Several days ago, in a post entitled Port Authority, I opined that the influence of labor unions accounted for the sudden and dramatic concern of New York and New Jersey senators for port security:

Call me cynical but my hunch is that the all-of-a-sudden concern about an Arab company running the ports is less out of bi-partisan concern over national security and more motivated by other factors. On the left-side we have lawmakers beholden to longshore unions and looking, as always, to score cheap political points against the President.

No surprise then that today I found an article from the New York area paper, NewsDay, entitled "Senators, teamsters and longshoremen protest port takeover by Arab company". The article begins as follows:

About 200 teamsters and longshoremen joined three U.S. senators at Port Newark to protest the sale of some American port operations to a state-owned company from the United Arab Emirates. New Jersey's two U.S. senators, Democrats Robert Menendez and Frank Lautenberg, and Charles Schumer D-N.Y., said the deal would compromise the safety of the United States and port workers.

The first of the those two sentences is, it seems, factual. The second, however, is remarkable - remarkable both for its duplicity and mendacity. It is duplicitous because decieves by pretending to entertain one set of intentions while acting under the influence of another. That only three elected officials who could bother to show up were Democrats underscores the nakedly partisan agenda of the ones who did- to undercut the credibility of the President on national security, an act which in and of itself jeopardizes national security.

The sentence is mendacious because of its last three words- and port workers. Although I don't believe that Dubai Ports World represents a threat of any kind to national security, I don't mind that many people feel they need reassuring on this. But how is it that the security of port workers is compromised? Do the senators and the dock workers really believe they have something to fear from DPWs takeover? Unfortunately the senators never tells us. Instead they merely rehash the "the Dubai deal is bad for the national security" meme, and unconvincingly at that.

Continue reading "The Unions, the Senators, and the Ports" »

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Nowhere have such examples been more prescient recently than last week in the field of journalism, when two high-quality, equally highly acclaimed weblogs published well-written, erudite and startlingly professional pieces of investigative journalism.

However, the low cost of entry into Internet publishing makes it possible for authors to create specialty publications which can effectively reach their audiences. Whether that's good or bad is the subject of debate. David Ignatius, writing in the Washington Post argues that unfiltered content, no longer moderated by the Gatekeepers, may be a dangerous and loose cannon.

Continue reading "Comment on Belmont's " The tree of knowledge of good and evil"" »

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Self-Selected Stories

Dubai Ports World

Ola , the Late Night Blogger, places importance on DPW's core strategy:

Rana saw plenty of upside in the initial announcement of the deal:

The beauty of this deal is that there was very limited overlap between DPW and P&O. With the CSX acquisition last year and this current acquisition, this will create much value to DPW as well as customers. DPW can now service customers with an end-to-end solution from Asia to the Middle East to Europe to the US. There is a strategic fit between the two and DPW is now truly global. It will be difficult to overtake DPW as No 3 as another major acquisition would have to take place and this would be difficult without triggering regulatory hurdles as well as port overlaps.

Ahmad

Was it a right decision for DP World to buy P&O? Nobody know the right answer yet, but lets look at it from David Porter’s 5 forces framework – barriers to entry which might give us some insight in what could be the right answer:

Economies of scale: DP World/ P&O can benefit from the economies of scale since it will have a wide network around the world, which will give them the ability to reduce their prices and making high profits at the same time. This will allow the major ports operators such as DP World to increases the barriers to entry at selective ports that has potentials in the future by reducing their prices.

Product differentiation: DP World established its name and reputation around the world by operating in several ports around the world successfully and currently by buying P&O DP World will by the second largest operator in the world.

Capital Requirements: DP World is government owned by a wealthy Emirate, DP World was successful in offering the world’s largest Sukuk issue to provide USD 6.8 billion to purchase P&O. the new acquisition will increase DP assets and its capacity.

Government policy: DP World and P&O are operating in foreign countries and dealing with foreign governments. All international ports operators are facing the risk of changing government policies against the foreign interests. But governments noticed the benefits of relying on large port operators in terms of efficiency and reliability. DP World received the approval from the US government to buy P&O which operates 6 ports in USA, national security and interest can work against the international operators at any point in time.

