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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.
  • Brainstorm: harnessing the amazing and wonderful adolescent brain

    [View:http://community.cengage.com/GECResource/themes/gew/ utility/ :550:0] Full length video via YouTube If you are between the ages of 12 and 24--this book can empower you and help you become more effective in your business life and in your personal life. If you are an educator or a manager, it can provide guidelines about motivating students or employees. If you a public policy wonk, it can provide you with the template for an incubator that could solve the world's problems. But if you are an entrepreneur looking to make a fast buck, there is no magic bullet here. A classic way to make money is to create a problem or a need and sell a product or a service that will fix that problem or assuage that need. Demonizing "the teenage brain" and naming diseases and syndromes to identify as a "problem" what may in fact be a natural evolutionary necessity creates business opportunities. Therapists, counselors, pharmaceutical companies, testing laboratories and departments in institutions of higher learning can all profit. If the characteristics of the adolescent brain are hard-wired as part of human growth--making this a problem to be solved is, from a marketing perspective, a huge and unending potential source of revenue. The author of this book takes a different perspective. He argues that the human brain is infinitely "programmable," and that each individual is the best programmer for their own brain. He also argues that the years between 12 and 24 are like a Silicon Valley incubator (or "start-up accelerator") . Any effort during this time period can bring greater life-time rewards. And some of the most effective tools are totally free. The investment requires a small amount of time daily, and the willingness to be in charge of one's own personal brain development. Source: " Brainstorm " by Dan Siegel, M.D., published by Tarcher, 2014. F ollow up: Are the approaches suggested by Dr. Siegel low-risk or high-risk investments? If you were managing a department with individuals in their first jobs out of college, how could you apply some of these principles in a practical way?
  • One really good bank for small businesses; Where is YOUR money?

    image from www.cleveland.com What makes a bank a "good bank" from the standpoint of supporting business growth and providing excellent service to customers? According to Steve Steinour, chairman and CEO of Huntington Bank: " Small businesses are the foundation of our Main Street economies throughout the United States. These businesses generate two-thirds of all of new jobs and help keep our neighborhoods healthy. Huntington is committed to supporting small-business growth as a key way to strengthen our communities as they continue through the economic recovery." Huntington Bank--a regional bank in Ohio--is the 33rd largest bank in the U.S. and has branches in Ohio, Michigan, Pennsylvania, Indiana, West Virginia and Kentucky. Nevertheless, Huntington Bank will probably be the number one small-business lender in the United States this year. For the first six months of federal fiscal year 2014 (which ends June 30, 2014), Huntington has the largest number of SBA loans. The classic business model for a traditional bank (as opposed to an investment bank) is to take depositors money, on which one interest rate is paid, and loan it out to regional businesses at a higher rate, thereby generating a profit. Investing in local businesses is the way to build strong business communities. On a side note, first quarter profits were down for Huntington, so a buy-back of shares is planned to help investor returns. First-quarter profits were $149 million, a declined of $4 million from a year ago. Per share, profits were unchanged at 17 cents. Sources: " Huntington Bank on track to become nation's largest small-business lender, but profits dip in first quarter, " by Teresa Dixon Murray, the Plain Dealer , April 16, 2014. F ollow up: What does "pent up demand" mean? Give another arena where this phenomenon has been observed. Where is YOUR money? In a mega-bank like Bank of American or Wells Fargo? Or in a bank with high numbers of small business loans? Watch the film " It's a Wonderful Life. " How does the Savings and Loan depicted in that film exhibit the characteristics of a bank that is important to small businesses? How does buying back shares help the returns for the bank's investors (as opposed to the banks depositors or creditors)?
  • Toyota criminal penalties: Are fines a real punishment? Why isn't Toyota in jail?

