Friday, December 12, 2008

A Prescription for the Big 3 Automakers

From my blog at Pepperdine:

As MBA students, it’s our job to come up with solutions to problems that other people can’t fix. So as an avid fan of the automotive industry, I have a few pointers for what GM and the rest of the Big 3 Automakers can do in the short and long-term to help turn things around.

The first question that should be asked is - what connotation does the term “American car” actually have? Does it conjure up images of V8-powered Mustangs from the 60’s, the gargantuan Cadillac Escalade of today, or do you just think of American cars as unreliable and less desirable than their foreign counterparts in nearly every price category? If you’re like me and you follow the industry, then you know that what we call American; Chrysler, Ford and GM, have all greatly improved their reliability according to most J.D. Powers quality surveys and are nearly as good and efficient as their competitors in each segment in which they compete. But for too long, American car companies turned out such mediocre or downright subpar products that they ended up destroying most of their brand equity to the point where many people don’t even consider buying American today, even if the cars are as good or better than their competitors. This is especially true in the super competitive mid-sized, Toyota Camry/Honda Accord/Ford Taurus segment… It’s gotten to the point where it’s psychological - many people simply will not cross shop a Honda Accord with a Ford Fusion. They won’t look at a Cadillac STS and compare it to a BMW 335i. They may not consider a Ford Focus over a Honda Civic; it’s actually happening in all segments.

So without going delving into the health-care costs and union issues that are plaguing the Big 3, my recommendation is simple - Stay product focused. Find product segments where you can offer something genuinely different, dynamic and with the ability to get consumers excited. If you can’t, then nothing else you do will allow you to overcompensate. You can’t focus on cutting costs any further if people don’t get excited about your product. You can’t throw more incentives and rebates at a particular car or truck if the product is fundamentally dull to begin with. If you don’t want to build exciting cars in every segment in which you operate, then stop building cars. Plain and simple.

In a nutshell this is what each of the Big 3 should do with respect to their sedans:

General Motors - Bring over more of your international sedans. GM has started to bring over Opel’s from Germany and rebadge them as Saturns, but in my opinion, the Saturn brand never had much equity and as good as the Opel-engineered Saturn Astra is, it’s still got the Saturn badge, and that doesn’t help matters. So GM should consider dropping certain brand names from its lineup. Just like no one really misses Oldsmobile, people may not shed a tear if Saturn disappears, or even Chevy - as far as sedans go. GM needs to further consolidate its brands, and consider branding more of their sedans as Opels in America. Cadillac is dynamic and doing well, so it should stay. But Chevy, Saturn and Buick could all be rebranded as Opel. Then Opel could produce 5 - 7 different models and cater to most of the market, and put itself in a position where it could be cross shopped by the Honda Accord, VW Passat and Toyota Camry buyers. The Chevy name should continue in the truck division where it has much stronger brand equity and is easily recognized and has a positive connotation.

Ford - Ever seen the Ford Mondeo? Well, probably not because it’s not sold in America, but it’s a gorgeous car that could reinvigorate Ford’s sagging revenues in the mid-size $20,000 to $30,000 market. This car should be sold in America, and the Fusion and Taurus should be dropped. The European Ford Focus should be sold in America along with the high performance versions of this car, and the current redesigned Focus that’s being sold in America should be dropped. It’s ugly, boring and not likely to be cross-shopped with the Civics, Golf’s and Corolla’s out there.

Chrysler - What Chrysler did with the introduction of cars like the Magnum and 300C was fantastic - reasonably priced products that were beautiful to look at, distinctive, and powerful. While the “powerful” part of the equation might have to the curbed due to the industry movement towards more fuel efficient engines, Chrysler should continue to differentiate themselves and create exciting products like they have in the past.

All in all, the Big 3 should focus on their core competencies, reduce the number of brands they offer, and put an end to the practice of introudcing their best sedans in countries outside the U.S. - if they sold them here, they’d sell very well, and might actually give people a reason to buy American.

