Get Summer 2014 Right First Time with tutor2u Exam Coaching & Revision Workshops
The attached PowerPoint (In_the_news_last_week_Gov_Int.ppt) links three current stories from sport, media and education and asks “should governing bodies intervene or should the invisible hand of free markets be left unchecked?”. In each case, students can discuss the merits and shortcomings of regulation in the respective industries, and explore the reasons for intervention in the first place.
The lesson works as a nice starting point and leads naturally to further research on Adam Smith and Milton Friedman.
Hope it helps!
My students were particularly interested in Facebook’s acquisition of WhatsApp for the ridiculously high $19billion. We used the previous blog, then delved deeper and found a few great related articles; one explaining why it was a good price ($42 dollars for each of the 450m customers) but bad strategy and the other predicting that WhatsApp will not help them succeed in China. To summarise the two:
- WhatsApp is pro-privacy and data-free
- WhatsApp CEO Jan Kuom is sticking to his “ad-ban”
- WeChat – China’s domestic messenger service already has 300m customers and better functionality
- WeChat helps China’s economy and is subject to Chinese law (meaning “they” can keep tabs on the content).
- Chinese government banned Facebook, linked them with an act of terrorism and state media claimed that “80 percent of China’s net users felt Facebook should be punished”
- The government don’t want Facebook siphoning money and talent away from China’s domestic social media industry, most notably Weibo (China’s Twitter), whose profits have just jumped from $2.4m to $44.5m!
Segueing seamlessly to a social networking firm that seems to have secured a way into China; LinkedIn is trialing it’s Chinese language site via joint ventures with Sequoia China, China Broadband Capital and the aforementioned Weibo and WeChat!
Chief Executive Jeff Weiner said the deal has raised “difficult questions” for him, and has been forced to make various concessions in order to adhere to the Chinese Government’s censorship requirements, but believes that “LinkedIn's absence in China would deny Chinese professionals a means to connect with others on our global platform,"
Overall, these combined articles give students relevant ammunition for each of the research “bullets” as it covers success, failure, methods of operation and ethical implications of entering the Chinese market.
It would appear that social network firms need to network with Chinese social network firms if they want to become social network firms that operate in China. Simple really.
Did you know that most train operating companies will refund 50% of your ticket for a delay of 30 minutes or more, and will double that if the delay is for an hour or longer? And that, if you are travelling by tube, Transport for London offers refunds if your journey is delayed by 15 minutes or more (although you won’t get a refund if the delay is caused by a security alert, “third party action” such as a strike or bad weather)? Most probably you didn’t, as a survey by the Office of Rail Regulation has found that more than 75% of rail passengers know “not very much” or “nothing at all” about what they are entitled to when services are disrupted.
The report also found that 74% of passengers felt that train companies do “not very much” or “nothing at all” to proactively provide information about compensation when there are delays. As Simon Gompertz found in this video report, there are plenty of ways in which the train operating companies could make the information available, whether through instructions on the back of the tickets and announcements on trains to use of technology through their websites or apps.
This poor standard of information for customers is now to be improved. The ORR will now oversee the development of a code of practice on provision of ticket retail information, which will be in place by the end of 2014 and will provide clarity on what information passengers can expect from their train companies, including information on the different types of fares, restriction, and key terms and conditions, such as compensation and refund rights.
The government are also making compliance with these requirements part of their new franchising arrangements, to add to the regulation of the industry.
In the meantime, if you have had a journey delayed recently and want to claim compensation, here’s some guidance on what you might be entitled to.
I'm rather bitter that Eric Cantona one of Manchester United's best former players has been banned by The Advertising Standards Agency today.
Watch the clip and try to work out why this has happened.read more...»
What is wrong with this advert? Produced as part of a safety campaign by Cycling Scotland, the Advertising Standards Authority has banned it, so it can no longer be shown on tv.read more...»
Yesterday, David Cameron told the Federation of Small Business conference that more than 3,000 rules affecting business are to be scrapped or amended, saving more than £850m a year. BUSS4 students need '...a broad understanding of the scope and impact of legislation relating to business', and will be well aware that the legislation adds to business costs. Cameron is proud to say that his government would be the first in modern history to end a term in office with less regulation on the statute books than when it came into power.read more...»
The global pharmaceutical industry is under threat, like never before, for the way that it markets its products.read more...»
The recent trouble at the Co-Op Bank Group highlight numerous weaknesses amongst the management which have damaged its ethical reputation and USP. “Friendly” banks – that is, a wide variety of types owned by members and customers rather than shareholders – are hugely popular around the world, with an estimated 20 per cent of the market for deposits and loans in Europe alone.read more...»
