Exam results are going to published next week instead of yesterday as planned. Having convinced myself that I didn’t care I suddenly realised that actually I do. We did get our group’s finance coursework result though – an A – a real relief as it was the kind of thing that if you got wrong you could get really wrong. Thankfully there were enough financial minds in my group (that does not include me!).

I have begun reading my first fiction book since starting the MBA. Normally I read quite a lot of fiction but so far have avoided reading anything that isn’t directly related to the MBA. This is not a sign that I have less to do; it is more an attempt to begin my transition back into the real world in October. I can’t live the rest of my life only focusing only on work after all and I need to get back to real world standards of managing work/life balance.

Just in case you’re interested I am reading Cryptonomicon by Neal Stephenson. It is roughly part of the science fiction genre but when I tell people I am reading science fiction I get a look that says: “Oh, I didn’t know you were a geek.” I  read Stephenson’s Baroque Cycle last year and absolutley loved it. Having studied English Lit at uni first time round, people sometimes ask me what I’m reading hoping to get some high brow injection of literary magic. My answers usually disappoint, though that is usually because many people’s conception of great literature does not include any crime fiction, or sc-fi – which is grossly unfair. Having read Joyce, Delillo, Dickens and Eliot, I can tell you that Stephenson is up there with the best. Read the Baroque Cycle and find out for yourself!

Hello all. Too many blog posts start with an apology for not blogging enough, so I won’t do that. Although I’ve blogged very little this term my average is still reasonably high after my hyper actvity last term, and absence, after all, makes the heart grow fonder. Do you feel fonder?

This term is a lot less structured than last term, a bit more like the real world, though still a long way off. Every full time MBA student has to do six ‘electives’, the business school’s term for the courses you choose from a large selection. My choices are:

Managing Negotiations

Designing and Innovating Services

Hi-tech strategy

Corporate Social Responsibility (though the description makes it look more like an intro to the theory of public policy)

Strategic Management Accounting

Managing Change

I’m midway through my third elective. My choices are all bunched up early in the year – some people finish their electives in August, I finish mine in June. Coupled with the IED project (workshop 2 completed, workshop 2 on the horizon), finding a good summer project and finding a job after the MBA I am very busy.

I wrote so many blogs last term because I spent so much time in the library looking for things to avoid working, but this term I have not been in the library anywhere near as much so have not had the inclination.

I am trying to live the seven habits of highly effective people, as propounded by Stephen Covey. I have a love-hate relationship with this kind of thing. The English Literature student in me is sniffy about the corny, sometimes superficial and shallow style dressed up in depth and deep thinking. But they can be damn useful. I like that book because it doesn’t give easy solutions but does give a few handy tools. One of them is the quadrants for self-management:

Basically the very sound advice is that you should be trying to do things in the non-urgent but important quadrant as much as possible. I’d like to think blogging was in that quadrant but there are times when it gets pushed down into the not important/not urgent quadrant I’m afraid.

Hello everyone. Apart from the last post (which I wrote ages ago and forgot to post), this has been my longest gap between posts. Since my exams finished 10 days ago it seems like several weeks have passed.  We’ve begun our lecture course on innovation, entrepreneurship and design. Great lecturers so far, but it’s hard to regain my motivation knowing that they won’t be directly examinable. (the exams went okay I think – I’ll let you know when we get results in March)

I am now in anxiety-causing sight of the real world. Having turned the calendar corner that was new year, I can see my money running out and and the need to have a job looming large. I have begun networking, tapping up old contacts and exploring what I might do afterwards.

Do I do what I did before, but in a slightly better role? Maybe.

Do I attempt to make a big change? Maybe.

Do I make money a goal and try to recoup some of my sunk costs? Maybe.

Do I go for what energises me and makes proud of what I do? Well, duh, yes, of course.

I’m in a bit of a pickle because given the fact that when you google my name, this blog comes up, I need to avoid writing anything that might jeopardise future career prospects. So I can’t write that I couldn’t imagine anything worse that working for XXXX company, because i’m changing my mind so fast I might want to work for them next week, and someone might read my blog.

In fact I can’t imagine working for quite a lot of companies. I dearly wish I could abuse them on this blog. I think it would make good reading. But I must stay cool and collected.

This year is general election year in the UK. Polls predict a win for the Conservatives, ousting Labour after 13 years in power. But what can game theory tell us about election strategy, and what does selling drinks on the beach have to do with it?

Imagine a stretch of beach with sunbathers evenly spread along it. You are a selling cold drinks, and there is another seller, selling the same drinks at exactly the same price. The only strategic choice left for you is location along the beach because sunbathers will simply walk to the drinks vendor closest to them. You could locate yourself in the middle of one half of the beach i.e. 1/4 of the way along, and hope that the other guy does the same at the other end of the beach. But if you did that the other guy could simply locate himself in the centre of the whole beach and take about 62.5% of the whole market. So you both end up  in the centre of the whole beach (and probably end up having to differentiate yourself in some way).

