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  • Trade-offs on Minimum Wage

    The current federal minimum wage is $7.25 per hour, but in his State of the Union address, President Obama proposed an increase to $10.10 per hour. The Congressional Budget Office (CBO) reported, "Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly." Managers may decide to use more technology to reduce labor costs. For example, you can order a product and never talk to a person. You use your iPad, computer, or telephone. Raising the federal minimum wage would have advantages and disadvantages. What impact might a higher minimum wage have?
  • Minimum Wage Debate

    Protesters gather in front of a McDonald's in New York City The fast-food industry competes by offering low-cost meals. Historically, fast-food employees have been low-payed teenagers. Today, especially since the great recession, many fast-food employees are adults. Thus, the fast-food industry is a target of labor organizers, such as the Service Employees International Union , to increase wages. Protests to push for higher wages took place across the United States Thursday, December 6. The protesters called for pay of $15 per hour. The United State Department of Labor states, "The federal minimum wage for covered nonexempt employees is $7.25 per hour effective July 24, 2009. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA) . Many states also have minimum wage laws. In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages." Thus the minimum wage is set by the government, not by the employer. The National Restaurant Association, an industry lobbying group, said in a statement that the demonstrations were a coordinated public-relations campaign “engineered by national labor groups where the vast majority of participants are activists and paid demonstrators; relatively few restaurant workers have participated in the past.” Scott DeFife, the NRA’s executive vice president for policy and government affairs, stated, “Dramatic increases in a starting wage such as those called for in these rallies will challenge that job-growth history, increase prices for restaurant meals, especially in the value segments, and lead to fewer jobs created. Business owners already face great uncertainty due to a lack of a clear economic plan from Washington and the health care law’s implementation. Calls to double the minimum wage only intensify the challenges faced by job creators.” Who should set wages? The business or the government? Explain.
  • JFK and Consumer Bill of Rights

    Today, November 22, 2013, the United States marks the 50th anniversary of the assassination of President John F. Kennedy with memorial ceremonies and moments of silence. In 1962, President John F. Kennedy said in a message to Congress, "Consumers, by definition, include us all. If consumers are offered inferior products, if prices are exorbitant, if drugs are unsafe or worthless, if the consumer is unable to choose on an informed basis, then his dollar is wasted, his health and safety may by threatened, and the national interest suffers." Furthermore, he announced his consumer bill of rights. Consumer Bill of Rights The right to safety : to be protected against the marketing of products and services that are hazardous to health or to life. The right to be informed : to be protected against fraudulent, deceitful, or grossly misleading information, advertising, labeling, or other practices, and to be given the facts needed to make informed choices. The right to choose : to have available a variety of products and services at competitive prices. The right to be heard : to be assured that consumer interests will receive full and sympathetic consideration in making government policy, both through the laws passed by legislatures and through regulations passed by administrative bodies. The right to education : to have access to programs and information that help consumers make better marketplace decisions. The right to redress : to work with established mechanisms to have problems corrected and to receive compensation for poor service or for products which do not function properly. Since the 1960's, increasing consumer rights have been added by statute and by proclamation. You can see a list of laws in food and drug law history at the Food and Drug and Administration (FDA). The Federal Trade Commission (FTC) is one of the federal agencies charged primarily with protecting consumer rights. The USA.gov provides information for filing a complaint, being a smart shopper, understanding credit, and more. Managers need to know the laws. But, managers need to serve the customer. Would consumer protection laws be needed if businesses served the customer?
  • Elements of Disruptive Innovation

