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Insights And Admonishments For Coke's Mary Minnick


Dean Foust's "Queen of Pop" (Cover Story, Aug. 7) gave insightful analysis of Mary Minnick's innovative and creative approach to reinvigorating Coca-Cola Co. (KO). However, one statement does not accurately capture the essence of her approach: that Minnick's exploration of new products as far afield as beauty and health care "would have been heresy to legendary ex-Chief Executive Roberto Goizueta."

When Goizueta became Coke's CEO in 1981, he took over an underperforming company that over the years had diversified into unrelated businesses ranging from water purification to shrimp farming in an attempt to grow. One of his first initiatives was to analyze Coke's various businesses using "economic profit" (net operating earnings minus a capital charge for net assets employed). A business with positive economic profit that increases over time creates shareholder value. This analysis concluded that only Coke's core carbonated beverage business was creating shareholder value. The other far-flung businesses, while generating revenue, were consuming value. Consequently, they were divested or shut down. Goizueta then focused on Coke's core beverage business using its substantial competitive advantages: global brand, worldwide distribution system, and sales and marketing expertise. The results of his 18-year tenure are history, and very good history at that.

Minnick's new broadening initiatives also focus on Coke's competitive advantage: brand, worldwide distribution system, and ability to meet consumer beverage needs. The health-care and beauty products being explored are beverage products, not totally unrelated. If Minnick's new initiatives have business plans that generate positive economic profit that grows over time and are executed successfully so that growth in economic profit is realized, her actions are not "heresy" but are following in the footsteps of one of the greatest CEOs of the past 30 years.

Jan Shack

Senior Partner

Shack & Tulloch Inc.

Fairport, N.Y.

I, for one, am tired of rewarding "discontented" managers with success. After reading about how Mary Minnick treats those she works with, I went out and bought a case of Diet Pepsi. Let me be blunt, Mary: You alienate consumers as well as co-workers.

Tom Sadlowski

The Woodlands, Tex.

Having just spent two weeks in call-center hell trying to restore my EarthLink (ELNK) DSL service along with Verizon (VZ) phone service, I was stupefied as to why it was so difficult to fix what seemingly was a "local" problem ("Call center? That's so 2004," Global Business, Aug. 7). To operations vice-presidents across the country: Please recognize that your consumers aren't idiots. I found it particularly amusing, when on my fourth or fifth call, the operator clearly was instructed to "disguise" this international business model by using Anglo names like Tom and Jack. Better work on the language skills a bit first. It's especially insulting when you sit on hold for over 15 minutes listening to: "Your call is very important to us," only to speak to someone who really doesn't have any stake in fixing the problem. And you wonder why we get irate? There are plenty of Americans who used to do these jobs, many in our backyards, who do have a stake in good customer service.

Lisa W. Parker

Principal

Stratovation Consulting Inc.

Marblehead, Mass.

I had to laugh at the practice of Friday "knock meetings" at General Motors Corp. (GM) ("Renault-Nissan: Say hello to Bo," The Corporation, July 31). Knocking on tables to approve a buyer's pitch is a revealing tidbit about the outdated business culture at "Generous Motors" and says a lot about what is wrong with the company. Automotive suppliers are tired of the brutal tactics of GM and like companies. The fact is that GM is on the decline, and its supplier base will gain more leverage than ever before. Bo I. Andersson appears to have good ideas about increasing the number of shared components among GM vehicles. However, I suspect that he will resort to the short-term tactic of his predecessors -- to unilaterally reduce the purchase price of components and raw materials at the expense of suppliers' margins (and possibly their solvency).

Many automotive suppliers are stretched to their limits dealing with rising material costs. I believe that rather than people thinking Andersson is a "hero" in five years, he will be remembered as "that head purchasing guy who helped usher GM into bankruptcy."

Jeff Stout

Baraboo, Wis.

Editor's note: The writer works in the plastic molding industry, providing components to automotive original equipment manufacturers and their suppliers.

Re "Can GM rev up its hip factor?" (Up Front, Aug. 7): General Motors has a very long history of designing and offering lousy "'import-beaters" such as the Chevy Scooter, Vega, Nova, and the super-sad Cavalier, the ill-fated Cadillac Cimarron, and Pontiac Sunfire. Now we have a new gang of small cars from Honda (HONDA), Toyota (TM), and Nissan, some of which have been marketed very successfully in Japan and Europe for three or more years. These are shrunken bigger cars with most of the popular features standard, clearly not built for price alone. For the most part, they are all winners.

The Chevy Aveo in your article is a cheapo Korean-made car that rates right down at the bottom of most lists in just about all ways, clearly very seriously compromised by GM to maximize profits. Until GM ceases and desists with this practice, it will continue to lose market share, total sales, and eventually pass the point of recovery.

Bruce W. Parkinson

San Jose, Calif.

Re "When outsourcing turns outrageous" (Government, July 31): It's unfortunate that Senator Byron Dorgan's (D-N.D.) bill "eliminating fraud and abuse and improving competition in contracting and procurement" failed to clear the Senate. Perhaps the market itself will do what our elected representatives have failed to do: provide oversight of the vast amount of tax dollars doled out by the Pentagon to military contractors. Boeing Co.'s (BA) recent settlement with the Justice Dept. resulted in sharp losses for the second quarter, calling into question its current and future earnings capacity. A bipartisan group of senators has called for a hearing on Boeing's many procurement scandals. As taxpayers, we should support the call for this hearing as well as a reevaluation of government spending practices and increased accountability at the highest levels of the Pentagon.

Honest bipartisan congressional oversight can bring the military-industrial- congressional complex to heel and thus make a tiny slice of the Pentagon's budget available to provide health care for our children who lack it, hire cargo inspectors for our insecure ports, rebuild our public schools, and much more.

Vice-Admiral Jack Shanahan

(U.S. Navy, Ret.)

Ormond Beach, Fla.

Let's stop blaming consumers alone for the gas problem ("Can't stop guzzling," News: Analysis & Commentary, July 31). This problem is the result of a fat and happy generation of politicians, business leaders, and consumers that forgot about the oil crisis of the '70s. What are the real alternatives? With little or no mass transit system in 99% of the country, Americans are forced to commute via automobile. Carpooling is only valid for those who have the single agenda of commuting to work -- no picking up dry cleaning, dinner, or kids at soccer practice. And the transaction costs of selling and buying a new fuel-efficient vehicle make gas savings negligible. This is the old principle of inelastic price demand at its best. It's just too bad we didn't "get it" 30 years ago.

Christian Carr

Baltimore


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