Monday, July 21, 2008

Driving in the Caucuses

I never thought I'd find a place where cars matter more than people - but if you've ever crossed the street in Tiblisi or Yerevan, well, you'd think people are expendable and cars are not. After all, human limbs are replaceable, but front bumpers? Gotta keep those intact!

After arriving in Yerevan for my internship a few weeks ago, I noticed a lot of good socio-economic changes - more people starting their own businesses, new stores on every street corner, new high-rises going up and old buildings being renovated. Everything seems a lot more professional and systematic in Yerevan compared to 2001 when I was here last. But the driving culture still scares the shit out of me. Whether I'm riding in a cab, or trying to cross the street - there's never a time I'm more alert in my life, than when trying to avoid old speeding Russian Lada's and pricey Mercedes G-class sport utilities (although to the country's credit, you could also be hit by an increasing number of middle income cars such as Skoda Fabias or Ford Fusions).

It all started one night last week when I was coming home from the Malkhaz jazz club. Let me tell you that some of the best Jazz you'll hear in Yerevan is on Pushkin street at the Malkhaz Jazz club, or seeing Chico and Friends perform at the StopClub. But back to the driving part of things. I left the jazz club at about 1am - looked both ways before crossing the street and did my trademark light jog across about 6 lanes of traffic. By the time I had almost crossed over, this car started accelerating at me like there was no tomorrow. Before I knew it, he was within feet of hitting me. My heart was pounding but I looked away and kept going. It came down to the wire, and finally, mr. psycho swerves, goes around me and keeps driving. Without a doubt the driver was accelerating to hit me, maybe on a dare, or maybe because he was drunk or maybe because this is frigin' Armenia, but I narrowly escaped his wrath.

If I was careful before that incident, then you can imagine how careful I am now when crossing the street. Most people start crossing the street when before the crossing signal turns green - but me? Oh I wait, I wait patiently like a handicapped elderly woman transported here from another planet. Other people cross the first few lanes of traffic and then get caught in the median, and wait for cars in the opposite direction to pass and then wade out casually into traffic, their toddlers in hand, their shopping bags slung over their shoulders. Me? I watch them and pray to the traffic gods that I'm not going to witness a horrific accident that'll be aired sometime after 3am on FoxTV on "Worst Car Accidents" International Edition. Well finally, I watch an entire cluster of pedestrians make it over to the other side of the road. Now the light turns green and it's my turn.

Even with a green crossing signal in Armenia, cars that are making right and left turns can still come in your direction and they will NOT stop for you. Or rather, they'll stop for you when their bumper is a few centimeters from your kneecap. The kind of distance where your life flashes before your eyes just as you feel that homicidal tendency coming on - a desire to take the driver who's about to hit you and smash his head through his own windshield. Then, suddenly, you stop, or you let the driver pass and it's all over. You're across the street in one piece and now you don't feel like killing anyone, and no one feels like killing you. You just regroup and get ready for the next crossing.

So almost 3 weeks into my stay here, I'm just barely getting used to pedestrian/driving culture. I've almost mastered how to make it across the street and I've gotten rid of my "light jog" across lanes of traffic. Now I walk a bit more casually and dare I say, confidently across the roadways here. Well maybe the term confident is still a bit of a stretch. My pulse still jumps about 300 beats a minute as my right foot leaves the sidewalk. I start looking in every direction, sometimes even up into the sky, as if there's there's traffic up there too. I think I've refined my obstacle avoidance techniques to the point where I could probably walk into sniper fire and avoid getting hit for a few seconds. Ah. The skills you pick up in certain parts of the world. And to think I toyed with the idea of renting a car here:)

Tuesday, June 3, 2008

Day 1 in Croatia

“Areg, you must go sailing on the Croatian coast!” That’s right I said to my roommate Branko - and I should probably go sky diving soon or on a $5,000 safari in Kruger National park. That was back in 2000 when I could barely think about anything other than getting through my junior year in college and keeping enough money in my bank account for alcohol and bacon calzones after 4am.

