Update: Joshua, who used to work as a Barista told me that Starbucks does not use extra coffee when drinks are upsized. In general a shot of espresso is used to prepare any given drink (unless you pay for extra shots).
The conclusion is still the same, what this means is that the profit margin is understated.
If you are reading this, I am in a grave need of your help. I am in peril...THEY GOT ME! Well actually, if I have time to write a blog post, the reality is, I am physically safe. The only thing damaging to my psyche is...I think I might have volunteered to have myself ripped off.Well maybe ripped off is too strong a word, I volunteered to have myself price discriminated is much more technical and correct.
I like that Seattle-based coffee chain(you know,the one named after a character in Moby Dick), but their marketing strategy is way too clever, that even some economics students will be fooled. This is the problem, when you frequent one of the chains of this Seattle-based coffee company there are myriads of coffees to choose from, with 3 different "sizes" that you can opt for. (Actually there are four, do you know that you have the option of telling the Barista you want it "short"?The "short" sized coffee is around 8OZ at roughly 15% cheaper than the smallest of the 3 size available on the menu.Something to think about for another day.)
The difference between each size of coffee is RM1. The difference between each size of coffee is 4 OZ. A tall sized Frapucinno(12 Oz) costs RM13.50, a grande one (16Oz) RM14.50 and a Venti (20Oz) one RM15.50.
The "rational" ones would go, hey if I wanted a 16Oz Frapucinno, I should pay RM14.50 to get a grande one. The "rationale" is that since RM13.50 buys a cup of 12Oz coffee, then one Oz should cost RM1.125. If one wants 16 Oz of coffee, he is willing to pay RM18. However, now that he can get the same amount of coffee for RM14.50, he has saved RM3.50. Talk about Consumer Surplus! Thanks, Starbucks!
On second thought, did the "rational" guy who saved RM3.50 got himself a "good deal"? First, understand what you drink. So it seems like the drinks are essentially made of the same ingredients, coffee beans, steamed milk (or hand foamed milk, which in essence are still milk), and water. So why is a Capucinno priced differently from a latte? Maybe I am wrong, because a Mocha uses an extra ingredient - chocolate, that is why it is priced differently, right?
The question in, how much "extra" cost is imposed on this coffee chain to add the chocolate to your coffee, and come to think of it, how much extra coffee beans must they use to add in the extra 4Oz of coffee to your grande sized order? This is when the math comes in.
The cost for your cup of coffee has two components, the fixed cost and the variable cost.
Total cost for a given cup = fixed cost+variable cost.
The fixed cost includes the premium for the rental of the shop, and maybe the allowance for depreciation of the capital goods (blender, fridge,etc). The employees work across shifts as the shop has a standard operating hour, so I consider the wages to be a form of "fixed" cost.
The variable cost on the other hand is of course chiefly the price of the ingredients, from coffee, to milk and sugar and utility bill.
As the name suggests, the fixed cost is constant. The variable cost on the other hand, changes. If you order a venti sized coffee, then it costs Starbucks just a little bit more of coffee beans, water,sugar and milk to produce your drink.
If we ASSUME the fixed cost for a given cup of coffee to be RM5 and the marginal "variable" cost for each additional 4 Oz of ingredients,including coffee,milk,water and chocolate to be RM0.15, then the function for the differently sized coffees are
Tall: RM5+3(RM0.15)
Grande: RM5 +4(RM0.15)
Venti: RM5+ 5(RM0.15)
So the cost of one the respective coffees are
Tall: RM5.45
Grande: RM5.60
Venti: RM 5.75
So the profit for selling the different sizes of coffee are
Tall: RM8.05 (RM13.50-RM5.45)
Grande: RM8.90 (RM14.50-RM5.60)
Venti: RM9.75 (RM15.50-RM5.75)
The profit margin (Profit/Retail Price) sheds light on how much are consumers who order differently sized coffee charged differently adjusted for the size of the coffee they order.
If A orders a Tall Coffee, the profit margin for the coffee shop for that transaction is 59.63%.
When B orders a Grande Coffee, the profit margin for the coffee shop for that transaction is 61.38%.
When C orders a Venti Coffee, the profit margin for the coffee shop for that transaction is 62.90%.
So why am I made to pay more,adjusted to the size of my order compared to another consumer who ordered differently?
In short, the coffee shop makes more profit from me compared to the next guy who ordered a size or two sizes smaller than my venti coffee. (In other words, it also means that for every additional RM1 I spend to upsize my drink, the coffee shop makes an additional RM0.85).
