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Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985.  Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand (which is now part of PricewaterhouseCoopers).  She attended the University of Michigan and Wayne State University.

  • Apple bites Beats: will it get its groove back?

    Image above of The Beats by Dr Dre headphones cradling the Apple logo , signifying the new merger Jimmy Iovine has agreed to sell Beats Electronics to Apple Inc . for $3 billion. Beats Electronics, the maker of Beats by Dr. Dre premium headphones, currently has a contract with Hewlett Packard to integrate Beats hardware with their machines. (The HP contract will not be renewed when it runs out in 2015.) Apple seems to be buying a company that brings to the table some attitudes and features that Apple lacks. "Human curation" (rather than algorithms) drive the music selection of Beats' streaming music services. The Beats headphones couldn't be more unlike the Apple ear buds--they deliver sound quality far superior to what the tiny ear buds even attempt to offer. But Jimmy Iovine does share the key quality of showmanship coupled with "reality distortion" that Steve Jobs used to create a memorable business story. One claim that Jimmy Iovine makes about Beats is that it it built its $500 million business over three years while spending "zero dollars" on marketing--just by using their ability to "harness the media." They can talk all they want. It will still be a treat to see what products evolve from this partnership. Source: " A New Irreverent Spirit at Apple " by Vindu Goel, the New York Times BITS, May 29, 2014. F ollow up: Have you listened to music using Beats Electronics headphones? What are the pros and cons, compared to Apple ear buds? Compare and contrast this new acquisition by Apple with Beats Electronics' partnership with Hewlett Packard.
  • Buzzfeeds believe it or not Business Facts!

    image from the "article" linked below... Buzzfeed--which often links the social-networker to cute kitten videos--periodically posts various items that will "Blow Your Mind." This business communication technique (hyperbole) is a primitive way to generate excitement and urge viewers to click through to the "article." What is the purpose of this type of article? Buzzfeed makes it money from generating clicks is the purpose of a headline like this. I clicked through to find article inspiration for this blog...but the whole set up of this was interesting from a business communication point of view. In other words, nothing on the list really did "blow my mind".... Source: " 57 Fascinating Business Facts That Will Blow Your Mind " by Jessica Misener, BuzzFeed Business, March 21, 2014. F ollow up: How many ads did your run into when you viewed Buzzfeed's List of Business Facts? What products were offered? Did you find anything substantive in the list that added to your general knowledge? Did you research any items to find out additional information or see if they were true? Define hyperbole and give other examples of hyperbole
  • Accounting skills linked to moral high ground

    image by Javier Jaén from the article linked below Americans don't understand much about accounting and finance. Jacob Soll , a professor of history and accounting at the University of Southern California, thinks that this lack of cultural literacy in accounting may be partially responsible for the unfettered lack of morality and self control exhibited by financial institutions in modern life. He makes the point that when accounting skills were pervasive in society, people viewed keeping things in balance as a moral prerogative as well. In the heyday of the Dutch East India Company and the Medici financiers in Italy, portraits of businessmen were painted with the individuals actually doing accounting, or with their books of account in prominent display. The basis essence of double-entry accounting is fairness and equality in each business transaction. Debits = Credits. According to Soll, as a society we have left the understanding of these accounting basics concept to "specialists and computerized banking." He suggests, " If we want stable, sustainable capitalism, a good place to start would be to make double-entry accounting and basic finance part of the curriculum in high school, as they were in Renaissance Florence and Amsterdam ." It can't hurt. Source: " No Accounting Skills? No Moral Reckoning ," by Jacob Soll, New York Times opinionator , April 27, 2014. F ollow up: Do you want to get started on your accounting literacy? Check out this link from the Accounting Coach. Summarize what you learned. What is the historical significance of the Dutch East India Company?
  • Researchers find USA is no longer a democracy; what does this mean for middle income business people?

    image from Many of us educated in the United States grew up thinking that "democracy" and "free markets" went hand-in-hand, and that both were "as American as apple pie." But a newly published research study, Testing Theories of American Politics: Elites, Interest Groups and Average Citizens , by Martin Gilens of Princeton and Benjamin I. Page of Northwestern University, makes the case that the U.S.A. is no longer a democracy. Their findings, in a nutshell: " Comparing the preferences of the average American at the 50th percentile of income to what those Americans at the 90th percentile preferred, as well as the opinions of major lobbying or business groups, the researchers found out that the government followed the directives set forth by the latter two much more often ." In other words, these groups have influence over public policy, regulation and law-making: Americans with income of 90% and above major lobbying groups major business groups In fact, Gilens and Page found that, " the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy ." If there are few major employers, or power is concentrated in the hands of the few, what is the mechanism for paying adequate wages and salaries to workers and middle managers? There is no incentive to pay fair salaries if the number of employment options has diminished, and the regulatory bodies are controlled by the companies that are supposed to be regulated. There are an increasing number of op-ed pieces, research papers, and books addressing the issues of income inequality and the diminished existence of truly free markets. Both have affected the economy and business practices in the United States. Sources: " Princeton Concludes What Kind of Government America Really Has, and It's Not a Democracy ," by Tom McKay, PolicyMic , April 16, 2014, citing an article to be published this fall in Perspectives on Politics . F ollow up: Do an internet search for "oligarchy" AND "free markets". Summarize the results of your search. According to the article by Tom McKay (or the research paper itself), what are some specific implications of Gilens' and Page's findings for middle-class business people? Play the devil's advocate: why is an oligarchy good for American business?
  • A social network just for college students...sound familiar?