Airline Industry

Mohammed al-Thani concludes that Air Arabia's "low cost" model is a source of competitive advantage:

Alia asks an important question: "So, how could a small carrier like Emirates Airlines hit its target while giants like BA are loosing cash ?" Here's part of her answer:

Khulood's blogNothing is Crystal Clear, contains an application of Hamel's Business Concept Innovation framework to SouthWest Airlines.

Here's her analysis of the Core Strategy, i.e. how the company wishes to compete:

Continue reading "RoundUp of AUS MBA Student Blogs" »

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In "The Tree of Knowledge of Good and Evil" is a discussion of "the growing competitiveness of the blogs with mainstream media in certain respects."

I'm not sure that in-depth blog reports or unedited video will ever have the mass appeal of slickly packaged print and video products which are simplified so that they can be digested at a glance or reduced into a single memorable soundbite. There's a real market in content-reduced information as the Reader's Digest well knew, and that segment will probably remain alive and well.

However, the low cost of entry into Internet publishing makes it possible for authors to create specialty publications which can effectively reach their audiences. Whether that's good or bad is the subject of debate. David Ignatius, writing in the Washington Post argues that unfiltered content, no longer moderated by the Gatekeepers, may be a dangerous and loose cannon. ... What do you think?

Here's what I thought:

Continue reading "Comment on Belmont's "The Tree of Knowledge of Good and Evil"" »

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Self-Selected Articles

Hamna asks whether "all's well" with one of Dubai's premier company's, Emaar, where share price has dropped to $5.44 from a high of $12.80 last year. She says:

This decline can be owed to its "massive rate of expansion", the author explains. investors are in a frenzy, not knowing whether to buy or not. while i'm no expert in predicting a company's fate, i think investor's neednt worry becuase despite the rumours, Emaar has further scales to reach.

I base this forecast upon the 'question of value' put up by Barney in his VRIO framework. the question states whether a firm's resources and capabilities enable it to respond to environmental threats and opportunities? in this case, i think the most valuable resource that Emaar can boast of is none other than its chairman, Mohammad Alabbar himself. having extensive experience working with the emirate's department of economic development through which he launched the DSF, the man is simply a genius. his company is doing what no other can; fulfilling the dreams of several UAE residents, in particular expats including myself, of owning their own home in a country they love. he has placed dubai on the world property map and continues to announce impressive large-scale projects in the MENA region, which includes Burj dubai, the next tallest building in the world and the King Abdullah Economic City. Once these projects will be completed and put into action, Emaar is likely to score profits beyond analysts' expectations.

Sultan has two nice posts about the new marketing plan for Sony's new PSP movie site. The first, entitled, "Free Movies- for a Price", uses Porter's Five forces. The second, "Free Movies- Still for a Price" utilizes Barney's four resource questions. Here's what he wrote about Substitutes:

The second force here is Substitutes, as Porter defines substitutes; these are other products from a different industry that serve the same purpose. In this case, the iTunes music store seems to be a good example. Ultimately, video downloads from the store can only be viewed on a computer or an iPod Video. I don’t know whether files can be converted such that they can be viewed on a PSP, but it’s different, because with the iTunes music store, one pays per movie or show download. Not a one time membership.

The New School

Continue reading "More AU-Sharjah Student Blogs" »

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

With the start of a new semester, the Danish boycott, and now the Dubai Ports World row, I had all but forgotten about one of my favorite blogging topics- the war against Wal-Mart. By far the most interesting development in the last few weeks is that Wal-Mart critics are receiving assistance from a new source, and an interplanetary one at that.

I discovered this quite by accident after having read a recent NY Times article by Steven Greenhouse and Michael Barbaro about Wal-Mart CEO Lee Smith's website, Lee's Garage. A careful reading of the article reveals it comes neither from New York nor anywhere else on Earth. Rather, it has come to us from a planet somewhat like Earth, but in a parallel universe. I don't know the name of the galaxy or the specific name of the planet. For the purposes of this discussion I'll call the planet "Marxon".