Thoughts:
First of all, I wasn't forced to buy the coffee anyway (actually I bought two blended drinks in one go, a Toffee Nut Frap and a Chocolate Cream Chip, both Ventis). The truth is, I enjoyed the coffee and I value my experience in the coffee shop to be much more higher than the money I paid (Nice view, relaxing, great ventilation,using the WiFi to check my university application and so on). Since this transaction is a non-zero sum game, I think I have made a net gain (sort of) from it.
Secondly, the marketing strategy of this chain is amazing, talk about the wonderful and stealthy application of price discrimination, I believe the profit margin could have been higher for some "special drinks" - Mocha for instance. That said, I think it will be correct to attribute the exploration of this topic to the Undercover Economist - Tim Harford though I haven't read his book. (I think it was Hobart who introduced this book to me when I was 16).
Thirdly, the fact that the profit margin the coffee chain for someone who orders a larger sized or more "special" drink compared to another who doesn't does not mean that the coffee chain is evil. It is pretty pragmatic in making people who want to pay more to pay more and vice versa. (There is always the short option).
Finally, the fact that I have ordered 2 Ventis in a go suggests I have a long long way to go to financial prudence. Just in case any family member or relative is reading this, I was verifying the Law of Diminishing Marginal Utility.
Tuesday, December 29, 2009
Wednesday, December 16, 2009
The Wan Tan Mee Uncle presents : A lecture in the application of the Law of Diminishing Marginal Utility in Business
My father, being a street-food connoisseur (an informal one at that), has his fair share of stories involving famous street hawkers. As the story goes, there is a Wan Tan Mee uncle who refuses to sell individual customers more than 4 "sui kaos" (dumplings) at a time. Of course, not all customers are chuffed, and some are grudgingly tolerating the apparent "arrogance" of the uncle.
On a very superficial observation, it seems like the uncle is acting in a very irrational manner, if people want as much dumpings as they want, then he should supply as much dumplings as demanded right? After all, Revenue = Price x Quantity, and since Price is fixed, then he should strive to maximise his profit by increasing the quantity sold.
It turns out that the Wan Tan Mee uncle, like the proverbial Kung Fu Masters you watch on TV, knows what he is doing. Better yet, he is an expert in what he is doing. My dad's friend, amused (or maybe annoyed) with the antics of this uncle, asked him about the "quota" for customers. The wise uncle explained that he did not (and still does not) want his customers to feel "sickened" by the food as a result of having too much of it.
Unintentionally, the Uncle has applied a Microeconomics Principle - The Law of Diminshing Marginal Utilities. Sui Kows are normally a side dish to Wan Tan Mee, so the "usefulness" as in satiating your hunger is not really that much. However, it derives its utility from "satisfaction." So you gain quite a sum of utility from your first Sui Kow. Assuming that the "usefulness" of the Sui Kow is fixed in terms of satiating hunger, then the "extra" or marginal utility from consuming another Sui Kow stems from your satisfaction. The problem is, you derive less satisfaction from consuming more Sui Kows.
Algebraically, the satisfaction you get from consuming an additional sui kow(for example) is
S(x) = 1 - 0.05(x)
Where X is the number of Sui Kows you consume and S(x) is your marginal utility for consuming one additional unit of Sui Kow.
So by the time you consume 2o sui kows, your marginal utility (for satisfaction) is 0. Any more than that, and you have a negative "satisfaction" (This is when you start hating Sui Kows).
So ultimately, it seems like the uncle is not being irrational after all. He is a competent entrepreneur who applies Microeconomics Principle well.
P/S: The satisfaction model is constructed on the basis that "usefulness" and "satisfaction" under the concept of Utility are mutually exclusive.(When satisfaction increases, usefulness decreases. Case in point: Do you really need 10 pairs of high heels?) That means P(U) + P(S) = 1. Hence to get the function of satisfaction, simple algebra will give you P(s) = 1 - P(U).
Of course, not everybody's "full" threshold (capacity for food) is same, it varies among individuals. Still, the conclusion is the same. I.E. in mathematical terms, the satisfaction function is a family of function with infinite number of members.
Thursday, December 10, 2009
Let's play Monopoly..in a bigger scale?
I think, no word in Economics could have invoked more fear, outrage and rare enough, a consensus among Economists that its existence is detrimental than MONOPOLY. Those who have taken the Principles of Microeconomics of the "dismal science," can easily tell you that Monopolies offer lower total utility(or a negative one) to the community and is a form of market failure. (Unless of course, if it is a form of natural monopoly, in which this will be regarded as much more "desirable).
P/S Bear with the unless of course, on the other hand, and sentences like then again...this is a perennial trait of economists or would be economists.
