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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.


Net neutrality: Speak out now, for or against...

06-07-2014 1:24 AM

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Video of John Oliver on Last Week Tonight, [warning regarding language] via YouTube

 

If you want a painless way to learn about the ostensibly boring (but important) topic of  "Net Neutrality," then listen to the John Oliver piece. Unfortunately, you have to be willing to endure a lot of bad language. Basically, phone/cable companies (specifically, Comcast, Verizon and AT&T) want to end the practice of equal access to internet bandwidth. They want to implement a two-tier system that would allow big phone and cable companies premium access, and slower access for the rest of us. The Slate article linked below does a summary of some of the salient points of the issue:


"
Traditionally, with a few exceptions, the cable and phone companies have not blocked particular websites or discriminated in favor or against any of them. For the past decade, the FCC has made it clear it would punish a cable or phone company for deviating from providing 'neutral' access. In January, the FCC lost an important court decision, which said that the FCC does not have the authority to stop phone or cable companies from discriminating against websites or creating “'ast' and 'slow lanes' on the Internet—unless the FCC chooses to act under a particular part of the law known as Title II. Rather than act under Title II, FCC Chairman Tom Wheeler has proposed a rule that would permit the phone and cable companies to engage in discrimination, subject to fairly useless conditions. The FCC has received tens of thousands of citizen comments and stern letters from open Internet supporters in the Senate and Congress. The president—who repeatedly promised that he would ensure neutral access to the Internet without paid-for fast lanes—has provided almost no support for Wheeler, with the White House issuing distancing press statements. The chairman’s two fellow Democratic commissioners critiqued his plan publicly."

Oliver provided additional perspective regarding some of the operational tidbits regarding the big phone/cable companies. And almost everyone has agreed with him.

But on the other side of the issue--in favor of the two-tier system are:

  • Comcast, Verizon and AT&T
  • politicians and citizens who oppose "anything Obama is for"
  • the FCC chairman, Tom Wheeler, and
  • Jon Healey, who wrote an opinion piece this week in the Los Angeles Times that has some internet traction

Healey makes the point that Oliver is mainly a comedian, and should not be taken seriously. He also says, "The real question is what's the best way to preserve the Internet as an open platform for innovation and content, without interference from the cable and phone companies that dominate the market for broadband connections." He mentions that many conservative and liberal observers oppose the FCC messing with the current open situation. These are not really arguments that support his opposition to Oliver's position. Nevertheless, the headline seems to be opposed.

Since this is an issue which will have a major effect on everyone who uses the internet, it is probably important to have an opinion and to take advantage of a unique opportunity to state your opinion at the highest level. In case you want to actually comment where your comments will count, contact the FCC yourself at this website:



Source:  "John Oliver’s Hilarious Net Neutrality Piece Speaks the Truth...and nothing but," by Marvin Ammori, Slate, June 6, 2014.
"John Oliver finds humor in net neutrality, but loses the facts," by Jon Healey, The Los Angeles Times Opinion, June 5, 2014.

Follow up:

  • What arguments can you make IN FAVOR OF a change in the law to allow two-tiers of internet band width? Weigh those arguments against strengthening protections to keep the internet open.
  • According to the Slate article, what are the more nuanced Business Law issues that are part of the net neutrality issue?

Posted by teri.bernstein

Tiny Hachette publishing is taking on Amazon

06-02-2014 9:19 PM


image from the prnewswire

Michael Pietsch (rhymes with "beach"), the CEO of the Hachette Book Group, is in a battle with Amazon over pricing and availability issues regarding manipulation of the market for books. All of the other book publishers are waiting to see what happens. Other publishers have been afraid to take a stand against Amazon, because of Amazon's tremendous clout. Amazon has huge volume and it is willing to sacrifice profits in pursuit of market share. Not every publisher can afford to pursue that strategy.

But Pietsch seems willing to get the issues on the table in order to not lose everything in the long run. Unfortunately, because Amazon and Hachette have signed confidentiality agreements, the nitty-gritty details of their dispute remain secret. Nevertheless, other publishers guess that Amazon is trying to sell Hachette e-books at bargain prices, and Hachette is trying to maintain their profit margins. One tactic that Amazon is using to prevail in this fight is to deliver this message to potential customers wanting to buy a Hachette title:


Image from Amazon...when they are trying to delay
shipping your book, whether they have it or not...

