(#53) Why Mcdonald's launches CosMc's; BMW’s Decarbonization Strategy; Adobe vs. Figma

14 of the top 25 companies investing in R&D are American, 4 European, 4 Chinese, one Japanese and one from South Korea.

Dec 21, 2023

Download the latest edition of EY Attractiveness Survey Romania, an in-depth study designed to help businesses make investment decisions.

Findings are based on the views of representative panels of international and local decision-makers. Click HERE.

My work:

1/ This month was published the academic article “Navigating the Intricate Relationship between Investments and Global Output: A Leontief Matrix Case Study of Romania”, a study which I co-authored. LINK

2/ My Business Predictions from 2023 have reached a status: 8 were achieved and 3 were not. Next week I will focus on the 2024 business predictions. LINK

Onto the update:

Strategy

Adobe fails to acquire Figma

The Wall Street Journal:

“Adobe has called off its planned $20 billion acquisition of the collaboration-software company Figma, weeks after a U.K. regulator warned that the deal would likely harm innovation.
Adobe and Figma said Monday morning that they have mutually agreed to terminate the cash-and-stock transaction because they couldn’t see a clear path to receiving regulatory approval from the European Commission and the U.K. Competition and Markets Authority.” LINK

But, why did Adobe try to acquire Figma in the first place? Well, there are two reasons: (1) the innovative approach Figma introduced in the design software market and (2) the strategic benefits Adobe seeks for its future positioning.

Let’s take them one by one:

1/ Figma represented a significant shift in the design software landscape, differentiating itself from competitors like Sketch and Adobe’s products. Its unique selling point was its browser-based platform, enabling unparalleled collaboration and integration in design workflows, a stark contrast to the desktop-centric models of its rivals. This innovation was critical in a market increasingly defined by teamwork and complex projects involving designers and developers. While Figma did not directly challenge Adobe’s flagship products like Photoshop and Illustrator in terms of their core functionalities, its evolving capabilities and potential for expansion into broader feature sets posed a long-term strategic challenge. The introduction of APIs and support for third-party plugins in Figma signaled a move towards creating a more comprehensive and integrated design ecosystem, a threat to Adobe’s dominance in the field.

2/ From a strategic standpoint, Adobe’s acquisition is a forward-looking move to maintain its leadership in the rapidly evolving design software market. Recognizing the shift towards more collaborative and web-based tools, Adobe’s acquisition of Figma is a step towards adapting to this new paradigm. Unlike Adobe’s acquisition of Macromedia, which was more about consolidation, this move is about embracing and leading a transition to a new way of working in design. The considerable investment made by Adobe, including a significant acquisition cost and stock options for Figma’s team, underscores the strategic importance Adobe places on Figma’s technology and market presence. This acquisition was less about eliminating competition and more about integrating a pioneering platform into Adobe’s suite of tools, ensuring Adobe remains at the forefront of the design software industry.\

So, on the 18th of December, this move failed. What’s next?

for Adobe? Simply put, focusing on innovation: Adobe Firefly (generative AI at full speed) while developing a robust plugin ecosystem.
for Figma (and other start-ups): you have to think of building a financially sound business from Day 1.

Artisanship monopoly
Too big to fail? LVHM group market cap is 50% larger than the bottom 10 companies combined.

Inside BMW’s decarbonization strategy
So many good points:
1/ There are three themes in the automotive industry: automation, ride-sharing, and electrification.
2/ Producing both ICEs and EVs presents a monumental challenge in terms of manufacturing
3/ Customers can’t perceive BMW as an EV manufacturer. At least, not yet…

Listen to the entire interview. LINK

Apple is worth $3 trillion, but has some challenges in front:
1/ China. It is rumored that iPhones will be banned in government institutions.?
2/ Lack of an AI strategy…so far
3/ The iPhone kind of lost its charm and the company will probably put it in the back seat to focus on wearables and Vision Pro in 2024. LINK

McDonald’s’ launched a beverage-centric restaurant concept in the USA named CosMc's
Why? Three reasons:

1/ CosMc's is designed to capitalize on the growing demand for to-go eating. The chain is set to offer a variety of customizable iced drinks, such as flavored lemonades and turmeric spiced lattes, and a limited food menu including the classic Egg McMuffin. This initiative represents McDonald's strategic pivot to compete in the lucrative specialty beverage and coffee segment, areas where it has previously faced stiff competition.

