• China's connection with Africa: No longer a plus?


      How China is Changing Africa, Al Jazeera English, August 11, 2015

    The video above, from five months ago, addressed both growing concern and emerging hopes among Africans regarding its relationship with China. On one hand, the concern centered on the purchase by China of land and natural resources, draining the continent of assets that may have been useful in building its economy for the future. On the other hand, some Africans were encouraged by the increased availability of loans, trading opportunities and technical expertise. 

    Lately, China's demand for African products has decreased dramatically. Nigeria (a major oil producer) and South Africa (iron ore) have been particularly hard-hit. Organizations like the International Monetary Fund (IMF) have lowered its predictions about Africa's economic prospects in the near future. This has a further dampening impact on the economy. Credit ratings of other countries have also been downgraded: Ghana, Angola, Mozambique and Zambia. 

    China's shrinking economy is hitting the African continent first, because of heavy investment and loans made there, but the ripple effects of the Chinese downturn is expected to be felt globally. 

    Source: "African Economies, and Hopes for New Era, Are Shaken by China," by Norimitsu Onishi,  New York Times, January 23, 2016.

    Follow up:

    • Watch the video and read the article. What countries and businesses in Africa grew during the Chinese economic boom? Are the markets for any of these products still thriving?
    • What products and countries are most affected by the waning interest China has for African products? What other factors have been problematic for African economies at this time? 

                  

  • Disney Outsourcing: H-1B foreign workers replace Americans


       YouTube video, the Tea Party channel: former workers--fired and replaced

    About 250 tech workers at Disney were laid off about a year ago. They were replaced by immigrants, primarily from India, who were given special H-1B work visa status. To add insult to injury, several of the American employees spent their last months at Disney training their replacements. Some of them mistakenly believed that they would be able to transfer to other jobs within Disney.

    The H-1B program's intention is to allow employers to recruit foreign workers for "specialty jobs" requiring skills for which it is difficult or impossible to find capable U.S. citizens. But as far as observers and former employees can figure, the only "special skill" possessed by the foreign workers hired by Disney was a willingness to work for lower pay.

    Some laid off Disney employees have filed a lawsuit in Tampa, Florida. Others are seeking to form a class action lawsuit. The defendants in these lawsuits are both Disney AND the intermediary recruiting companies who found the workers to fill the jobs. HCL (based in India) and Cognizant (based in New Jersey) are the primary agents recruiting and placing workers. The lawsuit claims the hiring and recruiting companies were colluding to displace the American workers.

    The lawsuit has caught the attention of other engineers, IT workers, accountants and administrators who believe there is an organized effort between American corporations and the placement agencies to replace workers by "outsourcing" jobs with workers who come to the U.S. and accept a lower salary.  

    In an effort that parallels the lawsuits, the Labor Department has opened investigations against both the companies doing the hiring and the companies recruiting the workers. 

    Source: "Lawsuits Claim Disney Collude to Replace U.S. Workers With Immigrants," by Julia Preston, New York Times, January 25, 2014.

    Follow up:

    • What are the positive consequences to businesses of allowing foreign workers in on a special work visa? What are the disadvantages to the company? What are the disadvantage to individuals in the U.S. workforce? What are the basic reasons that the U.S. government issues H-1B visas?
    • What other businesses are being investigated regarding this practice? List and describe the situation with the workers and with any regulatory or legal action.
    • What is collusion? Why is it a problem? What are the advantages of collusion to those participating?

               

  • It doesn't take a genius to do your taxes


       Michio Kaku explaining the concept of "zero" on Turbo Tax ad

    It is tax season.  Many of us, however, procrastinate about doing our taxes--for several reasons:

    • Some people fear making a mistake, so they figure it is safer to do nothing...at least for now.
    • Tax prep seems daunting, so easier tasks get completed before this more complicated task.
    • Some folks "work better under pressure." There is a certain thrill to having a high-pressure deadline.
    • Gathering paperwork takes time and effort, and many of us are lazy, or are distracted by leisure activities.
    • Some of us feel no time pressure at all--because there are extensions available until October.
    • If a refund is not expected, then there is no "positive feedback" associated with filing the return.
    • Filing a tax return costs money.