Firms can morph into a monopoly, and governments around the world have enacted laws to safeguard or enforce market competition and to prevent monopoly. The spirit of competition laws then is to preserve market competition (again, in the exception of natural monopolies, though the shift of paradigm might change this).
So if governments around the world share the consensus that market competition should be safeguarded or enforced for the benefits of all, is it safe to conjecture that the same notion should be enforced in the global level? China is gradually morphing into the equivalent of a monopolistic player in the global arena source , and its unbridled growing capacity is creating a great sense of unease.
Will China's rise be detrimental to everybody else? There seems to be no spillover effect to some of its neighbours, and rising negative sentiments from disenchanted neighbours and other nations are starting to jeopardise the growth brought about by China's export oriented model. With the demise of free-spending American consumers, China is finding it increasingly difficult to sustain this promising double digit economic growth. Factoring in its weak domestic consumption, a net flow of jobs towards a region where most of the population in its vast rural areas are incapable of spending on items that aremore than necessary, what we see is a bleak picture for all the players involved in free trade. (This argument is not new, for those who have read my essays, papers or attended the seminar in class where my partner and I presented on the topic of globalisation and outsourcing).
So back to the ultimate question, should the WTO, the body "overseeing" international trade, introduce the equivalent of competition laws to safeguard and enforce competition among nations in the global arena, in view of China's monopolistic dominance? I could foresee some arguments against such a move, and it will mostly be based upon the logic that the reason why China is able to dominate is because of its comparative or absolute advantage in producing what the world needs. My response is : Really? Just how much of China's growth is because of relative factor endownment(the abundance of natural resources) or relative factor intensity( the availability of necessary infrastructure and labour with skills to keep it easy)? True, the aforementioned factors played a huge role, the question is do these factors play a bigger role or is it more because it is a bubble fueled by an artificially and forefully devalued currency? I reject the notion that China is the country that has the comparative or absolute advantage in producing everything (this is a truism).
Hopefully, the question on whether or not to introduce the equivalent of an international competition law provides motivation to study this issue in international trade and to enhance global and public discourse on China's monopoly.
P/S Bear with the unless of course, on the other hand, and sentences like then again...this is a perennial trait of economists or would be economists.
Firms can morph into a monopoly, and governments around the world have enacted laws to safeguard or enforce market competition and to prevent monopoly. The spirit of competition laws then is to preserve market competition (again, in the exception of natural monopolies, though the shift of paradigm might change this).
So if governments around the world share the consensus that market competition should be safeguarded or enforced for the benefits of all, is it safe to conjecture that the same notion should be enforced in the global level? China is gradually morphing into the equivalent of a monopolistic player in the global arena source , and its unbridled growing capacity is creating a great sense of unease.
Will China's rise be detrimental to everybody else? There seems to be no spillover effect to some of its neighbours, and rising negative sentiments from disenchanted neighbours and other nations are starting to jeopardise the growth brought about by China's export oriented model. With the demise of free-spending American consumers, China is finding it increasingly difficult to sustain this promising double digit economic growth. Factoring in its weak domestic consumption, a net flow of jobs towards a region where most of the population in its vast rural areas are incapable of spending on items that aremore than necessary, what we see is a bleak picture for all the players involved in free trade. (This argument is not new, for those who have read my essays, papers or attended the seminar in class where my partner and I presented on the topic of globalisation and outsourcing).
So back to the ultimate question, should the WTO, the body "overseeing" international trade, introduce the equivalent of competition laws to safeguard and enforce competition among nations in the global arena, in view of China's monopolistic dominance? I could foresee some arguments against such a move, and it will mostly be based upon the logic that the reason why China is able to dominate is because of its comparative or absolute advantage in producing what the world needs. My response is : Really? Just how much of China's growth is because of relative factor endownment(the abundance of natural resources) or relative factor intensity( the availability of necessary infrastructure and labour with skills to keep it easy)? True, the aforementioned factors played a huge role, the question is do these factors play a bigger role or is it more because it is a bubble fueled by an artificially and forefully devalued currency? I reject the notion that China is the country that has the comparative or absolute advantage in producing everything (this is a truism).
Hopefully, the question on whether or not to introduce the equivalent of an international competition law provides motivation to study this issue in international trade and to enhance global and public discourse on China's monopoly.
Tuesday, June 9, 2009
Securities Commission Scholarship Interview - A guide
I applied for the Securities Commission Scholarship sometime back in March (after the release of the SPM Results). For the benefit of those who do not know what is the Securities Commission (SC), it is a regulatory agency empowered under the Securities Commission Act to oversee and regulate the trading of the financial tools. (Eg Shares, aka common stock listed in Bursa Saham Malaysia Bhd, bonds, trusts, and other financial instruments) It also serves to develop the financial industry.
