For many of today’s youth, the nostalgic memories of playing catch outside and riding bikes many millennials treasure will be replaced with bright flashing screens and rapidly smashing buttons. The rise of video games has caused a clear shift from sports to screens; however, the division between these two, originally distinct, activities has blurred. E-sports are rapidly growing in support and are doing so despite clearly contrasting many traditional sports established practices.

As detailed in my classmate Spencer Ang’s blog, many e-sports tournaments have prize-pools which can total in the multi-millions of dollars, but in general player salaries are low. This system is contrary to that of traditional sports where athletes are often paid astronomically high salaries but receive smaller bonuses. The e-sports model decreases the misplaced incentive that individual-performance based pay has on athletes and instead rewards team work.  Furthermore, unlike traditional sports where sponsorships are mostly limited mainly to commercials and endorsements, e-sports sponsorships are blatant and often teams are named after their sponsors–a perfect example of this being the 2016 League of Legends World Championship Finals in which SKT Telecom competed against Samsung Galaxy. This encourages companies to invest in sponsorships as they will receive much more visibility than if they were to sponsor a different sport.

E-Sports live events such as the League of Legends World Championships pictured above have become popular destinations for many enthusiasts.

Another key way E-sports is changing the face of sports is through the channels fans are reached. Unlike many tradition sports which can only be viewed live or on TV. E-sports are often streamed online for free. This allows the studios that produce the games to attract new players and sell more merchandise by reaching a broader audience. However, the market for watching e-sports live is not to be underestimated. The League of Legends World Championship Finals—mentioned above—managed to sell out the entire Los Angeles Staple Dome in less than an hour . Despite the success of these live events, League of Legends game maker Riot Games is still losing money on these large scales events. Therefore, Riot is investing heavily in the short run on large scale events in the hopes that they will create an immersive e-sport culture that will lead to customer retention and future profitability.

The meteoric rise of E-sports has been on the radar of many business investors world-wide with high profile businessmen such as Mark Cuban and Robert Kraft having already invested in the industry. As technology becomes increasingly integrated in to our lives, the line between sport and video game will continue to blur and the industry still has much room to grow. However, it remains to be answered whether e-sports are a lasting trend or just a fad.

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Even though the shock should be nulled by now, jaws of homeowners across Ontario continue to drop wider and wider every month when their power bills arrive. These exorbitant payments have become monthly expectation since the passing of Ontario’s Green Energy Act in 2009. In my classmate Ansel’s blog post he argues that the Canadian government should capitalize more on the growing green power industry; however, I would argue—with Ontario as evidence—that government subsidization of green energy can do more harm than good.

Per data taken from Ontario Power Generation, solar power costs a stunning 50¢/KWH and wind 13.5¢/KWH compared to 5.6¢/KWH and 3.5¢/KWH for Nuclear and Hydro respectively. These prices directly tie in to shareholder theory in a very complicated way. Although by subsidizing green alternatives, Ontario is benefiting communities by creating new jobs and a cleaner environment, the large size of power bills has resulted in many Ontarians near the poverty line struggling to make ends meet. It also has made Ontario unattractive to new businesses by raising variable costs and has resulted in more night shifts to produce during off-peak hours. Therefore, green power subsidies have become a very polarizing topic in Ontario as supporters argue they are necessary to transition to a cleaner brighter future, but opponents hold that the increased cost to consumers and loss of industry growth and jobs clearly outweigh the benefits. Due to this pushback, the Ontario government recently had to cancel almost four billion dollars in green projects.

The subsidies have promoted a saturation of the power-market as new green energy firms rush to take advantage of the higher power prices. This has resulted in an oversupply of power in Ontario which becomes a very complicated problem. Normally, when the number of suppliers increases, prices drop and firms leave the industry. However, the fixed contracts in the power industry have resulted in too many suppliers and no increase in price to encourage firms to leave the industry. As power cannot be stockpiled, Ontario must sell off the surplus–usually at a loss. A study done by the Fraser Institute found that the GEA is costing Ontario five billion dollars a year but the same environmental results could be achievable by policies that would cost 1/10^th as much.

Although the growth of green power is vital to the continued sustainability of society and the environment, it is crucial that in rushing to go green society does not end up worse off than before. Government interference can often do more harm than good and it is important that the government can recognize an ineffective policy and find better alternatives.

Sources:

Our Coast and Values for LNG’s Pipeline?

https://cna.ca/why-nuclear-energy/affordable/power-rates/

http://www.desmog.ca/2016/10/17/ontario-cancels-nearly-4-billion-clean-energy-projects

https://www.fraserinstitute.org/sites/default/files/environmental-and-economic-consequences-ontarios-green-energy-act.pdf

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In recent months, the international community has been entertained by the drama of the USA’s most recent spectacle. Unfortunately, it has not been a blockbuster movie or sporting event that has created this shock and awe, but their election. Many in the business world have been watching campaign season with particular intrigue as newly introduced laws and regulations will influence both how successful firms are and how they will operate. This is because the macro-environment of a business has a direct impact on how the firm operates and how successful it is. The business world could be particularly impacted in the coming US election where trade agreements have been a hot button topic.

