Georgetown Class Essay – The Structure of Global Industries, Pt 1

I’m writing class essays while I’m here at Georgetown to ensure I translate everything I’m learning into my own words and assist with deep learning. After orientation, we began a three-week, two-class intensive with 4.5 credits packed into thirteen days of classroom time. The below covers my main learnings from the economics-focused class, Structure of Global Industries.

Credit for good material goes to Georgetown and their faculty. Mistakes or omissions are mine.

The Structure of Global Industries, Pt 1

1. Economic Frameworks

Supply and Demand
Over and over again the concepts in class came down to different applications of supply and demand. The law of supply says that increased price increases quantity produced and that a decrease in price decreases quantity produced. This is coupled with the law of demand that says the a increase in price decreases demand and a decrease in price increases demand. These fundamental laws interact with each other to find a price and quantity equilibrium, where the price entices producers to make this quantity (supply) and the price entices enough consumers to purchase (demand).

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Quick examples:
– A finite of supply of gold plus an increased demand for gold has led to an increase in price
– Long lines outside Apple stores when new phones release (price increase here is normal phone cost + hours spent waiting)

Elasticity
If the price changes on a good, what will the response be? Will demand suddenly increase? An example of inelasticity would be a 10% increase in the price of Netflix. For most of us, that wouldn’t change our purchase of that subscription. This means the demand here is inelastic. A counter example could be a $0.50 increase in the price of Orbits gum. Many more people would switch to a different brand of gum if the price increased.

High elasticity often happens at the upper end of the price axis, where price is high and quantity produced is low (think luxury goods). Low elasticity often happens at the upper end of the quantity axis, where price is lower (think commodities).

Production possibility frontier
This was a helpful thought exercise in understanding international trade. Imagine a country that can produce only two things. Let’s keep it paleolithic and say this country is made up of a caveman and a cavewoman who can catch fish and pick berries.

If the caveman picks berries all day he can pick two units of berries. If the cavewoman fishes all day she can catch two units of fish. For the sake of the thought exercise, assume a unit of fish and a unit of berries are equal.

1 caveman day = 2 units of berries
1 cavewoman day = 2 units of fish
2 total days = 4 total units

Let’s say now that the caveman goes to help the cavewoman catch fish. Unfortunately he’s too slow and only can catch one unit of fish per day. The next day, the cavewoman goes to help the caveman pick berries. She’s not very good at picking berries so she can only pick one unit of berries per day.

1 caveman day fishing = 1 unit of fish
1 cavewoman day fishing = 2 units of fish
2 total days = 3 total units

OR

1 caveman day picking berries = 2 units of berries
1 cavewoman day picking berries = 1 units of berries
2 total days = 3 total units

It’s clear that most they can produce is four units. This is the production possibility frontier – the maximum units they can produce.

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Productivity and the two-good model
Now we’ll assume that there are two paleolithic countries, each with one caveman and one cavewoman. Country A has an abundance of rivers and lakes and together they can catch 6 units of fish per day, but they don’t have much fertile land so together they can only pick 2 units of berries per day. Country B has the opposite and can catch only 2 units of fish per day but can pick 6 units of berries.

This is where trade becomes beneficial for both countries. Country A benefits by trading 2 units of fish (1/3 day of work for them) for 2 units of berries (a full day of work for them). They have the same total units of food but with trade they have the berries they would have picked in a full day plus 4 units fish. The reverse is true for Country B. They have 6 total units of food (4 units of berries and 2 units of fish).

Country A’s comparative advantage in catching fish gives them an incentive to produce that and trade it for berries. This advantage can come from a number of things: factor abundance (your country naturally has a lot of something), institutions (school, etc), policy (tax incentive to produce something), and sometimes just luck and chance (discovering the wheel).

Purchasing Power Parity (PPP)
This is an economic theory that says the same basket of goods in one economy should cost the same relative amount in another economy. Relative is typically measured as a percentage of GDP. For example, a gallon of milk costing 1% of your average daily wage in Country A should cost the same 1% of average daily wage in Country B. This is helpful when determining exchange rates.

