The Wal-Mart Effect by Charles Fishman

500: Typical number of jobs created by a new Wal-Mart Supercenter.

 

450: Typical number of retail-related jobs eliminated in a community 5 years after the opening of a new Wal-Mart Supercenter

 

It is headlines like the above that drew my attention one Sunday afternoon while browsing the business section of my local bookstore. Being in Supply Chain Management I thought reading about the biggest store and employer (1.6 million employees) in the world would be ideal to let me  into some of the secrets of Wal-Mart and its highly efficient supply chain and procurement. Well, reading this book, I soon found out that Wal-Mart is one of the most secretive companies in the world and maybe this is one of the reasons it has remained so successful. Wal-Mart has imposed a wall of silence around its operations and its relationship with  suppliers with the constant threat of losing business with Wal-Mart.

 

In his book, Fishman shows how Wal-Mart started from a small thrift store in rural Arkansas by Sam Walton and turned into the world's biggest company  (now 2^nd after Exxon-Mobile, due to the soaring oil prices) by providing inside stories and anecdotes from retired Wal-Mart executives and suppliers. We learn how Wal-Mart in the early 1990s demanded that suppliers stop boxing deodorant cans, creating an industry standard and saving many trees at the same time.  But also how the $2.97 gallon of pickles, nearly put its manufacturer, pickle-maker Vlasic, out of business.

 

Fishman, with the depth and breadth of his research tries to answer the question on everybody’s mind; Is Wal-Mart bad for America? Do suppliers, pressured by Wal-Mart’s slogan of “always lower prices” lay off employees and close down factories to open up new ones in China in order to reduce their prices and stay competitive? Fishman points out how Wal-Mart’s requests of manufacturers for yearly 5% cost cutting are difficult to resist, especially when Wal-Mart is your largest customer.

 

The Wal-Mart Effect is a fascinating book, and even though we don’t live within 15miles from a Wal-Mart store like ninety percent of Americans, its impact probably reaches our lives without us even realising it.

The Long Tail by Chris Anderson

In his book The Long Tail Chris Anderson, a business journalist who formerly worked at The Economist and now edits Wired magazine promises to answer the question: “Why the Future of Business is Selling Less of More”.

 

This is a fascinating book that describes how we are now moving away from the hit, whether it is a blockbuster film, a bestselling novel or a chart-topping song and we start discovering the niche.

 

Anderson claims to have coined the term "Long Tail" to describe these niches for which we didn’t have room for on our shelves, screens and channels but we now do have room for thanks to the internet and the abundant distribution systems.

So from the perspective of a store like Wal-Mart, the music industry stops at less than 60,000 tracks, since an average record store needs to sell at least four copies of a CD a year to make it worth carrying. However, for online retailers like Rhapsody, with a library of over 1.5 million songs, the market is seemingly never-ending. Anderson, supporting his research with various graphs, proves that not only is every one of Rhapsody’s top 60,000 tracks streamed at least once each month but so are all the rest of the tracks in its library since every song will find an audience somewhere in the world. All of these sales of songs in the Long Tail, can be highly profitable which challenges the common business saying that twenty per cent of the products generate about eighty per cent of the revenue.

 

Another example the author give is of a Blockbuster store, where ninety per cent of the movies rented are new releases. His contrasts it with Netflix, a successful DVD-rental company that allows its customers to order films online and receive them in the mail, where about seventy per cent are from the back catalogue, and many of them are documentaries, art-house movies, and other little-known films that might never have had theatrical release.

 

But "Without filters, the Long Tail risks just being noise," Anderson writes. That is where filters like Google and Amazon come in. Where Blogs and recommendations can promote the niches to a wide audience with the power of the internet.

 

According to Anderson there are two keys here

• Make everything available.

• Help me find it.

 

Nevertheless he closes by acknowledging the fat that people like being with other peoples, shopping or going to the movies, “There's a comfort in numbers,"

Inventing Japan by Ian Buruma

Inventing Japan is a kind of biography of a century of Japan's history from Commander Perry's "black ships" which sailed to Japan to force trade with the U.S. to the 1964 Olympics in Tokyo. I enjoy reading history books, but until now I mainly focused on European history, so reading this book gave me a different perspective of things. It's a good introduction of how Japan became one of the biggest economic powers, and in 176 pages it was easy to read during my commute. The author's account is very personal and it goes through Japan's descent into militarism and its reaction to defeat in the Second World War. Inventing Japan gave me an overview of modern

Japan's many identities, it's transition towards democracy and the creation of a constitution drawn up under the Allied Occupation, but also of Japan's love of suicide and assassination and the fact that Japan's system of Emperor worship, far from being traditional, is a distinctly modern phenomenon.

