recentpopularlog in

jerryking : barriers_to_entry   14

Why the US economy isn’t as competitive or free as you think
November 14, 2019 | Financial Times | by Martin Wolf.

The Great Reversal: How America Gave up on Free Markets, by Thomas Philippon, Belknap Press RRP$29.95, 368 pages

It began with a simple question: “Why on earth are US cell phone plans so expensive?” In pursuit of the answer, Thomas Philippon embarked on a detailed empirical analysis of how business actually operates in today’s America and finished up by overturning much of what almost everybody takes as read about the world’s biggest economy.

Over the past two decades, competition and competition policy have atrophied, with dire consequences......America is no longer the home of the free-market economy, competition is not more fierce there than in Europe, its regulators are not more proactive and its new crop of superstar companies not radically different from their predecessors.

Philippon's argument:
(1) US markets have become less competitive: concentration is high in many industries, leaders are entrenched, and their profit rates are excessive.
(2) this lack of competition has hurt US consumers and workers: it has led to higher prices, lower investment and lower productivity growth.
(3) contrary to common wisdom, the main explanation is political, not technological: Philippon traces the decrease in competition to increasing barriers to entry and weak antitrust enforcement, sustained by heavy lobbying and campaign contributions.”....... the US economy has seen a significant reduction in competition and a corresponding rise in monopoly and oligopoly.

What should the US want? The answers, suggests Philippon, are: free entry; regulators prepared to make mistakes when acting against monopoly; and protection of transparency, privacy and data ownership by customers. The great obstacle to action in the US is the pervasive role of money in politics. The results are the twin evils of oligopoly and oligarchy. Donald Trump is in so many ways a product of the defective capitalism described in The Great Reversal. What the US needs, instead, is another Teddy Roosevelt and his energetic trust-busting. Is that still imaginable? All believers in the virtues of competitive capitalism must hope so.
antitrust  barriers_to_entry  books  book_reviews  campaign_contributions  Citizens_United  competitiveness_of_nations  crony_capitalism  dark_money  economics  economists  entrenched_interests  EU  FAANG  free_markets  French  gun_laws  healthcare  lobbying  market_concentration  monopolies  monopsony  oligopolies  oligarchs  regulators  Theodore_Roosevelt  uncompetitive 
november 2019 by jerryking
Where Women Fall Behind at Work: The First Step Into Management - WSJ
Oct. 15, 2019 | WSJ | By Vanessa Fuhrmans.

Long before bumping into any glass ceiling, many women run into obstacles trying to grasp the very first rung of the management ladder—and not because they are pausing their careers to raise children—a new, five-year landmark study shows. As a result, it’s early in many women’s careers, not later, when they fall dramatically behind men in promotions, blowing open a gender gap that then widens every step up the chain...... fix that broken bottom rung of the corporate ladder, and companies could reach near-parity all the way up to their top leadership roles within a generation.....“Bias still gets in the way—bias of who you know, who’s like you, or who performs and operates the same way you perform and operate, whose style is more similar.....Employers’ moves to diversify their most senior echelons could provide a road map.....“We’ve seen that if companies really put their minds to it, they can bring about change that matters,” Ms. Thomas says. “If they can apply the same extra elbow grease that they do at the top to the broken rung.........The numbers show that the first step is the steepest for women. But why is that? What’s holding women back from climbing that first rung into management?

It isn’t for lack of ambition..... while many employers have increased their efforts to groom and elevate more senior women—a smaller, select group—fewer have applied the same rigor to cultivating more junior female managers....The upshot: At nearly every career stage, the disparities between men and women have narrowed only marginally since the Women in the Workplace research began in 2015. Even in industries with largely female entry-level workforces, such as retail and health care, men come to dominate the management ranks—a phenomenon that Haig Nalbantian, a labor economist and co-leader of consulting firm Mercer LLC’s Workforce Sciences Institute, calls “the flip.......even in many “female-friendly” sectors, entry-level women still tend to get hired into jobs with limited upward mobility, such as bank tellers or customer-service staff. ..“When companies ask, ‘What’s the one thing we can do systemically?’ we say, ‘It’s not quotas, it’s not targets,’” says Mr. Nalbantian. “It’s about how do you position women and minorities to succeed in the roles that are likely to lead to higher-level positions.”......The takeaway for some women is that they have to assemble their own career ladder.....To secure a sponsor, “you’ve got to consistently perform, have a strong brand and deliver. That’s just table stakes,” she says. “But a lot of people do that and might still not move, because they don’t have the right support.”
barriers_to_entry  biases  coaching  diversity  entry-level  female-friendly  glass_ceilings  gender_gap  management  movingonup  obstacles  sponsorships  takeaways  talent_pipelines  up-and-comers  women  workforce  workplaces 
october 2019 by jerryking
Why It’s Not Enough Just to Be Disruptive - The New York Times
By JEREMY G. PHILIPS AUG. 10, 2016

Short-term success may be driven by exceptional execution; long-term value creation requires building a defensible model.

