The New School

More than 1.2 million college graduates every year face the harsh reality of competing against other graduates for jobs in the marketplace, according to the article "The New School" by Kim Jack Riley. That is why many students who complete their Bachelors degree go on to continue their MBA studies in order to have a better competitive advantage over others when they graduate. The question is that: Is this a good strategy? Could be, but I am not sure it works out all the time for several reasons. If we think of MBA students as firms trying to compete against rivals, and we apply the strategic theories of Porter, Hamel and Barney, we can reach interesting conclusions.

From Porter's point of view, since there are many suppliers (students with MBAs) in the market, then the buyers (companies hiring students in the marketplace) will start possessing bargaining power. The supply is greater than the demand for what students call a "good job". Not many companies are capable of giving students compensation that is suitable or acceptable to them. Sometimes it is because the students think that they are worth more than that. Nevertheless, the bargaining power of companies offering the "good jobs and positions" is increasing, and this could be one thing that is a competitive force in the economy. Moreover, there are those MBA students who already have jobs but are looking for better positions. What about them? Aren't they afraid of potential entrants who might snatch away those positions before they do? Yes, that is true. Those MBA students are threatened, and that does nothing but adds to the competitive forces in the hunt for jobs. That is why those who are threatened should create value for themselves and distinguish themselves, a fact that takes me to the next framework, created by Barney.

Barney's question of value appears when we wonder whether the MBA students who already have jobs, but are still looking for better positions, possess the capabilities and resources that enable them to respond to environmental threats and opportunities. For example, their experience in the market gives them value against potential entrants (a combination of ideas I have made between Porter's and Barney's frameworks). However, the experiences they get should enable them to compete and win in the marketplace. The degree by itself cannot be considered valuable because it does not allow them to respond to the threats of potential and new entrants. In addition to that, we can clearly see that the MBA degree is not a rare resource. Today, many people already possess that "MBA resource". Furthermore, there is no question as to whether this resource is imitable or not. Most people have the resources and capabilities to get an MBA degree. Therefore, there is no cost advantage in this case for obtaining an MBA except if students lack the financial abilities to do so. Imitation in this case can take the form of direct duplication, if it was obtained from the same university as others working in the market, or it can take the form of substitution if the MBA degree was from any other university. What I think would make each MBA student different is the question of organization in Barney's framework. As a matter of fact, I think it is the most important in considering the strengths and weaknesses of any individual or any organization. We can clearly see that when, in the article, Tony Lee, editor-in- chief of the College Journal, is sited when he affirmed that "the primary concerns of employers today are:

Even if the applicant has an M.B.A., does the job seeker really have the aptitude to do well in the job?Was the decision to go to graduate school made last minute out of desperation to get a job?Was the M.B.A. received at a top-tier business school?"

Now these are good indicators to the fact that an MBA degree by itself is not enough. It is how that degree is used that matters to employers – that is, how the "organization" of that MBA graduate is. How he or she can use the MBA degree to enable him or her to fully exploit the full competitive potential of that degree, according to Barney's definition.

Moving on to Hamel's theory, if we think of MBA students as firms competing in the market, then we can state that they must have a core strategy in order for them to succeed. One element of Hamel's core strategy that MBA graduate can use is the basis for differentiation. They have an advantage with their degree, no doubt about that, but they also need to know what the best way is for them to compete differently from their rivals. The key word here is "differently". Furthermore, according to Hamel, these students with MBA degrees have a strategic asset which if used properly, will enable them to succeed.

Going back to the question I posted in the beginning (Is obtaining an MBA degree a good strategy to compete in the market for jobs?), and applying the three frameworks, we can see that an MBA degree by itself is not a very good strategy. According to Porter, the degree only increases the competitive force, while with Barney's framework; the discussion above will show you that these graduates do not have a perfect competitive advantage. Moreover, with Hamel, MBA degrees by themselves are just an addition. They cannot do anything without some other supportive strategy, like competing differently for example.

Effect of Danish Boycott Patchy

After the controversial cartoons portraying pictures of the Muslims' prophet, Muhammad (peace be upon him), were issued in a Danish newspaper, Muslims started boycotting Danish products. This affected different parts of the economy, and the interesting part is that, even though the "Effect of Danish Boycott Patchy" article is all about politics, Hamel's frameworks and Porter's forces arise again as part of the strategic decisions that were made and that we could see.

First of all, with the collective boycott for Danish products, we can tell how powerful buyers can be if they work together and agree on one thing. In this case, the boycott forced sales of Danish products to drop, even though they have been very profitable and were doing well. We could also sense the power of buyers in that supermarkets, when they knew about the boycott, pulled down the Danish products from the shelves, leaving these shelves empty for a while so that buyers can notice that this particular store does not sell Danish products. It was like these supermarkets were fearful of the buyers' power that they didn’t want to give them the impression that "we see what you boycott". They probably did not want that kind of risk of losing the customers.

Second, the article tells us that supermarkets and hypermarkets pulled down Danish products leaving the "shelves empty for the people to notice". Now I would think of this as one of Hamel's customer interface component of the business concept. I think it fits properly under "fulfillment and support". These supermarkets are reaching the customers by providing them with support. In this case, it is not necessarily a physical support with the products, but rather an emotional support. This is important because it keeps the customers loyal. In addition, I think that leaving the shelves empty for the customers to see falls also under "information and insight". They are providing customers with the necessary information: "Hey! We are with you! We do not sell things you do not like and you can see that from the empty shelves!" In fact, I liked that strategy. Furthermore, one manager said, "as the situation stand, [Danish products] are off for the foreseeable future", and that was followed by "positive feedback from [the] customers". Now that is information and insight again. This manager is on the lookout for customer feedback in order for him to be able to extract insight from this information… exactly what Hamel explained in his business concept innovation! I also see information and insight when SADAFCO was trying to tell its customers (and shareholders) that they "do not import or sell any products from Denmark or Norway". They were trying to convey the message to the customers that their wishes are the demands of the companies in the market. We can tell here how important a role the media plays in the daily decisions of managers. It's their channel of getting information over to the customers. That is something I never noticed before.