    image (of a Prius that had accelerated to 90 mph on a mountain road) from the Colorado State Patrol, published in the Los Angeles Times Toyota recently entered into an agreement to pay a multi-billion dollar settlement as a result of a known problem that caused deaths. The documented problem was that of sudden, unexplained acceleration. Last week, Toyota settled a criminal case brought against it by the Justice Department. Various lawsuits remain, but costs to this point include: $1.6 billion settlement of civil claims in a class-action lawsuit on this issue a $1.2 billion payment to the Justice Department, a criminal penalty, relating to wire fraud issues National Highway Traffic Safety Administration fine, which is capped by law at $35 million an agreement that Toyota will not be allowed to deduct its criminal penalty on its tax returns, which means that the American taxpayer will not lose out because of this settlement Part of the Justice Department agreement also stated that no individual executives will be prosecuted for these injuries and deaths related to the sudden acceleration problem. “The rules of evidence sometimes do not allow you to use certain kinds of evidence and certain documents against individuals, although they might be admissible against the company itself. Although there is an admission that they were individuals who engaged in conduct which provides for a basis to bring a case against the company, they are not charged here,” explained Preet Bharara, the U.S. attorney for the southern district of New York. Toyota can afford these penalties, as its current year profits total about $19 billion. If an individual person had committed these crimes, it is unlikely that they would get off without any jail time. Here are some mandatory minimum sentencing guidelines for individuals: Mandatory sentencing guidelines, Federal, from Wikipedia But Toyota is still allowed to operate. Toyota's stockholders continue to make money. According to the doctrine of " Corporate Personhood ," corporations have many of the rights as individuals. But if a corporation has the benefits of a person, should it also not be subject to the same criminal penalties? Source: "T oyota sudden-acceleration suit is ratified ," by Tina Susman and David Hirsch, The Los Angeles Times , March 20, 2014. " Toyota admits deceiving consumers; $1.2-billion penalty is record, " by Jerry Hirsch, The Los Angeles , Times, March 19, 2014. Follow up: What do you think? Is manufacturing a car when you know a defective part will cause deaths a punishable crime? Is it better to charge money penalties or to give the corporation the same penalty a "person" would receive: inability to work for a time period. What are the pros and cons of shutting down a corporation the same way an individual would have his or her business life shut down by incarceration? Should individual executives be prosecuted? Discuss the pros and cons. Comment on the agreement that Toyota cannot deduct its penalties from its taxes. Can individuals deduct fines such as parking tickets on their tax returns? Discuss the reasons for tax deductions and how criminal penalties fit into that logic.
  • Blackfish: whistleblowing ethics and animal welfare

    image from www.examiner.com What do the bands Heart, Willie Nelson, and Barenaked Ladies have in common? It seems that all of them have dropped out of commitments to play at SeaWorld due to the " Blackfish " scandal. Animal welfare is a hot-button topic that can polarize fans and radically influence events. If you aren't up on this particular scandal, here are the particulars: "Blackfish" is a documentary, directed by Gabriela Cowperthwaite , that is critical of the treatment of whales in captivity. It is currently available on Netflix . Controversy surrounding the leaking of documents relating to the 2010 fatal attack by a killer whale named Tilikum on Dawn Brancheau, a SeaWorld trainer, is a major part of the current issue. SeaWorld has pursued an aggressive campaign to deny harm to killer whales in captivity and to block certain OSHA officers from oversight of their facilities while the whole issue is under review. According to the NYT article, " Whether the film and a subsequent debate about the propriety of orca captivity have taken a toll on SeaWorld’s business — a publicly traded company with a stock market value of more than $3 billion — remains an open question ." Whether relevant or not..."Blackfish"--once considered a contender for the 2013 Best Documentary Oscar--was not nominated. It seems that SeaWorld's pushback against what may or may not have been unfair ethical complaints has had some influence in at least the small community of Academy voters. It remains to be seen what effects accusations--true or untrue--may have on the SeaWorld business model for years to come. Source: " Seaworld Questions Ethics of Blackfish Investigator ," by Michael Cieply, New York Times, February 28, 2014. Follow up: What effect do animal rights issues have on you and your business decisions? Do you eat meat? Wear fur? Wear leather shoes or belts? How do these issues affect your peer group? Are there any broader issues that influence your decisions? What are your thoughts about misplaced indignation and the effects it can have on legitimate business operations? What should the penalties, if any, be for this type of breach? What should the standards of proof or business harm be for damages? Have you seen "Blackfish"? What are your thoughts?
  • Drugs made in India found to be substandard...and a lot of our Rx are imported from India

