The Service Employees International Union yesterday took the first concrete step toward breaking up the AFL-CIO, the nation's central labor federation. The SEIU executive board, at a meeting in San Francisco, authorized union leaders to quit the federation. As many as four other unions -- the Teamsters, the United Food and Commercial Workers, Unite Here and the Laborers -- could follow suit, pulling out 5 million of the AFL-CIO's 13 million members. The conflict could become a major battle at the AFL-CIO convention at the end of July in Chicago, with both camps so angry that prospects for a peaceful resolution appear unlikely.

Continue reading "Division of Labor" »

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Bush's taste in SEC chairmen was best reflected by Harvey Pitt, his first appointee in 2001. Before his nomination, Pitt spent most of his career representing the industries that the SEC regulates. He began his SEC tenure by replacing career staffers with fellow industry representatives, declaring an amnesty against previous violators and promising, "We aren't going to play 'gotcha.' " Most notoriously, he called for "a kinder, gentler" SEC.

This suited Bush just fine until Enron broke the next year. At that point, having an obvious industry lap dog as SEC chairman proved to be too much of a liability. Bush had to replace Pitt with William Donaldson, an old-line Republican (which is to say, a Republican who occasionally disagreed with the business lobby). Donaldson, a longtime Bush family friend, had a reputation for integrity, but he was not expected to make waves.

Instead, he proved unexpectedly tough. Businesses howled, and now that everybody has completely forgotten about Enron, Bush feels free to force out Donaldson and replace him with the distinctly Pitt-like Cox.

Continue reading "Managing Expectations" »

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REMEMBER etoys.com? What about Webvan.com? Do Boxman.com or Boo.com ring any bells? Pets.com, perhaps? The casualties of the dotcom bust have long closed or changed hands since the heady days of the late 1990s turned to the crash of the new millennium. But of the internet firms that survived the demise of the “new business paradigm”, many are now enjoying soaring market values as investors regard online enterprises with renewed confidence. And new firms are coming to market too, amid no small amount of excitement: for instance, PartyGaming, a gambling website, is working on an initial public offering (IPO) that values the firm at about $10 billion. Is this a new fit of over-exuberance?

Continue reading "Fool Me Twice, Shame on Me" »

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It has been noted widely that the deal comes at a tough time for the movie exhibition business. Theater admissions are down for two years running since 2002, and DVDs, which are available sooner than ever, are cutting the interest in theater-going. Also, the kids are into videogames even more than they once were. What's less said is that 2002 was a high point in recent years, and 2004 was the third-best year in terms of admissions since 1987, according the National Association of Theater Owners.

Continue reading "Cineplex Odious" »

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Continue reading "Market Segmentation, Saudi Style" »

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Germany’s SAP boasted Monday it has hired at least nine executives in the last two months from rival companies like Oracle, Siebel Systems, and BEA Systems, as it moves to strengthen its No. 1 position in the enterprise business software market. SAP, which employs more than 32,000 people, said it has lured more than 200 employees from competitors in the last 18 months. The industry defection rate is expected to remain high as the market matures and competition heats up.

Continue reading "The Palo Alto Raiders" »

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Continue reading "Sage Against the Machine" »

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From about 90,0000 members five years ago, Neopets has grown to about 25 million members today — 60 percent of whom are over age 13 — who create and care for "virtual pets" that inhabit a mythical world called "Neopia." The site is one of the world's largest and fastest-growing among youth, MTV said. "Neopia" has its own geography, pet species and games.

"The combination of NeoPets and Nick.com gives us a one-two punch leadership position in the online entertainment space among kids and young adults," said Herb Scannell, vice chairman of MTV Networks and president of Nickelodeon Networks. Neopets Chairman and Chief Executive Doug C. Dohring said aligning with MTV will expand the Neopets brand offline into television, movies and publishing. Dohring said the site's original characters offer "tremendous opportunity for creative innovation."

Continue reading "Virtual Pet Shop Boys" »

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Rob Reutman of the Rocky Mountain News expresses legitimate skepticism about a recent announcement by Toyota:

A rather startling story came across the news wires Wednesday, and we put it in Thursday's paper. The headline, "Toyota may crank up U.S. auto prices," wasn't particularly jaw-dropping. But I found the reasoning behind the new pricing strategy to be the sort of man-bites- dog story that we in the newspaper business always look for. Toyota Chairman Hiroshi Okuda said at a news conference in Japan - for the second time, actually - that the automaker was considering a price hike "to support struggling U.S. carmakers."

