Wednesday, June 30, 2010
A Blog Worth Reading
The blog located at the address below has a lot of information on facilitating meetings and bringing out the best in a group.
http://www.ideaarchitects.org/?expref=next-blog
http://www.ideaarchitects.org/?expref=next-blog
Monday, June 28, 2010
Why Is Canadian Banking the Envy of the World?
Canada's Banking System Really So Smart?
One of the odder turns in the financial crisis has been the emergence of what can only be described as a worldwide cult of the Canadian banks. Yes, those Canadian banks: fat, slow, bone-stupid, deniers of loans and graspers of fees, easy targets for generations of low-rent columnists and politicians on the make.
Yet look at them now, the toast of five continents. The Financial Times calls Canada's banks "the envy of the world." Newsweek's Fareed Zakaria gushes that, thanks to its banks, "Canada has done more than survive this financial crisis. The country is positively thriving in it." Barack Obama, no less, confessed during his recent visit that Canada "has shown itself to be a pretty good manager of the financial system in ways that we haven't always been here in the United States," while Paul Volcker, the former Federal Reserve chairman and eminence grise in the Obama administration, has touted Canada's banks as the model for what a reformed American system should look like.
He's not alone. At this week's conference of the G20, Stephen HARPER would have found an attentive audience whenever the subject turned to financial regulation. The notion that "the Canadian system" offers a blueprint for other countries' BANKING sectors has become accepted wisdom - in Ireland, for example, they are more or less explicitly copying it. And, needless to say, the Prime Minister has not been shy about trumpeting our success at home, even urging Canadians to set aside their usual modesty and toast their banks' good health. If other countries wish to idealize Canada, who is a Canadian politician to argue?
But what is this "Canadian system"? Are we really as others imagine us, an island of financial prudence in a sea of recklessness? What accounts for this, if so? Is it, as so many suggest, our more strict system of oversight and regulation? Or is it the more buttoned-down, risk-averse culture of our bankers? Is the future of banking the simple, no-frills model that Volcker suggests, where banks take deposits and make loans, but do little else? You know, like they do up in Canada?
We can date the origins of this particular mania with unusual precision. On Oct. 8 of last year, with stock markets collapsing around the world and several major banks threatening to do likewise, the World Economic Forum released its annual Global Competitiveness Report, a dense compendium of statistics purporting to rank the "competitiveness" of various national economies across a number of categories, or "pillars": infrastructure, innovation, labour market efficiency, and so on. Canada ranked 10th overall in 2008, up from 13th the previous year: a respectable showing, but hardly earth-shattering. But buried in the numbers was one striking figure, of unusual interest at this particular moment: in the category of "soundness of banks," Canada ranked number one. The world's soundest banking system. That caught people's attention.
The methodology of the report may be debated. It's survey-based, for starters. The World Economic Forum did not collect a lot of hard data on each country's banking system - leverage ratios, loan-loss provisions, that sort of thing. Rather, they asked 75 Canadian executives what they thought of their country's banks. And they compared this to the responses other countries' executives gave to the same questions about their banks. As it turned out, our guys thought our banks were sounder than their guys thought their banks were.
Still, there's no denying that Canadian banks have weathered the storm better than most. It's true that we have suffered no bank failures since the crisis began: the United States had 25 in 2008, with more banks likely to shut their doors this year. It's true-ish that Canada's banks have not had to be rescued by their government, if you don't count the $25 billion - later raised to $75 billion, then $125 billion - in government purchases of MORTGAGE assets through the CANADA MORTGAGE AND HOUSING CORPORATION: not a bailout, as such, since the CMHC was on the hook as the insurer of the mortgages anyway, but not quite laissez-faire either.
And it's true that, by virtually any measure, Canada's banks are in healthier shape than their international rivals: profitable, well-capitalized, even raising $9 billion in capital since the fall through fresh share issues - an unheard-of feat in today's markets. As American banks have tumbled, collapsed, or merged, Canadian banks have risen in relative terms. Of the 10 largest banks in North America, measured by assets, four are now Canadian; a decade ago, we had none in the top 10. Just seven banks in the world retain a AAA rating from Moody's Investors Service. Two - Royal and Toronto-Dominion - are Canadian.
But their record is hardly unblemished. If Canada's banks did not issue the dodgy sub-prime mortgages that were at the root of the crisis, they did buy them, or rather derivative products based on them: CIBC, for example, was forced to take a $3.5-billion charge on its portfolio of mortgage-backed securities last year. All told, the banks have taken some $20 billion in writedowns since the crisis began - nothing on the U.S. scale, but hardly chicken feed.
The banks also played a small but pivotal role in the collapse of the asset-backed commercial paper (ABCP) market in Canada. What turned a debacle into a full-blown crisis was the Canadian banks' refusal to honour their commitments to the issuers of these products to be the buyers of last resort. That was no doubt prudent, but it's probably not the sort of thing the banks' new-found fans have in mind.
What explains the less-awful performance of the Canadian banks, when compared to their international counterparts? For many, the answer lies in the stringency of the Canadian regulatory system, the most conservative, by some accounts, in the world. Viewed strictly in prudential terms, there is some truth in this. Where the international standard, as set out in the first Basel Capital Accord - a 1988 agreement among the world's leading monetary and banking authorities - required banks to hold no less than $4 in "tier 1 capital" (common equity, published reserves and equivalents) for every $100 they lent out, and where U.S. regulators consider a bank well-capitalized at a six per cent ratio, Canadian regulators set the bar at seven per cent.
But it's a long way from this to explaining the relative performances of Canadian and, say, American banks as a simple matter of regulation versus deregulation. For one thing, the actual capital of the Canadian banks has consistently been in the neighbourhood of 10 per cent, well in excess of the regulatory standard. To be sure, banks would normally want to add some margin of safety, just to be sure of not running afoul of their overseers, but the size of the margin suggests their prudence had a commercial rationale as well, whether impressing the ratings agencies or reassuring prospective business partners.
For another, there was no deregulation of American banks in the last decade, or certainly none that had anything to do with their willingness to issue subprime mortgages. Nor was there any regulation to prohibit it here; indeed, subprime mortgages make up about seven per cent of the Canadian market. And while American banks were typically more leveraged, it's not clear that imposing higher capital ratios would have changed matters, given the American banks' heavy reliance on securitization, that is, on selling mortgages to third parties. Since the purpose of securitization was to get these assets off the banks' books (so they would not be counted against their capital), tighter capital requirements might have simply spurred even more securitization.
Finally, in important ways Canadian banks are actually less heavily regulated than the American. Canadian banks do not labour under anything like the Community Reinvestment Act, for example, which obliges American banks to extend mortgages to low-income households, even at the cost of watering down their usual lending standards. Nor is there any Canadian equivalent to the government-sponsored enterprises known as Fannie Mae and Freddie Mac, which by their own strenuous efforts to provide funding for subprime mortgages did so much to bring the system to ruin.
The truer statement about the Canadian approach to financial regulation is not that it's tighter, but that it's different. Where other countries adopt a detailed, "rules-based" approach to regulation, Canada uses a more discretionary, "principle-based" approach. The Office of the Superintendent of Financial Institutions doesn't set out a fixed formula for what it considers adequate provision against loan losses, for instance, but it knows it when it sees it - and has the power to step in to compel banks to make the necessary adjustments. Likewise, where other countries' bank regulators have involved themselves in a wider range of concerns, from privacy to racial profiling, ours have kept the focus on risk - risk, whatever its source or precise form.
An example: long before the 1999 reforms lifting the long-standing ban on American banks owning other types of financial institutions, Canadian banks were free to do the same. After the MULRONEY government's 1987 deregulation bill, most of the country's large investment houses were swallowed up by the Big Five. But whereas each subsidiary of an American banking conglomerate might be subject to a different regulatory authority, according to whether it was classed as an insurance company, investment bank, or commercial bank, in Canada power was consolidated in the OSFI to regulate the whole entity. So, far from destabilizing the banks, the brokers' absorption into the banks served to stabilize the brokers. Where a Lehman Brothers or Bear Stearns had neither parents with deep pockets nor prudential regulation to save it from disaster, our investment banks had both.