Any microeconomics textbook will tell you there are limited sources of competitive advantage. The most valuable companies combine several reinforcing strands, like scale and customer loyalty.....

While it is hard to stay ahead solely through superior execution over an extended period, it is sometimes enough in the short term to draw a deep-pocketed buyer where there are strong, immediate synergies. Creating enormous value over the long term requires turning a tactical edge into some form of durable advantage....Superior tactical execution can still create real value, particularly where it provides ammunition for a bigger war (like Walmart’s battle with Amazon). And in the long term, value is created not by disruption, but by weaving together advantages (as both Amazon and Walmart have done in different ways) that together create a barrier that is hard to storm.
disruption  value_creation  Gillette  competitive_advantage  execution  books  slight_edge  Amazon  Wal-Mart  microeconomics  short-term  long-term  barriers_to_entry  compounded  kaleidoscopic  unfair_advantages  endurance  synergies  M&A  mergers_&_acquisitions 
august 2016 by jerryking
Hunting the gazelle
DECEMBER 7, 2007 | The Globe and Mail | by SEAN WISE.

If one is attempting to build relationships with fast growing companies, how does one decide which ones (of the thousands of small companies starting out) will become big companies - big enough to justify the cost of investing in them now?.......in an effort to ensure a shared nomenclature, here's a communal taxonomy to help classify the various types of ventures encountered.

• Mice are small companies that are likely to stay small. Think "Bob's Pizza"- they can serve a great slice of 'za but it is unlikely they will double in size annually.

• Elephants are large companies whose growth is constant, but at a low level. Think Royal Bank. Its revenues grow annually, but it is so large that the growth is negligible over the short term, yet noticeable over the long term. Unfortunately, these companies have a high client acquisition cost.

• Dogs are medium to large companies that are experiencing low or negative growth. Think "AOL". A great company, but its revenue is shrinking. In the venture capital business, I often refer to these companies as kennel capital, i.e., companies that should be put to sleep.

• Gazelles are young companies that are experiencing extreme, massive growth. For those that pitch them early, the CAC is low and carries with it a high return on investment. Think "Facebook".

From a cash flow perspective, all four business animals start at similar points, however, they diverge rather quickly. The green Mouse stays fairly consistent, growing and shrinking its cash flow over time - possibly as a result of seasonal conditions. Never is it losing money, but it's never really hitting it big, either. The yellow Elephant starts in the best cash flow position and grows consistently at a relatively reasonable CAGR (Compounded Annual Growth Rate - a common business term used to represent the annualized growth of the business). Backing an elephant is never a bad idea, it is in fact, the safest bet (no one ever got fired from trying to land an Elephant). Unfortunately, Elephants are hunted by all, and this in turn, drives up the customer acquisition cost (CAC).......The Gazelles are where it's at from a business development (aka hunting) perspective. Gazelles tend to have the highest CAGR. They're also non-bureaucratic, and are flat in their organizational chart, which contributes to shorter sales cycles and lower CAC.

How to pick a Gazelle?
(1) Focus on those in industries with CAGR > 25%. If an industry is growing annually by 25% or more, then even those companies who finish second or third in their niche will do well. After all, a rising tide floats all boats.

(2) Look for Scalability. If a company can scale, it means they can produce their products for ever-increasing margins (i.e., the 1000th widget costs less to make than the 10th).

(3) Focus on Sustainable Competitive Advantage. If the company you are reviewing lacks any sort of proprietary intellectual property (i.e., patents), or has no barrier to entry, how will they stop others from flooding the market and eating their lunch? Gazelles continue to grow faster than their competitors by being able to differentiate their offerings to their clients.

(4) Look for the 10x rule. Being a little better, a little faster; or a little cheaper isn't enough to turn a startup into a Gazelle. For that to happen, a company has to offer a solution that is 10x faster, 10x better, 10x more secure, 10x cheaper, etc. To sustain double digit growth over the long term, and/or to obtain dominant market position, you will need a 10x solution, a solution that is exponentially better.

The Bottom Line

Whether you are a startup, an angel investor looking to back the best startups, or a service provider looking to serve either, you need to be able to spot high growth companies earlier than others. You need to be able to separate the wheat from the chaff - the potential world leaders from those that will become kennel capital.