    In the ad above, Intuit's TurboTax tackles a couple of these issues:

    • The issue addressed directly is the "no cost" issue--no accountant to pay if you use TurboTax to prepare your taxes, and no fee to file your federal return electronically, either. (This year TurboTax is also paying the fee for filing your state return.) 
    • The calm and serious young man in the ad who is preparing his taxes conveys the message that the task can be untaken with serenity.
    • The ad line, "It doesn't take a genius to do your taxes with TurboTax" drives home the concept that preparing taxes this way is not complicated.

    It is a daring ad campaign, however. These physicists are not popular "household names." Also it might be risky to use these scientists because they ARE geniuses and they are the ones that are helping the tax preparer. But the conversations are so super-simplified that anyone can understand them, so it might be working.

    Maybe Intuit (who makes TurboTax) and Weiden + Kennedy (W & K, the ad agency) are doing a public service by educating the populace about the scientists, and by placing the ads early in tax season. It doesn't hurt that they are sponsoring major end-of-season football games that will be seen by large numbers.

    But some industry observers postulate that one motivation for W & K might be to garner a Clio Award (the Oscar of the advertising world). TurboTax is probably just trying to maximize sales--or defensively stay in the minds of consumers who will be bombarded during the same football games by ads from H & R Block (a tax preparation company).

    By the way, I have prepared my family's taxes with TurboTax for over ten years--and I find that it is just as easy (or just as hard) as pulling together the information to give to a professional tax preparer. 

    Sources"Intuit Turbo Tax Ad 2016: Michio Kaku," televised during football games on 1-24-16.
    "Physics Geniuses Illustrate the Mind-Bending Simplicity of TurboTax in W + K's New Ads: Campaign Will Include a Super Bowl Spot," by David Gianatasio, AdWeek, January 4, 2016.

    Follow up:

    • Do you find this ad series to be effective? Why or why not? What are the downsides and upsides of taking this approach? Discuss the defensive strategy that may be a major factor in Intuit's running this ad campaign.
    • Do you prepare your own taxes? Do you use an accountant? Do you let your parents handle your tax preparation? What filing deadline guides the timing of your information-gathering, and how many weeks in advance do you prepare? Explain your reasons for your tax-related behaviors. 
    • Check out the link to Weiden & Kennedy. Comment on some of their (daring) ad campaigns. 

                                                                       

  • The Blizzard and Business


      Blizzard 2016 in New Jersey across the Hudson from invisible NYC; Al Jazeera English

    Once again, bad weather conditions are buffeting the eastern seaboard of the United States. Anticipation of snow conditions have businesses making a difficult decision: whether to stay open, cut back operations, or close. 

    "Those that close are unlikely to recoup the losses. Business interruption insurance would go into effect only if there is physical damage," noted Jeanne Salvatore of the Insurance Information Institute.

    Anticipation of snow conditions has already affected the following business operations:

    • 5 major airline hubs between the Carolinas and New York have shut down, canceling 6300 flights and delaying at least 4,675
    • Washington D.C.'s mass transit system was shut down through the weekend
    • Schools and universities are closing or canceling classes
    • Office workers are being asked to telecommute, especially since city mayors are asking people to stay inside...and certainly not drive
    • Garth Brooks cancelled two sold-out concerts
    • Thousands of restaurants and retail businesses are closing--to protect both workers and customers

    Not every business is suffering due to Snowmaggedon 2016. Some businesses are experiencing a spike in business and workload prior to the storm:

    • Hardware stores ("batteries, flashlights, salt, snowshovels")
    • City workers and charities are preparing additional shelter for the homeless and others displaced or endangered by the weather conditions.
    • Various drug stores and groceries are staying open as long as they can.

    Most businesses are using social media (Facebook and Twitter) to communicate to their customers about the status of their business operations.

    And by the way, 24 Hour Fitness on the Jersey Shore intends to remain open throughout the storm and the aftermath.

    Source: "Blizzard Forecast Prompts Dire Warning on East Coast as Snow Begins," by  Sheryl Gay Stolberg, New York Times, January 22, 2016. [includes a slide show of photos and updating links]
    "Blizzard: Should Businesses Open or Close?" by Michael Diamond, Devin Loring, Dan Radel & Nicquel Terry, app.com, a division of USA Today, January 22, 2016.

