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Speaker 1: This is what the Flux.

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Speaker 2: I'm justin and I'm harsh Deep, and it's Friday, the

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Speaker 2: seventeenth of May.

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Speaker 1: HG. The jobless rate has jumped back up to a

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Speaker 1: two year high of four point one percent in April

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Speaker 1: this year, which was actually a bit of a relief

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Speaker 1: for investors. I know, it sounds kind of strange that

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Speaker 1: higher jobless rate should likely mean a lower inflation figure,

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Speaker 1: which means hopefully no cash rate rises this year.

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Speaker 2: Pluxpam. If you like a bit of friendly competition and

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Speaker 2: you like to win money, then we have the game

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Speaker 2: for you. Our weekly quiz quick Sticks is live today.

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Speaker 2: Each Friday, we send a notification to your phone at

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Speaker 2: a random time, and the first person to answer three

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Speaker 2: quiz questions correctly wins fifty dollars. It's that simple, So

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Speaker 2: make sure down with the Flux app and have your

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Speaker 2: notifications turn.

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Speaker 1: On three gamified stories today, HG.

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Speaker 2: Let's get into it.

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Speaker 1: For our first. The owner of Mainland Cheese and the

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Speaker 1: distributor of Beiger Cheese is planning to sell its brands

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Speaker 1: in Australia because it wants to get out of dealing

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Speaker 1: with consumers.

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Speaker 2: Don't forget they also own Perfect Italiano cheese that goes

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Speaker 2: on my past, tell me more.

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Speaker 1: Okay, So Fonterra is actually a New Zealand based dairy

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Speaker 1: giant that's listed on both the ASX in Australia and

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Speaker 1: the New Zealand Stock Exchange too.

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Speaker 2: In fact, this is the largest most dairy delicious company

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Speaker 2: in the whole of New Zealand.

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Speaker 1: Now it's she. Fonterra's specialization has always been collecting milk

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Speaker 1: from dairy farmers and then processing that milk and.

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Speaker 2: Then on selling it to other companies that would sell

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Speaker 2: it to consumers and.

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Speaker 1: That's been a cash cow for them for a very

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Speaker 1: long time, no pun intended.

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Speaker 2: But then jaz Fonterra had an idea, with the rivers

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Speaker 2: of milk at our disposal, why not whip up our

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Speaker 2: own cheese, butter and create our own milk brands.

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Speaker 1: And that's where it's brands like Western Star Butter, Mainland

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Speaker 1: Cheese and Perfect Italiano come in.

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Speaker 2: Plus they've also had a twenty five year license to

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Speaker 2: distribute Bigger Cheese.

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Speaker 1: But now ach Fonterra's announced its plans to sell its

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Speaker 1: Australian dairy assets.

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Speaker 2: Including the Director consumer brands and its eight manufacturing sites.

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Speaker 1: Because they want to focus on their core business of

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Speaker 1: supplying high value dairy ingredients because they d the highest

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Speaker 1: value owner of the consumer and jazz.

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Speaker 2: This is a case when vertical integration isn't quite the

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Speaker 2: best call for a big business and.

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Speaker 1: They're expecting to get around two billion New Zealand dollars

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Speaker 1: for the sale. So what is the key learning here?

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Speaker 2: Vertical integration is when a company controls multiple stages of

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Speaker 2: production or distribution within the same industry.

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Speaker 1: For example, a dairy company cannot only produce milk, but

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Speaker 1: they can also make cheese and yogurt and sell.

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Speaker 2: These products directly to consumers.

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Speaker 1: Because, surprise, surprise, both of these products use a ton

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Speaker 1: of milk.

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Speaker 2: Owning a large part of the chain gives them increased

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Speaker 2: control over the supply chain as well as lower transportation costs.

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Speaker 2: But HG.

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Speaker 1: Vertical integration can be trickier than turning milk into a

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Speaker 1: perfect breed because it requires a company to gain expertise

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Speaker 1: in multiple areas of the value chain.

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Speaker 2: Which can be significantly different from its core competencies. So

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Speaker 2: by divesting these assets, Fontera can focus on its core

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Speaker 2: competencies in very unsexy but utterly profitable milk collection.

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Speaker 1: For our second story, Netflix has announced it's good to

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Speaker 1: build its own advertising tech platform to compete against the

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Speaker 1: big players like Google, Meta, and Amazon.

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Speaker 2: This is how you know ads are a big part

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Speaker 2: of the Flix's future. Do tell me what's the story here?

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Speaker 1: Yes, we know Netflix, the OGTV and movie streaming service

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Speaker 1: who was hit hard by a drop in revenue and

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Speaker 1: subscribers in twenty twenty two.