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Parts two and three covering policy and strategy are coming up soon.

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Georgetown “Summer Ignition Series”

As I wrote last week, I’ll try to recap all of my classes at Georgetown with an essay here. Credit for the good material goes to Georgetown and their faculty. Mistakes or omissions are mine.

The McDonough School of Business (MSB) has my classmates and I off to an early start. Before I’ve even moved to Washington (some are already there posting enviable photos of social events online), we’re completing a week-long webinar series to prepare us for the upcoming tidal wave that is business school. Recruiting and interviews begin quickly and there will be infinite opportunities to network with various industry and company representatives. Before that beings, it’s time to take a step back to think deeply on the metanarrative of my career. To do so, the steps of the series are:

•Reflect: understand where you’ve been, are and are going

•Unpack: understand your accomplishments and how they relate to your career

•Clarify: focus in on where you want to go post-MBA

These goals were broken into four “deliverables” that I submitted to the career office.

 

Deliverable One: The Accomplishments Record

This was basically a résumé outside the typical résumé format. The assignment was to take your last three employers (or last three titles if you’ve worked at one company) and write out the five most important things you accomplished in each role. Here’s how it looked.

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I spent a lot of time fine-tuning my résumé when I was applying to business school and this would have been really helpful. I like that it gets all the information first and asks for the resume bullet point last. It’s much easier to write an effective résumé point when you’ve written out all the information in pieces.

This took the longest but was very helpful.

 

Deliverable Two: Career Inventory

In short, this was a comparison of where you are and where you want to be, with a detour to ensure your understanding of where you want to be is accurate. This examination is somewhat parallel to the scientific method:

  1. Ask question
  2. Do background research
  3. Construct hypothesis
  4. Test with an experiment
  5. Analyze results and draw conclusion
  6. Hypothesis is: True (continue to step 7), or False or partly true (go back to step three)
  7. Report results

To do this, we completed a questionnaire to evaluate our fit for certain industries. Similar to personality tests, I answered 1-5 on a number of questions and totaled my score to determine different fits. You can recruit and interview with whomever you want, this was only for self-reflection.

Based on your scores in each function and industry you could get a sense of how your job search would be.

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Deliverable Three: 355+ Value Strategy

We’ve narrowed down to the industries and functions (and maybe even companies) that are interesting. Now we can ask, “Why me?”, and even, “Why not me?”

The 355+ document will be useful in preparing for interviews and though we aren’t at that stage yet, I think Georgetown is wise to prepare us. It’s a useful analysis to complete for anyone interviewing.

  • 3 reasons you’re interested in the company
  • 5 most important things the employer needs
  • 5 best values that match with their needs
  • + why wouldn’t they hire you?

 

Deliverable Four: MSB Format Resume

This one was easy, just a lot of copying and pasting. I’m sure this is so they can put together résumé packets for recruiters to review. We took the bullet points from the accomplishments record and added them here.

 

Recap

Overall, this was a pretty useful experience. I want to go a less traditional route and join a startup so maybe my résumé perfection isn’t as important, but I’ll certainly use these frameworks in the recruiting process.

One more thing… I think the biggest value in these exercises is to get out of day-to-day “survival mode” that is easy to fall into and take time to think on who you are, where you’ve been, and where you’re going.

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Why I’m writing essays on my classes at Georgetown

Last year, I read Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel and Blake Masters. Blake was a graduate student at Stanford where Peter taught CS183 and his notes from the class provided the foundation for the book. (In the fall of 2014, CS183B was taught by Sam Altman, one of the founders of Y Combinator. It’s a great class titled How to Start a Startup.)

While at Georgetown I plan to write my class notes in a similar way. It’s well known that having to rephrase and teach information helps it be learned more deeply and that’s the intent behind writing these essays. If a best-selling book deal comes my way as it did for Peter and Blake, well that’s just a bonus.

My first essay recapping the summer ignition series at Georgetown will be posted in the next few days.

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