    Follow up

    • What businesses see sales increase before a bad snowstorm?  How about after a bad snowstorm? Are there investment opportunities created by this?
    • When your school or business is affected by very serious bad weather, how does it respond? Are there options to work at home? Make up work? If you are working, are your personal days or sick time bank affected? Discuss what you feel is fair. 

                                                                                                                

  • Recycling plastic: how falling oil prices make this less profitable


      Overview of plastic bottle to polyester recycling via YouTube

    Let's say you take your old clothes to Goodwill. You might think that taking your used soda bottles and aluminum cans to the recycling center is analagous. 

    It isn't.  Goodwill is a charity, but recycling is a for-profit business--even if it looks like it is being hosted by your municipality. 

    One of the underlying factors that can make recycling profitable is illustrated in the video above. According to madehow.com, if polyester fabric wasn't made from recycled plastic, it would be made from coal, air, water, and petroleum. Oil. So when oil prices fall (in 2015 oil was $120/barrel; now in 2016 oil is less than $30/barrel), it becomes cheaper to make polyester from oil instead of the recyclables. Since the recycling companies that clean and sort the plastics still have to make a profit, and their costs have not decreased--they can't lower the cost they sell the "raw materials" at. But the oil prices are lower. The cost/benefit of recycling disappears.

    This can make a serious dent in the $100 billion dollar/year recycling business. Not to mention thwarting the sustainability issues. If a potential buyer is purchasing oil rather than recycled plastics, the plastics end up in the landfill...and recyclers go out of business.

    So if I were the owner of a recycling operation, I'd be happy to see gas and oil prices GOING UP. 

    Source: "Low Oil Prices Interfere With What Recyclers Are Paid for Plastic," by Stacey Vanek Smith, Planet Money, NPR, January 14, 2016.

    Follow up:

    • Describe how this situation is a classic example of the relationship between product costs, pricing and market share. 
    • Do some research. What are the most lucrative products to recycle? Make a 3-column chart showing the material, the current price paid to the recycler for the cleaned materials, and the products made of the recycled materials. 

                                                                                  

  • Legendary Pictures: $3.5 billion stake purchased by Chinese company


        Warcraft (from Legendary Pictures) trailer, 2016 via YouTube


    What conclusion can you draw about this list of top money earners in the global market?

             from Box Office Mojo

    It looks as though the big earners are primarily action pictures, with a few exceptions. One of the top grossing films, Jurassic World, was produced by Legendary Entertainment...which produced many other popular (primarily action) films as well, including:

    • Straight Outta Compton
    • Man of Steel
    • the Hangover movies
    • Godzilla
    • 300
    • Pacific Rim
    • Thresher

    A majority stake in Legendary was recently purchased by Dalian Wanda, a Chinese entertainment and property conglomerate--for $3.5 billion.  It is probably going to be worth it to Wanda, as the blockbuster action films--which are Legendary's specialty--are also a favorite of Chinese filmgoers. All time top grossers in China are:

    1. Fast and Furious
    2. Transformers 4: Age of Distinction
    3. Avengers 2: Age of Ultron
    4. Jurassic World
    5. Monster Hunt
    6. Avatar
    7. Lost in Thailand
    8. Journey to the West: Conquering the Demons

    We'll see if Legendary's product mix changes over the next few years...

    Source: "Dalian Wanda of China Buys Legendary Entertainment for Up to $3.5 Billion," by Michael Forsythe, New York Times, January 12, 2016.

    Follow up:

    • What are the implications of a media company being majority owned by a Chinese corporation? Discuss the possible effects on product development, product mix. Do the political connections of Dalian Wanda influence your thoughts?
    • Over the next few years, track the movies produced by Legendary. See if you can determine whether there has been a material change from the films developed prior to the purchase.

                                                                                 

  • "Wearable Tech": Failure or Success?