The Office of Fair Trading is investigating potentially illegal pricing activities by six furniture retailers. It all relates to the use of price discounts.read more...»
This simply couldn't be worse news for two multinational giants in the global chocolate product market. Authorities in Canada have charged the food giants Nestle and Mars, together with a network of independent wholesale distributors, in an alleged conspiracy to fix prices of chocolates. Hershey is also involved - but they appear to have confessed to the illegal price-fixing activities and will be hoping for relatively lenient treatment in return for cooperating with the Canadian authorities.
Price-fixing is illegal - plain and simple. But it's also unethical. To be caught out price-fixing is to be caught acting against the interests of consumers. Not a good place to be if you are a global brand that values its reputation.
Nestle and Mars have both denied the alleged behaviour and have vowed to fight the legal action:
Nestlé said in a statement:
“Nestlé Canada will vigorously defend these charges. At Nestlé Canada, we pride ourselves on operating with the highest ethical business standards.”
Mars issued a similar promise to fight the allegations.
Time will tell whether price fixing has actually taken place.
But what is price-fixing?read more...»
The Co-Op has keen to highlight their ethical credentials as a key part of its marketing and positioning strategies. Supporters claimed that its mutuality was a more desirable form of ownership than PLCs.
The Banking Division has run into difficulties, and there have been significant changes in personnel within the last few weeks, in part as a response to major financial problems. On Friday there were reports that it had stopped offering loans to new business customers, and today The Independent on Sunday reported that The Co-Op Group's Finance Director Steve Humes had resigned. This followed the recent resignation of Brian Tootell after Moody's downgraded the Bank's bonds.
Mr Humes The Group Finance Director for the last two years, had been involved in managing the Co-Ops food operations, and may have had insufficient experience of its banking operations. Euan Sutherland the Co-Op's new CEO who was appointed in May, could be about to make significant changes in other key management positions.
The decision to stop lending to new business customer may imply that the there may be insufficient capital to support current obligations let alone new loans. The ethical bank may be about to meet its most serious crisis.
From the employer's point of view, a zero hours contract is a great example of the benefits of the flexible labour market. They allow the employer to change the number of hours an employee works each week, with more shifts offered when they are busy, and fewer when they are not; costs can therefore be controlled and matched more exactly to revenue. They are particularly popular with the fast food outlets like McDonalds and Subway, and high street chains like Boots and Sports Direct. Those employers draw heavily on the younger end of the labour market, with many of their staff being students who are looking for flexible shifts that work around their study hours; for them a zero hours contract may work well. However it is also important to consider whether this will have a detrimental effect on the business's culture; with a high proportion of staff working irregular hours it may become much more difficult to instil a culture and sense of identity with the organisation.
One of the strengths and a key component in the Co-Op Bank's USP after recent banking problems - sub-prime lending, collapse of Northern Rock and LIBOR rate fixing, was its emphasis of ethical banking.
The horrific Bangladesh factory disaster has highlighted a number of business issues and proved a stark reminder of the global effects our purchasing decisions may or may not have on people halfway around the world. Tom White has already put up a blog with some initial thoughts; I thought I’d pose some further questions and examine some of the issues raised in that post.
A great starting point would be to listen to the ever-reliable Business Daily, from the BBC World Service. Their programme In the Balance invites guests to debate a topical business issue, and this week, the Rana Plaza disaster was under discussion.
One of the first questions to ask is to examine the extent to which firms which are supplied by such factories are responsible. There were more immediate causes, of course, such as the owner’s actions and the culpability of local regulation and enforcement (or lack of). But this is not the first time there have been such disasters, nor are the poor conditions in such factories surprising. So is it right that chains such as Primark continue to use such suppliers? Isn’t it their fault, with their demands for low prices and increased flexibility to meet the needs of the fast fashion market? Do they have a responsibility to ensure fair and safe working practices in factories they don’t own and which they are merely customers of? A lot of people would argue that yes, they do. But isn’t that the same as arguing we as consumers should audit the supply chains of the shops which we buy from? Primark is as much a customer as we are.
You may not want to dwell on this topic, which is so terrible that I am sure your first reaction to what has happened will have been highly emotionally charged. The scale of the tragedy only seems to grow, with the situation perhaps made worse by the realisation that these events are very typical of working conditions in many countries.
I've been putting together some links to encourage a bit of reflection on what, if anything, we can learn.read more...»