Third, "relationship dynamics" comes into play in this particular article when we are told about the customer who came back with the Danish product and asked for a refund. This person's wishes were respected and he was given his money back. Now I think that this is a kind of interaction between the buyer and the seller. It creates a sense of loyalty among the customers to that particular store.

Fourth, with regards to Hamel's strategic resources, I suppose we can say that core processes (which is what the people in a firm do) appear all over the article! First of all, we see how companies responded. The actions they took in order to satisfy the customers for example included removing the Danish products from the supermarkets. It is true that in this example I gave the supermarkets did not physically transform inputs into outputs, but hey! They did create value for the customers through their actions. Those actions were valuable to Muslims probably because this is their religion and the cartoons might have been offensive to them!

However, I would like to point out that even though strategic assets (which are part of the strategic resources) are thought to enhance a business concept, I think they worked against the firms and the supermarkets in this article. Strategic assets are what firms own, and in this case, the supermarkets owned the unwanted Danish products and brands that were part of their inventory and, thus, part of their assets. It caused them trouble rather than added value and growth. However, core competencies helped the companies know what to do. Because they were aware of what was going on in the market, they were able to respond, and their response, I think, was suitable to the situation.

Tags: danish boycott|

Google is Destined to Fail in China

We all heard about Google's continuous attempts to enter the Chinese market and get hold of its internet population. However, these attempts, unfortunately to Google, turned out to be a failure simply because Google is not a Chinese company! According to the article "Google Is Destined to Fail in China" by Perry Wu, the search engine market is not a weak sector in China, and Google probably saw that. Perry Wu goes on and emphasizes in his article how different Google is from Chinese internet companies and explains the main features that may deter Google from being able to enter the Chinese market.

As I went through the article, it was difficult for me not to notice how some of the five competitive forces discussed by Associate Professor, Michael Porter, stood out. In fact, before I knew about Porter's competitive forces, I never noticed how companies and governments have different strategies when it comes to real life.

First of all, we see that there is an expected retaliation from the existing Chinese companies like Sohu, Sina, and Netease. History has shown that many companies like Yahoo and Lycos tried to enter China to win, but ended up investing their money in the country and then leaving "poor, confused and embarrassed". Wu, in his article, explains how Chinese internet companies act in "cooperation" rather than in "competition". They have a mutually beneficial relationship where they try to remain of the same size and try not to grow too big, because it is known that they might end up falling hard. This fact can lead to a slow growth in the industry, and according to Porter, slow industry growth signals that there is a strong likelihood of the local competitors to retaliate. In addition, the history of Lycos and Yahoo for instance is a good indication that there has been retaliation in the past. Otherwise, why would these companies leave a county with a big internet population?! Moreover, the Chinese companies are well-established and are probably supported by their government. This brings government policy into action as a barrier to entry for the foreign internet companies.

Since the Chinese companies are more into socialism, they are more likely to remain in the same market position, as they do not plan to grow. However, a company like Google has a major objective of growing and that is the main reason it is entering the Chinese market in the first place. Therefore, even though Porter does not discuss that, I think it is a major barrier to entry for Google. The stockholders at Google want it to grow, but if it enters China, it will have to remain in the same market position for one of two reasons: either that the competitors will retaliate (which is reflected in Porter's competitive forces) or Google will risk being a "Titan" and "falling hard".

Moreover, government policy (discussed in Porter's barriers to entry) appears when Wu implies that China is a socialist nation. This means that they companies in China are owned collectively by a centralized government that often plans and even controls the economy. Google is a global internet search engine! According to Wu, it is an open company, and many things that happen in China can seem to be fine in the country, but not in Wall Street. Now that can be a serious barrier to entry for Google, and, in this case, it is also about ethical and corporate governance. I agree with Porter as to how vital government policy is when it comes to market entry, but I think he also should have emphasized on the importance of corruption as part of government policy when he talked about the five competitive forces. Chinese companies got into lawsuits that merely appeared in 60-minute shows, and some of them have gotten away with firing a top executive without giving notice to the press! Is that possible for Google, a company operating in the global marketplace, to indulge in? Maybe not, and this becomes a barrier to entry from my point of view.

In addition to that, towards the end of the article, Wu states that Google has agreed to censor its search results, and with that government policy comes into play again. However, I can also see bargaining power. The Chinese population is the buyer, while the Chinese government is the supplier, and in this case, the Chinese government possesses the bargaining power of the supplier, which is a competitive force discussed by Porter. The government is exerting that power by reducing the quality of the searches that are provided by Google, since they will be censored. Google is not such an important customer to Chinese government, especially that there are other internet companies available in the country.

In conclusion, I think that Google needs to defend itself by taking into consideration Porter's five competitive forces. For example, Google can differentiate its search engine in a certain way that the Chinese government cannot refuse. Google should turn the "bargaining power of the supplier" to its side, because, at the end of the day, Google is the company providing the differentiated service.