Wednesday, April 30, 2008

End of the MBA ?

the program has almost ended. we have one more weekend session to go and we're home free. of course this is going to be difficult as its the private equity project and requires a huge write-up. that said, our management simulation ended and the professor sent out some thoughts about running a company. thought i'd share with the readers (???)

Danger of group think – need to think “out of the box” (seek “diversity” – break “Not Invented Here” syndrome) – someone needs to challenge the “status quo” with respect to strategy and tactics

Note the shifting that occurred in your team discussions over time of energies and focus from “us” to “them” and how them affects our in-place strategy (dynamic strategizing)

Power of keyboard control – you need to be concerned and work on sharing the sense of control with co-managers

Importance of recognizing small victories in difficult times (e.g. – getting to positive cash flows from operations, positive operating income, etc)

You don’t have to “kill” the competition – if you do a good job creating and executing a fundamental strategy (with dynamic adjustments), the competition will fall by the wayside (or at least have limited success). Years ago the Boston Consulting Group introduced the notion that only 2-3 firms can compete over the long run in a given market. While the definition of market is crucial to this concept, it is widely believed to be operative. Jack Welch lived by it.

Importance of taking calculated risk – winners take risks – but don’t bet the firm unless there is no viable alternative. If the equity is effectively gone, management might as well make negative expected NPV bets as long as they can get their hands on other people’s money. This is why most loans have restrictive covenants – constraints that keep such agency issues at bay.

You can make good money in mature markets – being new doesn’t always equate to best profit opportunity. One of the best firms was solely in "PROD-X" at the end.

Economies of scale in R&D – getting the most bang (volume) for your buck (spent dollars that produce saleable products in many markets). Especially in Y and Z, which took large R&D investments each year to remain competitive, being able to sell those products in the EAST, WEST and EC spread those R&D costs over greater volume – making it easier to compete on price as well as quality.

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