So the notion that seems to be afoot among some of our international admirers, that "the Canadian model" amounts to confining banks to the traditional deposit-and-loan knitting, untainted by any suspicion of investment banking, currency hedging, or other dark arts, is hard to square with the facts. It's not true, and it wouldn't be a good idea if it was.
Perhaps of greatest importance, Canadian banks are federally chartered, and nationally based. There never was any Canadian counterpart to state and federal laws forbidding interstate banking or even branch banking within states, which has stuck the U.S. to this day with more than 8,000 banks of hugely varying degrees of solvency, not to say competency. Likewise, Canadian banks are spared some of the wilder state laws, such as those permitting homeowners to tear up their mortgages once their houses are "under water" (when the value of the house sinks below that of the mortgage). Much of the behaviour of the American banks can be explained as an attempt to get around the limits imposed by regulation: just as the securitization craze was driven in part by banks' efforts to diversify their asset base beyond their immediate surroundings, so their traditionally greater reliance on commercial paper markets for funds, as opposed to deposit-taking, owed much to legal restrictions on the interest rates they could pay depositors.
Similarly, the Canadian banks' more restrained behaviour is probably best explained as a consequence of historical accident - dumb luck, in other words. In broadest strokes, where financial regulation in America, with its populist, agrarian tradition, has historically been tilted to the benefit of creditors - notably in the matter of mortgage interest deductibility - ours has tended to favour the lenders. Partly in response to earlier American adventures in hyper-localized "unit banking," dating back to Andrew Jackson's dismantling of the Second Bank of the United States, the FATHERS OF CONFEDERATION chose to make banking a federal matter. Banks were thus able to develop broad, national branch systems, which the best of them soon did. Indeed, in a curious way our thinly dispersed population proved to be a source of strength for the front-runners: once a bank had gone to the trouble of setting up the extensive branch networks needed to service such a customer base, each additional branch cost much less.
Economies of scale and survival of the fittest quickly served to winnow down the number of banks, from 38 in 1890 to just 10 in 1925. With the collapse of the Home Bank in 1923, the last major bank failure in Canadian history, the industry had assumed broadly its current form, with five or six major national banks (the Toronto and Dominion banks merged in 1954) dominant, all with roots going back to the 19th century. With a broad base of depositors to draw upon, and similarly diversified loan portfolios, our banks have been less hostage to the ups and downs of local economies, while the steady stream of fees from their retail banking activities lessened the need to gamble on riskier ventures. The dominance of the big five banks, moreover, disadvantageous as that can be at most times, may well be a source of strength in a crisis. Fewer, larger banks makes for greater institutional memory, better risk management, and, if necessary, more easily coordinated responses.
Still, attempts to explain our banks' ability of late to avoid the worst excesses of their international rivals in terms of a more risk-averse national culture have to reckon with repeated episodes in the past where those same banks collectively showed a talent for rushing off the nearest cliff. From the Third World debt crisis of the early 1980s, through the Dome Petroleum fiasco and Northland and Canadian Commercial bank failures later in the decade, all the way to the Olympia & York meltdown of the early 1990s, Canada's bankers have shown themselves capable of blowing their brains out with the best of them. Had they been permitted to merge some years ago as they intended, the better to compete in foreign markets, they might have spent the last decade following the global herd to disaster.
Therein may perhaps lie the best explanation for their recent, relative success. Having sown their wild oats, as it were, in previous decades - with painful, though not fatal consequences - the Canadian banks were a chastened lot by the time the party was really getting under way. A stable industry structure, a firm regulatory hand: these played their part. But there's nothing like a crushing hangover to bring a sinner to Jesus.
Maclean's April 13, 2009
One of the odder turns in the financial crisis has been the emergence of what can only be described as a worldwide cult of the Canadian banks. Yes, those Canadian banks: fat, slow, bone-stupid, deniers of loans and graspers of fees, easy targets for generations of low-rent columnists and politicians on the make.
Yet look at them now, the toast of five continents. The Financial Times calls Canada's banks "the envy of the world." Newsweek's Fareed Zakaria gushes that, thanks to its banks, "Canada has done more than survive this financial crisis. The country is positively thriving in it." Barack Obama, no less, confessed during his recent visit that Canada "has shown itself to be a pretty good manager of the financial system in ways that we haven't always been here in the United States," while Paul Volcker, the former Federal Reserve chairman and eminence grise in the Obama administration, has touted Canada's banks as the model for what a reformed American system should look like.
He's not alone. At this week's conference of the G20, Stephen HARPER would have found an attentive audience whenever the subject turned to financial regulation. The notion that "the Canadian system" offers a blueprint for other countries' BANKING sectors has become accepted wisdom - in Ireland, for example, they are more or less explicitly copying it. And, needless to say, the Prime Minister has not been shy about trumpeting our success at home, even urging Canadians to set aside their usual modesty and toast their banks' good health. If other countries wish to idealize Canada, who is a Canadian politician to argue?
But what is this "Canadian system"? Are we really as others imagine us, an island of financial prudence in a sea of recklessness? What accounts for this, if so? Is it, as so many suggest, our more strict system of oversight and regulation? Or is it the more buttoned-down, risk-averse culture of our bankers? Is the future of banking the simple, no-frills model that Volcker suggests, where banks take deposits and make loans, but do little else? You know, like they do up in Canada?
We can date the origins of this particular mania with unusual precision. On Oct. 8 of last year, with stock markets collapsing around the world and several major banks threatening to do likewise, the World Economic Forum released its annual Global Competitiveness Report, a dense compendium of statistics purporting to rank the "competitiveness" of various national economies across a number of categories, or "pillars": infrastructure, innovation, labour market efficiency, and so on. Canada ranked 10th overall in 2008, up from 13th the previous year: a respectable showing, but hardly earth-shattering. But buried in the numbers was one striking figure, of unusual interest at this particular moment: in the category of "soundness of banks," Canada ranked number one. The world's soundest banking system. That caught people's attention.
The methodology of the report may be debated. It's survey-based, for starters. The World Economic Forum did not collect a lot of hard data on each country's banking system - leverage ratios, loan-loss provisions, that sort of thing. Rather, they asked 75 Canadian executives what they thought of their country's banks. And they compared this to the responses other countries' executives gave to the same questions about their banks. As it turned out, our guys thought our banks were sounder than their guys thought their banks were.
Still, there's no denying that Canadian banks have weathered the storm better than most. It's true that we have suffered no bank failures since the crisis began: the United States had 25 in 2008, with more banks likely to shut their doors this year. It's true-ish that Canada's banks have not had to be rescued by their government, if you don't count the $25 billion - later raised to $75 billion, then $125 billion - in government purchases of MORTGAGE assets through the CANADA MORTGAGE AND HOUSING CORPORATION: not a bailout, as such, since the CMHC was on the hook as the insurer of the mortgages anyway, but not quite laissez-faire either.
And it's true that, by virtually any measure, Canada's banks are in healthier shape than their international rivals: profitable, well-capitalized, even raising $9 billion in capital since the fall through fresh share issues - an unheard-of feat in today's markets. As American banks have tumbled, collapsed, or merged, Canadian banks have risen in relative terms. Of the 10 largest banks in North America, measured by assets, four are now Canadian; a decade ago, we had none in the top 10. Just seven banks in the world retain a AAA rating from Moody's Investors Service. Two - Royal and Toronto-Dominion - are Canadian.
But their record is hardly unblemished. If Canada's banks did not issue the dodgy sub-prime mortgages that were at the root of the crisis, they did buy them, or rather derivative products based on them: CIBC, for example, was forced to take a $3.5-billion charge on its portfolio of mortgage-backed securities last year. All told, the banks have taken some $20 billion in writedowns since the crisis began - nothing on the U.S. scale, but hardly chicken feed.
