H McKee Stewart Jr

Musings on Business, Finance, and Economcs.

In which Monty Python meets Braveheart

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This is great. One of my favorite films of all time, but it’s something completely different from what’s presented in this trailer…..

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Written by hmstewartjr

12 September 2013 at 8:23 PM

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Ronald H. Coase, RIP

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At the untimely age of 102.  Here’s a link to a bad PDF of “The Problem of Social Cost” to let you get up to… October 1960. 

He was still doing meaningful work over the age of 100

Written by hmstewartjr

4 September 2013 at 10:08 PM

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Elmore Leonard, RIP

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On writing.

Update: Good Advice.

Question: Why does good advice always seem to involve hard work and getting up early?

Written by hmstewartjr

20 August 2013 at 9:12 PM

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Let’s Hope This Guy Went to Jared

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World’s nerdiest marriage proposal. And people say that math has no practical application.

Written by hmstewartjr

27 February 2013 at 8:57 PM

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Business 101–It’s Cheaper to Learn from the Mistakes of Others.

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Let’s say that you have a well known, well respected product, with untold thousands of loyal customers. Domestic demand is strong; you are rapidly growing share in foreign markets. Demand is so strong, in fact, that you are having a difficult time keeping your product stocked.

What to do? Light a cigar, put your feet up on the desk, and contemplate your bonus?  Follow that up with a price increase, and then put out a press release suggesting shortages to create a buying frenzy? Introduce smaller packaging sizes at the your current price points, effectively raising prices again? Have another cigar, and then do what you can to ramp up production to take advantage of the higher prices?

All classic, basic economics (demand up, short run supply fixed, prices … increase).  Straight from the shoulder, tried and true, falling off a log responses. Anybody can figure this out.

Right? Right?

Apparently not at Maker’s Mark.  Apparently, faced with this “problem”, management went into panic mode. That appears to be the only explanation for what they decided to do:

Blast their brand’s position in the market.

I can just picture the boardroom scene now: Confusion. Chaos. Huddled groups scribbling on flip charts about the threat.  Panic…. Time is passing….. What to do, what to do, what to do????

Suddenly, light breaks over the group lead by Dewey Cheatem, 3rd associate assistant to the Chief Sustainability Officer: “Let’s Trash the Product!!!”*.

CEO: “It’s just crazy enough to work!”.

This probably won’t be as catastrophic as the Edsel or New Coke, but the crippling potential is there.  Whiskey is one of those extremely sensitive to perceived status items. Essentially, once you get beyond the market for “Old Gym Sock”, it’s a Veblen good.  Which means that a premium pricing strategy is required.  Taking that price increase by cutting quality corners – and bragging about it publically – is what we used to call a “no-no”.  The bad press alone will take millions off of the value of the brand.

It doesn’t matter if there is “no difference” in taste (even in the alternative universe where Spock has a goatee, this is an unlikely outcome).  What matters is that Maker’s Mark has announced to the world that they are a company the cuts corners, not a company concerned with putting out the best product they can. 

Interesting to note that the genius behind this move – Rob Samuels – is a the grandson of the founder.  Maker’s Mark, however, is owned by Jim Beam, who apparently never caught on to the notion that the third generation is often a liability in the family business.  Honestly, what were the thinking? Send this guy out on tour talking up Gramp’s recipe, or get him on a reality show with Paris Hilton and Honey Boo Boo,  but don’t let him anywhere near a decision.

* Actually, the flip chart read “incentivize our synergies to strategically deleverage our quality position while maintaining a market posture of vertical backwards integration”.  Let me know if you need other ‘businessese’ translated.

Written by hmstewartjr

12 February 2013 at 8:15 PM

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Sounds Like They have a Good Grasp of the Material

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“BOSTON (AP) — Harvard University said Friday it issued academic sanctions against approximately 60 students who were forced to withdraw from school for a period of time in a cheating scandal that involved the final exam in a class on Congress…”

Written by hmstewartjr

3 February 2013 at 7:35 PM

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Merry Christmas!

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From Luke Chapter 2 (Authorized Version):

1 And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed. 2 (And this taxing was first made when Cyrenius was governor of Syria.) 3 And all went to be taxed, every one into his own city. 4 And Joseph also went up from Galilee, out of the city of Nazareth, into Judaea, unto the city of David, which is called Bethlehem; (because he was of the house and lineage of David:) 5 To be taxed with Mary his espoused wife, being great with child. 6 And so it was, that, while they were there, the days were accomplished that she should be delivered. 7 And she brought forth her firstborn son, and wrapped him in swaddling clothes, and laid him in a manger; because there was no room for them in the inn.

8 And there were in the same country shepherds abiding in the field, keeping watch over their flock by night. 9 And, lo, the angel of the Lord came upon them, and the glory of the Lord shone round about them: and they were sore afraid. 10 And the angel said unto them, Fear not: for, behold, I bring you good tidings of great joy, which shall be to all people. 11 For unto you is born this day in the city of David a Saviour, which is Christ the Lord. 12 And this shall be a sign unto you; Ye shall find the babe wrapped in swaddling clothes, lying in a manger.

13 And suddenly there was with the angel a multitude of the heavenly host praising God, and saying, 14 Glory to God in the highest, and on earth peace, good will toward men.

15 And it came to pass, as the angels were gone away from them into heaven, the shepherds said one to another, Let us now go even unto Bethlehem, and see this thing which is come to pass, which the Lord hath made known unto us. 16 And they came with haste, and found Mary, and Joseph, and the babe lying in a manger. 17 And when they had seen it, they made known abroad the saying which was told them concerning this child. 18 And all they that heard it wondered at those things which were told them by the shepherds.

19 But Mary kept all these things, and pondered them in her heart.

20 And the shepherds returned, glorifying and praising God for all the things that they had heard and seen, as it was told unto them.

Written by hmstewartjr

24 December 2012 at 8:08 PM

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