Dow sinks 777 points, -7%, S&P -8.8%

Brad Schmitt on the phone - "There are three phases to controlling a financial crisis:

1) Liquidate everything you have

2) Buy everything and put it all into silver bullion.

3) Buy your choice of firearm, go down into the basement with your bullion, and wait for the enemy to arrive.

These are the three steps to take when encountering a financial crisis.

America For Sale!

The past few classes we've discussed the impact globalization is having on our economy and what approaches we need to take in order to face this issue.  I have never been more cognizant of the struggles of America than in the past few years.  That could be partly due to my lack of education or interest in the American economy during the first 15 years of my life or it may be attributed due to the American economy has never been as appealing to foreigners that it is today.  Foreign investment is coming into this country and scooping up everything from the famous Clydesdale horses that represent Budweiser beer to such income revenue streams as the Pennsylvania Turnpike.  According to Dan Dennehy, "the American dream is alive and well, the problem is its primarily in India and China."  So what does this mean for the US of A?  I think the greatest challenge facing our nation today is creating the drive and passion for hard work that this country was founded on and is currently so easy to see in the people of emerging economies.  Until the US finds a way to encourage this attitude in citizens, it will continue to lag behind in the global economy growth race.

To paraphrase an article I recently read regarding the current troubles of America, "America's ability to delay gratification and make personal sacrifices today, potentially will steal benefits away from future generations."  In my mind this sense of entitlement is ingrained in our culture and contributes to why foreigners are having a field day scooping up flagship American companies.  Take the mortgage crisis for example.  The premise of almost every player in this recent event from the investment bankers, mortgage lenders, new home buyers, and CEOs were all based on finding gratification now instead of later.  I'm sure this is not any different from most bubbles, but its easy to see how caught up in today we can get.

Social insecurity, zero savings rate, and a sense of entitlement that is permeating throughout our culture may be the contributing factors to what leaves America behind in the race for global economic growth.  I don't want to point the finger at all citizens of this great country, because there are obviously some great examples of people that are doing well financially and getting ahead of the curve.  However, I don't think its difficult to see that the federal government has not helped this situation by running up budget deficits for as long as I can remember.  Going forward, Americans will need to learn to adopt some of the attributes of our Greatest Generation who pulled themselves up by their bootstraps and often carried multiple jobs just to make it in this country.  Until current citizens decide to take the lead in their finances, their careers, and their responsibility for their own economic well being, this country will get swallowed whole by the emerging economies that are truly capitalizing on the opportunities that a global economy is presenting. 

Everyone is in Sales

In class this past week, we discussed the role that sales persons play in an organization and also how every one actually in sales whether we know it or not.  I never thought about everyone being in sales, but thinking about it some more its interesting to notice.  To get most jobs, applicants have to sell the employer on the fact that he or she can carry out the tasks necessary required of the position.  To get into grad school, my peers and I had to sell ourselves either through our test scores or our interview that we were capable of handling the workload in grad school.  Furthermore, in the dating world - where I seem to be a pro - you have to sell yourself either through looks, humor, or an intriguing personality to get the other person to spend a significant amount of time with you.

I come from a long line of sales people.  My father is a sales manager in the wealth management department of a bank in ohio, my mom used to sell medical supplies equipment, and my grandmother was in sales for 30+ years selling insurance and deferred compensation products to city of Pittsburgh employees.  One of the reasons I came to Katz was to do some research into what it takes to be a good marketer, specifically as it relates to selling.  One of the industries I aim to work in post graduation is a sales capacity at a money management firm.

After reading the white paper article online, titled - "The Sales Manager's Precarious Perch" I agree with many of the statements regarding what it takes to be successful as a sales manager.  However, one of the areas of the article that I agree with the most is that not all sales people are successful sales managers.  The roles are entirely different and often require completely different skill sets.  But who most often is selected to be a sales manager?  The best performing sales person.  The transition to sales manager from sales person does seem like a paradox.  I think that companies that are looking for success in their sales department should not turn to excellent sales people, but rather excellent managers.  Excellent managers have the ability to encourage to negotiate at high levels as well as manage different personalities for the greater good of the organization.  For companies that are looking to hire people that can drive their organization, managers with successful backgrounds dealing with a variety of people are the way to go. 