        Image from wearewearables.com

    "Wearable Tech" accessories have been hyped with showy marketing campaigns over the last few years: 

    • Apple Watch
    • Lumo Lift
    • Google Glass
    • GoPro
    • Nuzzle (wearable for dogs)

    But few have hit their predicted sales targets. The companies with their product mix dependent on a single type of wearable product are the most at risk. GoPro admitted to this limited revenue stream in the prospectus for its IPO, but investors were still excited and the wearable HD video camera sales took off. The stock climbed to $90 per share. But the company has found it hard to maintain its sales momentum, and without other products to fall back on while the need for this camera permeates the market, it is struggling. The stock is now selling for $12 per share.

    Stories like these prompt some nay-saying media to predict the concept of wearable tech as a failure. But the past is a terrible predictor of the future in tech fields. Any even industry professionals cannot always make predictions that are accurate:

    • Steve Jobs: "The subscription model of buying music is bankrupt." (2003)
    • Ken Olson, president of Digital Equipment Corp: "There is no reason anyone would want a computer in their home.” (1977)
    • Time magazine: "Remote shopping, while entirely feasible, will flop." (1966)
    • Bill Gates: "When we set the upper limit of PC-DOS at 640K, we thought nobody would ever need that much memory" (quoted in InfoWorld, April 29, 1985)

    One of the important questions is: what will you buy and incorporate into your daily life?

    Source: "The rise and fall of GoPro," by Andy Uhler, Marketplace--American Public Media, January 14, 2016.

    "Wearable Technology Failures--Don't Misread them," by Emory Craig, Digital Bodies, December 3, 2015

    "50 Wearable Tech game-changers for 2016," by Dan Sung, Wareable.com, December 14, 2015.

    Follow up

    • Research Google Glass, Apple Watch, and other wearable tech. Have they been successes or failures...or don't we know yet? List the factors that support your opinion. 
    • Why would anyone studying new product launches and marketing compare the Apple Watch to the Apple Newton? What are typical trajectories for sales of products that represent new technologies? How are early adopters different from the customers that adopt later?
    • Review question: what is an IPO? Give examples.

                                                                               

  • Powerball: You didn't win this week and you will never win


    Does your retirement plan depend on winning the lottery?

    You might want to re-think that. First, here is a reality check on the odds, put in perspective:

    • Odds of being struck by lightning: 1 in 1.19 million
    • Odds of being in a plane crash: 1 in 11 million
    • Odds of winning the Powerball Jackpot last week:  1 in 292.2 million
    • Population of the United States: 320 million

    Those are terrible odds. 

    Here is something that really doesn't make sense, if you follow the logic:

    1. As the jackpot goes up, more people buy tickets in the hopes of "winning big"
    2. As more tickets are sold, the odds of an individual ticket winning goes DOWN.
    3. Therefore, a ticket-buyer in a week when the jackpot has built up has less of a chance of winning anything than he or she does in most weeks. 

    Many small-time investors look at the small returns on Certificates of Deposit or savings accounts, and they feel like it is not worth investing any money at all. Then they get attracted by the possible HUGE return of $1.5 billion from investing $2 in a Powerball ticket.

    The reality is, it is more likely that a Powerball investment will be a 100% loss

    Source: "You Will Not Win the Powerball Jackpot," by Daniel Victor, New York Times, January 12, 2016. 

    Follow up:

    • What are your realistic plans for retirement?
    • Did you buy a ticket for the $1.5 billion drawing, even if you are not a regular buyer? If you did, what were your reasons, given the discussion above? Was this a quantitative or a qualitative decision? 
    • Does Donald Trump buy lottery tickets? Warren Buffett?  Just kidding...

                               

  • Signing bonuses for administrative assistants


        The "Golden Hello"--graphic from Bloomberg


    Why would an administrative assistant get a signing bonus? 

    I thought signing bonuses were for professional sports players or CEOs.  A moving allowance for managers, maybe. But my 27-year old daughter stopped by today and announced that she'd gotten a job as an administrative assistant that included a decent salary and a 10% signing bonus. I congratulated her, but had never heard of this practice being applied to administrative assistants. I figured I should investigate.

    It turns out that Fortune Magazine had already looked into this phenomenon. They concluded that candidates that had skills in somewhat short supply were often offered a signing bonus instead of a higher salary. Market-driven starting salaries at companies--in the improving economy--are often higher than the salaries of existing workers. Rather than create a situation where jealousies might arise, the new employee's salary is structured so that the weekly paychecks are on par with the other employees. The higher salary is achieved by offering the up-front "signing bonus" or "golden hello."