Sometimes students get a bit stuck on the politics part of PEST analysis. How are businesses affected by politics? Lots of examples come up on the T2U Business blog. Firstly, politics is the law, and business legislation has a dramatic impact on firms. Then comes a bewildering array of regulations and tax implications. If you think that's complicated, consider the difficulties of making international location decisions. (I was wondering what might have brought BMW to the UK last year).read more...»
If you had lasagne last night you might be wondering if it was the last remains of the non-running hurdler "100% Pure Beef". Findus have a major problem to resolve after tests showed that their lasagne had been made from horsemeat.
Selecting a memorable brand name for a product is fraught with linguistic and cultural difficulties. A week ago, Pret A Manger had launched a spicy tomato flavoured crisp " Virgin Mary", based on the non-alcoholic version of a Bloody Mary cocktail.
After complaints from members of Protect The Pope, a Roman Catholic presure group; Pret A Manger’s CEO Clive Schlee removed the product from sale and apologised to The Church, he announced that the unsold packets of crisps will be offered to the homeless. Although no laws were broken, and no politician had expressed concern, it highlights difficulties associated with a firm's ethical behaviour - whose ethics, whose values drive what is acceptable to society.
The new product drew attention to the brand, but it
illustrates the importance of PEST analysis and Delphi techniques before a
product is launched, it also indicates the influence of new media and blogs used by pressure groups to influence opinion and commercial decisions.
My students know that I love the radio. Many a spare half an hour can be whiled away with a podcast of The Bottom Line (which returns on Thursday/Saturday this week), or More or Less, or Peter Day’s World of Business. And the great thing about this form of learning is that it can overlap with other tasks – there’s no opportunity cost! Listen to a business/economics podcast whilst at the gym, going for a run, doing the washing-up, whatever…
But whilst Radio 4 is well-scouted territory, but one students might not be so familiar with is NPR’s Planet Money. This show, from America’s public radio, is quite close in style to R4’s More or Less with a more of a business focus. 2 fifteen minute shows are podcasted a week.
This edition is a great place to start.
Investors vs Managers vs Employees - a classic example of stakeholder
conflict - is to be examined in a 30-minute radio programme on Monday
evening, spotted by my colleague David Wright and of potential value to teaching Business Studies as well as Economics. Radio 4’s Analysis series will be
looking at “...how the relative power of executives has grown and is now
reflected in their own
much higher financial rewards and enhanced esteem. And if both workers
and investors want to increase their influence and their share of the
rewards how might they go about it?”.
The programme will also look at the power that trades unions held in the 1960’s and 70’s, and how that power was lost. Looks like a useful half hour: BBC Radio 4 on Monday 21st January at 8.30pm.
A directive from The US Federal Aviation Administration has stopped flights of the Boeing 787 Dreamliner, until the plane maker has satisfied the regulator that it has resolved problems with the aircraft’s battery systems. Boeing’s shares had dropped by 2% $72.80 (£45.50) after the announcement. The share price of GS Yuasa the Japanese battery maker had fallen 11% since 7 January when an electrical fire broke out on a JAL 787 at Logan International Airport in Boston.
Looking ahead a little to teaching BUSS4 topics next term, the ongoing spats between BA and Virgin Atlantic provide a consistently rich seam of resources for exploring the themes of business culture and leadership. And in the last few weeks, they have done it again. Willie Walsh and Sir Richard Branson have been sniping at each other in an entertaining and characteristic manner.
It started with reports that Branson might sell some of his 51% share of Virgin Atlantic. Walsh suggested that Virgin would not be around as a brand in five years time. Branson was in conciliatory mood; he responded that he would not bother to sue Walsh for his comments on this occasion but instead he would put up £1m, to be distributed to BA staff should Virgin Atlantic cease to exist, if BA agreed to pay Virgin Atlantic staff the same amount should the brand still exist in five years. Rather more aggressively, Walsh's counter-offer is a knee in the groin, on the basis that he considered the loss of £1m would not hurt Branson's personal fortune, whereas the physical assault would be equally painful for either recipient.
Some more background to the altercation is needed for any student wanting to use this example as evidence in an essay; it will only count as anecdote without accompanying analysis. This article will offer that background, along with a brief history of previous bickering and legal challenges between the two airlines - essential detail to strengthen student analysis.
Many Business students get round to considering the importance of research and development (R+D) and innovation to firms. To many, it’s seen as a crucial component to business success. Firms often keep all kinds of secrets and guard them jealously. Now a story has emerged of a possible spy at Dyson, long seen as a key UK-based innovator.read more...»
