Picture retrieved from: http://money.cnn.com/2013/11/15/investing/jpmorgan-settlement/index.html?iid=Lead

The payment of $4.5 billion in settlements to institutional investors who suffered losses on mortgage securities is a painful blow to JP Morgan Chase &Co. This amount is probably a manageable one for the investment bank considering the amount of profits they make annually, however, this no doubt will affect their operations as they tighten budgets and limit hires to make up for the lost. Although the amount pay out could be potentially higher, I still perceive it to be too much. In the financial crisis of 2008, JP Morgan made a rather important move that helped saved the American economy when it took over Bear sterns and it’s troubled assets. If the investment bank had not help buy out the toxic assets then, the American government or effectively the American people would have been the ones bearing the cost. JP Morgan is certainly not given enough credit for taking on such a huge risk for the country.

I do not discount the fact that investment banks are in some ways guilty for the financial crisis and the hefty fine does serve as a reminder to other banks to not temper with greed. The purpose of investment banks is to help, people, government and corporations raise capital, these are the founding principals of investment banks and they have an obligation to maintain the financial stability of a country. Investment banks were created with the intent to protect the interest of people, not abuse it and If they deter from this primary responsibility, they risk putting the country of perhaps the world in jeopardy just like in 2008.

References/Interesting reads:

Article: http://money.cnn.com/2013/11/15/investing/jpmorgan-settlement/

When a fine is a crime: http://www.economist.com/blogs/schumpeter/2013/09/jpmorgan-chase

Sharing the fine!: http://intellihub.com/2013/10/24/much-jpmorgans-13-billion-fine-will-taxpayers-foot/

 In Focus: Social Entrepreneurs 

Picture retrieved from: http://www.cbc.ca/news/canada/nova-scotia/dragons-den-to-feature-hope-blooms-entrepreneurs-1.2424764

The inspiring story of young social entrepreneurs brought the dragons at CBCs Dragon’s Den to tears as they described how they converted wasteland into a farm to produce organic salad dressing:

“We’re social entrepreneurs. With a small portion of our profits, we use [that] to buy seeds and our tools and teach community members … how to grow,” said one of the young entrepreneurs.”

Their story humbled me as they showed me that regardless of age and financial status, there are always ways out there to contribute to society and still earn some money for yourself. If kids at this age are already feeling the urge to go out there and do something for the environment and society, it is rather shameful that many adults, who are the role models of children, are not making efforts to give back to society.

A report by the huffington post shows that Canada trails many “other countries in taking full advantage of this burgeoning, win-win movement that merges smart business sense and the pursuit of a better world”. This is good news and I think we’re really just scratching the surface of social enterprise. There is so much potential in this field and it is certainly becoming a trend for many businesses to move in this direction. I do hope businesses out there see the merits of giving back to society as life is really more than just making money and spending it.

References:
The article: http://www.cbc.ca/news/canada/nova-scotia/dragons-den-to-feature-hope-blooms-entrepreneurs-1.2424764

Report from huffington post: http://www.huffingtonpost.ca/craig-and-marc-kielburger/canada-social-entrepreurship_b_3141402.html

Hope Bloom Video: http://www.cbc.ca/player/News/Community/Canada/NS/ID/2314100864/

In Focus: Finance

Articled Retrieved from: http://www.cbc.ca/news/business/fairfax-has-no-comment-on-blackberry-deal-as-deadline-looms-1.2325341

Picture retrieved from: http://www.gadgetsmagazine.com.ph/wp-content/uploads/2013/09/blackberry-new-logo.jpg

Just weeks ago FairFax Financial announced its intent of a $4.7 billion buyout of Blackberry. There are now doubts of whether this transaction will go through as they recently reported a net loss of $571.7 million. Buying over Blackberry is a high risk, high return strategy for any potential buyers as the smartphone industry is extremely competitive and capital intensive with the amount of R&D required to compete with other smartphone giants such as Apple and Samsung. Considering the current financial situation FairFax is at, they are probably not the best investors to help Blackberry get back on track. However, if they manage to pull through with this investment, the returns are high as the smartphone industry is a highly lucrative one. At present, I doubt the success of the transaction as (1) risks are too high (2) returns have limited guarantee (3) successful transactions always boils down to financial status. There were analysts that believe Blackberry should discontinue their smartphone line and focus on software development to ensure the survivability of the business. I agree with this proposal as the struggling company needs to drop commitments and focus on key strengths in order to survive for the long run.