As a professor of strategic management and organizational behavior, I find the reportage from Marxon quite fascinating. What keen Marxonian observers say about business on Earth can provide us with many valuable clues about how business is conducted in a parallel universe. Gleaning insights into the vastly superior and advanced Marxonian business-model may provide lessons on how to improve business practices on Earth. Let's have a look-see shall we?

The article begins, interestingly enough, with a statement that makes clear that not everything on Marxon is different from Earth. Apparently reporters have confidential sources; often these are employees that have axes to grind.

In a confidential, internal Web site for Wal-Mart's managers, the company's chief executive, H. Lee Scott Jr., seemed to have a rare, unscripted moment when one manager asked him why "the largest company on the planet cannot offer some type of medical retirement benefits?" Scott first argues that the cost of such benefits would leave Wal-Mart at a competitive disadvantage but then, clearly annoyed, he suggests that the store manager is disloyal and should consider quitting.

[Scott's] tone is at times biting. In his response to the store manager who asked about retiree health benefits, Scott wrote: "Quite honestly, this environment isn't for everyone. There are people who would say, 'I'm sorry, but you should take the risk and take billions of dollars out of earnings and put this in retiree health benefits and let's see what happens to the company.' If you feel that way, then you as a manager should look for a company where you can do those kinds of things."

So one interesting thing we learn about management practice on Marxon is that firms can have their cake and eat it too. Apparently, Marxonian firms don't have to control costs to maintain competitive advantage over their rivals. Interesting as well is the use of the word "planet" in the manager's question. Makes you wonder if said manager was fed the question by the Marxonian reporters.

Most intriguing of all, however, is how reporters from Marxon interpret disucssions about what we Earthlings term person-organization fit, i.e. " the congruence of an individual's beliefs and values with the culture, norms, and values of an organization." According to earthling consultants and Industrial Organization psychologists like Dr. Charles Handler, "the idea of ensuring a good fit between a candidate and a job or organization is pretty much the main idea of the entire hiring process." And it applies to retention, too.

Not so on Marxonia, it would seem. There, everyone fits with the organization's values and norms- whether they like it or not.

Copies of Scott's postings covering two years were made available to The New York Times by Wal-Mart Watch, a group backed by unions and foundations that is pressing Wal-Mart to improve its wages and benefits. Wal-Mart Watch said it received the postings from a disgruntled manager. While the existence of the Web site and Scott's participation in it have been known, transcripts have never been made public before.

From this I infer that on Marxon a labor union backs interest groups with the sole aim of increasing benefits and wages of all workers. They do not, it would seem, back these groups as a means of advancing the union's goal of unionizing the workers. And why should they? The workers of Marxonia have already united (and have nothing to lose but their chainstores).

Continue reading "Dispatch from a Parallel Universe" »

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Several students blogged about the "New School" article in Black Enterprise magazine about "how a poor job market is affecting how business schools compete for students and what you can expect from today's M.B.A. program."

Haifaa Hassan had these observations:

As mentioned in Barney's book, "Gaining and sustaining competitive advantage", there are [a] few questions that [are] important when it comes for analyzing the firm's strengths and weakness which is, in our case, the employee. First of all, there is the matter of the value of the employee, in other words, what can this employee by his years of experience add to the organization? Second,there is the question of rareness, which reflects what makes the chosen employee unique or different than others. It doesnt necessary mean the MBA degree; it can also be the training programme that he has joined.

Diana also had interesting observations about this article, particularly in the way that MBA programs can differentiate themselves and their products:

The strategy that can really differentiate between each college is the way they interface with their students, the services and supplies that they can provide the students with, by implying the third component of the business concept by Hamel, Customer Interface, where one of its elements is information and insights where refers to all of the knowledge that is collected from and utilized on behalf of their students, if they can attend an evening program, or work online whenever they can on the program.

Lulwa, who is not convinced that MBA's are necessarily valuable, has a novel solution- more education!

Also, if someone went to graduate school immediately after graduation, he/she will lack experience. I think that one can learn more in the working field than in schools. Hence, we cannot consider a masters degree as a valuable resource unless it is combined with a Ph.D. According to the school there are millions of unemployed graduates, if having a master’s degree will solve the problem why don’t they just go a head and apply for a program.