This is a risky strategy for Amazon, because delays tend to annoy customers. Amazon's "branding" includes being customer-friendly, so any delay tactic might tarnish their image. Nevertheless, it also thwarts sales of Hachette titles--especially for those customers who are loyal to Amazon via their Amazon Prime relationship, or those who have an Amazon gift card to spend. Other customers take the bait and switch to another title recommended by Amazon when they are on a Hachette author's pages.

The "currently unavailable" strategy is also used by Amazon in dealing with independent, single-book-inventory booksellers (who know they have delivered inventory to Amazon's warehouses). Even if the titles are somewhere in Amazon's inventory, Amazon can put these low volume items on the back burner without tarnishing their reputation for delivery within two days...if they say the title is "currently unavailable."

The roots of this dispute go back to before the 2012 Justice Department anti-trust lawsuit against book publishers. Five publishers were found to have conspired to raise e-book prices. They'd banded together to try to maintain their profits in the face of the Amazon undercutting of prices. [See: "Can eBooks get past the price-fixing scandal?"] The settlement included a two-year period where Amazon was allowed to discount e-book prices.

That agreement has expired, and now Hachette is stepping up and bargaining on principle. Pietsch insists that books are a special kind of product and cannot be treated like some of the other mass-produced items sold by Amazon. A major Hachette author, James Patterson, supports Pietsch and has said, "Amazon also, as you know, wants to control bookselling, book buying, and even book publishing, and that is a national tragedy.


Other booksellers may want Hachette to win, but like scared schoolchildren in the face of a bully, they are standing quietly on the sidelines, fearful of the retaliation that has already been directed at Hachette. Meanwhile, some customers are upset by Amazon's policies. "If Amazon thinks I don't care about its silence, it's wrong. I take it personally that the company doesn't think it owes me even a half-baked explanation for why I can't buy some books from it," complained Jack Shafer, writing for Reuters.In addition, some legal observers think that Amazon is risking government anti-trust action.

Who will "win" in the long run?

Source:  "Hachette Chief Leads Book Publishers in Amazon Fight" by Jonathan Mahler, the New York Times, June 1, 2014.
"Amazon Absorbing Price Fight Punches," by David Carr,
the New York Times, June 1, 2014.

Follow up:

  • Read the articles and previous post linked above. In hindsight, do you think that the anti-trust suit brought against the publishers in 2012 may have had the unintended consequence of creating a better environment for an Amazon monopoly?  Give your reasons.
  • What do some established authors think are the risks of this stand-off? How might this affect sales?
  • What are the marketing and potential sales issues for Amazon, and for the publishing industry as a whole?

Posted by teri.bernstein

Maximizing productivity: take the strengths survey

06-02-2014 12:16 AM


image from the energystrategy.eu

No one can be productive at work when they are preoccupied with their problems or wallowing in unhappiness. According to the consultants at Energy Strategy (based in Amsterdam), a key to maintaining personal happiness is cultivating your strengths. Since many of us find it difficult to identify our own strengths, it is best to ask people who know you well...or take this Character Strengths Survey (it is the near the bottom of the list). 

The survey results will identify five strengths.  Then you can make of list of what gives you pleasure and another list of what, if you were at the end of your life, would you look back on and feel had meaning.

Match up your strengths with what gives you pleasure and meaning, and you have some paths to happiness. Making rituals to remind you to take actions multiple times per day to give your strengths an opportunity to influence your environment, and you have a chance at increasing your happiness--in spite of what your natural state seems to be. If you are at work, your strengths are what will build your success.

I did these activities at a workshop--and, simple though they seem, they were not easy.  I was a little at odds with one of the strengths that both the survey and friends had identified in me: bravery.  How could that lead to pleasure or meaning? Most of the times in my life where I have acted bravely have been extremely uncomfortable.

One of the young people in my breakout group had an interesting insight. She asked how I felt in the moments or days before I took an action that required bravery. Did I feel torn? In an ethical dilemma? Was I afraid? Did taking action relieve any of these negative feelings?  Were there positive results? She had a good point. Acting from bravery led to being less unhappy, if not happier. And those actions produced positive outcomes in the long run. Hmmm.

For most people, identifying strengths and building on those strengths can lead to increased satisfaction and business success. Can you identify your strengths?

Source:  "Happier at Work: How to Embed the Science of Happiness in the Way We Work" by Rens ter Weijde for Energy Strategy , workshop May 31, 2014.

