The run up to Christmas has been seen as a good time to bury bad financial news, however Tesco's auditors, Price WaterhouseCoopers now face an inquiry over the preparation and auditing of Tesco accounts from 2012 onwards. The Financial Reporting Council is the independent disciplinary body for UK accountants and actuaries.
It is possible that this inquiry could lead to pressure to break up the oligopolistic nature of auditing, currently dominated by 'The Big Four', viz. Deloittes, Ernst & Young, KPMG and PWC. Ultimately it is up to the politicians to decide that this sector needs to be shaken up.
2014 has been a particularly grim year for Tesco, and it's new CEO, Dave Lewis, still faces the challenge of restoring shareholder and customer confidence.
The case of Premier Foods and the 'pay to stay' payments that they were extracting from their suppliers gives an opportunity to use the Porter's Five Forces model to analyse the food manufacturing industry in the UK. Last week, BBC's Newsnight carried a report about Premier Foods, who manufacture many key brands including Ambrosia, Mr Kipling, Oxo and Bisto.
The online report comes with a 5-minute video clip which sets up the topic nicely. Newsnight's Laura Kuenssberg interviews engineer Bob Horsely, who had a contract to supply maintenance services to Ambrosia's factory in Devon. He received a letter from Premier Foods saying that "We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas. We will now require you to make an investment payment to support our growth." When he queried this, he received another letter: "We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list." In other words, pay up or we won't buy from you any more.read more...»
Prepare yourselves for a shock; Red Bull does NOT give you wings, and have had to pay over $13m in compensation for saying so. I would assume the latter statement caused more astonishment than the former, and so I looked into previous false advertising cases and compiled the attached game called Court Out.
There are 10 case of false advertising, students have to decide which businesses were “court out” and had to pay damages, which advertising campaigns “got away with it” and which one is an urban legend. On the final slide is Graham’s “Spectrum of Analysis” in which students must evaluate which ones they felt were the most or least culpable.
To prevent any class action law suits against me, I would say it is a relatively fun and engaging game that should promote discussion and evaluation and might help students understand the fine line between good marketing and mendacity*.
*learning not guaranteed but I hope it helps!
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!
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...»
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...»
Did Robin Thicke rip off Marvin Gaye? Should Nestle be allowed to use the colour purple? Is there anything wrong with calling your business Obama Fried Chicken? Is Wozniak's idea of cross-licencing a good one?
This a fun, differentiated and ready made lesson in which students become IP lawyers and examine the evidence for 7 different intellectual property courtroom spats.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...»
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.
Global multinationals like Starbucks, Amazon and Google have faced intensive pressure in recent months for their perceived tax avoidance activities. Why has this become such a big issue? What are the implications for those businesses and what should government do?
This boardroom discussion from Reuters is well worth watching to enable students to update their understanding of the commercial, legal and ethical issues raised by corporate tax avoidance.read more...»
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.
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.
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?
A great example here of a change in the nature of government regulation of business activity - this time focusing on the costs and procedures that firms experience when they want to fire someone. This excellent 2 minute video from the BBC's Hugh Pym explains how the maximum compensation workers can win for unfair dismissal will be cut, in proposals announced by the the Business Secretary Vince Cable. Cable has also announced the use of settlement agreements, where staff agree to leave with a pay-off but no option of a tribunal.
The UK Government is under great pressure from a variety of pressure groups and business organisations to reduce what is perceived as a burden of regulation and legislation that may inhibit business growth. These laws and regulations are commonly referred to as "red tape" and students ought to be able to see how the reduction of red tape might enable a business more freedom in its decision-making.
However, on the other hand, what might be seen as "red tape" to a business owner could also be viewed as essential protection for stakeholders such as employees (in this case), customers etc.
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...»
I’ve been reading Thinking, Fast and Slow and am rapidly losing confidence in what I thought was my finely tuned intellect guiding me towards rational decisions(!) Instead, I’m pretty sure many of my choices and preferences are based on the flimsiest of hunches. And it would seem that when shoppers think they are identifying bargains, their instincts are very often wrong.read more...»
It must be awful to become personally bankrupt. So awful in fact that it’s widely believed that potential investors must be afforded some protection against the risk. That lies behind the idea of the limited liability company.read more...»
This revision presentation outlines the reasons why governments might support or intervene in takeovers and mergersread 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...»