    image from " Bad Medicine" American Enterprise Institute From the New York Times: " India, the second-largest exporter of over-the-counter and prescription drugs to the United States, is coming under increased scrutiny by American regulators for safety lapses, falsified drug test results and selling fake medicines ." The FDA has recently increased its inspection schedule of Indian drug producers, and has banned the export of several generic version of medicines including Accutane and Cipro, which had been found to be adulterated. Worries about drugs produced in India reached a high point last week, when the Indian drug producer Ranbaxy (which had been found in violation of safety violations "too numerous to count") asked the FDA to please let them continue to ship drugs while they are trying to fix the problems. The FDA said no. I would say that Ranbaxy is "unclear on the concept" of the importance of drugs being produced to a high standard of safety. But the problem is not just with that one firm in India. G. N. Singh, India's Drug Controller General, said in an interview with The Business Standard : “ If I have to follow U.S. standards in inspecting facilities supplying to the Indian market, we will have to shut almost all of those .” Some of the problems that have occurred include: over 100,000 orders were knowingly shipped of antibiotics with no medicine in them the World Health Organization study estimated that 1 in 5 drugs made in India are fakes counterfeit medicines in a hospital in Kashmir resulted in hundreds of infant deaths drugs shipped to Uganda had counterfeit labels from Cipla, a company which tries to maintain high standards. I have started looking at the labels that are on the medicines provided through my health plan. Sure enough--almost all of them are made in India. Hmmm... Source: " Medicines Made in India Set Off Safety Worries ," by Gardiner Harris, New York Times, February 14, 2014. Follow up: What are the possible remedies for this situation? What might you do to protect yourself? Would you pay more for drugs manufactured in the United States? Would a private auditing company's seal of approval be better? Who should be in charge of regulation of drugs taken by Americans? The U. S. government? The Health care provider that contracts with the drug companies? Explain your thoughts on this matter.
  • Outside the box: high pay for workers increases profits

    [View:http://community.cengage.com/GECResource/themes/gew/ utility/ :550:0] " The Good Jobs Strategy " TEDx at Cambridge 2013 Zeynap Ton , an MIT professor, has studied retail sector jobs and profits, and has found that companies who pay workers well are more profitable in the long run. She found that, initially, cutting jobs and hiring minimum-wage workers produces short term gains, but when customer satisfaction decreases, sales and profits suffer. Originally writing in the Harvard Business Review , Ton noted that companies that offer high pay, flexibility, advancement opportunities and personal autonomy were also profitable. She profiled four companies in particular: Costco, Trader Joe's, Quiktrip and Mercadona (a Spanish company). photo taken by Wilfredo Lee for AP photo These were some of the practices employed by those companies that helped the human resource plan work: simplification of the product offerings and fewer sales promotions; training of employees in mastery of a wide range of tasks; letting employees make minor decisions (enriching individuals' expertise and job buy-in, as well as lessening the need for management time) elimination of waste in all other areas but staffing--such as advertising and logistics management. Adam Davidson's article in the NYT Magazine delineates his personal experience with the furniture retailer IKEA. IKEA changed their human resource strategy between one visit by Davidson and a second visit. Davidson's first experience was terrible--lost in the huge store, and unable to find staff capable of helping him, he vowed never to return. When he reluctantly DID go back--the experience was totally different (he was even greeted at the door by someone who pointed him directly to the area he needed to go to). What had happened in the meantime was that IKEA had hired an " operations management " firm named Kronos , who helped them set up a system along the lines of Ton's research. Sources: " Thinking Outside the (Big) Box, " by Adam Davidson, New York Times Magazine, January 5, 2014. " The Good Jobs Strategy ," by Zeynap Tom, published by New Harvest, January 2014. Follow up: Check out the stock prices for Walmart and Costco from 10 years ago, five years ago and today. What conclusions can you draw from an analysis of stock prices, compared with human resource policies? According to the NYT Magazine article, what other researcher backs up Ton's claims, and how many dollars in increased sales can be obtained for every dollar spent on workers? What does the field of "operations management" or "workforce management" entail?
  • Business tool: Naps