According to Robert Peston of the BBC the BAE EADS merger proposal has failed. Analysts, shareholders, staff and suppliers amongst others expect BAE's board to find a new strategy.read more...»
As the October 10th deadline approaches, the board of BAE face significant difficulties to
complete the proposed merger with EADS.
Rather than merge with a rival, car firms may form alliances in the development of new products.
The BAE EADS merger proposal ought to help pupils attempt develop analytical skills using PESTLE, SWOT or stakeholder models. Can you use these management tools to develop your analysis and evaluation and go beyond application and understanding?
British Aerospace (BAE Systems) and EADS announced that they are discussing a merger.
Often students are looking around to see how firms are affected by the legal environment that they operate in. All UK firms, big and small, are influenced by health and safety regulations, which might be starting to change.read more...»
The allegations of price fixing of Barclay’s LIBOR rates have led to the resignation of The Chairman Marcus Aegis on Sunday night, politicians, and journalists wondered if Bob Diamond, The Chief Executive ought to be on his way out instead.read more...»
Barclays have been fined for fixing prices or interest rates. The London Interbank Offered Rate (Libor) interest rate is used to price loans and savings rates.
Savers might have received lower interest on their deposits from 2005, and borrowers may have been forced to pay more on their loans.read more...»
The Greek economy contracted 6.5% in the first quarter of 2012. Carrefour, the massive french supermarket which is the world’s second largest retailer, has been operating in Greece in a joint venture with local partner Marinopoulos since 1999 and had 41 hypermarkets, 287 supermarkets and 479 convenience stores in Greece and Cyprus. They made 2.2 billion euros of sales there last year, but are thought to have made a loss of 440 million euros on that revenue.
A fall in sales of a further 16% in the first quarter of this year has now convinced Georges Plassat (a new CEO who took up his post last month) that it is worth taking a loss of 220 million euros to get rid of the business by selling it to the Joint Venture partner for just one euro, and the stock market clearly agrees with him as shares in Carrefour rose by 2.8% in Paris. Here is an example of a new CEO quickly making a decision to mark a change in strategy. Reuters quotes an un-named analyst who implies that the company needs to focus on its core business: “Greece was a market which had been dragging on them. They have their hands full with other projects. It’s better for them to concentrate on saving their French operations.”
M&S took a similar decision last month when they took a 44.9 million pound write-off on their Greek business. French bank Credit Agricole is transferring assets to France from its Greek subsidiary Emporiki bank. Given the deep uncertainty about what will happen to the Greek economy, a business strategy of retrenchment is looking like one which may gain momentum amongst overseas investors.
This revision presentation outlines the reasons why governments might support or intervene in takeovers and mergersread more...»
The textbooks often find it hard to come up with a topical example of contingency planning which has widespread application - but I suspect that the possible break-up of the Euro zone is a good one. In fact I think this has to be the best example of a possible future event which is of such significance that almost every sizeable business needs to consider contingency planning.
With that in mind, this pdf document from accountants Deloitte provides some useful evidence of how contingency planning works. Its a detailed document and certainly not worth printing or reading in full. I have jotted down some examples from the document further below to illustrate the role that contingency planning plays for this potentially significant risk.
The key for students is to use examples like this to help develop the depth of their analysis. By using the Euro crisis, they are also able to demonstrate the use of relevant, independent research in their answers.
Let’s take a look…read more...»
For most teachers and students, the Public Limited Company is seen to be the dominant type of private sector firm in the economy. But could that cease to be true? It’s not just the disappointing launch of Facebook as a PLC that has dented enthusiasm for this form of legal structure. A recent Economist article argues that the PLC may already be some way into a long term decline.read more...»
Two themes wrapped up together here.
Firstly, you will be sure to have noticed references to a ‘Shareholder Spring’ in which normally quiet and docile shareholders have been increasingly resistant to executives’ claims for ever higher rewards. There’s a link to a very handy summary below.
Secondly, this serves as a reminder of one of the several ways in which you can boost the evaluative component of your answers.
A fascinating and detailed look here at working conditions at Apple’s main supplier in China. This 15 minute video raises a lot of issues which students can develop; particularly useful for any discussion around CSR, but also excellent for operations and HRM. In the video, ABC News Nightline goes behind the scenes of the FoxConn factory - the operation which makes iPads and iPhones.read more...»
