Wal-Mart

December 27, 2009

I’ve been reviewing some of the things I learned this past semester in my MBA classes, and wanted to share some problems and other interesting information. I’ve tried to make it approachable, although hopefully not too dumbed-down that it’s become insulting.

When you look at grocery stores, you’ll notice food sellers make money by selling lots of their products at low profit margins. They may only make 2 or 3 cents per dollar in sales, but they’re able to sell a vast quantity of their products. Plus, it’s relatively cheap to operate a grocery store. It usually goes this way, or the opposite. If you are a cable TV provider, you have to invest heavily in assets–the physical cable network covering a city is extremely expensive, plus set top boxes, an army of individuals to service customers, etc. You’re unlikely to bring in a lot of revenue compared to the amount investment in assets you’ve made, but you’re also in a position where competitors are unlikely to challenge you. This lets you set prices well above the cost to actually operate your network, and gives you a high profit margin. And without competitors, you can take your time in paying off your infrastructure. This idea can also be extended to fashion items that are largely marked up, but come at a greater risk of the public not being interested in and simply not purchasing.

It’s unusual to find a company with both a high profit margin and a high sales to assets ratio, as competitors will see a market they can enter, lower prices, and (hopefully) outsell others. And you also rarely see a company low sales and a low profit margin…at least you rarely see one not headed towards bankruptcy.

Looking at grocery stores, it’s easy to see why a store like Wal-Mart causes trouble. They’re able to enter a market, and because they buy in such huge quantities, are able to negotiate lower prices than their local competitors. And if you’re only making 2 or 3 cents per dollar of sales to begin with, how do you compete with a huge store offering prices 10 or 25 cents under yours?

Wal-Mart is also able to take advantage of something many local stores aren’t able to: they’re able to sell below cost in order to attract customers, and make up the difference in other areas. Also, Wal-Mart is able to actually make money on items it sells below cost. They do this by taking possession of the merchandise and having it sold very quickly–often within a week. This is all done weeks before they have to actually pay for the goods. In that time, they’re able to invest the money they owe and see a higher return than the amount they discounted their product. For instance, say they buy $100 worth of Tide, and it for $98 within a week. The terms of purchase state they have to pay for that merchandise within 5 weeks, so over the next four weeks they invest that $98. They wind up with $102, and have managed to make money while selling at prices lower than their competitors could dream of selling. Admittedly, 4+% return over 4 weeks might be a little absurd. Wal-Mart probably couldn’t run their entire business this way, but it does illustrate a clever way they’re able to keep customers without giving their money away.

The question this leads me to, though, is whether Wal-Mart is justified in selling below cost, or in negotiating massive discounts from manufacturers. Local competitors without Wal-Mart’s resources will say no, but isn’t the company obligated to utilize its resources to maximize its return to stockholders? If Wal-Mart was losing money because it has raised its prices to match competitors, wouldn’t stockholder’s rightfully demand action? (Wal-Mart may have some legitimate claims against its employment practices, but I consider that outside the realm of this post.) Some states have also instituted laws prohibiting companies from selling below cost. Are states justified in involving themselves in pricing? Isn’t it a company’s right to set prices however they want, even if they’re losing money? Aren’t lower prices better for consumers? Wal-Mart isn’t going into an area with low prices, just to jack them up when competitors leave the market.

I’m curious to hear other people’s thoughts on this topic. The questions extend into other areas, such as a company’s rights and regulation. But I’m interested in everyone’s thoughts, from those with successful business careers to those without any formal business training.

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Favorite albums of the decade

December 27, 2009

I thought I’d put together a list of some of my favorite albums, released from 2000-2009. These aren’t necessarily the “best” or “most important” albums (who am I to make those sort of determinations?), but rather the ones I found myself listening to over and over again. I’ll also mention some of my favorite songs that maybe weren’t as popular.

(After I got done compiling this, it got much longer than I had intended. If you want to just skim through that’s fine, but feel free to leave your favorite music in the comments, even if you don’t know me. Thanks!)

In no real order…

Parachutes, Coldplay

I know, I know. A Coldplay album…but this is the best one they’ve put out, back before they decided selling out stadiums and hitting number one was most important. It’s got a nice, almost bluesy vibe to it. It’s low key, and cold at times, but it’s also incredible intimate. My favorites are: Don’t Panic, Spies, Sparks, and Parachutes.

Illinois, Sufjan Stevens

A somber album, but a good one. Stevens stands out for his ability to capture small, seaming incidental moments in his music, but it makes his world seem like mine. Not a bad song album, which lists 26 songs on its roster. My favorites are Casimir Puaski Day, Chicago, and John Wayne Gacy, Jr.

Plans, Death Cab For Cutie

This one was a toss up, because this probably isn’t my favorite album of theirs this decade, but it does have my favorite song of their. I know this is a list of favorite albums, not songs, but this is my list and I’ll do what I want. Plus this was a huge CD, so it almost seems wrong to ignore it. My favorites: Summer Skin (also the best Death Cab song), I Will Follow…, Some Day You Will Be Loved, Crooked Teeth.

Do You Like Rock Music?, British Sea Power

Hands down, one of my all time favorite albums. It’s simply full of great rock music. Catchy but not pop, heavy without leading to screaming. The experiment with different sounds but always stay based firmly in rock, and it pays off. Again, one of my all time favorites. The best songs include Lights Out For Darker Skies, Canvey Island, and Waving Flags.