A great example here of the role of competition legislation and regulation here - which involves everyone’s favourite A2 case study - Apple…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 Sunday Trading Act was passed 17 years ago. Before that most shops were not allowed to open on Sundays, which is a situation students will not be able to imagine. The law changed the culture around how the spend the day, speeding the development of shopping malls as destinations with coffee shops, restaurants, cinemas and other leisure facilities which encourage family outings for a whole day. According to Verdict market research:
- 53% of people regularly shop on a Sunday
- An estimated 14% of consumer expenditure takes place on Sunday’s, including online shopping
- Sunday is eBay’s busiest day
- 421,000 more people work Sundays than pre-1994
Don’t try this at home - but watch this expert open up his smartphone to illustrate the use of patents and patent protection…read more...»
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!
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.
If you’re interested in different types of legal structure for business organisations – or football – you might be intrigued by the decision by football club Tottenham Hotspur to “de-list” its shares from the stock market and “go private”.read more...»
Pubs and clubs that want to show live football, cricket or rugby on Sky TV have to be extremely confident that it will raise their profits - the monthly cost of subscription runs to over £500 per month. For many, showing live sport is a way to keep customers coming to the pub rather than drinking at home, so may be the only strategy available to stay in business.You can easily see the benefit of finding a cheaper source of satellite broadcasts if possible, and this is the background to the well-publicised case in which Karen Murphy, landlady of a pub in Portsmouth, was taken to court by Sky and the Premier League for using a cheaper Greek decoder to bypass controls over match screening. The European Court of Justice has ruled that national laws which prohibit the import, sale or use of foreign decoder cards are contrary to the freedom to provide services.read more...»
Tesco’s have tried hard to respond to consumer preference for ethically farmed meat. Their TV ad for their own-brand Butcher’s Choice sausages shows one of the farmers who raised the pigs, and some of his pigs roaming in a field. But the ASA have objected, because although some of the pigs used in the sausages could wander freely outdoors, not all of them could - and the ruling is that the image shown is therefore misleading. Nina Best, an advertising lawyer, said that even though Tesco had only shown the pigs roaming outside for a few seconds, it was enough for the ASA to act: “Companies must not forget to ensure that their visual claims are capable of substantiation as well as their written ones.” So, the ad has to be withdrawn.
Here is the advert. What do you think?read more...»
Samsung and Apple are the world’s two biggest manufacturers of smartphones, and Samsung’s Galaxy Tab has become a huge-selling rival to the iPad, which has dominated the growing market for the touchscreen devices. Rather than focus on competing with each other on price or promotion, the two are focusing on features of their products and at each other’s throats at the moment over allegations of breach of patent. In the current round of claim and counter claim, Apple started it in April by accusing Samsung of copying its smartphones and tablet computers. Apple claimed that the Galaxy phones and tablets ‘slavishly’ copied its own designs for icons and other design features, while Samsung said that the look of their products was the results of market research and not copying. Later in April Samsung responded with their own claim that Apple was copying Samsung features in the area of wireless communications standards and mobile device user interface, and breaking patent legislation in five countries. The escalation has now reached the stage at which Samsung has asked the US International Trade Commission to ban the import of Apple products into the United States.read more...»
From the first of July, businesses will have another piece of legislation to deal with when the Bribery Act comes into law. This was proposed and passed in 2010 just before the election last May, and in the last year the government have been determining the precise way in which it should be put into practice. There are good reasons for it, to establish the country’s position as a global leader in the fight against business corruption – the UK currently holds a strong position in the World Bank’s rankings of economies for their ease of doing business. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm, and in June 2010 the UK was fourth on this register (behind Singapore, Hong Kong and New Zealand). London was ranked top amongst the Top 50 Cities for Doing Business, and the regulatory environment is a key aspect of this.read more...»
I’ve read a bit of history this week that was quite moving, and serves as a reminder how far we’ve come in recognising the struggle between profit, principle and the law. Through time, this has lead to the creation of the legal and regulatory environment firms operate in today.
A major milestone was a catastrophic factory fire in New York City in March 1911.read more...»
Walmart is the worlds largest private sector employer; it employs 2.1 million people worldwide and nearly 900,000 of them are women. They claim that they have “strong policies against discrimination and these policies are there to ensure women are promoted and paid well” - yet in 2001 the average female Walmart manager earned $14,500 less than their male counterpart.
In the US Walmart is now facing a lawsuit from six of their female employees who believe they and Walmart’s other female staff were paid less and missed out on promotion because of their gender.
This story is worth reading - could be a valuable piece of EVIDENCE to quote in BUSS4 essays about social responsibility towards employees, and the need for government intervention to assist with ensuring those responsibilities are met.
