Today, I attended a talk about inequality between Dean Robert Helsley and Joseph Stiglitz, who received the Nobel Memorial Prize in Economic Sciences. It was a highly intriguing talk about the causes and solutions for inequalities in income, wealth, health etc. However, what truly enlightened me was his take on the TPP.

He surmised that the TPP is a just “a bad trade agreement”, given that it is a “managed trade agreement for large companies in the US”. He elaborated on a couple of different points to back up his claim

1.Drugs.

In pharmaceuticals, it is a battle between the Generics and the Big Pharmas. The TPP is essentially a trade agreement that was crafted without the Generics at the table, and hence is aimed at gains for the big Pharmas at the expense of generics. Essentially – making drugs more expensive and less accessible.

2.Managed for the special business interest

The agreement was made with regards to different business interests and based on rules of origin. Japanese cars are duty free. However, the definition of a Japanese car is slightly ambiguous – whether they have to be manufactured in Japan, or simply sold by a Japanese Auto Manufacturing Company is not 100% clear. So it is that Chinese cars can enter the States free of any tariffs. That would be absolutely devastating to the local industry. However, tariffs on American Agriculture will drop, most of them to 0. It is clear that American agriculture will be a big winner from the TPP. However, the effects of that on other countries local agricultural industries are unfathomable given that the US government subsidizes a lot of the agriculture.

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From what his expertise and reasoning told me, the TPP is by no means a trade agreement countries should sign – and definitely not the United States. Dr. Stiglitz said that part of the culture in many American treaties, is to “always call an agreement the opposite of what it is”. So if it is called a partnership – then its more of a domination.

An interesting concept I came across while reading blogs was that of the Mental Inventory Turnover. As explained by Derek Christensen in his blog post, Mental Inventory turnover is the space in your head that is used up by the indecisions you are facing.

This concept takes inventory turnover, which on its own is a measure of how many times the average inventory a company has sold or used in a given period, say, a year. Christensen explains that when he wants product X but does not purchase it in order to make more comparisons on all substitutes of product X or to wait for a sale, he experiences a lingering sensation at the back of his mind which resembles a mental warehouse where he has a stock of this indecision that he may keep for months.

Looking at it from the outside, however, is a good phenomenon for companies, who try to have their products on your mind all the time through marketing, until the point you buy it.

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On the other hand, the concept of mental inventory turnover can be applied to Firms too.Ann has told us about how Coca Cola did outstanding amounts of market research for bottled water, instead of simply starting to sell bottled water. The amount of research done did not end up giving them a competitive edge in the market, it just dragged on the decision making part and increased costs. Which brings me to quote Christensen, “Sometimes you have to make a decision not because it is the best decision, but to get it out of your head so you can move on to something else”

After reading a blog post by Candice Dela Cruz on the topic of social responsibility concerning the indian car manufacturer Tata Motors, I wanted to explain how their targeted customer segment has shifted and how their newer models (as opposed to the Nano they launched in 2009) depict their change in business model.

As a start, the model Nano has already been abandoned. Amidst the poor safety ratings, flimsy 30 horsepower the car amounts to and the lack of pretty much anything you’d want in a car, the company realized that such a car that gave practically no concern to peoples comfort and peace of mind has no part in the modern market. This car was intended to be sold to people living in rural areas – which turned out to be a mistake, as those demographics tended to care about safety just as much as anyone else, and even more cautious with their money. Tata didn’t even realize that their largest fanbase was in the middle class urban youth that supported them, and was focusing on the wrong customers when they delivered its Nano to first time buyers in rural areas.

To start the remedy, Tata has unveiled several new models such as the GenX nano, the Nano Twist and the Nano eMax. These cars have essentially implemented most of the things that the Nano was criticised for not having before – airbags, AC, radio etc. The company has even stepped up its game with the Nano eMax to start and target a different group – as it currently stands as India’s most fuel efficient car.

