Jan 28

1. #economics Oil prices has slumped by 10% due to Corona Virus (CNN)

The reason is investors are worrying that preventing the outbreak will slow down the economy and send the demand down.Last December, OPEC and Russia agreed to deepen production cuts in an attempt to prop prices, but they still need to…deepen further because of Coronavirus. In China, the second largest oil-consumption country in the world, the government imposed restrictions on transportation. This would crimp demand for products made from crude oil, such as jet fuel. Then when demand decreases, oil price will continue to fall

2. #competitiveadvtheory Why fierce competitors become frenemies? (HBS)

The article is typical in defining competitive advantage in the marketplace: it is based on the company’s core strength. The example is Apple selling Ipad with Ibooks and ebooks on it, while Amazon is selling Kindle with ebooks, also. Although they are direct competitors, they chose to collaborate (Kindle App is put in IPad) as the core product of Apple is IPad, and for Amazon is ebooks. Then it’s reasonable for both companies to sacrifice the sales of their peripheral segments: ebooks of Apple and hardware of Amazon.

3. #economics Corporate Asia: A capital paradox (McKinsey)

A huge wave of capital has vaulted Asian corporate to rapid growth, but this influx has not been accomplished by the economic returns. While investment has tripled over the past ten years, Asia has gone from an average economic profit (profit-cost of capital) $152B (2007) to an economic loss of $207B: a turnaround of $359B. The key to this profit paradox is how Asia allocates that capital, mostly to low-capital return industries like energy and material sectors.