The fields of discipline offered under this scholarship are :
- Business Administration
- Law
- Economics
- Islamic Finance and Banking
- Investment Banking
- International Business
- Accountancy
- A-levels (for holders of the Pre-U Scholarship)
Note: The scholarship is a free ride. It covers tuition fees, allowance, books etc.
There are 4 rounds of assessments applicants have to go through. (Excluding the essay submitted with the application form)
1st Round : Preliminary Screening
2nd Round: Case Study
3rd Round: Online Psychometric Test
4th Round: Q and A session
First, I shall start with the essay that is required of all applicants. Applicants are required to write a HANDWRITTEN essay "of not more than 1000 words on past achievements and future career aspiration in relation to the application of this scholarship."
Now, the SC Scholar Selection Panel have come across a lot of essays throughout the years, so what you would probably want to do is to make your essay stand out. Hence these are the advice I would give you:
-Do not write a letter that merely states your extracurricular activities. IE, I was the Head Prefect in High School, I represented the school in Frisbee Competitions, I was a school debater etc.That is what your resume is supposed to do, and what your stacks of certificates testify. Hence, what you should write is WHAT YOU HAVE LEARNED by participating in such activities or holding such offices. Add your personal experience, your opinion, your reflection. Link that to your job scope when you serve the SC. In other words, HOW DO ALL THESE CONTRIBUTE TO THE SECURITIES COMMISSION'S OBJECTIVES? All in all, your personal experience will be testimonial to your character, virtues and leadership abilities. By sharing the experience on how you have led the club with your board proves that you are both a capable leader and a team player. This is better than writing "I am a good leader and a team player.I am also very honest. bla bla bla"
I think the experience in the Young Entrepreneur Programme and the Citigroup Stock Challenge will give you some insights.
- Provide some insights from your observation/reflection of incidents around the world that has to do with the position in the SC that you will serve in the future.Eg, You've read about how the former SEC (The USA equivalent of the SC) Chairman Christopher Cox was partly responsible in the Financial Crisis I.E allowing the banks to overleverage themselves, his laidback leadership, his penchant to push for deregulation etc. What have you learned from all this? (Though your essay is not to criticise the SEC, or to present a ten-point plan to solve the problem,but merely to point out what you have learned from this)
Summary on writing an essay for the SC Scholarship:
Write more about what you have learned from your ECAs rather than the position you've held. To modify a quote someone from ReCom, "you are more than just the sum of your grades", "you are more than just the sum of your achievements." (I am sorry because I have forgotten which thread have I read this from and I can't remember your name. Please send me an email and I will edit this post to include your name. )
Include your opinions and the idealogy that you subscribe to in your essay. Remember to link all these to the objectives of the SC, to show how you can contribute as an SC employee (which is ultimately the goal of this scholarship) . The last advice on the essay writting is of course, to be creative within the leeway.
Now, in around two week's time (or perhaps longer), you will probably receive a call from the SC to inform you that you have been shortlisted for an interview. Congratulations! You are one step closer to your dream of working for the SC. For out of state applicants, you are required to travel to the SC Building in Mont Kiara, KL for the interview. Your travel expenses will not be reimbursed. The SC Building is in the middle of nowhere, right next to the National Science Centre. It is hard to get transportation to go there, since some taxi drivers don't know where it is. The best landmark to use is of course, the national science centre. If you stay in any of the hotel in Bukit Bintang, it will cost your less than RM20 to go to the SC Building. Do let them know if you have problems going to the SC Building, they are glad to help you.
First Round Assessment: Preliminary Screening
Next, let us move on to the first round assessment, the Preliminary Screening. Basically, this is just a typical interview in which you will be assessed by a panel comprising of two SC Employees. You are required to register with the receptionist, and you will be given an access card. Go to the library, (which is normally where the interview is conducted). You will be ushered into the waiting room with the other applicants from the other age groups. So Pre-U students will have the chance to meet with the undergraduate applicants. This is a good opportunity to make new friends, and besides that, lunch will be provided. (Though everybody seemed to nervous to touch anything). You will be summoned to your panel of interviewers. This is a normal interview in which they ask you to introduce yourself and typical questions like
-Apart from your academic qualifications, why do you think that you deserve this scholarship?
-Tell us about your family.
They will also ask questions about your essay. So if you don't really understand anything about fiscal policy, DON'T WRITE IT IN YOUR ESSAY. You don't want to give them an impression that you are just putting words to make your essay impressive.In other words, DO NOT INSULT THE INTELLIGENCE OF THE INTERVIEWERS. They are after all, smart people selected to work in the SC. They are experts of their field, so, do not pretend to be knowledgable if you are not.