If you are looking to find the next Google, Facebook, or Workbrain, you need to strap on your pith helmet and start tracking the Gazelles. Doing so will most likely ensure the greatest returns on your efforts,
10x  barriers_to_entry  business_development  CAGR  cash_flows  competitive_advantage  culling  customer_acquisition  gazelles  high-growth  howto  return_on_effort  scaling  small_business  start_ups  taxonomy 
february 2015 by jerryking
Do Things that Don't Scale
July 2013 | Paul Graham

The question to ask about an early stage startup is not "is this company taking over the world?" but "how big could this company get if the founders did the right things?" And the right things often seem both laborious and inconsequential at the time.
advice  start_ups  Y_Combinator  Paul_Graham  scaling  recruiting  experience  management_consulting  barriers_to_entry  product_launches  partnerships  customer_acquisition  user_growth  Steve_Jobs  unscalability  founders  questions 
november 2013 by jerryking
HOW TO SELL FRESH PRODUCE TO SUPERMARKET CHAINS
March 1999 | | Bobby G. Beamer, Adjunct Professor, Department of Agricultural and Applied Economics, Virginia Tech.

The most common approach to penetrating the fresh produce market has been to identify market windows created by seasonal production variations in major production areas. To attract buyers, local producers have attempted to fill market windows left open by established marketing channels. This production
approach to marketing fails to consider the needs of their customers: the retail supermarkets and their buyers.
However, by adopting a marketing approach , growers can establish better long-term relationships with their customers and capture more benefits than merely competing with other producing regions on price. Marketing efforts must begin before production as growers learn about buyers` needs and
requirements, including grade, quality, packaging, and delivery, in addition to learning which individual produce items are needed. The marketing approach, then, requires that growers produce what they can sell rather than trying to sell what they have produced. With the emphasis on variety in the produce section, Virginia growers may find more production opportunities in the specialty item category than by attempting to meet the shortages created by seasonal production
variations.

the average produce department in 1994 occupied 12 percent of the total store space but generated almost 17 percent of the average profits for the store. Previous research (Runyan, et al .) identified the following problems that can hinder the development of a good relationship between buyers and producers:
∑ lack of consistent quality,
∑ uneven sizing and grading,
∑ product too mature,
∑ lack of advance notice of product availability,
∑ inadequate removal of field heat, and
∑ lack of organization among local growers.

CONCLUSIONS
This study confirms the conditions for market entry described by Ryan, et al .: consistent grading for quality, even sizing, proper product maturity; removal of field heat; anticipated arrivals; and grower organizations. Merchandisers stressed the importance of good relationships, stating that new producers would have a hard time penetrating the market because of the loyalty factor established between growers and buyers. Part of this relationship is that ì. . . even at a cheaper price, itís going to be hard to pry us away from [our usual suppliers] because they provide consistent size, color, packing, and delivery. If we call them up and say that weíre short and need another truck load, theyíll have it here for us this
afternoon.îThe existence of these relationships emphasizes the need for the producer to get to know the market.
Rather than trying to compete with existing relationships, producers need to identify commodities having inconsistent supplies or poorly established supply relationships.

During interviews, produce merchandisers consistently expressed doubts about the willingness of small-scale, local produce growers to adopt practices conducive to the establishment of relationships . Although small-scale producers lack the economies of size that enable large-scale producers to invest in equipment and facilities, new institutions, such as the shipping-point markets, may provide small firms with the support needed to establish market relationships. However, such marketing support may be coming at the wrong end of the production process. Traditionally, fruit and vegetable growers, like many people involved in agricultural production, view their role primarily as commodity producers. The primary emphasis is placed on producing a good product, while marketing is viewed as strictly a post-harvest activity. One merchandiser related the story of a new producer who grew several acres of Daikon, a large, hot Japanese radish. The producer was disappointed to discover that after harvesting the crop no one was interested in purchasing it. Such a problem could have been avoided if the grower had invested some time, prior to production, in market research. Unfortunately, many producers still follow this approach in the production and marketing of fresh fruits and vegetables
fresh_produce  supermarkets  grocery  howto  market_windows  statistics  profitability  barriers_to_entry  farming  agriculture  Virginia  decision_trees  WaudWare  OPMA 
april 2013 by jerryking
How to battle a dominant brand
Nov. 29 2012| The Globe and Mail | SUSAN KRASHINSKY - MARKETING REPORTER.

This emphasis on customer service, insinuating that dominance has made the competitor lazy because they can afford not to try as hard, is one way to challenge a highly dominant competitor.