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The company went down a dark path. However, I feel like to a certain extent, it has actually managed to redeem itself. It shows this by changing the catchphrase that used to define the company, “The world’s cheapest car” into a relevant and witty one to capture their middle class urban youth’s attention-“Thinking cheap is out and celebrating awesomeness”

Reference: http://www.theguardian.com/commentisfree/2014/feb/03/tata-nano-car-cheap-poor-safety-rating

In Hong Kong, affordable or even free public healthcare services are provided by the government – and it never occurred to me that it could be otherwise in any other Developed country. That thought was set straight when we started discussing different types of costs in class.

Legacy Costs. For American Auto or Steel manufacturing companies as well as older airlines, the term legacy cost represent astronomical sums of money that the company has to set aside for healthcare and pensions of retired employees. Instead of being spread out across the society, these costs are attributed to single companies who hire a large part of the workforce.

Companies such as Chrysler, Ford and GM become less competitive compared with other Auto manufacturers who are new to the United States or are based elsewhere in countries that provide national healthcare, and hence do not have to incur such a cost. General Motors Corp., for example, spent $4.8-billion (U.S.) in 2003 to cover 1.1 million people, which is more than what it spent on expenditure for steel. Health care is estimated to add an extra $1400 (U.S) to the cost of every car GM produces.

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People should not have to had worked in a company until retirement to be able to receive free healthcare services. Healthcare also shouldn’t be a second taxation for companies. The donors and the recipient criteria in this equation is mismatched. This is a burden that the government has every obligation to bear. In my opinion, National healthcare services is a solution long overdue.

A couple of classes back, we were provided with articles about Zappos, an online shoes and clothing retailing company that is extremely big on customer services, and provides these services through their call centres.

Simply by looking at the company’s offices, management, core values, hiring processes etc. you would immediately realize that Zappos deviates violently from any typically company. The first thing that might strike you as odd is how much they care about customer satisfaction, and the extent to which they go to try and enhance this.

The company starts off by having a very rigorous but fun-oriented hiring process, in which employees are taught how to “Deliver Wow through service” (Company core value #1). This 2 week training period is not just for skill enhancement, but also to detect and cultivate to-be employees’ passion alongside with their dedication to this job. Zappos offers all potential employees the chance to walk away with $2000 immediately after being offered the job, in order to ensure that they are only left with employees who truly want to work at Zappos.

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On top of this, apart from giving all employees their own desk as opposed to conventional call centres, Zappos allows employees full autonomy over them, and encourages customization and creativity. “Create fun and a little weirdness” (Company core value #2)

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If you are still not convinced that Zappos is any different from any hip startup, let me tell you that different departments within Zappos host regular parties, that employees have no time limit on calls – thats 0 time pressure for any customer call – and that there’s free food for all employees.

If that doesn’t convince you that Zappos is fun and eccentric, I don’t know what will.

We are all familiar with the term dumping – which is essentially selling products in other countries at a price lower than what the good is being sold at, a price which the local producers find extremely difficult to adopt. It is an extremely invasive form of business as they threaten or often times do kick out local firms from their respective local markets. For example, EU States have been protesting against China steel dumping as their own steel manufacturers are unable to compete with their costs.

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This is the reason for which I stand against the ‘one on one’ business model that firms like Toms, KNO clothing, Roma Boots etc. have adapted.

One on one can severely disrupt local small industries. For companies like Toms, it seems as if they are addressing a major social issue which can be solved by simply donating to them the things the poor the things they need. However, rooted below this act of kindness is the underlying implications it has for the local manufacturing industry of that item – the effects of donating free goods has an eerily similar effect that dumping has on the local business. In the example of Toms, local shoe manufacturers have been completely undermined as trucks come in on randomized occasions to give shoes out for free.

The one on one model makes recipients of such reliant on these donations as their local industries dwindle. They also serve as an easy feel good for people outside of these developing countries as it provides a way to easily overlook the institutionalized poverty that cant be solved by simple donations. Therefore,as long as it undermines local manufacturers in the same industry, I stand against the one on one business model.