Second Round Assessment: Case Study
So, if you have made it through to the second round assessment, you will receive a phonecall from the SC. This is by far the most interesting assessment throughout the interview. The second round assessment will NOT BE CONDUCTED by the SC. They will outsource this job to a HR firm. Representatives from the firm will brief you on your task. You will be required to do a case study, and this is where all the fun is. They will give you a report that describes the role you will play, and the problems that you are required to solve. Most of the time, this will be a policy-making case study. In the "report", there are views and perspectives from distinct special interest groups. As an independent taskforce committee member, you are required to make recommendations and formulate a viable policy. You will be given 30 minutes to work out everything on your own (No discussion, no brain storming). After that, you will be summoned one by one to present your policies and make your recommendations to the representatives from the firm, who will assess you. Once everyone in your group is done, you will all be gathered in a room to come up with a policy and reach a consensus in a given period of time. The representatives from the firm will observe your discussion (or should I say,debate.) Their assessment are kept confidential of course, but you might find the following advice useful.
Advice:
First of all,use the following guidelines
a) Capture the essence of the case study and identify the tasks
(What are you required to do? What recommendations? What sort of policy?)
Note: Someone in our group devoted his time to criticize the problem and blamed one of the special interest groups in the case study. He did not come up with any concrete measures, but merely treated us to an emotionally packed sermon. Of course, for failing to identify his task, he did not make it to the third round assessment. I hope this highlights the importance of identifying your task and to capture the essence of the case study.
b)Identify and balance the needs of the special interest groups
Preferably, you need to come up with a win-win situation. Therefore, you must be able to make concessions with the other applicants in your groups. Pragmatically speaking, you need to balance the gains and losses of the special interest groups in the case study.
In other words, give everyone something to take home. You can't have a policy in which a side has all to gain and the other has all to lose. In the real world, such policy won't even survive a vote in Parliament.(Who wants to attempt a political suicide?) Even when you have come up with your balanced policy, be prepared to make concessions with the other applicants so as to reach a consensus as a group. Sometimes you have to stand your ground on an issue, but sometimes, you have to take a step back. So go in with an open mind, attempt to see things from the other's perspective, and then decide on the best course of action to take.
In my group, everybody worked together to draft out a policy, but there was one little provision in which me and one applicant couldn't agree on.I had to work out a concession that one very agressive fellow applicant.In the end, we all reached a consensus. The representative nodded in agreement when we worked out the concession and I knew I've made it.
c) Be explicit in your policy
Do not insert ambiguous languages that could be interpreted in a variety of ways. Be explicit in your content. If you are introducing regulations, make them clear. Take this assessment seriously.
Summary : Overall, this is a task that puts your knowledge and people skill to the test. Teamwork is crucial in this round. If you must disagree with something, say something nice first. When the applicant who spent all his time delivering a sermon emotionally made his presentation to the group, the agressive applicant interjected, complete with an exasperated look and tone with "Yeah yeah I know what you feel, but what do you ACTUALLY HAVE TO PROPOSE?!" Ouch! Needless to say, Mr-I-am-delivering-a-sermon here wasn't very happy.
Don't do that.
Instead, say something nice like me. "I recognise the sentiments that stems from this issue, and I concur with Mr-I-am-delivering-a-sermon. However I think that we have to(insert what needs to be done,and your policy recommendations.) "That helped me to get the job done, and everybody liked me more than Mr Aggressive. So this are little things in which you have to learn, while Mr Agressive is doing exactly what is required, he lacked a little bit of tactfulness.
Finally, and importantly, MAKE CONCESSIONS IF IT IS REQUIRED. Learn to understand that you won't have everything your way. This is the art of policy making that I thought they should teach at the Kennedy School of Government. That said however, remember, if there are issues you think you need to stand your ground, do it. In my case, I didn't want to allow advertisement on beer and cigarettes. Mr Agressive wanted that(He insists Malaysia allows such advertisement to be aired, guess who has the last laugh?). So what do I do? I took half a step back. We worked out a concession in which beer and cigarette companies are allowed to advertise, but they must not in anyway , display images of beers or cigarettes. So what that is allowed under this provision is that they can only display the name of their brand, definitely not their product.
Third Round assessment: Psychometric Test
This is my graveyard. I got a call from the SC to go to my third round assessment online two days after I have returned from the second round assessment. I was in a buoyant mood and was acting recklessly when I took the test. This led to my downfall. I FAILED THIS ASSESSMENT.
