In 2011 a stock analyst shorted Sino Forest Corp and announced it was a “ponzi scheme”. Shortly after that the company’s stock declined sharply and the company announced bankruptcy. The main reason for its downfall was Accounting or rather lack there of.

Sino Forest was a Chinese company listed on the Toronto Stock Exchange. Its main issue was that its accounting department misstated its assets as well as operational and its auditor Ernst & Young all missed both. investors lost billions and are suing the parent company to get it back.

These kind of moment show why its very important o have competent and ethical accountants as well as independent auditors whose work should be verified. Perhaps one way to combat failures in auditing would be to have 2 auditors and compare their work or have one auditor and send it to another auditor for verification. Although this might add extra cost to the company, if you ask the shareholders who lost billions in Sino Forest, they would tell you it would have been worth it.

http://www.classaction.ca/classaction-ca/master-page/actions/securities/current-actions/sino-forest-corp.aspx

http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/auditors-sino-forest-settlement-stands-court-rules/article12835545/

http://business.financialpost.com/2013/03/20/judge-approves-ernst-young-settlement-for-sino-forest-shareholders/

http://www.theglobeandmail.com/globe-investor/the-roots-of-the-sino-forest-mystery/article594111/?page=all

Although they introduced a gold version to maintain their market share as a premium product, the fact that they introduced 5C suggest Apple is trying to become a more affordable product. Although this may be commendable from an accounting perspective, it is a rather surprising move from a marketing point of view.

According to Ries and Trouts free product trap theorem, when a brand tries to hold on to multiple positions in a market, either its new product won’t do well or it will be at the expense of its old products. And although the fact that apple sold an estimated 9 million Iphone its opening weekend, the details tell a much different story.Out of the 9 million Iphones about 5-5.5 million were Iphone 5S while 3-3.5 million were Iphone 5 C’s.

Some can make the argument that Apple did the same thing with the Ipad mini and that seems to have worked. But the difference is that Apple advertised their product as the same thing just in a smaller size even producing the slogan “concentration and not reduction” of the full sized Ipad.

http://www.quickmba.com/marketing/ries-trout/positioning/

http://online.wsj.com/article/SB10001424052702304713704579092931680449134.html