    Entrepreneurs, like Steve Jobs of Apple and Bill Gates of Microsoft, have brought us products that reduce costs and improve quality. Yet, even though the United States leads the world in health care innovation, no entrepreneur has appeared. Why not? Disruptive innovation, also known as cost-cutting innovation, is described in The Innovator's Prescription by Clayton Christensen, Jerome Grossman, and Jason Hwang. The professors explain that cost-cutting innovation comes from the supply side, not the demand side. The elements of disruptive innovation can be seen in the graphic below. The entrepreneur understands what consumers want. But, many times, consumers can't describe these wants. Who among us visualized using a personal computer, smart phone, or tablet computer? In the video below, Jason Hwang talks about disruptive innovation in health care. He is co-author with Clayton Christensen and Jerome Grossman, of The Innovator's Prescription: A Disruptive Solution for Health Care . In the regulation of healthcare, Robert F. Graboyes, senior research fellow with the Mercatus Center and professor at George Mason University writes, "Medicare's reimbursement formula muffles prices and distorts resource allocation in ways that affect prices and distorts resource allocation in ways that affect private insurance. Tax laws effectively bind employees to their employers' health plans. State regulations protect insiders through scope-of-practice regulations, protectionist licensing, and certificate-of-need requirements" ( Robert F. Graboyes, " Where are the health care innovators ?"). How can managers influence the external environment of political/legal/regulations? How can managers drive costs down while increasing quality?
  • The Affordable Care Act

    On October 1st, anyone can go to http://www.healthcare.gov and use the new Health Insurance Marketplace to see all of the health plans available in an area and sign up for one. Also, anyone can find out if they are eligible to pay less for private health insurance or whether they qualify for other free or low-cost programs. Attached is a report discussing how affordable insurance will be. Find your state's Marketplace premiums at http://www.whitehouse.gov/healthreform/map . What is the Affordable Care Act and what does it mean for a company and its employees?
  • Happy Labor Day!

    Labor Day, an annual federal holiday on the first Monday in September, is celebrated to acknowledge the social and economic achievements of American workers and their contributions to the strength and prosperity of the United States. Often, it is considered the unofficial last day of summer, because it is often the last weekend before the new school year begins. This is ironic since there is a connection between economic mobility and educational achievement. The more education a student can get, the better his or her chances of getting a job. The Brookings Institution's Hamilton Projec t "policy memo provides 13 facts on the growth of income inequality and its relationship to social mobility in America." (See attached.) The chart below shows that education is the best investment. The Hamilton Project authors report: "Obtaining a college degree can significantly boost one's income. Over the past three years, individuals between the ages of thirty and fifty who graduated from high school but did not attend college could expect to earn less than $30,000 per year. Those whose highest level of educational attainment was a bachelor's degree earned just under $60,000 per year, and those with an advanced degree earned over $80,000. But even individuals who attend college and do not obtain a degree still see an increase in their annual earnings." Do you someone who is trying to decide if working and staying in college is worth it? Do you know someone who has been laid-off and is looking for a job? How can people move ahead? How can they upgrade their skills? What is the vital link between education and the workplace?
  • DOJ Blocks AA and US Airways Merger

    The US Department of Justice (DOJ) and attorneys general of Arizona, Florida, Pennsylvania, Tennessee, Texas, Virginia and the district of Columbia filed suit August 13, 2013 to stop American Airlines and US Airways from merging. The proposed $12 billion merger would combine the two airlines into the world's largest carrier. The lawsuit alleges that the merger would reduce competition. It would "raise prices, impose new or higher baggage and other ancillary fees, and reduce capacity and service." Managers see the merger as necessary in an increasingly competitive market. The airline industry's business model is challenging. Since the 1980s, more than 40 U.S. airlines have declared bankruptcy. But, unlike airlines in earlier mergers, both American and US Airways are profitable. Cheryl Hall of the Dallas Morning News interviewed Robert Crandall the retired chairman, president, and CEO of AMR, parent company of American Airlines (August 14, 2013, D1, 10D). Crandall told Hall the following. "This is another indication that the U.S. government does not know the first thing about the aviation industry. The government made a mistake when they allowed US airlines to send their airplanes overseas for maintenance, thus sacrificing tens of thousands of middle-class maintenance jobs in the U.S. And they made a mistake when they permitted Delta to absorb Northwest and permitted United to merge with Continental because they created monolithic carriers that require monolithic competitors. Without a merger, neither (American or US Airways) in the very long run can make it -- be sure to emphasize in the very long run . Ten years down the road, if American and US Air don't succeed in creating greater mass and more ubiquity, they can't compete effectively against United and Delta." The merger would have left just four large companies serving the U.S. airline market. Does the merger hurt consumers? All managers study the business environment, with political being one of the most important elements. Did the managers under estimate the government issue? How could the relationship with the Justice Department have been managed more carefully?
  • Foreign Corrupt Practices Act Quiz