This logic shows why petrol stations end up so close to each other. And it also shows why political parties move inexorably towards the centre as elections near. It doesn’t pay to be off to the left or right. So the real battle of an election is in defining the centre (this is where polling and other research comes in), and arguing why your party is much more representative of the centre than the other party.

So where is the centre? Well recently Gordon Brown made a comment about “the playing fields of Eton” – this was designed to create a perception of the Conservatives as way off centre, promoting the interests of a thin slice of the population at one end of the spectrum. He has since pushed this further, stressing that he is not targeting his core vote (i.e. left of centre), but the middle classes.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

—Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (1776)

Last term in Business Economics we watched a series of videos taped by the FBI of price fixing by multinational chemical companies (fixing the price of lysine, an industrial chemical). [BTW this counts as revision as I am learning about collusion for an exam on Monday] The quotation from Adam Smith has dated a little - law enforcement agencies (at least in the developed world) go out of their way to prevent and break up cartels.

What strikes me from the videos is how brazen they are. Little did they know that one of their number had gone to the FBI and was wired. In fact by coincidence they released a film recently about this called the Informant with Matt Damon.

They (that is, the real life ‘they’ - I don’t know what they did in the film) use a trade association as cover and Mark Whitacre, the informant, convinces the Japanese to meet in Hawaii - I assume this was so the FBI would still have jurisdiction. Whitacre convinces the Japanese guy over the phone by saying how good the golf will be.

There ate two main challenges for an effective cartel: actually agreeing on how to collude, and enorcing that agreement. On the first challenge lysine has many properties that may lead to a successful cartel:

• it is a homogenous product.
• The market is highly concentrated: the four largest firms control most of the U.S. and world markets, and the four largest buyers purchase less than 30 percent of the total market.
• Buyers make infrequent, large purchases.
• Entry is difficult because new plants are expensive, take a long time to build, and need skills

In fact lysine is so good for cartel behaviour they tried it again in the late nineties, and got caught resulting in prison sentences and a $100million fine.

Thanks to Jonathan Haskel for the lecture and all the videos, which I uploaded to youtube and show below.

1.    The cartel firms felt that they needed all the major firms to participate. {Segment 1 of the lysine movie shows the conspirators discussing and introducing the various firms involved.}

2.    They fixed prices and allocated quantities that could be sold to each firm. {The cartel members discuss fixing prices in segment 4 and allocating output in segment 5.}

3.    They used their industry organization to collect data and provide cover for their illicit meeting. {See segment 3.}

4.    They shared sales data. {See segment 8. Segment 6 shows the largest firm threatening other smaller firms if they do not agree to the cartel and its allocation terms.}

5.    They had a punishment scheme in place to prevent firms from exceeding their quotas {See segments 7 and 8.}

I feel compelled to write something good – the gospel according to me is that finance is beginning to make sense. I had a really reassuring session with a few classmates today that brought it into focus, working out what I had to learn, what it all meant and that there isn’t that much. Not that I will be getting full marks or anything, just that I can actually pass. The exam is on friday – 2 hours: half multiple choice questions and half long answers, and not much room for tactically missing out any topics.

The next stress inducer is accounting. I am sure this is actually a necessary phase in my preparation – crap myself so much that I eventually do something about it. A few of us had a session on business economics last week. We blithely began to do some of the past papers and we picked the furthest one back. As we began to work through the question, I felt a cold sweat and a stunned silence in the room. At least one of the group is really good and he was ploughing through it on the whiteboard but my life was flashing before my eyes. Luckily we discovered a few minutes later that an announcement had gone out that morning saying the syllabus had changed since that paper. In fact we had been taught the stuff to do the question, we just weren’t expected to know it for the exam.

At the moment I am using Economics for Dummies, having gradually slipped down from the academic tome on the reading list, to the lecture slides and wikipedia. It is just about my level.

…but I can’t seem to help it. I was just thinking how I had been posting consistently negative comments recently (sort of  – I thought I was being positive about the british government making me the only person who is). So I’d resolved to post something happy and sunny. But then reality struck as I woke this morning.

Last night I had a full on nightmare about my exams. I arrived late to the exam, and it was in an old time classroom, with those desk/bench combos – I had to squeeze into the centre of a row and when I started the paper it was all dark and I couldn’t read the words, like I badly needed glasses. I managed to finish a question, but then the invigilator (the MBA Programme Manager) said time was up for the first section, but I had not finished by a long way. The next section was impossibly hard – I had to translate loads of binary numbers into english which I didn’t even know we were supposed to know how to do. And my eyesight was still really bad. I ended up bursting into tears and flinging my standard issue calculator across the room, and storming out complaining, at which point a friend of mine I haven’t seen since sixth form turned up to console me.