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Speaker 2: So it announced its radical plans to offer a cheaper

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Speaker 2: streaming subscription with ads.

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Speaker 1: And since that move, as well as password crackdown rete,

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Speaker 1: Netflix's revenue has gone gangbusters.

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Speaker 2: Yeah, Netflix has seen forty million users jump onto the

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Speaker 2: ad supported plans.

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Speaker 1: That's up from just five million ad supported users just

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Speaker 1: twelve months ago.

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Speaker 2: And you know that Netflix is taking this seriously because

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Speaker 2: it's ditched its partnership with Microsoft, who it used for

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Speaker 2: its initial ad tech capabilities.

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Speaker 1: And it will now develop them in house NHD. Netflix's

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Speaker 1: plan is to experiment with episodic campaign, which would mean

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Speaker 1: an advertiser could run a series of ads throughout shows

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Speaker 1: that tell a story.

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Speaker 2: As opposed to the generic, repetitive ads that it runs today.

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Speaker 1: This goes to show even if you start by buying,

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Speaker 1: you can still build later on.

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Speaker 2: So tell me, Jazz, what is the key learning.

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Speaker 1: When a business is building out a new feature or project,

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Speaker 1: there's one key dilemma. Do we build or do we buy?

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Speaker 2: Do we keep things in house or outsource.

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Speaker 1: It to the professionals CG. For Netflix, outsourcing to Microsoft

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Speaker 1: meant it didn't quite have as much control over its

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Speaker 1: new AD system. That's bad, bad HD. Outsourcing a project

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Speaker 1: also means you don't need to make an initial investment

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Speaker 1: like you would if you built it from scratch.

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Speaker 2: You can also learn from someone who already knows what they're.

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Speaker 1: Doing and then build it yourself later or with all

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Speaker 1: those insights.

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Speaker 2: And given Netflix recons its AD revenue could grow to

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Speaker 2: five billion USD per year in the near future. It

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Speaker 2: can't be relying on external parties. For our third and

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Speaker 2: final story, Nike is cutting jobs at its subsidiary company

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Speaker 2: Converse as part of its cost cutting plan.

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Speaker 1: I gotta be honest, I didn't even know the Nike

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Speaker 1: owned Converse. So what is the story here?

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Speaker 2: Well, Jazz, Nike is the world's biggest sneak of brand,

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Speaker 2: with arguably one of the most iconic logos ever.

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Speaker 1: Gotta that, but HD, Nike's growth has actually seen itself

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Speaker 1: suffering during this period of reduced consumer spending.

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Speaker 2: So to push through this period, Nike's been going hard

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Speaker 2: on cost cutting, with a plan to cut two billion

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Speaker 2: dollars of costs over the next three years.

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Speaker 1: And as part of that plan, Nike is expected to

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Speaker 1: cut two percent of its workforce. And right now it's

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Speaker 1: the Converse staff who are in the firing line, you.

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Speaker 2: See, Jazz, Converse has struggle to move on to new

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Speaker 2: trends that appeal to younger generations.

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Speaker 1: In fact, their revenue dropped nearly twenty percent in the

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Speaker 1: most recent quarter.

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Speaker 2: Yep, all those all SOA sneakers just aren't ugly enough

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Speaker 2: like crocs to sell well.

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Speaker 1: Sounds like Nike's too caught up with these layhoffs and

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Speaker 1: cost cards to focus on anything else.

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Speaker 2: So tell me, Jazz, what is the key learning here?

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Speaker 1: Even as an industry titan, you can't rest on your laurels.

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Speaker 2: You see, while the slow global economy has impacted all shoemakers,

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Speaker 2: not all of them are struggling to the same extent

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Speaker 2: as Nike.

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Speaker 1: The past, consumers would generally sport one of two brands

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Speaker 1: for athletic activities either Nike or as, but.

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Speaker 2: Now running shoe brands like and Hawker have been dominating.

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Speaker 1: Get This earlier this week, On, which is a Swiss

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Speaker 1: shoe brand backed by Roger Federer, so a twenty nine

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Speaker 1: percent jump in its first quarter revenue compared to the

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Speaker 1: same time last year.

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Speaker 2: I do hear that run clubs are the new tender.

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Speaker 2: Got to impress your date with the latest kicks, right.

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Speaker 1: So while consumers are more conscious with their spending, shoe

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Speaker 1: manufacturers need to work even harder to tempt them. Flux, Am,

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Speaker 1: make sure you play your phone, you've got the Flux out,

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Speaker 1: and you've turned on your notifications, because you could win

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Speaker 1: fifty bucks for the weekend. All you've got to do

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Speaker 1: is be the first person to answer three quiz questions

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Speaker 1: correctly and it's all yours.

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Speaker 2: Thanks for listening, and we'll see you on Monday.