Journal Entry 4 10/14/2011

The CAPSIM simulation has provided a very effective means of applying and clarifying what we learn in class by process of decision making. During the simulation, I have observed my own team members confuse the term or concept of strategy with application of strategy. For example, one team member said, "our strategy is to spend more than our competitors in marketing and sales while decreasing our variable costs." In actuality, our strategy as Digby is a hybrid of "Low Cost Provider with Product Cycle Focus" and "Niche Differentiation". One of the several methods we employ to enforce that strategy is by spending more on marketing and sales budgets, while decreasing our variable costs via automation investment. Thus, the CAPSIM simulation has created a series of epiphanies, if you will, to understanding and clarifying strategy concepts discussed in class; this also includes the reality of constraints that clearly force a firm, if that firm wishes to succeed, to pick their core competency and pursue it with all vigor.

A core competency reflects what one person or entity can do better than everyone else. For CAPSIM, the model we adopted to help us determine our strategy, reflecting our core competency, is adopted from the Forumla 1 case, the VRIO Model of Sustained Competitive Advantage.

We then move the the table form of the VRIO model and ask ourselves, in a variation from what Dr. Burke posted on the slides. Will this decision maximize value to the firm? Is it a rare move, relative to our competition? Will such yield to us a first mover advantage and thus be costly for our competitors to imitate? Will this decision allow us to exploit the target segment and eventually earn super-normal profits? The consequences of adopting this strategy were clearly seen yesterday.

We had a bad round one, biting off more than we could chew and getting hit with a big Al, destroying value of the firm. Adopting the VRIO strategy, we jumped forward significantly, gaining ground on every team, including the computer; in fact, aside from the computer, we were the only team that had a stock price increase. We also had products that did extremely well in the Performance, Size, and Traditional target segments, our segments of focus, yet we generated significant returns in the Low-End target segment. We feel we are also well positioned going into the next round, having earned a large amount of cash almost entirely generated from operations. Therefore, round three should prove even better than round two.

Journal Entry 3, 10/6/2011

As I enjoy my final semester of the Business Management-Finance program at the Marriott School of Management, I notice an extreme amount of concern for future, primarily regarding students obtaining gainful employment. Indeed, achieving the goal of landing a niche position within a respected firm is so often labeled the culmination of graduation, that I cannot help but wonder if students become so focused on the short-term that they forget the all-important, ever-patient, long-term perspective on life; for eventually, every long-term perspective becomes the short-term. I have taken the long-term perspective, and it has forever changed my thinking and decision-making process.

I executed an internship for Johnson and Johnson, in the medical devices division, for the well-respected industry leader Biosense Webster; my position was within Operations Finance. Shortly after beginning the internship, I came to the quick and painful realization of how understaffed the operations finance department was at the time; with global operations reaching nearly a billion dollars in revenue, the Ops Finance team consisted of two full-time employees (one US, one Mexico), two sub-contractors (one Israel, one Mexico), and me, the intern. Several weeks into the internship, my direct report left the company to pursue a competitive offer; by so doing, I became the only Operations Finance personnel based in the US, for the entire company. To further compound the stress, my new direct report was located in Israel, which made communication for guidance very difficult; I also had the gruesome responsibility to get our financial reports online, which required basic computer programming, though far beyond VBA and ISYS 201. The business partners in other departments repeatedly asked when the reports would be ready; the reports were vital to assist in their daily, weekly, quarterly, and even annual decision making. Now that I was the only go to guy, the amount of pressure to get the reports done and soon was increasing daily; needless to say I was stressed.

At the end of my internship, by God's help, I had accomplished every task given to me, in a reasonable time period. I had also produced a new manual, nearly 150 pages, for all interns that follow after me; engineered and consulted in the automation of the critical reports so that the key reports, so vital to decision making, can never go offline again; and created a new process for accomplishing key tasks that by the end of my internship, I literally was asking others if I could help them with their work, as I had finished my own. Before leaving the internship, the VP of Operations asked me if I was coming back; we had a conversation in which he tried to persuade me to apply for the position, so he could hire me. The FLDP program for JNJ for SoCal pays around $60K, plus benefits. Not bad to start out; however, I had another great opportunity to become a sales manager with Vivint, $100K, plus other benefits. A model in strategy illustrates the two opportunities:

Looking at the graph shows the analysis I used to make my decision. The decision is essentially between doing sales at Vivint, something I had done three years previously, or enter the corporate finance world directly. The x axis represents the top four categories that are important to me personally; the HL and LL signify "High Level" and "Low Level" respectively.

Passion is something I love doing; opportunity is the the future bridges that are built as a result of the decision; free time is time outside of work; monetary compensation, as a means to support my family and invest early to secure our financial future. As the graph depicts, the decision was close, but I chose Vivint. Why? The ability to pass the CFA exams much faster than working full time, plus double earning power I currently earn to invest in properties and secure perpetual rents, compensate for lower opportunities available upon leaving Vivint. I furthermore have a strategy of transitioning from Vivint to an equity-research position with a well-respected firm. In a sense, I am taking a back-door approach to a successful life, but to me, it's not risky at all; I've done my due diligence, I have hedge the risk, and God willing and with his blessing, I will be successful. The model helps depict the logic of what may appear to be an illogical decision.