    image of Evan Rosenbaum, Akash Nigam and Matt Geige of Blend. It's " deja vu all over again." Blend is a social networking site that is for college students only. This might sound familiar because that is how Facebook started, on Harvard's campus. I remember my students telling me...back in 2006...that they could "get me onto Facebook" because I had an email address that ended in .edu, but that most "grown-ups" were excluded. Now the demographics of Facebook have shifted. According to iStrategyBlabs , 3 million young people (under 25) have left Facebook within the last three years...while the number of users over 55 years old have increased by 80%. Does this sound like a "party" you'd like to be at as a college student? Here is how Blend works: A theme is posted each day, such as "Tailgate Saturday, Library Shenanigans or My Pet Is Better Than Yours." Users post photos relevant to the themes. Other users can "snap" the photos they "like." Photo-posters can earn points based on the number of snaps received to be redeemed as gift cards for Blend advertisers. Ads are inserted between every six photos. Blend has set up 4 seasonal campaigns a benchmarks for advertisers. Student "influencers" approve potential advertisers, and act as their representatives on each campus. Observers have tracked steady growth for Blend. Where will it be 3 years from now? Source: " A Social Network That’s Just for College Students ," by Eileen Zimmerman, the New York Times--You're the Boss, February 6, 2014. Follow up: How much do you use Facebook? How about other social networking sites? Make a pie chart showing the relative amounts of time you spend on various sites. What is your reaction to Blend ? What do you think of its motto: "Share, snap, score"? Evaluate its business and monetization strategies. What are some indicators of Blend's future success or failure? To whom is the phrase "it's deja vu all over again" attributed, and why is it funny?
  • "Bull Market's 5th Birthday" may be its last...

    It seems as though the celebration of five years of a Bull Market , which I wrote about last week, was the last bit of stock market cheer we might be hearing for a while. Investors seem to be responding to several negative economic factors, and the Standard & Poor's 500 stock index is down 5.8% since January 15th.The S&P 500 index was at 1741.89 at the end of trading on Monday, February 3rd. Some of the negative economic factors include: the pullback of "quantitative easing" by the Fed, which stimulated the money supply the global response to the change in U.S. monetary policy a manufacturing industry survey released on February 3rd (whose "bad" numbers were a result of this winter's bad weather) Observers are now awaiting the market's response to the employment numbers which will be released later this week, on Friday, February 7th. Source: " As Recovery Looks Weak, Stocks Take a Deep Dive ," by Nathaniel Popper, The New York Times Dealbook, February 4, 2014. Follow up: What is the annualized percentage decrease, based on the 5.8% number noted above, that might be projected if the current bear trend goes unchecked? [Hint: it is an appallingly large number, and it is unlikely that the market will continue to plunge at the rate it has been falling over the last 2 weeks. Nevertheless, it is an interesting number to compute, to put the percentage in an annualized perspective.]
  • Businesses track and respond to the erosion of the middle class

    Image from Even if politicians and media celebrities debate whether the middle class is struggling in these economic times...the debate means little if corporations are already reacting to their conclusion about this matter. Business entities, in preparing sales and production budgets, have already noted and responded to the current state of affairs: the upper class is buying and the middle class is not. In the Chelsea district of Manhattan, the Loehmann 's discount store is closing and the upscale Barneys store is taking its place. Red Lobster and Olive Garden flounder but the Capital Grille thrives. Only demand for the high end appliances is soaring; mid-range appliance demand is faltering. According to Steven Fazzari (Washington University) and Barry Cynamon (Federal Reserve Bank of St. Louis), in 2012 the top 5% of earners consumed 38% of the domestic product. This was up from 28% in 1995. They also noted that top earners' purchases have been driving the current economic recovery. Sources: " The Middle Class Is Steadily Eroding. Just Ask the Business World ," by Nelson D. Schwartz, The New York Times, February 3, 2014. " The Middle Class Falls Further Behind ," by Aaron Smith, , August 22, 2012. Follow up: What DID go wrong for Olive Garden and Red Lobster? Read the article that is linked to those chains above. Do you consider yourself middle class? What does that mean to you in terms of your current and future financial life?
  • Job creation in North Carolina

