As a recent Sauderite, I am on the road to learning more about finance. I need access to reliable resources to expand my knowledge and to develop an area of expertise. Premier financial news sites, like the Wall Street Journal and the Economist require annual subscriptions of over $ 100. “Freemium” sites don’t offer much insight, either.

The Economist is a great resource; far too expensive for University students

During my quest for resources I came across a very interesting blog. To my delight, I realized that the BNN’s (Business News Network) blog sections have daily posts on a variety of topics, quite often with a financial focus

BNN’s daily posts provide a regular stream of very useful information. At my current level of education, the quality of the information I receive is still a priority. BNN’s blogs may not be at par with the Wall Street Journal or its likes. However, the quantity of information and the insights that BNN’s blogs provide is welcome.

Business News Network – My Newest Preferred Resource

BNN’s blogs have exposed me to ideas, discussions and topics I have never come across. Through these blogs I can now learn much about finance and related topics. As I continue my Sauder journey, I can be rest assured that I have access a valuable and reliable resource.

Links

• http://www.bnn.ca/Blogs.aspx

Jordan Teo’s article on Turing Pharmaceuticals was a very interesting read. Very recently, Turing Pharmaceuticals reported a third quarter loss, most likely the fallout of the over the 5000% increase in the price of its product Daraprim, the drug used to treat AIDS.

The company Turing Pharmaceuticals is not to be blamed for this unethical behaviour, but rather the man who acquired the business: Martin Shkreli, an investment banker. In news interviews, Mr. Shkreli stated that the rate increase was “not excessive”, but was “altruistic”. He claimed that the drug was unprofitable and the new price allowed for “reasonable profits”.

Martin Shkreli: The Most Hated Man in the USA (as quoted from BBC)

Our class had a long discussion with Dr. David Silver, regarding corporate responsibility to stakeholders and the ethical derivation of profits. Mr. Shkreli, it seems, begs to differ. He has shrugged off his responsibility to stakeholders and engaged in price gouging in a very evident vulnerable target market with inelastic demand.

To some, Turings’ declining fortunes is a welcome karmic outcome. To me, this is a lesson in the consequences of unethical actions bringing harm and irreparable loss than lasting benefits. Another valuable insight is how ethics or a lack thereof, can add or take away value from a business.

Justin’s blog post “Traditional TV Services Beating a Dead Horse “captured the essence of why Netflix is a valuable enterprise to investors and subscribers.

Justin is right that Netflix provides high incentives for users to use Netflix as a medium for entertainment, unlike other entertainment channels. House of Cards, a Netflix original, was incredibly successful. My testimony to this is that I watched all the 3 seasons of House of Cards in the span of a month.

House of Cards: One of the most successful Netflix Original Shows

The other insight from Justin’s blog post is Netflix’s brilliant use of the value proposition canvas. Netflix has been able to identify their customers’ job sectors, figure out customer pains, and then offer pain relievers. My greatest pain with TV channels is the commercials, which break my engagement, and prevent me from enjoying a show. Netflix’s ad-free service relieves this pain for me, allowing me to watch my favourite shows without interruption at a reasonable cost.

Netflix has recognized the importance of value addition where many other companies have not. The result is in Netflix achieving an enterprise value of 47 billion dollars. (As quoted from Justin’s blog.)

We all dread performance reviews. As students we have faced “performance reviews” in the avatar of report cards and transcripts, though many of us are yet to experience work performance reviews.

Like report cards, performance reviews are a stressful process for the parties involved

I do not enjoy being graded. But I still appreciate the method behind the “madness”. After all, report cards and grading help me discover where my talents lie, and where I should focus my efforts. In a similar manner, work performance reviews help employees see where they need improvement or if they need a career change, and thus help optimize the work environment.

Current and aspiring Accenture, Adobe and GE employees can rejoice. These companies joined the ranks of a growing number of organizations that are overhauling their performance review processes. Adobe has an informal check-in system that promotes more honest conversation between managers and employees, resulting in better employee retention and productivity.

The most recent company to entertain the new standard: Accenture

Recently, in our COMM 101 class, we discussed the importance of corporate culture in the workplace, particularly innovators like Zappos. I agree with the Fortune article that the issue with performance reviews isn’t the reviews themselves, but their disconnect with organizational culture. Hopefully, more organizations will realize this and follow suit.

Additional Links

• Fisher, Anne. “How Adobe Keeps Key Employees from Quitting.” Fortune, 16 June 2015. Web. 20 Nov. 2015. <fortune.com/2015/06/16/adobe-employee-retention/>.

I love Oreos. You love Oreos. We all love Oreos. However, we rarely see this cream-filled goodie as a disruptive or innovative product. After all, the shape, colour, and taste of Oreos have basically stayed the same for the last 100 years.

Mondelez International: Parent Company to brands such as Oreo and Cote D’or

Well, what Oreo (Parent Company: Mondelez International) lacks in innovation, it makes up through marketing. In the recent past, Oreo has been flooding the media with creative, attention-gathering, and occasionally controversial ads. Twitter shows that Oreo Cookie@oreo has as of date made 22.9K tweets with 777K followers. 3 years ago Oreo posted an image of an Oreo cookie with multi-colored stacks of cream on Facebook. This post went viral, with over 200,000 likes and 90,000 shares.