The banks also played a small but pivotal role in the collapse of the asset-backed commercial paper (ABCP) market in Canada. What turned a debacle into a full-blown crisis was the Canadian banks' refusal to honour their commitments to the issuers of these products to be the buyers of last resort. That was no doubt prudent, but it's probably not the sort of thing the banks' new-found fans have in mind.
What explains the less-awful performance of the Canadian banks, when compared to their international counterparts? For many, the answer lies in the stringency of the Canadian regulatory system, the most conservative, by some accounts, in the world. Viewed strictly in prudential terms, there is some truth in this. Where the international standard, as set out in the first Basel Capital Accord - a 1988 agreement among the world's leading monetary and banking authorities - required banks to hold no less than $4 in "tier 1 capital" (common equity, published reserves and equivalents) for every $100 they lent out, and where U.S. regulators consider a bank well-capitalized at a six per cent ratio, Canadian regulators set the bar at seven per cent.
But it's a long way from this to explaining the relative performances of Canadian and, say, American banks as a simple matter of regulation versus deregulation. For one thing, the actual capital of the Canadian banks has consistently been in the neighbourhood of 10 per cent, well in excess of the regulatory standard. To be sure, banks would normally want to add some margin of safety, just to be sure of not running afoul of their overseers, but the size of the margin suggests their prudence had a commercial rationale as well, whether impressing the ratings agencies or reassuring prospective business partners.
For another, there was no deregulation of American banks in the last decade, or certainly none that had anything to do with their willingness to issue subprime mortgages. Nor was there any regulation to prohibit it here; indeed, subprime mortgages make up about seven per cent of the Canadian market. And while American banks were typically more leveraged, it's not clear that imposing higher capital ratios would have changed matters, given the American banks' heavy reliance on securitization, that is, on selling mortgages to third parties. Since the purpose of securitization was to get these assets off the banks' books (so they would not be counted against their capital), tighter capital requirements might have simply spurred even more securitization.
Finally, in important ways Canadian banks are actually less heavily regulated than the American. Canadian banks do not labour under anything like the Community Reinvestment Act, for example, which obliges American banks to extend mortgages to low-income households, even at the cost of watering down their usual lending standards. Nor is there any Canadian equivalent to the government-sponsored enterprises known as Fannie Mae and Freddie Mac, which by their own strenuous efforts to provide funding for subprime mortgages did so much to bring the system to ruin.
The truer statement about the Canadian approach to financial regulation is not that it's tighter, but that it's different. Where other countries adopt a detailed, "rules-based" approach to regulation, Canada uses a more discretionary, "principle-based" approach. The Office of the Superintendent of Financial Institutions doesn't set out a fixed formula for what it considers adequate provision against loan losses, for instance, but it knows it when it sees it - and has the power to step in to compel banks to make the necessary adjustments. Likewise, where other countries' bank regulators have involved themselves in a wider range of concerns, from privacy to racial profiling, ours have kept the focus on risk - risk, whatever its source or precise form.
An example: long before the 1999 reforms lifting the long-standing ban on American banks owning other types of financial institutions, Canadian banks were free to do the same. After the MULRONEY government's 1987 deregulation bill, most of the country's large investment houses were swallowed up by the Big Five. But whereas each subsidiary of an American banking conglomerate might be subject to a different regulatory authority, according to whether it was classed as an insurance company, investment bank, or commercial bank, in Canada power was consolidated in the OSFI to regulate the whole entity. So, far from destabilizing the banks, the brokers' absorption into the banks served to stabilize the brokers. Where a Lehman Brothers or Bear Stearns had neither parents with deep pockets nor prudential regulation to save it from disaster, our investment banks had both.
So the notion that seems to be afoot among some of our international admirers, that "the Canadian model" amounts to confining banks to the traditional deposit-and-loan knitting, untainted by any suspicion of investment banking, currency hedging, or other dark arts, is hard to square with the facts. It's not true, and it wouldn't be a good idea if it was.
Perhaps of greatest importance, Canadian banks are federally chartered, and nationally based. There never was any Canadian counterpart to state and federal laws forbidding interstate banking or even branch banking within states, which has stuck the U.S. to this day with more than 8,000 banks of hugely varying degrees of solvency, not to say competency. Likewise, Canadian banks are spared some of the wilder state laws, such as those permitting homeowners to tear up their mortgages once their houses are "under water" (when the value of the house sinks below that of the mortgage). Much of the behaviour of the American banks can be explained as an attempt to get around the limits imposed by regulation: just as the securitization craze was driven in part by banks' efforts to diversify their asset base beyond their immediate surroundings, so their traditionally greater reliance on commercial paper markets for funds, as opposed to deposit-taking, owed much to legal restrictions on the interest rates they could pay depositors.
Similarly, the Canadian banks' more restrained behaviour is probably best explained as a consequence of historical accident - dumb luck, in other words. In broadest strokes, where financial regulation in America, with its populist, agrarian tradition, has historically been tilted to the benefit of creditors - notably in the matter of mortgage interest deductibility - ours has tended to favour the lenders. Partly in response to earlier American adventures in hyper-localized "unit banking," dating back to Andrew Jackson's dismantling of the Second Bank of the United States, the FATHERS OF CONFEDERATION chose to make banking a federal matter. Banks were thus able to develop broad, national branch systems, which the best of them soon did. Indeed, in a curious way our thinly dispersed population proved to be a source of strength for the front-runners: once a bank had gone to the trouble of setting up the extensive branch networks needed to service such a customer base, each additional branch cost much less.
Economies of scale and survival of the fittest quickly served to winnow down the number of banks, from 38 in 1890 to just 10 in 1925. With the collapse of the Home Bank in 1923, the last major bank failure in Canadian history, the industry had assumed broadly its current form, with five or six major national banks (the Toronto and Dominion banks merged in 1954) dominant, all with roots going back to the 19th century. With a broad base of depositors to draw upon, and similarly diversified loan portfolios, our banks have been less hostage to the ups and downs of local economies, while the steady stream of fees from their retail banking activities lessened the need to gamble on riskier ventures. The dominance of the big five banks, moreover, disadvantageous as that can be at most times, may well be a source of strength in a crisis. Fewer, larger banks makes for greater institutional memory, better risk management, and, if necessary, more easily coordinated responses.
Still, attempts to explain our banks' ability of late to avoid the worst excesses of their international rivals in terms of a more risk-averse national culture have to reckon with repeated episodes in the past where those same banks collectively showed a talent for rushing off the nearest cliff. From the Third World debt crisis of the early 1980s, through the Dome Petroleum fiasco and Northland and Canadian Commercial bank failures later in the decade, all the way to the Olympia & York meltdown of the early 1990s, Canada's bankers have shown themselves capable of blowing their brains out with the best of them. Had they been permitted to merge some years ago as they intended, the better to compete in foreign markets, they might have spent the last decade following the global herd to disaster.
Therein may perhaps lie the best explanation for their recent, relative success. Having sown their wild oats, as it were, in previous decades - with painful, though not fatal consequences - the Canadian banks were a chastened lot by the time the party was really getting under way. A stable industry structure, a firm regulatory hand: these played their part. But there's nothing like a crushing hangover to bring a sinner to Jesus.
Maclean's April 13, 2009
Saturday, June 26, 2010
Thursday, June 24, 2010
Wednesday, June 23, 2010
Tuesday, June 22, 2010
Monday, June 21, 2010
We won Marketplace 6
For the final course of my MBA we participated in a head to head game of Marketplace 6 in 3 member groups. In my group one person did not participate so I did marketing, sales, human resources and manufacturing and we won! We not only won but we kicked butt! I cut and pasted the final results (which give us an A+ on 50% of our grade) below so that I can save them long after the game results are no longer open. The game took place over 6 quarters of a computer company start up. We ended up with 67% of the market!!
Balanced Scorecard IP (Infinite Possibilities)
Quarter:6
Review your balanced scorecard for quarter 5. Your performance on the individual criteria should have improved.
Your balanced scorecard should be positive by now. If it is not, it may be that you have not generated enough sales to drive your costs down. You may have to consider revising and expanding your marketing program.