Dollars in Distribution

In class this past week we discussed how the impact of the distribution channel can impact the grocery store industry.  It was interesting to learn that a majority of the groceries that are placed in stores and restaurants in the area carry food supplied by Sysco, the food distribution company.  Sysco is huge and despite their size, their power comes from their ability to distribute food in mass quantities to their customers.  They are powerful because they manage the distribution channel and can determine the prices they set to customers based on supply and demand requirements.  Giant Eagle is not one of Sysco's clients because they manage and operate their own distributor which orders from Sysco's competitor's and other local food producers.  

Prior to this class, I would not know the significance of owning a distribution channel.  However, shortly after class, I read in the news that Sheetz is debuting a $50 million manufacturing facility located directly next to their distribution center.  The manufacturing facility will produce baked goods, test kitchen, and quality control area among other things.  The purpose of this expansion is to perfect the prepared food sold in their stores.  Furthermore, by creating the goods right next to its distribution center, they will be able to cut out the producer in their supply chain, thus eliminating the extra cost to each product.  Similar to Giant Eagle, Sheetz has realized that the more control the company can have over its supply chain, the more profit will arise.  

Its intriguing to see a dynamic company like Sheetz transform itself from a gas station to a convenience store to a fast food restaurant and now a mini mart.  This company is really tracking the needs of the consumer and trying to capitalize on the shifting demands of the market.  As the new millennium begins and consumer tastes and preferences change rapidly, the companies that are the most flexible in their overall ability to adapt to the market will find the most success.

The Traditional Marketing Model is broken

"Letting go of the past and looking towards the future."  This last line from the "Nightmare on Madison Avenue" article essentially sums up the current state of the advertising industry.  Mainstream ad firms in New York are having a difficult time keeping up with the rapid change going on in the media world today.  Despite the fact that the article was written four years ago, many of the same challenges still exist for media buyers in the industry today as well as some new challenges.  One of these new challenges is the proliferation of the social networking site Facebook.

Facebook was founded in February 2004 about four months before this article was written.   The growth of the site has been substantial growing from approximately 2 million users at the end of 2004 to more than 80 million active users today.  The company is estimated to be worth around $15 billion and many consider this company to be the next Google.  However, the company only brought in around $150 million in revenues last year, which seems like a lot, but for being one of the most trafficked websites in the world, its quite paltry.  These numbers show that the opportunity to capitalize on the Facebook phenomenon is still out there.  Until Madison Avenue firms realize that the mode of advertising is changing and other mediums like Facebook are the new avenues for advertising, only then will main street ad firms enjoy the success they once had in reaching their target market.

To further support the need to shift, the "Madison Avenue" article states that internet ad spending grew 20% in 2003 to $7.2 billion.  Furthermore, according to ZenithOptimedia, Internet ad spending is expected to exceed radio ad spending in 2008 as well as magazine ad spending in 2010.  This shift will be the most significant shift the ad industry has had since the introduction of the television.  I'm sure there are firms that have figured out the new Internet advertising medium already, however the ones that haven't must learn to adapt or will be the victim of consolidation or a buyout within the industry.  

Buzz Marketing and my generation

Periodically between classes I get to sit outside under the tent in the Oakland quad area and listen to music while I eat my lunch.  I've done this a few times and really enjoy getting some fresh air after sitting inside all morning.  On the past two occasions, there were two people walking around with shirts on that said the name of a social network.  They were college age students and hoping they wouldn't disrupt my lunch, I overheard them saying to groups of college age students - "...its just like facebook...".  After reviewing a list of popular social networking sites, I still couldn't find their name.  