This is a test that asks you to rate statements relative to its impact on your motivation for work.There is no right or wrong answer, but your answers will represent your character. The bad news is, you can only do it once.
Let's say its something like this.
How do you find working in an environment in which protocol has to be strictly adhered to.
You will need to click on the answers based on the scale of :
It highly demotivates me, it demotivates me, it does nothing to me, it motivates me, It highly motivates me.
After some deep analysis of the structure of the SC, I think candidates who fulfilled the following criteria are highly desirable by the SC.
Note:This is just my opinion. If it works for you, you may send me flowers, PM me for my address. If it does not, do not haul molotov cocktails into my house. You have a brain don't you? Courteously speaking, VIEWER DISCRETION REQUIRED. If you make are here to follow my advice blindly, PM me, I would love to know you, you can be my slave.
Desirable characterics for SC employees:
Since this is not a profit-driven,self-interest regulatory agency, therefore you need to
a) Be comfortable working in an environment that requires adherence to protocol
b) Have no problems working in an agency that has no commercial interest
c) Work hard (Duh, every single employers want that)
d) Eager to seek challenges in work
e) Welcome critisim from peers or superiors to improve on work performance
f) Self-motivated
g) Have no problem taking a supervisory role
h) learn continuously even after graduation (Lifelong learning)
i) Be content with a competitive salary
VERY IMPORTANT NOTE: Even though I have broken down the desirable characteristic of an SC Employee to you, you are still obliged to answer truthfully even if you know that your answers will jeopardise your chance in getting the scholarship (like me). After all, it is no use if you have accepted the scholarship, graduated, and then feel miserable when you are working for the SC because you won't get bonuses. There is more to life than just scholarships. As a scholar(I'm a JPA scholar, not an SC scholar) myself, I don't think the "scholar" label makes you any more smarter than anyone. It is not a badge of honour. It is an obligation.
Fourth Round Assessment: Q and A session
I didn't attend this round mainly because I didn't go through the Psychometric Test. According to my sources however, the fourth round is like a briefing in which you and your parents are invited to have a dialogue with the SC. They will state out explicitly what they expect of you, and you have to return every summer for your internship (if you are sponsored to study abroad) . I think if you can make it to this round you are more or less guaranteed the scholarship.
So, for those of you who want to spread this guide around, feel free to do so. But seriously if you only read this blog for this guide, you suck.
The fields of discipline offered under this scholarship are :
- Business Administration
- Law
- Economics
- Islamic Finance and Banking
- Investment Banking
- International Business
- Accountancy
- A-levels (for holders of the Pre-U Scholarship)
Note: The scholarship is a free ride. It covers tuition fees, allowance, books etc.
There are 4 rounds of assessments applicants have to go through. (Excluding the essay submitted with the application form)
1st Round : Preliminary Screening
2nd Round: Case Study
3rd Round: Online Psychometric Test
4th Round: Q and A session
First, I shall start with the essay that is required of all applicants. Applicants are required to write a HANDWRITTEN essay "of not more than 1000 words on past achievements and future career aspiration in relation to the application of this scholarship."
Now, the SC Scholar Selection Panel have come across a lot of essays throughout the years, so what you would probably want to do is to make your essay stand out. Hence these are the advice I would give you:
-Do not write a letter that merely states your extracurricular activities. IE, I was the Head Prefect in High School, I represented the school in Frisbee Competitions, I was a school debater etc.That is what your resume is supposed to do, and what your stacks of certificates testify. Hence, what you should write is WHAT YOU HAVE LEARNED by participating in such activities or holding such offices. Add your personal experience, your opinion, your reflection. Link that to your job scope when you serve the SC. In other words, HOW DO ALL THESE CONTRIBUTE TO THE SECURITIES COMMISSION'S OBJECTIVES? All in all, your personal experience will be testimonial to your character, virtues and leadership abilities. By sharing the experience on how you have led the club with your board proves that you are both a capable leader and a team player. This is better than writing "I am a good leader and a team player.I am also very honest. bla bla bla"
I think the experience in the Young Entrepreneur Programme and the Citigroup Stock Challenge will give you some insights.