Check how well you performed relative to the industry. The industry scores represent your benchmark on how well you should be doing. Your firm should be above average in all areas measured. If not, try to find the weaknesses and correct them.
Industry results for quarter: 5
Minimum Maximum Ave. IP (me)
0.21 45.43 15.69 45.43
Financial Performance 20.11 85.86 42.67 85.86
Market Performance 0.13 0.54 0.30 0.54
Marketing Effectiveness 0.54 0.69 0.61 0.69
Investment in Future 1.55 4.83 2.69 1.70
Wealth 0.85 1.58 1.12 1.58
Human Resource Management 0.75 0.89 0.82 0.89
Asset Management 0.07 0.64 0.37 0.64
Financial Risk 0.79 0.95 0.89 0.94
Review the results of your company's performance during the previous quarter. This scorecard will be used to measure your firm's performance in comparison to the other firms participating in the exercise. The final evaluation will be based upon your performance during the last four (4) quarter of play.
First segment: Workhorse
Second segment: Traveler
Total Business Performance = 85.86 * 0.54 * 0.69 * 1.70 * 1.58 * 0.89 * 0.64 * 0.94 = 45.43
Financial Performance = 85.86
Market Performance = 0.54
Marketing Effectiveness = 0.69
Investment in Future = 1.70
Wealth = 1.58
Human Resource Management = 0.89
Asset Management = 0.64
Financial Risk = 0.94
If one of the performance measures is less than zero, then the total overall performance measure will be zero.
Total Business Performance.
The Total Business Performance indicator is a quantitative measure of the executive team’s ability to effectively manage the resources of the firm. It considers both the historical performance of the firm as well as how well the firm is positioned to compete in the future. As such, it measures the action potential of the firm.
The index employs what is called a balanced scorecard to measure the executive team’s performance. The most important measure is the team’s financial performance, and thus its ability to create wealth for the investors. However, the focus on current profits has caused many executives to stress the present at the expense of the future.
The long-term viability of the firm requires that the executive team be good at managing not only the firm’s profitability, but also its marketing activities, production operations, human resources, cash, and financial resources. The management team must also invest in the future. These expenses might depress the current financial performance, but are vital to creating new products, markets, and manufacturing capabilities.
In short, top managers must be good at managing all aspects of the firm. The balanced scorecard puts this perspective into practice. It focuses attention on multiple performance measures, and thus multiple decision areas. None can be ignored or downplayed. The best managers will be strong in all areas measured.
The Total Business Performance measure is computed by multiplying several indicators of business performance. This model underscores the importance of all measures. This is because any strength or weakness will have a multiple effect on the final outcome, the Action Potential of the Firm.
The following is a summary of the measure of the firm’s Total Business Performance and its key performance indicators. The computational details follow.
Financial Performance measures how well the executive team has been able to create profits for its shareholders. A positive number is always desired and the larger the better. It is computed in three steps. First, the net profit from operations is computed by taking the operating profit shown in the income statement and adding back investments in the future that are expensed in the current quarter. It measures how well the managers are able to create revenue from the current quarter’s marketing, sales and manufacturing activities.
Note that the income statement includes expenditures for R&D, new sales offices and quality control. However, this money is spent to create future business opportunities. Thus, these expenses are added back to the operating profit so that the financial performance measure is entirely focused on current quarter revenues and expenses.
Second, the total number of shares of stock is computed by adding all forms of equity investment. If an emergency loan has been taken out, shares of stock will automatically be issued to the loan shark and they become a permanent part of the equity financing.
Third, the net profit from current operations is divided by the number of shares of stock issued to determine the net profit from current operations per share of stock.
financial performance = net profit from current operations / total shares issued
= 8,473,844 / 98,698
= 85.86
net profit from current operations = operating profit + investments in firm's future = 7,038,945 + 1,434,899 = 8,473,844
operating profit: 7,038,945
investments in firm's future = 380,000 + 994,899 + 60,000 = 1,434,899
cost to open new sales offices and new web center: 380,000
R&D investment in new brand features: 994,899
R&D to create new brands: 60,000
total shares issued: 98,698
number of shares issued to executive team: 40,000
number of shares issued to venture capitalists: 40,000
number of shares issued to loan shark: 18,698
Market Performance is a measure of how well the managers are able to create demand in their primary and secondary segments. The firm’s market share in two target segments is used to measure this demand creation ability. The market share score is adjusted downwards if there were any stock outs. This penalty for stock outs is to underscore two points. First, unnecessary resources have been spent to generate more demand than can be satisfied. Second, ill will has been created by having potential customers become frustrated when they do not find the products that they have been persuaded to buy. The score ranges from 0 to 1.0 and will depend upon the number of competitors. If there are 3 firms, a good score would be greater than 0.5. If there are 8 teams, a good score would be greater than 0.35.
market performance = average market share in targeted segments/100 * percent of demand actually served/100
= (53/100) * (100/100)
= 0.54
average market share in target segments = (55 + 52)/2 = 53
market share in first segment: 55
market share in second segment: 52
percent of demand actually served = ((6,491 - 0) / 6,491) * 100 = 100
total net demand after ill will: 6,491
number of stock outs: 0
Marketing Effectiveness is a measure of how well the managers have been able to satisfy the needs of the customers as measured by the quality of their brands and ads. Customer perceptions of the firm’s brands and ads in its primary and secondary segments are used to measure customer satisfaction. The two scores are then averaged to obtain the indicator for marketing effectiveness. The score ranges from 0 to 1.0. A good score would be greater than 0.8
marketing effectiveness = [average brand judgment/100 + average ad judgment/100]/2
= [69/100 + 70/100]/2
= 0.69
average of best brand judgments in target segments = (65 + 73)/2 = 69
highest brand judgment in first segment: 65
highest brand judgment in second segment: 73
average of best ad judgments in target segments = (76 + 63)/2 = 70
highest ad judgment in first segment: 76
highest ad judgment in second segment: 63
Investments in the Firm's Future reflect the willingness of the executive team to spend current revenues on future business opportunities. They are necessary but risky. In the short-term, these expenditures can cause large negative profits on the income statement. As a result, the retained earnings may become highly negative, thus indicating that a substantial portion of the stockholder's investment has disappeared into the operations of the firm. In the long-term, these investments are absolutely necessary if the firm is to be competitive. Thus, there is a need to balance the loss of stockholder's equity against investments which could create even greater returns for the investors in the future. The score is always greater or equal to 1.0 and a good score would be greater than 3.0.
investments in the firm's future = (current expenditures that benefit firms future / net revenues) * 10 + 1
= (1,434,899 / 20,457,733) * 10 + 1
= 1.70
current expenses that benefit firm's future = 380,000 + 994,899 + 60,000 + 0 = 1,434,899
cost to open new sales offices and new web regional centers: 380,000
R&D investment in new brand features: 994,899
R&D to create new brands: 60,000
R&D licenses: 0
net revenue = 22,603,309 - 2,145,576 + 0 = 20,457,733
sales revenue: 22,603,309
rebates: 2,145,576
interest income: 0
Creation of Wealth is a measure of how well the executive team has been able to add wealth to the initial investments of the stockholders. During the start-up phase of the company, it is expected that expenses will greatly exceed revenues leading to large losses and retained earnings figures that are largely negative.
To compute the creation of wealth measure, the net equity of the firm is first computed by adding the retained earnings to the total of the investments from all of the stockholders. The retained earnings figure is the sum of all profits from the inception of the firm. As noted above, the retained earnings will be negative in the early quarters as the firm invests money to startup and grow the business.