I only mention this because in the last five years or so of the social networking phenomenon, I can never recall anyone walking up to me or viewing some communication material for that matter advertising social networking of any kind.  Every type of social networking I've come in contact with or learned about was through a friend or from buzz marketing.  In 2005 a buddy of mine told me about facebook and how it was going to change the way people communicate because all college students were using it.  Sure enough, a year later I joined then a few years after that I now have 418 people that call me a friend.  

I think buzz marketing began with my generation and the Internet.  The first week I arrived at college in the summer of 2000, I learned about Napster and how to download music on the Internet illegally.  During my senior year at college a person walked up to me on campus and told me that the Mercedes car company was having a demo day at the stadium and giving out free test drives of their vehicles and I went.  A few weeks before the end of every spring semester, Penn State has a free concert called Movin' On that stages some of the biggest bands in the country and I heard about it from a few roommates shortly before it happened.

I think for Generation Y and the Echo Boomers, buzz marketing might be more effective than putting up billboards or traditional marketing efforts.  The success of the most popular technologies of my generation were all communicated by word of mouth between peers and that seems to be the preference of choice.  This often poses a challenge to marketing departments that want to appeal to demographics that are very wide.  What I'm learning in the technology arena is that my parent's generation also is affected by buzz marketing, however its not from their peers but from their children or young adult friends.  I recall telling my father about facebook, digital music, and digital cameras.  My parents friends aren't on the cutting edge and they also aren't targets of buzz marketing campaigns.  Maybe that's because buzz marketing doesn't appeal to them.  As long as new technology continues to change and constantly evolve, the Generation Y and Echo Boomers will be on the receiving end of buzz marketing campaigns.

Price Waterfall and the Financial Advisor Business Model

In class this past week we looked at a McKinsey study describing the concept of a price waterfall.  This concept describes the net price that the company would sell a product for after all expenses were paid.  Furthermore, the concept also described the number of customers and the amount of their "pocket margin" or percentage of target price.  Since I am targeting the investment management business as a career after graduation, I thought about what this means to clients within this industry.  In my view, there are two sides to applying a price waterfall approach - one viewpoint from the product side that investors utilize to accomplish their retirement, savings, and investing needs.  The second is from the advisor side, as they try to serve their most profitable clients.

From the product side, advisers have many options when putting their clients in different investments.  Take an investor that has $10,000 to invest.  If an advisor uses a load fund with a 5.75% front end load the net balance an investor will have as their cost basis will be $9,425.  On top of this initial investment, the average mutual fund carries an annual 1.0% expense ratio that is imputed in the fund return.  If a typical fund returned 10% gross, 9% net the investment would have $10,273 left after one year or 2.73% return on a $10,000 investment.  A different way an advisor can set up his practice would be to use no load funds that have comparable returns as load funds, however no upfront sales charge and lower expense ratios.  These advisers charge 1% of net assets annually in order to earn their compensation.  If this same investor made a $10,000 investment, achieved a 10% return, no up front load charge, and the expense ratio was 0.20% then the net balance at the end of year 1 would be (10k*(1.1)*(.99)*(.998) = $10,868.  The net return for this investment would be 8.68%, substantially higher than for the previous example.  I think its important for clients to understand the fees that are involved when investing with a financial advisor.  If the fees are not described in detail up front, the cost to an investor can be substantial.

From the advisers perspective this pocket margin can be applied to their clients.  Assuming the advisor uses the fee based form of compensation like the second example above.  Using this method, the advisor will soon realize that his most profitable clients are the largest ones that provide the highest amount of fees.  One way of analyzing this total fee revenue stream would be to categorize the accounts in increments of $250,000 and show how much fees are generated from each category.  Because fee based financial advisers typically scale down their fees as the size of assets grow higher, advisers may find that the more lucrative clients are the ones with lower assets.  It would be an interesting study to analyze how much revenue is  generated from each "asset under management" category and divide that by the time spent on that client.  If an advisor doesn't spend a lot of time on small accounts but still generates 1% of fee revenue from them, they could end up being the most profitable accounts to collect.  In addition, analyzing this pattern in a bar graph form would provide further insight into which clients an advisor should aim to collect.