    image from www.citytowninfo.com Brian Halligan is the CEO of HubSpot , an "inbound marketing software platform." His experience is that all of his brilliant ideas arise either when he is falling asleep or just waking up. Even though these epiphanies arise only once or twice a month, it is important to him to nap on a regular basis, and he encourages his workers to do the same. Much of his workforce is part of "Generation Y." He has rethought the business culture and his management style in terms of what motivates and nourishes those in this generation. Some of the preferences Halligan tries to cater to include: workers wanting to work wherever they can work workers wanting freedom, but who are also willing to take on huge responsibilities workers wanting to change jobs about every six months (so he changes routines and assignments frequently) workers being motivated more by learning than by money. Halligan's philosophy about Human Resource management seems radical, but he seems to have been willing to adapt with the times--an important attribute in an information-technology-based company. Source: " Brian Halligan, Chief of HubSpot, on the Value of Naps ," by Adam Bryant, The New York Times, December 5, 2013. Follow up: What is an "inbound marketing software platform"? What is a "seam head"? What is "VORP"? Do naps work for you in the same way they work for Halligan? How do your own sleeping patterns either help or hinder your working life? Do Halligan's views about the "Gen-Y" worker ring true to you? Why or why not?
  • What professions are perceived as honest?

    image from nursingcrib.com According to a recent Gallup poll , advertising professionals and stockbrokers are thought to be just slightly more honest than politicians and car salespersons. One probably wouldn't expect that businesspeople of any type would be ranked very highly. At best, a business transaction is " quid pro quo ." There is what is perceived to be an equal exchange of value: $130 to a retailer in exchange for a cashmere sweater, for example. There is no altruism or charity involved--it is an even trade. In accounting terms, debits = credits. If one side of the business transaction decides to misrepresent things--with a phony $20 as part of the cash tendered--or a 30% orlon sweater sold as 100% cashmere--then we are in the realm of dishonesty. And some businesspeople seem to be in the business of misrepresenting their products. Here are the results of the survey: What would it take for advertisers and car salespeople to be perceived as more honest? Source: " Congress Retains Low Honesty Rating ," by Frank Newport, Gallup Politics, December 3, 2013. Follow up: How would you rate Medical Doctors, Engineers, College teachers, Business executives, Stockbrokers, Advertising practitioners and Lawyers? Give your reasons for your rankings. What would it take for advertisers and car salespeople to be perceived as more honest? What does "quid pro quo" mean?
  • Unpaid internships under broad attack

