The End is Here!!!

Well, its been a great semester of blogging. We've all been through our ups and downs, but we made it and we are all better bloggers AND people for it! Yes, the blogging was slightly annoying at times, but lets face it, posting your thoughts on a topic is not the most difficult assignments. After all, they're your thoughts. They are there regardless...all you have to do is reach in and grab them. Only for the last assignment, I had to do some extra legwork.

I think its been interesting as well to see how different people feel about various issues. In addition to that, you got to know more about everyone and what kind of people they are. The assignments have been OK too. They got me thinking about and analyzing all kinds of issues in the business world, especially when it comes to management. And even though the blogging has been interesting and even fun at times, I won't continue doing it after I'm done with the class. I just don't see myself as a blogger (a person that writes blogs). But its definitely been interesting and provided a fun outside experience for the class.

Are YOU facing strategic problems?

I have selected 2 problems I would like to discuss. They are, constantly ongoing legal suits and declining productivity. Constant legal suits can be a problem because a lot of money goes to legal fees and possibly settlements later on. Also this creates doubt about your company and investing in it. Stock prices tend to be affected by these thing. Declining productivity is an obvious indicator that you're not doing the right things in order to keep competing in you industry.

Microsoft is a company that always has legal problems. Whether its patent infringements or anti-trust violations, you are never surprised when you open a newspaper and see this company in court. Declining productivity is also an issue. Microsoft competes in the Application Software industry. They have the largest market capitalization rate in this industry. Behind them are, Oracle, SAP AG, and Adobe Systems. I took the last quarter revenue and divided it by the amount of employees in all of these companies and Microsoft actually came up last. I think that if they want to stay in first place, they should try to avoid all the legal suits that they encounted and maybe motivate their employees to be more efficient so they wouldn't need as many or so they would be more productive and increase sales.

What the future holds......

Hello kids, today we will be discussing the future. Yes it is scary, I know. It gets worse. We will be discussing the future of...a financial firm!!! At this point you should be really scared. If not, then you're either not scared easily or maybe you don't watch the news. The collapse of the subprime mortgage market put a heavy strain on many banks and financial institutions, threatening the very existence of some. Some predicted it, many didn't believe it. JP Morgan Chase was one of the companies that was forces to write off over a billion dollars worth of debt. Now they have to deal with it and continue operations, although the extent of the damage may not be fully realized just yet. So what other events may occur in the future that will challenge JP Morgan Chase?

One possibility is a nationwide depression. The way things are going now, I would estimate that there is about a 5% chance of this happening. For this to be a serious problem most Chase customers will have to withdraw their deposits at once. Of course banks keep reserves on hand, but it might not be enough in case of a nationwide economic crisis. Its practically impossible to hedge yourself against such a loss of assets except to limit the percentage of assets held as short term deposits, and I'm sure they already do this. But I'm sure in such a situation, the firm's equity would be devalued dramatically regardless along with all other financial institutions.

Another event that could create very serious problems for JPM Chase is if their corporate headquarters in NY and their retail financial services and commercial banking headquarters in Chicago were completely destroyed in a terrorist attack. Considering the turbulent times we live in, the possibility of this is close to 0. Nonetheless, heavily armed guards throughout the buildings , anti-aircraft weaponry on top of the buildings, bomb proof glass and possibly electric fences might prevent this kind of incident.

Finally, its possible that in the future, people will not have a need for commercial banking or financial services. There might be no money in the far away future and everything will be bartered or free. The possibility of this in the near future is probably 0, but maybe 500 years from now, this will be the case. To protect themselves against this, Chase will have to create their own government and print their own money. But I don't think we have to worry about this any time soon. So don't get scared just yet.

Why do they have competitive advantage?

As mentioned in the assignment, competitive advantage is the advantage firms have over competing firms. There are various reasons why firms have it and ways this advantage is maintained.

One of the ways is to be the first entrant into a market. A good example of this is Microsoft. They had the first mainstream operating system for a personal computer. Today there is very few other operating systems used while Microsoft's remains the most popular. In addition to that, they are the number 1 software company in the world and the 3rd largest company in the world. So it is fair to say that they maintained their competitive advantage.

While on the topic of computers and Microsoft, the company Apple comes to mind. Macintosh computers that run on Apple's operating system managed to position themselves in a specific niche. They have always been considered better for professional video or graphics editing and apply to students and artsy crowds. They reinforced this concept through advertisements featuring the business IBM guy that never works, and the regular Mac guy that is always better at everything. So Apple managed to dominate that specific market which is a good example of niche dominance. They're also the 4th largest technology, hardware and equipment manufacturer in the world.