Another way is to chip away at a niche segment the competitor may not be looking at. The sweetener product Stevia is currently attempting this. It is facing a very crowded market for sugar alternatives: Globally, roughly 50,000 tonnes of high-intensity sweeteners will have been consumed by the end of 2012. Aspartame accounts for about half of the market in terms of volume, according to Euromonitor International. Saccharine and sucralose, the ingredient in Splenda, also each have a healthy share.

The marketing for Stevia, like other sweeteners, revolves around a reduced calorie option for consumers attempting to keep a healthy lifestyle; with one difference. While other sweeteners are associated with being highly processed, chemical products, Stevia markets itself as natural.

“There’s such a demand for reduced calorie products, and because Stevia has that added natural benefit, it’s doing fairly well and competing for space,” said Lauren Bandy, an ingredients analyst with Euromonitor. That is despite the healthy debate around just how natural the product really is.

That niche demand has helped it land deals to be included in some high-profile company’s products, such as PepsiCo’s reduced-sugar juice Trop50, in Coca-Cola’s Sprite on a test basis in France and Australia, and in some Danone yogurt products. Stevia still only has about 2 per cent of the global market in sweeteners by volume, but that’s doubled since last year. Euromonitor expects its growth to continue at a compound annual rate of 23 per cent from 2011 to 2016.

But that strategy can also be used against underdog brands. One of the most powerful ways for a company to protect its dominance is to fragment the market pre-emptively, giving challenger brands no niche to use as a foot in the door, said Niraj Dawar, a marketing professor at the Richard Ivey School of Business at the University of Western Ontario.
brands  Nike  Stevia  Susan_Krashinsky  Google  search  Bing  market_leadership  Microsoft  underdogs  branding  product_extensions  niches  fragmentation  customer_service  pre-emption  sweeteners  sub-brands  category_killers  habits  barriers_to_entry 
december 2012 by jerryking
Canada’s hazy takeover rules hurt everyone
Oct. 28 2012 | The Globe and Mail |Barrie McKenna.

Following an upsurge of national angst triggered by the buyouts of Canadian resource giants Inco, Falconbridge Ltd. and Rio Tinto Alcan in 2006, Ottawa ordered up the exhaustive “Compete to Win” report. The result was the 2008 federal Competition Policy Review Panel headed by former BCE Inc. chairman Lynton (Red) Wilson, which urged the government to turn the investment review process on its head.

The Wilson panel anticipated the growing clout of state-owned investors as well as the commodities super cycle.

Mr. Wilson’s prescription was to scrap the “net benefit to Canada” test and replace it with a “national interest” benchmark used by countries such as Australia. He urged Ottawa to reverse the burden of proof on takeovers, making it the responsibility of the government to demonstrate why a deal is bad for the country, not the other way around. And the panel said the government should publicly explain the rationale for blocking or approving transactions, scrapping a regime that “does not meet contemporary standards for transparency.”...The absence of investment reciprocity or evidence that state-owned actors won’t behave like other companies both would qualify as possible reasons for saying no.
barriers_to_entry  Barrie_McKenna  FDI  SOEs  mergers_&_acquisitions  M&A  rules_of_the_game  commodities_supercycle  national_interests  competition_policy  transparency  say_"no" 
november 2012 by jerryking
Seth's Blog: Changing the game
Posted by Seth Godin on November 01, 2007

Google announced an open interchange that allows users to take their social graph with them from one site to another. MySpace just joined in. This changes the rules for FaceBook, because now users have a choice of picking from dozens, soon to be hundreds of open sites... or just one closed one.

How can you change your game?

Consider the plight of Mike Huckabee and John Edwards. Both are making strong runs for the nominations of their parties, but both suffer because they're not seen as front runners. So why not change the game? Instead of waiting for a TV network to invite them to a debate, why not make your own TV show? Debate each other, in public, in Iowa. Broadcast the whole thing on YouTube. When you're done, challenge others in the opposite party to debate you, one on one. On your channel. What are they, chicken?

Consider the sandwich/burger shop/deli on a street crowded with choices. What to do? Why not get rid of all the meat and become a vegetarian/kosher sandwich/burger shop/deli? Now, it's five competitors and you. Anyone with a friend who eats carefully will bring her to your shop, the one and only one of its kind.