The TW Tour

I read the most interesting article last night that brings into perspective the power one individual could have in a marketplace.  The article, posted here on ESPN.com, suggested that Tiger Woods has the ability to start his own tour.  Much like Oprah crafted her own production company, due to the celebrity status Woods has across all different cultural backgrounds, he has the power to change the way golf is marketed and sold across the world.  

The way the article tied into marketing for me was how by creating his own tour, Tiger would essentially create a competing market channel that would appeal to a much wider audience.  Currently, the PGA Tour is predominantly suited for an American audience.  All events are held in the United States and 39 of the top 100 players represent the US - more than any other country - thus making it the most competitive country to play golf.  However, that leaves 61 players remaining in the top 100 world rankings that are from other countries.  This proves there is a tremendous audience for golf outside the US.  

If Tiger was able to start his own world tour, he could set up tournaments that would be played on some of the finest golf courses throughout the world and offer purses that would be multiples of what is offered on the PGA tour.  One of the interesting stats was the Tiger effect of professional golfer salaries over the past 10 years since Tiger won the Masters.  In 1997, nine people earned more than $1 million in pay compared to 99 players in 2007 - in my estimation that exceeds inflation.

By creating his own tour, Tiger would be able to expand the reaches of his brand beyond the US.  His audience would be significantly broader and the sponsors would love him for the idea.  They would see the opportunity as a chance to reach distribution channels that may be difficult to enter otherwise.  Buick, as one of Tiger's sponsors, in my estimation doesn't have any presence beyond the US.  Assuming that this is true, because it is the name on Tiger's bag, it would be seen across the entire world, and may allow the company to begin to enter markets it never would consider due to its lack of presence in the region.  The TW Tour would be a great opportunity for Tiger's sponsors and could also open up many doors for Tiger's  plans beyond golf, whatever those plans may be.

Theory: Best Companies can pay 10% less than competition

The theory that the best companies can pay 10% less than their competition has an exception to the rule - Goldman Sachs.  Over the last year, many have witnessed the financial crisis firsthand and if you happened to be working on Wall Street a year ago, there is a good chance you might not be working there now.  Bear Stearns, Citigroup, Merrill Lynch, and now most recently Lehman Brothers have all reported quarterly losses within the past few quarters and one of these companies (Bear Stearns) now no longer exists.  While these companies were losing money hand over fist, Goldman was preparing to make money hand over fist.  Their ability to recruit the best and the brightest has paid off substantially, by correctly hedging their balance sheet against the mortgage market correction and its employees will be rewarded accordingly.

At the end of every calendar year, the financial news media frequently enjoys reporting on the inflated salaries of investment bankers, especially when the years are good.  At the end of 2007 the media reports which bonus pool is the largest.  In 2006, Goldman paid out 46% of the bonus pool money from the five largest firms.  For 2007, it was predicted to be close to 53%.  These are just predictions, however if Goldman was able to outperform its competition in a year where almost everyone failed, it is probably considered among the majority the most well regarded investment bank on Wall Street.  Furthermore, they consistently pay out the highest bonuses of its top 4 competitors.  The theory that the best companies can pay 10% less than their competition may be true for a majority of companies, however in the investment banking industry, it surely is false!

Ries and Trout

The other day, after reading the Ries and Trout, I was enlightened what I learned regarding two aspects of the article.  The one strategy that marketers are focusing their time and efforts on now is position.  They realize that there is only so much room in their prospects brain for at the most 7 different brands for each product, that in order to reach their target customer, they have to position themselves as an entirely new brand.  I thought the article was most interesting when it comes to conglomerates.  Ries brought the example of Proctor and Gamble.  At least three of P&G's brands compete in the laundry detergent.  Unlike other conglomerates which emphasize diversification, P&G aims towards domination!  All three brands had different tag lines aiming towards making your clothes white, whiter than white and bright!  It would be riveting to step inside the market research group in Cincinnati working for P&G to see how frequently one brand is chosen over the other.  In my feeble, grad student mind, I would think that diversification would be more important than domination, but obviously P&G as a whole has been doing this a little longer than my month getting my MBA.