Next, the net equity is divided by the total of all equity investments to obtain a ratio of wealth creation. A value of zero or less indicates bankruptcy. A value greater than zero and less than one indicates the executive team is relying upon the initial stockholder's investments to pay day-to-day expenses plus invest in the future. A value greater than one indicates the firm is adding wealth to the stockholders.
creation of wealth = net equity/total stockholders equity
= 12,616,490 / 8,000,000
= 1.58
net equity = 4,616,490 + 8,000,000 + 0 = 12,616,490
retained earnings: 4,616,490
common stock: 8,000,000
dividends paid to date: 0
total stockholders investment = common stock = 8,000,000
Human Resource Management is a measure of how well the executive team is able to recruit the best employees, satisfy their needs and motivate them to excel. Sales force productivity and factory worker productivity are averaged together to obtain a single score. High performance is only possible if the firm's compensation packages is competitive and in tune with what is important to employees over time. The scores range from zero to 1.00 and a good score would be greater than 0.80.
human resource management = (sales force productivity/100 + factory worker productivity/100) / 2
= (83/100 + 95/100) / 2
= 0.89
sales force productivity: 83
factory worker productivity: 95
Asset Management is a measure of the executive team’s ability to use the firm’s assets to create sales revenue. The first step in measuring asset management is to compute the asset turnover of the firm. Effective managers are able to use the assets to create sales which are two or three times the value of the assets. Thus, a very good score would be 3.0
In addition to asset turnover, ending inventories are also measured and included. To avoid stock outs, and their associated penalties, managers might be inclined to build excessive inventory. To discourage large ending inventories, there is a penalty for producing more inventory than is needed to meet demand. The penalty increases as the proportion of ending inventory to production increases.
asset management = asset turnover * penalty for excess inventory
= 1.42 * 0.45
= 0.64
asset turnover = net revenue/total assets = 20,457,733 / 14,424,183 = 1.42
net revenue = 22,603,309 - 2,145,576 + 0 = 20,457,733
sales revenue: 22,603,309
rebates: 2,145,576
interest income: 0
total assets: 14,424,183
penalty for excess inventory = (1-ending inventory/production) = (1 - 5,895 / 10,770) = 0.45
ending inventory: 5,895
production: 10,770
Financial Risk measures the executive team's ability to manage debt as a financial resource. The financial risk indicator is based upon the degree to which debt is part of the capital of the firm. As debt increases relative to the total capital, then the financial risk associated with the company increases. Conversely, as the proportion of equity in the total capital increases, then the perceived financial risk in the firm decreases.
To compute financial risk, the proportion of equity is obtained by computing the amount of equity in the firm and dividing it by the amount of capital invested in the firm from all sources. Specifically, the amount of equity is equal to the sum of common stock plus retained earnings. The amount of capital is equal to the sum of debt plus common stock plus retained earnings. As the ratio of equity to capital decreases (meaning more debt), then financial risk increases.
A value of 1.00 would indicate there is no debt and, therefore, no perceived financial risk.
It is important to realize that financial managers do not want to totally discourage debt. The optimum capital structure will vary by firm depending on its tax situation, overall risk, asset base, and financial slack. Some debt may be desirable in order to help the firm take advantage of value enhancing business opportunities (i.e., opportunities that earn more than the company's weighted average cost of capital).
In order to mitigate or downplay the effect of low amounts of debt in the capital structure, the value for the share of equity in the company is raised to a power of 0.5 (square root). Thus, if debt represented 20% of the capital structure, then the Financial risk indicator would be 0.89 (0.80 ** 0.5). If debt were 50% of the capital structure, the Financial Risk indicator would be 70.
A Financial Risk indicator below 0.80 (more than 36% debt) would be considered unfavorable.
financial risk = (total equity / total capital)0.5
= (12,616,490/14,424,183)0.5
= 0.94
total equity = common stock + retained earnings = 8,000,000 + 4,616,490 = 12,616,490
total capital = debt + common stock + retained earnings = 1,807,693 + 8,000,000 + 4,616,490 = 14,424,183
Balanced Scorecard IP (Infinite Possibilities)
Quarter:6
Review your balanced scorecard for quarter 5. Your performance on the individual criteria should have improved.
Your balanced scorecard should be positive by now. If it is not, it may be that you have not generated enough sales to drive your costs down. You may have to consider revising and expanding your marketing program.
Check how well you performed relative to the industry. The industry scores represent your benchmark on how well you should be doing. Your firm should be above average in all areas measured. If not, try to find the weaknesses and correct them.
Industry results for quarter: 5
Minimum Maximum Ave. IP (me)
0.21 45.43 15.69 45.43
Financial Performance 20.11 85.86 42.67 85.86
Market Performance 0.13 0.54 0.30 0.54
Marketing Effectiveness 0.54 0.69 0.61 0.69
Investment in Future 1.55 4.83 2.69 1.70
Wealth 0.85 1.58 1.12 1.58
Human Resource Management 0.75 0.89 0.82 0.89
Asset Management 0.07 0.64 0.37 0.64
Financial Risk 0.79 0.95 0.89 0.94
Review the results of your company's performance during the previous quarter. This scorecard will be used to measure your firm's performance in comparison to the other firms participating in the exercise. The final evaluation will be based upon your performance during the last four (4) quarter of play.
First segment: Workhorse
Second segment: Traveler
Total Business Performance = 85.86 * 0.54 * 0.69 * 1.70 * 1.58 * 0.89 * 0.64 * 0.94 = 45.43
Financial Performance = 85.86
Market Performance = 0.54
Marketing Effectiveness = 0.69
Investment in Future = 1.70
Wealth = 1.58
Human Resource Management = 0.89
Asset Management = 0.64
Financial Risk = 0.94
If one of the performance measures is less than zero, then the total overall performance measure will be zero.
Total Business Performance.
The Total Business Performance indicator is a quantitative measure of the executive team’s ability to effectively manage the resources of the firm. It considers both the historical performance of the firm as well as how well the firm is positioned to compete in the future. As such, it measures the action potential of the firm.
The index employs what is called a balanced scorecard to measure the executive team’s performance. The most important measure is the team’s financial performance, and thus its ability to create wealth for the investors. However, the focus on current profits has caused many executives to stress the present at the expense of the future.
The long-term viability of the firm requires that the executive team be good at managing not only the firm’s profitability, but also its marketing activities, production operations, human resources, cash, and financial resources. The management team must also invest in the future. These expenses might depress the current financial performance, but are vital to creating new products, markets, and manufacturing capabilities.
In short, top managers must be good at managing all aspects of the firm. The balanced scorecard puts this perspective into practice. It focuses attention on multiple performance measures, and thus multiple decision areas. None can be ignored or downplayed. The best managers will be strong in all areas measured.
The Total Business Performance measure is computed by multiplying several indicators of business performance. This model underscores the importance of all measures. This is because any strength or weakness will have a multiple effect on the final outcome, the Action Potential of the Firm.
The following is a summary of the measure of the firm’s Total Business Performance and its key performance indicators. The computational details follow.
Financial Performance measures how well the executive team has been able to create profits for its shareholders. A positive number is always desired and the larger the better. It is computed in three steps. First, the net profit from operations is computed by taking the operating profit shown in the income statement and adding back investments in the future that are expensed in the current quarter. It measures how well the managers are able to create revenue from the current quarter’s marketing, sales and manufacturing activities.
Note that the income statement includes expenditures for R&D, new sales offices and quality control. However, this money is spent to create future business opportunities. Thus, these expenses are added back to the operating profit so that the financial performance measure is entirely focused on current quarter revenues and expenses.
Second, the total number of shares of stock is computed by adding all forms of equity investment. If an emergency loan has been taken out, shares of stock will automatically be issued to the loan shark and they become a permanent part of the equity financing.