Update/Extra readings:

Blackberry should stop selling Blackberry: http://www.v3.co.uk/v3-uk/analysis/2304974/blackberry-should-seek-survival-in-software-and-services

BlackBerry might be sold to FairFax Financial:  http://www.cbc.ca/news/business/blackberry-to-be-sold-to-group-led-by-fairfax-financial-1.1864922

Buying time for BlackBerry: http://www.cbc.ca/news/canada/blackberry-takeover-offer-buys-company-time-1.1865640

Smartphone market worth $341.4 billion by 2015: http://www.prweb.com/releases/mobile-phone-market/smartphone-market/prweb11242089.htm

In Focus: Innovation and Entrepreneurs

http://www.bloomberg.com/news/2013-10-30/drones-delivering-pizza-venture-capitalists-wager-on-it.html

Picture retrieved from: http://media.salon.com/2012/05/drone1.jpg

The title says it all! Drones that were traditionally used in the military for spying missions is now a possible tool for businesses such as pizza and shopping companies to deliver their products without the need of hiring people to do so. Venture Capitalists such as Tim Draper backs the idea by investing in a start up that develops the necessary software to direct drones into achieving this goal. It has been a while since there was much innovation in the delivery service and this is potentially the next popular move businesses can look forward to in the near future. However, the are several possible issues that this innovation needs to consider. (1) What happens in a malfunction? Will the drone drop from the sky and hit people? (2) How much more efficient is the drone as compared to a delivery truck? (3) How accurate is the GPS guiding system in the drone? Will it deliver the products to the wrong location?

There are of course, many other related concerns that has not been addressed. There are always many threats and uncertainty surrounding start ups. The funding aspect is at least out of the way for those entrepreneurs who received venture capital funding to achieve this goal. It’s still premature to determine the feasibility and success of this innovation but it’s definitely something to keep a look out for in the future.

References:

Commercial Drone Growth: http://ysnews.com/news/2013/09/miami-valley-area-seeks-commercial-drone-growth

Drones grow Nevada Economy?: http://www.vegasinc.com/news/2013/nov/11/will-drones-make-nevadas-economy-soar/

What are drones?: http://dronewars.net/aboutdrone/

In Focus: Business tools, Porter’s Five Forces

Original Blog post by Vivek Thakkar: https://blogs.ubc.ca/vivekthakkar/

Picture retrieved from: http://cdn.gottabemobile.com/wp-content/uploads/2013/11/ATT-Logo.jpg

Vivek raised an important point with regards to porter’s five forces when he mentioned there are a strong barriers to entry in the Canadian telecommunication market. This means that the threat of new entries of telcom companies is low and the existing telcoms in the Canadian market are going to be profitable for a long time.

In a report by OECD, it found that Canadians pay one of the highest prices for one of the worst telecom services in the industrialized world. The entrance of AT&T would have increased competition and in the long run, lower the prices of telecom services in Canada. The suppliers, Bell, Roges, Telus and Wind, face very minimal threats of substitutes as there are not many services out there that can replace them. There is also a high demand for telcom services for day to day usage and hence the telcom companies in Canada seems to have solidified their positions, enjoy high profits and maintain control over the market here.