One trade agreement that has been particularly put under the microscope is NAFTA. Politicians have been blaming this free trade agreement for job loss and other economic hardships with Donald Trump going as far as declaring NAFTA “the single worst trade deal ever approved in [the US]” (Politico, 2016) and Democrat Bernie Sanders stating that NAFTA “decimated the state of Michigan” (Detroit News, 2016). However, I agree with the stance asserted in Dustin Walsh’s blog post “Opinion: Candidates wrong on free trade” that the collapse of Michigan’s manufacturing sector was much more complicated and more a result of other changes. Contrary to popular belief, Michigan’s manufacturing sector actually added over 80,000 manufacturing jobs during the first four years of NAFTA. Instead, increasing productivity of firms due to technological gains has a much larger impact and can be associated with over 80% of job losses in developed countries (VOA, 2016).

Removing free trade agreements will not fix economic issues. The removal of free trade agreements directly has an impact on Porter’s Five Forces. Free trade increases rivalry as there are more firms able to compete equally in a specific market. Although removing free trade may help domestic companies develop in the short term by limiting competition, in the long run competition is beneficial to firms as it forces them to differentiate themselves and innovate to gain a competitive edge. Therefore, free trade breeds efficient well-structured firms not dependent on government protection. Furthermore, removing free trade will result in higher prices and more dissent from domestic consumers. It also could result in retaliation from other countries in the form of higher tariffs and eventually trade wars.

In conclusion, candidates are pandering to the discontent of the unemployed and those suffering economic hardship by using free trade agreements as a scapegoat. Instead of blaming these agreements for economic hardships, politicians should hone in on the real causes of economic issues in order to prove their capability to lead the USA.

Sources:

http://www.politico.com/story/2016/09/trump-clinton-come-out-swinging-over-nafta-228712

http://www.detroitnews.com/story/news/politics/2016/03/02/bernie-sanders-trade-policies-decimated-michigan/81247190/

http://www.voanews.com/a/presidential-election-issues-free-trade/3549686.html

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Another week, another banking controversy. American bank Wells Fargo has been thrown into the public eye this week over long lasting and blatantly unethical business practice. Clearly this is not the first time a major bank has faced scorn for unethical actions and surely it will not be the last. Although unfortunately regular, it is important that consumers and the business world alike both analyze such an exposé from a business ethics standpoint in order to avoid their re-occurrence.

The exposé revealed that Wells Fargo employees have opened approximately 1,500,000 bank accounts and applied for 500,000 credit cards by skirting consumer consent through the use of fake email addresses (Bloomberg L.P., 2016). To begin, this practice is unethical in its lack of consideration for the consumer’s consent. It is extremely unethical for a business to force its products upon consumers especially in a case such as this where the product is often one with associated fees (in this particular case, regulators estimate that the accounts in question brought in around $2,000,000 in fees (Bloomberg L.P., 2016)). Despite taking steps towards amends by offering to pay back any fees in question and accepting the fines set out by regulators, the most significant damage will be to Wells Fargo’s reputation.

Furthermore, this clear violation of consumer trust is even more painful for Wells Fargo given their industry. How can the impacted consumers expect to trust Wells Fargo with holding their money when they now know that the very bank they trusted to safeguard it was quietly snatching it away from them? Therefore it is clear that ethical business practice is not only the right thing to do but also makes sense from a customer relations perspective as well.

In my opinion, the most intriguing aspect of this controversy from an ethics standpoint is that it was not a plan of Wells Fargo executives but by thousands of low-level employees. This is because of the harsh penalties the employees faced if they missed unrealistic sales goals. One employee went as far as to say that facing these sales targets “…became a living nightmare” and that “…It  drove  [him] to drink.” (Charlotte Observer, 2016). I would argue that Wells Fargo’s sales system –with such harsh penalties and unrealistic targets that it leads to wide spread fraud and in some cases damage to the personal lives of employees– evidences a lack of care for its employees and absence of their fair and ethical treatment. In the future, Wells Fargo and all other companies must carefully consider the effects of their policies on employee behavior and strive to succeed through ethical business behavior.

Associated Sources:

https://www.bloomberg.com/view/articles/2016-09-09/wells-fargo-opened-a-couple-million-fake-accounts

http://www.charlotteobserver.com/news/business/banking/bank-watch-blog/article100975597.html

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