Follow up:

  • Take the survey.  What are your five identified strengths?
  • How do you resonate with those strengths? How are you at odds with those strengths?
  • How can you see applying these exercises to improving your work performance or managing others?

Posted by teri.bernstein

Apple bites Beats: will it get its groove back?

05-30-2014 2:44 AM


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.

Follow 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.

Posted by teri.bernstein

Buzzfeeds believe it or not Business Facts!

05-30-2014 2:43 AM


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 advertising...so 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.

Follow 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

Posted by teri.bernstein

Food fight over sausage company

05-30-2014 2:41 AM


image from coupon site

There has been a bidding war on the stock market for a takeover of Hillshire Brands Co., which makes Ball Park hot dogs and Jimmy Dean sausages, among other processed meat products. The bidders? Tyson Foods and Pilgrim's Pride Corp.


Why would these companies want to own Hillshire Brands? According to the Marketplace article:

1) Diversification. Because of increasing prices on various meat commodities (beef, pork, chicken), producers want to control more of the market.

2) Hiring profits: the margins on Hillshire Brands products are higher, since they have more prepared food (for example, croissant sandwiches)

3) Competitive pressure: Hillshire Brands planned to buy another company--Pinnacle Foods, Inc. Other companies want to get control of Hillshire before that happens.

4) Possible tax benefits. Some analysts claim that two years after they previous acquisition, the tax penalties on a subsequent acquisition might be less...and it has been two years since the association of Hillshire Brands with Sara Lee.

Source:  "Why does everyone want Hillshire these days?" by Kate Davidson, Marketplace American Public Media, May 29, 2014.

Follow up:

  • What is Tyson Foods offering for Hillshire Farms?  What is the current market price?
  • If you are reading this after the takeover is complete, what was the sales price? Who was the successful purchaser?

Posted by teri.bernstein

California dream or tragic corruption?

05-30-2014 2:37 AM


image from www.senate.ca.gov

Two widely divergent opinions are expressed in the linked article. Corruption and collusion are alleged by those supporting one side of this issue. Fairness is alleged by those supporting the other side. In any event, the issue--a loan program for California high school graduates without U.S. citizenship--highlights how divergent opinions can be when money is involved.

The communication techniques on both sides of the issue can be identified and analyzed by a critically-thinking reader.

  • What arguments are emotional? What arguments are fact-based?
  • How are hyperbole used by each side?
  • Identify, for each side, the selection of only those facts that support their position.

Demographic predictions for the state of California--and their implications for business--seem to have been ignored by both sides. Nevertheless, demographics are usually a major factor in the business economy.


Source:  "Senator Lara Announces the California Dream Loan Program–College Loans for Illegal Aliens" by Stephen Frank, California Political News and Views, April 4, 2014.

Follow up:

  • Putting your personal feelings aside, analyze the positions taken in the linked article with respect to principles of business communication.
  • What effect might SB 1210 have on small business in California? Read the demographic data on Report P-1(Race) as you form your thesis.
  • Comment on the communication techniques used by those posting comments to the linked article.

Posted by teri.bernstein

How much would a Made-In-America iPhone cost?

05-24-2014 6:29 PM


Ironically, the image above is from the Moto X, which can be made in America for
approximately the cost of making it overseas.

"How much would an iPhone cost if it were entirely made in the U.S.?"

This question was posed on a recent Marketplace radio-cast. The supporting data had already been analyzed by IHS Technology. The bottom line? A 100% American-made iPhone would cost around $2,000...compared to the $650 - $850 retail cost of the iPhone on the market today.

It turns out the the increased price is partly due to labor costs and partly due to supply-chain issues for component parts. Labor in the U.S. is two to three times the cost of labor in China, where the phones are currently manufactured. But access to the needed parts is a larger factor. Whole "villages" have evolved around iPhone manufacture in China
(for example, Shenzen). Component parts are nearby and few logistics problems exist to keep the assembly lines for iPhones moving. In addition, labor costs for the manufacture of component parts--the most expensive of which is the display--are also a factor.

Source:  "How much would an all-American iPhone cost?" by Stacey Vanek Smith, Marketplace, American Public Media, May 20, 2014.

Follow up:

  • Does it matter to you where the iPhone is made? Is maintaining production facilities and production jobs in the USA a value to you? List your reasons.
  • Read the link regarding the Moto X as well. One point in that article is that customization is possible with the Moto X.  What do the authors of that article see as the pros and cons of American production for that phone?
  • What percentage mark-up, from cost to retail, is IHS assuming in arriving at the $2,000 retail estimate?

