Monthly Archives: September 2014

Income inequality has always been an ongoing problem in the USA and even poses a threat to state tax revenue. What’s surprising, however, are the underlying factors causing the issue to occur. Traditionally, the blame has been directed toward income discrepancy amongst management and the blue collar workforce, but time seems to be looking at a shift in trend.

Reading through Walter Frick’s blog post, “The Salary Gap between Stingy and Generous Companies is Growing”, job income inequality is transitioning into exactly what the title suggests – a difference in wages for similar roles in the industry.

Perhaps higher paying companies attract the most skilled workers in the industry and therefore can justify their decision-making or perhaps workers with lower pay are compensated through benefits. What this can only prove is the wide range with which similar companies value their employees and the skills that they bring. It is apparent that placing a dollar sign on the head of each employee is not regulated by a consistent method and therefore makes sense, that the intangible asset of human intellect is NOT included on financial statements.

In fact, can humans be considered an intangible asset? I’m afraid that the current situation doesn’t fulfill the criteria of the second point.

International Accounting Standards Recognition Criteria for Intangible Assets (IAS 38)

Since adolescence, our eyes have always been set on the newest toys around. As mentioned in Lily Du’s post, “Consuming the Consumers”, we often “feel the compulsion to constantly buy the latest and “greatest””. Whether it be plastic blonde Barbie dolls that we’d play with and easily toss aside or egg gadgets known as Tamagotchi’s, the consumer world has always been a strong advocator of the bandwagon effect. The iPod Touch was no different.

In such a consumption-hungry world, the need for companies to keep up with changes, especially in the fast paced IT industry, is crucial. Agreeing with what the blog post mentions, we never really look back on the objects we retire but merely look ahead to the new innovative goods the market will bring.

The evolution of the iPod. (Source)

What I find ironic, however, is that some companies may be impairing themselves in the process, in competition against themselves.

Apple, for example, hurt their iPod Touch sales, with the launch of the iPhone and iWatch. Yes, Apple is “positioning (their) product in the mind of the customer” (Ries and Trout) but they could have strategically planned to keep the iPod Touch in the loop.

While “the first mover has a large advantage that can make up for other shortcomings” (Ries and Trout), it doesn’t mean that they will always stay on top.

After announcing WestJet’s new baggage fee policy on Monday, September 15^th, their stock value instantly skyrocketed. This rise was matched by Air Canada before they even followed suit.

 WestJet’s stock activity from Sept 13th-19th, 2014. (Source: Yahoo! Finance)

Air Canada’s stock activity from Sept 13th-19th, 2014. (Source: Yahoo! Finance)

Comes to show how competitors in the market have a great influence on one another! As “change is inevitable and a leader must be willing to embrace change rather than resist it” (Ries and Trout), it only made sense for Canada’s largest full-service airline to keep up with their competitor and the rest of North America’s airline carriers.

While the concept faced much criticism by the CBC News Community who claims that WestJet’s plan will back fire, I doubt that this will happen. Air Canada and WestJet are the two biggest airline companies in Canada and while they’re head to head with competition, consumers are limited in their options. The baggage fee will be unavoidable for consumers wanting economy-class airfare.

While it is a clever marketing strategy, things sound a little suspicious…seems like price collusion doesn’t it?

Meanwhile, Southwest Airlines Co. will have higher ground by “outperform[ing] rivals with advantages they can preserve” (Harvard Business Review). They have decided to opt out of the policy and will be the more desirable choice when making travel plans.

The Kinder Morgan TransMountain Pipeline expansion project has caused much controversy amongst both the municipal and federal government. While the National Energy Board (NEB) has approved that work could proceed, the city of Burnaby is adamant about preserving the wildlife that is home to Burnaby Mountain – filing a notice with BC Supreme Court in retaliation.

Political cartoon in retaliation of the unethical motives of the TransMountain Pipeline project. (Source)

If the company continues to be indifferent toward the community and the society we live in, they could suffer from the actions of the government. As a resident of Burnaby, I know that the project expansion would make Burnaby an extremely undesirable area to live in while decreasing property value. Imagine facing the threat of an oil spill on a daily basis! This could devastate BC’s salmon wildlife and other marine animals, along with the pristine condition of BC’s wilderness. As a result, this could also lead to the downfall of the tourism industry, causing many people to lose their jobs. It is disappointing, to say the least, that a company in BC could make irrational decisions for the benefit of themselves and their financial needs.

What will happen to this project? That has yet to be determined.

However, according Freeman’s Stakeholder Theory, unethical companies that neglect their corporate social responsibility and the issues of civil society are destined to be regulated to decline.

Whether that will hold true for Kinder Morgan will soon be revealed as the government announces their final decision, either for or against the company.