Month: October 2012

The technology company who once held a near-monopoly on the smartphone marketplace has taken another hit in the global market, falling 37 spots from 56th to 93rd in Interbrand’s annual list of best global brands. The fact that new Research in Motion products have been met with lukewarm response, such as the PlayBook, as well as the delay of the anticipated BlackBerry 10, have led to the freefall of the the Research in Motion brand. RIM is also plagued with harsh competition in the smartphone market, including the iPhone 5 and the Samsung Galaxy SIII, both of whom are already on the market while the BlackBerry 10 is awaiting release. Interbrand also noted that RIM’s shipments are down 41% in the past year, and their market share has fallen from 11.5% in 2011 to 4.8% now.

This is a clear example of what happens to a corporation when they stop innovating and lose their value proposition to the competition. It is much easier to maintain a good reputation in the market than to regain one, and it appears this is exactly what RIM is going to be forced to do. They must regain that competitive advantage that they rode for so long, and rehabilitate their global image, as well as the BlackBerry’s “cool factor” that Apple and Samsung have taken from them. Let’s hope the new BlackBerry 10 will be just the thing that RIM needs to recover its market share, because RIM’s margin for error is small, and this may be one of its last chances to redefine its image in the market before it is drowned by the competition.

Whatever the Greeks are doing, let’s do the opposite. The country notoriously close to economic failure doesn’t appear to be making a recovery any time soon. The draft budget was submitted to the Greek Parliament on Monday shows that the economy is predicted to contract a further 3.8% and unemployment expected to rise to an extremely high 24,7%. Despite Greece’s massive budget cuts, the country is expected to continue to run on a deficit budget, which is more bad news for the country, and the whole Eurozone.

The unbelievably large unemployment rate is contributing to this downward spiral, as people who have no income pay no taxes, therefore the Greek government is consistently short on money to aid the country through their economic troubles. This is extremely taxing on other countries in the Eurozone, particularly Germany and France who will be forced yet again to bail out their Greek counterparts to keep the Eurozone afloat, which will lead to further devaluation of the Euro and further troubles for the continent.  Time will show how the European financial catastrophe will respond to further bad news from their friends in the Aegean, and hopefully Greece will be on the road to recovery on the 2014 financial report, because 2013 appears to be another write-off.

The massive credit card company American Express has been fined 112 million dollars to settle accusations from regulators that it was charging its customers with unlawful and unethical late fees and deceived them into paying off debts unnecessarily and buying new lines of credit without being obligated to do so.

These fines for unethical proceedings were imposed upon the company following an enquiry from numerous regulatory forces, including the Consumer Financial Protection Bureau and the Federal Reserve.  The company is being forced to pay around 85 million dollars to approximately 250000 customers, and 27 million in civil fines. The enquirers discovered that the company had been cheating customers from 2003 onwards to this spring. One of the deceptive scams used frequently by AmEx was to falsely tell customers that if they paid off a portion of their debt immediately, the remainder of their debt would be forgiven, as well as charging late fees on some credit cards based on a percentage of their debt, a practice outlawed by a 2009 law prohibiting some unfair credit card practices.

This case is a clear violation of Business Ethics as the company was earning a great deal of money by taking advantage of vulnerable customers who don’t know any better. This is yet another case of companies choosing to business the wrong way until they are caught and fined by regulatory forces. It showcases that if there weren’t regulatory forces such as the Federal Reserve there would be nothing keeping businesses to go about in an ethical manner other than their own conscience, which we have seen is a rare commodity in the corporate world.

Ethics is something that is taught in EVERY business school, so why do these things continue to happen? There are many cases to back up a train of thought that states that people simply do not care about doing the right thing, or just prefer to look the other way. Perhaps it will just be a problem that will always be present in the corporate world, and consumers, regulators, and other businesses will have to be aware of these issues, and strive to correct them.