Day 2

Day 2 Today my day consisted of shadowing a number of employees as they created the systems involved in creating the accounts and evaluating employees, as well as filling them out. They were encountering the problems of changing their systems to account for new changes within the organisation and when confronted by all the tonnes of intricate changes required to the system I must confess my head hurt. They essentially were working on a few systems, checking the division of an FTE's labour, uploading the forecast costs, working out said forecast costs and processing all the original costs. Seeing how intricate an excel document could actually be and from my own experience with it helped me realise what an onerous task this one. I could now understand why turn around times on changes in politics, economics and businesses are so long. For every small internal change all of the systems in place that are effected by it need to be changed to take account of it. The system regarding queries, itself, fascinated me. When they make changes in the organisation or have issues with proposals in meetings either emails are sent out to everyone and with simple sorting, all the problematic issues are received or an interactive spreadsheet is created within the department, where people can register queries. These can then easily be adressed. This then laid the foundation for my second learning of the day. Planning a head is crucial. I had no idea how much forecasting was involved in running a business and this showed it too me. They have a forecast for every month of the year and then an overall forecast for the end of the year. Each month they review the forecasts based on their actual results and usually find they're accurate to the nearest percent, whenever it's not questions get asked about why not. It's incredible how serious they take their forecasts and having and having seen the business it's clear why. If there's a problem with the systems changing them can have a knock on effect on other systems and result in massive changes and it's important they identify these as quickly as possible. The other reasons is that, in an organisation like the civil service, the specifics are important and a small miscalculation or human error can have far reaching consequences. This was the basis of my final learning of the day. The way that the department work is in a pyramid style system; the people at the bottom break down their data into the important manageable chunks, which are fed up to the person above who collects lots of these key pieces of information and then boils them down to their most noticeable factors. He gives this info to the person above him and it continues thus until it reaches the senior civil servants and MPs. This is why it's important to eliminate all small errors in the data at an early stage, lots of 1% errors can amount to large over/under evaluations of performance and it'll be a month before these errors have any chance of being spotted. It isn't possible to miss out the finer details as if there is a query higher up (for example "what's the main part of that cost?") they can then break it down (and find out it was the purchasing of an expensive software). I had no idea that politicians had to deal with this simplified outlook on the civil service, yet if they notice they're spending too much of their government spending on the service then they can find out what is causing it. So I guess the main thing I have taken from today is a sense of perspective, whilst large decisions can be made at the top of the hierarchy there's always tonnes of employees somewhere down the line who get affected.

An economic problem for dummies: price discrimination

I recently read the undercover economist and one of the main stand out chapters to me was the chapter of price discrimination and consumer surplus and it got me thinking about other examples of how this price discrimination is and could be being used in the modern day of apps. Consumer surplus is the amount of customers who would be prepared to pay more than the asking price for a food or service. This group of consumers is something that firms have wanted total into for years; in an ideal world, for the seller, everyone would buy their good at the maximum price that they'd be prepared to buy at, thereby maximising revenue. As a result they have tried tonnes of methods for making use of this great potential source of additional revenue. Whilst the logical step seems simply charge the point on a demand curve where PED is equal to 1, as this is the single price point where the firm makes the most money, in actual fact price discrimination is used to entice people to spend as much money as they are in fact prepared to. Whilst I want to get into the world of modern day price discrimination it must first be established the other means by which this has been done. The most effective method to date has been the simple market stall haggling; a good negotiator should be able to persuade a customer to pay as much as possible. This is very good for allowing humble market sellers to make as much money as possible but what if our humble market trailer wants to expand into the world of retail, by setting up a number of shops. Well the first way he could get a similar effect would be to offer different prices on his good in each of bishops dependent on their location, how convenient, how pleasant and how competitive is the location would all play a factor. Coffee served at a motorway service station I have noted is a good 20p dearer than it is on the high street. DAMN YOU COSTA! In fact dear old costa aren't just shrewd with their locale based pricing but also with our product range. Has anyone noticed that a mocha at costa costs £2.35 whilst being essentially a fifty-fifty blend of a laté, £2.15, and a hot chocolate, £2.30, making it in theory worth £2.23. So why charge more? Price discrimination of course, they are cleverly tricking their customer to pay an extra 12p more for a coffee that costs them no extra to make. In addition they've recently been pushing 30p extras, cream, syrup and other unhealthy treats, that I can guarantee cost them a fraction of that price. By purchasing these pricier, large and extra smothered coffees you are telling costa you don't mind paying more, it's rather shrewd is it not. "But Dave you said modern day! What is more modern than a high street coffee brand?" The Internet and online micro transactions, of course! A new phenomena of the modern world are i devices and their apps. I recently decided to investigate some apps that I'd been hearing a lot about, temple runner, jet pack joyride and draw something, and was surprised that they were all free to play. So, naturally, downloaded them without question to discover they not only all had coins that could all be purchased with real world money. I am now going to ignore temple runner and jet pack joyride as their economic model has been eclipsed by the shear awesomeness of draw something's one. The way draw something works is it allows consumers to download a free and inhibited version of the app. Prepared to pay more? Well then buy the full version with a whole dictionary of words and more starting colours, for 69p. You've started playing with our pals and your on a long streak but are stuck on a word, fear not there are bombs which drastically enhance your chances of guessing it. However, you need to buy them too! The app not demonstrating your artistic prowess? Buy more colours then! In fact, buy a pack of coins so you can get both! This model is genius! If you value your drawing streak more than £1.99 then you'll show that by buying more of the helps. The app manages to successfully get the consumer spending real money on things that cost the company nothing extra and the amount a customer spends on their product is dependent on how much they're prepared to pay. In addition there are the small adverts in the app, which over the costs of the free app itself, so anything after that is pretty well just profit for the company. It isn't all rosy, though. App development is still very much the wild west of software and video game development, even with Apple's strict monitoring policies news of court cases revolving around apps. Anti gay apps and many apps inappropriate for certain ages are still on the store; this isn't what this about though. The incident I want to refer to is the smurfs app which allowed for in app purchases of $99.99 a piece. This has given apple a bit of legal trouble, having had children, using their parents credit card, spend away small fortunes on intangible gifts. The argument against this is that children should not be given access to their parents credit card and a valid one. I only hope that issues like these are actually dealt with by firms as micro transactions would appear to be a fantastic way of keeping both consumers and sellers happy and I hope it continues to gain speed.

