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On December 14, 2015, Cathy commented on Regina Miracle – Victoria’s “Secret” :

Thanks for the comments! I can see this is a common trend now in China by shifting low value add manufacturing process outside China to maintain margin given labor cost has been rising at 9% in southern China. And their bargaining power with the customers seem to be limited – a common flaw of B2B model. There are a few upsides of moving out of the China now though due to the continued depreciation of RMB that benefits the export biz.

On December 14, 2015, Cathy commented on Regina Miracle – Victoria’s “Secret” :

Thanks Jon! I think this is a valid point. They are being too concentrated on the customer side, and may run into risk if any of these key vendors run into problems. They contributes very minimal amount of VS and UA’s procurement cost <10% therefore some will argue the it's less likely UA and VS will switch supplier given the low cost high value model. However this will indeed put a ceiling on their bargaining power. One thing they are doing now is to continue lower their cost by moving the operations to Vietnam, and start opening retail stores to leverage its B2B and IPO marketing impacts to attract retailers. The industry is very competitive and allows for a lot specific brand consolidation therefore if they can expand their SKUs it could protect the downside as well.
One interesting observation is that VS hasn't entered Greater China yet – I have been hoping them to enter for years! So would be interesting to see how that plays out if they do.

On December 14, 2015, Cathy commented on HBS: Creating Human, Intellectual, and Financial Capital :

Thanks for putting things into perspective with numbers! I think the prestigious part of this education program also lies in its selectivity, the faculty resources. It seems the business has 3 parts 1) publishing – stable high ROI biz 2) MBA – core biz lower ROI but stable 3) higher margin exe program 4) others (moving online etc) As the new initiatives continue to move in (which to some extent imply a shift in biz model), such as Exec program, online education program, how do you balance the resource allocation with its core MBA program, preservation of its franchised value while it scales up?

On December 14, 2015, Cathy commented on HBS: Creating Human, Intellectual, and Financial Capital :

They do. It’s an industry practice. In fact if you go to the HBS review you can even purchase cases from Tsinghua publishing team as well 🙂

On December 14, 2015, Cathy commented on Emirates, connecting the world. :

Interesting post, on its long haul business model (a bit similar to HK where all flights are essentially “international flights”) with controllable cost. Although I do have questions to clarify:
1) how are they able to maintain at the low cost with only operating at the large aircraft i.e 380 and 777. It could only be possible when the passenger per carrier is higher / occupancy rate is higher. Is the low cost still valid in a weaker econ environment when people travel less?
2) another edge of low cost thanks to lower energy cost. What’s your view on the prolong weak energy price is gonna impact its competitive advantage to continue pushing out favorable price to its customers. as it seems now every airline is enjoying the benefit
3) being a travel hub in the region. It certainly is strategically located within reach of different continents. But i think the only time i will take connecting flight is for personal travel but not business. But i know most airlines only make money from its business travelers. In a less cost competitive market and less bargaining power in pricing, will the business model continue to be viable?

On December 14, 2015, Cathy commented on Making Memories with the American Girl Company :

Interesting post, especially to see how a traditional legacy business model is still able to compete against the prevailing e-commerce business through focusing on customer experience! I think this is the barrier that’s less easier to overcome for the time being. and I like it that they are able to accompany the user through extended period – extend the user’s life experience. A few risks I have:
1) it seems the unit price for the doll is high on average $100 and I wonder how big of a customer base they can attract per year. While it makes sense for them to price this the highest and use this to subsidize other lower price segments such as apparels. I can imagine the margin for the doll must be high if it’s made in China
2) competitor landscape: who do you see as their main competitors, esp in their cashcow sector i.e barbie?
3) what’s view on the increasing heroine trend that’s forming and driven by the media industry (hunger game/divergence etc), do you think that will play against their customer preference?

On December 14, 2015, Cathy commented on Rent the Runway :

Interesting post! Although I haven’t used RTR yet but I have observed its price tag and turnover for each garment for a while. In general I found out it’s very profitable considering the cost per rental is about 10%-15% (or even higher) of the dress value and the fact they are able to rent c.30x. That means even with two times earnings from the dress they are still not able to cover the high maintainance cost per item. Therefore my question is in the longer term how can the business start generating positive cashflow? seems it’s both high fixed cost and variable cost business.
Also what do you think of the possibilities of adding new business element such as partnering with fashion magazine, model, trend-setting, advertising for certain brands’ dresses?