Posted by teri.bernstein

Brainstorm: harnessing the amazing and wonderful adolescent brain

05-24-2014 5:33 PM

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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.

Follow 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?

Posted by teri.bernstein

Wanna make $21 per hour at McDonald's? Move to Denmark

05-16-2014 12:49 AM


 image from reuters

In Denmark, there are two McDonald's wage levels: $21 per hour applies to adults 18 years of age and over. $15 per hour is the minimum wage for workers under 18 years old. Even the lower wage level is more than double the minimum wage for adults in the U.S.--and it exists in a public policy environment where health care is universal.

These wage levels were not McDonald's idea. They were bargained for by a union--and putting that union in place required years of work. Sometimes the discussion in the U.S. media around the minimum wage ignores the profits being made by large corporations. The talking points center on the hurdles all costs are for small businesses just starting up.

An additional argument for a higher minimum wage is that boosting wages for the lowest paid workers also boosts the salaries of entry-level professionals. This might mean less profit for stockholders of corporations like McDonalds--or fewer bonuses at the highest levels of management. Nevertheless, it also might mean that the social service costs of low-income wage earners are shifted away from middle class taxpayers and onto the corporations who are profiting from the labor provided at these low wages.

What do you think?

Source:  "I’m making $21 an hour at McDonald’s. Why aren’t you?," by Louise Marie Rantzau, Reuters: The Great Debate, May 15, 2014.

Follow up:

  • One definition of the "minimum wage" is a "living wage": the wage level that, with full-time work, can support a four person family at a lowest-rung middle class level.  What do you think would be the living expenses at this level?
  • What are the pros and cons of raising the minimum wage in the U.S.? What would be your definition of "minimum wage"? Is the concept of a "living wage" relevant? Would one wage work for the entire country?
  • Research the wages paid at Chipotle, Costco and Walmart. How do minimum wage laws affect large corporations and small businesses differently?
  • Have you ever supported yourself while being paid a minimum wage? Explain how that worked or didn't work. Read the article to find out how working for the current U.S. minimum wage affects others, if you do not have experience of your own.

Posted by teri.bernstein

Success: structure trumps overwhelm and struggle

05-14-2014 1:17 AM


Image from tompooleymarketing.com

Have a goal? Almost every business situation and every career path is about setting goals and achieving them.

But what does research show us makes the difference between someone who meets their goals and someone who doesn't? According to Tony Stubblebine, the CEO of Lift (a goal-setting app), here are some results:

  • "The number one driver of whether a habit change is a success or not is how big the initial goal is. Everyone, if they're consistent, will eventually achieve something massive. But the people that end up failing are the people trying to achieve overnight success."  In other words: set small goals to get to your ultimate aim step-by-step.
  • "The structure matters. People put all of this effort into optimization and research, but honestly everything we see about success rate says that the most important thing is to structure your goals so you can be consistent."


In other words, only pick intermediate goal steps that you KNOW you can achieve on a schedule.  One example cited is setting the goal "Go to the gym" rather than "Work out for 60 minutes on the elliptical machine."

Getting a four-year college degree is an example of institutionalized structure that creates opportunities for success.  One reason that it works is that a 120 semester-unit degree is broken down into semesters containing 3-5 classes. Still challenging, of course--but manageable. No one is expecting anyone to complete all 120 units at once.

The goal-achieving system described by Stubblebine highlights programming reminders into your phone or creating some other unavoidable trigger that will inspire consistency.  This is where the app comes in handy.

By the way, the tagline of Lift is "Succeed at Everything."

Source:  "WHY SUCCESSFUL HABITS ARE ABOUT STRUCTURE, NOT EFFORT," by Drake Baer, fastcompany.com, May, 2014.

Follow up:

  • Check out this app: Lift. What will be your first goal and what are the steps you will take to achieve it?
  • List three long range goals that someone you know aspires to. Act as a consultant to that person. What small-step actions would you recommend that will lead to success in each of those goals?