It actually isn’t too far from the truth in terms of my feelings of preparedness. I have four exams over the 2.5 weeks: finance, micro and macro economics, and accounting. They are very much my weaker areas. Anyway – I better get back to work. It’s good to be challenged, and it’ll all be fine. I think I’ve set impossibly high standards for myself and if I just get some perspective I’ll be fine.

Now career development is obviously a major factor in choosing to do an MBA. And Imperial has a careers service that supports you right through the year. I have a dedicated careers coach and access to all sorts of opportunities and resources. And of course the content of the courses will help me in my career. Etc Etc

But I hadn’t realised the stuff I learnt on the MBA would provide careers advice in itself. For example:

Macroeconomics (BTW we do this class mainly as background – it was separated from business econ only this year in the light of the recession etc) – we have been learning about ricardian comparative advantage – usually applied to countries but equally applicable to individual career development. Essentially this fundamental principle of economics suggests that I should devote my time to where my relative opportunity cost is the lowest compared to my ‘competitors’. This sounds sensible enough but often doesn’t happen. I think I’ve spent a lot of the last seven years not playing to my strengths and am resolved to play to my strengths in the future.

Strategy - lots of careers advice here. Firstly industry analysis techniques suggest that I should be finding professions with high barriers to entry – so I need to go places where my MBA is valued and people without MBAs find it difficult. What kind of strategy should I follow? Well I don’t want to be a cost leader – no one wants that I guess, but I need to be a differentiator. But the best advice from strategy class is to focus on your core competences (similar to the comparative advantage point) and also focus on preventing imitators through a hard to copy approach.

Marketing - well the focus on shareholder value in marketing emphasises long term, durable cash flow, and a focus on customer satisfaction.  I think this means that I shouldn’t operate a slash and burn strategy, hopping from job to job – but build long term customer (employer)  relationships that will reduce the cost of sales (job hunting) and open up new opportunities.

Accounting - what does accounting have to tell me about careers? Well it’s all about depreciation – the cost of assets should be depreciated across their working life. The cost of my MBA, including opportunity costs is into six figures.  But discounted across a long period it becomes much more realistic. Key lesson – renew your assets to meet future challenges.

Organisational Behaviour - well there’s been so much careers advice here I don’t know where to start.

I’m beginning to think I need to do something much more interesting than the usual opportunities. I would rather shoot myself in the knee than drift into bureaucratic nonsense. Hmmm, need to think harder about what I want to do when I finish…

Yesterday we chose not to remember that we have more exams after christmas and took the chance to celebrate christmas, finishing the first batch of exams, the end of the first term, and anything else we could think of. Thai food in fulham started at 730pm, leaving a worryingly long time between the morning exam and dinner.

I’m going to forget about the next set (Finance, Accounting, Macroecon, Business Econ) and the coursework for a few days and do nothing for the first time in 2 and a half months.

Next week I am catching up with various people and things, and generally chill out. I’ll maybe get around to doing those posts that involve me uploading things to youtube. I will certainly clean up the house.

At some point I need to start applying for some jobs…

Still mid exams, trying to learn about various theories of team decision making right now – wrote this a while ago after the actual class, but never got around to posting it…

Had a class about interest rate setting. Was stunned about how interest rates are actually set. When you hear the Bank of England (BoE) have ‘set’ an interest rate, what is actually happening is very diffuse and in the current siutation, prone to failure.

Our lecturer likened it to“shooting at a moving target, while wearing a blindfold, with a bullet that moves very slowly, at unpredictable speeds.” He was hardly exaggerating.

Interest rates are a key lever of monetary policy and the BoE has two ways of influencing them (in common with other developed economies)

Setting the rate at which banks can borrow from the central bank – interestingly this turns out to be quantitatively insignificant. That is until the credit crunch -  see this amazing chart from the Federal Reserve Bank of St Louis:

See that huge increase in lending by the central bank! Crazy. (the grey bars denote periods of recession) But it remains that usually the discount rate is usually just a signalling device, particularly in the context of the second main lever:

Open Market operations: the central banks either buy or sell bonds in order to affect liquidity, hoping this will ripple through into the interest rates that banks set for their customer:

If they sell bonds it takes cash out of the system and reserves and the money supply falls (and interest rates rise) .

If they buy bonds it injects cash into the system and the money supply rises (and interest rates fall).

I had no idea it was such a hit and miss affair! At the moment we’re getting information about the current crisis from two directions: our finance lecturer and our macroeconomics lecturer. The dual perspectives are fascinating….