The REAL Shoe Game

Specifically for students of the strategy capstone, here's a fascinating read on the rise and fall of Adidas and Puma athletic shoes.  As the saying goes, truth is often stranger than fiction!

What if renewable energy reduced our cost per unit?

Right now the debate on renewables in the United States is more of a when, than if, debate.  But when is always some day in the future.  Eventually the cost per unit of renewables will be lower than the cost per unit of fossil fuels.  But, we're not there yet.

Or have we just chosen not to go there yet?

Renewable Energy in Germany

Germany, as true with other parts of Europe, has been far more aggressive than the United States at pursuing renewable energy.  How well has their program gone?  Well enough that they are experiencing problems we haven't begun to fathom.  Consider this article from Der Spiegel which contains this interesting quote:

At least renewable energy sources have led to the price of electricity coming down on the markets, because they have displaced expensive conventional power plants.

In other words, Germany has passed the tipping point with renewables.  Their wind and solar now comes in at a lower per unit cost than their natural gas, coal and nuclear power.  

Interestingly, this economic push away from non renewables increases the salience of maintaining at least some traditional power creation.  Consider, for instance:

SPIEGEL: What do you propose?
Kohler: We have to make sure that operating power plants remains economically attractive. Nowadays, solar systems are often in operation around noon, when there is high demand for power and the price was high in the past. As a result, conventional power plants can no longer make enough money, which is why existing plants are being shut down and no new ones are being built. Anyone who guarantees the security of supply in the future has to be paid for it, even if his power plant is only needed at certain times.
SPIEGEL: Some receive subsidies for supplying green energy, while others are paid so that they'll be available in case it rains or the wind doesn't blow. It doesn't sound very market-based.
Kohler: It can indeed be organized in a market-based way throughout Europe by using so-called capacity markets. But that doesn't do any good. We have to synchronize the addition of more solar and wind energy systems with an expansion of the overall system, or the energy revolution will be a failure.

The remainder of the interview is a recommended read.  Germany, per this article, confronts two issues with renewable energy.  These are the natural asynchronicities of the timing and geography of supply and demand.  These are non trivial issues which  are certainly a necessity of a renewable based energy system.

While their problem is one we won't see for some time, we certainly would benefit from observing their approach to the problem as well as its solution.  What is more important, though, is realization that the challenge for renewable energy - at least in Germany - is not that "it's too expensive."

Cool Stuff

One of the neat things about strategy is that it requires a forward orientation.  You need to keep your eyes on the horizon in order to anticipate emerging threats and opportunities. A side effect of this scanning behavior is that you learn about simply neat things coming out.  After discussing a few of these with students after our most recent class meeting, I decided to put together a post about some of the new tech gadgets I find most interesting:

Tesla Model S

The new Tesla has the distinction of being the first non-combustion engine car to win Motor Trend's car of the year award.  This isn't the Tesla sport coup, this is the 4-door Sedan.  It has a large comfortable cabin while maintaining surprising energy efficiency.  At a base price of $49,900 ranging up near $100,000 fully loaded, this isn't a car that will sit in everyone's driveway.  On the other hand, this car lands nicely in the price range of upscale sedans, indicating that the electric car can compete on price in that segment.  Tesla only plans on selling 3000 or so units this year (already sold out) and expect to move that closer to 20,000 units in 2013.

Source: Car and Driver

Phillips Hue: Lightbulbs go WiFi

Phillips launched Hue back in October and they are a bit pricey for now.  A $300 or so starter package brings you three lightbulbs and the network connection.  After that, the bulbs run around $60 each.  This is an LED lighting system, so expect the bulbs to last for years.  That's not enough to justify the price though, what makes Hue really interesting are the WiFi applications and the possibilities with "smart" light bulbs.  Some of the things you can do with Hue include:

• Remote management of lighting
• Pre-lighting a room for wake up or dimming a room for falling asleep
• Changing the colors of the lighting in your room

Google Glass

Time Magazine recently listed Glass as one of the best innovations of 2012.  Glass is Google's attempt to bring augmented reality to your daily life.  Glass will become commercially available by 2014 with expected prices around $1400.  If I understand correctly, Glass will be available sometime next year for those who pre-ordered the technology.  Don't go looking though, that pre-order sold out pretty fast.

