Category Archives: Business

Up in the Air

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For the airline industry, maintenance is the single most important task to be performed with care and precision. In Curtis’ blog about Southwest Airlines, it seems like Southwest is not taking enough precautions before letting their planes fly, or the company is just simply trying to cover up the incident with “internal confusion”.

As we have seen many times before, poor maintenance is the number one cause for fatal flight accidents, including metal fatigue, missing/damaged parts…etc. If an aircraft does not go through rigorous tests EVERY TIME before they fly, it is risking hundreds of lives. Southwest seems to be more concerned with profit before the incident and public relations after rather than examine what went wrong.

Safety should always be the top priority when comes to air travel, and poor maintenance is the number one cause of fatal accidents. In order to prevent tragedy such as China Airlines 611 in the future, transportation authorities and the airline itself really needs to treat this issue seriously, and cannot leave it “up in the air”.

If anyone is interested to gain further knowledge on aircraft safety, I recommend checking out the TV series Mayday (sometimes called Air Crash Investigation), which provide comprehensive reports on a number of accidents.

https://www.youtube.com/watch?v=-t_15aSSLzY

Lockout – NBA Style Pt.2

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In response and to add on top of Adrian’s blog about NBA Lockout

The NBA 2011-2012 season was scheduled to begin on November 1st. However, due to the unsettled Collective Bargain Agreement, the future of the season remains unknown. As Adrian has pointed out in his post, the players union had rejected owner’s offer multiple times over the dispute of BRI, Basketball Related Income, share between owners and players. It is evident to see why the players would reject the proposal since the owners want to cut the share from 57% player to 47-50%. The players are taking a pay-cut of at least 7% since the owners claim to be losing money. The previous blog on NBA (Accountant’s Magic – NBA Style Pt.1) discussed the issue of teams claiming to be in deficit. One interesting thing to note is that, Michael Jordan, basketball legend, now the majority owner of Charlotte Bobcats, has been one of the hardline owners who want to cap the share at a dreadful 47% due to team loss. However, in 1998 under a similar dispute over labour agreement, Jordan, then a player, criticized the owners with the famous quote, “If you can’t make a profit, you should sell your team”. We can definitely see some hypocrisy from Jordan.

NBA Commissioner David Stern VS Head of Players Union Derek Fisher

From a marketing perspective, the lockout is not healthy at all for the basketball industry. The NBA has reached record viewership last season, having a lockout could cause a loss of fans, since in the US does not seem to lack choices of sport entertainment. If the NBA stays idle, it can be hurting not only the players and owners, but also many related businesses and workers.

College Tuition: University or Degree Store?

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The college tuition is rising year over year. However, the establishment of new universities and educational institutes and enrollment in the recent years does not seem to slow down in any way. A college degree is more and more common, with the value depreciates quickly. It is time for us to take a closer look at the cause of the inflation and recognize the problem.

1. Establishment of “Degree Stores”

Many new universities are established by big corporations, and the primary objective of these institutes are maximizing profit. These universities accept many students without much challenge, and loosely monitor the quality of education. This leads to excessive amount of university degrees being handed out to many unqualified.

2. Inelastic Demand for College Education

It has been a common understanding that college education is required for a “better future”. In my opinion, it is merely a propaganda and misconception. Many people who go into trades end up much better off than someone who complete their college education. It is definitely not the case all the time, but recognition should be given that people can do well even without a degree or pursuing the degree at a later date.

3. Easy Student Loan

Banks and government give out loans to students with little, if any, credit check. It is easier than ever to attend college, therefore the demand for college is hiked up artificially which also drives up the cost.

Many graduate from college with heavy debt load (and increasing), and the degrees they receive have much less value. This also caused some protests from students all over the world. I can’t help but wonder, if the decision of going to college is really worth it if you cannot afford it?

 

Tax Cut ≠ Jobs

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On the news, we see business top-dogs complaining tax is hurting the job market and the company’s operation. In economics class, we learn that free market is the way to go and tax would create dead weight loss for the society. But is it really the case? A blog post by billionaire entrepreneur and my favorite sport team Dallas Mavericks’ owner Mark Cuban explained the relationship and pretty much nailed the issue.