What all these means is we as consumers, are paying for the inefficiency of telcom services here as they have minimal incentives to improve. I would have definitely loved to see AT&T or other telcom providers enter the market really just for the extra options and improvement of telcom services throughout Canada

References/Updates:

High telco cost: http://rabble.ca/blogs/bloggers/openmediaca/2013/07/confirmed-canadians-pay-some-highest-prices-some-worst-telecom-se

http://www.itworldcanada.com/article/oecd-again-assailed-for-canadian-telecom-ranking/43094

AT&T say no to Canada: http://www.bnn.ca/News/2013/9/17/ATT-looked-at-entering-Canada-nixed-idea.aspx

In Focus: Marketing Strategies

Comments on “Marketing on Facebook: a new thing or an old thing with a new face” from: https://blogs.ubc.ca/haohuahuang/2013/10/02/marketing-on-facebook-a-new-thing-or-an-old-thing-with-a-new-face/

Picture retrieved from:http://strategy.consiliumglobalbusinessadvisors.com/blog/bid/215617/Inbound-Marketing-for-an-I-m-too-busy-world

I agree on Benji’s point on how social media and television channels offer the same value proposition. Over time, the channels of advertising have been constantly evolving and advertisers are always on the lookout for the best and cheapest alternative to get information out into the mass market. However, with the increased accessibility and affordability to advertising, it is now a challenge as people compete for spaces to spread the information they hope to.

There are some signs that television advertising will become less relevant in the future as people turn away from television to online video streaming services such as Netflix and YouTube. These video services offer a wider variety of shows, the ability to choose what consumers want and are relatively cheaper than paid for cable television. As people start to move away from the television to computers, advertising on televisions seems less impactful as it used to be. This is no doubt the reason why we are starting to see increasing amounts of advertisements on our online video streaming services such as YouTube. Apart from social media and online video advertising, I wonder what’s the next big channel for advertising in my time?

References/Interesting reads:

The rise of Netflix: http://singularityhub.com/2011/06/07/the-rise-of-netflix-and-the-future-of-home-entertainment/

The rise of Youtube: http://content.time.com/time/photogallery/0,29307,2019371,00.html

Television less popular: http://blogs.wsj.com/digits/2010/12/13/internet-now-as-popular-as-tv-survey-shows/

In Focus: Marketing

Article retrieved from: http://www.bloomberg.com/news/2013-09-18/solid-new-iphones-fail-to-excite-rich-jaroslovsky.html

Picture retrieved from: (http://www.dvice.com/2013-7-29/mounting-evidence-points-plastic-iphone-5c-apple)

The new IPhone 5s and 5c, attempts to create a point of difference for apple with finger scanning technology, faster processor and an update to their iOS system. Apple is also deviating from their standard model of releasing one IPhone a year to include an extra lower cost model. Apple maintains its points of parity by keeping their phones thin, light and simple to use. These are qualities that Apple has avoided changing since the original IPhone probably because they believe this to be their strength. Apple is an established brand but has not made much changes to their points of parity causing them to lose market share to competitors such as Samsung which has been evolving theirs over the years. Furthermore, Apple’s points of difference such as faster processors and operating system upgrades are not something its competitors are not able to provide. Apple seems to have lost the “wow” factor that they used to provide consumers with when launching new products. The points of difference for smartphones are driven by innovation and Apple needs a lot of it in order to maintain control of the smartphone market.

References:

Iphone 5s/c Sales: http://www.statisticbrain.com/iphone-5-sales-statistics/

IPhone 5s/c Sales analysis: http://www.taipeitimes.com/News/biz/archives/2013/10/30/2003575703

IPhone 5s review: http://www.techradar.com/reviews/phones/mobile-phones/iphone-5s-1179315/review

In Focus: Financial Accounting

Article retrieved from: http://www.cbc.ca/news/business/twitter-ipo-details-raise-questions-over-financials-bots-1.1912936

Picture retrieved from: (http://cdn0.fiverrcdn.com/photos/572524/medium/twitter.jpg?1327145997)

#twitter#IPO#hashtags#investment#risk

Twitter is about to go through with its Initial Public Offering (IPO) to raise capital for the company. This is a risky investment considering that the company has only been making losses to date, their current debt stands at $418.6 million. The plus side of this IPO is that Twitter managed to triple their revenue to $316.9 million in 2012 and have a large data base of users. In a Financial accounting perspective, there is a possibility that the revenues could be overstated and debts understated to convince investors to purchase their shares. Twitter might have also deferred some debts over the next few years which are not reported but are still part of the losses they incurred.  In addition, considering that the amount of debt it has, they have limited amounts of free cash flow that can be used to grow the business. Twitter currently relies on credit from banks and private investors and if this IPO is not successful in raising enough capital for the company, they might continue to make losses. Investors should exercise caution before buying twitter shares.