- Provide some insights from your observation/reflection of incidents around the world that has to do with the position in the SC that you will serve in the future.Eg, You've read about how the former SEC (The USA equivalent of the SC) Chairman Christopher Cox was partly responsible in the Financial Crisis I.E allowing the banks to overleverage themselves, his laidback leadership, his penchant to push for deregulation etc. What have you learned from all this? (Though your essay is not to criticise the SEC, or to present a ten-point plan to solve the problem,but merely to point out what you have learned from this)
Summary on writing an essay for the SC Scholarship:
Write more about what you have learned from your ECAs rather than the position you've held. To modify a quote someone from ReCom, "you are more than just the sum of your grades", "you are more than just the sum of your achievements." (I am sorry because I have forgotten which thread have I read this from and I can't remember your name. Please send me an email and I will edit this post to include your name. )
Include your opinions and the idealogy that you subscribe to in your essay. Remember to link all these to the objectives of the SC, to show how you can contribute as an SC employee (which is ultimately the goal of this scholarship) . The last advice on the essay writting is of course, to be creative within the leeway.
Now, in around two week's time (or perhaps longer), you will probably receive a call from the SC to inform you that you have been shortlisted for an interview. Congratulations! You are one step closer to your dream of working for the SC. For out of state applicants, you are required to travel to the SC Building in Mont Kiara, KL for the interview. Your travel expenses will not be reimbursed. The SC Building is in the middle of nowhere, right next to the National Science Centre. It is hard to get transportation to go there, since some taxi drivers don't know where it is. The best landmark to use is of course, the national science centre. If you stay in any of the hotel in Bukit Bintang, it will cost your less than RM20 to go to the SC Building. Do let them know if you have problems going to the SC Building, they are glad to help you.
First Round Assessment: Preliminary Screening
Next, let us move on to the first round assessment, the Preliminary Screening. Basically, this is just a typical interview in which you will be assessed by a panel comprising of two SC Employees. You are required to register with the receptionist, and you will be given an access card. Go to the library, (which is normally where the interview is conducted). You will be ushered into the waiting room with the other applicants from the other age groups. So Pre-U students will have the chance to meet with the undergraduate applicants. This is a good opportunity to make new friends, and besides that, lunch will be provided. (Though everybody seemed to nervous to touch anything). You will be summoned to your panel of interviewers. This is a normal interview in which they ask you to introduce yourself and typical questions like
-Apart from your academic qualifications, why do you think that you deserve this scholarship?
-Tell us about your family.
They will also ask questions about your essay. So if you don't really understand anything about fiscal policy, DON'T WRITE IT IN YOUR ESSAY. You don't want to give them an impression that you are just putting words to make your essay impressive.In other words, DO NOT INSULT THE INTELLIGENCE OF THE INTERVIEWERS. They are after all, smart people selected to work in the SC. They are experts of their field, so, do not pretend to be knowledgable if you are not.
Second Round Assessment: Case Study
So, if you have made it through to the second round assessment, you will receive a phonecall from the SC. This is by far the most interesting assessment throughout the interview. The second round assessment will NOT BE CONDUCTED by the SC. They will outsource this job to a HR firm. Representatives from the firm will brief you on your task. You will be required to do a case study, and this is where all the fun is. They will give you a report that describes the role you will play, and the problems that you are required to solve. Most of the time, this will be a policy-making case study. In the "report", there are views and perspectives from distinct special interest groups. As an independent taskforce committee member, you are required to make recommendations and formulate a viable policy. You will be given 30 minutes to work out everything on your own (No discussion, no brain storming). After that, you will be summoned one by one to present your policies and make your recommendations to the representatives from the firm, who will assess you. Once everyone in your group is done, you will all be gathered in a room to come up with a policy and reach a consensus in a given period of time. The representatives from the firm will observe your discussion (or should I say,debate.) Their assessment are kept confidential of course, but you might find the following advice useful.
Advice:
First of all,use the following guidelines
a) Capture the essence of the case study and identify the tasks
(What are you required to do? What recommendations? What sort of policy?)
Note: Someone in our group devoted his time to criticize the problem and blamed one of the special interest groups in the case study. He did not come up with any concrete measures, but merely treated us to an emotionally packed sermon. Of course, for failing to identify his task, he did not make it to the third round assessment. I hope this highlights the importance of identifying your task and to capture the essence of the case study.
b)Identify and balance the needs of the special interest groups
Preferably, you need to come up with a win-win situation. Therefore, you must be able to make concessions with the other applicants in your groups. Pragmatically speaking, you need to balance the gains and losses of the special interest groups in the case study.
In other words, give everyone something to take home. You can't have a policy in which a side has all to gain and the other has all to lose. In the real world, such policy won't even survive a vote in Parliament.(Who wants to attempt a political suicide?) Even when you have come up with your balanced policy, be prepared to make concessions with the other applicants so as to reach a consensus as a group. Sometimes you have to stand your ground on an issue, but sometimes, you have to take a step back. So go in with an open mind, attempt to see things from the other's perspective, and then decide on the best course of action to take.