When a CEO publicly criticized a tax, it is not because he is concerned with the company’s well-being, it is for his PERSONAL gain. Lower tax means more money in his pocket. Companies do not stop hiring people because of high tax rates, or vice versa. Taxes do not stop companies from investing either. Mark Cuban phrases:

I wonder if Amazon hesitated in developing and releasing the Fire because they were concerned about corporate tax rates ? I wonder if Dish looked at corporate tax rates before they determined the strategic value of buying spectrum. Think Apple looked at tax rates before it decided to open their stores ? Did McDonalds bring back McRibs because the tax rate was low enough ? Companies make strategic decisions every day.  They invest because they want to grow the company. They invest because they are competitive and they want to win. They invest because they want to make more money. They don’t invest because they just had their tax rates lowered.

Theories are always theories. No matter how much you learn, it does not matter if it does not apply realistically. Too many economic ideas over simplify the real situation. They might sound great, but communism is a great idea in theory, too. Maybe policy makers can realize this and make decisions according to real numbers and stats if they want to fix the economy, instead of relying on advisers who care only about their personal gains.

(On a side note, Mark Cuban is probably the only “1 percenter” who is in favour of more taxation on the rich. “Be happy that you have the chance to write a big cheque to the government” and “Tax the hell out of Wall Street” are some quotes from his blog. For more, visit blogmaverick.com)

CouchSurfing – No Room, No Problem

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With over 3 million users/participants, the couch surfing project and its founder Casey Fenton demonstrated that a simple idea that benefits every traveler can earn you millions.

If you are familiar with the website, you might wonder, “isn’t CouchSurfing not-for-profit?” Not anymore. As of August 2011, Couch Surfing accepted $7.6 million investment from Benchmark Capital. Fenton cited that CouchSurfing’s application of the non-profit organization was never granted by the US government, which led him to seek for other options.

Sleep on couch, save money! (and earn me money)

That aside, it is a great example of entrepreneurship, where the company was able to earn investments just by a simple growing concept. Even better, Fenton assumed no risk and is using other people’s money to get rich! Paid features are now added to the website and are projected to generate significant revenue for the company. The innovation also triggered many other similar ideas being established in other industries, such as gift-giving and car-sharing websites.

Accountant’s Magic – NBA Style Pt. 1

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Recently in class and in the tutorial section, we have talked about financial accounting and how a company’s financial report can be misleading. I immediately related the topic to my “beloved” NBA and the teams’ infamous profitability to avoid tax.

“Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I could get every national accounting firm to agree with me.”    – former Blue Jays VP Paul Beeston

First trick is the RDA, Roster Depreciation Allowance(see article). Introduced in 1959, the allowance argues that players are a depreciable asset once they are paid. Indeed, a 35-year-old player’s value might be decreasing over time, but there are young players who might develop multi-million values in a short span of time. This is their own personal earning power change, not the teams’. The trick is to list both player salary and RDA (loss on players’ contracts) as operating expenses. Well, if the team spent 50-million on players, the maximum loss would be 50 million, which is the worst case scenario that all of them got permanently injured and cannot play. However, under the RDA, the team can post another 50-million-dollar loss in this case, and the total loss suddenly become 100 millions, and that is significant.

So , when you see a sports’ team losing millions of dollar for more than 5 years, you might have to wonder why they can keep operating normally. Of course, it’s the “love for basketball”, the owner might say.

“If buses come on-time, they won’t be called bus”

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The bus is late, yet again, big surprise. How often do you stare at a bus schedule attached at the bus stop and wonder if it is just a joke from the very beginning?

The city of San Francisco is about to have a change with its troubled public transportation system, and a simple technology, Open Data, can help its cause.

Commuters in SF are now able to receive realtime updates on their phones through apps and SMS, which provide far better predictions of the arrival time of the buses. As you may note, Translink also has apps and SMS functions, but it only gives you the scheduled time of the next bus, and 99% of the time it is inaccurate.