Update/Further/Interesting readings:

Sceptical Investors: http://news.yahoo.com/ap-cnbc-poll-twitter-faces-skeptical-investors-051700470–finance.html

Wall Street Brokers push up twitter IPO targets: http://www.reuters.com/article/2013/11/01/us-twitter-ipo-analysts-idUSBRE9A010720131101

Twitter Indicators for stock market analysis: http://www.downsidehedge.com/twitter-indicators/

In Focus: Business tools, Business Canvas

Article retrieved from: (http://www.theglobeandmail.com/report-on-business/small-business/sb-money/business-funding/sap-commits-650-million-to-venture-capital-fund/article14656965)

Picture retrieved from (http://international.iteem.ec-lille.fr/north-america/sap-a-useful-tool-for-companies%E2%80%A6/)

Venture capital is investing money into new or expanding businesses that has the potential for further growth. SAP’s commitment to venture capital signals a shift in their business plan, in particular their revenue streams and key partnerships. Research and development operations are typically expensive and sometimes can be unyielding. The $ 650 million fund will attract potential entrepreneurs to partner with SAP who is able to provide them with expertise, distribution channels, marketing and etcetera to grow their business. They are also expanding their key resources since they have a share in the assets of the companies they buy equity in. When these businesses become profitable and expand to a sizeable scale, SAP can sell their stake in the company for a significant amount which contributes to their revenue stream. SAP is also potentially attracting entrepreneurs that have businesses overseas and buying into these starts ups will expand their operations abroad which opens new opportunities and revenue streams from other countries. The right investments will potentially reduce their research and development cost since these starts ups are introducing new ideas into the market for SAP and they do not need to fund research projects or hire people to do so.

References:

SAP gloomy software trend: http://www.reuters.com/article/2013/10/21/us-sap-results-idUSBRE99K02I20131021

SAP expands partner program: http://www.pcworld.com/article/2045510/sap-expands-partner-program-for-application-development.html

In Focus: Business Ethics

Article retrieved from: (http://www.nytimes.com/2010/01/02/world/asia/02milk.html?ref=melamine)

Picture retrieved from: (http://groundreport.com/wp-content/uploads/2013/09/Whole-Milk-Powder.jpg)

The news of melamine discovered in sanlu Chinese baby milk was a severe breach in corporate responsibility. Melamine is a toxic substance and when consumed leads to complications such as kidney stone and cancer. The producers tempered with the milk formula in order to lower the cost of production and profiting off the portion that would have otherwise cost them. Business is a competitive field and many corporations resort to unscrupulous ways to earn that extra market share but there is a sacred social line involving the health and safety of the consumers that should be considered. We may be free individuals but as members of a community entails conformity to an agreed set of shared values and responsibilities that encompasses the will to not harm one another. Corporations are inanimate objects that have no feelings, the heart and soul of it is driven by people, hence we are well in the position to control our actions. Businesses can consider using stakeholder theory as an evaluation of their commitments to customers, suppliers, employees and the community. If they can balance their stakeholders well, they are effectively growing their business to benefit the community and themselves which ultimately leads to an overall improvement of society.

References/Interesting reads:

Timeline of Milk Scandal: http://news.bbc.co.uk/2/hi/7720404.stm

Social responsibility of business, Milton Friedman: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

Little comfort in milk powder scandal verdicts: http://news.bbc.co.uk/2/hi/7845545.stm