Nader nicely summed up the "New School" article this way:

Job market is the most competitive market since the supply way exceeds the demand. Knowing that 10.2 million in population this year competed for three million jobs only has started controversial issues. As a result, the bargaining power of buyers (employers) has increased; moreover, the rivalries among existing employees increased in order protect themselves from potential entrants (new grads). Therefore, most of new graduates are going for MBA after getting their undergraduate degree as a basis of differentiation to distinguish them and be unique.

Lina (the Warrior Princess) Osman applied three frameworks - Porter, Hamel, and Barney - to the New School article. Here's a sample of how she applied the Business Concept Innovation framework:

Moving on to Hamel's theory, if we think of MBA students as firms competing in the market, then we can state that they must have a core strategy in order for them to succeed. One element of Hamel's core strategy that MBA graduate can use is the basis for differentiation. They have an advantage with their degree, no doubt about that, but they also need to know what the best way is for them to compete differently from their rivals. The key word here is "differently". Furthermore, according to Hamel, these students with MBA degrees have a strategic asset which if used properly, will enable them to succeed.

Seniors at Senior Level

Mohammed A. has issues with the argument made in the article "Seniors at Senior Level", about the valuable contribution older workers can and do make in the workforce.

I partially disagree with what BILL GLAUBER said in “Seniors At Senior Level”. I’m a 22 years old undergraduate student who will get in to workplace in couple of years. Couple of years after work, my ambition is to be a CFO in one of the biggest companies in the world. If seniors are still around their, me other young people will not have the patient to wait for senior to passaway. I think after a person reaches 60 he/she must retire. I don’t think that they will still be efficient anymore.

Question for Mohammed: will professors be exempt from this rule? Abdul Aziz Alami read the same article and notes that it is often hard for older workers to leave:

There was something in the article that caught my attention about George Dalton, there happens to be a similar story in saudi arabia, this one has to do with the giant saudi company Gazzaz, the CEO is now over 80 years old and is basically running the managment of the companyon his own. he loves his job and cant see himself without it, it has become part of him. when you start off as a little boy working in a space and paying for meter by meter land and then you make your way to the top, its hard to let go.

Nailya sees positive and negatives associated with employing seniors. She used the four-resource questions in this manners:

I believe that kind of people might be very helpful in some businesses. Such people with their willingness and experience might make up the most important and valuable resources for the company because they enable the firm to respond to environmental threats and opportunities. As we know from Barney’s framework, resources and capabilities are valuable if and only if, they are reduce the firms costs or increase its revenues compared to what would have been the case if the firm did not possess those resources. Since such people with their experience and abilities to work as George Dalton might increase the costs of the company, he represents a valuable resource to the company. They also might serve as a rare resource for the firm since not many other competing firms might possess the same or similar employees. In addition, such employees might be hard to imitate resource for their competitors due to the fact that social complexity might make the resource costly to imitate.

Continue reading "Best of the Blogs of Sharjah, Entry 3" »

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Last week I wrote:

"My other hunch is that someone is going to explain it all to the lawmakers pretty soon and that this story will blow over rather quickly."

Well I don't think I got that one entirely right. Still, I stand by my contention that the deal is going to get done and Dubai Ports World is going to be getting control of the port operations to which they are entitled. In the meantime, here is a bit more information about some of what has been happening on the story as of late.

Following the lead of a bipartisan groups of lawmakers, several bloggers have gotten their knickers in a twist this week. The reason is the pending take over by Dubai Ports Worldwide of London-based Peninsular & Oriental, a takeover which would result in DPW having control of commercial operations at six US ports- New York, New Jersey, New Orleans, Baltimore, Philadelphia, and Miami. Here is a sample of what several have had to say.