    Managers and employees of global operations must be familiar with the Foreign Corrupt Practices Act (FCPA). It is illegal to accept or offer a bribe. How well do you know the Foreign Corrupt Practices Act (FCPA)? Take this quiz, published by the Wall Street Journal . It was adapted from guidance published by the Justice Department and the SEC. 1. Gas Corp. is a large energy firm based in New York and listed on the New York Stock Exchange. It enters into a joint venture with a private European company, Euro Gas Ltd., to bid on a contract to develop an oil field in Nigeria. Senior vice presidents at Gas Corp. and Euro Gas meet in New York and decide to hire a consultant, Middleman Inc., to funnel payments on the joint venture's behalf to a deputy oil minister with influence over the bidding process. The payments are invoiced as consulting fees, but Middleman Inc. passes most of the money to the deputy minister. The joint venture wins the contract. Which entities are liable under the FCPA? A) Gas Corp. B) Gas Corp. and Euro Gas C) Middleman Inc. D) All of the above Answer: All of the above. Gas Corp. is both based in the U.S. and listed on a U.S. stock exchange, either of which means it is bound by the FCPA. Euro Gas is liable because its executives made the decision to pay the bribe while they were in New York. And Middleman Inc., even though it never took any actions in the U.S., could be charged with conspiring with the other two companies to violate the FCPA. (Euro Gas could be charged in the same conspiracy, even if its executives had never stepped foot in New York.) *** 2. At a trade show in Shanghai, Widgets Co., a Kansas City, Mo., company that wants to expand its presence in Asia, invites current and prospective customers out for drinks and pays the bar tab. Those invited include midlevel executives at companies owned or controlled by the Chinese government. Is this a violation of the FCPA? Answer : No, the FCPA doesn't prevent companies from promoting their businesses or providing legitimate hospitality. However, be mindful that the Justice Department and the SEC consider employees of state-owned enterprises to be foreign officials, meaning it is illegal to bribe them under FCPA. *** 3. After drinks, Widgets Co. executives invite executives at one of China's state-owned utility companies to the U.S. to talk about a lucrative contract with the utility on which the American firm is bidding. Widgets pays for the officials to fly first class with their spouses to Las Vegas and puts them up in a casino hotel for a week before meeting with the Chinese executives on the final day of the trip to discuss the contract. Is this a violation of the FCPA? Answer: Yes. The trip can barely be said to have a legitimate business purpose. It is extravagant and clearly meant to curry favor with the Chinese executives, who have influence over whether Widgets wins the contract. *** 4. Mining Corp., a mining company listed on the New York Stock Exchange, just identified a new mineral deposit in Afghanistan. The company needs to build a road from the deposit to a nearby port and hires a local agent to help it secure the necessary permits from Afghan authorities. The agent informs Mining Corp.'s international vice president that he plans to make a one-time small cash payment to an Afghan clerk, so the clerk will stamp and file the permit applications quickly. In the past, the clerk has sat on such applications for months. The vice president authorizes the payment. Does the payment violate the FCPA? Answer : No. The FCPA contains an exception for "facilitating payments"-a euphemism for grease bribes-that are paid to obtain a routine service. In other words, Mining Corp. is paying the clerk to do something the clerk is supposed to do-file applications for permits. A note of caution, however: Facilitating payments may be illegal in the country in which they are paid, and they have to be recorded accurately in a company's books and records. *** 5. A few months later, the agent tells Mining Corp.'s vice president that he can't get an environmental permit for the road because the planned route would cut through protected wetlands. Mining Corp. could build the road around the wetlands for about a million dollars more. Or, the agent says, the company could make a $3,000 cash payment to the director of the country's natural-resources department, who in return will sign the permit so the road can be built on the wetlands. The vice president authorizes the payment. Is this a violation of the FCPA? Answer: Yes. The payment is clearly designed to influence the director, a foreign official, into using his power improperly. Unlike the clerk, the director has discretion to approve or reject the application. Your score 5 out of 5 : You're practically a compliance officer. 4 out of 5 : Your company provides good FCPA training. 3 out of 5 : You ignored your company's FCPA training. 2 out of 5 :...
  • Independence Day is Big Business