Usually, when you destroy the barriers in an existing industry, everyone loses... except you.
game_changers  entrepreneurship  risk-taking  barriers_to_entry  Seth_Godin  change_agents  thinking_big  scaling  constraints  vegetarian 
september 2012 by jerryking
Finding a New Niche May Offer Better Chance at Fat Margins - WSJ.com
May 13, 2003 | WSJ | By JEFF BAILEY | Staff Reporter of THE WALL STREET JOURNAL
These days, with information and capital zipping around at warp speed, a business or industry with fat margins essentially has a target painted on its back.

And yet, plenty of small and midsize companies in less-than-glamorous industries manage, some year after year, to post enviable margins. Some have patents or other intellectual property that protect them from competition. Others have invested large sums in plant and equipment to acquire economies of scale that scare off new market entrants. Some defend themselves by knitting together extensive sales-and-distribution networks that would take years to replicate.
patents  intellectual_property  entrepreneur  business_models  dealerships  automotive_industry  barcodes  medical_devices  hospitals  niches  unglamorous  differentiation  proprietary  small_business  mid-market  barriers_to_entry  economies_of_scale  margins  warp_speed  defensive_tactics  distribution_channels 
may 2012 by jerryking
Viterra another example of Canadian short-sightedness - The Globe and Mail
ERIC REGULY | Columnist profile | E-mail
ROME— From Saturday's Globe and Mail
Published Friday, Mar. 23, 2012

The point is that Viterra is irreplaceable, certainly within our lifetime. Glencore is nabbing 63 grain elevators and seven port terminals in Canada that could not magically be built overnight should another group of investors decide to clone Viterra.

This industry has massive barriers to entry and that’s why Glencore, led by the ever-savvy Ivan Glasenberg, pounced. For him, it was a once in a lifetime opportunity (and pocket change compared to Glencore’s $45-billion market value). If he didn’t nail Viterra, he knew it would have disappeared into the maw of Archer-Daniel-Midlands, Cargill, Bunge, Louis Dreyfus or any of the other agribusiness heavyweights who know that food isn’t going out of style and that feeding another 2 billion people by 2050 just might translate into compelling growth story....If there is one industry that had a bright future, it was global agriculture and Canada had all the components: Land, water, fertilizer, technology, schools, expertise, infrastructure, agri-business companies. What it lacked was ambition.

Viterra could have been the foundation of a Canadian Glencore or Cargill. Now it’s a piece of someone else’s global vision.
Eric_Reguly  agriculture  agribusiness  barriers_to_entry  Viterra  M&A  mergers_&_acquisitions  farming  sellout_culture  short-sightedness  one-of-a-kind  Glencore  ADM  Cargill  Bunge  Louis_Dreyfus  vision  ambitions  uniqueness 
march 2012 by jerryking
U.S. Technology Dominance? Think Again
December 30, 2004 | WSJ | Richard Parenteau. Andy Kessler’s
Dec. 23 editorial-page commentary “ We Think, They Sweat “ is a prime
example of the hubris that will cause great loss to the U.S. economy and
loss of employment. He seems to believe that only in the U.S. can
inventions be made and new products designed....Mr. Kessler (and the
rest of us) must realize we are moving away from technology industries
and related employment to an economic model based on services that need a
person’s physical presence. We are fast losing our ability to compete
where the work can move elsewhere. The “thinking” barriers of university
education, experienced labor force, critical technology research
centers, etc. that kept high-prestige, high-pay jobs here in the U.S.
have fallen. Until we start “thinking” about shaping our future
opportunities, given the new facts of life, we are the ones who will be
“sweating.”
America_in_Decline?  Andy_Kessler  barriers_to_entry  college-educated  face2face  high-prestige  high-wage  hubris  in-person  letters_to_the_editor  services 
october 2010 by jerryking
The Internet Report
February 1996 | Morgan Stanley U.S. Investment Research pg. 41 |
by assorted writers. When looking for investment ideas in new markets,
we default to our favorite maxims from Don Valentine of Sequoia Capital,
who is known as one of the toughest and smartest technology venture
capitalists in Silicon Valley. Don follows several simple rules in
choosing early-stage tech investments: (1) Find “monster” markets that
can be really big, like the Internet; (2) find good technology and good
technologists who can stay ahead of competitive threats; (3) find
outstanding leaders/management teams that can drive the technologies and
markets forward; and 4) buy companies, not products, and try to find
companies that have achieved critical mass with their products — or can
achieve it, and can create some form of “barriers to entry.”
barriers_to_entry  buying_a_business  critical_mass  Don_Valentine  engineering  good_enough  high-growth  investors  large_markets  leaders  Mary_Meeker  Morgan_Stanley  rules_of_the_game  Sequoia  teams  technology  vc  venture_capital  filetype:pdf  media:document 
february 2010 by jerryking

Copy this bookmark:





to read