As I try to synthesize, analyze, and evaluate this towards my profession, its interesting to see how asset management firms position themselves in the marketplace.  After working at BNY Mellon for the last few years, they position themselves as a money manager with a rich history catering to extremely wealthy families, who are primarily a part of the "old money" crowd.  

If I had to guess, I would place Goldman Sachs and the other Wall Street bulge bracket investment banks as the money management preferences for the "new money" crowd, such as the technology tycoons out in Silicon Valley and the Mark Cubans of the world.  My reasoning is that they would have relationships with the investment banks already through IPO's, merger and acquisition services, and other relationships, that they would probably think of these competitors first.

With "old money" families and "new money" families lined up, I think that the remaining stock of wealth individuals falls into the glut of the thousands of financial advisers, brokerage firms, registered investment advisers, mutual fund companies, and insurance companies that compete ruthlessly to gather as many assets as possible.  It would be an interesting study to see how a wealthy individual selects the firm that they decide to manage their money.  In the asset management business, I think that sometimes its less about the brand that the salesperson is promoting, and more about the person selling the service.  Great salespeople are what will ultimately win over a client's assets and it won't end up being whether they choose a bull or a bear.  Unless of course that bear happens to be Bear Stearns...

This is not a plane, this is not a passenger

7 Up, the soft drink company had an ad campaign in the 1980's to make itself known as the Uncola.  The idea was to differentiate the 7 Up brand from its competitors in the ruthless cola that took place between Pepsi, Coke, and other soft drink makers.  The idea stems from the fact that consumers only have room in their heads for a limited amount of data regarding each market.  By telling consumers that 7 Up was a drink that wasn't a cola, but rather an uncola, they would be able to segment itself apart from the Cola wars into a new idea.

With this concept fresh in my brain, I was reading the WSJ this morning and came across an article on British Air launching a new airline.  The ad copy shows two advertisements.  The first one shows the front of a Jet with the phrase "THIS IS NOT A PLANE" and the second one shows an attractive female business executive laughing with the phrase "THIS IS NOT A PASSENGER".  In the same way 7 Up's campaign was an effort to differentiate itself from its competitors, BA is aiming to change the way passengers view their airline.  

This advertisement taught me that a technique used in 1980 can still be effective today.  Despite the many changes in technology and the means of communicating with consumers tastes and preferences, the techniques and methods used in appealing to the brain are still similar to those ad agencies used 25+ years ago.  

Market Segments

Its Sunday in Oakland, and I'm about to head off to church.  After learning about market segments over the past few weeks, I've come to realize that market segmentation is everywhere, especially within the church.  Having grown up in a great church community north of the city of Pittsburgh, its easy to see how different churches meet the needs of different people.  Similar to Gatorade, Powerade, and the timeless classic bottled water that all aim to quench one's thirst, churches all serve the same God, but in different ways.

Take a look at churches in Oakland.  Northway Oakland, where I've attended the past month is a Christian community full of young students - undergraduate and graduate alike, families in the medical field (due to all of the hospitals in Oakland), and young families.  After attending twice in the past few weeks, I don't recall seeing anyone over the age of 60 in the audience.  This church is appeals to a social group that is searching for a sense of community with their peers and the opportunity to connect with people who have similar beliefs.  The congregation experiences God through multimedia videos, live worship music, and dynamic speakers that relate real life to scripture.  Northway Oakland has structured their service to fulfill a market segment's desire to experience a service that is contemporary and relevant to the culture today.

In contrast to Northway Oakland, I also visited the Church of the Ascension in the past month.  This church is on the same Protestant side of palette, but is much more traditional than Northway Oakland.  The service lasted a solid hour and 40 minutes, the congregation was mainly families with kids between 2 and 10 and some members in their 60s and 70s, and the service was very traditional.  This church appeals to the segment of the market that desires a liturgical church which does not depart from tradition.  The church did not have many college students at all, primarily because of its conventional tone.  The church was founded in 1889 and was in an old building with stained glass windows, pews, and an altar - very different from Northway Oakland's stage with many instruments, stackable chairs, and free coffee and pastries for the taking.