This comprehensive study presentation guides students through the relationship between business and legislation (the “L” in PESTEL” analysis). It outlines the main purposes of legislation in the business environment, including consumer protection, environmental laws, competition policy and health & safety. It also provides some recent case studies of firms and industries affected by changes in legislation.read more...»
The relationship between business and the government - one important element of this is government support for business investment through fiscal policy (taxation), regulation and legislation. Yesterday Glaxo announced that they were investing £500mn in a new factory in Cumbria which will provide 1,000 much needed jobs. And this extract from the BBC article about this shows how government has helped to bring this about:
Glaxo said it was motivated specifically by Chancellor George Osborne’s confirmation in the Budget on Wednesday that the government would introduce so-called patent boxes.
These allow corporations to pay a lower rate of tax on profits generated from UK-owned intellectual property.
“The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain,” said Glaxo chief executive Sir Andrew Witty.
“Consequently, we can confirm that we will build GSK’s first new UK factory for almost 40 years.”
A useful little piece of evidence to use if writing BUSS4 essays on this topic.
Coke and Pepsi are estimated to have a 90% share of the global market for fizzy drinks between them and both fiercely guard the ‘secret recipes’ which protect their strength in the market. However, the state of California has added the chemical 4-methylimidazol to its list of carcinogens, and both companies use this ingredient to add chemical colouring to their drinks. If they continue to use it, they would need to add a cancer warning label to their cans and bottles, to comply with California laws - and neither want to do that.read more...»
AQA BUSS4 students are likely to be covering Business Legislation and Business and the EU about now. News over the weekend about new regulations giving workers a legal right to extra time off work if they become ill while on holiday give a useful case study combining both areas, as the regulations are due to changes to the European Working Time Directive, and state that time taken off work for sickness, maternity and paternity leave must be given to workers in addition to their legal right to annual leave.read more...»
You might reasonably believe that a legal squabble about screening Sky football matches in the pub had little to do with Business Studies. But in fact the recent ruling sheds a clear light on the single most important feature of the European Union to UK businesses.read more...»
Competitors and customers are both stakeholders, and can both be significantly impacted by a takeover or merger. Sir Richard Branson can always be relied upon to have a comment to make about anything that British Airways do, and he doesn’t let us down here as Virgin Atlantic have lodged a formal complaint on the proposed merger between IAG (owners of BA) and BMI to the European Commission.
Virgin has said passengers would be left with a “choice of one” on flights between Aberdeen and Edinburgh and Heathrow. There is some great data in this article about the complaint from both sides, about Virgin’s claims of reduction in services and increase in prices for passengers which are likely to result from the merger, and BA’s counter-claims about increases in viability of services between Heathrow and Scotland. There is clear reference here to bullet point 6 - the reasons why governments might support or intervene in takeovers and mergers - as well as Sir Richard calls on “regulatory authorities, in the UK as well as in Europe, give this merger the fullest possible scrutiny and ensure it is stopped.” Definitely one to add to the BUSS4 resources!
Last Wednesday, Vestas the leading supplier of wind turbines posted a substantial operating loss of €166m on its operations. This has led to the resignation of the Chief Financial Officer Henrik Norremark, and the Chairman Bent Carlsen and two other main board directors. Norremark was about to be promoted to Chief Operating Officer, in control of the firm’s manufacturing operations.read more...»
Yesterday morning’s business news has been dominated by the proposed merger of Glencore and Xstrata. Glencore’s 34% holding of Xstrata shares had made a third party approach for Xstrata very difficult if not impossible.read more...»
International Airlines Group or BA and Iberia are trying to acquire BMI from Lufthansa.
A move which would allow IAG would gain c. 56 additional take-off and landing slots at Heathrow. Lufthansa had bought up most of BMI’s shares in 2008 but has failed to prevent the group losing money.
HP is an example of a firm which is struggling to integrate acquisitions, and the perils of diversification.
Germany has long been noted for the strength of its trade unions, and the power of the works councils in manufacturing industries. Concerned about the blurring of the divide between work and home life, Volkswagen’s powerful works council has struck an agreement with management that most employees who use a company BlackBerry will be subject to new email restrictions. The company’s email server will cease routing messages 30 minutes after the end of an employee’s shift and will only begin sending mails again half an hour before the next working day begins.read more...»
At first glance, Olympus is a market leader in the endoscope market, miniature cameras used in micro surgery and engineering inspections.
Photographs of flawless models with tiny waists, perfect bums and endless legs, may hold the attention of consumers, but is it ethical to use computer generated images to promote a firm’s clothing ranges?