In my group, everybody worked together to draft out a policy, but there was one little provision in which me and one applicant couldn't agree on.I had to work out a concession that one very agressive fellow applicant.In the end, we all reached a consensus. The representative nodded in agreement when we worked out the concession and I knew I've made it.
c) Be explicit in your policy
Do not insert ambiguous languages that could be interpreted in a variety of ways. Be explicit in your content. If you are introducing regulations, make them clear. Take this assessment seriously.
Summary : Overall, this is a task that puts your knowledge and people skill to the test. Teamwork is crucial in this round. If you must disagree with something, say something nice first. When the applicant who spent all his time delivering a sermon emotionally made his presentation to the group, the agressive applicant interjected, complete with an exasperated look and tone with "Yeah yeah I know what you feel, but what do you ACTUALLY HAVE TO PROPOSE?!" Ouch! Needless to say, Mr-I-am-delivering-a-sermon here wasn't very happy.
Don't do that.
Instead, say something nice like me. "I recognise the sentiments that stems from this issue, and I concur with Mr-I-am-delivering-a-sermon. However I think that we have to(insert what needs to be done,and your policy recommendations.) "That helped me to get the job done, and everybody liked me more than Mr Aggressive. So this are little things in which you have to learn, while Mr Agressive is doing exactly what is required, he lacked a little bit of tactfulness.
Finally, and importantly, MAKE CONCESSIONS IF IT IS REQUIRED. Learn to understand that you won't have everything your way. This is the art of policy making that I thought they should teach at the Kennedy School of Government. That said however, remember, if there are issues you think you need to stand your ground, do it. In my case, I didn't want to allow advertisement on beer and cigarettes. Mr Agressive wanted that(He insists Malaysia allows such advertisement to be aired, guess who has the last laugh?). So what do I do? I took half a step back. We worked out a concession in which beer and cigarette companies are allowed to advertise, but they must not in anyway , display images of beers or cigarettes. So what that is allowed under this provision is that they can only display the name of their brand, definitely not their product.
Third Round assessment: Psychometric Test
This is my graveyard. I got a call from the SC to go to my third round assessment online two days after I have returned from the second round assessment. I was in a buoyant mood and was acting recklessly when I took the test. This led to my downfall. I FAILED THIS ASSESSMENT.
This is a test that asks you to rate statements relative to its impact on your motivation for work.There is no right or wrong answer, but your answers will represent your character. The bad news is, you can only do it once.
Let's say its something like this.
How do you find working in an environment in which protocol has to be strictly adhered to.
You will need to click on the answers based on the scale of :
It highly demotivates me, it demotivates me, it does nothing to me, it motivates me, It highly motivates me.
After some deep analysis of the structure of the SC, I think candidates who fulfilled the following criteria are highly desirable by the SC.
Note:This is just my opinion. If it works for you, you may send me flowers, PM me for my address. If it does not, do not haul molotov cocktails into my house. You have a brain don't you? Courteously speaking, VIEWER DISCRETION REQUIRED. If you make are here to follow my advice blindly, PM me, I would love to know you, you can be my slave.
Desirable characterics for SC employees:
Since this is not a profit-driven,self-interest regulatory agency, therefore you need to
a) Be comfortable working in an environment that requires adherence to protocol
b) Have no problems working in an agency that has no commercial interest
c) Work hard (Duh, every single employers want that)
d) Eager to seek challenges in work
e) Welcome critisim from peers or superiors to improve on work performance
f) Self-motivated
g) Have no problem taking a supervisory role
h) learn continuously even after graduation (Lifelong learning)
i) Be content with a competitive salary
VERY IMPORTANT NOTE: Even though I have broken down the desirable characteristic of an SC Employee to you, you are still obliged to answer truthfully even if you know that your answers will jeopardise your chance in getting the scholarship (like me). After all, it is no use if you have accepted the scholarship, graduated, and then feel miserable when you are working for the SC because you won't get bonuses. There is more to life than just scholarships. As a scholar(I'm a JPA scholar, not an SC scholar) myself, I don't think the "scholar" label makes you any more smarter than anyone. It is not a badge of honour. It is an obligation.
Fourth Round Assessment: Q and A session
I didn't attend this round mainly because I didn't go through the Psychometric Test. According to my sources however, the fourth round is like a briefing in which you and your parents are invited to have a dialogue with the SC. They will state out explicitly what they expect of you, and you have to return every summer for your internship (if you are sponsored to study abroad) . I think if you can make it to this round you are more or less guaranteed the scholarship.
So, for those of you who want to spread this guide around, feel free to do so. But seriously if you only read this blog for this guide, you suck.
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