    image from "Promise Zones." The phrase implies hope and focus. The new initiative was presented at North Carolina State University, which is leading a group that hopes to "reinvigorate the nation’s manufacturing economy." The intention of the program is to bring manufacturing jobs back to America. The new program redirects existing funding, rather than requiring additional tax dollars. Deciding when and where to create the manufacturing institutes has required a lot of planning. A competition will be held to decide which proposals will actually be funded. According to the article, "This is the first of three such institutes the White House plans to announce in the coming weeks. It will be financed by a five-year, $70 million grant from the Department of Energy, which will be matched by funding from the consortium members, including the equipment maker John Deere and Delphi, an auto-parts maker." This specific initiative will focus on advanced semiconductor technology in order to create energy-efficient devices for various industries. Source: " Obama Announces Institute to Create Manufacturing Jobs ," by Mark Landler, The New York Times , January 15, 2014. Follow up: Is "Promise Zones" an effective name for marketing this new initiative? In what ways does it "work"? Can you think of a better name to describe this effort?
  • Part Time Nation: good jobs turn permanently bad

    image from What usually happens during a recession is that people lose their jobs, and the economy slows. As the recession ends and growth recovers, jobs have returned and people can once again find full-time employment. Something different has happened in the recent recession and partial recovery. There have been rehires...but not for full time jobs. And those who managed to stay employed had their hours cut. New employee hires as the economy improved kept everyone in a part-time, no-paid-vacation-or-sick-leave, no-benefit status. Barbara Garson writes about the specifics relevant to this recession: " 21% of the jobs lost ...were low wage, meaning they paid $13.83 an hour or less. But 58% of the jobs regained fall into that category." "...employers used the downturn to dump entire departments and reorganize themselves so that the same work, the same jobs, requiring the same skills, would henceforth, in good times and bad, be done by contingent workers." D uring the course of the recent recession " ...corporate profits went up by 25%-30% , while wages as a share of national income fell to their lowest point since that number began to be recorded after World War II." Part time employment has traditionally been a "stop-gap" measure. But can productivity and quality be maintained over the long term by a part-time labor force? That remains to be seen. Source: " Abracadabra You're a Part Timer ," by Barbara Garson, Le Monde Diplomatique, English edition, August 20, 2013. Follow up: What was your experience in the job market over the last three years? If you are looking for your first full-time job after college, what kinds of positions have you been offered? Are the pay and benefits what you expected?
  • San Diego mayor and sexual harassment

    [View: :550:0] from YouTube July 11, 2013 Bob Filner, mayor of San Diego, has been accused by several female colleagues of sexual harassment. The video posted above was his initial apologetic response, but he hedges his apology with this statement: " It is a good thing that behavior that would have been tolerated in the past is being called out in this generation for what it is: inappropriate and wrong. " He seems to be justifying his behavior as being acceptable based on the standards of a previous time period. Observers have complained that Mayor Filner has not resigned his office, but instead has chosen to govern in absentia. Mayor Filner made another statement (in the video linked below) explaining that governing issues will be handled well while he takes a leave of absence for sexual harassment training. Source: " Video of San Diego mayor announcing his plans to undergo therapy ," by Robert Mackey, New York Times: The Lede , July 26, 2013. Follow up: What do you think of the Mayor's apology and refusal to step down? What are the parameters and consequences for sexual harassment in your workplace or school? Do you think Mayor Filner is correct in stating that sexual harassment standards were different a few years or decades ago? If so, when did they change? Are standards different in other parts of the world or in other cultures? Explain the differences. What do you think the standards of behavior should be?
  • Standard & Poor's-500 stock index at record high

    image from The Standard & Poor's-500 stock index closed today (Thursday, March 28) at an all-time high of 1569.19. Analysts consider this high to be more meaningful than the record set earlier this year by the Dow Jones Average, because the S&P-500 is a more broad-based sample of stocks in all sectors of the economy. The previous record as of the close of trading was in October 2007--and the mid-day high set then has still not been surpassed (1,576.09). As you can see from the graph above, this index has been trending upward for the past few years--in spite of poor labor statistics and global banking problems. This benchmark was applauded on the floor of the New York Stock Exchange. image from Source: " Broad-based S & P-500 Stock Index Ends at Record High ," by Nathaniel Popper, New York Times , March 28, 2013. Follow up: What occurred when the S & P-500 stock index was at its lowest point since October 2007? Pinpoint on the graph when that happened and do an internet search to determine its cause. In general terms, how is the S & P-500 stock index calculated?
  • Understanding the trillion dollar coin