A good example of competitive advantage due to market share is the brewery, Anheuser-Bush. They own almost 50% of the market share in the US, this allows them to dominate distribution channels, forcing wholesalers into exclusive contracts and making it very difficult for smaller companies to sell beer on a larger scale.

Google is a good example of a firm with government protection. The patent on the software algorithm for their search engine protects other firms from copying their invention and no other search engine as simple to use and as effective has been made. Due to this and advertisers' interest in google's search engine, Google became the number 3 software company in the world, just from a search engine.

Retailers and Their Wonderful Strategies

One store that immediately comes to mind when thinking about cost leadership is Walmart! The only way they can keep their prices so low is to keep their costs to a minimum. A good example of them doing so is the lack of a Walmart in NYC. I would think that the reason for that would be higher taxes, costs associated with zoning problems and higher property costs.

I believe Nike is a company that uses a differentiation strategy. If you are asked what the best sports brand is, it is very likely that you will answer Nike, even though the quality of Reebok or Adidas may not be worse. However there is only one official Nike retail store and that is Nike Town where the prices on sporting goods and apparel are much higher than other retail stores. People still shop there because they consider Nike to be a higher quality product than all other competition.

Paragon Sports, a sporting goods store that I used to work in uses a focus strategy. They only have one retail store nationwide that is located in Manhattan so they apply to a very small geographic area. That is what I saw in the story. Only New Yorkers shopped there, Manhattan residents for the most part including actors and famous athletes that live in NY. I personally saw Walt Frazier, Spike Lee and James Gandolfini there. I think if there were a 100 other chains of this store nationwide, it would not attract shoppers of that caliber. I only say they're high caliber shoppers because they bought a lot of merchandise and we earned extra commission on sales =]

That Porter Model

The Porter Model is a very good tool to analyze the attractiveness of a certain industry. By attractiveness, I don't just mean entering an industry, but staying and competing inside it. It describes what kind of pressures a company will face from buyers, suppliers and its competitors. I think this is a relatively effective tools for determining whether an industry is worth penetrating since it helps you realize how profitable your company can be within that industry. However I also think that it leaves out the pressure a company can feel from a government or political groups. Are there any specific regulations for that industry? Any extra costs that will have to be incurred? What is this government's stance on monopolies or price setting? Etc. Aside government, I think the Porter Model does a good job describing the forces effecting an industry.

I think the automotive industry has high barriers for entry. The capital requirements for starting up a car manufacturing company have to be very high since you need the plant or plants and the expensive equipment used in auto manufacturing. Brand loyalty is in my opinion very strong. There are many people who only buy specific brands of cars. If a new brand of car comes out, people will be very skeptical about since there are already brands in existence that they know and trust. Also people switch cars once in a several years and the cost of switching is high since you're likely to be selling an old depreciated vehicle and buying a new and more expensive car. So customers will likely not want to switch to a new expensive product that they haven't heard of before.

Statement of Mission!

Here at Lenny Kaplan we strive to create a financial consultant of extremely high caliber and earn a most excellent salary. To achieve these goals, we utilize a variety of psychological techniques some of which include self-motivation, the desire to strive forward and good moral standards! We also implement not quitting and the lack of ability to stop, in order to reach our objectives. At Lenny Kaplan we don't just promise quality, we promise quantity ($)!

Career Strategy

I recently accomplished my first major goal for my career and this was acquiring an internship at a financial company, in this case Smith Barney.

Right now I plan to do a good job at it and network for the next several months until I graduate in December.

After that I will try get a job as an FAA or a Financial Adviser Associate. This is like a training program for Financial Adviser and you get paid a salary as well while trying to build a book. In addition to that I will acquire the necessary licenses that I need.

Hopefully if thats working out well, I will get a job as Financial Adviser either at the same place or any other firm with a well known name. At this point I will hopefully have some clients already and I will continue to attain more clients so that when I'm no longer getting paid a salary, I'll be able to make a good living off commission only. What I like about it is that you are in business for yourself.

When I do that for several years and I have money to throw around, I will invest in some kind of business or an idea, but this is definitely not within the next 5 years, so I don't know what exactely its going to be.

The beginning!

This is the first post that I am creating for the BPL class blog. At this point, there is not much to say except that the class looks like its going to be interesting since its not large in size and the people seem to be more social than in other classes. At the end of the semester, our group will be doing a presentation related to the Beer Industry. I'm sure that we're going to do very well considering the fact that I have personally conducted intensive research into this industry. My group partners know what they're doing so its going to be fun and I look forward to the rest of the class.