I think this has to be the best dataset I’ve come across so far for colleagues and students researching the key issues in corporate social responsibility. The Edelman Trust Barometer has been going for over ten years, and the latest 2011 report provides some gold-standard data evidence for the A* AQA BUSS4 student essay…read more...»
Good news for Ginsters of Cornwall. Bad news for Greggs of Newcastle! The iconic Cornish Pasty has joined a select group of protected foods, including Champagne, Stilton cheese and Rioja wine, and has been awarded “protected food” status by the European Union.
The Guardian explains that the Cornish Pasty joins a select group of 42 other British protected products including Cornish clotted cream, Melton Mowbray pork pies and Arbroath Smokies. The announcement of European protection does not stop other producers from making other type of pasties but they won’t be able to sell them as ‘Cornish’. Greggs, which sell millions of the things every year, will now have to relabel and perhaps redesign their product. In the age of social media, the rumour is that Greggs will turn this into a promotional Facebook opportunity and invite customers to participate in the new product development process.
What business benefits does the protected status provide to manufacturers in Cornwall? Well, it allows them to benefit from secured demand from consumers who really do want the real thing. For the rest of us who just want a steaming hot pasty filled with mince, potato and onion, any old pasty will still probably do
A neat little news story here to help illustrate the concept of trademark protection….read more...»
Coca-cola is the latest in a (very) long series of firms to have been caught out by what you can say/what you can’t say in an advert. This is a classic constraint on UK business which operates within a reasonably rigid legal framework. Here are a few links to recent relevant cases and where you can go to find out more.read more...»
Here’s another business ethics example to think over. It’s attracted lots of media attention (not all of it justified) in recent weeks. But it’s worth reflecting that on average, over the last few years, there have been 250 annual prosecutions for benefit fraud (which costs about £1bn a year). There have been roughly 50 annual convictions for tax credit fraud (which costs about the same) but there have been precisely 0 convictions for tax evasion using offshore accounts (which costs vastly more than all forms of social security fraud put together).
Do UK firms have an ethical case to answer?read more...»
Range Rover has signed up more than 40 global “trendsetters” to tweet about their forthcoming city 4x4. The idea came from an ad agency who are anxious to point out that “no one has been paid to tweet”. However, the lucky trendsetters did get a free loan, and in some cases were given, a Range Rover.read more...»
Retail businesses have to keep up with new laws that affect sales of goods to customers, particularly when there are regulations about the minimum age of customers who are allowed to buy certain goods. Thus, as every teenager is well aware, ID is needed to buy many goods, from cigarettes and alcohol to knives and fireworks. Sales of both indoor and outdoor fireworks to under-16’s are now banned, following the Pyrotechnics Articles (Safety) Regulations introduced this year which reinforced laws banning the sale of explosive items to children. As a result, retailers will have had to ensure that their staff were fully aware of the regulations, and what to do in the event that a customer who appears too young, tries to buy those goods that are included in the ban.
This is a very tough question that the BBC are exploring on Radio 4’s Sack ‘Em programme.
Some believe that employment law is now so complicated and slanted towards employees that employers end up “paying off” people they should be sacking. Other people are much more worried about the huge power firms already have over workers’ lives and think that staff need even more protection. Both arguments have some merit.read more...»
You will have noticed that a General Election is coming. But before you start to consider the extent to which firms will be affected by a change in government, stop to consider the significant change in the relationship between politicians and business over the last couple of years around the world.
The BBC’s Robert Peston has picked up on 5 quick examples: very helpful when you’re working through that PEST analysis.read more...»
Fifa is very protective of its image rights and trade marks around the World Cup, and with less than three months to go to kick off on June 11th they have objected to a South African budget airline’s advertising. The advert featured pictures of the stadiums, national flags, vuvuzelas (South African plastic trumpets) and the delightful tag line ‘Unofficial National Carrier for the You-Know-What’. Kulula is know for its quirky adverts and aircraft designs; the one shown above is, they say, part of their ongoing strategy to demystify air travel, and the one below helped them to raise over half a million rand for the charity CHOC (Children’s Haematology Oncology Clinic Childhood Cancer Foundation of South Africa).
Anyone following the news knows that tax and government spending are the main issues facing firms and households in the forthcoming general election. The bottom line: spending is likely to fall and taxation is likely to rise. Whilst most of us can get our heads around income tax and VAT – mainly effecting households - what are the main tax issues facing firms?read more...»
Employees are protected at work by a variety of laws and regulations. This revision presentation outlines the main areas of legislation in this area, including that relating to pay, discrimination, employment rights and health & safety.