    My daughter had worked as a temp for the company that hired her, so the hiring risk was minimized.  But who knew that very polished people-interaction and phone skills--as well as an ability to take charge of a project and delegate--were worthy of a bonus...up front. 

    Interested in a similar job? Here is Travis Robertson (ReMax) talking about the qualities that make a good administrative assistant--from the boss's perspective:


    YouTube

    Source: "Why your new admin just got a signing bonus," Vickie Elmer, Fortune Magazine, June 20, 2014. 
    "I just got a 10% signing bonus," H R Bernstein, administrative assistant, January 14, 2016.

    Follow up:

    • Do you have a job for which you received a signing bonus?  What was it based on? Do you know how your annual salary (exclusive of bonus) compares to your co-workers? Discuss your understanding of how this is perceived in the workplace.
    • Talk to your friends who are interviewing in your field. What are the normal practices in your area? 

                               $              5%           10%              $       

  • Small Business as a Target for Hackers

    After owning several Windows-based computers since 1983, in 2009 I switched from being a PC user to a Mac user (except at my workplace). My reason for switching was multiple virus-induced crashes.  "Common knowledge" at the time held that Macs did not get viruses and PCs did. Apple engineers might claim it was because of their closed and safe operating system, but industry observers crunched the numbers and found that (as of 2011) Windows-based systems captured over 65% of the web client market, while Mac OS systems had about 6%. Therefore, it was more cost-effective ("security through minority") for hackers to create a virus that would work on 10 times as many computer systems.

    The same kind of logic has been applied to modern hacking that occurs in several operating systems. Hackers invest their time where it will really count--in hacking big businesses, right? And they leave small businesses alone???

    Maybe not. And in the cases outlined in the article--definitely not. 

    One reason may be that larger businesses are more protected, as illustrated in the chart above. It is easier for hackers to breach the unprotected or poorly maintained defenses of a smaller company. The trend has been for hackers to encrypt files so that the victim company cannot operate its business...and then extort money from the company so that their files will be released. This is called "ransomware." 

    Hackers also use phishing emails to obtain personal information--first mining the contacts list to create an email address that looks familiar to the employee sifting through emails. 

    Are small businesses doomed to be invaded? No. They can set up fairly inexpensive systems--including secure passwords, firewalls, and updated anti-virus software.  Even storing data on the cloud can be safer than maintaining company servers (at least for now). 

    If companies can afford it, they can also hire experienced (but not criminal) hackers to beta-test their systems for vulnerability. Whatever methods are used, it is important to make the investment in company "self-care."

    Source: "No business too small to be hacked," by Constance Gustke, New York Times, January 13, 2016. 

    Follow up:

    • Have you been the victim of any of the major health-care information or credit-card hacks that have occurred over the last year?  Or do you work at Sony Pictures, which was hacked around the time The Interview was released? Maybe at your individual workplace? Describe.
    • What protections did you take afterward? Were any solutions offered by security providers for the institution that suffered the hack? Did you take advantage of them? Why or why not? Have you been trained at your school or workplace on good "computer hygiene" to help prevent attacks?
    • Aside from in this article, have you heard of "ransomware"? Describe how it worked in the real-life or fictional situation you encountered. Remember to cite your sources.

                                                                                          

  • Airline price changes: anti-trust violation or coincidence?

         Fox News on the Justice Department investigation into airline price fixing last July

    About six months ago, the Justice Department opened an investigation into the four biggest airlines to investigate a coordination of policies aimed at increasing revenue. Involved are:

    • American Airlines
    • United Airlines
    • Delta Airlines
    • Southwest Airlines

    The initial investigation targeted alleged collaboration to:

    • NOT expand
    • NOT buy bigger planes
    • NOT increase the number of flights.

    These policies would reduce SUPPLY, so if DEMAND stayed the same (which it probably would), prices would be likely to go up.

    Another investigation around the same time targeted collaborative price gouging in response to the increased consumer demand for flights after the Philadelphia Amtrak crash in May, 2015.

    This type of collaboration, or price-fixing, is forbidden by anti-trust laws.