A Random Walk Down Wall Street by Burton G. Malkiel

Seeing RBS's stock price at 12pence makes you think what if a year ago i had invested in RBS a large part of my savings, when it's price was around 400pence or 2 years ago when it was around 700. In this context "A Random Walk Down Wall Street" is very relative since it is a highly influential book about investing in the stock market. In a knutshell Burton Malkiel, a Princeton Economist, explains that the stock market is so efficient that it is a waste of time for the typical investor to try to exploit any inefficiencies. His best bet is to simply buy a diversified

portfolio heavy on index funds that includes a large number of different companies (eg S&P500) and hold on it. The efficient market theory states that all knowable information about a stock's value is already reflected in its share price and this is what Malkiel holds as true. Even if you manage to beat the market chances are that the transaction costs of your trading will eat up the extra returns.

Bottom line: you can't predict future stock prices!

Apart from th is, Malkiel provides a lot of investing information around the pricing of the stock market, which you don't have to be an expert to understand. He also cites some of the financial "crazes" in history including tulipomania, where even poor people sold their possessions in order to speculate in the tulip market, giving an insight into the irrational investor behavior that causes stock market bubbles. Although originally published in 1973 it has been updated many times with the last edition in 2007. I think a new edition that would include a chapter on the recent economic crisis would be quite useful !

PS You will find no get rich quick scheme here!

The State of Africa by Martin Meredith

If you are looking to read a comprehensive book about the recent history of Africa then I would suggest reading Martin Meredith's "The State of Africa". A Cameroonian friend of mine suggested this book and I have to say I've now have a more clear picture of Africa and the reasons behind its current state.
In almost 700 pages Meredith manages to give, in his easy to read style, a comprehensive picture of contemporary African politics going through almost fifty years of independence covering the entire continent. Starting with Ghana in the late 1950s and closing with Zimbabwe and South Africa, Meredith observes the historical similarities between most of the countries which passed from the euphoria and hope of independence to the cruelty and corruption of single party politics based mostly on tribal loyalty. Examples of governments lavish spending and corruption are plentiful. President Omar Bongo of Gabon ordered a new palace for himself with sliding walls and doors, rotating rooms and a private nightclub, costing well over $200 million. In 1984, while in the countryside of Ethiopia millions of people were starving to death, Colonel Mengistu Haile Mariam was planning his spectacular celebration to mark the 10th anniversary of Ethiopia's revolution. In 2003 six of the seven wealthiest people in Angola where government officials and the combined wealth of just 60 people was $4 billion, almost half of the country's GDP.
So how did this continent become the most desperately poor and underdeveloped region in the area, despite receiving the most financial aid? Reading this book the pattern seems common for most countries. A new state emerges with an early promise of freedom and prosperity with a charismatic leader like Mugabe, of whom Ian Smith, the leader of white Rhodesia said "He behaved like a balanced, civilized westerner, the antithesis of the communist gangster I had expected". But soon corruption is everywhere, palaces are built, top jobs go to a select few fellow tribesmen, opposite political parties are violently banned and the economy collapses … all laying the ground for a coup that will bring another idealist military leader who would end up to be a clone of the tyrant he deposed.
Of course there are exceptions of African countries like Botswana and of leaders like Mandela, but Meredith leaves the reader to decide for himself which is the more critical in holding the continent back: Not enough debt relief, free trade and aid or just bad leadership.

Collapse by Jared Diamond

In his book Collapse, Jared Diamond tells the story of how societies choose to fail or survive considering 5 possible contributing factors: environmental damage, climate change, hostile neighbours, friendly trade partners and finally and always important the society's responses to its environmental problems.
The diversity of case studies he uses is extraordinary. He begins with the small communities of present-day Montana as they face a decline in living standards and a depletion of natural resources. We read about the Greenland's Vikings who had to leave Greenland in the hands of the Inuit (Eskimos) who built igloos for winter housing and hunted with their kayaks and harpoons, showing that even in difficult environments, collapses of human societies are not inevitable, but depends on how people respond. Modern day Haiti and the Dominican Republic share the island of Hispanolia which was originally largely forested, but today 28% of the Domican Republic is forested as opposed to only 1% of Haiti. If you stand on the border and
you look west you look at brown fields with no trees, but if you look towards the east you see gree pine forests.
Diamond tries to answers questions such: How could a society fail to have seen the dangers that seem so clear to us in retrospect? What were Easter Islanders saying as they cut down the last tree on their island ? Like modern loggers did they shout "Jobs, not trees" or "Technology will solve our problems, we'll find a substitute for wood"? Or "we don't have proof that there aren't palms somewhere else on the island, we need more research, your proposed ban on logging is premature and driven by fear-mongering" 

The often irreconcilable clash between the pursuit of short-term gratification and the defence of future generations' long-term interests can be seen in many of his case studies. Diamond offers some explanations such as "Creeping normalcy" which refers to slow trends concealed within noisy fluctation, like Al Gore's example of climate change where noisy fluctiations conceal the slow trends of rising temperatures and CO2 emission. And "Landscape amnesia" where we forget that a mountaintop was once snow covered.
The book finally considers the impact of big businesses and how some are amongst the most
environmentally destructive forces today (examples are abundant), while others provide some of the most effective environmental protection even if the ultimate reason is again for shareholder value. To his astonishment he discovered when visiting Chevron's oil field in New Guinea that many bird and mammal species were much more numerous inside the Chevron area than anywhere else in the wild in the island, apart from a few remote uninhabited areas.