    During the debt crisis, one "solution" surfaced that was out-of-the-box and surprisingly comprehensive. It was a legal work-around that would theoretically make the fiscal debt-ceiling crisis go away. According to Paul Krugman , here is how it would work: "The Treasury would mint a platinum coin with a face value of $1 trillion (or many coins with smaller values; it doesn’t really matter). This coin would immediately be deposited at the Federal Reserve, which would credit the sum to the government’s account. And the government could then write checks against that account, continuing normal operations without issuing new debt." [from the article linked below] Here is a quick explanation of the debt ceiling problem , and how the coin would solve it: The US government is currently not bringing in enough revenue to cover all of its expenses. A Congressional law limits the amount of debt (overspending) that the government can assume. If the Trillion Dollar Coin was minted, it could be deposited into the government's account, and "Voila!" the US government would no longer be in debt. Weird as this may seem, minting the coin is legal. By the way, the debt ceiling crisis was resolved temporarily by another piecemeal compromise. The threshold for violation will probably arise again in a few months. Perhaps the trillion dollar coin "solution" will be considered once again. Source: " Coins Against Crazies ," by Paul Krugman, New York Times, January 10, 2013. Follow up: What was the law allowing a trillion dollar coin to be minted probably intended for, according to the article? Even though the minting of the coin seems to have no underlying substance, why might it make sense, considering the current structure of monetary policy, both domestically and globally? What are the global economic risks of minting a trillion dollar coin, if any?
  • The History of US Taxation

    image from the New Yorker , November 26, 2012 Businessmen, co-workers, relatives, friends and politicians are all voicing opinions about taxes these days. Many of the statements sound like facts. But few of us have been formally schooled in the actual history of US taxation. In last week's volume of the New Yorker, Jill Lepore tackled the whole complicated mess. image from In her article she delineates the history of business interests fighting against taxes, beginning with Andrew Mellon, who helped re-define American citizens as "taxpayers. She talks about the history of "direct" taxes (real estate) versus "indirect" taxes (sales tax and income tax), and the way those taxes fit into constitutional questions. The take-away, from the article: " Taxes are what we pay for civilized society, for modernity, and for prosperity. The wealthy pay more because they have benefitted more. Taxes, well laid and well spent, insure domestic tranquility, provide for the common defense, and promote the general welfare. Taxes protect property and the environment; taxes make business possible ." Source: abstract of article at: " Tax Time ; why we pay" by Jill Lepore, New Yorker , November 26, 2012. To read the whole article, subscribe at the site, or visit your local library. Follow up: In what year did the Constitutional amendment allowing the US government to levy income taxes pass? What was the number of the amendment? What was the source of money to run the government prior to the income tax? During what period of prosperity was the highest personal income tax rate 92% in the US?
  • Insider trader Gupta gets a 2-year sentence

    image from Reuters by Jane Rosenberg Several months ago, I wrote a blog about the sentencing of Raj Rajaratnam in " Insider Trader Gets Eleven Year Prison Sentence ." This week, another player in that scandal, an insider at Goldman Sachs, Rajat Gupta, was sentenced to two years in prison and a $5 million fine. The sentence was far less than prosecutors requested. Nevertheless, the judge and others deemed Gupta's crimes as "a terrible breach of trust." Gupta leaked information, obtained at a Board meeting, of a pending investment by Warren Buffett. So urce: " Ex-Goldman Director Gupta Gets Two-Year Sentence ," by Grant McCool and Basil Katz, Reuters, October 24, 2012. Follow up: According to the article, what prominent individuals filed briefs requesting leniency for Gupta? Why do you think these individuals supported him?
  • Nobel prize in economics awarded for marketing models

    [View: utility/ :550:0] Video is linked at The Guardian This year's Nobel Prize in Economics went to two academic researchers who separately developed models for "two-way" marketing transactions. These transactions require that both parties to the transaction agree to engage in the transaction before it can take place. Some examples of these transactions are: applying to a college...and either getting accepted or rejected applying to rent an apartment...and either getting the apartment or not speed dating--where both parties must agree to meet again, or no transaction occurs matching kidney donors and recipients Roth, when interviewed after the announcement, said that he was going to teach his classes as usual. " But I imagine that they'll be listening with renewed interest," he said. "I think this will make market design more visible to economists and people who can benefit from market design ." Source: " Nobel Prize for economic sciences awarded to Alvin Roth and Lloyd Shapley-video ." [Note--the first part of the video is sub-titled in English, but the second part is in spoken English]. and " Nobel Prize for Economics Won By Alvin Roth and Lloyd Shapley ," by Larry Elliott and Josephine Moulds, The Guardian , October 15, 2012. Follow up: Read the article. What factor that is usually a major factor in a marketing decision is NOT the deciding factor in these two-way transactions? Why is it not as relevant? Is it still a factor in some or all of the examples listed above? Explain. What other business applications might benefit from this work?