    Consumers are more cognizant of other ways that airlines seem to have collaborated to raise revenue:

    • baggage fee policies
    • withholding seats from those trying to cash in frequent flyer miles
    • increasing cancellation fees
    • not decreasing fuel cost surcharges when fuel prices decrease

    This week Reuters reported that another curious "coincidence" occurred--Delta, United, and Jet Blue all raised prices on one-way fares by $3 per flight. This can only add to the evidence mounting up that (illegal) collaboration to raise revenue is being practiced by airlines. 

    Source: "Major U.S. airlines raise fees by three dollars," by Kai Ryssdal, Marketplace American Public Media, January 5, 2016.

    Follow up:  Read this airline-related interchange posted today on Facebook by one of my "Friends":

    • Have you had a similar experience when trying to interact with an airline customer service department? Describe.
    • How does price-fixing and collaboration decrease the "natural consequences" of customer service interactions like the one above, as well as objections to fee and flight-price increases? Explain.

                                                                 

  • Girl Scout Cookies tap online sales opportunities


        Girl Scout Cookies Sales: an "old school" online approach...via YouTube

    The video above brings to mind the iconic door-to-door sales pitch for Girl Scout cookies. But starting last year, Girl Scouts of America has allowed online sales. Dell and Visa have invested three million dollars this year to solidify the web platform for sales. 

    Still, local troops or regions make the decisions about how to sell their cookies, but individual sellers who are internet savvy can boost sales several times over.

    Everything changes. It will be interesting to see how the sales mix (online vs. in-person) varies over the next five or ten years.


        Girl Scout Cookie 2016 menu

    Web sales aren't the only way that the Girl Scouts of America are using technology to spur cookie sales. To help you find a location for local sales, you can DOWNLOAD THE APP.

    Source: "Girl Scout Cookie Sales Go Digital, With Help from Visa and Dell," by Elizabeth Olson, New York Times, January 3, 2015.

    Follow up:

    • Find the website for the troop using online sales that is nearest to you...and order some cookies! Just kidding. What I meant to say was...critique the website for easy of use and good (or poor) layout and marketing appeal. 
    • How do you think the home video above will be used to sell cookies? Compare and contrast this use of online resources with the plans embraced by Dell and Visa. In what types of markets might each technique be effective? What markets might each technique miss?
    • What are the legal and ethical issues involved in online Girl Scout Cookie sales? How are they being managed? What ethical or legal issues might be resolved by online sales?
    • What are the positives and negatives of the shift to online sales for the organization as a whole? How might it increase or mitigate some of the organizational issues mentioned in the article?

          

  • Managing one's reputation by "managing up"

        from Harvard Business Review via YouTube

    With the new year, many employees set work goals for themselves as well as personal goals. Consider the following possible work behaviors that might be influencing how an employee might be perceived by management and peers:

    • Metaphorically "Punching the clock": keeping an eye on work hours to make sure one is out-the-door at quitting time.
    • Not being pro-active about what needs to be done: waiting to be told what to do.
    • Being critical without offering a solution.
    • Requesting more-than-enough time to complete a project, so that one is sure to come in under deadline: undermining the perception of one's ability to be productive.
    • Lack of enthusiasm for the mission of the company: not being a team player and embracing company goals and values. 

    Being aware of these issues is part of developing the skill of "managing up." It is important to understand the needs of one's bosses, and to try to fulfill those needs. Some bosses, nevertheless, attach a value to the skill of "managing down" as well. Setting a good example for subordinates (by avoiding the above behaviors in yourself) is an important part of that skill-set, too. 

    Source: "5 Office Mistakes Costing Millennials the Promotion," by J.T. O'Donnell, Inc.com, July 15, 2015.

    "5 Changes Millennials Will Make in the Corporate World in 2016," by Joel Goldstein, Business2community, December 31, 2015.

    Follow up

    • Read the first article. Comment on the "Advice To Millennials" under each habit designated as harmful to one's reputation. 
    • Define, describe, compare and contrast the two skills of "managing up" and "managing down." Which skill set aligns more with your personal values and talents? How can you improve on the skill that doesn't come as easily? Do the above behaviors exhibit either of those skills? Explain.