Graduation, Kanye West

I know most people might look to The College Dropout or Late Registration as his best album, but this was the first one that got me into him. I was a late bloomer, I guess. Yes, Kanye West is a giant douche bag, but he makes good music. I don’t listen to his albums for life lessons, I listen to them for good music. And like it or not, the man is talented. Best songs: Can’t Tell Me Nothing, Stronger, Good Life, and Flashing Lights.

A Grand Don’t Come For Free, The Streets

I’ll be the first to admit I know next to nothing about white British rappers, but I do know this is a great album. There’s something relatable about it–something everyday and approachable. That’s not intended as an insult or another way of calling it boring, but somewhat like Sufjan Stevens (although in a very different way), you can see his music in your own life. Dry Your Eyes comes off a little cheesy, but that’s the only misstep I’d credit to this album. Best Songs: Fit But You Know It, Blinded By The Lights.

Good News For People Who Love Bad News, Modest Mouse

Somehow the fairly unassuming Modest Mouse became my favorite band, or at least in the top bunch. I’m not sure which of their albums I like best, but I went with this one because it’s the one I got hooked on. Modest Mouse is different. They have a unique sound, but one that wears well. After dozens of listens, I’m ready for dozens more. Best Songs…well…tracks 1-16.

In Rainbows, Radiohead

I avoid declaring all time favorites, but if you pin me down, well…this would be a top contender. And in my book, that’s a high compliment. In Rainbows is not just another Radiohead album, and my love for it has nothing to do with it being free. It was just really really good. The album’s deep textures reward those who listen over and over. I’m still picking out little surprising bits of music, tucked away behind the songs. Another album where it’s impossible to pick out a few favorite tunes, because the album serves as one whole unit.

Inside In / Inside Out, The Kooks

Another classic. I don’t know how many times I’ve listened to this through and through. It’s got a lot of energy and the lyrics are smart and quick. All the songs are good, but be sure to listen to “Ooh La,” “See The World” and “Seaside.” If you listen to their follow up, which I’d definitely advise, look for “Sway” and “Shine On.”

Vampire Weekend (self-titled)

This is such a fun album. Vampire Weekend has such a great sound, different from pretty much anything around. It’s hard to keep from wanting to dance when their music comes on. I’d check out Cape Cod Kwassa Kwassa, Oxford Comma, and The Kids Don’t Stand A Chance. Of course, all the rest of the songs are good too.

All That You Can’t Leave Behind, U2

I am a big U2 fan, but I haven’t really loved much since Achtung Baby. This album is good, though. Their most recent CD is not bad, but left me kind of indifferent. All That You Can’t Leave Behind, though, is perhaps U2’s last great masterpiece.

…Ok everyone, thanks for bearing with me this far…I’m almost done I promise. This decade brought lots of good music.

American Idiot, Green Day

I’m saving this one for closer to the bottom because, not only is is one of my favorite albums of the decade, it was also a very important album. In this album they said a lot of things people were starting to wonder, but not sure how to say. Plus it was grand in scope and worked really, really well. As much as I like their old stuff, it’s hard to believe this is the band that put out Dookie so many years ago…

Siren Song of the Counter Culture, Rise Against

Another one of my all time favorite albums, Rise Against put out a CD that compared in a lot of ways to Green Day’s American Idiot. Angry about the problems our country had put put into, and not afraid to point fingers. It was something needed at the time. On top of that, Rise Against does a good job of making heavy music catchy and approachable. In less talented hands, it would have just been loud, headbanging music.

Oracular Spectacular, MGMT

This post was meant to be a quick round up of some of my favorite albums, but quickly turned into something very different. There is a reason, however, I saved this album for last. It’s by far my favorite album of the first ten years of this century. It stands out from everything around it. It’s different and brazen. It gets 4 stars, two thumbs up, a golden star–everything there is to offer. I’m begging you all to check this album out, you won’t regret it. Favorites are Time to Pretend, Electric Feel, and Kids…although the rest are great too…

Well, once this post spiraled out of control and landed at somewhere near 1300 words, I’d actually planned to include a few Albums of Note. There were albums I enjoyed but maybe didn’t get to listen to enough, or only heard a few years after they’d been released. But I’m tired and have spent 3 hours on this, so I’ll just make a list of them:

  • Cease to Begin, Band of Horses
  • Keep Color, The Republic Tigers
  • The Blueprint 3, Jay-Z
  • The Devil and God Are Raging Inside Me, Brand New
  • Funeral, Arcade Fire
  • Balls, The Broken Family Band
  • Anything by Calexico
  • Beneath Medicine Tree, Copeland

And probably more. I know it’s not much of a “favorites” when I list half of the albums I listened to this past year…next decade I’ll work to be more concise. Thanks for bearing with me, and tell me your favorite music of this year in the comments. Please?

Dodged a bullet

December 16, 2009

Time to get my act together.

I’m not actually going to put up a new album each week, but this one is a keeper.

Alright, I’m from Kansas City, which makes me biased. But it’s good stuff. Check out info on them here, or listen here.

The Republic Tigers, Keep Color

In other news, I’m actually working on a real, substantial post.

Intermission

November 17, 2009

Yes, eager blog followers, I have neglected you.

This negligence will probably continue for some time.

2 minute plan

August 13, 2009

If you can get it done in two minutes or less, don’t put it off.

I now find myself far more productive. I wrote this post AND immediately unclogged the toilet because of this rule.