Startups and organizational design

This article describes the need for a change in organizational design that startups face when they grow. Here is a money quote:

"the company needs more structure for communications and decision-making".

The article talks about the need for good information flows and clear decision rights.

How Google refines the screens it uses for job applicants

This article in Quartz talks about interview questions Google used to use to screen job applicants and how data convinced them to stop using the questions.

Entry in the market for razors

Online Upstart Harry's Razor Jumps Into Gillette's Turf
by: Saron Terlep and Khadeeja Safdar
Nov 11, 2016
Click here to view the full article on WSJ.com

TOPICS: Microeconomics

SUMMARY: When Target opened its razor aisles to online upstart Harry's Razor, Gillette paid the price. Within weeks, Harry's grabbed a 10% share of the retailer's cartridge sales and about 50% of razor handle sales.

CLASSROOM APPLICATION: Students can evaluate three issues: (1) entry into an established market, (2) whether a retailer should have multiple or single suppliers of products, and (3) the relationship between products sold by a retailer and the prices of the products.

QUESTIONS: 
1. (Advanced) Should a retailer create competition among suppliers? Alternatively, should a retailer have a dominant supplier? What are the benefits of having a sole supplier of a product? What are the benefits of having multiple suppliers?

2. (Advanced) What opportunity did Gillette create for Harry's? That is, does Gillette produce an inferior product? Does Gillette earn positive economic profit?

3. (Introductory) Do retailers like Target earn lower profits on razor blades in order to sell complementary products?

Reviewed By: James Dearden, Lehigh University

How to bargain in politics?

http://qz.com/838321/nonviolent-communication-the-scientifically-proven-step-by-step-guide-to-having-a-breakthrough-conversation-across-party-lines/?utm_source=Quartz+Morning+Brief&utm_campaign=79ea024f53-EMAIL_CAMPAIGN_2016_11_17&utm_medium=email&utm_term=0_1ff2527dbb-79ea024f53-55459981

How to bargain in politics?

http://qz.com/838321/nonviolent-communication-the-scientifically-proven-step-by-step-guide-to-having-a-breakthrough-conversation-across-party-lines/?utm_source=Quartz+Morning+Brief&utm_campaign=79ea024f53-EMAIL_CAMPAIGN_2016_11_17&utm_medium=email&utm_term=0_1ff2527dbb-79ea024f53-55459981

How to bargain in politics?

http://qz.com/838321/nonviolent-communication-the-scientifically-proven-step-by-step-guide-to-having-a-breakthrough-conversation-across-party-lines/?utm_source=Quartz+Morning+Brief&utm_campaign=79ea024f53-EMAIL_CAMPAIGN_2016_11_17&utm_medium=email&utm_term=0_1ff2527dbb-79ea024f53-55459981

New threat from a substitute product in the diamond market

DeBeers Tries to Counter a Growing Threat: Man-Made Diamonds
by: Scott Patterson and Alex MacDonald
Nov 07, 2016
Click here to view the full article on WSJ.com

TOPICS: Innovation, Marketing

SUMMARY: A team of scientists working for De Beers is scrambling to stave off a looming threat that could tarnish the luster of natural-mined diamonds: high-quality man-made stones.

CLASSROOM APPLICATION: Students can evaluate the effect of an increase in the supply of man-made diamonds, which are imperfect substitutes for natural-mined diamonds, on the diamond market. An interesting psychological and marketing issue is the reason why despite identical physical characteristics, some people prefer natural-mined diamonds to man-made ones.

QUESTIONS: 
1. (Advanced) Lab-grown diamonds are "disrupting" the diamond industry. What is a disruptive innovation?

2. (Advanced) Why is the perception of relative scarcity important in creating consumer value of diamonds?

3. (Introductory) If man-made diamonds are physically identical to natural-mined diamonds, then why do some people prefer natural-mined diamonds?

Reviewed By: James Dearden, Lehigh University

Disparate examples of game theory and the rational actor paradigm in action

Business World. Donald Trump and Vladimir Putin's Troublemakers
by: Holman W. Jenkins, Jr.
Nov 05, 2016
Click here to view the full article on WSJ.com

TOPICS: Economic Incentives

SUMMARY: The Kremlin has a stake in promoting email leaks that suggest America is as kleptocratic as Russia. This week's Business World column is about two incentive problems. First, "Dictators can be-but aren't necessarily-trapped into ever-increasing repression by fear of retribution over the means they used to gain power." Second, "The U.S. Army loads more checklist requirements on junior officers and their units than they can possibly comply with, leaving junior officers little choice but to become practiced at deciding which requirements to meet and which to lie about."

CLASSROOM APPLICATION: Students can evaluate the effect of pressures (i.e., incentives) that lead to unethical behavior, such as ever-increasing repression by dictators and lying and cheating by employees.

QUESTIONS: 
1. (Advanced) The column notes "tit-for-tat strategies." Describe these strategies. In games such as the prisoner's dilemma, how can the use of tit-for-tat strategies promote behavior that increases the payoffs of the players involved in the game?

2. (Introductory) What causes dictators to ever-increasingly repress their citizens?

3. (Advanced) Why does setting impossible standards for employees to meet result in unethical actions like lying and cheating by employees?

Reviewed By: James Dearden, Lehigh University

Reblog: Organizational design at Wells Fargo

https://managerialecon.blogspot.com/2016/11/wells-fargo-are-economies-of-scope-big.html

Reblog: minimum advertised prices as form of price discrimination

https://managerialecon.blogspot.com/2016/11/minimum-advertised-prices-as-form-of.html

Transfer pricing

What would determine the price ATT charges Time-Warner to stream content when the two are subsidiaries of the same parent? ATT provides a wireless network. Time-Warner produces movies and TV shows.

How does an increase in the price affect

1. ATT
2. Time-Warner
3. ATT's competitors
4. Time-Warner's competitors

Was ClassPass the victim of asymmetric information?

http://nymag.com/thecut/2016/11/classpass-got-rid-of-its-popular-unlimited-plan.html

1. Who knows whether they want to take a large number of classes or a small number, the customer or ClassPass?
2. What type of user signs up for the unlimited plan?
3. Who is more likely to take a class when they are considering costs and benefits, someone on the unlimited plan or someone who is not?

Does FB have a "“virtually insurmountable competitive advantage"?

http://www.marketwatch.com/story/facebook-earnings-growth-wont-stop-70-profit-jump-expected-2016-10-31?utm_source=Quartz+Morning+Brief&utm_campaign=f7771806f8-EMAIL_CAMPAIGN_2016_11_02&utm_medium=email&utm_term=0_1ff2527dbb-f7771806f8-55459981

An analyst says so. Is he correct? Why or why not?