Google Glass is kind of a Star Trek bit of tech, it's a visor (pair of glasses) that projects computer information in front of you, allowing you to see the real world and a computer screen simultaneously.  It uses an embedded camera to read the world around you and follows voice activation commands.

The Driverless Car

You can find an interesting discussion of driverless automobiles at the Conversable Economist.  The technology has been around for a while and seems to be making rapid progress.  Dr. Taylor's article is insightful and provides a number of relevant links for those interested in learning more.

Competitive Intelligence for the Small Business: An interesting discussion on rising education costs

Competitive Intelligence for the Small Business: An interesting discussion on rising education costs

This post follows a discussion of rising education costs.

University of Washington students charged with patent infringement

This is an interesting, and evolving case, between an entrepreneurial start-up "JoeyBra" and the holder of a 1999 design patent.  The defendants are two students at the University of Washington school of business - defending a start up company that recently placed as a finalist in the UW business plan competition.

The primary parts worth reading involve the distinction between patenting and innovating (bringing to market). Additionally, some of the commentary brings up distinctions between design and utility patents.

This comes on the heels of discussion that Apple and Google now spend more on patent defense (and offense) than on research and development.

Solar Energy will likely be cheaper than regular electricity by 2015

At least in the sunniest parts of the United States.  That's the conclusion of this Scientific American blog.  The author does a nice bit of work demonstrating the cost reduction curves and power outputs for solar.  There is a reason that Wal-Mart is leading the pack in solar installation, and the reason isn't goodwill!

Noahpinion: A parable of one-way free trade

Noahpinion: A parable of one-way free trade

An interesting discussion of free trade, government intervention and tariffs addressed in the context of solar energy.

Competitive Intelligence for the Small Business: Making sense of nonsense: A review of copyright an...

Competitive Intelligence for the Small Business: Making sense of nonsense: A review of copyright an...: I was just directed to James Grimmelmann's remarkable dissection of digital cable reproduction as a function of copyright compliance.  In " ...

Inter-organizational Studies- Academic Article

The Effects of E-business on the Performance of Strategic Alliances

By: Hung-Wen Lee and Jhy-Hong Ding

What this article discusses is the different affects that E-business plays on the performance of strategic alliances. E-business and strategic alliances are both ways that businesses can gain a competitive advantage in the global market. With the growth of communication and information technologies companies have found it beneficial to use these technologies to help them gain this competitive advantage.  Organizations are able experiment and see what strategies would work with the implementation of e-commerce.

The writers Hung and Lee present 10 hypotheses that they test in order to determine their final results. The ten hypotheses presented are:

H1a-3c: The relationships of both partners, the better communication of both partners and the greater level of alliance performance all depends on the greater extent of e-business and how much resources are invested to it.

H2a-2c: The extent of similarity between alliance members is determined by the higher level of relationship expectations, communication expectations and trusts between both alliance members.

H3a-3b: The extent of expectations of the future relationships between the alliances is determined by the higher level of communication and trust between the alliances.

H4: When the extent of communication between the alliances is high then so is the trust.

H5: When there is a high level of trust between the alliances, the performance between alliances will be higher.

The article also presents a model the helps in discovering the relationship between e-business and strategic alliances. The model presented uses many variables such as strategic alliance familiarity, alliance and communication expectations and the trust between both partners.

                                  Figure 1: Research Framework

The authors found that the model they used to test their results found that some of the hypothesis that they suggested were accurate. Although the implementation of e-business improves communication it does not play a direct role of the performance of strategic alliances. It is the different applications that have an effect on alliances. What their testing found is the positive level of trust and communication between strategic alliances was based on the expectations of future relationships and the level of e-business.

My thoughts are similar the results that were found. I believe that e-business can help strategic alliances in many ways but the most important thing for strategic alliances is to develop a good level of trust and communication with one another.