Oreo’s LGBTQ Cookie

The insight I have gained from this is that, a company can be disruptive in many ways. The Oreo cookie essentially stayed the same, but through creative positioning (supporting LGBTQ, which has gained momentum in the last few years), Oreo has positioned itself as a favoured company in the eyes of many, gained publicity and most likely created a strong brand following. The power of positioning has allowed Oreo to tip the advantage in its favor, which I see as disruptive and most certainly innovative.

Links

• Hsu, Tiffany. “Gay Pride Rainbow Oreo Sparks 20,000 Facebook Comments, Debate.” Los Angeles Times. LA Times, 26 June 2012. Web. 20 Nov. 2015. <http://articles.latimes.com/2012/jun/26/business/la-fi-mo-gay-pride-oreo-20120626>.
• Oreo. Twitter. Twitter, n.d. Web. 20 Nov. 2015. <https://twitter.com/Oreo>.
• Bingham, Amy. “Oreo Pride: Rainbow-Stuffed Cookie Sparks Boycott.” ABC News, 26 June 2012. Web. 20 Nov. 2015. <http://abcnews.go.com/blogs/politics/2012/06/oreo-pride-rainbow-stuffed-cookie-sparks-boycott/>.

The SGX (Singapore Exchange) is investigating what appears to be another case of financial fraud. In a SGX regulatory column, SGX Chief Regulatory Officer Tan Boon Gin stated that the SGX was concerned about diminishing cash balances, assets or retained earnings of corporations operating in China, coinciding with China’s economic slowdown. Customer claims for compensation ten times larger in value than the original sales, writing-off of significant supplier pre-payments and loans to business associates, etc. are eroding the assets of these companies, portraying weaker financial positions than they really could be.

The Singapore Exchange is one of many market providers for emerging South-East Asian Economies colloquially dubbed “Tiger Economies”

The most likely cause is financial fraud. In the financial accounting discussions in class, we saw, for example, how weaker liquidity positions and large write-offs can result in low taxable profits and lower income tax charges, or grounds for government assistance. The SGX official cautions shareholders and boards of these companies to exercise due diligence with respect to management decisions that lead to questionable results, and replace executive officers or legal representatives, when required.

The SGX has stated that it will be bringing in a special auditor to evaluate the true status of these companies. Hopefully, this results in a thorough investigation, with fraudulent companies being held accountable.

TOMS shoes` business model of providing a needy child a pair of shoes when a pair of its shoes is purchased has captured world-wide attention. This “one-for one” idea registers well on paper; TOMS can create profits by attracting customers who connect to the idea, while also catering to millions who lack proper footwear.

TOMS has its heart in the right place, but not its Business Model Canvas

However, one-for-one models stimulate dependency without breaking the cycle of poverty. This has been a frequently discussed topic by world leaders and politicians. Many agree that providing aid is just a Band-Aid solution to a gaping wound. It doesn’t empower and motivate the helped. It is literally long-term spoon feeding.

Aid is necessary. Providing footwear and basic necessities where none are available is a commendable cause. However, as implied in the Skoll World Forum discussion on Social Entrepreneurship, social entrepreneurs must be drivers of transformation who innovate, not by modifying aid systems, but by creating employment in practical ways, providing people with tools and knowledge to build homes, and not by just building homes for them.

Mohammed Yunus: The Man Who Pioneered Social Entrepreneurship

“Teach a man to fish”, they say. By micro financing like Mohammed Yunus or stimulating female employment like Hindustan Lever`s Project Shakti social entrepreneurs can help the needy live independent and self-respecting lives.

Value creation by companies has been the topic of multiple COMM 101 classes; business model canvasses and value proposition canvasses assist a company in enhancing value for its customers.

15 Companies with aggressive stock repurchase programs

However, the CEOs of “the titans among giants”, companies like IBM, HP and Cisco seem to be missing the point. Value building, for them, seems to be through stock buy-backs, as a quick internet search of the term “stock buy-back” will reveal. What is stock buy-back? A stock buy-back is the repurchase of a company’s stocks from its shareholders. Buy- backs are harmless per se, but questionable when they drive companies’ liquidity into the ground. In recent years, IBM has spent over $ 160 billion on stock repurchase despite stagnating revenue. HP too has spent billions on its buy-back program despite declining revenue. Instead of reinvesting in research and development or acquisitions that benefit all stakeholders, these companies chose to enhance value only for their shareholders. These decisions will hamper their legacy, and return to haunt them.

Buy-back expenditures of various companies

The lessons to learn from this discussion: a) Commerce classes are important, so don’t miss them and b) Value generation is a key aspect of organizational development. Do not take shortcuts to enhance value.

Links

• Brettell, Karen, David Gaffen, and David Rohde. “How the Cult of Shareholder Value Has Reshaped Corporate America: The Cannibalized Company.” Reuters, n.d. Web. <http://www.reuters.com/investigates/special-report/usa-buybacks-cannibalized/>.
• Bens, Daniel A., Franco Wong, and Douglas J. Skinner. “What Drives Companies to Repurchase Their Stock?” Chicago GSB | Capital Ideas. Chicago Graduate School of Business, Fall 2003. Web. 20 Nov. 2015. <https://www.chicagobooth.edu/capideas/fall03/stockrepurchases.html>.