Month: December 2010

After the class on the Balanced Score Card (BSC), I have wondered is there anyone else that’s aware conventional employee performance metrics needs changes? Homeloan Management Ltd. (HML) seemed to be aware of it.

Firstly, HML abolished their previous methods of evaluating employees based on the time worked in the company and technical expertise. Employees may end up keeping information to themselves rather than sharing it with colleagues to get high individual rankings in technical expertise. On the other hand, new recruits will most likely be discouraged due to their short period of time worked at HML. All those previous metrics lend a hand to “the folly of rewarding A but hoping for B.”

Hereafter, HML must establish a new metric for evaluating employee performance. They are intent in focussing on goal-setting and progressive feedback to evaluate their employees. Employees are empowered to learn and grow by themselves through the assistance of progress reports, goal resolutions and self-evaluation of own performances. This method suggests that the employer truly care about talent and rewards talent.

In conclusion, I have realized that a well-designed employee performance metric, which rewards for intrinsic qualities, can have very positive effects on employee productivity and growth.

http://web.ebscohost.com.ezproxy.library.ubc.ca/ehost/pdfviewer/pdfviewer?hid=11&sid=aa6d502e-1535-4657-9bb0-f273af218c0e%40sessionmgr13&vid=4

The 2008 financial crisis is at risk of repeating itself when government-sponsored mortgages issued by Fannie Mae retraces the steps of unrestricted lending practices. Accordingly, under a government-imposed lending program, Fannie Mae is lending out mortgages to people for very low down payments once again. In the lecture on the financial crisis with Murray Carlson I have learned that highly leveraged mortgages and sequential defaults resulted in failures of small investment banks and hedge funds. Fannie Mae’s “no money down” policy definitely reproduces high leverages and could potentially lead to defaults on payments.

Furthermore, on the borrower’s side they still assume very minimal responsibilities. The government’s intention in funding these mortgages is to allow better terms for borrowers so that the housing market could get moving again. However, in doing so, the government has given more reasons for borrowers to default on payments if the “housing bubble” was to collapse again. Borrowers expect the loss to be absorbed by the government, which makes defaults practically guilt-free.

Although we expect lessons to be learned from the recent financial crisis, there still exist bullies who take advantages of others but leaves without consequences. These bullies are not the bankers, but the borrowers.

http://www.cnbc.com/id/39097637/Fannie_Mae_Sponsoring_No_Money_Down_Mortgages_Again

After learning about Zara International’s new logistics management strategy the major takeaway was that products should be delivered “fresh.” Waiting time, as we learned, results in opportunity costs and products becoming obsolete. To press for an improved and effective supply chain, many firms nowadays are adopting the Just-In Time logistics strategy (JIT). Just-In Time logistics work by having specific parts or materials delivered to the manufacturer at the time they are needed for assembly. Or in retail, this means having the products delivered on the specific day the intended sales will take place. This reduces the amount of warehousing expenses as well as being able to eliminate the amount of time products spend sitting in warehouses. This is particularly true for automobile manufacturers. In the last Automotive Logistics Conference, the JIT logistics system was widely promoted to automakers in India. Since then, many automakers followed suit and are adopting this system to better assist in supply chain management.

JIT is just one of many new innovations in the field of logistics and supply chain management. Despite not being directly related to revenue, I realized that efficient logistics could actually help firms cut costs and deliver products to customers very efficiently.

http://web.ebscohost.com.ezproxy.library.ubc.ca/ehost/pdfviewer/pdfviewer?vid=4&hid=14&sid=f3f3a325-a11b-4e5c-a9ce-deae0c644607%40sessionmgr4 

http://logistics.about.com/od/supplychainglossary/g/JustInTime.htm

Following up on the case of Google’s planned acquisition of Groupon; the results of the negotiations have recently been out. Groupon has turned down Google’s $6 billion offer, in consideration of its own plans to go public next year.

The lecture on brand valuation and goodwill becomes relevant in this context, particularly in the perspectives of the two different parties of the negotiation. Although Google saw $6 billion as a very generous offer, Groupon saw a prospect much greater in the future if they remain autonomous rather than to receive the short-term gain that Google offered. The goodwill of Groupon highly-marked up based on the company’s 35 million users at present, offers great confidence that Groupon will grow to exceed $6billion in the future.

Despite Groupon’s aggressiveness over its valuation, they seem to neglect that there are many competitors out there that could bring down their valuation. Their choice to operate by themselves may be more risky than acquisition.

In conclusion I have come to realize goodwill valuations can be extremely subjective. This may introduce risk to both parties as subjectivity often neglects certain aspects of reality. Only end results will show the reliability of Groupon’s goodwill-based forecasts.

http://www.bloomberg.com/news/2010-12-04/google-bid-to-buy-groupon-site-is-said-to-be-rejected-update1-.html