Third, the net profit from current operations is divided by the number of shares of stock issued to determine the net profit from current operations per share of stock.
financial performance = net profit from current operations / total shares issued
= 8,473,844 / 98,698
= 85.86
net profit from current operations = operating profit + investments in firm's future = 7,038,945 + 1,434,899 = 8,473,844
operating profit: 7,038,945
investments in firm's future = 380,000 + 994,899 + 60,000 = 1,434,899
cost to open new sales offices and new web center: 380,000
R&D investment in new brand features: 994,899
R&D to create new brands: 60,000
total shares issued: 98,698
number of shares issued to executive team: 40,000
number of shares issued to venture capitalists: 40,000
number of shares issued to loan shark: 18,698
Market Performance is a measure of how well the managers are able to create demand in their primary and secondary segments. The firm’s market share in two target segments is used to measure this demand creation ability. The market share score is adjusted downwards if there were any stock outs. This penalty for stock outs is to underscore two points. First, unnecessary resources have been spent to generate more demand than can be satisfied. Second, ill will has been created by having potential customers become frustrated when they do not find the products that they have been persuaded to buy. The score ranges from 0 to 1.0 and will depend upon the number of competitors. If there are 3 firms, a good score would be greater than 0.5. If there are 8 teams, a good score would be greater than 0.35.
market performance = average market share in targeted segments/100 * percent of demand actually served/100
= (53/100) * (100/100)
= 0.54
average market share in target segments = (55 + 52)/2 = 53
market share in first segment: 55
market share in second segment: 52
percent of demand actually served = ((6,491 - 0) / 6,491) * 100 = 100
total net demand after ill will: 6,491
number of stock outs: 0
Marketing Effectiveness is a measure of how well the managers have been able to satisfy the needs of the customers as measured by the quality of their brands and ads. Customer perceptions of the firm’s brands and ads in its primary and secondary segments are used to measure customer satisfaction. The two scores are then averaged to obtain the indicator for marketing effectiveness. The score ranges from 0 to 1.0. A good score would be greater than 0.8
marketing effectiveness = [average brand judgment/100 + average ad judgment/100]/2
= [69/100 + 70/100]/2
= 0.69
average of best brand judgments in target segments = (65 + 73)/2 = 69
highest brand judgment in first segment: 65
highest brand judgment in second segment: 73
average of best ad judgments in target segments = (76 + 63)/2 = 70
highest ad judgment in first segment: 76
highest ad judgment in second segment: 63
Investments in the Firm's Future reflect the willingness of the executive team to spend current revenues on future business opportunities. They are necessary but risky. In the short-term, these expenditures can cause large negative profits on the income statement. As a result, the retained earnings may become highly negative, thus indicating that a substantial portion of the stockholder's investment has disappeared into the operations of the firm. In the long-term, these investments are absolutely necessary if the firm is to be competitive. Thus, there is a need to balance the loss of stockholder's equity against investments which could create even greater returns for the investors in the future. The score is always greater or equal to 1.0 and a good score would be greater than 3.0.
investments in the firm's future = (current expenditures that benefit firms future / net revenues) * 10 + 1
= (1,434,899 / 20,457,733) * 10 + 1
= 1.70
current expenses that benefit firm's future = 380,000 + 994,899 + 60,000 + 0 = 1,434,899
cost to open new sales offices and new web regional centers: 380,000
R&D investment in new brand features: 994,899
R&D to create new brands: 60,000
R&D licenses: 0
net revenue = 22,603,309 - 2,145,576 + 0 = 20,457,733
sales revenue: 22,603,309
rebates: 2,145,576
interest income: 0
Creation of Wealth is a measure of how well the executive team has been able to add wealth to the initial investments of the stockholders. During the start-up phase of the company, it is expected that expenses will greatly exceed revenues leading to large losses and retained earnings figures that are largely negative.
To compute the creation of wealth measure, the net equity of the firm is first computed by adding the retained earnings to the total of the investments from all of the stockholders. The retained earnings figure is the sum of all profits from the inception of the firm. As noted above, the retained earnings will be negative in the early quarters as the firm invests money to startup and grow the business.
Next, the net equity is divided by the total of all equity investments to obtain a ratio of wealth creation. A value of zero or less indicates bankruptcy. A value greater than zero and less than one indicates the executive team is relying upon the initial stockholder's investments to pay day-to-day expenses plus invest in the future. A value greater than one indicates the firm is adding wealth to the stockholders.
creation of wealth = net equity/total stockholders equity
= 12,616,490 / 8,000,000
= 1.58
net equity = 4,616,490 + 8,000,000 + 0 = 12,616,490
retained earnings: 4,616,490
common stock: 8,000,000
dividends paid to date: 0
total stockholders investment = common stock = 8,000,000
Human Resource Management is a measure of how well the executive team is able to recruit the best employees, satisfy their needs and motivate them to excel. Sales force productivity and factory worker productivity are averaged together to obtain a single score. High performance is only possible if the firm's compensation packages is competitive and in tune with what is important to employees over time. The scores range from zero to 1.00 and a good score would be greater than 0.80.
human resource management = (sales force productivity/100 + factory worker productivity/100) / 2
= (83/100 + 95/100) / 2
= 0.89
sales force productivity: 83
factory worker productivity: 95
Asset Management is a measure of the executive team’s ability to use the firm’s assets to create sales revenue. The first step in measuring asset management is to compute the asset turnover of the firm. Effective managers are able to use the assets to create sales which are two or three times the value of the assets. Thus, a very good score would be 3.0
In addition to asset turnover, ending inventories are also measured and included. To avoid stock outs, and their associated penalties, managers might be inclined to build excessive inventory. To discourage large ending inventories, there is a penalty for producing more inventory than is needed to meet demand. The penalty increases as the proportion of ending inventory to production increases.
asset management = asset turnover * penalty for excess inventory
= 1.42 * 0.45
= 0.64
asset turnover = net revenue/total assets = 20,457,733 / 14,424,183 = 1.42
net revenue = 22,603,309 - 2,145,576 + 0 = 20,457,733
sales revenue: 22,603,309
rebates: 2,145,576
interest income: 0
total assets: 14,424,183
penalty for excess inventory = (1-ending inventory/production) = (1 - 5,895 / 10,770) = 0.45
ending inventory: 5,895
production: 10,770
Financial Risk measures the executive team's ability to manage debt as a financial resource. The financial risk indicator is based upon the degree to which debt is part of the capital of the firm. As debt increases relative to the total capital, then the financial risk associated with the company increases. Conversely, as the proportion of equity in the total capital increases, then the perceived financial risk in the firm decreases.
To compute financial risk, the proportion of equity is obtained by computing the amount of equity in the firm and dividing it by the amount of capital invested in the firm from all sources. Specifically, the amount of equity is equal to the sum of common stock plus retained earnings. The amount of capital is equal to the sum of debt plus common stock plus retained earnings. As the ratio of equity to capital decreases (meaning more debt), then financial risk increases.
A value of 1.00 would indicate there is no debt and, therefore, no perceived financial risk.
It is important to realize that financial managers do not want to totally discourage debt. The optimum capital structure will vary by firm depending on its tax situation, overall risk, asset base, and financial slack. Some debt may be desirable in order to help the firm take advantage of value enhancing business opportunities (i.e., opportunities that earn more than the company's weighted average cost of capital).
In order to mitigate or downplay the effect of low amounts of debt in the capital structure, the value for the share of equity in the company is raised to a power of 0.5 (square root). Thus, if debt represented 20% of the capital structure, then the Financial risk indicator would be 0.89 (0.80 ** 0.5). If debt were 50% of the capital structure, the Financial Risk indicator would be 70.
A Financial Risk indicator below 0.80 (more than 36% debt) would be considered unfavorable.
financial risk = (total equity / total capital)0.5
= (12,616,490/14,424,183)0.5
= 0.94
total equity = common stock + retained earnings = 8,000,000 + 4,616,490 = 12,616,490
total capital = debt + common stock + retained earnings = 1,807,693 + 8,000,000 + 4,616,490 = 14,424,183
Sunday, June 20, 2010
Saturday, June 19, 2010
Executing Strategy
Executing strategy as an operations-driven activity that revolves around the management of people and other business processes involves the following framework:
1. Building an organization that is capable of good strategy execution which involves staffing, core competencies, competitive capabilities, and structuring the value chain to effectively use its resources.
2. Staffing the organization with a strong management team and hiring as well as retaining skilled workers.
3. Developing and instituting policies and procedures that facilitate strategy execution.
4. Constantly improving value-chain operations.
5. Installing information and operation systems that enable company employees to effectively do their jobs
6. Rewarding employees when they achieve strategic and financial targets.
7. Creating a corporate culture that is conducive to good strategy execution.
8. Exercising strong leadership that propels the organization forward, keeps making improvements upon the execution strategy, and achieves optimum operation performance in an efficient manner.