    image from nyulocal.com Partly due to a lawsuit in a second industry famous for its use of unpaid internships, the unpaid internship "rite of passage" is becoming risky business for employers. A few months ago, I wrote about a lawsuit against Fox Searchlight Pictures won by two interns working in the Hollywood film industry. Now it is the publishing industry that is under attack. Lisa Denmark brought suit against Vogue , one of several magazines published by Condé Nast Publications. Some of her complaints included: being "terrorized" for not using sticky tape correctly on bulletin boards being "forced" to load books into an editor's car being "forced" to take items to a resale bookstore being "forced" to pick up dry cleaning being "forced" to buy and serve juice. Hearst Publications has also been sued by interns. Unpaid internships are sought by many students and unemployed college graduates as a way to "get a foot in the door" or to boost a resum é--particularly in hard-to-break-into creative fields, as well as business and finance . But there is a fine line in federal labor law between enforced servitude without compensation, and what constitutes an internship that is educational and beneficial to the person doing the work. Some businesses have routinely crossed that line, but recent litigation seems to make that gamble less cost-effective. Women's Wear Daily and Cond é Nast have recently cancelled their internship programs due to this risk. This doesn't help anyone. One media corporation, Atlantic Media , has taken a different approach. They did away with unpaid internships a few years ago, and has replaced them with 45 highly competitive, paid "fellowships." One major advantage of this approach is that its pool of applicants can be more diverse. (Unpaid internships have been a luxury that only those with wealthy family support could afford.) “ We were looking for ambitious, creative, original journalists, and we did not want income to be a barrier,” said James Bennet, editor in chief of The Atlantic . “Publishing that includes the web means we need to reach a national audience, and that requires a diverse mix of class, region, race and, yes, generations to do our job. ” Is the following a consequence or coincidence?: The Atlantic has grown 34% in the first two quarters of 2013 . What tasks make a great internship? I think the following pie chart was meant as a joke...but, like most humor, probably has a grain of truth: image from www.fullstop.net [ joke..?.] Sources: " How Washington Abandoned America's Unpaid Interns " by Stephen Lurie, the Atlantic, November 4, 2013. " Overlook the Value of Interns at Great Peril ," by David Carr, New York Times: the Media Equation, November 25, 2013. Follow up: The author of one of these source articles cites his own experience as producing results similar to those experienced by the Atlantic . Describe that experience and why it was significant.
  • iGoogle is Dead...

    image from www.makeuseof.com So...they've been warning us about this for 18 months..but today was the day: iGoogle is dead. In my Pollyanna-ish thinking, I'd hoped it would be extended the way that Google Reader had life beyond the expiration date. But: NO. It is gone. All my little widgets, all the habits that were part of my daily "hello" to my computer: GONE. Google's suggested replacements are more like using a mobile phone. I don't want my laptop to act like my phone. It has made me re-think my whole "relationship" with Google. I am moving my mail to my Apple Mail id, and I am re-creating all of my favorite widgets in " Startme " but there are many, many alternatives to iGoogle. I'm free. Moreover, I am tired of writing emails to friends about upcoming trips and then magically seeing ads for hotels in those places appear in my right margin seconds after I type. Here is my message to Google: If you hook us on a product: don't abandon us. The only piece of my iGoogle that was an uber-convenience were the widgets that connected me to the blogs of my friends. Google: when you abandoned me, I found that others could deliver them just as well. Also: you can do better at both protecting our privacy and keeping us connected with those whom we care about. Get some programmers who can write algorithms that actually address our needs! That new mail segregation system you imposed really wasn't working for me. So: goodbye, Google... Hello: doing things my way. Sources: " iGoogle died today " by Liz Gannes, All Things D, November 1, 2013. " How to stop using Google for search, email, video, maps, and more, " by Charles Arthur, the Guardian, May 2, 2013. Follow up: Think about the discontinued products that you "mourn." A restaurant? Website? App? A favorite item now discontinued by Trader Joe's? What part does marketing play in discontinued products? Consider the short term and long term effects.
  • How to Leave Work on Time