    Happy 4th of July! Independence Day is big business. Many Americans will buy an American flag, patriotic apparel such as a t-shirt or hat, and patriotic decorations. They will cook out or barbecue and watch fireworks. But, most of the 4th of July products are not made in America. Bloomberg Businessweek reports that American 4th of July standards are changing. "Budweiser, the signature American beer, is owned by a Belgian company; fireworks are made in China; even the big summer song is by two French guys." In addition to these outsourcing and importing decisions, most managers decide to keep the business open on July 4th, rather than taking a holiday. Spending for the July 4 holiday averages $191 per person, according to a Visa poll . So, most retail employees will work while most office employees will take off. The Statue of Liberty is an American cultural icon. Many businesses use 'liberty in their names or ads to associate themselves with freedom. How did you celebrate July 4th? Did you shop? Did you buy new patriotic merchandise, apparel, decorations, or accessories? What did you eat and drink? What would you tell managers about the holiday?
  • History of Affirmative Action

    Affirmative action originated in the 1960s as a plan to give members of specific groups priority in hiring or promotion. Laws that mandate affirmative action were passed to end job discrimination. But to get a good job, you need a good education. So, it shifted to college campuses. Race may be used for college admissions, but the vast majority do not consider race in their admission process. Even if the law doesn't require affirmative action plans, managers of many organizations choose to develop plans which include goals and timetables for achieving greater representation of and equity for protected groups. What is the importance of affirmative action to organizations today?
  • 10 Highlights from National Small Business Week

    Entrepreneurs are important to the economy of the United States. Thus, the United States government encourages competition. The Small Business Administration (SBA) was created in 1953 as an independent agency of the United States federal government "to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise, and to maintain and strengthen the overall economy of the nation." SBA just celebrated 50 years of National Small Business Week . You can sign up for email updates from the SBA. I just received this email with "The top 10 highlights from the National Business Week." "SBA is no longer the federal government's best kept secret."- SBA Administrator Karen Mills John Stonecipher, President and CEO of Guidance Aviation in Arizona, was named the 2013 National Small Business Person of the Year "Technology helps level the playing field for entrepreneurs."- SBA Administrator Karen Mills Advice to entrepreneurs from Co-Founder of Square and Twitter Jack Dorsey- "Always ask the question why." "If you don't have a business mentor, go get one for free at SBA.gov ."- SBA Administrator Karen Mills "The 3 P's of entrepreneurship are people, passion and perseverance." - Steve Case, Chairman and CEO, Revolution Co-Founder, America Online Chairman, The Case Foundation "If you get a compliant about your business, go grab a cup of coffee. Think about a thoughtful response before replying."- Angie Hicks, Founder and Chief Marketing Officer, Angie's List "Cash flow is king to helping small businesses succeed."- Dave Rader, Wells Fargo, SBA's 7(a) Loan Program Lender of the Year "We need to make sure America stays a magnet for manufacturing, and small business plays a big part in that."- SBA Administrator Karen Mills "You don't have to look far to see the hard work of small business owners, they stand with their companies through every challenge and success."- Lee Rhodes, Founder, glassbaby Successful entrepreneurs report that they are more likely to be curious, passionate, self‐motivated, honest, courageous, and flexible. Which of these characteristics do you possess? Do you think you would be a good entrepreneur? Why or why not? Which of the ten highlights do you find most inspiring?
  • Employee versus Independent Contractor

    Owning a business or being self-employed is the dream job of many people. One way to be self-employed is to become an independent contractor. In the audio presentation below, Rick Schampers provides information on what the law says in general about what factors and situations indicate a worker should be treated as an employee and which situations indicate workers should be treated as independent contractors. According to the IRS, to determine whether an individual is an employee or an independent contractor under the common law, the relationship of the worker and the business must be examined. In any employee-independent contractor determination, all information that provides evidence of the degree of control and the degree of independence must be considered. Facts that provide evidence of the degree of control and independence fall into three categories: (1) behavioral control, (2) financial control, and (3) the type of relationship of the parties. Does thinking about being self-employed as an independent contractor still sound good to you? You'll still have a boss -- your customer! In order to satisfy your customers, you might need to be assess able 24/7. You'll have to sell yourself to build a client base. You'll need to do your own billing and record-keeping. OR have you decided to conduct a job search? How does considering self-employment help you conduct a better job search?
  • Congratulations to the 2012 Baldrige Award Recipients

