You know you are an MBA student when you analyze the core competencies of a restaurant

We heard the above title in class a few days back and the whole class laughed. What was even funnier (or sadder) was that when were at Otto's Restaurant, we did exactly that. Here is our analysis:

The restaurant is looking to move to a larger location down the road but its current location is rarely full anyway. On the weekends it is at capacity but there isn't much of a wait and they have a decent size bar that patrons can wait in and, more importantly, buy drinks.

Otto's core competency is mid level restaurant that caters to grad students, adults 25 and up, and craft beer enthusiasts. Their prices are typically too high for undergraduate students. They have made a name for themselves in the State College area as a legitimate brewery as they are the only brewery in town. They need to focus their attention selling their beer and the food should just be a complementary good.

By moving into the larger space they will incur more overhead costs and they still won't be able to reach capacity on weekdays. Weekend they will likely reach capacity but they will have less of a wait for a table, which will eat into their bar revenue. Usually, restaurants make most of their money from the bar and by having patrons go to the bar while waiting for a table, they will be more compelled to buy a drink or two. During dinner time, patrons will typically have one beer if they even order. It is in Otto's best interest to keep their patrons in the bar long enough for them to order a round of drinks but not too long that they give up waiting on a table and if they do end up leaving to go elsewhere for dinner, it's not too bad, based on the assumption that the margins on their beer is higher than their food.

On a side note, I don't know whether to feel ashamed that I actually analyzed a restaurant or accomplished. I will take the prior as I do feel like a total nerd.

The music industry and disruptive technology

Inspired by a presentation I heard about the music industry today:

Unless you have been living under a rock for the past 10 years you know that the innovation of MP3's have creatively destroyed the music industry. Analysts have continuously criticized the music industry for not adapting to the changing environment. In retrospect, it's very easy to consider the outcomes and make a judgement as these analysts have done and don't get me wrong, I believe the analysts were right but what is the argument for the music industry?

Like any type of disruptive technology, MP3 technology entered as an inferior technology to compact discs. It sounded worse, many of the songs were cut off, and the volume varied from song to song. Consumers who were used to CD quality music would never put up with the lack of quality. At the time, it was debatable if this technology was really disruptive in nature.

However, the music industry lived in its own little bubble. They neglected to consider the ecosystem they were in. The IT infrastructure was growing and was easily able to support the new technology, more and more people were becoming comfortable with the internet, and college age kids were willing to put up with poor quality to get something for free. As the quality got better and more companies entered the market, the problems MP3's once had were diminished and there was little reason for individuals to buy CD's. So they became the proverbial "frog in the boiling pot."

Social Marketing Experiment

So for one of my presentations I am presenting Swoopo.com, an entertainment auction site that, some critics say, plays off the emotions of the consumer. My team was talking about why these auctions evoked emotions from its bidders, which raised the question, what are some other forms of emotional purchases that people make and is widely accepted. We came up with a small list, like the wedding industry, chocolates, etc, but we didn't feel like we had anything concrete.

I chose to use social media as a source of finding our answer. On my facebook page, I posted the question, "Needs examples of emotion based purchases." The results varied from utterly hilarious (a wife, thanks Tom), to totally ridiculous (Condoms, maybe more of a passion based purchase Jeremiah), but many of the responses were pretty accurate (Wegmans chocolate cake ... when you are depressed about school..., Thanks Rowan, Louboutin shoes, Good one Katie) . All in all this was pretty accurate to what I expected from an open and flat platform but I found it amazing how many responded and if I were to transfer this to other topics, would I get the same quality of responses or is it that on facebook, users respond because they are within my network and my friend or do they feel empowered when they answer simple questions like the one I posted. For instance, if I were to post this on a message board, would people respond? What would be the quality of the responses? On a general message board, posters don't know me so why should they post? However, users visit these sites often to give their opinion because it makes them feel like their knowledge is important (and it is).

Social media has definitely furthered the path for 2 sided platforms and, for this reason, has become a very important tool for businesses today. Company blogs are an effective way for company's to not only promote their company through grassroots advertising but also gain insight from their customers. Sites like Yelp is a forum for advertising. Writers write because it makes them feel empowered but what they write is also a form of free advertisement for the establishment. Even negative comments can be used to improve processes and efficiencies.

foursquare

http://foursquare.com/
This is an interesting new site. From what I can tell it doesn't add much value to me right now but as I obtain more friends, network externalities should make my experience more enjoyable. Emotionally, I really like the site and I like checking into places and hopefully I will become the mayor of a place some day but logically, I don't see any value add and I feel like I should not like the site as much as I do.

The concept is that the user can check into places, which will let his friends know where he is. If the friends are in the area, they can meet up with you. The downside is that this could be a bit stalkerish if someone keeps following the user.

Hello

I am starting this blog because I want to get my mind of the impending issues surrounding my life. My name is Brent and I am an MBA student at Penn State. Currently, I have 3 papers due but I find it much more important to procrastinate and start this blog. I guess I was inspired by a quote my friend sent me earlier today.

"The trick is in what one emphasizes. We either make ourselves miserable, or we make ourselves happy. The amount of work is the same."


In 2 months I will graduate. I am both excited and worried about this. Aside from the statistical reasons (no job), I have also met so many great people and learned so much, like Schumpeter's theory of creative destruction, that I don't want to leave yet. However, on my path to being relevant again, I must start contributing tax dollars to my government once again.

Things I like:

Food!!!! bgizzle.yelp.com
Football
Cycling
Schumpeter

Upcoming blogs
Ronald McDonald House
Joseph Schumpeter
Barcelona for Spring Break
London for Spring Break

That's it for now. I must get back to my studies.