On tuesday, eBay Inc. announced to spin off Paypal into a separate entity next year to reach its full potential in the competitive mobile payment market. In a statement, Mr. Donahoe said “a thorough strategic review with our board shows that keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively.”[1]

Video-CNN “eBay to spin off Paypal”  https://www.youtube.com/watch?v=GBJXmTzB8is

As its fastest growing segment, Paypal was acquired by eBay 12 years ago for $1.5 billion. Now the service is available in 203 markets worldwide and is on track to process 1 billion mobile payments in 2014.[2] According to CNN, PayPal is involved in one in every sic dollars spent online today. In the most recent quarter, PayPal gained four million new, active registered accounts, up 15 per cent, to 152 million US. Payments revenue rose 20 per cent to $1.95 billion, about 45 per cent of eBay’s total revenue.[3] The eBay’s Board and Management believed that the separation will allow more flexibility and business potential.

Now looking into the international e-commerce/mobile payment service market, statics show that worldwide mobile payments are increasing by about 40% a year.[4] The mobile service is rapidly taking over the traditional way of using credit card and other physical payments.

PayPal’s potential competitor, Alibaba, the Chinese e-commerce leader in China, also took the first step to split off its mobile payment service segment, Alipay, in 2011. Recently, Apple Inc. also announced their wireless, digital wallet, Apple Pay, that’s coming out in this October. [5]

Looking at both internal and external factors, the separation will allow Paypal to be more competitive in the growing e-commerce industry. The division would also highlight Paypal’s own strengths while expanding beyond its online payment service. With more flexibility in the management as an individual company, Paypal will be more competitive to face the recent emergence of Apple’s wireless payment service and the hotly anticipated Alibaba.

Resources: “EBay Does About-Face in Decision to Spin Off PayPal.” DealBook EBay Does AboutFace in Decision to Spin Off PayPal Comments. N.p., n.d. Web. 30 Sept. 2014. <http://dealbook.nytimes.com/2014/09/30/ebay-to-spin-off-paypal-adopting-strategy-backed-by-icahn/?_php=true&_type=blogs&_r=0>.

“EBay follows Icahn’s advice to spin off PayPal.” The Globe and Mail. N.p., n.d. Web. 1 Oct. 2014. <http://www.theglobeandmail.com/report-on-business/international-business/us-business/ebay-to-spin-off-paypal-in-2015/article20853218/>.

Press, The. “EBay to spin off fast-growing PayPal payment service.” CBCnews. CBC/Radio Canada, 30 Sept. 2014. Web. 1 Oct. 2014. <http://www.cbc.ca/news/business/ebay-to-spin-off-fast-growing-paypal-payment-service-1.2782860>.

Accounting rules are widely viewed to be very complex and sometimes even professional analysts cannot understand them. At present, there is not a fixed set of accounting rules and standards among different countries, but the two important accounting systems- U.S. GAAP (generally accepted accounting principles) and IFRS (international financial reporting standards) are commonly used. [1]

However, this week the company, Manulife Financial Corporation, shows how tough the Canadian accounting rules are, compared to the one in the south border. It also highlights the discrepancies in accounting rules between different countries can cause a huge problem. The company would have reported a $2.2 billion profit in they were located south of the border. The calculation ends up to be $1.28 billion loss, which result to a discrepancy of $3.4 billion. Manulife’s shareholder equity would also be $16 billion higher when it is calculated according to the American standards.

 Fair value accounting and a standard accounting system should be considered as companies and markets are increasingly going to be globalized in the future. Any discrepancy can cause a huge different when the accounting statements are present to the investors, choices would be made differently, and companies in countries that have a tougher accounting systems will be in disadvantage when competing with other companies that show a better financial statements due to looser regulations in their countries. Differences in domestic standards might also influence a company’s performance in its international market.

 (This is a blog comment on Rachel Lee’s blog-https://blogs.ubc.ca/rachlee/2011/11/14/can-canadian-losses-really-be-american-profits/)

Source: “How a Canadian address turned Manulife’s $2.2-billion profit into a $1.28-billion loss.” The Globe and Mail. N.p., n.d. Web. 5 Oct. 2014. <http://www.theglobeandmail.com/globe-investor/how-a-canadian-address-turned-manulifes-22-billion-profit-into-a-128-billion-loss/article2223793/>.

What jobs are the customers looking to get done? What products or services are valued by our customers?

Theodore Levitt, a Harvard Business marketing professor, once said that “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”. It highlights the importance of identifying customers’ problems are, rather than focusing on innovating the products, which has a possibility of a narrower customer segment.

Often time, we hire a product or pay for a service to get the job done. In the case of the reward card provided by the Hilton HHonors Program[1], the product itself serves as a pain reliever. What are the pains that customers want to get relieved? For business travellers, frequent and lengthy flights are the “pains”, and an elite status with First Class priority check-in and free upgrades would be the “relievers” or even “gains” to them.

Other companies also offer business travel cards and rewards program to provide their customers with a more manageable and enjoyable trip that give them a boon in startup and more saving and return from accumulated points. In other industries, what are the improvements can we do to better satisfy our customers?

The interesting video about milkshake:

https://www.youtube.com/watch feature=player_embedded&v=s9nbTB33hbg

Plus, a further reading on the “pain reliever” : http://www.theglobeandmail.com/report-on-business/small-business/sb-money/cash-flow/loyalty-programs-take-pain-out-of-business-travel/article20889672/

Source: “Loyalty programs take pain out of business travel.” The Globe and Mail. N.p., n.d. Web. 5 Oct. 2014. <http://www.theglobeandmail.com/report-on-business/small-business/sb-money/cash-flow/loyalty-programs-take-pain-out-of-business-travel/article20889672/>.

Christensen’s Milkshake Marketing — HBS Working Knowledge. N.p., n.d. Web. 5 Oct. 2014. <http://hbswk.hbs.edu/item/6496.html>.

Capitalism is always closely associated with economic growth. When we think about capitalism, we usually think about private property, individual rights, and personal freedom. But when come down to business, Michael Porter from HBR urged people to rethink the definition of capitalism.

In recent years, we see that business has often been blamed as a major cause of environmental, social, and economic problems. Companies are often viewed to be only maximizing their profits but not caring about the sustainability of the society. We know that the mass production has caused toxic air pollution in Beijing, the short-term profits have caused a long-term environmental problems in many countries.

Rethinking Capitalism

A leading practitioner of shared value in business would be Walmart. They set goals on sustainability and women-own business. By taking on these social issues, they bring the business and society closely together, and yield a stronger community with their customers and employees.  http://sharedvalue.org/groups/shared-value-execution-walmart

By thinking Capitalism in a different perspective, we can see that a shared value can be achieved and new opportunities and benefits can be created not only for companies, but also for the society.

The concept was defined in the Harvard Business Review article “Creating Shared Value” (January/February 2011), by Professor Michael E. Porter and Mark R. Kramer.