Good strategy execution involves a holistic view of the company in its environment. It should be proactive rather than reactive. Inviting and inspiring every employee, supplier and customer to be part of this process increased the likelihood of success. Successful implementation and follow through are of paramount importance. Organizing the work effort involves: deciding which value chain activities to perform internally and which to outsource, making internally performed strategy-critical activities the core building blocks in the organizational structure, deciding how much authority to centralize and what to decentralize or delegate, providing for internal cross unit coordinationa dn collaboration to build and strengthen internal competencies and capabilities and providing for the necessary collaboration and coordination with suppliers and strategic allies.
1. Building an organization that is capable of good strategy execution which involves staffing, core competencies, competitive capabilities, and structuring the value chain to effectively use its resources.
2. Staffing the organization with a strong management team and hiring as well as retaining skilled workers.
3. Developing and instituting policies and procedures that facilitate strategy execution.
4. Constantly improving value-chain operations.
5. Installing information and operation systems that enable company employees to effectively do their jobs
6. Rewarding employees when they achieve strategic and financial targets.
7. Creating a corporate culture that is conducive to good strategy execution.
8. Exercising strong leadership that propels the organization forward, keeps making improvements upon the execution strategy, and achieves optimum operation performance in an efficient manner.
Good strategy execution involves a holistic view of the company in its environment. It should be proactive rather than reactive. Inviting and inspiring every employee, supplier and customer to be part of this process increased the likelihood of success. Successful implementation and follow through are of paramount importance. Organizing the work effort involves: deciding which value chain activities to perform internally and which to outsource, making internally performed strategy-critical activities the core building blocks in the organizational structure, deciding how much authority to centralize and what to decentralize or delegate, providing for internal cross unit coordinationa dn collaboration to build and strengthen internal competencies and capabilities and providing for the necessary collaboration and coordination with suppliers and strategic allies.
Friday, June 18, 2010
Thursday, June 17, 2010
Wednesday, June 16, 2010
Tuesday, June 15, 2010
Monday, June 14, 2010
Sunday, June 13, 2010
The Domestic Biggest Western Star in China
Dashan 大山; "Big Mountain"
Mark Rowswell who is known as ‘Dashan’ (Big Mountain) in China. He is currently presiding as Canada's Commissioner General at the Shanghai 2010 World Expo. Although relatively unknown in the West, he is the most famous foreign national who has become a bona fide domestic celebrity in China. He has worked in comedy, dramatic acting and as a television host. Dashan can speak English, Mandarin and Cantonese fluently. Upon graduation from the University of Toronto with a Bachelor of Arts in Chinese Studies in 1988, Rowswell was awarded a full scholarship to continue Chinese language studies at Peking University. Dashan's name and image can often be seen in commercial endorsements for various Chinese and international companies, including Ford automobiles. Dashan is also active as a spokesman for several charity organizations, primarily involved with cancer prevention as well as environmental protection.Mark Rowswell has made such contribution to cross cultural understanding and to Chinese Canadian relations, all without much awareness in his home country. That seem so quintessentially Canadian to me!
Saturday, June 12, 2010
Practical Lessons in Marketing
Supermarket Psychology: take note of the thought processes that go into each placement and each component of the decisions. This is a primer in marketing (pun intended).
Friday, June 11, 2010
Canadian Immigrantion 2004
It is crucial to understand where immigrants to a country hail from in order to understand the country's marketplace.
Rory Sutherland shares more insights
Rory Sutherland is a leadinng thinker in the world of marketing. As always, I hope you have the time to give a listen.
Thursday, June 10, 2010
Wednesday, June 9, 2010
The Future of User Interface
Marketers really need to have a sense of what the world of tomorrow will be like. If you have the time, take a look at this video with expert user interface developer (he did the technology for the movie Minority Report) and get a glimpse of our not so distant future.
Cross cultural negotiations
Ethnocentricity leads to great misunderstandings between nations and businesses. This video helps to illuminate the issues
Tuesday, June 8, 2010
Understanding India is Crucial for Marketing Futures
This news clip is from the 2009 election in India.
The Online Value Chain
Online Value Chain
This video by Smartboard is excellent in supplying knowledge of the online influencers.
This video by Smartboard is excellent in supplying knowledge of the online influencers.
Monday, June 7, 2010
Sunday, June 6, 2010
How to research any company online
How to research a company online:
Publication/subject Lexis-Nexis file name
Hoover company profiles HOOVER
Securities and Exchange Commission SEC
Company annual reports ARS
Company annual 10-K filings 10-K
Company quarterly 10-Q filings 10-Q
Business wire BWIRE
Public relations newswire PRNEWS
S&P Daily News SPNEWS
Disclosure DISCLO
Consensus earnings projections EARN
CNN Financial Network CNNFN
Dow Jones News/CNBC CNBC
Business Week BUSWK
Forbes FORBES
Fortune FORTUN
Some company web pages include links to the home pages of industry trade associations where you can find information about industry size, growth, recent industry news, statistical trends, and future outlook. A number of business periodicals like Business Week, the Wall Street Journal, and Fortune have Internet editions that contain the full-text of many of the articles that appear in their paper editions. You can access these sites by typing in the proper Internet address for the company, trade association, or publication. The following web sites are particularly good locations for company and industry information:
• Securities and Exchange Commission EDGAR database (contains company 10-Ks, 10-Qs, etc.) www.sec.gov/cgi-bin/srch-edgar/
• NASDAQ www.nasdaq.com/
• CNNfn: The Financial Network www.cnnfn.com/
• Hoover’s Online www.hoovers.com/
• American Demographics/Marketing Tools www.marketingtools.com/
• Industry Net www.industry.net/
• Wall Street Journal--Interactive edition update.wsj.com/
• Business Week www.businessweek.com/
• Fortune www.pathfinder.com/fortune/
• MSNBC Commerce News www.msnbc.com/news/COM_Front.asp
• Los Angeles Times www.latimes.com/
• New York Times www.nytimes.com/
• News Page www.newspage.com/
• Electric Library www.elibrary.com/
• International Business Resources on the WWW--a Michigan State University site ciber.bus.msu.edu/busres.htm
Publication/subject Lexis-Nexis file name
Hoover company profiles HOOVER
Securities and Exchange Commission SEC
Company annual reports ARS
Company annual 10-K filings 10-K
Company quarterly 10-Q filings 10-Q
Business wire BWIRE
Public relations newswire PRNEWS
S&P Daily News SPNEWS
Disclosure DISCLO
Consensus earnings projections EARN
CNN Financial Network CNNFN
Dow Jones News/CNBC CNBC
Business Week BUSWK
Forbes FORBES
Fortune FORTUN
Some company web pages include links to the home pages of industry trade associations where you can find information about industry size, growth, recent industry news, statistical trends, and future outlook. A number of business periodicals like Business Week, the Wall Street Journal, and Fortune have Internet editions that contain the full-text of many of the articles that appear in their paper editions. You can access these sites by typing in the proper Internet address for the company, trade association, or publication. The following web sites are particularly good locations for company and industry information:
• Securities and Exchange Commission EDGAR database (contains company 10-Ks, 10-Qs, etc.) www.sec.gov/cgi-bin/srch-edgar/
• NASDAQ www.nasdaq.com/
• CNNfn: The Financial Network www.cnnfn.com/
• Hoover’s Online www.hoovers.com/
• American Demographics/Marketing Tools www.marketingtools.com/
• Industry Net www.industry.net/
• Wall Street Journal--Interactive edition update.wsj.com/
• Business Week www.businessweek.com/
• Fortune www.pathfinder.com/fortune/
• MSNBC Commerce News www.msnbc.com/news/COM_Front.asp
• Los Angeles Times www.latimes.com/
• New York Times www.nytimes.com/
• News Page www.newspage.com/
• Electric Library www.elibrary.com/
• International Business Resources on the WWW--a Michigan State University site ciber.bus.msu.edu/busres.htm
Transcultural Leadership
Transcultural Leaders ensure that companies do not fall into ethnocentrism. There is significant value in having leaders with experience of the world that goes beyond our own society.