Not only the buses are nearly impossible to track, Skytrains share the same characteristic. It is impossible to know when the next train will arrive, and which line (Expo or Millennium) until the very last second when you actually see the train. This troubled commuters to efficiently plan their schedule and be on-time.

This is a excellent example of how IT Technology can help the business. It is bizarre to know that simple technologies can improve our transit system by miles, however, nothing is being implemented to make commuting more convenient, and Translink still wonders why people drive instead of ride?

When I was in Taiwan, the informations of the next 2 trains were clearly displayed without sacrificing the advertising ability (Taipei Metro)

 

Old school but serve the purpose, I was in Germany and they have these, also clear and informative (Berlin U-Bahn)

Skytrain Display

Thanks, weather reports really help when I can just look outside for myself (Vancouver Skytrain)

Mr. salesman, what keeps you awake at night?

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What kind of salesman do you absolutely dislike or just find them unconvincing? How many times do you have absolutely no clue what the salesperson is actually selling?

According to the Sales Executive Council research chart below, there are mainly four parts to customer loyalty, company and brand impact, product and service delivery, value-to-price ratio, and sales experience, and sales experience contributes more than half out of the 4 drivers. To analyze further, we can see that the most important aspect of a sales business is the human connection.

Want a customer to come back? Don't give them great deals, give them a great experiences

One of the standard textbook tactics for a salesperson is to identify the customer’s need, and offer solutions accordingly to their problems. Ironically, most customers’ “need” is to figure out what they need. The assumption that customers know exactly what they want is false, and if they do, they do not need a salesman. Rather than asking the customers what they need, it is better to tell them exactly what they need in a professional manner. This way, the customers are more likely to trust the salesperson, and go ahead with his suggestions, rather than being creeped out by the question “what’s keeping you up at night?“

Businesses starting to review their “coupon marketing”

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As the economy recesses, “Coupon Economy” has become a trend amongst shoppers. A new term, “Extreme-Couponing“, was created, and refers to people who would not consume unless they can get discounts or bonuses from their collection of coupons. This action, however, alarmed the businesses that they might be throwing away money and receive no return from these coupon hunters. The creation of group purchase sites like Groupon and coupon-sharing websites like RetailMeNot did not help the cause either.

Coupons used to encourage customer loyalty, but with these extreme couponers, it is practically impossible to gain any profit. The exploitation of the coupon forced the businesses to rethink their approach in order to establish customer loyalty. In this internet era, it is easy for consumers to share and spread the “love for coupons”, therefore businesses would definitely need to change their marketing strategy to avoid low-yield customers.

This showed that in the field of business, there is no permanent, golden rule or tactic that will apply universally and forever. However, the age of coupon is not over yet. The key is to fully evaluate the customers, create a formula to encourage spending with coupons, and ride the trend to the top.

7-Up? Sprite? Bilingualism… oh and Air Canada

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Whether a business practice is ethical or not, is largely determined by individual thoughts and perceptions. One person might find a particular case to be perfectly ethical, another might be totally offended.

Here is an interesting article (another one here) about a man demanding compensation after he was served Sprite instead of 7-Up onboard the flag carrier of Canada. Another thing to mention is that he demanded “7-Up”(sept up?) in French. He uses this case to denounce Air Canada of their “incompetence” to provide service in both English and French, as regulated by the authority in Canada, amongst other “faults” such as not being able to check-in speaking French in Atlanta (Atlanta now speaks French!).

Monsieur Michel Thibodeau, who demanded $500,000 in compensation for a can of 7-Up

Finally, the questions arise. Is Air Canada unethical and discriminated the language right to serve Sprite instead of 7-Up? Is M. Thibodeau unethical on the consumer side for demanding such compensation even though he, a federal employee, speaks perfect English?

By the way, he won, and received $12,000, far from what he had expected, but not a bad day. Judge Madam Marie-Josee Bedard, ruled that “The violation of their rights caused them a moral prejudice, pain and suffering, and loss of enjoyment of their vacation.” It is also not the first time M. Thibodeau sues Air Canada for this matter. If Air Canada constantly cause such emotional and moral damages to him, why did he continue to use their service? His intention is questioned.

Traveller alert! Bilingual surcharge now applies.