Tag Archives: Career

Lessons from a Masters In Business Administration: What Is Strategy?

What Is Strategy? Michael Porter’s five forces have shaped business strategy since his theory was published in 1980. Five Aspects of Business Strategy: 1) barriers to entry, 2) supplier powers; 3) customer power; 4) substitutes, 5) rivalry. An example of the application of this model would be a London kebab shop: barriers are relatively low, does not require highly skilled labour, and anyone can buy a kebab shop with a bank loan. That is why so many immigrants run kebab shops in London UK, for example. If you speak bad English, have little money, and are prepared to work hard, kebab shops are a great first entrepreneurial endeavor. The suppliers to a kebab shop are those who make meat rotator machines and the variable costs like the Halal meat. There is plenty of both, so prices are lowered, and there are options to change suppliers at any time. The bad news is customers, as there are 100s of kebab shops in central London. If they don’t like your kebabs, they can go to another. Competition is fierce, and stoked by low barriers to entry, weak suppliers, powerful customers, and substitutes in the market where the business is located. In addition to the five forces is “6) complements”: Complement are for example, PCs you could get the software, and printers. The better software, and computers make the PC more desirable. Nurturing complementary businesses can have a positive effect on your business.

Competitive Advantage: either you have a cost advantage where you can make things cheaper and sell them cheaper OR you differentiated your product somehow either by making it better than your rivals or by designing it differently to appeal to a different group of people. There two forms of differentiation were known as vertical or horizontal. Vertical is meant to be better or worse; horizontal means different. Vertically differentiators would mean for example that you have two cars, one with better brakes, and steering. That car is better therefore they are vertically differentiated. If you have identical cars but one has been painted pink they are horizontally differentiated. One nightmare for a business is to have no advantage, to be neither the cheapest produce nor clearly differentiated. Bill Gates has a picture of Henry Ford in his office because it reminds him that success breads complacency. Ford was over taken by General Motors overtime. When the iPad came out, Amazon introduced the kindle fire…

[This is a synopsis of several books on the MBA experience including What They Teach You At Harvard Business School by P.D. Broughton]

Lessons from a Masters In Business Administration: Mergers and Acquisitions / Porter’s Theory

Mergers and Acquisitions: Company A announces a merger with Company B, it offers a price x, for Company B which is about Company B’s current stock market valuation. The arbitrageur asks himself, is the likelihood that this deal will actually go through? Will the shareholders of Company B accept it? Will there be account fraud of Company B? What if the CEO of Company A dies? The stock prices of the merging companies move around more than usual as investors weigh up the probability of the merger’s taking place. For risk arbitrageur, the risk of losing $100,000 is .1% and the risk of losing $500 is 20%. They spend an inordinate amount of time thinking about the 20% chance ruining a day instead of the .1% chance of running a career. Everywhere in life there are small risks of disaster that you would think of as an arbitrator: chances of the babysitter turning to be a kidnapper; and the costs would be infinite.

Porter’s Theory: Michael Porter believes that competition is the engine of productivity, growth and every business, town or country should be seeking out a competitive advantage. He’s not interested in cost and willingness to pay…

Private/Public Sectors: The relationship between business and government. Government gets its tax revenue from businesses, don’t ever forget that fact. Many believe that business does not need government whatsoever. MBAs are taught to believe that business is the most important institution in society.

[This is a synopsis of several books on the MBA experience including What They Teach You At Harvard Business School by P.D. Broughton]

Lessons from a Masters In Business Administration: Microsoft, eBay & Work/Life Balance

Cash-flow At Microsoft: Investors tend to like to see cash invested on improving the business or returned to them as dividends.  Microsoft kept a lot of cash on its books. Many think this is because software is intensely competitive, and so Microsoft needs a cash cushion to carry it through. Microsoft habitually create a negative impression to investors to minimize earnings expectations in order to beat the Wall Street predictions. However, Bill Gates explained the cash on hand as such; when he hired his friends, they would be expected to be paid, so he developed a conservative approach to paying them by ensuring that there was enough money in the bank to pay a year’s worth of payroll. Getting your friends to leave their jobs and then not having enough to pay them would be a betrayal. Do not let down your friends if you are working in a start-up.

Meg Whitman & eBay: returns on assets and investment will never go out of fashion. The fundamentals of costs, customers, and competitors yield rewards. Experience builds intuition which is invaluable. Employees are motivated by the feeling of being on a mission.

A Rules To Live By: Whitman says that you’re never as good as you think you are, but never as bad either. She also laments having missed out on her family, and friends. Whitman’s 9 point personal philosophy:

  1. do something you enjoy;
  2. deliver the results;
  3. codify the lessons learned;
  4. be patient and stick around good people, and good things;
  5. build a team and share credit;
  6. be fun to work with;
  7. ask what you don’t know or understand;
  8. don’t take yourself too seriously;
  9. never, ever compromise your integrity.

The Five Whys: ask why five times, and you will find the root of a problem.

Work/Life Balance: business schools are not interested in promoting those who have simply gone out, and led happy lives. They are interested in game-changers to entice new recruits for consultancies, and investment banking. MBA programs pay lip service to giving people the right kind of work/life balance all the time. If you are really seeking a healthy work/life balance than you should work in the education sector.

[This is a synopsis of several books on the MBA experience including What They Teach You At Harvard Business School by P.D. Broughton]