Article Citation:

Hung-Wen, Lee, and Ding Jhy-Hong. "The Effects Of E-Business On The Performance Of Strategic Alliances." Total Quality Management & Business Excellence 21.7 (2010): 707-724. Business Source Complete. Web. 3 Aug. 2012.

Growing your firn- Academic Article

http://web.ebscohost.com/ehost/detail?vid=11&hid=21&sid=0a8b616b-6ffe-40d6-8d2a-db321c811038%40sessionmgr12&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=76460284

In business, especially economics, people do not like tinkering in the field of religion. But does it affect the way some people do business, and are some companies using religion as an incentive, saying if they do business with them they will have a better afterlife.

They have done research to show that many households do not feel presured from businesses as mucha s they may feel from their religious organiztion. The families that do in fact contribute money religiously, had been doing it and it was not a direct effect of businesses trying to guilt them into it.

It is found however, that charitable giving is a soft spot for many people that are already religious givers as well as those who ar not. Charity seems to be the place where businesses alike can get a lot of poeple to contribute monetarily.

Growing your company- current event

http://search.proquest.com/wallstreetjournal/docview/1027823975/1383EAAAEAB611BD88F/14?accountid=7108

Everyone knows who Ebay is and how they work. But what if they want to open their "doors" to a larger crowd. Since the beginning of Ebay, they have not allowed minors, those under eighteen, to purchase or seel from their website. They now are creating a portion of their website to target just this group.

Many people are skeptical about this because of the material that may be exposed to these minors, but Ebay insists that the parental controls involved will be so intense you will have no need to worry about your child.

This decision has been a good one for Ebay, because of this they have seen a boost in revenue by 9.1% just this month. It seems that at the moment it is working out for Ebay, now we will just wait and see when the first minority dilemna will occur?

Inter-Organizational Studies - Current Event - Shinea Sharma

Inter-Organizational Studies - Current Event 

Apple Inc versus Samsung

   The legal concept of copyright dictates that the original creator of a product deserves exclusive rights to it. Infringement of this concept is seen as a violation of the creator’s intellectual property rights. However, some companies try to eliminate competitors by claiming that their patent rights have been breached. Apple Inc., the maker of iPhone and iPad, is expected to rock horns with Samsung in courtroom over claims of breach of patent rights and unfair competition (Levine & Gupta, 2012). Apple has sued Samsung over allegations that Samsung has copied the design of Apple’s iPhone in manufacturing its Smartphones. Apple argues that Samsung blatantly copied its design thereby infringing its intellectual property rights. On the other hand, Samsung has counter-sued Apple claiming that Apple is trying to block competition in order to continue enjoying excessive profits in the US market (AFP, 2012). 
   
  Apple Inc. is a multinational cooperation located in the USA, and it manufactures and sells personal computers, computer software and consumer electronics. The company was founded in 1976 by Steve Jobs and Steve Wozniak, and it has come to known for its populous products such as the iPod, iPhone and the iPad. Currently, Apple Inc is only behind Samsung and Nokia in the mobile phone trade industry.  Samsung electronics is a South Korean multinational information Technology and Electronics Company, which is a subsidiary of Samsung Group. Samsung is the leading company in mobile manufacturing industry and it controls the mobile phone market more than any other company in the world (Chen, 2012). The company has recently introduced Smartphone S III, which has hit the ground running almost instantly. However, this product has seen the two titans in the mobile phone market upgrade their antagonism to courtroom battles. 

    The case will take place in a federal court in California, San Jose. The outcome of the case has the potential to reshape the ever-evolving mobile phone market, which is hugely controlled by the two antagonists. Should Samsung lose the case, it will be forced to pay Apple in excess of $2.56 billion, which could actually be tripled (Levine & Gupta, 2012). In addition, Samsung would be prohibited from selling its tablet computers and Galaxy smartphones in the US market. Undoubtedly, this would be a serious blow to Samsung considering that at acquires more than 20% of its profits from the US market. On the other hand, should Apple lose the case, it will be forced to pay Samsung exorbitant financial damages and sale of its iPhose S4 would face a brisk future. Samsung has swiftly outperformed Apple, as well as Nokia in the mobile phone market and it is currently the world’s most recognized smartphone manufacturer.

