It's back! Vertical intergration that is.

Vertical integration is back. After all the analysts said that companies must only focus on their marketing to the exclusion of the rest of their supply chain. Larry Ellison, the "bad boy" of Silicon Valley is now saying that for a company to be competitive in the new economic reality, there should be vertical integration throughout the company's markets. This is what happens when there is to much buy in of the latest fad from short term strategists.

For years it was spin off anything that doesn't have to do with core competencies. Now we are going back to the future in the manner of Henry Ford.

WSJ.com link

Outsourcing tutors

Well you would think that with the economy the way it is a teacher could make a little extra money tutoring students on the weekend or summer. Nope. The newest process that is being outsourced is tutoring to of all places, India. No shock there. Soon everything that is intellectual or not a concrete task, such as plumbing, will move offshore. Maybe I should ditch the MBA and learn a trade such as auto repair.

I recently had my hair cut at a cosmetology school in town and I was talking to the girl who was learning. I asked her why she was learning a trade instead of going to UIS. She said that she could always start a shop and work for herself no matter what the economy looked like. Mmm sounds like she may have something there.

Global Post link

Danny Pang

With the recent uproar of the House wanting to curb the powers of the Fed, this seems to be a good article to look at. Reading this I was amazed at the warning signs Pang showed throughout the years. And yet he still managed to attract investors that were willing to allow him access to their money. Never underestimate the power of a unbelievable return rate. Now could Dodd and Frank really have prevented this? Of course not. Pang was a con man pure and simple. And con men always find an angle to work. All the legislation in the world would not have prevented Pang from doing what he did. Just has it would most likely have not stopped Madoff. Con men tell people what they want to hear. Kind of like Obama and health care reform.

WSJ.com link

Economies of scale in medical care

Heart surgeon Devi Shetty's hospital did over 5000 heart surgeries in 2008. As he said in this article in the WSJ, "what the Japanese did for autos, India will do for health care". I wonder how many of those people that are proponents of outsourcing thought that health care would be the next industry to move from the US? I can see it now. When the government takes over the US health system and service tanks and it takes years to get an operation done, all those with the financial means will move to Mexico to quit paying high US taxes and will fly to India for health care. The poor will not pay anything and use the free health care. The middle class will pay foe most of the costs and be shocked at how poor the system has become. And the wealthy will move somewhere where taxes are low and go where the health care is cheap. And all of us will wonder what the hell happened.

WSJ.com link

Labor unrest in India

The global slowdown is creating labor strikes and violence in India. According to the WSJ, a company that build car parts for Ford and Toyota wanted to layoff a large number of employees. The HR director of Pricol was beat up and killed. It seems that the only thing keeping Americans from doing the same thing with a true unemployment rate of over 17% is a year of unemployment from the Obama administration. Or perhaps we're not as hungry as some machinist from India.

WSJ.com link

Finnegan Nye Dobbs

Here is our son who was born on 10/23/2007. Everyone is doing great.

Mgt Philosopher Russell Ackoff

As I opened my WSJ Wednesday morning, I saw the obituary of Russell Ackoff, a business professor at the Wharton School of Business. His model for teaching business education was "no curriculum, no classes, no examinations, no admission requirements -- only exit requirements." Wow what a fantastic idea. Too bad so few business schools actually believe in this. I see many in the field of business education to be very conservative when it come to thinking outside of the box in teaching concepts. The model of lecturing as teaching is dying. Why can't this be seen by the administrators of universities?

Testing in a holistic manner would get the concepts of business across so much better then simply a lecture. Perhaps teaming up with a local business and applying MBA concepts such as marketing, finance, and organizational function in the field would be so much more interesting then doing same thing I did as an undergrad.

WSJ.com link

Apple App Store

This is how new markets and jobs are created. WSJ.com profiled how the Apple App Store is drawing new graduates to Silicon Valley in search of the next big application. Entrepreneurship. This is what MBA programs at universities should be teaching instead of creating new graduates that move into multinational corporations and are then laid off when the economy tanks. UIS are you listening?