    image from www.news.co.au We complain that we work too much and our health consultants tell us to lead a balanced life. But sometimes we get caught in a culture of over-working, and we need some help to change our habits. Here are some suggestions offered by Lea McLeod: Begin the day with the end in mind . Having a plan to leave makes it at least possible. Tell people when you have to leave . This means telling people that requests made after a certain time cannot be addressed until the next day. Allow 20 minutes to transition . This will help you clean up and get organized for tomorrow. Do the most important work . List important tasks for the day, and do them first. Less important tasks can be squeezed in or done later in the day. Stop wasting time during the day . Distractions hurt productivity. Pick up the phone . Avoid the messages that can kill time with call-backs and phone tag. Use technology to help you focus . There are apps like Freedom that prevent you from internet surfing, and others that can help you stay on task in short time chunks. If you do value your time, and believe in life balance, creating good habits with respect to time management at work can be a life-saver. Source: " 7 Ways to (Always) Leave Work on Time ," by Lea McLeod, The Daily Muse Employee Almanac, September 13, 2013. Follow up: Does your workplace or circle of school friends overvalue working overtime? Are the number of hours spent working or studying more important than how effective they are? Do you judge people as "less than" if they work fewer hours than you do? What one of these techniques might you implement? What are your work habits with respect to managing your time?
  • Citibank Whistle-Blower Ignored and Fired

    image of Richard M Bowen III, originally from CBS interview, reproduced in the NYT article linked below. Richard M. Bowen III tried to tell his story on November 7, 2007 , when he was a Citibank executive in charge of mortgage underwriting. Bowen sent these words to top Citibank exectives: "The reason for this urgent e-mail concerns breakdowns of internal controls and resulting significant but possibly unrecognized financial losses existing within our organization." He detailed that the job he was doing--buying billions of dollars worth of "bad" mortgage loans, and packaging them into investments that would be resold--was creating serious problems for Citibank because they were over-valuing the investments. In other words, he described the crux of what would become the financial crisis that exploded in 2008. He was called the following week by Citibank attorneys and was told to keep quiet and wait to hear from them. They never contacted him. Bowen's responsibilities were reduced and he was marginalized within the company. In April 2008, he filed a whistle-blowing complaint, under Sarbanes-Oxley, with the Securities and Exchange Commission. He testified before the SEC, and filed over 1,000 pages of supporting documents, but there was no follow-up investigation. Meanwhile, Citibank received $45 million in taxpayer bailout funds as part of the "Too Big To Fail" deal engineered by Henry Paulson. (The U.S. government later parlayed the government's ownership position as a part of this deal into a $12 million profit.) Bowen was fired from Citibank in January, 2009, and had to sign a confidentiality agreement in order to get a severance package. In February 2010, Bowen was called to testify before the Financial Crisis Inquiry Commission . Although his later testimony on April 7 of that year is a part of the public record, the 4-hour testimony in February, with lawyers present, was sealed and cannot be accessed until 2016. Perhaps coincidentally, this would be after the five-year statute of limitations period for fraud has passed. Several events transpired between the initial FCIC meeting in February and the later public testimony, but the bottom line was that Bowen was pressured by Bradley J. Bondi (FCIC's deputy general counsel) as well as Citibank's lawyers, to sanitize his statement. Bowen decided that "it’s better to get something on record than nothing.” He made the requested edits. To him, the FCIC was clearly not functioning as an independent government investigatory commission, but was being strong-armed by Wall Street firms who had the power to affect the future careers of all parties concerned. As it happens, Bondi is now a partner in a Washington D.C. law firm and Citibank is one of its clients. Richard Bowen has this to say about the whole debacle: " It was devastating. It truly was. From my standpoint, the corruption extends to the highest levels of government. I feel absolutely, completely violated. " Source: " Was This Whistle-Blower Muzzled? " by William D. Cohan, New York Times, September 21, 2013. Follow up: Read, in the linked article, the detail of the events that transpired among Richard Bowen, the FCIC and Citibank's law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP. What do you think happened here? What alternative courses of action might have been taken, and what are the pros and cons of each--for Mr. Bowen, for Citibank, and for the American taxpayer?
  • Whistle-blowers: risks and rewards