Posted by teri.bernstein

The Income Gap: How to fix it

05-14-2014 12:54 AM


image from therealsingapore.com

Robert Reich, U-C Berkeley professor and noted economist, is a huge fan of the middle class. Therefore, income equality is an issue that he has a lot to say about. And--unlike Thomas Piketty--Reich does not believe we are doomed. Some major factors which influence his position include the following actions which need to be taken to counteract the income gap:

  • Make work pay. If a minimum wage of $15 per hour were attached to the fast-growing fields of hospitality, restauranteurism, and tourism, this would make a huge difference. According to Reich, "No American who works full time should be in poverty."
  • Unionize Low Wage Workers.  Unions gave the middle class clout, and unions are now the only way that low-wage workers can face off against global competiion.
  • Invest in eduation. This might seem like a no-brainer, but education costs money and the uneducated sometime do not have a voice in policy decisions. According to Reich, "Education should not be thought of as a privae investiment; it is a public good that helps both individuals and the economy."
  • Invest in infrastructure.  This means road, public transportation, decent rents in places near to work, affordable utilities, education from age 3-23. Everything. America is behind on investing in these basic, business-supporting needs.
  • Pay for these investments with higher taxes on the wealthy. According to Reich, "Between the end of World War II and 1981 (when the wealthiest were getting paid a far lower share of toalt nation income), the highest marginal federal income tax rate never fell below 70 percent, and the effective rate (including tax deductions and credits) hovered around 50%. But with Ronal Regan's tax cut of 1981, followed by George W. Bush's tax cuts of 2001 and 2003, the taxes on top incomes wer slashed, and tax loopholes favoring the wealthy were widened."
  • Make the payroll tax progressive. Since payroll taxes are 40% of government revenues, shouldn't they be progressive, if that is an American value?  Government could exempt the first $15,000 of income from these taxes for a start.
  • Raise the estate tax and eliminate the “stepped-up basis” for determining capital gains at death. OUCH. This one would personally hurt me, but I have to admit that inherited wealth is not really fair. Taxing wealth that has not been personally earned is actually a very good idea--especially as far as adjusting for income inequality is concerned.  Fist step : reduce the taxable threshold on inherited wealth from $5.34 million down to $1 million. How many people is that going to hurt?  And those that it does "hurt"--can they afford it?
  • Stepped up basis inequality: Here is how the current rule works: If my parents sell their house before they die, they are subject to tax on the increase in its worth since they bought it. But...if it is in their estate, it passes to their heirs at the value it had the day they died.  The increase in capital worth that occurred while they were alive is NEVER TAXED. Is that fair?
  • Constrain Wall Street:  Resurrect the Glass-Steagall Act in full and restrict the size of banks--back to the 1975 level ideally. (Fat chance).
  • Give all Americans a share in future economic gains. According to Reich, one thing that aggravates the inequality is that, "The richest 10 percent of Americans own roughly 80 percent of the value of the nation’s capital stock; the richest 1 percent own about 35 percent."  He advises that,"As the returns to capital continue to outpace the returns to labor, this allocation of ownership further aggravates inequality. Ownership should be broadened through a plan that would give every newborn American an “opportunity share” worth, say, $5,000 in a diversified index of stocks and bonds—which, compounded over time, would be worth considerably more. The share could be cashed in gradually starting at the age of 18."  RADICAL.
  • Get big money out of politics. If corporations, with multi-thousand...and now multi-million dollar contributions to lawmakers allowed didn't control our political representatives, average Americans might have a voice. the Supreme Court's Citizens United decision made that impossilbe. But a Constitutional Amendment (according to Elizabeth Warren) or at least full disclosure (still possible under current Supreme Court direction, but not yet mandated by law) would be a step in the right direction.


Is there a chance to reign in income equality? What are we willing to do to make that a reality?

Source:  "Robert Reich: 10 ways to close the inequality gap: The former secretary of labor on American society's single greatest obstacle -- and what we can do about it," by Robert Reich, the Salon, May 13, 2014.

Follow up:

  • What are some of the highlights of Robert Reich's resume? Are you inclined to listen to his ideas because of this resume, or reject them? Please explain your rationale.
  • Does the Income Gap bother you? Why or why not?

Posted by teri.bernstein

"Chef": social media meets career path crossroads

05-12-2014 5:49 PM

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trailer of the movie "CHEF" from YouTube

By most accounts, "Chef" is not a profound film, but it is an engaging story that coincidentally highlights several aspects relevant to business and career realities. Here are some of the highlights (spoiler alert):

  • a chef is at odds with his boss: the boss wants a conservative menu; the chef wants to be creative
  • the boss gives the chef an ultimatum
  • a food critic uses Twitter to soundly criticize the chef
  • the chef learns about Twitter from his son, but responds to a tweet in what he thinks is a personal environment, but what is in fact, the Twitter universe
  • emotional outburst gets viral attention, leading to the end of the chef's employment
  • career path crossroads: chef starts a food truck
  • the best-of-all-possible outcomes evolves

For business students, this stream of events produces some obvious questions:

  • Can being fired be the best of all possible events?
  • Is Twitter a profound and effective marketing medium for a restaurant?
  • What are the regulatory requirements for setting up a food truck in various states or other jurisdictions?
  • Is being an entrepreneur the answer to every worker's dreams of real fulfillment and financial success?
  • Can financial backing realistically materialize in the way it does in this movie?

