen Markets, Cuts Jobs (WSJ)

What YGCC is Reading #296

Uber is the world’s largest ride-hailing group with operations in 63 countries. It is currently trying to sell UberEats in India to local delivery app Zomato, backed by Chinese payments group Ant Financial. Food delivery has become increasingly popular in India and attracted billions of dollars from foreign investors. But UberEats is not profitable in India owing to intense competition and thin margins. Uber is in talks with Zomato to sell the business in exchange for a stake in Zomato. Uber has executed a similar industry consolidation strategy in other regions as well such as Southeast Asia and China. Uber announced last month it plans to be profitable in 2021.

 

  • Describe the business model of UberEats, and estimate the market size of food delivery in India.

  • What is the impact of this potential deal on Uber?

Read more: 

Uber in talks to sell Indian food delivery business to Zomato (FT)

What YGCC is Reading #295

2019 saw massive success of plant-based food businesses, and experts project that vegan sneakers, made only of plant-based, biodegradable, and not animal-derived materials, may be another instantiation of this trend in 2020. Both Reebok and Nike have already designed plant-based running shoes with plans to target vegan customers and young customers, who report being concerned about the environment. Market research has shown that 35% of customers report being willing to pay more for sustainably made shoes. 

 

  • What factors would you consider in pricing a new plant-based sneaker? 

  • Nike priced their plant-based sneakers at $150. Assuming that $150 is an average price, estimate the market size for plant-based sneakers in dollars.  

 

Read more: 

Vegan sneakers set to be next plant-based craze in 2020 (CNN)

What YGCC is Reading #294

Meepl is a Zurich tech company whose app measures your body with two smartphone photos and connects you with vendors, who then sell you clothes that fit perfectly. It provides a Software-as-a-Service solution that enables clothing retailer clients to reduce return rates, digitize supply chains and deliver an interactive 3D shopping experience to customers. Meepl has been integrated into websites of clothing brands such as Hugo Boss and AlphaTauri. Though a 3D-scanning home fitting service seems to be a novel way to make the fashion industry more sustainable, the competition is already fierce. Existing players in this category include Size Stream in North Carolina, Body Labs in New York (just bought by Amazon), and 3DLook headquartered in Silicon Valley.

 

  • What is the business model of Meepl? 

  • Meepl is currently working in Austria and Germany. Should Meepl consider international expansion? If so, how? 

 

Read more: 

Tech entrepreneurs are transforming online fashion (FT)

What YGCC is Reading #293

Powerfront is a company that allows businesses to track and chat with online shoppers using its main product, Inside. Powerfront’s technology, which is currently mostly used by luxury brands, allows customer service agents to see what customers have in their carts, what they have purchased in the past from their company and others. The technology also allows agents to see what customers are typing into a live chat window before they press “send” and even analyzes the content of messages, along with other data, to determine how a customer might be feeling. Inside can then assign customers labels like “favorites” or “VIPs” to guide customer service agents. 

 

  • Imagine your client is a luxury goods retailer considering using Powerfront’s services. What factors would you weigh in determining whether or not they should? 

  • Powerfront has roughly 400 clients. Estimate their annual revenue using reasonable assumptions.  

 

Read more: 

They See You When You’re Shopping (NYT)

What YGCC is Reading #292

Novartis, a big Swiss pharmaceutical company, has agreed to a $9.7bn cash deal to acquire the Medicines Company whose drug Inclisiran is said to be potentially transformational for improving patient outcomes. Inclisiran is a cholesterol-lowering drug, which works by silencing a gene and reducing a protein that controls the production of “bad” cholesterol. The drug has been shown to reduce “bad” cholesterol by up to 58% in its successful late stage clinical trials. Unlike the current treatment of a statin pill daily, Inclisiran is an injection administered every few months. Novartis said over 50m patients cannot control their high cholesterol with the current standard of care. It is estimated that tens of millions of patients have increased risk of cardiovascular problems because of high cholesterol. 

 

  • Who are the target consumers of Inclisiran? 

  • Novartis is a leader in cell and gene therapy, and is currently seeking to boost total shareholder returns by a series of disposals and takeovers. What are the benefits and risks of this acquisition for Novartis?

Read more: 

Novartis agrees $9.7bn deal for US cholesterol drugmaker (FT)

What YGCC is Reading #291

Disney recently launched its Disney+ video service, offering streaming access to Disney-owned franchises like Star Wars, Marvel, & The Simpsons. The service achieved >10 million subscribers in its first day, and many potential users will have access through existing services like Verizon, which is offering Disney+ with its phone plans. It is priced at $6.99/month, below competitors like Netflix ($12.99/month) and HBO Go ($14.99/month). Journalists & analysts are describing the launch as the start of the “streaming wars," where first-movers like Netflix will compete with legacy media companies like Disney and HBO and with crossover tech providers like Amazon Prime and Apple TV.

 

  • Currently, there are over 1 billion on-demand video streaming users worldwide, and that number is predicted to reach 1.2 billion by 2024. Disney predicts 60-90 million subscribers by 2024. What would Disney’s market share be in this case? 

  • What revenue would these services have if they maintain their current pricing? How should Disney price Disney+ in light of their competition? 

  • Disney also owns Hulu, with a base of 28 million subscribers. Should Disney consider folding it into their Disney+ brand, or leave the two separate?

 

Read more: 

Disney+ isn’t really the beginning of the streaming wars — the next year is just a warm-up (CNBC)

What YGCC is Reading #290

Expedia, one of the world’s largest travel sites, has reported missing its quarterly earnings forecasts. The company booked revenue of $3.56 bn overall and earnings of $3.38 per share. Analysts were looking for earnings of $3.8 on revenue of $3.58bn. Such misses have been widely seen across travel site companies. Expedia said it spent more on advertising as search engines such as Google are committing additional prominent space to their own paid travel products, forcing Expedia to rely on higher-cost ad links. Hotel pricing is also under a lot of pressure due to negative economic and geopolitical factors, not to mention the threat from the likes of Airbnb. 

 

  • What is the business model of Expedia?

  • As people choose Airbnb and short-term rentals over traditional hotel rooms, what should Expedia do to improve its declining profit?

 

Read more: 

Travel sites spook investors worried about Airbnb and demand (FT)

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