Saturday, June 5, 2010
The Happiness Project - Buy some Happiness
Buy some happiness
The Happiness Project is a book and a series of Youtube videos that consider how to increase an individual's happiness. I am including this segment here so that you can consider the sort of purchases or ways to spend money that actually enhance an individual's level of happiness. This might be good information for marketers to consider when discussing the shifts in consumer behaviour.
The Happiness Project is a book and a series of Youtube videos that consider how to increase an individual's happiness. I am including this segment here so that you can consider the sort of purchases or ways to spend money that actually enhance an individual's level of happiness. This might be good information for marketers to consider when discussing the shifts in consumer behaviour.
An Economist Discusses The Science of Pleasure
The Science of Pleasure as it relates to marketing is discussed by an economist, Daniel McFadden. The lecture is dense but worth the time and cognitive effort. The lecture is about an hour. It is a higher level of discourse but informative.
New Science of Pleasure
.
New Science of Pleasure
.
Value Chain Analysis
Value Chain Analysis is an important component of marketing. The visuals on this video start slowly but they are there so please be patient for this is a good tool for understanding the big picture of value chain analysis.
Friday, June 4, 2010
I (the blogger) am asking you (the reader) when a C in life was ever good enough?
So you'll flunk us if we do not change the world?
Well, you might just squeek by with a 'C'.
-dialogue from 'Pay it Forward"
I'm asking when a 'C' in life was ever good enough?
Well, you might just squeek by with a 'C'.
-dialogue from 'Pay it Forward"
I'm asking when a 'C' in life was ever good enough?
What if business people 'Paid it Forward?'
yWhat if every business took one world problem that it could make a difference in and 'Paid it forward'?
What if they did it in a way that would help them too? That is the topic of Michael Porter's 2006 article in Harvard Business Review.....well OK not exactly but close. Porter said that if businesses tackled world problems with their expertise they were in a better position than anyone else to make a diffference and a profit. So....what if Pfizer made up for some past faut pauxs and picked a disease it could eliminate for very littel money or Ecolab worked to help eliminate rats in any big city. The idea is to go after the problems we can strike off the list or the ones that generate more complex problems as they get bigger. What if another company bought the resources to help iodize salt in countries that need the help? Or water companies drilled wells overseas with sponsorships or a percentage of profits for the corporate social responsibility kudos? Win win solutions add up to more in the long run. I have included this film trailer for inspiration or motivation.
What if they did it in a way that would help them too? That is the topic of Michael Porter's 2006 article in Harvard Business Review.....well OK not exactly but close. Porter said that if businesses tackled world problems with their expertise they were in a better position than anyone else to make a diffference and a profit. So....what if Pfizer made up for some past faut pauxs and picked a disease it could eliminate for very littel money or Ecolab worked to help eliminate rats in any big city. The idea is to go after the problems we can strike off the list or the ones that generate more complex problems as they get bigger. What if another company bought the resources to help iodize salt in countries that need the help? Or water companies drilled wells overseas with sponsorships or a percentage of profits for the corporate social responsibility kudos? Win win solutions add up to more in the long run. I have included this film trailer for inspiration or motivation.
Trading Revenue at U.S. Bank Holding Companies in 2009
All data from December 2009 FR Y-9C filings. Dollar amounts in millions.
Total Assets, Dec. 31, 2009 Trading Revenue As a Percentage of Industry Trading Revenue
1 Goldman Sachs Group $849,278 $23,234 36.2%
2 Bank of America 2,224,539 12,067 18.8%
3 JPMorgan Chase 2,031,989 9,870 15.4%%
4 Morgan Stanley 771,462 7,279 11.3%
5 Citigroup 1,856,646 4,448 6.9%
6 Wells Fargo 1,243,646 2,674 4.2%
7 Bank of New York Mellon 212,336 1,032 1.6%
8 State Street 156,756 598 0.9%
9 Northern Trust 82,142 508 0.8%
10 MetLife 539,314 361 0.6%
11 GMAC 172,313 173 0.3%
12 PNC Financial Services Group 269,922 170 0.3%
13 U.S. Bancorp 281,176 163 0.3%
14 Fifth Third Bancorp 113,380 125 0.2%
15 SunTrust Banks 174,166 100 0.2%
Sum: Top 15 Banks by Trading Revenue 62,803 97.8%
Remaining Bank Holding Companies 1,399 2.2%
Total: All Bank Holding Companies (986 banks)
Total Assets, Dec. 31, 2009 Trading Revenue As a Percentage of Industry Trading Revenue
1 Goldman Sachs Group $849,278 $23,234 36.2%
2 Bank of America 2,224,539 12,067 18.8%
3 JPMorgan Chase 2,031,989 9,870 15.4%%
4 Morgan Stanley 771,462 7,279 11.3%
5 Citigroup 1,856,646 4,448 6.9%
6 Wells Fargo 1,243,646 2,674 4.2%
7 Bank of New York Mellon 212,336 1,032 1.6%
8 State Street 156,756 598 0.9%
9 Northern Trust 82,142 508 0.8%
10 MetLife 539,314 361 0.6%
11 GMAC 172,313 173 0.3%
12 PNC Financial Services Group 269,922 170 0.3%
13 U.S. Bancorp 281,176 163 0.3%
14 Fifth Third Bancorp 113,380 125 0.2%
15 SunTrust Banks 174,166 100 0.2%
Sum: Top 15 Banks by Trading Revenue 62,803 97.8%
Remaining Bank Holding Companies 1,399 2.2%
Total: All Bank Holding Companies (986 banks)
Thursday, June 3, 2010
Tuesday, June 1, 2010
Marshall Mcluhen-Canadian communications thinker
The global village
In the early 1960s, McLuhan wrote that the visual, individualistic print culture would soon be brought to an end by what he called "electronic interdependence": when electronic media replace visual culture with aural/oral culture. In this new age, humankind will move from individualism and fragmentation to a collective identity, with a "tribal base." McLuhan's coinage for this new social organization is the global village.
The term is sometimes described as having negative connotations in The Gutenberg Galaxy, but McLuhan himself was interested in exploring effects, not making value judgments:
Instead of tending towards a vast Alexandrian library the world has become a computer, an electronic brain, exactly as an infantile piece of science fiction. And as our senses have gone outside us, Big Brother goes inside. So, unless aware of this dynamic, we shall at once move into a phase of panic terrors, exactly befitting a small world of tribal drums, total interdependence, and superimposed co-existence. [...] Terror is the normal state of any oral society, for in it everything affects everything all the time. [...] In our long striving to recover for the Western world a unity of sensibility and of thought and feeling we have no more been prepared to accept the tribal consequences of such unity than we were ready for the fragmentation of the human psyche by print culture
In the early 1960s, McLuhan wrote that the visual, individualistic print culture would soon be brought to an end by what he called "electronic interdependence": when electronic media replace visual culture with aural/oral culture. In this new age, humankind will move from individualism and fragmentation to a collective identity, with a "tribal base." McLuhan's coinage for this new social organization is the global village.
The term is sometimes described as having negative connotations in The Gutenberg Galaxy, but McLuhan himself was interested in exploring effects, not making value judgments:
Instead of tending towards a vast Alexandrian library the world has become a computer, an electronic brain, exactly as an infantile piece of science fiction. And as our senses have gone outside us, Big Brother goes inside. So, unless aware of this dynamic, we shall at once move into a phase of panic terrors, exactly befitting a small world of tribal drums, total interdependence, and superimposed co-existence. [...] Terror is the normal state of any oral society, for in it everything affects everything all the time. [...] In our long striving to recover for the Western world a unity of sensibility and of thought and feeling we have no more been prepared to accept the tribal consequences of such unity than we were ready for the fragmentation of the human psyche by print culture
Subscribe to:
Posts (Atom)