However these questions are answered, "Chef" remains an engaging and inspirational advocate for the entrepreneurial spirit.

Sources:  "‘Chef’ movie review: Jon Favreau makes a satisfying return to his indie roots," by Michael O'Sullivan, Washington Post, May 15, 2014.

Follow up:

  • What would you do if you were in a job where you felt your best qualities were not appreciated by your boss? What are the pros and cons of taking action--either for the character in the movie, or as you would imagine in your own situation?
  • Are you a Twitter user?  Have you ever been a part of a communication situation that has spiraled out of control?
  • What examples from fairly current events can you cite where Twitter users did not understand the way that Twitter works...with unfortunate and unforeseen consequences?

Posted by teri.bernstein

Twitter stock plunges...for a good reason

05-12-2014 5:36 PM


 image from sigalonit.soup.io

Twitter stock is in "free fall" according to the New York Times. Stock prices fell 17.8% in one day last week. What happened?

Here are some of the reasons stock prices might fall:

  • the entire stock market is falling, due to outside economic data
  • earnings reports for the company in question could be lower than projected
  • a competitor company might have come out with a better, competing, product
  • a derogatory news event involving company personnel could be trending
  • the stock may have "split"
  • the laws of "supply and demand" may have their expected effect.

In the case of Twitter, "supply and demand" is the culprit.


from Reuters via the New York Times article linked below

Here is what happened: Twitter IPO purchasers were not allowed to sell their shares until last week...when several Twitter stockholders' dumped their shares on the market. The excess supply drove the price down.

Meanwhile, the buzz about Twitter's ability to make money didn't help. Revenue is up, but user growth is almost flat. This bodes ill for the future.

"User engagement" is also down by 3% domestically and 10% internationally (this is the screen-refreshing rate of Twitter users).

Nevertheless, business consultants are all about "getting on to Twitter." Go figure.

Source:  "Twitter stock plunges as more shares hit the market," by Nicole Perlroth and Vindu Goel, the New York Times, May 6, 2014.

Follow up:

  • Can you think of other factors that may cause a stock price to fall? What factors might cause a stock price to increase?
  • What is a stock split? Is it good for investors or bad? Explain.
  • How do Twitter executives explain the recent stock problems?

Posted by teri.bernstein

Alibaba: Who will be making millions from its messy IPO?

05-08-2014 10:50 AM


image from investorplace.com

Check out the investorplace Alibaba IPO VIDEO STORY

Alibaba is a huge Chinese online retailer that was started by a non-tech-savvy English teacher named Jack Ma. It is making news because of its proposed IPO...and the mysteries that its recently-released financial statements are revealing:

  • Alibaba runs two websites, but its financial statements combine the revenue in one line.
  • Revenue grew 60% from 2012 to 2013, but there is no detail provided to support how this happened.
  • Alibaba claims that mobile-device net revenue has increased 19.7%, but shows no detailed breakout of mobile revenue and expenses in its financial statements.
  • Alibaba restricta searches of its site by Baidu, a popular Chinese search engine and information provider. Alibaba's financial statements do not disclose how this artificial means of protecting profits might change if access is opened after the IPO. In addition, Alibaba might need the internet hits that Baidu could provide. 
  • Alibaba is extremely profitable, but questions arise as to whether that profitability can be sustained.
  • Its business model is not inventory-based, but is a service that links buyers and sellers. This is much more difficult to evaluate and audit.

Initial Public Offerings can be full of surprises. We will see how this one plays out.

Source:  "Big Profits at Alibaba, but Filing Has Gaps," by Peter Eavis, the New York Times, May 6, 2014.

Follow up:

  • What is an IPO? Why would a Chinese company want to launch an IPO on an American stock exchange?
  • How does restricting access to Baidu help Alibaba?  How does it hurt Baidu? What are the pros and cons of this policy?

Posted by teri.bernstein

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