Fast forward 7 years later to August 2007 and after 4 years of less than glamorous non-stop management consulting work, complaining about being in Boston for too long, and feeling stagnant; it was time to put my frequent flyers to good use and head out to the former Yugoslav Republic of Croatia! It would be my first time in Europe since 2002 and it turned out to be the most eventful and action packed trip I’d ever taken.

The trip for me actually really started of course, when I hung up my cell phone after booking my flights with American Airlines. You see, for those of you who know me well enough you know that my approach to extravagant vacations is a very procedural and intense phenomena; it’s also a little window into my slightly obsessive compulsive personality. It’s not the kind of obsessive compulsive disorder where I stalk old girlfriends or break the law. It’s more of a PG-13 tendency to Google the hell out of every new person I meet and to plan out each and every minute of my vacations like my life depended on it. But the first rule that really gets my vacation planning rolling of course, is to get mentally stimulated about a new location. I don’t like going to the same country twice, and I don’t like going to places that are typical vacation locales. So luckily Croatia didn’t violate either of those rules, nor was it on a US State Department list of places not to visit.

In its favor, it happened to have hundreds of miles of beautiful coastline, gorgeous Slavic women, incredible architecture, and years of history shaped by regional integration and disintegration. While many travelers would be heading out to Cancun for some dollar drafts and the chance to hookup with a promiscuous teeny bopper from Miami-Dade county, I would be heading to the sophisticated cultural paradise of Hrvatska (Croatia) - enriching myself on all levels, and trying to be as euro-chic as possible.

On my day of departure I was as pumped up as Hugo Chavez about to insult the President of the United States. This would not only be a vacation, it would the chance to liberate myself from the monotony of daily life. My route was from Boston to Raleigh-Durham, then to London, and then to Split Croatia – the second largest city in Croatia after the capital. Zagreb. As my British Airways flight approached the airport in Split, I gazed out my window and congratulated myself on a vacation spot well chosen; there were 10’s if not hundreds of islands below me each with some combination of lush vegetation and interesting rock formations. This trip would be like Greece without having to pay Euro prices, like the Bahamas with 10 times more culture but most of all, a chance to get my biweekly direct deposit while potentially being hungover and in bed on a Tuesday afternoon.

My flight finally arrived at Split Airport and we deplaned and went through customs. What an airport I thought to myself, it was extremely modern and tidy by any standard. I got my bags, darted into the gift shop and bought a quick $50 in phone cards before barely making it to a waiting bus that would take us into downtown Split. Why I felt the need to buy phone cards at that moment and risk the chance of missing the last shuttle bus into town was beyond me, yet very typical of the hyper multi-tasker I morph into during vacations.

I made it to the bus and grabbed one of the last seats left settling in for the short ride into town. Looking around, it was apparent that we were on a nearly new Mercedes passenger bus surrounded by elegantly dressed travelers about to depart one of the most charming airports I’d ever been in. This was Croatia? Take that gross domestic product and multiply it by ten – this place was nice! Soon however, I noticed an unfortunate teenage girl who began complaining in English that she didn’t have a seat on the bus and would have to stand in the aisle. Her complaining couldn’t have lasted more than 10 seconds. Almost immediately, the driver erupted into a full-on rage in Croatian, silencing the entire bus as he ripped this poor girl a new one. I wasn’t exactly sure if the punishment really fit the crime here but from what I could make out from the verbal onslaught, it amounted to, “shut the fuck up you stupid tourist brat-whore, you’re lucky enough to be on the bus, you can get off the bus if standing is too much of a problem, but shut the fuck up so I can start driving everyone else into town.”. I didn’t hear another word out of that girl. By the drivers standards, the little tourist brat probably deserved the reaming too. But the whole thing reminded me that were weren’t in Kansas anymore. In fact, experience has taught me that further east you go past a certain longitude, the shorter the tempers and the more fiery the people. From Italy to Crotia to Serbia, Greece, Turkey and Armenia and into Russia, people don’t hide their feelings and will come to a boil faster than Reverand Jeremiah Wright at a white power rally.

