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On December 14, 2015, JohnE2017 commented on Fast growing high-end kindergarten chain in China-Etonkids :

This is a really interesting company. Given the very well laid-out argument about its alignment between business and operating models, it seems like this could be the company’s biggest strength and biggest weakness. The market and parental appetite for western/Montessori education and styles very appealing to new parents. There is also a positive correlation between those that really value the Montessori method and those that can financially afford such premium services for their kids. Since growth is this company’s biggest opportunity, it will be a challenge for this company to continue expanding to capture this growth will still maintaining quality.

This is a really fascinating assessment. In a commodity business, it’s often the case that the lowest cost producer wins in the long run, particularly due to its ability to weather the downturns as the one we are in now. It’s interesting to see how this company achieves its position as one of the lowest cost companies through its operating strategy and what seems like discipline (and a bit of luck). One of the key reasons why cost has been able to be reduced is because of new technology that allows horizontal drilling, which Pioneer seems to utilize. The question is how and if Pioneer will be able to maintain its cost competitiveness relative to its competition as more competitors adopt new technologies.

On December 14, 2015, JohnE2017 commented on ExxonMobil: Strong History backed by Strong Principles :

It’s great to learn more about one of the most iconic companies. Exxon looks like a fully vertically integrated company, which seems to be its operating model along with huge capital investments. I’d be curious to find out about its margins or efficiencies for each of its divisions to find out if Exxon is truly good at all of the vertically integrated pieces. My inclination is to believe that you can be the best at all upstream activities, all downstream activities, and all chemicals businesses. Since Exxon spends so much in capital expenditures, this could also mean that it’s ROC could be subpar compared to peers in each of these specific areas (upstream, downstream, chemicals).

On December 14, 2015, JohnE2017 commented on A Well-Oiled Generic Pharma Machine :

I have heard of companies that try to operate similar businesses, though Bpharma’s revenue is definitely the largest I’ve seen. This company’s business model is not unique in pursuing off-patent drugs targeted at small markets, though this company’s rapid success is unique, which sounds like is due to its operating model. It’s very interested that the company’s most valuable asset is the R&D scientists. I’ve see companies that outsource both R&D and manufacturing, where the main value of these companies is the ability to identify and pursue specific projects/drugs. I’d be curious to find out how this company handles potential competition from smaller companies or start-ups that aren’t going for the $50-100 million drugs but rather the $5-10 million ones.