Both of these churches' underlying mission is to help people connect with God and are achieving this mission in very different ways.  Preferences of one market segment can vary dramatically from another.  However, the interesting thing to me is how the overall mission of the churches will not waver.  Over time the culture may dictate which church will prevail due to the tastes and preferences of the congregants, as well as the giving flows.  But until that time comes, new market segments will be developed and organizations evolve.  Staying contemporary with your audience will become of utmost importance in order to maintain an organization, but so will the ability to adapt to meet your congregations needs as culture changes. 

Encouraging Census Data

A few years ago I read an article in the Post Gazette, which can be read here.  The article stated that Allegheny County had the second oldest population in the entire country compared to any other county, which is a startling fact!  

As a soon to be graduate of the Katz MBA program, its important to understand the city demographics of the future location of my next job.  In many ways its tempting to go explore the growing cities like Phoenix, Charlotte, or Jacksonville, not just because they are a lot warmer, but also because of the tremendous potential for opportunities to succeed.  However, this article made a poignant comment that due to the fact that Pittsburgh has one of the older populations of all counties located in the US, this could be a source for growth potential.  

For example, take the baby boomer generation.  This generation comprises all people born between 1946 and 1966.  Add 65 years to each of those and you get 2011 and 2031.  If the baby boomers begin to retire in a few years and with unemployment at 4%.  There are going to be plenty of jobs available, especially in Allegheny County.  This is a promising statistic for graduates looking for places to settle down or start a career.  This is also an amazing stat for students like myself who are interested in going into the financial planning and advising field.  The more retirees that settling down, the more retirement accounts that will need to be managed.  Jane Bryant Quinn agrees with the above facts by stating that there is a need for 50,000 financial advisors over the next several years to service this transfer of wealth.  

Understanding market segmentation within your industry, between your competitors, and towards future customer demographics can go very far in comprehending the intricacies of our interests.  Because markets change rapidly, staying current and realizing your own stance might be the only thing preventing getting lost in the noise. 

How much my time is worth

This past week I was responsible for calculating how much my time is worth.  Right before beginning business school my tax adjusted, cost of living adjusted hourly rate was $29/hour.  If I relate this to sleeping 8 hours a day, it costs me about $240/day to sleep, or almost $88,000 per year.  That of course wasn't the purpose of this exercise, but rather to understand the power of the old adage - time=money, and to realize why serving the customer should be a top priority for many companies.

A prime example of this was going to lunch today with some friends.  I'm friends with a married couple and after church this morning we went out to eat at Uncle Sam's, a sub shop right off of Forbes Avenue in Oakland.  The husband is two years from being a full time orthopedic surgeon and his wife is a pediatrician.  According to some elementary research an orthopedic surgeon's average earnings was $389,000 in 2007 and a pediatrician's average earnings in 2007 was about $154,000.  Doing some simple arithmetic, their gross average hourly rate, assuming they work about 60 hours per week was $189/hour.  The reason I bring this up was because at this sub shop, which eventually served some great cheese steak sandwiches, our meals took 27 minutes to come to our table.  My buddy expressed his unhappiness to the waitress and had a small confrontation with her shortly before our meal came.  

If the food wasn't so good, he probably wouldn't go back there again, but its interesting to see how such a bad experience can form distaste in a customer.  In conclusion, I think that all retail establishments and customer service departments should treat their customers as if their time were worth $189/hour.   What if that waitress severed her finger chopping up steak for a sandwich and was rushed to an emergency room and discovered that the person that was going to put her severed finger back on was the guy who waited 27 minutes to receive his cheese steak this past weekend.  It would be unfortunate if the Doctor decided to wait a half hour and she bled a little longer just because he was busy chatting it up with the nurses.  Bottom line - serve all your customers as if they are of utmost importance because the world is small (especially Pittsburgh) and you never know when you'll need the assistance of a customer or colleague in the near future. 