WSJ.com link

Arthur Guinness Birthday 9/24/1725

Today is the birthday of Arthur Guinness. Those that are lucky enough to appreciate a pint, raise your glass and count yourself an honorary Irishman. While you are enjoying your pint, here is a great article in the WSJ on the merits of Guinness by author Colm Toibin. Cheers!

WSJ link

Buffet's Chinese suits

Warren Buffets love Chinese suits. According to the WSJ, Buffet even taped a testimonial that plays at the HQ of Trands suits. Italian industry is made up of relatively small factories that focus on a narrow segment such as water pumps. Chinese imports have placed the Italian manufacturing industry in a precarious position. I wonder what will happen to the Italian garment industry if Chinese suits reach a quality that has been traditionally been the domain of Italy? Well we will all be driving Chinese cars, why not wear suits made there too.

WSJ link

Obama's union problem

Since the unions threw all of their money behind Obama its now time to see some ROI. First tariffs on Chinese tires and now the paper industry. Right or wrong Obama is going to have a hard time balancing the divergent views of the unions and the benefits of free trade.

WSJ link

Cadbury's position in emerging markets

According to the WSJ, Cadbury has a large presence in Latin America and India. Kraft wants to use this presence as leverage to enter these countries in a major push for market share in the confectioner business. Hershey would be smart to make a push to acquire Cadbury in opposition to Kraft. With the iconic Hershey label and Cadbury's presence, the combined might of such a company would be a main competitor to Mars Chocolate.

WSJ.com link

Outsourcing to the US?

Too many short sighted CEO's see outsourcing as the panacea to drive down costs. Rethinking this strategy is Farouk Shami, CEO of a one billion dollar hair iron company. Citing counterfeiting problems and poor quality control, he is opening a plant to manufacture all of his company's production in TX. New Balance continues to assemble the majority of their shoes in MA. Of course how many NBA and NFL players endorse New Balance compared to Nike? Many times outsourcing brings problems with quality control or impacts company reputation, such as Dell's poor customer service scores. Once the decision to move some operations offshore takes into consideration factors other then monetary costs,the decision becomes more complex.

WSJ.com link

Mercury Marine employee concessions

The employees of Mercury Marine in WI choose to vote to give back many items that were in their expired contract. The one I saw that illustrated the new reality of business is how the workers with have a wage freeze for 7 years. With the cost of living increasing between 2-4% per year, the average line worker will be continuously facing a lower standard of living. The article mentions that the union choose to give in to company demands instead of losing their jobs entirely to either a non union plant in OK or a foreign country. Welcome to the new state of the world economy were the entity with the lowest labor cost has the competitive advantage, no matter the perceived benefits of the long term employees.

WSJ.com link

The value of benefits to competitivness

Read this article and see how the part time worker reacts when presented with the opportunity for 90% company paid health care premiums. They work harder to met the full time criteria with greater output. I don't see why companies are so short sighted when it come to creative methods of worker motivation such as this.

WSJ.com link

Should all university lectures be presented this way?

It sure looks like all university lectures should be presented the way Thomas Aquinas College does it. Guided facilitators using the give and take of student interaction to present concepts and defend them. Sure would make a more dynamic classroom experience with everyone involved. Just an opinion of one student.

Thomas Aquinas link.

The decline of micro-lending

Micro-lending, the process of granting mini loans to facilitate entrepreneurism in developing countries is in danger of suffering a meltdown ala the subprime market. This was one of the more useful tools to enable citizens of the third world a chance at a better life. Too bad that it does not appear that the original intent of the program will continue on into the future.

The Economist link

Harley in India

Since the downturn in the world's economy is hitting Harley-Davidson in US sales, the company is focusing on foreign markets including India. WSJ.com had an article on the move by Harley to grow their market share in India. The last paragraph had how the company is having a beer/barbecue for their upscale consumers. I wonder what the traditional motorcycle gang member feels about the social elite of India going to a beer bash for Harley riders?

WSJ.com link

Setting up and posting

The blog is set up and I will begin posting stories of interest on 8/30/09.