Michelle Malkin has a few posts on this topic- Stop the Port Sellout and Our Ports, Our Sovereignty. As the title's suggests, Michelle is strongly opposed to the DPW takeover. Both of her quote news accounts and editorials calling for the Bush administration to overrule the decision of the "secretive" Committee on Foreign Investment in the U.S. (CFIUS), an interagency panel headed by the Treasury Department, allowing the sale to go through. One rather unfortunate aspect of Michelle's posts is a link to an article written by Debbie Schlussel that includes dated and, I think, grossly inaccurate information about Dubai's Crown Prince, Sheikh Mohammed, aka Sheikh Mo:

Like most Arab leaders, Al-Maktoum gives only lip service to condemning terrorism, while his country sponsors, aids, and abets it.

Dubai, without apologizing for helping terrorists or price-gouging us on oil, needs the American tourist dollar more than ever.

If Ms. Schlussel has any evidence for the first claim, I'd be very interested in hearing it. What she seems to be doing is engaging in the practice of guilt-by-association. If your an Arab sheikh in a country that borders Saudi Arabia, you must either be a terrorist or support their objectives.

As for the second point, Dubai does not rely on American tourists for its prosperity. Tourism is growing here, as are other sectors of the economy, but not the Western tourists you see here are from Europe, not the US. I have yet to meet one American tourist in my six months here. Every American I've met is here for work, not play. When you consider that it's a 7 hour flight from the east coast of the US to Europe, and then another seven to Dubai from Europe, you can see why Americans aren't now and never have been falling over themselves to get here on vacation.

In a post entitlted "Suddenly Now, Hillary is Concerned about Security?" Teri O'Brien of Webloggin links to a Reuters piece entitled “Democrats plan bill to block Dubai-U.S. port deal.” and makes notes the irony attendant to Sen. Clinton's support for it:

The two democrats are Bob Menendez of New Jersey, who took Jon Corzine’s seat when he became governor and—here’s the best part—Hillary Clinton! Yes, the same Hillary Clinton who supported, and then opposed clemency for 16 FALN terrorists who were responsible for more than 100 bombings. Also the same Hillary Clinton who was co-president during the 8 years when Osama bin Laden was offered up on silver platter to U.S. 3 times. The Sudan’s proposal was rejected because Bill Clinton couldn’t think of anything to charge Osama with. There’s that September 10 party theory of fighting terrorism as law enforcement in action.

Captain Ed of Captain's Quarter's asks the question "Is This Our New Security Initiative?" His answer describes Dubai this way:

Dubai is part of the United Arab Emirates, a collection of authoritarian regimes considered friendly to the US and the West. However, UAE has had its troubles with Islamists in the past, as Michelle (Malkin) points out. In fact, the 9/11 Commission notes UAE involvement in Islamist terrorism in several spots.

He then goes on to list several passages from the 9/11 report that highlights links between the Bin Ladin, the 9/11 hijackers, and 9/11 planner Khalid Sheikh Mohammed. While I have no grounds to challenge the accuracy of those statements I would note that the quotes mostly note that while some the 9/11 operatives lived and worked in, transited through, and received funds from the UAE, no one has alleged state support for terrorism by the UAE. There are undoubtedly people in this country sympathetic to terrorists, but where is that not the case?

Also, if the Captain's standards are applied across the board, then what to do about Germany? Until the departure Gerhard Schoeder, who was actually in Dubai this week, Germany was openly hostile to the US in ways that the UAE has never been. If I understand Captain Ed's reasoning, if I extend it to its logical conclusion, Germany ought not to be allowed to run any ports in the US either. I don't believe they do, but China apparently does

Finally, here's a link to my delicious page where I have book marked twelve recent op-eds about the Dubai Ports deal.

Tags: Dubai.| UAE | Ports |

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Last September the Khaleej Times ran a story of the kind I hadn't expected to see here. The title was "Juvenile crimes on the rise."

Juvenile crimes committed by youngsters in the age group of 11 to 17 years in the UAE are on the rise, and psychologists attribute the increase to broken families, cross culture marriage, illiteracy among both parents as well as pressure and influence of corrupt and notorious peers.

When I see an article like this I always make sure to draw a distinction between the absolute numbers and the rates of change. Failing to do so can often leave the impression that problems are far worse than they actually are and can thereby mislead policy makers.