Continue reading "Propping Up the Competition" »

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Halfway through a four-year digital makeover, as its quarterly losses mount, Eastman Kodak Co. has some analysts wondering if the picture-taking pioneer is headed for a breakup. But even as Kodak reported a $1.03 billion loss for the third quarter, its new leadership - largely recruited from digital heavyweights like Hewlett-Packard Co. - say the results show they're making real progress symbolized by one historic milestone: Sales of digital products now exceed revenue from film-based photography for the first time. Patent-rich Kodak, they also point out, is No. 1 in sales of digital cameras and digital X-ray systems in the United States and photo kiosks, thermal home printers and online photo services worldwide.

Continue reading "Digitally (Un)Enhanced" »

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Fox, via WebMD, reports that the US House of Representatives has recently passed a bill banning obesity-related lawsuits against restaurants and food manufacturers. Interestingly, while obesity knows no party distinction- nearly 2/3 of American adults are classified as overweight; almost 30 % are obese; 15% of children aged 6 to 11 are also classified as overweight- there is a partisan divide over the issue. The bill, which passed 306-120, saw Republican lawmakers stressing the ideal of personal responsibility and accountability. No surprise there.

Continue reading "Fat Food Industry to Avoid Lawsuits" »

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The NBA has announced a new dress code for its players. In short, bling is out and business casual is in. According to the new code, players "are required to wear Business Casual attire whenever they are engaged in team or league business." The NBA defines "business casual" as:

A long or short-sleeved dress shirt (collared or turtleneck), and/or a sweater; Dress slacks, khaki pants, or dress jeans; Appropriate shoes and socks, including dress shoes, dress boots, or other presentable shoes, but not including sneakers, sandals, flip-flops, or work boots.

Continue reading "Business Casual" »

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Two colleagues of mine from the Sloan School of Management, SP Kothari and Peter Wysocki have recently released a working paper that addresses this question: "Do Managers Withhold Bad News?" According to their analysis, an event study, managers do in fact withold bad news:

In this study, we examine whether managers delay disclosure of bad news relative to good news. If managers accumulate and withhold bad news up to a certain threshold, but leak and immediately reveal good news to investors, then we expect the magnitude of the negative stock price reaction to bad news disclosures to be greater than the magnitude of the positive stock price reaction to good news disclosures. We present evidence consistent with this prediction. Our analysis suggests that management, on average, delays the release of bad news to investors.

Continue reading "No News is Bad News" »

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NASA is engaging in some damage control, literally. Having concluded that

inadequate methods of applying and repairing foam on the space shuttle's fuel tank probably contributed to the dangerous loss of a chunk of the insulation during Discovery's (search) launch 2-1/2 months ago

the space agency has decided to engage in some work redesign:

NASA already has introduced new techniques for applying foam and is limiting workers' access to vulnerable areas. Some redesign work will be required in the spot where foam came off Columbia and resulted in a fatal blow to the wing. During Discovery's liftoff, an 8-inch piece of foam broke off that same area. In all, worrisomely large foam chunks flew off in five spots.

Continue reading "Damage Control" »

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Designers at the world's fashion houses have an unenviable job: they have to constantly come up with new ways to dress the human body. One of the things they discovered a long time ago (though they could hardly claim to be the first) is that if you link clothes to peoples' values or sense of self, you can get them to wear things that they might not ordinarily. Also, you can get them to pay a lot more for wearing something than they would have otherwise. A lot more. And if you're really good, you can get them to do both. I have no qualm with that, per se. It is, after all, part and parcel of the marketing of everything from soft drinks to automobiles to athletic shoes to compact discs to laundry detergent.

That having been said, few industries have sunk to the depths recently sounded by the French marketing and style consultants Nelly Rodi and their client, Fashion Group International. According to AFP, during a seminar last week on "the future strategy of the fashion industry in Europe" the FGI was told the following:

Continue reading "Fashion without Limits" »

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Caption: A young job-seeker takes a seat in front of executives of ImageNet Co., one of Japan's top Internet apparel retailers, during an interview on top of Mount Fuji, August 24, 2005. The job interview was held atop Japan's highest mountain to make sure new employees have what it takes to scale the heights of business, the company said. 11 applicants out of 20 succeeded in reaching the 3,776-meter summit on Wednesday to attend the interview to try for one of four jobs on offer.

Here's an example of the kind of nonsense you can have when a company's human resource management strategy becomes a tool in the hands of the public relations department, when HR becomes a captive of PR. According to Reuters :

Some young Japanese graduates will literally have a mountain to climb to get their first job.

One of the country's top Internet apparel retailers wants to make sure new employees have what it takes to scale the heights of business by interviewing them at the summit of the 12,388 foot (3,776 metre) Mount Fuji.