Work experience: day 1

I have recently begun work experience with the financial department with the Department of Work and Pensions and have been amazed as to how useful I am finding it. This is essentially going to be a diary about what I have done and what I've got out of it. To start off with, my understanding of how the civil service ran was minimal. I had grasped the basics of ministers being responsible for certain sections of the economy in command of a vast team. As most of my understanding was based off of the TV series Yes Minister, I had little understanding of how the relationship between the ministers and civil servants communicated back and forth; sometimes the minister wants something done and wants to know how best to do it and other times the civil service wants something doing and needs to make it appealing to their minister. In addition I discovered more about its structure in general, with an in depth break down of the DWP as well as a look at the newer benefit reforms. Whilst a greater understanding of the civil service was very interesting, there were two main leanings that I took away from the first day. The first, of which, was the ability to interpret data and tackling the relevant problems from it. I learnt this because my first major task was to be given a comparison between the call centres performance, financially and quality wise, and it's targets. My task was to look at the few pages of data and find the major discrepancies and then, without any other information, figure out what was causing it and propose solutions. The first part of the task was very interesting as I had to get through the data very quickly working out both those that were not hitting the targets and those that were over performing, as the over achievers would likely be the cause of the underachievers. This taught me a lot about cause and effect, a principle I was already aware of from basic economics; a successful merger causes a rise in the stocks of that firm, a rise in price leads to a fall in demand and so on. Yet, I was extremely interested to see how, with a little bit of thought, a large amount of the figures could be explained by other figures and addressed thus; this kind of idea is partially what has drawn my fascination in economics, the idea of psychology and seemingly irrational behaviour can, with closer scrutiny, be somewhat predictable and then remedied. The remedies, themselves, I was asked to think up and this was where my basic classroom knowledge appeared to be of less use. (if lets say - I can't give actual examples as the information is classified - the expenditure on additional employee expenditure was under budget yet some departments were drastically exceeding their targets, with plenty of spare capacity, whilst another was under pressure, I'd suggest retraining members of the exceeding department to do the job of the under performing department. It's not that simple). Whilst my decisions would not be incorrect they were over ambitious (retraining takes time, resources and requires people to be off the phones in the pressurised department) and were only long term solutions. To make them work I'd need to provide a short term alternative to pick up the slack of the long term (in this case paying for overtime whilst the training is performed as well as providing additional information to make the change over smooth and prepare the FTEs for the change). I was well served enough to make a fair few unambitious suggestions, which were in use, yet they didn't help me learn the lesson of how what would theoretically be instant takes a fair bit of time for implementation. One of the best examples of them planning for such change was their allowance for discount caused by inflation (or time tax, as I coined it) when making large decisions; if something's going to cost you 1million now, to recoup the costs in three years time you need to save 1.3million over that time, for example. This made me realise that inputting a change to monetary policy, or another political decision, will take time to take effect, as the public needs to learn about it and then make the decision to change their routine around it. Everything takes a long time in big organisations, and the civil service is one of the biggest. This is something I learnt even more about on my second day!