RElaunch Review: Terms

SYNERGY: 2+2=5 or when two forces combine to create even more good things (i.e. strengths, capabilities, profits) NOUN

• Business sentence: Apple's new system that syncs up all of its products, from the iPhone to the Mac, has created a new form of intra-brand synergy.
• Mommy sentence: Some of the strangest synergies can be found in the toddler diet: Mac and cheese with cut hot dogs, for example, only appeal to them but they will eat this for hours! (Quite a feat if you have a picky tot like me.)

CSR: Corporate do-gooding, whether done by donating money or volunteer time. Strategically picked to go with company values, trendy causes and PR angles. NOUN

• Business sentence: Pampers' brand has its own CSR, promoting and funding childhood vaccination in 3rd world countries.
• Mommy sentence: Teaching my son CSR can be as simple as giving money to a homeless man at the subway, or working in a food kitchen with him when he is older.

SUPPLY: What is available for sale. Often affected by outside forces, like weather for produce or availability, in terms of minerals.

• Business sentence: Abercrombie & Fitch has been directly affected by natural disasters in Asia this year; drastically decreased cotton supplies are causing a spike in clothing prices of this already struggling retailer.
• Mommy sentence: My supply of coffee is getting low, causing a spike in my temper.

DEMAND: What people want, either in general, or of a certain product. This can be referred to in terms of wants (what is popular) or needs.

• Business sentence: High gas prices have cut the demand for road trips this summer, affecting tourism in small-market areas of the Midwest.
• Mommy sentence: How do you respond when your three kids are all demanding different things at once?

MARKET: Who wants it. This can either be in general (food or commodities) or specific (teenagers want smartphones.) NOUN, IN THIS USAGE.

• Business sentence: Water is at a premium in Africa where its market is affected by drought like conditions combined with extreme poverty.
• Mommy sentence: In my house, the market for Gap Kids clothing expands, the more used and cheaper the clothing becomes.

RElaunch REviews

Gotta give the people what they want. My favorite commenter asked for a review of our MBA mom lessons thus far and I will comply! July is crazy and my mind is spinning with all the summery vacationy events so a review is probably the best I can do anyways:)

I will post 3 reviews, based on terms, tips and lessons. There are some other great concepts on this blog (yoohoo, book publishers and colleges at which I applied to teach) so review those at your leisure, too!

Stock Tip of the day: Penny Stocks

Penny stocks are just that: stocks that cost mere pennies.

Penny stocks have the benefit of becoming mega-profitable if you have a few bucks to burn right now and can be patient.

Pier 1Imports is an excellent example. In 2007 the company was on the verge of bankruptcy, about to close. Stocks were $0.07 apiece. Yes, kids that's 7 cents a share. Now, at that price and with the company's history, they very well could have sank and closed forever. They were hiring a new CEO and that action can take a company in either direction. From my end, its before having children. I know for a fact I could have purchased $7 worth of stock in Pier 1. Had the company tanked, I would have lost the price of a lunch out or a few coffee drinks. No big.

So, say I purchased 100 shares in Pier 1. Today, 2011, Pier 1's stock is worth almost $11/share. Doesn't sound like much of a stock price.

BUT WAIT! Today's shares are now worth 149 TIMES what they were in 2007. That means that the $7 I invested is now worth... $1043. That would keep me fueled up on coffee drinks all year, er, I mean, take care of a mortgage payment!

Investing in pennies depends on how much you can purchase and how much you can afford to lose, because there is a very real possibility of losing it all.

I do know I could have dropped $70 with a heated discussion from hubby... or I would have spent that on an outfit. But I'm sure Goodwill has that outfit now and hubby would be enjoying that extra vacation with me this year or at least the mortgage payments $10,430 would cover.

If you get really economicky, like some of the TV pundits adivse, you would do things like turn down your sister's bridesmaid request for something like this. I happen to have TWO sisters getting married this summer. Am easily spending $700 combined. I could really anger them by saying no to being a part of their nuptials. BUT, I could invest what I would be spending in penny stocks and split the $104,300 with them in a few years... yeah, maybe penny stocks aren't secure enough to risk a rift in familial relations on a $104,300 emotional bandaid (and truthfully if it panned out, I'm not sure that I would want to part with that) but you catch my drift.

It all depends on what you can afford to lose... there are people making millions off this, but they have the few hundred bucks to (probably) lose. Get a crisp $20 for your birthday? Think pennies...

Profit Maximization of opportunity cost

Third and final part to the opportunity cost series, this also ties in rummage sale econ.

Demand for oranges is 3 times greater than demand for apples. People will buy 3 oranges or an apple. This equation is:

x=1/3 y with y being oranges and x being apples

For you mathletes, this will plot on a graph as a line going southeast.

Profit equation tells us that one apple is worth two oranges. The equation is:

x=2y with the variables being the same as above

At this point, you get your business manager/accounting person to do the math and figure out where profits will be maximized, but not before you ask what the supply equation is. Where the supply and demand equations (or curves) intersect along the profit equation, profit is maximized. You know what you can absolutely earn given your constraints.

DON'T WORRY. Some of you have MBAs, some of you don't. If I had more complex mathematical tools I would post a graph to illustrate this - I know I need one to understand it myself. Just knowing the terms and the concepts is good for now.

If the supply and demand equations intersect on the profit line, you know that is what you can potentially earn. If they hit above the profit line, it tells you that market's demand and supply are both greater than what you can profit (like coffee filters.) Think cheap items that everyone buys. If they hit below the profit line, demand and supply are both lower than what you can profit, meaning nobody really wants your product enough for you to make a profit (like knittted potholders.) Think expensive items nobody buys, or specialty shops that go out of business quick.

Rummage Sale economics

Today I am making my husband go to work late so I can check out this AWESOME rummge sale I saw being prepped. Plus right now Deigo is on the telly so its a good time for a blog post.

Supply, demand and market.

Supply: goods available for purchase. At your rummage sale, these are determined by your used junk, er, treasure. Depending on what you have, that will attract the type of customer... which is your:

Market: who is available and who desires to purchase your stuff. For example, I am in the market for gently used kids outdoor toys. I frequent those sales with outdoor appeal. Someone like me has to tote the ankle biters along so the more things out on the curb the better so I don't have to spend time sifting. The outdoor toys are something I really want... that is:

Demand: what is wanted for purchase. In an economy like this, all the good rummage sales sell out early. I know the demand for said toys is high so hence, I force my husband to wake up early and shovel food into the kids mouths with me so we don't miss that bouncing horse. Other years past, rummage sales were fewer and less frequented. But this economy has many considering the gently used and cheapskate is replaced with the term recessionista.

Market is usually pretty constant, though it can vary with economic and political conditions. But supply and demand can set your price point and you can use this to your advantage.

If there is a glut of curbside outdoor toys either in driving around or on craigslist, and they vary from $20-$60, you can safely offer $25 and if they pass someone else will take it... there are that many that are not selling so someone will meet your price. Supply is in surplus, demand is low and sellers need cash. On the other hand, if people are buying these babies at $50 and they don't stay on the curb pretty long, you probably need to decide if you need it at that price because the supply is limited, demand is high and people pay more.

There are more complicated supply and demand curves/explanations but this sums it up in a nutshell. Also think of it the next time you shop in the produce section. A bell pepper is not native to Wisconsin and can go for as much as $4 a pop in the winter (aka 9 months of the year.) In summer they are down to 99 cents each... and they carry many more to meet that demand. Cinco de Mayo time, people pay the $2 for an avocado but the rest of winter they have to price them at $1.50 or less to even make it worth their while to carry them... to meet their MARKET.