My priors on this issue are that the strong influence of religion, stricter punishment and enforcement, and the greater emphasis on traditional family structure would keep levels of juvenile crime fairly low in this part of the world. Statistics cited in the article would seem to support this:

Bushra Qaed, a psychiatrist and Director of the Juvenile Department at the General Directorate for Punitive and Corrective Establishments of Dubai Police, disclosed: "Last year, 35 juvenile delinquents of 12 different nationalities were admitted to the Juvenile Department at the General Directorate for Punitive and Corrective Establishments of Dubai Police."

Ahmed Mohammed Abu Taha, a social worker at the Social Care Unit in Sharjah, refers to the situation as 'alarming,' since the number of juveniles enrolled at the unit is increasing annually. "The number of juvenile delinquents last year was 180 including both UAE nationals and expatriates, but the current figures to date (August) has already touched 120 and a further increase is expected by the end of the year."

Take note of these numbers. Together the emirates of Sharjah and Dubai have a population of 1.5 million inhabitants. Out of that they have fewer than 200 kids classified as "deliquent". And for them, that's a teenage crime wave. To me, that number seem very low when compare to a US city like Philadelphia PA which has approximately the same number of inhabitants. While I don't have any figures on how many kids in the city of brotherly love are "deliquent" but, when I consider that its Division of Juvenile Justice Services employs over 400 people and has a yearly budget of $124 million dollars, I feel very safe in concluding the number is a whole lot higher than 200.

And though the numbers of deliquents are clearly lower her on aper capita basis, it does not mean that the crimes committed by them are not serious. In Dubai

"Robbery accounts for 65 per cent of the crimes committed by UAE juveniles, followed by 12 per cent for kidnapping, rape and indulging in homosexual acts. Statistics have proved that UAE juvenile delinquents mainly indulge in robbery and theft to satisfy their quest for endless luxuries in life which is probably beyond their reach and not affordable with the limited pocket money they receive at home from parents."

In Sharjah, the breakdown is similar:

A study last year showed that 42 per cent of the 76 juvenile delinquents were admitted to the unit through court orders for robbery cases, and 36 among them were UAE nationals and the remaining 40 were of various other nationalities. Nine per cent juveniles were homosexuals.

The study indicated that nine per cent were charged with rape (11 UAE nationals and five from other nationalities), eight per cent for fights (nine UAE nationals and six from other nationalities), seven per cent for illegal driving without licence (eight UAE nationals and five from other nationalities), six per cent for abetting crime, four per cent for rape of minors, two per cent for killing, and one expatriate female held on prostitution charges.

Continue reading "Crime Costs" »

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Earlier this week Dubai Ports World, based in the United Arab Emirates, announced that it would purchase London-based Peninsular and Oriental Steam Navigation Co. (P&O). The deal gives DPW control over commercial operations at six US shipping terminals- New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia.

This fact has caused a small but growing number of US lawmakers to press the White House and the Treasury Department to review their decision on the grounds that Arab control over American ports could jeopardize national security.

According to the LA Times, this list of lawmakers includes Senators Chuck Schumer (D-NY), Tom Coburn (R-OK), Frank R. Lautenberg (D-NJ) and Christopher J. Dodd (D-CT), and Representatives. Mark Foley (R-FL), Vito J. Fossella (R-NY) and Christopher Shays (R-CT). The Financial Times includes Richard Shelby (R- AL). The Daily Press of Hampton Roads, VA reports that Senator George Allen is opposed. As of Friday morning. Reuters is reporting that Senator's Hillary Clinton (D-NY) and Robert Menendez (D-NJ) are now on board as against the DPW-P&O deal. Here's summary of their objections and positions:

Senator Shelby: In a letter to Treasury secretary John Snow, Senator Richard Shelby, an influential Alabama Republican, stopped short of calling for the deal to be blocked, but said the transaction merited further scrutiny, potentially raising complications for DP World’s bid. Mr Shelby is expected to call for a hearing to discuss the issue in coming weeks.

