Final

Last night I took my last final for Summer I. The course was "Competitive Advantage from Operations" or Comp Ops for short. It was taught by the department head, a wiry Dutchman who's been teaching for thirty years.

It was a very interesting class, once I'd been looking forward to for quite a while. It was a bit more quantitative than I had expected, though fortunately since my near-death experience in Statistics, I seem to have ingrained some of the fundamentals of how to utilize the normal curve. Where I got lost at times was in parsing the problem, that is, how to express it in math.

The final was hard, but not inordinately so. It was, as the CFEs describes, "appropriately demanding of my time". We were given two and a half hours, and I clocked out at two hours twenty-five minutes. I later learned he let people run long, since most of the class was still on the case when I left. This morning, there was an email about extending partial credit more generously on the last problem; apparently a lot of people had difficulty with it.

All of that being said, I found the class very informative and useful in my present position. Reviewing my study notes, it's clear we covered a lot of very distinct topics: queing, supply chain management, project management, resource management, quality control, and using statistical models for decision making. It's the kind of thing that I used to make fun of in my youth - that period when we rebel against ourselves in order to prevent mono-dimensional personalities. I have to say, if (for example) you're shipping boatloads of cars overseas to market, you'd better have an accurate way to predict demand and resource your warehousing appropriately.

So, with that, Summer I is done. Summer II begins tonight! This time I am taking only one course - Foundations of Finance. I'm sure it will be a more demanding course, but the simple fact that I'm not getting home at 10 four nights a week will be greatly appreciated.

Xbox

I recently bought an Xbox, and I've come to a realization: the Xbox is Microsoft's iPod.

It's not a totally accurate comparison - the Xbox unit has yet to be profitable, while the iPod has been enormously profitable - but in terms of strategy, it occupies a similar space. Microsoft has spent a lot of money creating not just a product but a platform on which additional goods and services can be built.

The Xbox is not just a game machine, but a DVD player and network media center. It's what WebTV was supposed to be and so much more. WebTV was ahead of its time; now that broadband is commonplace and third-party suppliers of media content such as Netflix exist, Microsoft can concentrate on developing a platform with hooks into other services. Add to that the lowering cost of HD televisions, and you have a device where the game play is almost an ancillary function. At half the price, I could almost buy an Xbox for everything but the gaming functions.

That being said, the Xbox is an example of a strategy I learned about in business school. A firm may spend a lot of money just to enter and exist in a market space, even if the business is not profitable. The reasoning is that the market will eventually be profitable, and it is easier to enter the market when is still being developed rather than later. Instead of letting two (or three, depending on how far back you go) other firms lock up the market - say, Sony and Nintendo - enter the market, develop your internal operations to support additional goods and services, and eventually you'll take enough market to make it all worthwhile.

I do not know for certain, but I have read that the Xbox would be profitable if Microsoft hadn't taken a $1BN charge to facilitate repairs of units that fail due to a bad manufacturing process.

In any case, the Xbox is an interesting product to watch. Compare to the Sony Playstation 3, which is similar in aspiration and scope, but a year or so behind in development (which makes sense -it came out a year after the Xbox360). Sony is still trying to develop the backend connectivity and business relationships. Watch the business, not the device.

It will be interesting to see how these firms evolve their products to fit the market.

Shopping and the Market

The NYT has a piece today about changing strategies for retailers. A number of strategies are being attempted. Having recently engaged in various forms of shopping myself, I compared my experiences to the retail reality.

For one thing, supply chain management is huge. I have recently come into the market for a television, and after tons of research, settled on a particular model. While I normally shop online, I decided to check the local stores and kick the tires, so to speak, finding my model on the floor. Three times now, in the past two weeks, I have been thwarted in my attempts: the model is out of stock, and there are no guarantees as to when new stock will arrive. In fact, even when I use the retailer's online store to find where they stock the model, I have found them to be sold out by the time I get to the store.

This is one of two points in the NYT article. For one thing, retailers are beginning to combine their online shopping with in-store shopping, through shopping kiosks where customers can essentially order online within the store for in-store pickup. For another thing, consumers are buying within shorter, less predicatble time horizons, and so stores are not stocking as much inventory ahead of time. The result sems to be - in my case at least - that items in production are still hard to come by, unless I commit by ordering online, which is what I tend to do anyway for small items. It's one thing to order an external hard drive through the mail, quite another to order a television.

Apt

It's worth mentioning that I am actually wearing pinstripes and denim today - the name of this blog. Pinstripe pants from H&M and a denim jacket from the Gap.