Back on the bus everything was status quo again and we continued to meander through the hills and valleys of this country which grew on me with every passing minute. The landscape whizzing by was interesting. It was one part southern California and 2 parts Croatia; whatever that means. Well, I couldn’t exactly label it but it was beautiful nonetheless and I was just happy that Croatian used the Latin alphabet so I could sound out words on the road signs and pretend to guess their meaning. Maybe I could have asked the bus driver what they meant and then try to guess the meaning of each of the swear words he would have used back at me as punishment for pestering him with silly questions.

About 20 minutes elapsed and we pulled into the bus main bus station in Split. It just kept getting better. The town was absolutely breathtaking with white marble bell towers in the distance and a cool promenade along the water with palm trees and tons of cafes bustling with people who seemed like they were really enjoying themselves. They were probably happy because they didn’t live to work, rather they worked to live and probably got more than 2 weeks vacation time a year. Or maybe they were just drunk and high, but hey I thought I would try to see psycho-analyze remotely.

Our short-fused bus driver was back to tourist-friendly mode and diligently helped everyone remove their bags from the bus. Before I could take in anymore scenery we encountered a small group of female entrepreneurs from Split. Well, they weren’t as entrepreneurial as they were direct. Each one of them, about 40 to 60 years in age, held a hand written advertisement on a piece of cardboard about rooms for rent in their homes. It was as if they had written the signs in front of a mirror, reversing and blending English and Croatian words and somehow managing to write out the symbol for “dollar” and “Euro” in so many different ways I thought each of them were offering alternate approaches to proving the Pythagorean Theorem and wanted to know if their answers were right or wrong. Well, let me just say they were wrong. Dead wrong in fact, if they thought that OCD Areg Bagdasarian would ever randomly stay at the home of a stranger offering them a room even if it was a harmless babushka shaped grandmother who probably had hosted hundreds of happy tourists summer after summer. No way – tonight was not the night to get mugged, drugged and or raped as I slept in some apartment in a city I’d never been in so I could save a few bucks. That night would in fact, come in another Croatian city, but I’d be spared most of the bad stuff that I thought would happen. No, I would avoid the babushka Holiday Inns and march straight to the hotel that I had booked weeks ago online. “Kastel Split” as it was called was what I had deemed to be the perfect blend of location and value after an exhaustive internet search of places to stay in the city. This place was so good in fact, that according to their website the hotel is

at the most attractive location in town, southern part of 1700 years old Diocletian's palace with beautiful sea view, islands and the medieval square with the statue of famous writer Marko Marulic. Outstanding location, affordable prices and the thirty years old tradition will make your staying safe and pleasant.”

I was glad that my “staying” would be safe and pleasant, and that statue of famous writer Marko Marulic would be just outside the hotel. Actually, that statue would enhance the cultural quotient I was so desperately seeking. But even if the hotel proprietor’s had replaced Marko Marulic’s statue with one of Sadam Hussein performing a sex act, I’d still consider that culturally enriching as long as the hotel was close to all the bars and restaurants in Split.

I walked off the bus with my massive backpack and followed a map to my hotel Kastel Split. The city was soooo happening – I imagined this vacation to be the beginning of one perpetually long “Friday night” where I would start bar hopping immediately and stay up late each night either trying to drink more or so overcome with joy that I didn’t have to be sitting in front of a computer that I would completely lose it. Yes, this early desire ended up being a very close approximation to what I got during my 10 day stay, but with some nice added bonuses. Like the smell of sulfuric acid/mildly rotten eggs seeping from the ground all throughout the city. Or the fact that “finding your hotel in Split” means getting lost inside a labyrinth of a walled city that would make a lab rat cry and beg for directions. After an eternity I found my hotel and collapsed into bed.

Vacations are a lot of work I thought to myself, but totally worth it. It was time to think of the game plan for tomorrow, and to realize that I was probably much more deranged that a harmless Croatian babushka grandmother.