     At the moment, US consumers seem to prefer Samsung’s S III to Apple’s iPhone S4 because the former is better and user friendly than the latter. This is a significant competitive threat to Apple considering the market antagonism it is currently facing from Hauweii Mobile Phones. The Wall Street had predicted that Apple Inc. would sell approximately 28 million iPhone between January and June of 2012. However, Apple Inc managed to sell only 26 million iPhones, which is a sign of increasing competition and defeat by Samsung’s smartphone S III, which recorded sales exceeding 50 million smartphones (Bloomberg, 2012). Therefore, it can be argued that Apple Inc is employing excessive legal claims to derail the sales of smartphones until it launches iPhone S 5, since iPhone S 4 has been defeated.  Nonetheless, the jury will decide.

     The possible outcome of the case will significantly affect the financial stability and competitive edge of the loosing company. Thus, financial managers in both firms should be introducing cost-cutting measures in order to guarantee financial health of their firms. In case of Samsung, the marketing managers should heighten the campaigns for smartphones in the US in order to make more sales before the case is decided. In addition, they should advertise more in smartphones emerging markets such as Australia and South America. This would guarantee or even exceed the level of sales even if the case is lost. Finally, Samsung’s production managers should be thinking of another, better design, which would serious defeat Apple’s iPhones.           


References

AFP. (2012, July 22). Samsung smartphone sales booming. News24. Retrieved from     "http://www.news24.com/SciTech/News/Samsung-smartphone-sales-booming-20120722" http://www.news24.com/SciTech/News/Samsung-smartphone-sales-booming-20120722
Bloomberg. (2012).  Samsung Beats Apple in Smartphone Sales. Bloomberg Tv. Retrieved from    
"http://www.bloomberg.com/video/91596700-samsung-beats-apple-in-smartphone-" http://www.bloomberg.com/video/91596700-samsung-beats-apple-in-smartphone-sales.html

Chen, B. (2012). Samsung’s New Galaxy Phone Tops 10 Million Sales. The New York Times.     Retrieved from http://bits.blogs.nytimes.com/2012/07/23/galaxy-s-iii-10-million/
Levine, D.  & Gupta, P. (2012, July 27). Apple, Samsung take patent fight to crucial California     trial. Reuters. Retrieved from 
"http://www.reuters.com/article/2012/07/27/us-apple-samsung-trial-idUSBRE86Q16X20120727" http://www.reuters.com/article/2012/07/27/us-apple-samsung-trial-idUSBRE86Q16X20120727

Applied Strategy- Academic- Heavy Technology Use by Advisors Shows Positive Results

Applied Strategy- Academic- Heavy Technology Use by Advisors Shows Positive Results

 

Article by: Rebecca King

Abstract by: Russell Medley

 

Rebecca king is report on some results conducted by FPA in late 2011.  These surveys were based on the idea of asking business owners, employees and employers questions about their satisfaction level while at work and their use of technology.  The surveys were implemented to try and discover a connection between the two.  The results show that the higher the use of perceive integration (being the use of technology in your business) the higher percentage of those that would agree to being “on track” to their business/career goals.

The findings suggest that technology has appositive influence on the level of efficiency present in a business (see table 2 in the article).  It is evident in almost all of the surveys that a certain level of satisfaction is felt when a business has a strong grasp on the use of technology in their everyday operations.  The reason this works is because once the technology is in place and running effectively, you as a business person are given more time to do the things that make your business grow like prospecting for more clients or honing your skills instead of sitting at home waiting for your fax machine to finish printing the invoice.  Some tasks can even be done automatically for you such as monthly bank account checks and automatic payments.  This can be a huge time saver for the average do it-your-self business professional.

Lastly in the article it is said that technology should be put in place to “improve your professional and personal life, if it doesn’t, a re-evaluation of your current technology and how you’re using it is in order.”  This basically means that just because you have a ton of gadgets at your office, if they aren’t working FOR you, then they are working against you.  Having a fax machine, scanner, printer, 3 cell phones, 4 computers, 2 price scanners, a photo booth, and GPS equipment are all great…but not if you are the one who has to operate all of them.

Source:

Journal of Financial Planning; Mar2012, Vol. 25 Issue 3, p28-29, 2p, 3 Charts

Innovation-Current Event-Turning Plastic Into Fuel

Innovation Current Event-Turning Plastic Into Fuel

A new innovation currently on the rise is turning plastic into fuel. In an article titled, “JBI finds way to turn plastic into fuel,” a company in Niagara Falls discovers a way to save big on fuel costs. There are many places around the world that throw away plastics and they just sit in a land fill and take up space. If everyone would recycle their plastic products and this process discovered by John Bordynuik would be implemented around the United States, I believe gas prices would dramatically decrease. “Bordynuik said his invention allows JBI Inc. to produce fuel at a fraction of the cost of major refineries, and can convert two tons of plastic into 109 barrels of fuel.” (Tighe) Scientists have been studying this process for years but the products they come up with are very low quality, but this guy is the first to successfully product a quality product. This inspired many people to try and do the same. In Fairbanks, Bernie Karl began using his own machine for transforming plastic waste into oil. (Miller) In an article titled, “Turning plastic into oil would eliminate plastic waste and stick it to greedy oil companies,” it states that, “the machine takes anything form Styrofoam to plastic bags and melts them down in a vat heated to 800 degrees, turning the plastic into gas. The machine then sends the gas into a water container for cooling, which turns the gas into fuel.” (Miller)  CynarPic is another company that has been focusing on the technology to turn plastic into fuel as well. “Cynar Pic is developing and has patent applied for a technology which converts a wide range of ELP into liquid fuels, mainly diesel which Cynar calls-End of Life Plastic to Diesel(ELPD)” (CynarPic) As  you can see, there are many companies that are in the early stages of development in this new technology. I think it is a great idea and would help not only lower gas prices but also eliminate a lot of the plastic waste.

"CynarPic Converting End of Life Plastic into Liquid Fuels." CynarPic. n.d. n. page. Web. 26 Jul. 2012. <http://www.cynarplc.com/>.

Miller, Sarka-Jonae. Natural News.com. 09 05 2012: n. page. Web. 26 Jul. 2012. <http://www.naturalnews.com/035807_plastic_oil_energy.html>.

Tighe, Maryellen. "JBI finds way to turn plastic into fuel." Buffalo News.com. 11 06 2011: n. page. Web. 26 Jul. 2012. <http://www.buffalonews.com/business/article452079.ece>.

Inter-Organizational- Current Event- Facebook Acquires Face.com

Overview    

Facebook has been involved in numerous acquisitions since its launch. On June 18, 2012 Facebook announced one of its most recent acquisitions with Face.com.  It is unclear how much Facebook acquired the company for but it is said to be anywhere from 55 to 100 Million (Sutter).

Face.com is an Israeli company that was launched in 2007.  The Israeli company was best known for helping third parties integrate facial recognition to social networking sites (Owens). The facial recognition technology provided by face.com allows many social network sites that individuals use daily to automatically detect faces on the pictures that are uploaded by its users (Bloomberg).

Facebook website has been integrated with the company’s services and applications (Sutter). Features which many of us have seen or used on Facebook like PhotoFinder and PhotoTagger have been implemented in the website for two years. These applications operate by automatically detecting people's age and facial features when a photo is upload. The PhotoFinder application assists users in locating photos of themselves and friends. The PhotoTagger is an application that automatically mass tags photos uploaded by users (Newman). 

Expected Outcomes

Since its launch Face.com has targeted the creation of face detecting applications, especially for mobile devices (Owen). What many speculate including myself is this acquisition has a lot to do with Facebook wanting to lead in mobile photo capturing and uploading. For Facebook these face detection applications have not worked so well on mobile devices and tablets (Sutter). Many photos that users upload through their phones end up going untagged and this has a direct effect on Facebook as it minimizes the amount of news feed users get.  Facebook's recent 1billion dollar acquisition with Instagram also indicted that Facebook is looking to place a major emphasis on photo sharing through mobile devices (Owens).

Therefore, what users of Facebook will more than likely see in the future is the creation of new tools that will make it easier to tag friends in photos through mobile devices (Newman). This acquisition will most definitely assist the Facebook management team improve and enhance functionality and accuracy of the services on mobile devices and tablets.

Works Cited

Levy, Ary. "Facebook Buys Face.com, Adds Facial-Recognition Software." Bloomberg. N.p., 18 June 2012. Web. <http://www.bloomberg.com/news/2012-06-18/facebook-buys-face-com-adds-facial-recognition-software.html>.

Newman, Jared. "Facebook Buys Face.com; Prepare for Easier Photo Tagging." PCWorld. N.p.,18 June 2012. Web  <http://www.pcworld.com/article/257832/facebook_buys_facecom_prepare_for_easier_photo_tagging.html>.

Owens, Jeremy C. "Facebook Acquires Face.com, Stock Continues to Rise."MercuryNews.com, 19 June 2012. Web. <http://www.mercurynews.com/business/ci_20883128/facebook-acquires-face-com-stock-continues-rise>.

Sutter, John D. "Why Faces Matter to Facebook - CNN.com." CNN Tech. Cable News Network, 20 June 2012. Web. <http://www.cnn.com/2012/06/19/tech/innovation/face-recognition-facebook/index.html>

Move Beyond The Numbers

This is a important article recognizing the current challenges facing each business leader across the globe and their need to find the best candidates to meet the need in their organizations. Douglas Flint, the group chairman of HSBC Holdings, explained “I don’t think we’ve ever been in a period, in our lifetime, where things have been more uncertain.”

Uncertain times demand restructured thinking. Past procedures brought people to companies with a narrow focus, today’s needs for the new professional to offer a “multidisciplinary” approach with broader talents. 

Progressing through the article, Charles Tilley, initiates the dialogue for the CEOs need to be transparent giving a truer picture how the organization runs and potential opportunities. It is suggested that a fine line lies within producing growth and handing information to competitors. The key, James Singh executive vice president and CFO for Nestle, is “moving beyond the numbers… We must understand where business is creating value and where it is destroying value.”

The common thread continually reoccurring was the need to value the skilled professional , they would be pivotal point in an organization’s success. 

Journal of Accountancy March 2012, Charles Tilley, Helping CEO's Connect the Dots

Innovation-Academic article- Why Customers Value Self design Products.

Why Customers Value Self-Designed Products: The Importance of Process Effort and Enjoyment

This article is about a study that analyzes factors that prompts customers to show value to products that they create using mass-customization (MC) toolkit.  The reason why I think this article is important is because it allows an individual to come up with list what he or she wants in this product and how can he or she achieve it.  A product design requires creativity and lot of thought process.  Hard work put by an individual to achieve desired results will always add sentimental value towards that product.  However if desired results are not achieved then failure tends to motivate to gain more understanding and be more innovative.

In this article writers have tested the hypothesis on 186 participants who designs their own scarves by using MC toolkit. At the end of the testing finding are that customers are willing to pay more for products designed by them. This research also indicates that if the process was fun then it would add more value toward that product. The process enjoyment is defined as a “positive affective reaction elicited by the process of self-designing the product and perceived process effort as the subjective perception of the time and mental energy invested in designing the product.” As I mentioned earlier if an individual achieves desired results and enjoys the process, then it will add more value for that product.

Big companies like Nike and Adidas are using this toolkit to gain customer satisfactions.  I think this idea is an ideal way to make others appreciate the work it requires for one to get the job done.  For the practicing managers, I would suggest to implement similar style in working environment which will allow other members to learn and be aware of your efforts.

Source: http://libproxy.uhcl.edu:2057/ehost/pdfviewer/pdfviewer?vid=10&hid=105&sid=2b61bc19-d285-45de-b0d2-38a4776bde11%40sessionmgr114

Franke, Nikolaus; Schreier, Martin. Journal of Product Innovation Management. Dec2010, Vol. 27 Issue 7, p1020-1031. 12p. 3 Charts, 3 Graphs. 

Growing your firm Even in Down Times- Crystal Faught- Current Event

In the article “Strategies for Growth, Even in Down Times” the author addresses strategies to enhance and grow your business during an economic “down turn”. Obviously, this issue of growing a company during a difficult economic time is relevant still today. Our economy has appeared to make an attempt to “come back” from one of the most difficult economic times in the history of our country, companies must still strategize to ensure their company does not fall victim of the next economic struggle.

This article takes a microscopic look at a company by the name of Bandals and how they handled the economic crisis of 2008. Bandals experienced immediate flak from the crisis in the form of increased production cost. For any company this would require reconsidering the company’s business plan. For Bandals they had two choices, produce a new product or grow overseas. Tom Sesti, creator of Bandals, made the choice to go in both directions. This was quite a risk, due to the fact that the cost of these ventures was not minor.

The article goes on to share three helpful pointers when faced with the issue of increased production cost; consider new markets, don’t rush, focus on profits. Managers and executives should consider options and think beyond the typical “cut the cost” method. Thinking beyond what is obvious will allow the company to grow in ways that it otherwise could not have.

http://www.nytimes.com/2012/05/10/business/smallbusiness/how-some-companies-expand-even-in-a-stalled-economy.html?pagewanted=all

Governance and Ethics - Current Events –Strengthening Corporate Governance and Ethics in Business

Since the global economic collapse happened in September 2008, many scholars started to study the reasons which lead to the depression of world financial markets. It was reported that the factor of corporate governance and ethics had influence upon the global financial markets. By learning the experience, companies paid many efforts to improve their governance and ethics.

 

After the financial crisis in the year of 2008, by setting the ceiling level of executive compensation, many companies in America made great progress to enhance their sovereign from management and CEOs. In the July of 2010, President Barack Obama recommended “the Dodd–Frank Wall Street Reform and Consumer Protection Act” to encourage the reforms under the supervisory system. It was reported that the average salary of large company CEO in U.S was 225% more than it of large company CEO in other main industrial countries.

 

In recent years, corruptions and malpractices happened more often especially in the banking system. There were many big banks, such as Nepal Share Market Finance (NSMF), Capital Merchant Banking, Gurkha Development Bank (GDB) and People´s Finance Limited, had to stop their business due to the corruptions and malpractices. Dambar Bahadur Tamang, former chairman of Gurkha Development Bank (GDB), was nabbed for releasing illegal loans. Another malpractice case is that Jhalak Subedi, former chief of Credit Department of Muktinath Development Bank, was arrested for irregularities in faking bank loan.

 

Apparently, these corporate corruptions and malpractices have revealed not only the terrible consequences, but also the importance of corporate governance and ethics. As a result, the regulatory system of corporate governance and ethics must be paid more effort to establish to avoid those corruption scandals and corporate fraud happening in future.

 

In addition, in order to prevent corporate fraud and corruption, some international convention and laws are applied. For example, “the 1999 OECD Anti-Bribery Convention” and “the United Nations Convention against Corruption (UNCAC)” are used to develop anti-corruption policies. It is obvious that corruption scandals happened these years had significantly negative influence upon company’s reputation and even life. Thus, companies will be much more willing to develop more business ethical policies and practices.

Reference

“Ethics in business”, Pranav Bhattarai, July 2012

http://www.myrepublica.com/portal/index.php?action=news_details&news_id=37894

“Dodd–Frank Wall Street Reform and Consumer Protection Act”, Wikipedia

http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act

Innovation: Qualifiers and Differentiators in Innovation

Kevin McFarthing wrote “Qualifiers and Differentiators in Innovation” for Innovation Excellence.

Kevin believes “understanding the qualifiers and differentiators not only allows you to play the innovation game, it gives you a great chance of winning.”

The qualifier is what makes you competitive and the differentiators are what make you win the game. For example Extra gum, the gum (qualifier) gets you in the market, the extra-long lasting (differentiator) gets you winning the market. Qualifiers are only noticed by the customer when they are absent or when it has failed. It is important to be innovative and have not only a qualifier but a differentiator.  

When it comes to innovation here is what Kevin believes needs to be followed…

1. Really challenge yourself to know your consumer and understand what really makes a difference to them.

2. Match this knowledge against your product development targets.

3. Decide your “single-minded message”, the one that will truly differentiate your innovation from that of your competitors.

4. Deliver category standard performance on the Qualifiers.

5. Focus as much effort as you can to innovate on the Differentiators, those parameters that will drive preferred purchase.

6. Develop the communication of your innovation to the same principles.

Although this list seems pretty common sense to most business majors it is always good to have a reminder.

http://www.innovationexcellence.com/blog/2012/07/15/qualifiers-and-differentiators-in-innovation/

Governance and Ethics-Academic-Female Directors and Earnings Quality

SRINIDHI B, GUL F, TSUI J. Female Directors and Earnings Quality. Contemporary Accounting Research [serial online]. December 15, 2011; 28(5):1610-1644. Available from: Business Source Complete, Ipswich, MA. Accessed July 20, 2012.

According to the 2011Catalyst Census, only 16.7% (15.7% in 2010) of women sit on the board of directors of Fortune 500 companies. This number drops to 3% for women of color. The share of women’s board leadership in these companies is represented in the figure below:

2011 Catalyst Census: Fortune 500 Women Board Directors

Recently, the EU threatened to introduce quotas as companies failed to add female corporate board members. Only 13.7% of board seats in the EU belong to females (Bloomberg). In this same light, Norway has legislated for a 40% board representation for females or penalties for noncompliance. We observe an insurgence of advocacy groups for more females to the board of directors of major corporations. There was an extensive coverage in the U.S. media when Facebook and Zynga appointed Sheryl Sandberg and Ellen Siminoff respectively, as their first female Board members. Is the advocacy for a more gender-diverse board of directors justified? Is there any empirical evidence that supports gender-diversity on the board of directors as an added value to the corporation? 

Bin Srinidhi et al, in their article female directors and earnings quality, present empirical evidence that supports better corporate performance linked to a gender-diverse board of directors.  Using a conceptual framework with the board of directors as an important part of corporate governance, the authors show that female directors improve board governance which in turn improves the quality of earnings. They further suggest that female participation in the board of directors will increase firm’s reporting and increase investor confidence in financial statements (Srinidhi et al). The findings of this article back previous works on the impact of female participation on the board of directors to improve corporate governance. Recent publications suggest that female directors exercise more independent thinking, improve monitoring (Adams et al 2010) provide a better oversight over managers (Adams &Ferreira 2009), promotes effective board communication to investors (Joy 2008), and those exposed to different experiences than men could enrich the discussion and improve the decisions made by the board (Hillman et al 2003).  

  

On the one hand, the article like many others falls into the “female advocacy” genre. In fact, do females possess a particular trait that gives them a better ability to improve corporate governance? If yes, the next question will be, can males also acquire these attributes? No study up to this point has shown that females possess a “unique” trait (that makes them improve governance and thus earning quality) that males don’t. The evidence and literature are all based on subjective factors. Indeed, governance is improved not by the fact that these are “females”, but by attributes when possessed by an individual (irrespective of the genre) will add value to its outcome. On the other hand, this article equips female advocacy groups with an empirical evidence for more support for a gender-diverse board of directors. This goes a long way in strengthening the gender-equality argument.  

For a long time, males have dominated the corporate world. This situation is quickly changing. We find females as leaders of some top companies (HP, Yahoo!). As more women become better educated, handle executive positions that expose them to great experiences, it is expected that the trend of women in boards of director will increase based on their skills and abilities. Even without advocacy groups, the prediction is that the gender gap in the board of directors will shrink in future. Corporations can’t afford to miss out on the enormous resources and abilities possessed by “modern females”.