Some 50 hopefuls will need to be at the peak of their powers to get one of the four jobs on offer when they climb the mountain with company executives on August 24, aiming to reach the summit for a dawn interview the next day.

"We are aiming to be the No.1 Internet retailer, so the No.1 mountain in Japan is very suitable," said Yoshifumi Tsunada, head of public relations for Image Co, the parent company of ImageNet Co., which will do the hiring.

"A lot of people have said we are strange though."

Continue reading "Adverse Selection" »

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Today the Boston Globe (via AP) runs the kind of story that I never grow tired of, a story about producers who find new markets for old products or who revise old products to tap into unmet market demand. Today's example concerns what is argulably mankind's oldest food-related "product"- red meat.

In 1986, when ''red meat" was becoming a dirty phrase in a more health-conscious United States, cattle ranchers gathered in Doc and Connie Hatfield's barn to talk about finding a new market for their beef.

After hearing from a health-club trainer, they chose what has come to be known as natural beef -- produced without growth hormones or antibiotics and fed exclusively vegetable feeds -- and marketed it directly to natural food stores, where they could get a premium price.

''We were going broke. We were whining about how tough things were," said Connie Hatfield, a founder of the co-op Country Natural Beef, widely sold as Oregon Country Beef. Then, ''We found out about the market for antibiotic- and hormone-free beef."

Continue reading "The Other Red Meat" »

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Today's St. Paul Pioneer Press has a story that undoubtedly has the guys at Modern Drunkard crying in their beers:

It's legal in Minnesota to order wine directly from a winery, but it's not legal for the winery to advertise that you can do so. A lawsuit filed in U.S. District Court in Minneapolis Wednesday wants to overturn that law.

The suit also complains it's illegal for Minnesotans to buy wine from a winery over the Internet, even though you can order it online from a liquor store.

The law is supposed to prevent sales to minors. But Fieldstone Vineyards, of Morgan, Minn., White Winter Winery, of Iron River, Wis. and Kimberly Crockett, a wine enthusiast from Deephaven, said it violates their freedom of speech and hurts small wineries.

Continue reading "Getting Your Drink On(line)" »

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In the 90's, Dilbert cartoons were the ones most likely to be found on the office doors and the overhead projectors of my faculty advisors and on the cubicles of my fellow graduate students at Duke's Fuqua School of Business. And while I more often than not took issue with Dilbert creator Scott Adam's cynical view of the management profession, I readily admit that his cartoons were and still are quite funny. I am also willing to concede that his wry observations about working in and around cubicles have had an influence far beyond the funny pages. After all, who did I think of first when I saw this story in today's Akron Beacon about the end of the cubicle as we know it:

The cubicle is undergoing a makeover.

And even some cubicle manufacturers concede it's about time.

The ubiquitous workstation has served companies for more than four decades. Despite its blandness, businesses embraced the cube's simple functionality and relative cost savings. No need to blow out walls and remodel when you could plant a cubicle farm.

But knowledge- and service-based industries that put a premium on collaboration increasingly view the cubicle as a barrier to interaction and productivity. And a new breed of workers, weaned on peer-to-peer computer file sharing, always-on wireless hot spots and instant access to information, has pushed companies to rethink cubicles, design consultants and others say.

For many, the conventional cubicle is a quaint, even contradictory anachronism. How can you think outside the box when you're working inside one?

Continue reading "Cubicle Heaven" »

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I just saw this announcement in the Chicago Tribune, via Bloomberg News,

Yahoo Bans Internet Chat Rooms Promoting Sex With Minors Yahoo! Inc. has removed 70,000 user- created Internet chat rooms and will bar chat rooms that promote sex with minors, New York Attorney General Eliot Spitzer said in a statement today.

The agreement follows investigations begun earlier this year by Spitzer's office and the office of Nebraska's attorney general, Jon Bruning, the statement said. The investigations were prompted by tips that children had access to sexually explicit adult chat rooms, the statement said.

Continue reading "Why did they need to be told?" »

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The New York Times runs a fascinating article today about trademark and copyright squatters in Russia. The article use one Sergei A. Zukyov as Exhibit A in explaining how people like him first register trademarks of well-known global brands in Russia and then hide behind Russian law to sell the names back to the companies who pioneered and own them- for a hefy fee of course. One of the hundreds of brand names that Zukyov controls in Russia is Starbucks. His asking price is $600,000. Starbucks, it seems, is giving their answer in court. Others, we are told, pay up. Given the fees that copyright, trademark, and intellectual property owners command, the vagaries of foreign patent law, and lax enforcement all make such decisions easier to understand though no less unpalatable.

There may be one thing working in Starbuck's favor, something over which they do not have direct control but from which they may be able to benefit- Russia's desire to join the WTO:

Better enforcement of intellectual property rights is seen as a requirement for Russia's entry in the World Trade Organization later this year or early next year.

Authorities are indeed trying to clamp down. Last winter police made a show of grinding millions of counterfeit cigarettes under bulldozer tracks into the black mud of a field outside Moscow.

But that has not prevented intellectual piracy from rising to the higher levels of American-Russian relations. Rob Portman, the United States trade representative, bluntly told a Russian delegation in Washington on Sept. 27 that widespread piracy was a barrier to Russian membership in the W.T.O.

Continue reading "The Sickle, The Hammer, and the (Star)Bucks" »

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Is Europe Sick? That provocative question is the title of a recent "Global Economy Journal" paper by Robert C. Shelburne of the United Nations Economic Commission for Europe. It is not a rhetorical question. Rather, it is one that needs to be asked, that requires an answer, and as Shelburne argues convincingly, calls out for concerted and immediate action. Here are the patient's symptoms:

Europe’s economic performance has deteriorated continuously over the last two decades both in terms of its unemployment and its labor force participation rate; more recently its productivity has declined relative to the United States.

Shelburne's diagnosis is that the sickly performance is due less to any single, outstandingly obvious factor as to the interaction of several which, when taken on their own, are not particularly problematic.

Continue reading "The Sick Men of Europe" »

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The Los Angeles Daily News carries story about how business schools are changing their business models. Faced with sharply declining enrollment, more experienced and demanding students, slowed MBA hiring, schools from top to bottom are re-evaluating their programs from top-to-bottom. The changes are not so much radical as they are long overdue:

Continue reading "The Business Model of Business Schools" »

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Charles Murray, W.H. Brady Scholar at the American Enterprise Institute and author of "Human Accomplishment" has a very interesting view on the poverty that Hurricane Katrina underscored. While his ideas will certainly be dismissed out of hand by many in the establishment Left, at best, and labeled more hypocritical right-wing moralizing, at worst, I find his argument compelling and worthy of careful consideration. The title pretty much sums up his main point: The Hallmark of the Underclass- The poverty Katrina underscored is primarily moral, not material.

Here's the money paragraph:

Perhaps the programs now being proposed by the administration will help ordinary poor people whose socialization is just fine and need nothing more than a chance. It is comforting to think so, but past experience with similar programs does not give reason for optimism--it is hard to exaggerate how ineffectually they have been administered. In any case, poor people who are not part of the underclass seldom need help to get out of poverty. Despite the exceptions that get the newspaper ink, the statistical reality is that people who get into the American job market and stay there seldom remain poor unless they do something self-destructive. And behaving self-destructively is the hallmark of the underclass.

This is surely not an argument the advocates of the poor want to hear, let alone consider. They'd prefer to to seize upon arguments like the one Bill Bennett made last week because it allows them to call their detractors racist. Once so-designated, the argument need not really be considered. And that's precisely what any advocates want. The last thing poverty pimps wants is for their prostitutes to think.

Continue reading "Katrina, Poverty, and the US Job Market" »

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If you seek a five forces analysis of Wal-Mart, please try this page.

Having apparently grown weary and wary of the out all assault upon it by increasingly well-financed, organized, and motivated groups, Wal-Mart has deciced to counter-attack.

Wal-Mart Stores Inc. is enjoying its best publicity in years as even its harshest critics laud the retailer's Hurricane Katrina relief efforts. But Chief Executive Lee Scott isn't resting on his laurels just yet. For years, Wal-Mart largely ignored its image problems as customers flocked to its stores and its growth seemed nearly unstoppable. But the company acknowledges that it can no longer dismiss increasingly vocal and well-organized groups that are having some success in blocking its U.S. expansion, particularly in urban areas.

Continue reading "The Empire Strikes Back" »

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Fox News' report on extreme skateboarder Danny Way's jump over the Great Wall of China shows, if nothing else, the lengths and heights (or is it depths) to the sporting goods retailers like Quiksilver are willing to go to promote its products the Far East, in China.

I acted as faculty advisor to MBA Spring Trip to China in Spiring 2001. I am not sure whether the section of the Great Wall that Danny jumped on July 10th is the one we visited. More importantly, however, is what the subtext and the symbolism of this publicity stunt. For some time now, Western companies of every conceivable nature have been salivating and doing quadruple backflips at the prospect of gaining access to the 1.4 Billion person domestic Chinese market. In that light, an American skateboarder jumping the Great Wall is but a metaphor of the much larger and ongoing effort by companies the world over, especially those from the US and Europe, to surmount the world's most famous barrier to entry.

Continue reading "Barrier to Entry" »

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