2/ The first CosMc location, opening in a Chicago suburb, will feature a drive-through-only format with four lanes and no dining room, echoing the trend of consumer preference for takeout. This reflects McDonald's broader strategy to adapt to changing consumer behaviors, especially heightened by the Covid-19 pandemic. The pandemic has led many restaurant chains to reorient their business models towards takeaway sales, a trend mirrored by competitors like Taco Bell and Chick-fil-A, who are also exploring multi-lane drive-through designs. The concept of smaller, more efficient formats without dining rooms is part of a broader industry shift towards maximizing throughput and reducing operational complexities.

3/ Despite the innovative approach, McDonald's faces challenges and skepticism regarding the integration of CosMc's with its existing restaurant operations. The introduction of CosMc's also aligns with McDonald's strategy of tapping into nostalgia, as the alien character (logo) revives memories from the 1980s McDonaldland advertisements. This approach has been seen in other recent McDonald's promotions aimed at evoking nostalgia. The success of this venture is yet to be seen, and it will be crucial to observe how McDonald's balances this new concept with its traditional offerings, addressing franchisee concerns and ensuring a harmonious integration within its broader business strategy. LINK

Artificial Intelligence

America brain-drains China's AI talent

Harvard Business Review: 5 Forces That Will Drive the Adoption of GenAI:

1/ Board and CEO Expectations
2/ Customer Expectations
3/ Employee Expectations
4/ Regulatory Expectations
5/ Investor Expectations. LINK

Goldman Sachs on Gen AI’s impact:

“Over the next 10 years, AI could increase productivity by 1.5% per year. And that could increase S&P 500 profits by 30% or more over the next decade.”. LINK

Fashion models in China are leaving their last moments on the scene:

“If designers using AI charge 800 yuan, I’ll do 600. If they charge 600, I’ll get down to 500. There’s no other way out. I’ll fight till the end.” LINK

Generative AI 1 - 0 EU bureaucracy.
Albania to speed up EU accession using ChatGPT. LINK

Things Happen

China’s real estate meltdown is battering middle-class wealth.

“Every 5% decline in home prices will wipe out 19 trillion yuan ($2.7 trillion) in housing wealth, according to Bloomberg Economics”. LINK

Terence Tao, possibly the greatest mathematician alive, is using LLMs to aid in mathematical research. LINK

2024 Annual Forecast: The United States, from George Friedman. LINK

A portrait of the Andresseen Howoritz VC made by The Verge. LINK

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Data

💼 Romania underestimates what has achieved since 1990.

This economic indicator is a premier gauge of living standards, with the EU benchmark set at 100. The UK ranks at 107, the US excels at 164, and Japan is at 90. Remarkably, the living standards in both Poland and Romania are now on par with Japan's, a significant shift from the year 2000 when Japan's figure was triple that of Poland's.

Reflecting on Lech Wałęsa's 1990 campaign pledge of transforming Poland into a "second Japan," it's impressive to observe the fulfillment of this vision. Three decades ago, the average Japanese citizen could afford to purchase three times more than their Polish counterpart. Now, the gap has closed significantly, with Poland (and Romania) achieving a near equivalence in living standards, marking a triumphant realization of Wałęsa's aspiration 33 years on. LINK

EV subsidies
The German Government decided abruptly to end any EV subsidy. Now, I suggest adopting the Chinese strategy: subsidize the car markers to obtain cheaper products instead of giving random subsidies. LINK

The Job Skills of 2024 Report, by Coursera. LINK

But first, some data from 2023:

60% of workers will need retraining by 2027, but only 50% have access.
80% of employers reported difficulty in finding the skilled talent they need in 2023.
62% of workers say they don’t have the skills to effectively and safely use generative AI.

Some takeaways: