7 things to know before the bell
5 years ago
Tuesday, November 25, 2008
Sunday, November 9, 2008
Saturday, November 8, 2008
Wiki and collaberation
I found this article interesting written in Newsweek online byRachael King, "No Rest for the Wiki, The online tools for building collective info banks are making deeper inroads in corporations and rewriting the rules of collaboration" . What are the pros and cons' of the Wiki? Is our society ready for this much collaberation in the coorporate world?
Culture Shock
Over time, as wikis begin to get a critical mass of information, they tend to sprawl and become unwieldy. "You need some kind of person who sees the long-term consequences of not organizing," says the Marshall School's Majchrzak. Most often, individual contributors are not the people who will restructure existing content. Instead, that task is left to someone Majchrzak dubs the shaper—an employee who is willing to take time synthesizing information so it's easy to read. Executives need to encourage shapers as much as individual contributors. Otherwise, the wiki can become so unwieldy that nobody will use it, she says.
Others question whether large corporations are ready for wikis. "Most people and most companies don't really have a culture of collaboration and never have had one," says Alan Pelz-Sharpe, principal at CMS Watch, a research firm in Silver Spring, Md. "If you don't have it, all the software in the world won't give you one."
Intel's Moriarty says the tools themselves can be the catalyst for change. Intelpedia, for instance, is bringing people together and slicing through a ton of bureaucracy. "People are working on things independent of what they're told to work on," he adds. "It's connecting people globally." That's the best outcome possible in the wiki world.
http://www.businessweek.com/technology/content/mar2007/tc20070312_740461.htm
Culture Shock
Over time, as wikis begin to get a critical mass of information, they tend to sprawl and become unwieldy. "You need some kind of person who sees the long-term consequences of not organizing," says the Marshall School's Majchrzak. Most often, individual contributors are not the people who will restructure existing content. Instead, that task is left to someone Majchrzak dubs the shaper—an employee who is willing to take time synthesizing information so it's easy to read. Executives need to encourage shapers as much as individual contributors. Otherwise, the wiki can become so unwieldy that nobody will use it, she says.
Others question whether large corporations are ready for wikis. "Most people and most companies don't really have a culture of collaboration and never have had one," says Alan Pelz-Sharpe, principal at CMS Watch, a research firm in Silver Spring, Md. "If you don't have it, all the software in the world won't give you one."
Intel's Moriarty says the tools themselves can be the catalyst for change. Intelpedia, for instance, is bringing people together and slicing through a ton of bureaucracy. "People are working on things independent of what they're told to work on," he adds. "It's connecting people globally." That's the best outcome possible in the wiki world.
http://www.businessweek.com/technology/content/mar2007/tc20070312_740461.htm
Friday, November 7, 2008
President-elect Barack Obama and the healing of our economy
CHICAGO — President-elect Barack Obama called on Friday for the Bush administration and Congress to enact an economic-stimulus package, and he pledged to confront the country’s economic crisis “head on” the moment he is sworn in on Jan. 20.
“I do not underestimate the enormity of the task that lies ahead,” Mr. Obama said at his first news conference since his victory over Senator John McCain on Tuesday. He said he was certain that “some difficult choices” will have to be made.
“It’s not going to be quick, and it’s not going to be easy to dig ourselves out of the hole that we’re in,” Mr. Obama said, declaring that he wants to see “a rescue plan for the middle class” and a further extension of unemployment-insurance benefits.
See entire article...http://www.nytimes.com/2008/11/06/us/politics/08transition.html?ref=politics
“I do not underestimate the enormity of the task that lies ahead,” Mr. Obama said at his first news conference since his victory over Senator John McCain on Tuesday. He said he was certain that “some difficult choices” will have to be made.
“It’s not going to be quick, and it’s not going to be easy to dig ourselves out of the hole that we’re in,” Mr. Obama said, declaring that he wants to see “a rescue plan for the middle class” and a further extension of unemployment-insurance benefits.
See entire article...http://www.nytimes.com/2008/11/06/us/politics/08transition.html?ref=politics
Cover Letter
November 6, 2008
To Whom It May Concern:
My career achievements have assisted me to excel in many capacities that fit perfectly with this position. I enclose my resume as the first step in exploring the possibilities of employment with your company.
My most recent career accomplishments are office manager / bookkeeper for Lewallen Architecture located in Portland, Oregon. My prior career achievement was HR / Payroll / Finance manager at Rudolf Steiner College, a non for profit university located in Sacramento, California. This position worked closely and reported to the CEO, CFO and the board of directors. The HR aspect of my position with the college specialized in personnel activity such as employment recruiting and compensation, personnel files and compliance, benefits, training, and employee relations. The Payroll tasks included processing timely employee bi-weekly payrolls for 300+ employees. The finance aspect of my position, Directed, managed, supervised, and coordinated the activities and operations of the Finance Division. This position included, accounts receivable, and accounts payable. All aspects of banking and income posting, as well as in depth knowledge of QuickBooks, PayChex software, account reconciliation, financial reports, and month end closing.
I am currently on the presidents /deans list with a 4.0 GPA at Kaplan university to complete my Bachelors in Accounting as well as the accelerated program to complete my MBA in December of 2010.
Throughout my 20+-year career in management; I have worked in large and small offices within nonprofit and corporate organizations. I have demonstrated proficiency in all core office administration functions; including document preparation, internal/external communications, data and records management, meeting scheduling, and task prioritization. In short; I can manage the office without supervision, juggle multiple tasks effectively, and maintain confidentiality with highly sensitive materials and matters.
In addition, I have experience in supervising staff and working with high net worth clients, both of which require extra attention to the “people management” side of business. Through successfully managing both internal and external relationships; I have accelerated the achievement of goals and positioned myself as a valuable resource in a variety of situations.
I would bring to your company not only these administrative skills, but also a positive, cooperative attitude that I have displayed throughout my career. I maintain calm under pressure and adapt to meet the unique needs of each organization.
Again, my résumé will detail the required skills and background you seek. I would welcome the opportunity for an interview at your convenience, and I thank you in advance for your time and consideration.
Sincerely,
Jill Stidd
Resume
Jill Stidd
Portland, OR
Email: jillstidd@gmail.com
Blog: jillstidd.blogspot.com
May 2008-Present Lewallen Architecture, Portland, OR
Office manager/Bookkeeper
~Payroll, accounts receivable, accounts payable
~Banking and monthly accounts reconciliation
~Full charge 8 cycle Bookkeeper
~Manage daily activities of the firm
~Set up QuickBooks from cash to accrual basis~Manage all job tracking and invoicing
~Implement Marketing strategies for the firm
March 2006 – April, 2008 Rudolph Steiner College, Fair Oaks, CA
Finance & Office Manager, Human Resource Director
~Responsible for fiscal budget of $6M, managing all P&L including AP, AR, Payroll and Donations ~Developed and implemented progressive HR processes and quidelines
~Directly manage quarterly and annual audit compliance
~Oversee all Accounting personnel, projects and timelines
~Created QuickBooks profile and budget structure
~Designed HR Employee Handbook
~Major accounting systems include QuickBooks and PayChex software
~In depth knowledge of working with CEO, CFO, College Board, Finance committee, and executive committee in a non for profit university
Jan 2005 - Feb 2006 Sole Sensations Bloomington, Indiana
Interim Finance & Office Manager, Human Resource Director
~Family business euro comfort lifestyle and foot wear corporation
~Restructured corporate policies, implemented employee team cooperation and vendor relations ~Designed and created all forms, new employee and management handbook and provided proper guidance for implementation
~Brought operating budget and $40K debt from past due to current within 6 months
2002 – 2004 EarthSong Kinderhaus Telluride, Colorado
Director
~Director of 17 enrolled children ages 3-6 in non for profit educational program
~Built school from visionary stage to beautiful, creative Waldorf classrooms and campus
~Increased student enrollment by 50%
~Effectively managed $120K annual budget and operating expenses
~Worked closely with state licensing regulations
~Worked as liaison with Board concerning hiring, schedules, and Waldorf mentoring and education.
~Wrote and produced all school promotional materials, enrollment forms and admissions forms.
~Wrote and produced a 28 page “Parent Handbook” and “Faculty Handbook”
~Served as Faculty Chair on the Board2000 - 2002 School of the Suncoast Clearwater, FloridaAdmissions/Enrollment Director
~Assisted the pioneering a non for profit school (K-4) to set up the first enrollment/Admissions position the school employedAttracted and retained students by communicating the benefits of attending School of the Suncoast to parents in the Clearwater and Greater Tampa bay community
~Increased Student enrollment by 50%~Facilitated an enthusiastic entry and healthy transition of new students and families into the life of a Waldorf school
~Worked closely with the Board, Faculty, and Enrollment Committee on enrollment and retention issues
~Marketing skills, which included direct marketing, public relations and research
~Analytical skills that included database management and forecasting
~Accurately represented and articulated the mission and methods of a Waldorf school to recruit, motivate, and organize volunteer labor.
~Set up new QuickBooks bookkeeping program for accounting purposes. *Produced invoicing, collected and recorded tuition payments
~Assisted parents and students with their needs and questionsWorked closely with Board (attending all Board meetings) faculty, and committees
1993 - 2000 Body Oasis Day Spa Boca Raton, Florida
Owner
~Managed all aspects of a Holistic Day Spa; payroll, sales, ordering inventory, computer and register procedures
~Provided Salon services; haircutting, hair color, manicure, and pedicure
~Provided Spa Services; facials, massage, waxing, body treatments, and hydrotherapy
~Incorporated inspiring management techniques trained by Aveda Corporation
~This is the source of "business buzz"! Invigorating and thought provoking debates about what is happening in today's economic world.
Education
▪ May 2008 Kaplan University Graduation date: May, 2009
Currently achieving my BS Accounting, as well as MBA4.0 GPA on Presidents / Deans list.
▪ 2006-2007 Rudolph Steiner College Fair Oaks, CAn LifeWay’s Training
▪ 1988 Ogle School of Hair Design Arlington, Texasn Degree in Cosmetology
▪ 1980 – 1984 Indiana University Bloomington, Indianan A.S., Optometric Technology-Optician
▪ 1977 - 1978 Indiana Academy Cicero, IndianaCollege Prep
▪ 1978 – 1980 Columbus North High Columbus, IndianaCollege Prep / Graduated with High School Diploma
***Letters of recommendation available on request
Portland, OR
Email: jillstidd@gmail.com
Blog: jillstidd.blogspot.com
May 2008-Present Lewallen Architecture, Portland, OR
Office manager/Bookkeeper
~Payroll, accounts receivable, accounts payable
~Banking and monthly accounts reconciliation
~Full charge 8 cycle Bookkeeper
~Manage daily activities of the firm
~Set up QuickBooks from cash to accrual basis~Manage all job tracking and invoicing
~Implement Marketing strategies for the firm
March 2006 – April, 2008 Rudolph Steiner College, Fair Oaks, CA
Finance & Office Manager, Human Resource Director
~Responsible for fiscal budget of $6M, managing all P&L including AP, AR, Payroll and Donations ~Developed and implemented progressive HR processes and quidelines
~Directly manage quarterly and annual audit compliance
~Oversee all Accounting personnel, projects and timelines
~Created QuickBooks profile and budget structure
~Designed HR Employee Handbook
~Major accounting systems include QuickBooks and PayChex software
~In depth knowledge of working with CEO, CFO, College Board, Finance committee, and executive committee in a non for profit university
Jan 2005 - Feb 2006 Sole Sensations Bloomington, Indiana
Interim Finance & Office Manager, Human Resource Director
~Family business euro comfort lifestyle and foot wear corporation
~Restructured corporate policies, implemented employee team cooperation and vendor relations ~Designed and created all forms, new employee and management handbook and provided proper guidance for implementation
~Brought operating budget and $40K debt from past due to current within 6 months
2002 – 2004 EarthSong Kinderhaus Telluride, Colorado
Director
~Director of 17 enrolled children ages 3-6 in non for profit educational program
~Built school from visionary stage to beautiful, creative Waldorf classrooms and campus
~Increased student enrollment by 50%
~Effectively managed $120K annual budget and operating expenses
~Worked closely with state licensing regulations
~Worked as liaison with Board concerning hiring, schedules, and Waldorf mentoring and education.
~Wrote and produced all school promotional materials, enrollment forms and admissions forms.
~Wrote and produced a 28 page “Parent Handbook” and “Faculty Handbook”
~Served as Faculty Chair on the Board2000 - 2002 School of the Suncoast Clearwater, FloridaAdmissions/Enrollment Director
~Assisted the pioneering a non for profit school (K-4) to set up the first enrollment/Admissions position the school employedAttracted and retained students by communicating the benefits of attending School of the Suncoast to parents in the Clearwater and Greater Tampa bay community
~Increased Student enrollment by 50%~Facilitated an enthusiastic entry and healthy transition of new students and families into the life of a Waldorf school
~Worked closely with the Board, Faculty, and Enrollment Committee on enrollment and retention issues
~Marketing skills, which included direct marketing, public relations and research
~Analytical skills that included database management and forecasting
~Accurately represented and articulated the mission and methods of a Waldorf school to recruit, motivate, and organize volunteer labor.
~Set up new QuickBooks bookkeeping program for accounting purposes. *Produced invoicing, collected and recorded tuition payments
~Assisted parents and students with their needs and questionsWorked closely with Board (attending all Board meetings) faculty, and committees
1993 - 2000 Body Oasis Day Spa Boca Raton, Florida
Owner
~Managed all aspects of a Holistic Day Spa; payroll, sales, ordering inventory, computer and register procedures
~Provided Salon services; haircutting, hair color, manicure, and pedicure
~Provided Spa Services; facials, massage, waxing, body treatments, and hydrotherapy
~Incorporated inspiring management techniques trained by Aveda Corporation
~This is the source of "business buzz"! Invigorating and thought provoking debates about what is happening in today's economic world.
Education
▪ May 2008 Kaplan University Graduation date: May, 2009
Currently achieving my BS Accounting, as well as MBA4.0 GPA on Presidents / Deans list.
▪ 2006-2007 Rudolph Steiner College Fair Oaks, CAn LifeWay’s Training
▪ 1988 Ogle School of Hair Design Arlington, Texasn Degree in Cosmetology
▪ 1980 – 1984 Indiana University Bloomington, Indianan A.S., Optometric Technology-Optician
▪ 1977 - 1978 Indiana Academy Cicero, IndianaCollege Prep
▪ 1978 – 1980 Columbus North High Columbus, IndianaCollege Prep / Graduated with High School Diploma
***Letters of recommendation available on request
Paper: Aggressive Accounting and its Effects on Society, Written for College Composition 2, Submitted Oct 22, 2008, Grade A
Aggressive Accounting and its Effects on Society
Many interesting questions and images came to mind when first being introduced to the term “aggressive accounting”. Is “aggressive accounting” an energetic accountant? Could it quite possibly be an over-achieving accountant? Maybe it could be accounting methods that create hostility? Could it be a course of study in accounting that someone might consider as a profession? Ironically, these examples could be the outcome of anyone involved in the accounting profession that practiced “aggressive accounting”; however, it would not be the defining explanation. A simple definition of” aggressive accounting” is an unethical practice that can be used by accountants, CPA’s, and auditors to produce inaccurate or unlawful accounting methods in order to intentionally inflate the financial records of a company. “Aggressive accounting” has the potential to encourage scandals like the publicized Enron debacle. It also has the potential to destroy the public’s trust in the accounting and audit professions that oversee the safety of corporations, investors, stockholders, families, and ultimately our nation’s economy. To eliminate “aggressive accounting” practices it is important to promote public awareness for signs of fraud. Additionally, enforcement of all current regulations is imperative to insure there is a penalty for unethical behavior. Finally, accounting curriculums should include ethic standards as well as a historical time line of accounting advances to reduce mistakes previously made.
The history of accounting is fascinating, and can be traced back as far as 30,000 B.C. in the prehistoric Near East as described by archeologist Denise Schmandt-Besserat. There were hunters and gatherers that simply consumed whatever they accuired; therefore, there was no need for accounting. As humankind became more evolved, counting became extreemly important (Schmandt-Besserat, 1996, p. 103). She reports there were tokens used in three different stages of counting and record keeping. The first stage in Upper Paleolithic through 12,000 B.C. was very primative in nature. The second stage in the Neolithic era 8000 B.C. became more detailed and the third stage was the Urban era in 3100 B.C. where the tokens became more refined (Schmandt-Besserat, 1996, p. 99). Her research also reveals the complexity of the tokens as accounting began its form. Schmandt-Besserat’s research shows that during these intial phases of counting there was integrity in those who were the “counters.” She points out, “more important than the hunter, more in control than the chief, the holder of the tokens and dispenser of the grain, cereals, animals, or oils was the most important figure in these first small villages because they served as ‘honest brokers’ and controllers of the shared wealth” (Schmandt-Besserat, 1996, p. 28).
The Urban era was an historic time frame when accounting practices were just beginning. What is known about tokens, cords, and even later in tablets, created a very startling fact. The prehistoric “counters” began the process of accounting as it would develop over centuries. They would count every item of “data” and record it with a token for accuracy and accountability. This level to detail was the “perfect” audit model for the future and discontinuing “inventory control” because it became to costly in later years caused the accounting downfall. If this precision in “counting” would have carried through the generations of future accountants it quite possibly could have saved the many scandals and lack of public trust in the accounting and audit profession.
Moving into the 14th century, Luca Pacioli was considered the “father” of accounting with his double entry ledger method, which is still used today. He published a book in the 14th century titled, "Everything about Arithmetic, Geometry, and Proportions" which served as the first and only accounting textbook through the 16th century. This was a milestone for accounting because this textbook created the first students of accounting.
According to research of Mike Brewster, author of “Unaccountable: How the Accounting Profession Forfeited a Public Trust;” implementing the double entry ledger method through the 18th century in England seems to have set the stage for accounting standards for the United States to emulate some years later. Public trust in accounting practices were yet again advanced in England using Pacioli’s contribution to defining double entry accounting. Brewster summarizes, “These advances show that the most powerful members of society invested enormous trust in the top accountants” (Brewster, 2003, p. 32).
The 1960’s introduced the eight global accounting firms called the “big eight”. They were known as Arthur Andersen, Lybrand, Ross Bros. & Montgomery, Deloitte, Haskins & Sells, Ernst & Ernst, KMG, Peat Marwick, Price Waterhouse, and Touche Ross. These firms would face legal indictments over the next years that would reduce the global firms from the “big eight” as we knew them, to currently the “big 4” after Arthur Anderson was found guilty for involvement with the Enron scandal. There was a time in accounting history that the corporation had the upper hand on the auditor. If the auditor wanted to maintain a working relationship year to year there was incentive to be “bullied” in the board room to signing an inflated financial certificate. This shift in ethics when the corporation had the authority to determine when the auditor must acquiesce to the corporation was the down fall for the accounting and audit profession.
With the 19th century is the introduction of George May and Arthur Anderson, founders of two global firms. These two men would affect accounting policies in different ways for years to come. May, was a pioneer of separation of corporate fraternizing during audit procedures. He would discontinue participating in an audit if he felt there was any public speculation of inappropriately conceding to management. Ironically, Anderson on the other hand, was continually defined as an accounting firm that promoted their services “aggressively.” He did promote his accounting firms with a different attitude than the other global firms, and was a pioneer for aggressive selling tactics for the firms “consulting” and audit services. Anderson was the first to introduce computer technology to corporations; this was one more way for the firm to get “inside” the corporations for added revenue services. This advancement in technology for the global firms and corporate world created the next paradigm in accounting.
Public trust in accounting was being acknowledged for the first time due to its many advances. This created a demand for accounting services that could not be maintained by the global firms due to the hardships of travel at that time. This scenario would replay itself in the 1970’s. After the “Great Depression” the accounting staffs were cut back to a minimum. When the economy was ramping back up in the late 70’s the global accounting firms were scrambling for additional help to cover the magnitude of new partnered firms they had created across the country. This amount of travel and time away from families created inaccurate reporting and deadlines that were not met by the accountants and auditors. There were also audits performed that did not catch “aggressive accounting” practices, this once again undermined the public trust. Over time there was reduction of global firms that public companies could choose from to perform mandated audits. This problem only became worse with the newly designed stringent audit regulations of today’s Sarbanes-Oxley Act of 2002.
In comparison, the 19th century introduced Parliament, the first regulatory agency to set mandated audit standards for publicly held companies. The independent audits of public companies mandated by the Parliament were met with great criticism. These regulations created a stressor because there were not enough educated accountants that understood the new regulations to meet the demand. This cycle is repeated throughout history (McDermott, 1993, p. 4). This repetition poses a question, why did we not learn from these mistakes early on? Why did we repeat them over and over? The answer lies in the possibility that only in times when the public trust was violated there was government intervention, not when the problems began organically.
Brewer states, with the advance of auditing of public companies in the 20th century as well as newly formed regulations, there were more securities fraud and con artists than seen before. So do all these regulations that were introduced from the various agencies, both government and private, actually help to protect the public? It seems hasty regulations just antagonize the entire system.
With the invention of the generally accepted accounting principles, (GAAP) there was a format that all accountants must follow and are used currently. When the audit was complete the auditor’s primary role was to sign off on the corporation’s financial certificate that GAAP principles had been followed for accounting and reporting. However, as the auditors reduced their responsibility for detecting aggressive accounting, fraudulent activities increased. In addition there was no more “counting” of inventories to determine if what was in the ledgers actually made up the records of the business. It was as if some accountants had forgotten the integrity of their ancestors. That was unfortunate for the world and the advancement of the accounting profession.
For next we find in 1929 the market crash and the ensuing “Great Depression.” Many people lost jobs, businesses, possessions, and their faith in the economic future of the country. In the attempt to recover the accounting profession the “Federal Securities Act” of 1933 was established and mandated again by a government agency. This act, created out of desperation was full of problems and loopholes that led to overworked accountants tying to comply with the act in a timely manner. With the act of 1933 came the requirement of additional amount of “sampling” (pulling samples of documents that proved the data entry). Audits became extremely difficult and time consuming. Corporations could not fund these expensive audits and a whole new debacle was now on the rise, very similar to what happened after the Enron and WorldCom scandals. Out of these current scandals the securities exchange committee known as the “SEC” formed the Sarbanes-Oxley Act of 2002. Professor Thomas Joo, of UC Davis School of Law defines and explores the many issues with Sarbanes-Oxley Act:
There have been a lot of changes, the main change being the Sarbanes-Oxley Act, which did two things. First, it created the Public Company Accounting Oversight Board (PCAOB), which is in charge of registering and inspecting public accounting firms, and for adopting and modifying audit standards. (Ghoddoucy, 2006)
Joo goes on to say, “the Act does what critics would call a micromanaging of corporate governance by establishing some very specific requirements of corporations. For example, they must have independent audit committees. Again, this is something that historically has been done at the state level” (Ghoddoucy, 2006). He also states, “the classification of ‘independent’ defined by Sarbanes-Oxley Act is that the director of audit committees can not garner a salary from the corporation, yet directors are still being paid to be a voice for the committee” (Ghoddoucy, 2006).
Again, let’s pose the question why did we not learn from this experience? The answer possibly lies in the thought that the government agencies that were creating these acts were not accountants and admittedly did not know much about the accounting profession. Repeatedly, the securities exchange committee butted heads with the accounting profession. Primarily, accountants were offended that this agency would create a policy that accountants for ages had used from principles that had been passed down from generation to generation. With this conflict brewing between the governing agencies and the accounting profession there would be consequences. The effect was reduced public confidence.
There are suggestions for solutions that can be pondered. First, there are investors that are working with large volumes of dollars that have no formal training for this kind of business dealings. Investors should be required to have formal training prior to entering the markets. This would educate them to be better “watchdogs,” as well as be able to detect if companies are implementing controls that will provide ethical business dealings. Joo supports the idea of investor education:
The problem with that is that there is no institutionalized system of investor education. You need a license to drive a car, yet you can buy stocks without knowing anything about investing. There has been no serious attempt of any kind by the government, or anyone else for that matter, to educate investors. Investment is becoming a public policy concern since people increasingly are investing their retirement money into the stock market. We certainly don’t want retired people starving in the streets. I think society should pay for that, but I’d rather it not come to that. So why don’t we make sure that people are well educated when they invest so that these problems don’t occur. (Ghoddoucy, 2006)
Second, the fact that historically regulations have been mandated by governing agencies; however, very few of those regulations were ever enforced. Over time this lack of enforcement sent a clear message that there would be no penalties for unethical accounting practices. The regulating agencies must now send the clear message that “aggressive accounting” practices will not be tolerated and there will be a penalty for such actions. Joo’s insight is very interesting:
One way you can prevent people from breaking existing regulations is to enforce those regulations more strictly. I think it probably would have been better to crack down on enforcement of existing regulations, rather than to pass more of them that ultimately won’t be enforced. If you create an expectation of relaxed enforcement, then people will simply continue breaking whatever additional regulations you do pass. (Ghoddoucy, 2006 )
Third, formal education that trains accountants must be involved and create curriculums that look at the historical timeline of accounting to understand the similarities of accounting successes and failures. Curriculums must also stress the importance of ethics and the ramifications of practicing unethical accounting.
With the current debacles such as Enron, WorldCom, and Fannie Mae are excellent examples of how corporations can undermine the investors with various unethical practices. With the addition of our most current economic conditions it is imperative that “aggressive accounting” must stop. The CEO’s and accountants of each of these scandals were charged penalties of long jail sentences and expensive fines. It is the hope that this will be the beginning of our governing agencies sending the clear message that unethical actions will not be tolerated and punished by the letter of the law.
With our economy in the state that it is presently can the public’s trust in the safety of our countries financial structure be jeopardized any further? It appears that it is important in our society for each individual to be the eyes and the ears of the corporations and communities they are involved in. Much like the neighborhood “watch dogs” that looks for signs of crime and reports concerns; this is a simple grassroots model for the accounting profession as well. With the accounting profession government regulating agencies, and the public putting on their “ethical hats” we can maintain a steadfast economy and rise above these unstable economic times with equanimity.
References
Ackman, D. (2002). Andersen indictment and consequences. Retrieved Sept 30, 2008, from
Forbes website: http://www.forbes.com/2002/03/15/0315topnews.html.
Brewster, M. (2003). Unaccountable: How the accounting profession forfeited a public
trust. Hoboken, N.J.: John Wiley & Sons, Inc.
Ghoddoucy, D. (2006, May). Corporate Governance and Sarbanes-Oxley "Post-
'Post-Enron.'" Retrieved Sept 2, 2008, from UC Davis’s Website:
http://blj.ucdavis.edu/article.asp?id=590.
Gutman, H. (2002 ,February). The Lessons of the Enron Debacle. Retrieved Sept 3, 2008, from
Common Dreams website: http://www.commondreams.org/views02/0207-07.htm.
Jorion, P. (2003). Investing in a Post Enron World. New York: McGraw-Hill.
Schmandt-Besserat, D. (1996). How Writing Came About. Texas: Austin University of Texas
Professional Press.
Monday, October 20, 2008
Web research: Consolidated Statements of Cash Flows
Go to the website of Johnson & Johnson at http://www.jnj.com. Click on Annual Reports and Proxy under Investor Relations. Then open the most recent Annual Report and click on Financials. Click on Consolidated Financial Statements and then Consolidated Statements of Cash Flows. Examine the operating, investing, and financing activities sections.
What is the most significant source of cash for Johnson & Johnson? What is the most significant use of cash for Johnson & Johnson? Why do you think these sources and uses are significant for this company?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response:
Jill Stidd
20 Oct 08 10:22 PM MST
Initial Post: Jill Stidd
In 2007 it seemed most significant source of cash for Johnson & Johnson was from their pharmaceutical lines, with 41% of their sales at $24.9 billion dollars, Topamax increased it revenues the most at a large 21% and misc “other” had the most sales at 5.4 billion. Medical Devices and Diagnostics is the next in line with 35% of their sales at $21.7 billion dollars, vision care grew the most in this category with an 18% increase. However Depuy had the most sales in billions at 4.6.
I determined from my analysis of the statement of cash flows that the most significant use of cash was for retirement of short-term debt at $21,691. With all there research and development expenses I would think that it would produce some debt. However it seems they were very aggressive in paying that back. That always looks great to stockholders.
I thought I would give a stab at evaluation financial analysis of cash flows for Johnson and Johnson using the calculations we were given in our text page 712.
Cash flows from operating activitiesLess: Investments in fixed assets to maintain current productionFree cash flow$15,249 (Cash flows from operating activities) - $2,942 (Additions to property, plant and equipment) = $12,307 which is a positive cash flow and would because you would use this formula to evaluate retiring debt as just one example it seems they had enough cash flow to retire the amount of debt that they did.
What is the most significant source of cash for Johnson & Johnson? What is the most significant use of cash for Johnson & Johnson? Why do you think these sources and uses are significant for this company?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response:
Jill Stidd
20 Oct 08 10:22 PM MST
Initial Post: Jill Stidd
In 2007 it seemed most significant source of cash for Johnson & Johnson was from their pharmaceutical lines, with 41% of their sales at $24.9 billion dollars, Topamax increased it revenues the most at a large 21% and misc “other” had the most sales at 5.4 billion. Medical Devices and Diagnostics is the next in line with 35% of their sales at $21.7 billion dollars, vision care grew the most in this category with an 18% increase. However Depuy had the most sales in billions at 4.6.
I determined from my analysis of the statement of cash flows that the most significant use of cash was for retirement of short-term debt at $21,691. With all there research and development expenses I would think that it would produce some debt. However it seems they were very aggressive in paying that back. That always looks great to stockholders.
I thought I would give a stab at evaluation financial analysis of cash flows for Johnson and Johnson using the calculations we were given in our text page 712.
Cash flows from operating activitiesLess: Investments in fixed assets to maintain current productionFree cash flow$15,249 (Cash flows from operating activities) - $2,942 (Additions to property, plant and equipment) = $12,307 which is a positive cash flow and would because you would use this formula to evaluate retiring debt as just one example it seems they had enough cash flow to retire the amount of debt that they did.
Friday, October 17, 2008
Ethics discussion: Cash flow
Cash flow per share may appear to be a valuable measurement of the operating success of a business. However, it can be misinterpreted by users of the financial statements.
Linda Stern, president of Venician Fashions Inc., believes that reporting operating cash flow per share on the income statement would be a useful addition to the company’s just completed financial statements. The following discussion took place between Linda Stern and Venician Fashions’ controller, Ben Trotter, in January, after the close of the fiscal year.
Linda: I have been reviewing our financial statements for the last year. I am disappointed that our net income per share has dropped by 10% from last year. This is not going to look good to our shareholders. Isn’t there anything we can do about this?Ben: What do you mean? The past is the past, and the numbers are in. There isn’t much that can be done about it. Our financial statements were prepared according to generally accepted accounting principles, and I don’t see much leeway for significant change at this point.Linda: No, no. I’m not suggesting that we “cook the books.” But look at the cash flow from operating activities on the statement of cash flows. The cash flow from operating activities has increased by 20%. This is very good news—and, I might add, useful information. The higher cash flow from operating activities will give our creditors comfort.Ben: Well, the cash flow from operating activities is on the statement of cash flows, so I guess users will be able to see the improved cash flow figures there.Linda: This is true, but somehow I feel that this information should be given a much higher profile. I don’t like this information being “buried” in the statement of cash flows. You know as well as I do that many users will focus on the income statement. Therefore, I think we ought to include an operating cash flow per share number on the face of the income statement—someplace under the earnings per share number. In this way users will get the complete picture of our operating performance. Yes, our earnings per share dropped this year, but our cash flow from operating activities improved! And all the information is in one place where users can see and compare the figures. What do you think?Ben: I’ve never really thought about it like that before. I guess we could put the operating cash flow per share on the income statement, under the earnings per share. Users would really benefit from this disclosure. Thanks for the idea—I’ll start working on it. Linda: Glad to be of service.
How would you interpret this situation? Is Ben behaving in an ethical and professional manner?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response:
Jill Stidd
17 Oct 08 11:47 AM MST
Unless there is a law that I could not find in regards to reporting operating cash flow per share it seems that it is a used ratio by those that evaluate all the financial reports. This is an explanation that I took off the U.S. Securities and Exchange website for earning per share. “Income statements also report earnings per share (or “EPS”).
This calculation tells you how much money shareholders would receive if the company decided to distribute all of the net earnings for the period. (Companies almost never distribute all of their earnings. Usually they reinvest them in thebusiness.)”
(http://www.sec.gov/investor/pubs/begfinstmtguide.htm)
I might be confused on this question, however if reporting earnings per share is ethical than I do not see why it would not be ethical to report operating cash per share if nothing has been “cooked”.This is a section off another website that I found in terms of the calculation to find cash flow per share. I might point out the header that states” that this calculation measures a firm’s financial strength.” I can see why Linda saw the importance of putting cash flow per share on the income statement. Again unless there is something that I do not know about adding random sections to the income statement than I would think what she has requested is logical.
A measure of a firm's financial strength, calculated as follows:However I also acknowledge because this EPS can be easily manipulated, it would be important to question its accuracy. “Many analysts, as well as some of the greatest investors of all time, place more weight on cash flow per share than earnings per share. Because EPS is more easily manipulated, its reliability can at times be questionable. Cash, on the other hand, is difficult - if not impossible - to fake. You either have cash or you don't. Therefore, cash flow per share is a useful measure for the strength of a firm and the sustainability of its business model.”
(http://www.answers.com/topic/cash-flow-per-share)
From all that I read in this question it seems to me that Linda only wanted to high light what was positive on her company’s reports. She was not changing any figures and she had to clearly show what had dropped. It seems that she was clear that she did not to “cook” the books and she reinforced that to her controller. I would have to say I do not see anything unethical about either one of them as long as they were not altering any figures and only reporting the actual figures from the year’s business.
Linda Stern, president of Venician Fashions Inc., believes that reporting operating cash flow per share on the income statement would be a useful addition to the company’s just completed financial statements. The following discussion took place between Linda Stern and Venician Fashions’ controller, Ben Trotter, in January, after the close of the fiscal year.
Linda: I have been reviewing our financial statements for the last year. I am disappointed that our net income per share has dropped by 10% from last year. This is not going to look good to our shareholders. Isn’t there anything we can do about this?Ben: What do you mean? The past is the past, and the numbers are in. There isn’t much that can be done about it. Our financial statements were prepared according to generally accepted accounting principles, and I don’t see much leeway for significant change at this point.Linda: No, no. I’m not suggesting that we “cook the books.” But look at the cash flow from operating activities on the statement of cash flows. The cash flow from operating activities has increased by 20%. This is very good news—and, I might add, useful information. The higher cash flow from operating activities will give our creditors comfort.Ben: Well, the cash flow from operating activities is on the statement of cash flows, so I guess users will be able to see the improved cash flow figures there.Linda: This is true, but somehow I feel that this information should be given a much higher profile. I don’t like this information being “buried” in the statement of cash flows. You know as well as I do that many users will focus on the income statement. Therefore, I think we ought to include an operating cash flow per share number on the face of the income statement—someplace under the earnings per share number. In this way users will get the complete picture of our operating performance. Yes, our earnings per share dropped this year, but our cash flow from operating activities improved! And all the information is in one place where users can see and compare the figures. What do you think?Ben: I’ve never really thought about it like that before. I guess we could put the operating cash flow per share on the income statement, under the earnings per share. Users would really benefit from this disclosure. Thanks for the idea—I’ll start working on it. Linda: Glad to be of service.
How would you interpret this situation? Is Ben behaving in an ethical and professional manner?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response:
Jill Stidd
17 Oct 08 11:47 AM MST
Unless there is a law that I could not find in regards to reporting operating cash flow per share it seems that it is a used ratio by those that evaluate all the financial reports. This is an explanation that I took off the U.S. Securities and Exchange website for earning per share. “Income statements also report earnings per share (or “EPS”).
This calculation tells you how much money shareholders would receive if the company decided to distribute all of the net earnings for the period. (Companies almost never distribute all of their earnings. Usually they reinvest them in thebusiness.)”
(http://www.sec.gov/investor/pubs/begfinstmtguide.htm)
I might be confused on this question, however if reporting earnings per share is ethical than I do not see why it would not be ethical to report operating cash per share if nothing has been “cooked”.This is a section off another website that I found in terms of the calculation to find cash flow per share. I might point out the header that states” that this calculation measures a firm’s financial strength.” I can see why Linda saw the importance of putting cash flow per share on the income statement. Again unless there is something that I do not know about adding random sections to the income statement than I would think what she has requested is logical.
A measure of a firm's financial strength, calculated as follows:However I also acknowledge because this EPS can be easily manipulated, it would be important to question its accuracy. “Many analysts, as well as some of the greatest investors of all time, place more weight on cash flow per share than earnings per share. Because EPS is more easily manipulated, its reliability can at times be questionable. Cash, on the other hand, is difficult - if not impossible - to fake. You either have cash or you don't. Therefore, cash flow per share is a useful measure for the strength of a firm and the sustainability of its business model.”
(http://www.answers.com/topic/cash-flow-per-share)
From all that I read in this question it seems to me that Linda only wanted to high light what was positive on her company’s reports. She was not changing any figures and she had to clearly show what had dropped. It seems that she was clear that she did not to “cook” the books and she reinforced that to her controller. I would have to say I do not see anything unethical about either one of them as long as they were not altering any figures and only reporting the actual figures from the year’s business.
Monday, October 13, 2008
Ethics discussion: Bonds
Go to the website of Moody's Investors Service at http://www.moodys.com/. You will need to register at this site in order to access information. Once you have registered, login to the Moody's site. Then click on Ratings News, where you will see several announcements of recent bond rating changes. Open and read 3-4 of these announcements and note the reasons for the rating downgrades or upgrades.
If you were a bond investor, would you care if Moody's changed the rating on your bonds? Why or why not? If you were a bond issuer, would you care if Moody's changed the rating on your bonds? Why or why not?
My Response:
Jill Stidd
12 Oct 08 3:52 PM MST
Initial Post: Jill Stidd
After looking at the four or so announcements and notes it was obvious that Moody was very thorough in there analysis and reasons for their rating. Their descriptions were straight forward and easy to understand as to why they were downgrading or upgrading the ratings.After going to Mood’s website and researching the Moody company it was very interesting to go to their “about us” page and their rating philosophy, “that is why Moody's uses a multidisciplinary or "universal" approach to risk analysis, which aims to bring an understanding of all relevant risk factors and viewpoints to every rating analysis. We then rely on the judgment of a diverse group of credit risk professionals to weigh those factors in light of a variety of plausible scenarios for the issuer and thus come to a conclusion on what the rating should be. Several analytical principles guide that reasoning process.”
(http://www.moodys.com/moodys/cust/aboutmoodys/aboutmoodys.aspx?topic=rapproac)
I also found their ratings descriptions easy to understand and informative. (http://www.moodys.com/moodys/cust/AboutMoodys/AboutMoodys.aspx?topic=rdef&subtopic=moodys%20credit%20ratings&title=View+All+Rating+Definitions.htm)Some Basic Principles According to Moody Co.1. Emphasis on the Qualitative, 2. Focus on the Long-Term, 3. Global Consistency, 4. Level and Predictability of Cash Flow, 5. Reasonably Adverse Scenarios, 6. "Seeing Through" Local Accounting Practices.
I found it interesting in # 4 Level and Predictability of Cash Flow that this is their approach, “In every sector, the foundation of Moody's rating approach rests on the answer to one question: What is the level of risk associated with receiving full and timely payment of principal and interest on this specific debt obligation and how does that risk compare with that of all other debt obligations? When we speak of "risk to timely payment," we are measuring the ability of an issuer to generate cash in the future. Our analysis focuses, therefore, on an assessment of the level and predictability of an issuer's future cash generation in relation to its commitments to repay debtholders.”
(http://www.moodys.com/moodys/cust/aboutmoodys/aboutmoodys.aspx?topic=rapproach)
It seems given this description of how Mood’s ratio analysis works, along with the experts that are involved with this diagnosis that they have a reputation for accurate data. It seems that it is data that both the bond issuer and the bond investor would hold very valuable in terms of making decisions. The change in ratings would absolutely be important to both. Obviously and investor would think twice about a transaction with a company that has a low rating. However the low rating might indicate that an investor watch this company for a time to see If there are any good deals to be had. So it is a tool an investor can use on many levels. As for the bond issuer, well seeing how their company is being evaluated is always good information to have. As the saying goes, “someone from the outside looking inside”. They would not want a lower rating so I would assume it would be this kind of “watchdog” shall we say that might make a company think twice of inappropriate actions.
http://www.moodys.com/moodys/cust/aboutmoodys/aboutmoodys.aspx?topic=rapproac retrieved, October 12, 2008.http://www.moodys.com/moodys/cust/AboutMoodys/AboutMoodys.aspx?topic=rdef&subtopic=moodys%20credit%20ratings&title=View+All+Rating+Definitions.htm retrieved, October 12, 2008.
If you were a bond investor, would you care if Moody's changed the rating on your bonds? Why or why not? If you were a bond issuer, would you care if Moody's changed the rating on your bonds? Why or why not?
My Response:
Jill Stidd
12 Oct 08 3:52 PM MST
Initial Post: Jill Stidd
After looking at the four or so announcements and notes it was obvious that Moody was very thorough in there analysis and reasons for their rating. Their descriptions were straight forward and easy to understand as to why they were downgrading or upgrading the ratings.After going to Mood’s website and researching the Moody company it was very interesting to go to their “about us” page and their rating philosophy, “that is why Moody's uses a multidisciplinary or "universal" approach to risk analysis, which aims to bring an understanding of all relevant risk factors and viewpoints to every rating analysis. We then rely on the judgment of a diverse group of credit risk professionals to weigh those factors in light of a variety of plausible scenarios for the issuer and thus come to a conclusion on what the rating should be. Several analytical principles guide that reasoning process.”
(http://www.moodys.com/moodys/cust/aboutmoodys/aboutmoodys.aspx?topic=rapproac)
I also found their ratings descriptions easy to understand and informative. (http://www.moodys.com/moodys/cust/AboutMoodys/AboutMoodys.aspx?topic=rdef&subtopic=moodys%20credit%20ratings&title=View+All+Rating+Definitions.htm)Some Basic Principles According to Moody Co.1. Emphasis on the Qualitative, 2. Focus on the Long-Term, 3. Global Consistency, 4. Level and Predictability of Cash Flow, 5. Reasonably Adverse Scenarios, 6. "Seeing Through" Local Accounting Practices.
I found it interesting in # 4 Level and Predictability of Cash Flow that this is their approach, “In every sector, the foundation of Moody's rating approach rests on the answer to one question: What is the level of risk associated with receiving full and timely payment of principal and interest on this specific debt obligation and how does that risk compare with that of all other debt obligations? When we speak of "risk to timely payment," we are measuring the ability of an issuer to generate cash in the future. Our analysis focuses, therefore, on an assessment of the level and predictability of an issuer's future cash generation in relation to its commitments to repay debtholders.”
(http://www.moodys.com/moodys/cust/aboutmoodys/aboutmoodys.aspx?topic=rapproach)
It seems given this description of how Mood’s ratio analysis works, along with the experts that are involved with this diagnosis that they have a reputation for accurate data. It seems that it is data that both the bond issuer and the bond investor would hold very valuable in terms of making decisions. The change in ratings would absolutely be important to both. Obviously and investor would think twice about a transaction with a company that has a low rating. However the low rating might indicate that an investor watch this company for a time to see If there are any good deals to be had. So it is a tool an investor can use on many levels. As for the bond issuer, well seeing how their company is being evaluated is always good information to have. As the saying goes, “someone from the outside looking inside”. They would not want a lower rating so I would assume it would be this kind of “watchdog” shall we say that might make a company think twice of inappropriate actions.
http://www.moodys.com/moodys/cust/aboutmoodys/aboutmoodys.aspx?topic=rapproac retrieved, October 12, 2008.http://www.moodys.com/moodys/cust/AboutMoodys/AboutMoodys.aspx?topic=rdef&subtopic=moodys%20credit%20ratings&title=View+All+Rating+Definitions.htm retrieved, October 12, 2008.
Sunday, October 12, 2008
Ethics discussion: Bonds
When corporations issue bonds, the buyers of those bonds (the investors) should try to determine the impact of the bond issuance on the expected earnings of the corporation.
General Electric Capital, a division of General Electric, uses long-term debt extensively. In early 2002, GE Capital issued $11 billion in long-term debt to investors, then within days filed legal documents to prepare for another $50 billion long-term debt issue. As a result of the $50 billion filing, the price of the initial $11 billion offering declined (due to higher risk of more debt).
Bill Gross, a manager of a bond investment fund, “denounced a ‘lack in candor’ related to GE’s recent debt deal. ‘It was the most recent and most egregious example of how bondholders are mistreated.’ Gross argued that GE was not forthright when GE Capital recently issued $11 billion in bonds, one of the largest issues ever from a U.S. corporation. What bothered Gross is that three days after the issue the company announced its intention to sell as much as $50 billion in additional debt, warrants, preferred stock, guarantees, letters of credit and promissory notes at some future date.”
In your opinion, did GE Capital act unethically by selling $11 billion of long-term debt without telling those investors that a few days later it would be filing documents to prepare for another $50 billion debt offering?
Source: Jennifer Ablan, “Gross Shakes the Bond Market; GE Calms It, a Bit,” Barron’s, March 25, 2002.
My Response:
It is true from CNNMoney that the 11 billion in bonds that were issued in 2002, CNNMoney states, “GE Capital sold $11 billion in global bonds Wednesday, the second-biggest U.S. issue ever as the company sought to lock in low financing costs before the economy recovers.” (http://money.cnn.com/2002/03/13/news/companies/ge-bonds/index.htm)
This article interestingly goes on to say that who else but WorldCom was the other company that has beat out GE is bond issues just a few months prior issuing 11.9 billion in bonds. Now is that not interesting, WorldCom.Not only did they then sell the 50 billion 3 month later, they had sold 3.5 billion in notes just one month before and on the heels of that released a expanded annual report, “It also comes five days after GE released an expanded annual report to soothe investors who have been jittery about sprawling companies with complicated accounting, such as Enron Corp. (ENE: Research, Estimates) and Tyco International Ltd.” (http://money.cnn.com/2002/03/13/news/companies/ge-bonds/index.htm).
Given the quote by CNN and the Quote in the ethics question by Bill Gross, there was a great deal of speculation about this deal. I also feel that from the quote in the CNN article that Yes, GE was very much aware of the “jitters” of there investors especially due to Enron, and Tyco international. So why would they make such a bold step 3 months later when ethics were being so scrutinized at that time.Even American Express Asset Management team had something to say about all of this, “But not everyone was cheered by the news. Tim Doubek, a portfolio manager at American Express Asset Management in Minneapolis, said the bonds could only hurt investors if negative news persists about accounting, corporate earnings and management.” (http://money.cnn.com/2002/03/13/news/companies/ge-bonds/index.htm)
In that GE could make this decision to sell another 50 billion on the heels of the 11 billion, they like some of the big corporations these days added fuel to the fire of public trust yet again! How unfortunate and unethical! What is it going to take to get all this type of behavior to stop? Look at the mess our economy is in at the present. How low do we have to go I ask?
(http://money.cnn.com/2002/03/13/news/companies/ge-bonds/index.htm), retrieved October 11, 2008,
General Electric Capital, a division of General Electric, uses long-term debt extensively. In early 2002, GE Capital issued $11 billion in long-term debt to investors, then within days filed legal documents to prepare for another $50 billion long-term debt issue. As a result of the $50 billion filing, the price of the initial $11 billion offering declined (due to higher risk of more debt).
Bill Gross, a manager of a bond investment fund, “denounced a ‘lack in candor’ related to GE’s recent debt deal. ‘It was the most recent and most egregious example of how bondholders are mistreated.’ Gross argued that GE was not forthright when GE Capital recently issued $11 billion in bonds, one of the largest issues ever from a U.S. corporation. What bothered Gross is that three days after the issue the company announced its intention to sell as much as $50 billion in additional debt, warrants, preferred stock, guarantees, letters of credit and promissory notes at some future date.”
In your opinion, did GE Capital act unethically by selling $11 billion of long-term debt without telling those investors that a few days later it would be filing documents to prepare for another $50 billion debt offering?
Source: Jennifer Ablan, “Gross Shakes the Bond Market; GE Calms It, a Bit,” Barron’s, March 25, 2002.
My Response:
It is true from CNNMoney that the 11 billion in bonds that were issued in 2002, CNNMoney states, “GE Capital sold $11 billion in global bonds Wednesday, the second-biggest U.S. issue ever as the company sought to lock in low financing costs before the economy recovers.” (http://money.cnn.com/2002/03/13/news/companies/ge-bonds/index.htm)
This article interestingly goes on to say that who else but WorldCom was the other company that has beat out GE is bond issues just a few months prior issuing 11.9 billion in bonds. Now is that not interesting, WorldCom.Not only did they then sell the 50 billion 3 month later, they had sold 3.5 billion in notes just one month before and on the heels of that released a expanded annual report, “It also comes five days after GE released an expanded annual report to soothe investors who have been jittery about sprawling companies with complicated accounting, such as Enron Corp. (ENE: Research, Estimates) and Tyco International Ltd.” (http://money.cnn.com/2002/03/13/news/companies/ge-bonds/index.htm).
Given the quote by CNN and the Quote in the ethics question by Bill Gross, there was a great deal of speculation about this deal. I also feel that from the quote in the CNN article that Yes, GE was very much aware of the “jitters” of there investors especially due to Enron, and Tyco international. So why would they make such a bold step 3 months later when ethics were being so scrutinized at that time.Even American Express Asset Management team had something to say about all of this, “But not everyone was cheered by the news. Tim Doubek, a portfolio manager at American Express Asset Management in Minneapolis, said the bonds could only hurt investors if negative news persists about accounting, corporate earnings and management.” (http://money.cnn.com/2002/03/13/news/companies/ge-bonds/index.htm)
In that GE could make this decision to sell another 50 billion on the heels of the 11 billion, they like some of the big corporations these days added fuel to the fire of public trust yet again! How unfortunate and unethical! What is it going to take to get all this type of behavior to stop? Look at the mess our economy is in at the present. How low do we have to go I ask?
(http://money.cnn.com/2002/03/13/news/companies/ge-bonds/index.htm), retrieved October 11, 2008,
Monday, October 6, 2008
Web Research: Dividends
Go to the website of General Electric Corporation at http://www.ge.com/en and find information about GE's dividend record. Click on For Investors and then Stock Information to find the current market price of a share of GE stock. Then click on Dividend History to find the record of dividends paid per share of GE stock. Calculate the dividend yield of GE's common stock.
Discussion Question
What is GE's dividend yield? Is this dividend yield what you might expect from an established company like GE? Is GE's record of paying dividends an attractive feature of its common stock? Why or why not?
My Response:
Jill Stidd
6 Oct 08 3:46 PM MST
Here are a few things that I found in my research on the press that was on the GE website, it was very interesting to see that GE is parent company of NBC, I did not know that. These website are just packed full of information that I never even knew existed.
1.Aviation and jet enginesAviation and jet engines aren't the only way GE will try to tap this market, but they are a key: China is slated to open more than 40 new airports by 2010 -- at the end of 2006, the country had 147 -- and another 55 or so by 2020. The country's evolving airport geography is like a treasure map that pinpoints where the government is going to make massive investments. (http://www.fastcompany.com/magazine/125/all-systems-go.html)
2. NBC ratings for the olympicsRatings for NBC, the GE-owned television network and the holder of Olympic television rights in the United States, soared with each breathtaking performance by the Baltimore Bullet after a controversial decision to turn tradition on its head and stage the swimming finals in the morning so that the medal moments could fall sweetly into American prime time. (http://business.timesonline.co.uk/tol/business/industry_sectors/media/article4576410.ece
3. GE Gas turbines for olympicsTwo of General Electric's 9FA gas turbines have been installed in Beijing's Taiyanggong power plant, which will supply electricity, heat and air conditioning to the central area of the Olympic Games in August.( http://www.marketwatch.com/news/story/how-china-power-olympic-games/story.aspx?guid=%7B43798B25-F2A1-499A-AA93-BDE9A9FD147E%7D&dist=msr_27)
4. Wind powerIn March, GE Energy announced it had secured a $1 billion deal to supply 750 megawatts of wind turbines -- enough to power about 200,000 households.
(http://www.reuters.com/article/domesticNews/idUSN1835150320080519?pageNumber=2&virtualBrandChannel=10112)http://www.fastcompany.com/magazine/125/all-systems-go.html retrieved October 5, 2008http://www.marketwatch.com/news/story/how-china-power-olympic-games/story.aspx?guid=%7B43798B25-F2A1-499A-AA93-BDE9A9FD147E%7D&dist=msr_27 retrieved October 5, 2008http://business.timesonline.co.uk/tol/business/industry_sectors/media/article4576410.ece retrieved October 5, 2008http://www.reuters.com/article/domesticNews/idUSN1835150320080519?pageNumber=2&virtualBrandChannel=10112 retrieved October 5, 2008
Discussion Question
What is GE's dividend yield? Is this dividend yield what you might expect from an established company like GE? Is GE's record of paying dividends an attractive feature of its common stock? Why or why not?
My Response:
Jill Stidd
6 Oct 08 3:46 PM MST
Here are a few things that I found in my research on the press that was on the GE website, it was very interesting to see that GE is parent company of NBC, I did not know that. These website are just packed full of information that I never even knew existed.
1.Aviation and jet enginesAviation and jet engines aren't the only way GE will try to tap this market, but they are a key: China is slated to open more than 40 new airports by 2010 -- at the end of 2006, the country had 147 -- and another 55 or so by 2020. The country's evolving airport geography is like a treasure map that pinpoints where the government is going to make massive investments. (http://www.fastcompany.com/magazine/125/all-systems-go.html)
2. NBC ratings for the olympicsRatings for NBC, the GE-owned television network and the holder of Olympic television rights in the United States, soared with each breathtaking performance by the Baltimore Bullet after a controversial decision to turn tradition on its head and stage the swimming finals in the morning so that the medal moments could fall sweetly into American prime time. (http://business.timesonline.co.uk/tol/business/industry_sectors/media/article4576410.ece
3. GE Gas turbines for olympicsTwo of General Electric's 9FA gas turbines have been installed in Beijing's Taiyanggong power plant, which will supply electricity, heat and air conditioning to the central area of the Olympic Games in August.( http://www.marketwatch.com/news/story/how-china-power-olympic-games/story.aspx?guid=%7B43798B25-F2A1-499A-AA93-BDE9A9FD147E%7D&dist=msr_27)
4. Wind powerIn March, GE Energy announced it had secured a $1 billion deal to supply 750 megawatts of wind turbines -- enough to power about 200,000 households.
(http://www.reuters.com/article/domesticNews/idUSN1835150320080519?pageNumber=2&virtualBrandChannel=10112)http://www.fastcompany.com/magazine/125/all-systems-go.html retrieved October 5, 2008http://www.marketwatch.com/news/story/how-china-power-olympic-games/story.aspx?guid=%7B43798B25-F2A1-499A-AA93-BDE9A9FD147E%7D&dist=msr_27 retrieved October 5, 2008http://business.timesonline.co.uk/tol/business/industry_sectors/media/article4576410.ece retrieved October 5, 2008http://www.reuters.com/article/domesticNews/idUSN1835150320080519?pageNumber=2&virtualBrandChannel=10112 retrieved October 5, 2008
Friday, October 3, 2008
Ethics discussion: Dividends
When stockholders receive money from the corporation in which they hold stock, it is usually the result of dividends being declared and paid or the stock being repurchased by the corporation. When the stockholder is also an employee of the corporation, the stockholder also is also paid a salary. But other opportunities for the stockholder/employee to receive money may arise, and these may present an ethical dilemma for the corporation and its board of directors.
Bernie Ebbers, the CEO of WorldCom, a major telecommunications company, was having personal financial troubles. Ebbers pledged a large stake of his WorldCom stock as security for some personal loans. As the price of WorldCom stock sank, Ebbers’ bankers threatened to sell his stock in order to protect their loans. To avoid having his stock sold, Ebbers asked the board of directors of WorldCom to loan him nearly $400 million of corporate assets at 2.5% interest to pay off his bankers. The board agreed to lend him the money.
Comment on the decision of the board of directors in this situation.
Bernie Ebbers, the CEO of WorldCom, a major telecommunications company, was having personal financial troubles. Ebbers pledged a large stake of his WorldCom stock as security for some personal loans. As the price of WorldCom stock sank, Ebbers’ bankers threatened to sell his stock in order to protect their loans. To avoid having his stock sold, Ebbers asked the board of directors of WorldCom to loan him nearly $400 million of corporate assets at 2.5% interest to pay off his bankers. The board agreed to lend him the money.
Comment on the decision of the board of directors in this situation.
My Response:
Jill Stidd
3 Oct 08 3:03 PM MST
Initial post: Jill Stidd
From our text I would like to start by defining the role of the board of directors, “the stockholders control of the corporation is by electing a board of directors. This board meets periodically to establish corporate policies. It also elects the chief executive officer (CFO) and other major officers to manage the day to day corporation’s affairs.” (Warren, Reeve, and Duchac, p.569)
I do know that it is the board’s responsibility to create the policies and procedures for the corporation it is not stated if there was any policy around how the employee could use the stock. I do not think that the CFO can purchase stock from the corporation unless it is treasury stock provided by the corporation. So the stock initial sale was approved by the board of directors that we know. I it seems that the CFO could use the stock in any manner he chose given that the policies of the company did not state otherwise. We were asked to look at the ethics box on page 579, in this instance the dean of the school of business stated that the professor should not use his own money to purchase stock since he was “affiliated” with the program he was researching and had an unfair advantage of information.
I really do not see where this applies to our discussion, unless there is some conflict of interest that we are not aware of. From previous chapters part of internal controls is that there should be a red flag if there is evidence that someone in charge of financials is in financial trouble, strong potential for fraud, especially if it is the CFO! This could be in violation of Sarbanes and Oxley Act in regards to internal controls. The board of directors should have been taking stronger measures to monitor the CFO and certainly not loaning this amount of money to him. However, the board of directors has the authority to do so, given the ethics box on page 569, there is a possibility that the loan amount, should the CFO default and stock holders find out could file a suite that the director’s personal assets could be responsible to.
I am sure the board of directors saw some “benefit” of 2.5% interest on $4,000.00, again we are not given all the terms of the loan to know exactly how much they could collect in interest!!! The stockholders would not see this as ethical I am sure and public trust would be compromised as was Erron, WorldCom and Fannie Mae.Warren, Reeve, and Duchac, Accounting. P. 569, 578,579.
Wednesday, October 1, 2008
Telluride Watch Article
Scroll down to Koffe with Kandee...and see the article about my expereice with pioneering a Waldorf preschool initiative...Titled..."A Feeling of Celebrating Together Is Very Unique in Today's World".
http://www.telluridetoday.com/watch/111502.html#k
http://www.telluridetoday.com/watch/111502.html#k
Friday, September 26, 2008
Web research: Stocks
Go the website of Starbucks Corporation at http://www.starbucks.com/aboutus and find information that you would use in developing a company profile. Click on the company, and then click on and read the brief Company Fact Sheet and Mission Statements. Then go back to the about us page and click on investor relations. Click on stock information and find the current price of the company’s stock and the high and low price of each share during the past year.
Discussion Question
How did Starbucks get its name? What is the current price of a share of Starbucks stock? What was the high and low price of a share of Starbucks stock during the past year? Does Starbucks Corporation appear to have an operating philosophy that is similar or dissimilar to other corporations? Do you think this philosophy is serving Starbucks well?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response:
Jill Stidd
26 Sep 08 8:24 PM MST
I know that this post is a bit long winded,,,but I thought all these bits of information were so interesting along with all the “data” we were to get for this post. I like real life stuff. I also do not like to take simply what their website says but look further into what others are saying to get to the truth of thier statements.I wanted to find a little more details on the origination of Starbucks, It was very interesting to see where the first vision of three men started. “Starbucks began in 1971 when three academics—English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker—opened a store called Starbucks Coffee, Tea, and Spice in the touristy Pikes Place Market in Seattle. The three partners shared a love of fine coffees and exotic teas and believed they could build a clientele in Seattle much like that which had already emerged in the San Francisco Bay area. Each invested $1,350 and borrowed another $5,000 from a bank to open the Pikes Place store. Baldwin, Siegel, and Bowker chose the name Starbucks in honor of Starbuck, the coffee-loving first mate in Herman Melville's Moby Dick(so company legend has it), and because they thought the name evoked the romance of the high seas and the seafaring tradition of the early coffee traders. The new company's logo, designed by an artist friend, was a two-tailed mermaid encircled by the store's name. (http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)
It was obvious that the inspiration for these 3 men came from Aflred, Peet, “The inspiration for the Starbucks enterprise was a Dutch immigrant, Alfred Peet, who had begun importing fine arabica coffees into the United States during the 1950s. Peet viewed coffee as a fine winemaker views grapes, appraising it in terms of country of origin, estates, and harvests. Peet had opened a small store, Peet's Coffee and Tea, in Berkeley, California, in 1966 and had cultivated a loyal clientele. (http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)
After reading about how Schultz came on board with the company “In 1981, Howard Schultz, vice president and general manager of U.S. operations for Hammarplast—a Swedish maker of stylish kitchen equipment and housewares—noticed that Starbucks was placing larger orders than Macy's was for a certain type of drip coffeemaker. Curious to learn what was going on, he decided to pay the company a visit. The morning after his arrival in Seattle, Schultz was escorted to the Pikes Place store by Linda Grossman, the retail merchandising manager for Starbucks. A solo violinist was playing Mozart at the door, with his violin case open for donations. Schultz immediately was taken by the powerful and pleasing aroma of the coffees, the wall displaying coffee beans, and the rows of red, yellow, and black Hammarplast coffeemakers on the shelves. As he talked with the clerk behind the counter, the clerk scooped out some Sumatran coffee beans, ground them, put the grounds in a cone filter, poured hot water over the cone, and shortly handed Schultz a porcelain mug filled with the freshly brewed coffee. After three sips, Schultz was hooked. He began asking the clerk and Grossman questions about the company, about coffees from different parts of the world, and about the different ways of roasting coffee. (http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)
As a man that knew nothing about coffee or brewing after visiting the Pikes Place store he was sold on the idea and approached the three owner to hire him. After much effort on Shultz part they hired him as the marketing director .I was interested to see why they were so resistant to his visionary ideas. I was really trying to see how Peets coffee and tea were involved, I found out that later the 3 owners of Pikes Place store also purchased Peet’s coffee and tea, located in San Francisco with about all the funds they had and there was nothing left to promote Shultz’s idea to expand locations. “But a more pressing reason for their resistance emerged shortly—Baldwin and Bowker were excited by an opportunity to purchase Peet's Coffee and Tea. The acquisition took place in 1984; to fund it, Starbucks had to take on considerable debt, leaving little in the way of financial flexibility to support Schultz's ideas for entering the beverage part of the coffee business or expanding the number of Starbucks stores.”
(http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)
How strange that after various interactions with Shultz and Baldwin as owners of Starbucks and Shultz’s decision to go on his own that Baldwin would be involved yet again. “Ironically, as Schultz was finalizing the documents for his new company, Jerry Baldwin announced he would invest $150,000 of Starbucks' money in Schultz's coffee-bar enterprise, thus becoming Schultz's first investor. Baldwin accepted Schultz's invitation to be a director of the new company, and Gordon Bowker agreed to be a part-time consultant for six months. Bowker urged Schultz to make sure that everything about the new stores—the name, the presentation, the care taken in preparing the coffee—was calculated to lead customers to expect something better than competitors offered. Bowker proposed that the new company be named Il Giornale (pronounced ill jor-nahl-ee ) Coffee Company, a suggestion that Schultz accepted. In December 1985, Bowker and Schultz made a trip to Italy during which they visited some 500 espresso bars in Milan and Verona, observing local habits, taking notes about decor and menus, snapping photographs, and videotaping baristas in action.”
(http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)To the question of Starbucks operating philosophy two things stood out for me…1. That Starbucks bases there attention on the employees that it hires for reasons that are very smart most companies even though they might understand this concept do not have the passion that Starbucks does, “Starbucks recognizes competitors can replicate products, but they can’t replicate people. That’s precisely why the company focuses so much attention on the employee experience, because it is employees who create meaningful connections with customers. Many marketers view employee relations as a job solely for human resources—they see employees as tools. But employees—happy, rewarded employees—can work wonders for the company’s marketing efforts. There is no better spokesperson for a company, product, and brand than someone who is happy with his job and respected by his employer and peers. A happy employee will in turn, make customers happy.”2. I found it very interesting that Starbuck has stock options for its employees. “Starbucks has more than 172,000 partners (employees) worldwide as of September 2007. Eligible part- and full-time partners qualify for a comprehensive benefit package that includes healthcare benefits and stock option grants through Bean Stock,Starbucks company-wide stock option plan. Starbucks is committed to maintaining the quality, integrity and great taste of coffee as the company grows. “We have the mostknowledgeable workforce in our industry,” says Schultz. “I take great pride, not in the number of stores we have opened, but in the growth and development of our people.”(http://tribalknowledge.biz/discussion-tribal-truths/33-the-employee-experience-matters)I think both of these topics do set Starbucks apart from other companies in terms of their operating philosophy, and I also feel that it is this commitment to their employees that creates the successes that they have had.In terms of stocks:Data as of 09/26/08 4:00 p.m. ET / $14.96 / 52 Week High$27.82/ 52 week Low $13.33Sept, 26, 2007 $27.09.
(http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-stockQuote)http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html retrieved: September 26, 2008http://tribalknowledge.biz/discussion-tribal-truths/33-the-employee-experience-matters retrieved: September 26, 2008http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-stockQuote retrieved: September 26, 2008
Discussion Question
How did Starbucks get its name? What is the current price of a share of Starbucks stock? What was the high and low price of a share of Starbucks stock during the past year? Does Starbucks Corporation appear to have an operating philosophy that is similar or dissimilar to other corporations? Do you think this philosophy is serving Starbucks well?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response:
Jill Stidd
26 Sep 08 8:24 PM MST
I know that this post is a bit long winded,,,but I thought all these bits of information were so interesting along with all the “data” we were to get for this post. I like real life stuff. I also do not like to take simply what their website says but look further into what others are saying to get to the truth of thier statements.I wanted to find a little more details on the origination of Starbucks, It was very interesting to see where the first vision of three men started. “Starbucks began in 1971 when three academics—English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker—opened a store called Starbucks Coffee, Tea, and Spice in the touristy Pikes Place Market in Seattle. The three partners shared a love of fine coffees and exotic teas and believed they could build a clientele in Seattle much like that which had already emerged in the San Francisco Bay area. Each invested $1,350 and borrowed another $5,000 from a bank to open the Pikes Place store. Baldwin, Siegel, and Bowker chose the name Starbucks in honor of Starbuck, the coffee-loving first mate in Herman Melville's Moby Dick(so company legend has it), and because they thought the name evoked the romance of the high seas and the seafaring tradition of the early coffee traders. The new company's logo, designed by an artist friend, was a two-tailed mermaid encircled by the store's name. (http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)
It was obvious that the inspiration for these 3 men came from Aflred, Peet, “The inspiration for the Starbucks enterprise was a Dutch immigrant, Alfred Peet, who had begun importing fine arabica coffees into the United States during the 1950s. Peet viewed coffee as a fine winemaker views grapes, appraising it in terms of country of origin, estates, and harvests. Peet had opened a small store, Peet's Coffee and Tea, in Berkeley, California, in 1966 and had cultivated a loyal clientele. (http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)
After reading about how Schultz came on board with the company “In 1981, Howard Schultz, vice president and general manager of U.S. operations for Hammarplast—a Swedish maker of stylish kitchen equipment and housewares—noticed that Starbucks was placing larger orders than Macy's was for a certain type of drip coffeemaker. Curious to learn what was going on, he decided to pay the company a visit. The morning after his arrival in Seattle, Schultz was escorted to the Pikes Place store by Linda Grossman, the retail merchandising manager for Starbucks. A solo violinist was playing Mozart at the door, with his violin case open for donations. Schultz immediately was taken by the powerful and pleasing aroma of the coffees, the wall displaying coffee beans, and the rows of red, yellow, and black Hammarplast coffeemakers on the shelves. As he talked with the clerk behind the counter, the clerk scooped out some Sumatran coffee beans, ground them, put the grounds in a cone filter, poured hot water over the cone, and shortly handed Schultz a porcelain mug filled with the freshly brewed coffee. After three sips, Schultz was hooked. He began asking the clerk and Grossman questions about the company, about coffees from different parts of the world, and about the different ways of roasting coffee. (http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)
As a man that knew nothing about coffee or brewing after visiting the Pikes Place store he was sold on the idea and approached the three owner to hire him. After much effort on Shultz part they hired him as the marketing director .I was interested to see why they were so resistant to his visionary ideas. I was really trying to see how Peets coffee and tea were involved, I found out that later the 3 owners of Pikes Place store also purchased Peet’s coffee and tea, located in San Francisco with about all the funds they had and there was nothing left to promote Shultz’s idea to expand locations. “But a more pressing reason for their resistance emerged shortly—Baldwin and Bowker were excited by an opportunity to purchase Peet's Coffee and Tea. The acquisition took place in 1984; to fund it, Starbucks had to take on considerable debt, leaving little in the way of financial flexibility to support Schultz's ideas for entering the beverage part of the coffee business or expanding the number of Starbucks stores.”
(http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)
How strange that after various interactions with Shultz and Baldwin as owners of Starbucks and Shultz’s decision to go on his own that Baldwin would be involved yet again. “Ironically, as Schultz was finalizing the documents for his new company, Jerry Baldwin announced he would invest $150,000 of Starbucks' money in Schultz's coffee-bar enterprise, thus becoming Schultz's first investor. Baldwin accepted Schultz's invitation to be a director of the new company, and Gordon Bowker agreed to be a part-time consultant for six months. Bowker urged Schultz to make sure that everything about the new stores—the name, the presentation, the care taken in preparing the coffee—was calculated to lead customers to expect something better than competitors offered. Bowker proposed that the new company be named Il Giornale (pronounced ill jor-nahl-ee ) Coffee Company, a suggestion that Schultz accepted. In December 1985, Bowker and Schultz made a trip to Italy during which they visited some 500 espresso bars in Milan and Verona, observing local habits, taking notes about decor and menus, snapping photographs, and videotaping baristas in action.”
(http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html)To the question of Starbucks operating philosophy two things stood out for me…1. That Starbucks bases there attention on the employees that it hires for reasons that are very smart most companies even though they might understand this concept do not have the passion that Starbucks does, “Starbucks recognizes competitors can replicate products, but they can’t replicate people. That’s precisely why the company focuses so much attention on the employee experience, because it is employees who create meaningful connections with customers. Many marketers view employee relations as a job solely for human resources—they see employees as tools. But employees—happy, rewarded employees—can work wonders for the company’s marketing efforts. There is no better spokesperson for a company, product, and brand than someone who is happy with his job and respected by his employer and peers. A happy employee will in turn, make customers happy.”2. I found it very interesting that Starbuck has stock options for its employees. “Starbucks has more than 172,000 partners (employees) worldwide as of September 2007. Eligible part- and full-time partners qualify for a comprehensive benefit package that includes healthcare benefits and stock option grants through Bean Stock,Starbucks company-wide stock option plan. Starbucks is committed to maintaining the quality, integrity and great taste of coffee as the company grows. “We have the mostknowledgeable workforce in our industry,” says Schultz. “I take great pride, not in the number of stores we have opened, but in the growth and development of our people.”(http://tribalknowledge.biz/discussion-tribal-truths/33-the-employee-experience-matters)I think both of these topics do set Starbucks apart from other companies in terms of their operating philosophy, and I also feel that it is this commitment to their employees that creates the successes that they have had.In terms of stocks:Data as of 09/26/08 4:00 p.m. ET / $14.96 / 52 Week High$27.82/ 52 week Low $13.33Sept, 26, 2007 $27.09.
(http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-stockQuote)http://www.mhhe.com/business/management/thompson/11e/case/starbucks.html retrieved: September 26, 2008http://tribalknowledge.biz/discussion-tribal-truths/33-the-employee-experience-matters retrieved: September 26, 2008http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-stockQuote retrieved: September 26, 2008
Ethics discussion: Stocks
The par value assigned to a share of stock bears no relationship to the market value of that share of stock (i.e., the price at which the stock sells to an investor/owner.) The market value, however, should reflect some real or perceived value of the corporation.
Gigi Liken and Ron Bobo are organizing Gold Unlimited Inc. to undertake a high-risk gold-mining venture in Canada. Gigi and Ron tentatively plan to request authorization for 75,000,000 shares of common stock to be sold to the general public. Gigi and Ron have decided to establish par of $1 per share in order to appeal to a wide variety of potential investors. Gigi and Ron feel that investors would be more willing to invest in the company if they received a large quantity of shares for what might appear to be a "bargain" price.
Discuss whether Gigi and Ron are behaving in a professional manner.
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My response:
Jill Stidd
26 Sep 08 2:07 PM MST
Given the description in our book on page 574 in regards to stock prices, “the price at which stock can be sold by a corporation depends on a variety of factors. 1. Financial record, earnings record, and dividend record of the corporation. 2. Investors expectations of the corporations earning potential. 3. General business and economic conditions and prospects.” (Warren, Reeve, and Duchac, p.574)
I would be important to know if Gigi Liken and Ron Bobo had any of these discussions or evaluations. That was not stated in the post exactly. However what was stated was that there reason was for determining the price of $1 was that the investors would be more willing to invest in the company if they received a large quantity of shares for what would be a “bargain” price. I also understand that this corporations was also a “high-risk” venture and that would be even more reason to create this “bargain” price, but if it does not fall under three factors stated then it is not appropriate and not ethical.Out text also states in regards to discounted stock this, “many states do not permit stocks to be sold at a discount, in others it may be done only under unusual conditions.”(Warren, Reeve, and Duchac, p.574)
I researched the web for whether it was legal to sell discounted stock in Canada and could not get a definite answer. But because our text does not even illustrate discounted stocks due the rareness I would have to say that Gigi and Ron were not deriving their price for the stocks for their company in the proper format and using the 3 guides listed above.
Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.
Gigi Liken and Ron Bobo are organizing Gold Unlimited Inc. to undertake a high-risk gold-mining venture in Canada. Gigi and Ron tentatively plan to request authorization for 75,000,000 shares of common stock to be sold to the general public. Gigi and Ron have decided to establish par of $1 per share in order to appeal to a wide variety of potential investors. Gigi and Ron feel that investors would be more willing to invest in the company if they received a large quantity of shares for what might appear to be a "bargain" price.
Discuss whether Gigi and Ron are behaving in a professional manner.
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My response:
Jill Stidd
26 Sep 08 2:07 PM MST
Given the description in our book on page 574 in regards to stock prices, “the price at which stock can be sold by a corporation depends on a variety of factors. 1. Financial record, earnings record, and dividend record of the corporation. 2. Investors expectations of the corporations earning potential. 3. General business and economic conditions and prospects.” (Warren, Reeve, and Duchac, p.574)
I would be important to know if Gigi Liken and Ron Bobo had any of these discussions or evaluations. That was not stated in the post exactly. However what was stated was that there reason was for determining the price of $1 was that the investors would be more willing to invest in the company if they received a large quantity of shares for what would be a “bargain” price. I also understand that this corporations was also a “high-risk” venture and that would be even more reason to create this “bargain” price, but if it does not fall under three factors stated then it is not appropriate and not ethical.Out text also states in regards to discounted stock this, “many states do not permit stocks to be sold at a discount, in others it may be done only under unusual conditions.”(Warren, Reeve, and Duchac, p.574)
I researched the web for whether it was legal to sell discounted stock in Canada and could not get a definite answer. But because our text does not even illustrate discounted stocks due the rareness I would have to say that Gigi and Ron were not deriving their price for the stocks for their company in the proper format and using the 3 guides listed above.
Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.
Saturday, September 20, 2008
Web Research: Contingencies
Go to the website of Altria Group, Inc. at http://www.altria.com/. Click on Annual Reports and select the most recent annual report available. Click on Financial Review, and then click on Notes to Consolidated Financial Statements. Scroll down to find the note on Contingencies and read two or three pages of this note.
Discussion Question
Please respond to this Discussion Question using the information from the Web Field Trip above. Take time to review the responses of your classmates and provide your feedback.
In your Web Field Trip, you were asked to research the contingent liabilities of Altria Group, Inc. What are the major business units of Altria Group? Why do you think the Altria Group Annual Report has so much discussion of contingencies? Based on your brief review of the Contingencies note, are you confident that Altria Group has reported ALL its liabilities?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response:
Jill Stidd
20 Sep 08 1:27 PM MST
This financial page supports the subsidiaries that Altria owns, however I would like to add Kraft to this list as well, “Altria Group, Inc. is the name of the parent company of Philip Morris USA Inc., John Middleton Co., and Philip Morris Capital Corporation. As of December 31, 2007, Altria Group also holds a 28.5% economic interest in SABMiller plc. (http://www.altria.com/investors/2_6_1_financialnews.asp)
I have to say that my research after reading the many pages of contingencies, litigations, and lawsuits that the tobacco industry produced have created amazing liabilities for the subsidiaries. It makes me question the fact that there was a name change to Altria Group, “The name change to Altria Group, Inc. was effective January 27, 2003. All news releases in this Financial News section of our Web site, prior to this change, will refer to the parent company's former name of Philip Morris Companies Inc. “ (http://www.altria.com/investors/2_6_1_financialnews.asp)
The second question /concern for me was reading about the “spin-off” of shares by both Phillip Morris and Kraft very recently, “On March 28, 2008, Altria completed the spin-off of 100% of the shares of Philip Morris International to Altria’s shareholders.(http://www.altria.com/investors/2_6_1_financialnews.asp).
The Board of Directors of Altria Group, Inc. voted on January 31, 2007, to authorize the spin off of all shares of Kraft Foods Inc. owned by Altria to Altria's shareholders. The distribution of the approximately 88.9% of Kraft's outstanding shares owned by Altria was made on March 30, 2007, to Altria shareholders of record as of 5:00 p.m Eastern Time on March 16, 2007” (http://www.altria.com/investors/2_2_2_kraftspinoff.asp).
I think that the amount of liability due to the contingencies was to great a burden for Altria. It is very clear from the mission statement of the company that they are trying to stress change and improvements for the industry’s that they have purchased. There was a great deal of transactions happening during 2007 with all these spin-offs. What I did read from the Altria company was about their level of integrity. “Altria Group's scale, market position, balance sheet strength and improved operational focus make the company one of the most compelling investment opportunities available in tobacco and consumer products.” (http://www.altria.com/investors/2_1_strategyfinancialgrowth.asp)
Ultimately I feel that they are committed to proper reporting for the integrity of their company, the historic subsidiaries that they have purchased, and the shareholders that are scrutinizing their every move.
http://www.altria.com/investors/2_6_1_financialnews.asp retrieved September 20,2008.http://www.altria.com/investors/2_2_2_kraftspinoff.asp retrieved September 20,2008.http://www.altria.com/investors/2_1_strategyfinancialgrowth.asp retrieved September 20,2008.
Discussion Question
Please respond to this Discussion Question using the information from the Web Field Trip above. Take time to review the responses of your classmates and provide your feedback.
In your Web Field Trip, you were asked to research the contingent liabilities of Altria Group, Inc. What are the major business units of Altria Group? Why do you think the Altria Group Annual Report has so much discussion of contingencies? Based on your brief review of the Contingencies note, are you confident that Altria Group has reported ALL its liabilities?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response:
Jill Stidd
20 Sep 08 1:27 PM MST
This financial page supports the subsidiaries that Altria owns, however I would like to add Kraft to this list as well, “Altria Group, Inc. is the name of the parent company of Philip Morris USA Inc., John Middleton Co., and Philip Morris Capital Corporation. As of December 31, 2007, Altria Group also holds a 28.5% economic interest in SABMiller plc. (http://www.altria.com/investors/2_6_1_financialnews.asp)
I have to say that my research after reading the many pages of contingencies, litigations, and lawsuits that the tobacco industry produced have created amazing liabilities for the subsidiaries. It makes me question the fact that there was a name change to Altria Group, “The name change to Altria Group, Inc. was effective January 27, 2003. All news releases in this Financial News section of our Web site, prior to this change, will refer to the parent company's former name of Philip Morris Companies Inc. “ (http://www.altria.com/investors/2_6_1_financialnews.asp)
The second question /concern for me was reading about the “spin-off” of shares by both Phillip Morris and Kraft very recently, “On March 28, 2008, Altria completed the spin-off of 100% of the shares of Philip Morris International to Altria’s shareholders.(http://www.altria.com/investors/2_6_1_financialnews.asp).
The Board of Directors of Altria Group, Inc. voted on January 31, 2007, to authorize the spin off of all shares of Kraft Foods Inc. owned by Altria to Altria's shareholders. The distribution of the approximately 88.9% of Kraft's outstanding shares owned by Altria was made on March 30, 2007, to Altria shareholders of record as of 5:00 p.m Eastern Time on March 16, 2007” (http://www.altria.com/investors/2_2_2_kraftspinoff.asp).
I think that the amount of liability due to the contingencies was to great a burden for Altria. It is very clear from the mission statement of the company that they are trying to stress change and improvements for the industry’s that they have purchased. There was a great deal of transactions happening during 2007 with all these spin-offs. What I did read from the Altria company was about their level of integrity. “Altria Group's scale, market position, balance sheet strength and improved operational focus make the company one of the most compelling investment opportunities available in tobacco and consumer products.” (http://www.altria.com/investors/2_1_strategyfinancialgrowth.asp)
Ultimately I feel that they are committed to proper reporting for the integrity of their company, the historic subsidiaries that they have purchased, and the shareholders that are scrutinizing their every move.
http://www.altria.com/investors/2_6_1_financialnews.asp retrieved September 20,2008.http://www.altria.com/investors/2_2_2_kraftspinoff.asp retrieved September 20,2008.http://www.altria.com/investors/2_1_strategyfinancialgrowth.asp retrieved September 20,2008.
Friday, September 19, 2008
Ethics discussion: Payroll
An employer bears a special responsibility to account properly for the company’s payroll. A primary object of that responsibility is the government’s (federal, state, and local) “connection” to taxes levied on each employee’s income, as well as other taxes levied on the employer’s payroll.
Connor Lang was discussing summer employment with Jarrod McIntyre, president of Azalea Landscaping Service:
Jarrod: I'm glad that you're thinking about joining us for the summer. We could certainly use the help.Connor: Sounds good. I enjoy outdoor work, and I could use the money to help with next year's school expenses.Jarrod: I've got a plan that can help you out on that. As you know, I'll pay you $12 per hour, but in addition, I'd like to pay you with cash. Since you're only working for the summer, it really doesn't make sense for me to go to the trouble of formally putting you on our payroll system. In face, I do some jobs for my clients on a strictly cash basis, so it would be easy to just pay you that way.Connor: Well, that's a bit unusual, but I guess money is money.Jarrod: Yeah, not only that, it's tax-free!Connor: What do you mean?Jarrod: Didn't you know? Any money that you receive in cash is not reported to the IRS on a W-2 form; therefore, the IRS doesn't know about the income-hence, it's the same as tax-free earnings.
Why does Jarrod McIntyre want to conduct business transactions using cash (not check or credit card)?
How should Connor respond to Jarrod's suggestion?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response: Jill Stidd 19 Sep 08 12:01 PM MST
Per out text and the IRS website, it states clearly that an employer is responsible for submitting FICA taxes, social security taxes, workers comp that have been calculated and withheld from the employee’s gross pay. The other segment of payroll taxes is state taxes which are explained here on the Employment Development Department (EDD) website, “California has four State payroll taxes which are administered by the Employment Development Department (EDD). They are Unemployment Insurance (UI) and Employment Training Tax (ETT), which are employer contributions, and State Disability Insurance (SDI) and Personal Income Tax (PIT), which are withheld from employees' wages.Wages are generally subject to all four payroll taxes. However, some types of employment are not subject to payroll taxes and/or PIT withholding. For more information, please refer to the California Employer's Guide (DE 44).” (http://wwwedd.cahwnet.gov/Payroll_Taxes/What_Are_State_Payroll_Taxes.htm)
The employer is required to meet the amount of FICA taxes that the employee pays. This can be a very large cost to the employer and must be budgeted into operating costs of the business. The penalties and interest are quite large for late FDT payments. This is all very expensive and time consuming for an employer and that is the reason that Jarrod is suggesting this arrangement. By using Cash for payment, there is no paper trail or accounting of the payment there for a way he thinks he can hide the payment to Conner. However what he is not telling Conner is that Conner will still be responsible for his portion of FICA coming out of his paycheck at the end of the year if this company should ever be audited by the Employment Development Department in the state of California and caught for these actions. Which could result in a much lower tax return for Conner than he expected. Connor could learn the very hard lesson that he should have said no to Jerrod.Here is some good advice from the IRS, “How Can I Avoid Receiving FTD Penalties? You will be subject to a FTD penalty. The penalty rate increases according to the number of days the tax liability remains unpaid.If you make a deposit; late (after the deposit due date), or; of an incorrect amount (less than 100% or theapplicable safe harbor amount), or; in an incorrect manner (to an unauthorizedfinancial institution, directly to the IRS, or notthrough an electronic funds transfer, if required.”
(http://www.irs.gov/pub/irs-pdf/p1932.pdf)Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.http://wwwedd.cahwnet.gov/Payroll_Taxes/Reporting_Requirements.htm retrieved September 19,2008.http://wwwedd.cahwnet.gov/Payroll_Taxes/What_Are_State_Payroll_Taxes.htm retrieved September 19,2008.
Connor Lang was discussing summer employment with Jarrod McIntyre, president of Azalea Landscaping Service:
Jarrod: I'm glad that you're thinking about joining us for the summer. We could certainly use the help.Connor: Sounds good. I enjoy outdoor work, and I could use the money to help with next year's school expenses.Jarrod: I've got a plan that can help you out on that. As you know, I'll pay you $12 per hour, but in addition, I'd like to pay you with cash. Since you're only working for the summer, it really doesn't make sense for me to go to the trouble of formally putting you on our payroll system. In face, I do some jobs for my clients on a strictly cash basis, so it would be easy to just pay you that way.Connor: Well, that's a bit unusual, but I guess money is money.Jarrod: Yeah, not only that, it's tax-free!Connor: What do you mean?Jarrod: Didn't you know? Any money that you receive in cash is not reported to the IRS on a W-2 form; therefore, the IRS doesn't know about the income-hence, it's the same as tax-free earnings.
Why does Jarrod McIntyre want to conduct business transactions using cash (not check or credit card)?
How should Connor respond to Jarrod's suggestion?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response: Jill Stidd 19 Sep 08 12:01 PM MST
Per out text and the IRS website, it states clearly that an employer is responsible for submitting FICA taxes, social security taxes, workers comp that have been calculated and withheld from the employee’s gross pay. The other segment of payroll taxes is state taxes which are explained here on the Employment Development Department (EDD) website, “California has four State payroll taxes which are administered by the Employment Development Department (EDD). They are Unemployment Insurance (UI) and Employment Training Tax (ETT), which are employer contributions, and State Disability Insurance (SDI) and Personal Income Tax (PIT), which are withheld from employees' wages.Wages are generally subject to all four payroll taxes. However, some types of employment are not subject to payroll taxes and/or PIT withholding. For more information, please refer to the California Employer's Guide (DE 44).” (http://wwwedd.cahwnet.gov/Payroll_Taxes/What_Are_State_Payroll_Taxes.htm)
The employer is required to meet the amount of FICA taxes that the employee pays. This can be a very large cost to the employer and must be budgeted into operating costs of the business. The penalties and interest are quite large for late FDT payments. This is all very expensive and time consuming for an employer and that is the reason that Jarrod is suggesting this arrangement. By using Cash for payment, there is no paper trail or accounting of the payment there for a way he thinks he can hide the payment to Conner. However what he is not telling Conner is that Conner will still be responsible for his portion of FICA coming out of his paycheck at the end of the year if this company should ever be audited by the Employment Development Department in the state of California and caught for these actions. Which could result in a much lower tax return for Conner than he expected. Connor could learn the very hard lesson that he should have said no to Jerrod.Here is some good advice from the IRS, “How Can I Avoid Receiving FTD Penalties? You will be subject to a FTD penalty. The penalty rate increases according to the number of days the tax liability remains unpaid.If you make a deposit; late (after the deposit due date), or; of an incorrect amount (less than 100% or theapplicable safe harbor amount), or; in an incorrect manner (to an unauthorizedfinancial institution, directly to the IRS, or notthrough an electronic funds transfer, if required.”
(http://www.irs.gov/pub/irs-pdf/p1932.pdf)Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.http://wwwedd.cahwnet.gov/Payroll_Taxes/Reporting_Requirements.htm retrieved September 19,2008.http://wwwedd.cahwnet.gov/Payroll_Taxes/What_Are_State_Payroll_Taxes.htm retrieved September 19,2008.
Friday, September 12, 2008
Web research: Corporations
Go to the website of About.com and find information about patents and copyrights at http://www.usgovinfo.about.com/blpatents.htm. Read Part 1 on the first page, which contains general information about patents, and then click on one or more of the links to information about applying for a patent. Go back to the first page, click on Part 2, and read about copyrights. Click on one or more of the links about registering a copyright.
Discussion Question
Please respond to this Discussion Question using the information from the Web Field Trip above. Take time to review the responses of your classmates and provide your feedback.
In your Web Field Trip, you were asked to research the procedures for applying for a patent and registering a copyright. What are those procedures? Are these procedures available to anyone who wants to apply for a patent or register a copyright, or are there limitations?
My Response: Jill Stidd 12 Sep 08 12:14 PM MST
Patent: who can apply?“According to the law, only the inventor may apply for a patent, with certain exceptions. If a person who is not the inventor should apply for a patent, the patent, if it were obtained, would be invalid. The person applying in such a case who falsely states that he/she is the inventor would also be subject to criminal penalties. If the inventor is dead, the application may be made by legal representatives, that is, the administrator or executor of the estate. If the inventor is insane, the application for patent may be made by a guardian. If an inventor refuses to apply for a patent or cannot be found, a joint inventor or a person having a proprietary interest in the invention may apply on behalf of the non-signing inventor. If two or more persons make an invention jointly, they apply for a patent as joint inventors. A person who makes a financial contribution is not a joint inventor and cannot be joined in the application as an inventor. It is possible to correct an innocent mistake in erroneously omitting an inventor or in erroneously naming a person as an inventor.”
http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/web/offices/pac/doc/general/apply.htm)
Patent: who can not apply?“Officers and employees of the Patent and Trademark Office are prohibited by law from applying for a patent or acquiring, directly or indirectly, except by inheritance or bequest, any patent or any right or interest in any patent.” (http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/web/offices/pac/doc/general/apply.htm)Patent:
how to apply?They recommend using the electronic filing system due to its ease. All you do is turn what you are tryping to patent into a PDF and send it through there secure system along with the application and fees. “Use EFS-Web, the USPTO's electronic filing system for patent applications.” (http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/main/patents.htm)Patent: feesAlternative fee amount (non-small entity) basic filing fee 850.00 and for Alternative fee amount (small entity) basic filing fee 425.00 ( http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/go/fees/index.html p 2)
Patent financial data:Fiscal year 2007 small entity payments $41,519 and for non small entity $ 209,577 quite a bit of revenue here for patent applications. (http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/go/fees/index.html. p4,5)
Copyrights: who may apply?Persons or organizations creating "original works of authorship" including literary, dramatic, musical, architectural, cartographic, choreographic, pantomimic, pictorial, graphic, sculptural, and audiovisual displays usually register copyrights. Authors, artists, song writers and creators of computer programs typically register copyrights.Several categories of material are generally not eligible for federal copyright protection.
These include among others:• Works that have not been fixed in a tangible form of expression (for example, choreographic works that have not been notated or recorded, or improvisational speeches or performances that have not been written or recorded)• Titles, names, short phrases, and slogans; familiar symbols or designs; mere variations of typographic ornamentation, lettering, or coloring; mere listings of ingredients or contents• Ideas, procedures, methods, systems, processes, concepts, principles, discoveries, or devices, as distinguished from a description, explanation, or illustration•
Works consisting entirely of information that is common property and containing no original authorship (for example: standard calendars, height and weight charts, tape measures and rulers, and lists or tables taken from public documents or other common sources)http://usgovinfo.about.com/blcopyrights.htm
There is no need to "apply" for a copyright. A copyright is automatically considered to be granted to the author or creator of the work as soon as it is finished and considered "fixed" in a copy or recording. [Details from the US Copyright Office] While there is no need to apply for copyrights, there are definite advantages to registering them through the Copyright Office. Primarily, registering a copyright establishes a legally enforceable public record of the creator's copyright claim.Things that cannot be copyrighted include any inventions, ideas, procedures, processes, slogans, principles, or discoveries. (http://usgovinfo.about.com/blcopyrights.htm)
Copyright: who may not apply?In the case of works made for hire, the employer and not the employee is considered to be the author. Section 101 of the copyright law defines a “work made for hire” as:1. work prepared by an employee within the scope of his or her employment; or2. work specially ordered or commissioned for use as; a contribution to a collective work; a part of a motion picture or other audiovisual work&; a translation &; a supplementary work; a compilation; an instructional text; a test; answer material for a test an atlas.(http://usgovinfo.about.com/blcopyrights.htm)
Copyright: how to registerTo register a work, send the following three elements in the same envelope or package to:Library of CongressCopyright Office101 Independence Avenue, SEWashington, DC 20559-60001. A properly completed application form.2. A nonrefundable filing fee* for each application.3. A nonreturnable deposit of the work being registered. The deposit requirements vary in particular situations. The general requirements follow. Also note the information under “Special Deposit Requirements.”
(http://usgovinfo.about.com/blcopyrights.htm)
I have written a children’s book that I have wanted to copyright for some time now. I had researched into this a while back and found out that one way to secure copyright of my book was to make a copy, seal it, and send it to myself, and never break the seal. I did that. I now may make the next step and register it now that I have all the information I need to do so. I want to publish it as well; I am looking right now for someone to illustrate it.http://usgovinfo.about.com/blpatents.htmhttp://usgovinfo.about.com/blcopyrights.htmDate Modified: 12 Sep 08 12:20 PM MST
Discussion Question
Please respond to this Discussion Question using the information from the Web Field Trip above. Take time to review the responses of your classmates and provide your feedback.
In your Web Field Trip, you were asked to research the procedures for applying for a patent and registering a copyright. What are those procedures? Are these procedures available to anyone who wants to apply for a patent or register a copyright, or are there limitations?
My Response: Jill Stidd 12 Sep 08 12:14 PM MST
Patent: who can apply?“According to the law, only the inventor may apply for a patent, with certain exceptions. If a person who is not the inventor should apply for a patent, the patent, if it were obtained, would be invalid. The person applying in such a case who falsely states that he/she is the inventor would also be subject to criminal penalties. If the inventor is dead, the application may be made by legal representatives, that is, the administrator or executor of the estate. If the inventor is insane, the application for patent may be made by a guardian. If an inventor refuses to apply for a patent or cannot be found, a joint inventor or a person having a proprietary interest in the invention may apply on behalf of the non-signing inventor. If two or more persons make an invention jointly, they apply for a patent as joint inventors. A person who makes a financial contribution is not a joint inventor and cannot be joined in the application as an inventor. It is possible to correct an innocent mistake in erroneously omitting an inventor or in erroneously naming a person as an inventor.”
http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/web/offices/pac/doc/general/apply.htm)
Patent: who can not apply?“Officers and employees of the Patent and Trademark Office are prohibited by law from applying for a patent or acquiring, directly or indirectly, except by inheritance or bequest, any patent or any right or interest in any patent.” (http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/web/offices/pac/doc/general/apply.htm)Patent:
how to apply?They recommend using the electronic filing system due to its ease. All you do is turn what you are tryping to patent into a PDF and send it through there secure system along with the application and fees. “Use EFS-Web, the USPTO's electronic filing system for patent applications.” (http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/main/patents.htm)Patent: feesAlternative fee amount (non-small entity) basic filing fee 850.00 and for Alternative fee amount (small entity) basic filing fee 425.00 ( http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/go/fees/index.html p 2)
Patent financial data:Fiscal year 2007 small entity payments $41,519 and for non small entity $ 209,577 quite a bit of revenue here for patent applications. (http://usgovinfo.about.com/gi/dynamic/offsite.htm?site=http://www.uspto.gov/go/fees/index.html. p4,5)
Copyrights: who may apply?Persons or organizations creating "original works of authorship" including literary, dramatic, musical, architectural, cartographic, choreographic, pantomimic, pictorial, graphic, sculptural, and audiovisual displays usually register copyrights. Authors, artists, song writers and creators of computer programs typically register copyrights.Several categories of material are generally not eligible for federal copyright protection.
These include among others:• Works that have not been fixed in a tangible form of expression (for example, choreographic works that have not been notated or recorded, or improvisational speeches or performances that have not been written or recorded)• Titles, names, short phrases, and slogans; familiar symbols or designs; mere variations of typographic ornamentation, lettering, or coloring; mere listings of ingredients or contents• Ideas, procedures, methods, systems, processes, concepts, principles, discoveries, or devices, as distinguished from a description, explanation, or illustration•
Works consisting entirely of information that is common property and containing no original authorship (for example: standard calendars, height and weight charts, tape measures and rulers, and lists or tables taken from public documents or other common sources)http://usgovinfo.about.com/blcopyrights.htm
There is no need to "apply" for a copyright. A copyright is automatically considered to be granted to the author or creator of the work as soon as it is finished and considered "fixed" in a copy or recording. [Details from the US Copyright Office] While there is no need to apply for copyrights, there are definite advantages to registering them through the Copyright Office. Primarily, registering a copyright establishes a legally enforceable public record of the creator's copyright claim.Things that cannot be copyrighted include any inventions, ideas, procedures, processes, slogans, principles, or discoveries. (http://usgovinfo.about.com/blcopyrights.htm)
Copyright: who may not apply?In the case of works made for hire, the employer and not the employee is considered to be the author. Section 101 of the copyright law defines a “work made for hire” as:1. work prepared by an employee within the scope of his or her employment; or2. work specially ordered or commissioned for use as; a contribution to a collective work; a part of a motion picture or other audiovisual work&; a translation &; a supplementary work; a compilation; an instructional text; a test; answer material for a test an atlas.(http://usgovinfo.about.com/blcopyrights.htm)
Copyright: how to registerTo register a work, send the following three elements in the same envelope or package to:Library of CongressCopyright Office101 Independence Avenue, SEWashington, DC 20559-60001. A properly completed application form.2. A nonrefundable filing fee* for each application.3. A nonreturnable deposit of the work being registered. The deposit requirements vary in particular situations. The general requirements follow. Also note the information under “Special Deposit Requirements.”
(http://usgovinfo.about.com/blcopyrights.htm)
I have written a children’s book that I have wanted to copyright for some time now. I had researched into this a while back and found out that one way to secure copyright of my book was to make a copy, seal it, and send it to myself, and never break the seal. I did that. I now may make the next step and register it now that I have all the information I need to do so. I want to publish it as well; I am looking right now for someone to illustrate it.http://usgovinfo.about.com/blpatents.htmhttp://usgovinfo.about.com/blcopyrights.htmDate Modified: 12 Sep 08 12:20 PM MST
Ethics discussion: Internal controls
Leah Corbin, CPA, is an assistant to the controller of Beartooth Consulting Co. In her spare time, Leah also prepares tax returns and performs general accounting services for clients. Frequently, Leah performs these services after her normal working hours, using Beartooth Consulting Co.’s computers and laser printers. Occasionally, Leah’s clients will call her at the office during regular working hours.
Discuss whether Leah is performing in a professional manner.
My Response: 12 Sep 08 11:10 AM MST
Initial Post: Jill Stidd
I feel that this is not a professional attitude as a CPA. I think that there are two points to consider here that are important for this discussion. First, our text defines capital and revenue expenditures, “once a fixed asset has been acquired and placed in service, expenditures may be incurred for ordinary maintenance and repairs. In addition, expenditures may be incurred for improving an asset or for extraordinary repairs that extend the assets useful life. Expenditures that benefit only the current period are called revenue expenditures. Expenditures that improve the asset or extend its useful life are called capital expenditures.” (Warren, Reeve, and Duchac. P. 9,10)
The discussion says that Leah frequently uses the computer and printer to work on private clients after hours. It does not say if she has permission to do this, if so then that is a different story all together. If she does not have permission then she is adding to the wear and tear of the equipment that could add to accumulated depreciation and affect the assets on the balance sheet for the company she works for. If she creates a situation that the printer goes through more ink (which by the way is very expensive, or needs a minor repair then that would affect expenses which would effect the income statement and net income for the company.Second idea to look at, should not Leah as a CPA create her own company that purchases her own equipment so that she can garner the tax benefits that the company she is working for gets with deprecation and expenses?
Not only is she not very ethical and professional here, she is not a very smart CPA if she is letting the company she works for get all the tax benefit that she could acquire if she created her own business.As far as the phone calls go at work, in most places of business the policy is stated in the handbook that there should be no personal phone calls, so again this is highly unprofessional.Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.
Discuss whether Leah is performing in a professional manner.
My Response: 12 Sep 08 11:10 AM MST
Initial Post: Jill Stidd
I feel that this is not a professional attitude as a CPA. I think that there are two points to consider here that are important for this discussion. First, our text defines capital and revenue expenditures, “once a fixed asset has been acquired and placed in service, expenditures may be incurred for ordinary maintenance and repairs. In addition, expenditures may be incurred for improving an asset or for extraordinary repairs that extend the assets useful life. Expenditures that benefit only the current period are called revenue expenditures. Expenditures that improve the asset or extend its useful life are called capital expenditures.” (Warren, Reeve, and Duchac. P. 9,10)
The discussion says that Leah frequently uses the computer and printer to work on private clients after hours. It does not say if she has permission to do this, if so then that is a different story all together. If she does not have permission then she is adding to the wear and tear of the equipment that could add to accumulated depreciation and affect the assets on the balance sheet for the company she works for. If she creates a situation that the printer goes through more ink (which by the way is very expensive, or needs a minor repair then that would affect expenses which would effect the income statement and net income for the company.Second idea to look at, should not Leah as a CPA create her own company that purchases her own equipment so that she can garner the tax benefits that the company she is working for gets with deprecation and expenses?
Not only is she not very ethical and professional here, she is not a very smart CPA if she is letting the company she works for get all the tax benefit that she could acquire if she created her own business.As far as the phone calls go at work, in most places of business the policy is stated in the handbook that there should be no personal phone calls, so again this is highly unprofessional.Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.
Sunday, September 7, 2008
Class Work by Jill Stidd
For this Web Field Trip you will review the annual reports of the Coca Cola Company and Wal-Mart, two of the largest publicly traded firms in America.
Coca Cola
Go to http://www.thecoca-colacompany.com/investors/annual_other_reports.html. This page shows a link to the 2006 annual report.You will need to scroll through the annual report to find the information that you need to answer the questions. Remember what you learned in Accounting I about financial statements to help you find what you need.
Wal-Mart
Go to http://investor.walmartstores.com/phoenix.zhtml?c=112761&p=irol-irhome. Find the financial information and then annual reports. You will need to scroll through the annual report to find the information that you need to answer the questions. Remember what you learned in Accounting I about financial statements to help you find what you need.
Discussion Question
Please respond to this Discussion Question using the information from the Web Field Trip above. Take time to review the responses of your classmates and provide your feedback.
Compare the accounts receivable turnover ratios for Coca-Cola and Wal-Mart. What characteristic(s) of these companies would indicate that these ratios are reasonable?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response: 8 Sep 08 12:44 PM MST
Initial post: Jill Stidd
Coca-colaAccounts receivable turnover = (net sales) / (average accounts receivable)(24,088 ) / (2,587) +( 2,281) / 2 the AR net realizable values for both years INCLUDE the estimated write off.
To support this statement Coca Cola 2006 report states, “We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. We calculate this allowance based on our history of write offs, level of past-due accounts based on the contractual terms of the receivables, and our relationships with and the economic status of our bottling partners and customers.” http://www.thecocacolacompany.com/investors/pdfs/form_10K_2006.pdf . p.76
9.90= (24,088 ) / 2434
Answer 9.90 Accounts receivable turnoverWal-Mart($312,427) / (2,662) +( 1,715) / 2($312,427) /4377 /2($312,427) / 2188,50
Answer 142.76 Accounts receivable turnover
I would say that Coca Cola is completely different customer base from Wal-Mart. The account receivables also come from different sales strategies. Coca-cola, in that it ultimately sells beverage retail products to a consumer; those revenues go to the seller not to Coca Cola. Coca Cola makes it sales as a wholesaler invoicing the seller given the terms stated by Coca Cola, which creates their accounts receivables. (I looked long and hard for and documentation on terms, but did not find any) Let’s assume that they are net 30 and given that there turnover was 9.90 this would justify those numbers and are in line for Coca-Cola.Wal-Mart sells directly to the consumer there for the sales revenue is from the consumer. There receivables are from a very different venue. As stated by the 2006 report from Wal-Mart, “Receivables Accounts: receivable consist primarily of receivables from insurance companies resulting from our pharmacy sales, receivables from suppliers for marketing or incentive programs, receivables from real estate transactions and receivables from property insurance claims. Additionally, amounts due from banks for customer credit card, debit card and EBT transactions that take in excess of seven days to process are classified as accounts receivable.” http://walmartstores.com/Media/Investors/2006_annual_report.pdf p.36
I am sure part of the High turnover or Wal-Mart has two factors. I would like to note that I was very surprised to see this high turnover rate of 142.76 at first, but when I looked more closely it made perfect sense. Give that we use the net sales for the computation, Wal-Mart’s net sales is much higher than Coca-Cola net sales, but both of their A/R values were similar, that would be one reason that Wal-Mart’s turnover rate would be higher. The second reason I would think is because there A/R consists of insurance billing. With the electronic infrastructure of the insurance billing today it happens very quickly once it is submitted to the insurance company. It is all electronic from the submittal, to the response, and finally to the money being directly deposited into Wal-Mart’s bank account. This would create a rapid turnover in A/R .In conclusion I would have to say that yes, both companies in all their differences as companies are reasonable in their ratios of turnovers.
http://www.thecocacolacompany.com/investors/pdfs/form_10K_2006.pdfhttp://walmartstores.com/Media/Investors/2006_annual_report.pdfWarren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.
Coca Cola
Go to http://www.thecoca-colacompany.com/investors/annual_other_reports.html. This page shows a link to the 2006 annual report.You will need to scroll through the annual report to find the information that you need to answer the questions. Remember what you learned in Accounting I about financial statements to help you find what you need.
Wal-Mart
Go to http://investor.walmartstores.com/phoenix.zhtml?c=112761&p=irol-irhome. Find the financial information and then annual reports. You will need to scroll through the annual report to find the information that you need to answer the questions. Remember what you learned in Accounting I about financial statements to help you find what you need.
Discussion Question
Please respond to this Discussion Question using the information from the Web Field Trip above. Take time to review the responses of your classmates and provide your feedback.
Compare the accounts receivable turnover ratios for Coca-Cola and Wal-Mart. What characteristic(s) of these companies would indicate that these ratios are reasonable?
http://kucourses.com/ec/crs/default.learn?CourseID=3073466&Survey=1&47=4849309&ClientNodeID=404340&coursenav=2&bhcp=1
My Response: 8 Sep 08 12:44 PM MST
Initial post: Jill Stidd
Coca-colaAccounts receivable turnover = (net sales) / (average accounts receivable)(24,088 ) / (2,587) +( 2,281) / 2 the AR net realizable values for both years INCLUDE the estimated write off.
To support this statement Coca Cola 2006 report states, “We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the provision for doubtful accounts. We calculate this allowance based on our history of write offs, level of past-due accounts based on the contractual terms of the receivables, and our relationships with and the economic status of our bottling partners and customers.” http://www.thecocacolacompany.com/investors/pdfs/form_10K_2006.pdf . p.76
9.90= (24,088 ) / 2434
Answer 9.90 Accounts receivable turnoverWal-Mart($312,427) / (2,662) +( 1,715) / 2($312,427) /4377 /2($312,427) / 2188,50
Answer 142.76 Accounts receivable turnover
I would say that Coca Cola is completely different customer base from Wal-Mart. The account receivables also come from different sales strategies. Coca-cola, in that it ultimately sells beverage retail products to a consumer; those revenues go to the seller not to Coca Cola. Coca Cola makes it sales as a wholesaler invoicing the seller given the terms stated by Coca Cola, which creates their accounts receivables. (I looked long and hard for and documentation on terms, but did not find any) Let’s assume that they are net 30 and given that there turnover was 9.90 this would justify those numbers and are in line for Coca-Cola.Wal-Mart sells directly to the consumer there for the sales revenue is from the consumer. There receivables are from a very different venue. As stated by the 2006 report from Wal-Mart, “Receivables Accounts: receivable consist primarily of receivables from insurance companies resulting from our pharmacy sales, receivables from suppliers for marketing or incentive programs, receivables from real estate transactions and receivables from property insurance claims. Additionally, amounts due from banks for customer credit card, debit card and EBT transactions that take in excess of seven days to process are classified as accounts receivable.” http://walmartstores.com/Media/Investors/2006_annual_report.pdf p.36
I am sure part of the High turnover or Wal-Mart has two factors. I would like to note that I was very surprised to see this high turnover rate of 142.76 at first, but when I looked more closely it made perfect sense. Give that we use the net sales for the computation, Wal-Mart’s net sales is much higher than Coca-Cola net sales, but both of their A/R values were similar, that would be one reason that Wal-Mart’s turnover rate would be higher. The second reason I would think is because there A/R consists of insurance billing. With the electronic infrastructure of the insurance billing today it happens very quickly once it is submitted to the insurance company. It is all electronic from the submittal, to the response, and finally to the money being directly deposited into Wal-Mart’s bank account. This would create a rapid turnover in A/R .In conclusion I would have to say that yes, both companies in all their differences as companies are reasonable in their ratios of turnovers.
http://www.thecocacolacompany.com/investors/pdfs/form_10K_2006.pdfhttp://walmartstores.com/Media/Investors/2006_annual_report.pdfWarren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.
Friday, September 5, 2008
Ethics discussion: Bank Interest computation
Neka Kiser, vice president of operations for Mountain National Bank, has instructed the bank’s computer programmer to use a 365-day year to compute interest on depository accounts (payables). Neka also instructed the programmer to use a 360-day year to compute interest on loans (receivables).
Discuss whether Neka is behaving in a professional manner.
My Response: 5 Sep 08 10:09 AM MST
I wanted to provide a definition of a deposit account. I went to the web in search of this definition, “A deposit account is a current account at a banking institution that allows money to be deposited and withdrawn by the account holder, with the transactions and resulting balance being recorded on the bank's books. Some banks charge a fee for this service, while others may pay the customer interest on the funds deposited.
(http://en.wikipedia.org/wiki/Deposit_account, reveiwed, September 4, 2008)
To increase the days that the intrest is compute for the deposit account would increase the interest that the bank could collect from the consumer. This is not ethical and if customers looked at their bank statement and could analize this amount that must be disclosed then there would be complaints. This complaint would also be sent to the regulations that oversee the banking industry. The order that Neka gave the programer to compute the loans (receivables) for a 360 day year sends a clear message that Neka was aware of the correct thing to do and chose not to for the payables. Neka is acting in a very unprofessional manner and is asking someone else to create something in terms of computer programming that is unethical as well.The computations of the receivables is in order for computing at 360 days per our text. “ The interest rate on notes is normally stated in terms of a year, reagardlessof the actual period involved.”
(Warren, Reeve, and Duchac,. 2007)
http://en.wikipedia.org/wiki/Deposit_account reveiwed, September 4, 2008)Warren, Reeve, and Duchac.( 2007). Accounting 11. Thompson South – Western.
Thursday, August 28, 2008
Paper: Nike Brand Marketing Mix Analysis written by Jill Stidd / Grade A
Nike Brand Marketing Mix Analysis Final Paper
MT219-19: Marketing
Jill Stidd
Kaplan University
Given the importance in marketing for the deeper understanding of the strategic planning process and formulating a strong marketing plan, this paper analyzes the marketing mix for the Nike brand as well as stimulate suggestions and ideas for any areas of their existing marking objectives that change would create a better marketing plan.
I choose Nike brand because of my previous experience with the shoe sales industry and the fact that Nike’s headquarters and cooperate offices are local to where I live in Portland, Oregon. This history of Nike is that before Swoosh and before Nike there were to visionary men, Bill Bowerman and Phil Knight. These two men believed in their vision and invested $500 dollars each which created Blue Ribbon Sports Company. They placed their first order of 300 shoes in January of 1964. Bill sold the shoes out of his car, while Phil tore apart athletic shoes to see how he could make them better. He used one of the very important marketing tools of “trial” having anyone he knew to wear the shoes and give him feedback, hence became the start of customer loyalty and the foundation of Nike shoes. Nike is a major manufacturer of athletic shoes, apparel, and sports equipment there current portfolio is stated on their website, “Nike’s subsidiaries have a significant place in Nike's plan to grow to $23 billion in revenue by 2011. We estimate that 25 percent of the company’s targeted revenue growth in the next four years will be generated by these brands which currently represent revenues of more than $2 billion. Collectively over the past five years, these subsidiaries have nearly tripled revenue and increased their pretax income contribution more than fivefold. As part of our growth strategies, Nike continues to optimize its portfolio, ensuring that the company is investing in opportunities that will generate the highest returns. Nike’s Brand Portfolio currently includes four wholly owned subsidiaries: Converse Inc., NIKE Golf, Cole Haan Holdings, Inc., and Hurley International LLC.
(http://www.nikebiz.com/company_overview/subsidiaries/index.html, reviewed August 3, 2008.)
Nike’s width is action sports, basketball, cycling, eyewear, football, golf, running, soccer, skateboarding, swimming, tennis, women’s and men’s shoes, women’s and men’s athletic clothing, equipment. Nikes Depth in women’s running shoes is for example: Nike Shox Turbo VI+, Nike Air Max 360 III, Nike Shox Navina+, are but a few examples of their depth. Given the research that I have done it seems that the top competitive athletic shoes manufacturers today are New Balance and Reebok, they are all looking at one another to create their change and improvements. Currently Nike’s Position is #1, New balance is #2, and Reebok is #3, these statistics were stated on the New Balance video that we were to watch for a video project.
Given that Nike brand is a heterogeneous market great thought and attention to detail in regards to the target market and segmentation is vitally important to the success of Nike’s marketing plan. Nike’s marketing team without a doubt had to consider all five conditions before starting the task of market segmentation. Nike uses a differentiated strategy for market segmentation. It is clear that they had to use age, gender, race and ethnicity, income, and psychographic variables, such as personality characteristic, motives, and lifestyles to understand their target market in the wide range of athletic shoes they provide in both price and shoe quality, an example is that the “walker” does not need the same shoe as the “marathon runner” or a elderly person is not looking for the newest edgy design patterns as the teenager might be looking for. There is certainly a “status quo” with Nike branding with the promotional celebrities like Michael Jordan, his presence also brings the necessity for race and ethnic segmentation.
Nike brand marketing mix has been well planed in their definition of what they sell as a product via the website and other venues, options for price for the buyer as seen on their on-line store, their placement and distribution has been clearly outlined, and there promotion is state of the art. Because Nike’s product is a major manufacturer of athletic shoes, apparel, and sports equipment the product that they sell is a tangible good that would be classified as a consumer product because the products that Nike offers would be purchased to satisfy personal needs. I would like to note that I feel Nike has the potential to cross over into classifications as a consumer product.
For the average shoe buyer it would be considered a shopping product, but for the avid athlete, marathon runner, or Olympic competitor I think Nike would move into the specialty product. The features and benefits of Nike footwear is that they are a technologically advanced athletic shoe is design, comfort, support that certainly benefits every consumer looking for a shoe that meets their needs. Nike’s basic positioning is as an athletic shoe, apparel, and equipment that has been scientifically designed for athletics as well as those interested in the Nike brand. They support this positioning claim with various areas that are outlined on their website, here is one excerpt, “Today, Nike continues to seek new and innovative ways to develop superior athletic products, and creative methods to communicate directly with our consumers. Nike Free, Nike+ and Nike Sphere are just three examples of this approach.” http://www.nikebiz.com/company_overview/history/2000s.html , reviewed July 14, 2008.
I feel that Nike has researched extensively the basis for pricing their products, be it footwear, apparel, or various equipment offerings. It is obvious that ranked #1 they evaluate cost, demand and competition in setting the price structures. Nike’s price variable is that they have various price points from low to high for each of its categories that if offers. Mark up pricing is the pricing approach that Nike suggests to the retailers that sell Nike products. I think given the industry there is some demand pricing do to the fact of the popularity of some footwear that they designed that have a celebrities name attached as well as some competition based pricing happening with the mid range footwear that they sell. When they release a new product they must consider new product pricing. Given that Nike would be a company that has a goal to maximize profits for an entire product line rather than focusing on just an individual product the implement product-line pricing. It is my experience in the retail setting to see Nike using reference pricing in terms of setting a higher priced shoe of greater quality next to a lower priced “leader” shoe. As displayed in their on-line store they do implement odd and even pricing. They are aware that they use even pricing for their most expensive and top of the line footwear. (http://www.nike.com/index.jhtml?sitesrc=USLP#l=nikestore,grid,_grid,f-10001+12001/so-finalPrice0&re=US&co=US&la=EN , reviewed August 3 2008)
Reduced priced footwear as an odd price point for the appearance that this shoe is a bargain therefore it will be purchased. I also saw evidence in their online store of special event pricing, for example currently “back to school” discounts. I would have to say given my research in our text book and the online I would say that Nike product is a selective distribution. This article I found on the web describes my product category and supports selective distribution. “Selective Distribution Between exclusive and intensive distribution, there is selective distribution. Selective distribution is the strategy in which several but not all retail outlets in a given area distribute a product. Shopping goods are goods that consumers seek on the basis of the most attractive price or quality characteristics are frequently distributed through selective distribution. Because of this, competition among retailers is far greater for shopping goods than for convenience goods. Naturally, retailers wish to reduce competition as much as possible. This causes them to pressure manufacturers to reduce the number of retail outlets in their area distributing a given product in order to reduce competition. The number of retailers under a selective distribution strategy should be limited by criteria that allow the manufacturer to choose only those retailers who will make a contribution to the firm’s overall distribution objectives.” (http://www.web-articles.info/e/a/title/Exclusive-Distribution-and-Intensive-Distribution/, reviewed July 27, 2008.)
In terms of Physical distribution, Nike corporation states that Nike has added 700 manufacturing facilities. “Nike is committed to supply chain transparency by updating publish disclosure of the more than 700 contract factories worldwide producing Nike branded product. Disclosing our factory base encourages transparency and collaboration.
For Nike the Beijing Olympics provide an opportunity to share China's importance to our business. We have established aggressive business targets aimed at improving working conditions in contract factories, improving product through design, becoming climate neutral and investing in youth access to sport.” (http://www.nikeresponsibility.com/#workers-factories/beijing_factories , reviewed July 28, 2008). Nike is producing footwear, athletic wear, and uniforms for USA teams for the 08 Beijing Olympics as stated in the media on Nike’s Website, “EUGENE, Ore. (1 July, 2008) – Nike athletes, including Lauryn Williams, premiered Nike’s USA Track and Field (USATF) uniforms, which will be worn by members of the 2008 Olympic Team for Track & Field, before a sold-out crowd of 20,000 fans at the University of Oregon’s historic Hayward Field during the U.S. Track and Field Olympic Trials.” (http://www.nikebiz.com/media/pr/2008/07/01_USATF.html , reviewed July 28, 2008)
I feel that Nike has a great team that is planning an efficient physical distribution system that will insure decreased costs and increase in customer satisfaction. They have a very simply channel system, producer, retailer, and consumer, they seem to want full control of every operation. This production addition could potentially have great ramifications for the company if they are not fully stocked and ready for increased demand; however this company from all reports seems ready and eager for these goals to be met. This company is very aware of the cycle time of delivery as has researched all the venues for getting their product out to the consumer. They are even implementing some “on-line only” purchases of certain brands some of them the newest and with the most demand, understanding distribution for on-line sales would be extremely important customer satisfaction. Many of these customers would be “I want it now” customer.
Finally is analyzing Promotional techniques used by Nike I was impressed time and time again. Nike is a “new” company today than it was a few years back. Nike as a company was hit hard from a marketing perspective for attention to “toxic factories and the working conditions of their employees there” They have a great hurdle to unravel this debilitating review of their cooperate ethics, however in the financial report and a letter by the CEO of Nike, they are committed to a new paradigm with Nike, “This report covers a crucial period, and not just for Nike. Specifically, we saw heightened attention worldwide on corporate responsibility and the key challenges of climate change, poverty and equity. Simultaneously, we began to transform our vision of Nike’s role in contributing to positive change in communities around the world.
The opportunity is greater than ever for corporate responsibility principles and practices to deliver business returns and become a driver of growth, to build deeper consumer and community connections, and to create positive social and environmental impact in the world. We have made tremendous progress over the past two years in more deeply integrating corporate responsibility into our business model. We see corporate responsibility as a catalyst for growth and innovation, an integral part of how we can use the power of our brand, the energy and passion of our people, and the scale of our business to create meaning full change.”
(http://phx.corporate-ir.net/phoenix.zhtml?c=100529&p=irol-reportsAnnual ,reviewed August 3, 2008)
They use extensive advertising strategies on their website. Their idea to actually have an on-line personal trainer is yet another way to bring consumers to the website and visit and revisit thus promoting customer loyalty. “Jay Johnson currently serves as the Middle Distance Coach for the University of Colorado, his alma mater, where he has coached for more than five years. In addition to his coaching responsibilities, Coach Jay directs the Boulder Running Camp, one of the premier high school running camps in the country, and develops training materials for athletes and coaches of all ages and levels. Each week, Jay will be answering the best training questions we receive from you! If you have a question you want answered, email CoachJay@nike.com”. (http://insidenikerunning.nike.com/2008/07/09/july-9-2008/ reviewed August 1, 2008) , reviewed August 3, 2008) Nike’s decision to use athletes that can be great inspiration for others to start a training program and buy athletic shoes is a brilliant marking concept. Other Athletes they promote and sponsor and in turn promote Nike are: Asafa Powell, Shannon Rowbury, Shalane Flanagan, Bernard “Kip” Lagat, Kara Goucher.(http://insidenikerunning.nike.com/category/athletes/.com , reviewed August 1, 2008)
Other unique marketing promotion idea as well as brilliant integrated marking communications is there collaboration with Apple. An example, Nike + is an individualized site on NIKE.com that you can start your own monitored workout routine. Nike is smart to use the return to site basically every time you work out to record your results, using this device that they sell that you can put in a shoe that they sell! Nike+ teamed up with Apple and the iPod. “Welcome to Nike + iPod-Nike + iPod is your personal workout assistant. Music for every mile Supercharge your workout by creating high-intensity play lists. Check out what’s on your favorite athlete’s iPod.” (http://nikeplus.nike.com/nikeplus/v1/pdf/English.pdf) “Nike said yesterday that second-quarter profit rose 8.1 percent, helped by its iPod-compatible Nike+ line of running shoes. “Nike+ is turning out to be huge,” Nike CEO Mark Parker said in an earnings conference call. “In less than six months, Nike+ users have logged more than 3 million miles and there are over 3 million Plus-ready shoes in the global marketplace; we expect that number to double by the year end. Clearly our confidence in this concept has proven to be accurate.” Later in the call, Parker said, “Nike+ continues to be extraordinary, and we see that just accelerating as we add more styles to Nike+ over this next six to 12 months.” (http://www.ilounge.com/index.php/news/comments/nike-profit-boosted-by-nikeipod-sales/, reviewed August 1, 2008)
I did see coupons and cents off offers on other websites that were selling Nike shoes, however not the Nike website. I did not see any refunds or rebates with Nike shoes, I did not see a frequent user incentive, I know that Nike invests heavily in there brand and logo, their point of purchase materials, in terms of counter cards, display modules, signage, window displays and racks are always recognizable where you see NIKE shoes. I did not see any evidence of free samples, however I do know that they promote several different programs where they give away shoes to young children in “lets Play” program and others like it, if this would be considered free samples then yes, they use this promotion. I would say that Nike uses Consumer Games and contests heavily in there promotion with Nike 10K and Marathon’s, I think you could also add NIKE + personalized training program with this as well.
I am not sure exactly if Nike uses Trade promotions methods, however as I have stated prior, my father owns a european footwear store, and I do know that the shoe manufacturers use many of the trade promotions such as trade allowances (New balance does as stated in one of the video cases we heard) so I am sure Nike follows suite. Buy back allowances are used, scan back allowances are used, merchandise allowances are used , cooperative advertising is used when you place an add with there logo on it they will pay a portion of the add, free merchandise and dealer loader is used, premium money is used, as well as sales contests. I saw all these methods used over and over in the shoe sales industry.
I really feel that Nike current marketing mix is fully embracing there brand position. As I pointed out earlier in this report, Nike in the past had some trouble with this and is currently putting every resource and effort into being the “new” corporate business model. Their involvement in low income programs, as well as “let me play”, addressing child obesity that is rampant in our company, to “toxic-free factories” and shoe manufacturing are just a few of the areas that Nike is standing up to and evaluating in there segmentation. I have to say that I feel that Nike is on the cutting edge of marketing, there website proves it over and over. I feel there are no suggestions on my part in terms of product, pricing, distribution or promotion, as long as they continue this commitment to be a transparent in a information sharing corporation that is creating a green environment at every turn. That would have been my suggestion however they are 100% committed. They fulfilled their objectives of successful promotion by creating awareness of their product and commitment to the consumer, stimulating demand, identifying prospects having web users create their own accounts so there is personal information, retain loyal customers, and facilitate reseller support. When this is all a success the business is a success. Go Nike!
References:
http://www.nikebiz.com/company_overview/subsidiaries/index.html, reviewed August 3, 2008.
http://www.nikebiz.com/company_overview/history/2000s.html , reviewed July 14, 2008.
http://www.nike.com/index.jhtml?sitesrc=USLP#l=nikestore,grid,_grid,f-10001+12001/so- finalPrice0&re=US&co=US&la=EN , reviewed August 3 2008)
http://www.web-articles.info/e/a/title/Exclusive-Distribution-and-Intensive-Distribution/, reviewed July 27, 2008
http://www.nikeresponsibility.com/#workers-factories/beijing_factories , reviewed July 28, 2008
http://www.nikebiz.com/media/pr/2008/07/01_USATF.html , reviewed July 28, 200
http://phx.corporate-ir.net/phoenix.zhtml?c=100529&p=irol-reportsAnnual ,reviewed August 3, 2008
http://insidenikerunning.nike.com/2008/07/09/july-9-2008/ , reviewed August 3, 2008
http://nikeplus.nike.com/nikeplus/v1/pdf/English.pdf)
http://www.ilounge.com/index.php/news/comments/nike-profit-boosted-by-nikeipod-sales/, reviewed August 1, 2008)
MT219-19: Marketing
Jill Stidd
Kaplan University
Given the importance in marketing for the deeper understanding of the strategic planning process and formulating a strong marketing plan, this paper analyzes the marketing mix for the Nike brand as well as stimulate suggestions and ideas for any areas of their existing marking objectives that change would create a better marketing plan.
I choose Nike brand because of my previous experience with the shoe sales industry and the fact that Nike’s headquarters and cooperate offices are local to where I live in Portland, Oregon. This history of Nike is that before Swoosh and before Nike there were to visionary men, Bill Bowerman and Phil Knight. These two men believed in their vision and invested $500 dollars each which created Blue Ribbon Sports Company. They placed their first order of 300 shoes in January of 1964. Bill sold the shoes out of his car, while Phil tore apart athletic shoes to see how he could make them better. He used one of the very important marketing tools of “trial” having anyone he knew to wear the shoes and give him feedback, hence became the start of customer loyalty and the foundation of Nike shoes. Nike is a major manufacturer of athletic shoes, apparel, and sports equipment there current portfolio is stated on their website, “Nike’s subsidiaries have a significant place in Nike's plan to grow to $23 billion in revenue by 2011. We estimate that 25 percent of the company’s targeted revenue growth in the next four years will be generated by these brands which currently represent revenues of more than $2 billion. Collectively over the past five years, these subsidiaries have nearly tripled revenue and increased their pretax income contribution more than fivefold. As part of our growth strategies, Nike continues to optimize its portfolio, ensuring that the company is investing in opportunities that will generate the highest returns. Nike’s Brand Portfolio currently includes four wholly owned subsidiaries: Converse Inc., NIKE Golf, Cole Haan Holdings, Inc., and Hurley International LLC.
(http://www.nikebiz.com/company_overview/subsidiaries/index.html, reviewed August 3, 2008.)
Nike’s width is action sports, basketball, cycling, eyewear, football, golf, running, soccer, skateboarding, swimming, tennis, women’s and men’s shoes, women’s and men’s athletic clothing, equipment. Nikes Depth in women’s running shoes is for example: Nike Shox Turbo VI+, Nike Air Max 360 III, Nike Shox Navina+, are but a few examples of their depth. Given the research that I have done it seems that the top competitive athletic shoes manufacturers today are New Balance and Reebok, they are all looking at one another to create their change and improvements. Currently Nike’s Position is #1, New balance is #2, and Reebok is #3, these statistics were stated on the New Balance video that we were to watch for a video project.
Given that Nike brand is a heterogeneous market great thought and attention to detail in regards to the target market and segmentation is vitally important to the success of Nike’s marketing plan. Nike’s marketing team without a doubt had to consider all five conditions before starting the task of market segmentation. Nike uses a differentiated strategy for market segmentation. It is clear that they had to use age, gender, race and ethnicity, income, and psychographic variables, such as personality characteristic, motives, and lifestyles to understand their target market in the wide range of athletic shoes they provide in both price and shoe quality, an example is that the “walker” does not need the same shoe as the “marathon runner” or a elderly person is not looking for the newest edgy design patterns as the teenager might be looking for. There is certainly a “status quo” with Nike branding with the promotional celebrities like Michael Jordan, his presence also brings the necessity for race and ethnic segmentation.
Nike brand marketing mix has been well planed in their definition of what they sell as a product via the website and other venues, options for price for the buyer as seen on their on-line store, their placement and distribution has been clearly outlined, and there promotion is state of the art. Because Nike’s product is a major manufacturer of athletic shoes, apparel, and sports equipment the product that they sell is a tangible good that would be classified as a consumer product because the products that Nike offers would be purchased to satisfy personal needs. I would like to note that I feel Nike has the potential to cross over into classifications as a consumer product.
For the average shoe buyer it would be considered a shopping product, but for the avid athlete, marathon runner, or Olympic competitor I think Nike would move into the specialty product. The features and benefits of Nike footwear is that they are a technologically advanced athletic shoe is design, comfort, support that certainly benefits every consumer looking for a shoe that meets their needs. Nike’s basic positioning is as an athletic shoe, apparel, and equipment that has been scientifically designed for athletics as well as those interested in the Nike brand. They support this positioning claim with various areas that are outlined on their website, here is one excerpt, “Today, Nike continues to seek new and innovative ways to develop superior athletic products, and creative methods to communicate directly with our consumers. Nike Free, Nike+ and Nike Sphere are just three examples of this approach.” http://www.nikebiz.com/company_overview/history/2000s.html , reviewed July 14, 2008.
I feel that Nike has researched extensively the basis for pricing their products, be it footwear, apparel, or various equipment offerings. It is obvious that ranked #1 they evaluate cost, demand and competition in setting the price structures. Nike’s price variable is that they have various price points from low to high for each of its categories that if offers. Mark up pricing is the pricing approach that Nike suggests to the retailers that sell Nike products. I think given the industry there is some demand pricing do to the fact of the popularity of some footwear that they designed that have a celebrities name attached as well as some competition based pricing happening with the mid range footwear that they sell. When they release a new product they must consider new product pricing. Given that Nike would be a company that has a goal to maximize profits for an entire product line rather than focusing on just an individual product the implement product-line pricing. It is my experience in the retail setting to see Nike using reference pricing in terms of setting a higher priced shoe of greater quality next to a lower priced “leader” shoe. As displayed in their on-line store they do implement odd and even pricing. They are aware that they use even pricing for their most expensive and top of the line footwear. (http://www.nike.com/index.jhtml?sitesrc=USLP#l=nikestore,grid,_grid,f-10001+12001/so-finalPrice0&re=US&co=US&la=EN , reviewed August 3 2008)
Reduced priced footwear as an odd price point for the appearance that this shoe is a bargain therefore it will be purchased. I also saw evidence in their online store of special event pricing, for example currently “back to school” discounts. I would have to say given my research in our text book and the online I would say that Nike product is a selective distribution. This article I found on the web describes my product category and supports selective distribution. “Selective Distribution Between exclusive and intensive distribution, there is selective distribution. Selective distribution is the strategy in which several but not all retail outlets in a given area distribute a product. Shopping goods are goods that consumers seek on the basis of the most attractive price or quality characteristics are frequently distributed through selective distribution. Because of this, competition among retailers is far greater for shopping goods than for convenience goods. Naturally, retailers wish to reduce competition as much as possible. This causes them to pressure manufacturers to reduce the number of retail outlets in their area distributing a given product in order to reduce competition. The number of retailers under a selective distribution strategy should be limited by criteria that allow the manufacturer to choose only those retailers who will make a contribution to the firm’s overall distribution objectives.” (http://www.web-articles.info/e/a/title/Exclusive-Distribution-and-Intensive-Distribution/, reviewed July 27, 2008.)
In terms of Physical distribution, Nike corporation states that Nike has added 700 manufacturing facilities. “Nike is committed to supply chain transparency by updating publish disclosure of the more than 700 contract factories worldwide producing Nike branded product. Disclosing our factory base encourages transparency and collaboration.
For Nike the Beijing Olympics provide an opportunity to share China's importance to our business. We have established aggressive business targets aimed at improving working conditions in contract factories, improving product through design, becoming climate neutral and investing in youth access to sport.” (http://www.nikeresponsibility.com/#workers-factories/beijing_factories , reviewed July 28, 2008). Nike is producing footwear, athletic wear, and uniforms for USA teams for the 08 Beijing Olympics as stated in the media on Nike’s Website, “EUGENE, Ore. (1 July, 2008) – Nike athletes, including Lauryn Williams, premiered Nike’s USA Track and Field (USATF) uniforms, which will be worn by members of the 2008 Olympic Team for Track & Field, before a sold-out crowd of 20,000 fans at the University of Oregon’s historic Hayward Field during the U.S. Track and Field Olympic Trials.” (http://www.nikebiz.com/media/pr/2008/07/01_USATF.html , reviewed July 28, 2008)
I feel that Nike has a great team that is planning an efficient physical distribution system that will insure decreased costs and increase in customer satisfaction. They have a very simply channel system, producer, retailer, and consumer, they seem to want full control of every operation. This production addition could potentially have great ramifications for the company if they are not fully stocked and ready for increased demand; however this company from all reports seems ready and eager for these goals to be met. This company is very aware of the cycle time of delivery as has researched all the venues for getting their product out to the consumer. They are even implementing some “on-line only” purchases of certain brands some of them the newest and with the most demand, understanding distribution for on-line sales would be extremely important customer satisfaction. Many of these customers would be “I want it now” customer.
Finally is analyzing Promotional techniques used by Nike I was impressed time and time again. Nike is a “new” company today than it was a few years back. Nike as a company was hit hard from a marketing perspective for attention to “toxic factories and the working conditions of their employees there” They have a great hurdle to unravel this debilitating review of their cooperate ethics, however in the financial report and a letter by the CEO of Nike, they are committed to a new paradigm with Nike, “This report covers a crucial period, and not just for Nike. Specifically, we saw heightened attention worldwide on corporate responsibility and the key challenges of climate change, poverty and equity. Simultaneously, we began to transform our vision of Nike’s role in contributing to positive change in communities around the world.
The opportunity is greater than ever for corporate responsibility principles and practices to deliver business returns and become a driver of growth, to build deeper consumer and community connections, and to create positive social and environmental impact in the world. We have made tremendous progress over the past two years in more deeply integrating corporate responsibility into our business model. We see corporate responsibility as a catalyst for growth and innovation, an integral part of how we can use the power of our brand, the energy and passion of our people, and the scale of our business to create meaning full change.”
(http://phx.corporate-ir.net/phoenix.zhtml?c=100529&p=irol-reportsAnnual ,reviewed August 3, 2008)
They use extensive advertising strategies on their website. Their idea to actually have an on-line personal trainer is yet another way to bring consumers to the website and visit and revisit thus promoting customer loyalty. “Jay Johnson currently serves as the Middle Distance Coach for the University of Colorado, his alma mater, where he has coached for more than five years. In addition to his coaching responsibilities, Coach Jay directs the Boulder Running Camp, one of the premier high school running camps in the country, and develops training materials for athletes and coaches of all ages and levels. Each week, Jay will be answering the best training questions we receive from you! If you have a question you want answered, email CoachJay@nike.com”. (http://insidenikerunning.nike.com/2008/07/09/july-9-2008/ reviewed August 1, 2008) , reviewed August 3, 2008) Nike’s decision to use athletes that can be great inspiration for others to start a training program and buy athletic shoes is a brilliant marking concept. Other Athletes they promote and sponsor and in turn promote Nike are: Asafa Powell, Shannon Rowbury, Shalane Flanagan, Bernard “Kip” Lagat, Kara Goucher.(http://insidenikerunning.nike.com/category/athletes/.com , reviewed August 1, 2008)
Other unique marketing promotion idea as well as brilliant integrated marking communications is there collaboration with Apple. An example, Nike + is an individualized site on NIKE.com that you can start your own monitored workout routine. Nike is smart to use the return to site basically every time you work out to record your results, using this device that they sell that you can put in a shoe that they sell! Nike+ teamed up with Apple and the iPod. “Welcome to Nike + iPod-Nike + iPod is your personal workout assistant. Music for every mile Supercharge your workout by creating high-intensity play lists. Check out what’s on your favorite athlete’s iPod.” (http://nikeplus.nike.com/nikeplus/v1/pdf/English.pdf) “Nike said yesterday that second-quarter profit rose 8.1 percent, helped by its iPod-compatible Nike+ line of running shoes. “Nike+ is turning out to be huge,” Nike CEO Mark Parker said in an earnings conference call. “In less than six months, Nike+ users have logged more than 3 million miles and there are over 3 million Plus-ready shoes in the global marketplace; we expect that number to double by the year end. Clearly our confidence in this concept has proven to be accurate.” Later in the call, Parker said, “Nike+ continues to be extraordinary, and we see that just accelerating as we add more styles to Nike+ over this next six to 12 months.” (http://www.ilounge.com/index.php/news/comments/nike-profit-boosted-by-nikeipod-sales/, reviewed August 1, 2008)
I did see coupons and cents off offers on other websites that were selling Nike shoes, however not the Nike website. I did not see any refunds or rebates with Nike shoes, I did not see a frequent user incentive, I know that Nike invests heavily in there brand and logo, their point of purchase materials, in terms of counter cards, display modules, signage, window displays and racks are always recognizable where you see NIKE shoes. I did not see any evidence of free samples, however I do know that they promote several different programs where they give away shoes to young children in “lets Play” program and others like it, if this would be considered free samples then yes, they use this promotion. I would say that Nike uses Consumer Games and contests heavily in there promotion with Nike 10K and Marathon’s, I think you could also add NIKE + personalized training program with this as well.
I am not sure exactly if Nike uses Trade promotions methods, however as I have stated prior, my father owns a european footwear store, and I do know that the shoe manufacturers use many of the trade promotions such as trade allowances (New balance does as stated in one of the video cases we heard) so I am sure Nike follows suite. Buy back allowances are used, scan back allowances are used, merchandise allowances are used , cooperative advertising is used when you place an add with there logo on it they will pay a portion of the add, free merchandise and dealer loader is used, premium money is used, as well as sales contests. I saw all these methods used over and over in the shoe sales industry.
I really feel that Nike current marketing mix is fully embracing there brand position. As I pointed out earlier in this report, Nike in the past had some trouble with this and is currently putting every resource and effort into being the “new” corporate business model. Their involvement in low income programs, as well as “let me play”, addressing child obesity that is rampant in our company, to “toxic-free factories” and shoe manufacturing are just a few of the areas that Nike is standing up to and evaluating in there segmentation. I have to say that I feel that Nike is on the cutting edge of marketing, there website proves it over and over. I feel there are no suggestions on my part in terms of product, pricing, distribution or promotion, as long as they continue this commitment to be a transparent in a information sharing corporation that is creating a green environment at every turn. That would have been my suggestion however they are 100% committed. They fulfilled their objectives of successful promotion by creating awareness of their product and commitment to the consumer, stimulating demand, identifying prospects having web users create their own accounts so there is personal information, retain loyal customers, and facilitate reseller support. When this is all a success the business is a success. Go Nike!
References:
http://www.nikebiz.com/company_overview/subsidiaries/index.html, reviewed August 3, 2008.
http://www.nikebiz.com/company_overview/history/2000s.html , reviewed July 14, 2008.
http://www.nike.com/index.jhtml?sitesrc=USLP#l=nikestore,grid,_grid,f-10001+12001/so- finalPrice0&re=US&co=US&la=EN , reviewed August 3 2008)
http://www.web-articles.info/e/a/title/Exclusive-Distribution-and-Intensive-Distribution/, reviewed July 27, 2008
http://www.nikeresponsibility.com/#workers-factories/beijing_factories , reviewed July 28, 2008
http://www.nikebiz.com/media/pr/2008/07/01_USATF.html , reviewed July 28, 200
http://phx.corporate-ir.net/phoenix.zhtml?c=100529&p=irol-reportsAnnual ,reviewed August 3, 2008
http://insidenikerunning.nike.com/2008/07/09/july-9-2008/ , reviewed August 3, 2008
http://nikeplus.nike.com/nikeplus/v1/pdf/English.pdf)
http://www.ilounge.com/index.php/news/comments/nike-profit-boosted-by-nikeipod-sales/, reviewed August 1, 2008)
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