The CEO Game

Getting an MBA sounds to many like a sure-fire way to advance in the world of business. After all, the more degrees you have, the more legit you are, right? Well, not really. In this world in which BAs are more common than the swine flu (over a quarter of the US population holds a bachelor’s degree), having an even more advanced degree is definitely a key to getting a good job. When you’re competing for entry-level positions, an MBA is a handy heads up on the post-college competition.

Learn To Talk The Talk

An MBA looks great on your resume. And as more and more B-schools are only letting in people with real-world experience, there is more and more to learn in business school from your peers, and you will probably get more out of it yourself when it is not just theory. You’ll probably be intellectually stimulated. You’ll make great contacts. You’ll know how to talk the talk and walk the walk. Some complain that an MBA is just a waste of money because people who have MBAs still have a hard time finding jobs, but I think that’s nonsense. Those people would probably have a harder time without an MBA. Unless you’re getting your MBA in some unaccredited school no one has ever heard of. Then you might as well save your money.

But, honestly, an MBA doesn’t create a business tycoon. An MBA might help you climb the ranks, but it isn’t going to put you at the top. What puts you at the top is your mind, your idea, your ambition. No number of classes are going to bring you that idea that will shake up the world, and nothing but real-world experience will teach you to be an entrepreneur. If anything, classes might teach you that success as a formula, they might teach you to be too formulaic and risk-averse. An MBA might help you guarantee a moderate level of success, but it might stop you from being number one.
Some of the most successful business people in the world didn’t have a BA, let alone an MBA. Just ask Bill Gates, Steve Jobs, Rachel Ray, Ty Warner or Coco Chanel if they think they need an MBA. But they had balls, insight, and determination. So save your $80,000 and the two years of your life if you think you’ve got what it takes to become a leader on your own. But if you need help, let a great B-school hold your hand on your way to the upper-middle ranks of the business world. That’s good enough for some people.

Tamar.

The CEO Game.

How can industry analysis and business strategy influence your decision-making process as a CEO?
This article discusses industry analysis and business strategy and the use of Six Forces Model (by Michael E. Porter of Harvard Business School) in the business world.

What is the Six Forces Model? And what is it good for?
The Six Forces Model developed by Porter is a tool that determines the competition level in any industry and the attractiveness of the industry.

The six Forces are:

• Competition – this parameter is determined by the number of the competitors and their aggressiveness. If in your industry you have many competitors, and your competitors might be drawn into price wars, this will cause the profit rate to drop towards a competitive level (perfect competition)

• New Entrants – if your industry is highly profitable and doesn’t have any barriers to entry, many companies will enter your industry. This may cause the profit rate to drop towards a low, competitive level (perfect competition). If your industry has many entrance barriers such as high fixed costs, patent laws etc. your profit will soar. For example, if your company has a patent on any product, you can sell this product at almost any price you want without fearing any competition (but if you know the demand curve you’ll set the product price in such way that will lead to highest rate of profit).

Porter's Old 5 Forces Model

• End users/Buyers/costumers – this parameter is the bargaining power of the customer. If the product, like luxury products, is not necessary to the customer he might buy it at a lower price. If on the other hand the customer depends on this product, he might pay much more. This is the case for essential goods such as gas and water. In other words the parameter describes the ability of customers to put the firm under pressure and also the reaction of the customers to price changes.

• Suppliers – every company needs a supply of materials in order to make new products. These materials can be components, labor, and services, etc. Suppliers may refuse to work with a firm, such as many Arab countries that sell trade oil to Israel. Or suppliers may charge excessively high prices for unique resources like highly trained workers.

• Substitutes (Product or service) – the existence of similar products or services raise the barging power of the customers over the products. The customer has the most power when two products are practically identical. In that case, the customers don’t have any incentive to pay more for any one product and so the customers will buy the cheapest product available in the market. This case may lead to high elasticity of demand.

• Complementary products/ the government/ the public – this is a relatively new parameter and it is determined by how the government, complementary products or the public perception can change the profit rate of your company. For example, sometimes corporations can grow too much and the government tries to limit the company control over the market through the use of competition law (aka antitrust law in the US).

Omri.

The CEO Game.