    cartoon by George Wills from www.thegentlewaybook.com Whistle-blowers have been in the news lately. Last year Julian Assange of Wiki-leaks made headlines, and his story is being revisited in this season's film, The Fifth Estate . More recently, Edward Snowden stole classified documents and outed the NSA for "spying" on a wide swath of law-abiding citizens via their telephone interactions. Both of these individuals are facing prosecution, as their "truth-telling" involved secrets held by the Federal government. But individuals in the private sector have to weigh the risks when they discover evidence that their employer or contact has committed a crime. The downside of speaking up is explained clearly by Patrick Burns of the Taxpayers Against Fraud: “There is a 100 percent chance that you will be unemployed — the question is, Will you be forever unemployable?...The other 100 percent factor is the person who fired you, the person who designed and implemented the fraud, won’t be fired. He’ll probably be promoted again.” On the other hand, if the fraud discovered by the whistle-blower results in additional taxes paid to the Internal Revenue Service (IRS), then the whistle-blower could benefit from awards made by the Justice Department under the False Claims Act. Bradley C. Birkenfeld recently won a $104 million award for for information about the Swiss banking system. Nevertheless, the process of making a whistle-blowing claim is time-consuming, expensive and highly stressful. Big corporations don't make life easy for whistle-blowers, and corporations fight claims even when they know they have committed crimes. Even whistle-blowers who win are emotionally drained by the process. As observed by Patrick Burns: “ When people talk about the big whistle-blower payouts, I say, you don’t get it. You don’t see the train of pain I see every day. They can’t tell you their story without quivering and crying, even though they’re millionaires.” Additionally, 80% of claims made under the False Claims Act are not pursued by the Justice Department--but the process often exposes the employees making the whistle-blowing claims. Harassment and retaliation can result. Sometimes, then, the only reward for whistle-blowing is being able to live with yourself--knowing you did the right thing. Source: " The Price Whistle-Blowers Pay for Secrets ," by Paul Sullivan, New York Times, September 21, 2013. Follow up: Have you ever witnessed a crime being committed in a work situation? Or a smaller disregard for company policy? What have you done about it? What are the pros and cons of being a whistle-blower--short and long term?
  • Chinese "Steve Jobs" says his company is different from Apple

    image from alii.com Lei Jun, CEO of the Chinese company Xiaomi , is developing a reputation as the "Steve Jobs" of China. Yes, he runs a company that markets smartphones. Yes, he is a strong and visionary leader. Yes, he wears jeans and dark shirts. Yes, his product announcements are delivered much like Apple's product announcements. But in a recent interview on CNN, Lei Jun tried to downplay and contradict the comparisons with Steve Jobs. Lei Jun sees Xiaomi as a very different company from Apple. And he sees his role as very different from the role of Steve Jobs. image of CEO of Xiaomi, Lei Jun, from money.cnn.com: see linked VIDEO INTERVIEW Lei Jun views Apple as a "group of geniuses" who develop products that they have conceived as being what is innovative and best for their customers. Xiaomi, on the other hand, surveys its customers and potential markets, and then only designs and markets what their customers tell them they want. Another major difference, according to Lei Jun, is that Apple is a manufacturer of a product that has to be "marked up" considerably in price to cover costs of development and profit. Xiaomi, on the other hand, only incidentally is manufacturing and selling smartphones. Primarily it is selling future services that are what the consumers want. That way, the price of the phone itself can reflect the true costs of the phone manufacture, with a fair but small mark-up. Xiaomi began selling phones in 2011, and has rapidly expanded its market share in China. Their phones are manufactured by Foxconn, which also manufactures iPhones. Recently, Xiaomi hired Hugo Barra as Vice President of Xiaomi Global. Barra had previously headed Google's Android division. Although Xiaomi is currently privately held, it looks poised to be a major player in the world-wide smartphone market. Source: " Xiaomi CEO tired of Steve Jobs Comparison ," by David McKenzie and Charles Riley, @ CNN Money Tech, September 13, 2013. Follow up: Do you think that Lei Jun is being transparent when he contradicts the comparisons with Steve Jobs, or do you think he cultivates the similarities? Why did Hugo Barra leave Google to work for Xiaomi? What might this mean for the future?
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