When Stars and Cash Cows collide...

As a student of the stock market, I am always interested in the evolution of companies and the succession of the world's largest.  When it comes to trying to invest for the long term, greater than five years, its common for investors to go after the big name companies that exist like Wal-Mart, GE, Microsoft, Exxon Mobil, etc.   These companies are often revered as cash cows with a distinct competitive advantage in a specific area that has helped them to grow very large.  Unfortunately, cash cows often don't last very long in the grand scheme of things.  The up and coming rising stars tend to introduce new products and services that eventually eclipse the business models that cash cows set up successfully.

One area that has intrigued my interest lately is the Microsoft vs. Google battle.  In this example, Microsoft would be the cash cow and Google the star.  Ten years ago, Microsoft was the dominating company in the software business and Google was being formed by two Stanford Grad students in a garage.  Fast forward to 2008, and Microsoft is trying to purchase all or part of Yahoo - the jury is still out - in order to compete against the up and coming Google behemoth.  Google is essentially competing against Microsoft in everything from style to software to paid advertising on their search site to inventing new products out of thin air.  Furthermore, Google consistently reigns as the top employer for recent MBA graduates and I don't think its entirely because of their free meals in their cafeteria.  

In an arena like the technology industry where consumer tastes and preferences change on a daily basis, it will be interesting to see how Microsoft takes on the challenges they are currently facing.  If the Yahoo merger does not go through, will they be able to maintain their cash cow status as Google simultaneously replaces all that Microsoft sells and provides it on the web for free?  In the upcoming posts, I hope to dissect this battle between the two Tech-titans as well as determine the future of online media as we know it today.  

J&J Credo - more trouble than its worth?

An assignment for class this past week involved dissecting the intricacies of Johnson & Johnson's credo.  J&J is the esteemed health care company that has proven to be not only one of the best investments over the past five decades, but also the leader of its industry in developing pharmaceuticals and health care products.  The one page J&J Credo summarizes the four major stakeholders of the company and their responsibilities to each one.  

At first glance I was a little annoyed by all of the lofty goals stated in this document.  I found it unrealistic, cocky, and overbearing that a company could realistically think that they had the ability to please all of these stakeholders.  I always thought that being excellent at one thing was always better than being OK at many things.  But after further examination, I learned that their credo was created prior to the company going public and becoming the behemoth it is today.  Furthermore, the fact that their stock is up 6,000%+ over the past 4 decades compared to the S&P's measly 1,000+% over the same period, goes to show that they do deserve some credit.   I think it is difficult for every company to start out aiming to please every single aspect of their business.  Because businesses are run by people and people are imperfect, there will always be shortcomings.   However, without this credo in place, who knows how the Tylenol scandal would've transpired.  Maybe if more companies created credos like JNJ's at the beginning of existence, they will not struggle as frequently when deciding to make the right decision.

Day 1

I'm Robbie Gee and I'm pursuing an MBA at the University of Pittsburgh Katz Business School.  As part of my Marketing Management class, I am required to begin a learning journal to explore the nuances of what we'll learn within the class and compare it to real life events outside the classroom bubble.  As part of the class, my first post will state the rules my group and I set forth so that we act as a cohesive team on our assignments.  Below are the standards we have set forth in order to dissect these cases in a equal manner

1.  Prior to reading the case, the team will assign questions each person is responsible for.

2.  Each individual will read the case on their own.

3.  Each individual will complete their question and prepare for the group meeting that will occur to discuss the case prior to its due date.

Now for the fun part.  The above rules are somewhat rudimentary when breaking down group work.  If a team member does not care to participate in the group work, there is a chance that they will be eliminated from the team.  After each case, our team will allocate 20 points across the team.  If the team acted equally each person will receive five points.  However, if a team member believes that there is some inequality, then points will be lopsided.  If a team member continues to receive low points and not a standard five points, he or she will be "voted off the island" and asked to leave the group.  Hopefully this will not occur, however, what would an MBA program be without such exciting possibilities!?!?