    The 2012 Baldrige Award recipients-listed with their category-are: Lockheed Martin Missiles and Fire Control , Grand Prairie, Texas (manufacturing) MESA Products Inc. , Tulsa, Okla. (small business) North Mississippi Health Services , Tupelo, Miss. (health care) City of Irving , Irving, Texas (nonprofit) The nation's highest award for innovation and performance excellence is the Malcolm Baldrige National Quality Award . It is a presidential honor, established by Congress in 1987 "to promote quality awareness, to recognize quality and business achievements of U.S. organizations, and to publicize and share these organizations' successful performance strategies." Past winners include Motorola, Xerox, and FedEx. The seven key areas of the Baldrige Criteria for Performance Excellence are: leadership; strategic planning; customer focus; measurement, analysis, and knowledge management; workforce focus; operations focus; and results. "The Criteria are designed to help organizations improve their performance by focusing on two goals: delivering ever-improving value to customers and improving the organization's overall performance." Organizations submit an application detailing their achievements and improvements in those key areas. Many U.S. organizations have improved since the Baldrige Criteria for Performance Excellence were introduced. Baldrige Performance Excellence Program Strategy Map is attached. You can give feedback on the form at http://patapsco.nist.gov/BNQP_Feedback/SubmitFeedback.cfm .
  • Frankenstorm Hurricane Sandy Stops Business in the East

    NASA timelapse of Sandy - Photographer: NOAA Yesterday, Hurricane Sandy, dubbed "Frankenstorm," hit a 1,000-mile-wide area of the East Coast, from Massachusetts to Virginia. The storm brought rain, flooding, cold wind, and power outages. Managers in the area decided to close or limit business hours. Retail stores and restaurants closed. Oil refineries in the Northeast shut down or cut production. Even the U.S. stock exchange closed for the first time since 1888. New technologies were used to communicate during the storm. Weather and News feeds on the Internet were enhanced for those situations where citizens might lose television or cable but have some access to Internet, especially through mobile devices. Utilities and police sent emergency update email and text messages. Need disaster information? There's an app for that! FEMA's app contains a checklist for an emergency kit and a page on what to do during a hurricane, including tips like "take refuge in a small interior room, closet, or hallway on the lowest level." The American Red Cross released a Mobile App that includes a request for help, a flashlight app, and weather updates. It has information about open shelters and an "I'm Safe" alert for Facebook, Twitter, and email so people can tell their friends and family that they are OK. People can follow key accounts on Facebook and Twitter ( @FEMA and @RedCross ) to track the storm. Even though businesses in the affected areas closed, several are running some of their technology operations through offices in other parts of the U.S., Europe, and Asia. How has the storm affected businesses where you live? Do you think the storm will have a significant impact on business? Photo source: http://www.wptv.com/dpp/news/national/frankenstorm-live-video-8-year-old-boy-among-at-least-16-dead-in-us-after-hurricane-sandy-havoc#ixzz2AnDsZhKz
  • Crowdfunding

    Raising capital is a challenge for any business, but it is especially difficult for new businesses. Instead of asking investors for money, some small businesses and entrepreneurs are using crowdfunding Web sites like Kickstarter , to solicit money. Kickstarter began as a Web site for artists, musicians, and filmmakers to raise money for their creative projects. In this video, Yancy Strickler, co-Founder of KickStarter, tells how people are funding their entrepreneurial endeavors using his website. Backers pledge money for a project in exchange for items produced from the project, such as a music download or an art print. The Crowdfund Act is part of a new law, Jumpstart Our Business Startups (JOBS Act), which allows businesses to raise small amounts of money from small investors online. JOBS was "designed to jumpstart our economy and restore opportunities for America's primary job creators: our small businesses, startups and entrepreneurs" (See attachment). It changes the way small businesses raise capital. In general, the law allows companies to raise up to $1 million a year from small investors in return for part ownership. Whenever you ask people for help, you don't know what they will say. Will they like what you are doing? Will they want what you are offering? How successful do you think small businesses will be in searching for funds on the Web?