Sen Schumer: In a separate letter to Mr Snow, New York Senator Chuck Schumer and others said US ports were “the most vulnerable targets for terrorist attack”. They questioned whether DP World, which is owned and controlled by Dubai, should be allowed to take over P&O, charging that Dubai was a “key transfer point” for shipments of nuclear components bound for Iran, North Korea and Libya. ... “After the 9/11 attacks, your department complained of a lack of co-operation by the UAE and other Arab countries as the US was trying to track down Osama bin Laden’s bank accounts,” the letter stipulated. ... "America's busiest ports are vital to our economy and to the international economy, and that is why they remain top terrorist targets," Schumer said. "Just as we would not outsource military operations or law enforcement duties, we should be very careful before we outsource such sensitive homeland security duties."

Sen George Allen (R- VA): "While the United Arab Emirates has been a valuable ally in the War on Terror, there have been past circumstances that should raise concern," Allen wrote to Treasury Secretary John W. Snow, who is overseeing a group that already has approved the purchase. The UAE city of Dubai, Allen said, "has been a transfer point in the proliferation of nuclear components." Also, he added, "the September 11th terrorists spent time in UAE and utilized its banking system in carrying out their attacks."

Senators Robert Menendez (D-NJ) and Hillary Clinton (D-NY) said they would offer a measure to ban companies owned or controlled by foreign governments from acquiring U.S. port operations. "We wouldn't turn the border patrol or the customs service over to a foreign government, and we can't afford to turn our ports over to one either," Menendez said in a statement. ... "I will be working with Senator Menendez to introduce legislation that will prohibit the sale of ports to foreign governments," Clinton said in a statement.

Continue reading "Port Authority" »

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As is well known to regular readers of this blog, I left the US last summer to begin teaching at the American University of Sharjah in the United Arab Emirates. This semester I teach three sections of strategic management courses. Each student in those classes is required to maintain his or her own blog.

There are no restrictions on subject matter provided they follow one rule: they link the topic to one or more of the four strategic management theories and analytical frameworks that comprise the core of this course. Those theories are Michael Porter's "Five Forces", Gary Hamel's "Business Conception Innovation"; Jay Barney's "Resource-Based View of the Firm", and David Baron's "Four I's".

Each week I recommend up th three articles that the students may blog about. They are free, however, to choose any article or any topic beside those. This past week, one of the articles I recommended was one entitled "Effect of Danish Boycott Patchy" that appeared in the Saudi English daily, Arab News, on January 29th. As one might imagine, several students decided to write on this topic.

It is my privilege to present in "carnival" or "round-up" format their thoughts on this pressing matter. In no particular order I have summarized the post of my two undergraudate sections. A brief summary of my impressions of the posts can be found at the very end of the post. We all welcome thoughtful comments on these posts.

If you read just one of these posts in its entirety, it should be this one, "Trying to Work the Unworkable Boycott of Danish Products" by one of my Saudi students, Sultan Sindi. In my opinion he does an excellent job of integrating the strategic management theories with personal and local knowledge. Here are some excerpts:

It is much easier for a customer to walk into a supermarket and start yelling because he sees Danish products on the shelves, than it is for a Saudi importer for example to go to Denmark and yell at the news paper that first published the cartoon, which let’s not forget is what this boycott is all about!

Having spoken to members of my family and close friends of mine, they all seem to think that the issue is being turned into something that is a lot bigger than it should be. In fact, a person I know said she “switches channels” whenever she sees this issue on TV. Let’s face it; there are many other ways to resolve this issue, more diplomatic ways of going about it. What ever happened to diplomatic dialogue? If we insist on boycotting Danish products, then they will just have to find other areas to generate revenues, we’ll be left with nonexistent relations with Western Europe, and the cartoon issue would have not be solved either.

If you read a second of these posts, it should the one by Furqan. Though less overtly linked to the theories in the course, his unsparing criticism of the Danish press, in particular, and of the Europeans more generally, as well as his thoughts on the underlying motivation for the boycott, are compellingly expressed. Here are a few excerpts:

The boycott has not been imposed by any government but it’s been done voluntarily by the people. Don’t they have the freedom to choose what they want to boycott? ...

Basically due to a few in Danes the entire Danish economy is going to suffer the consequences. They have lost their Muslim customers. The Danish companies will have to strive very hard to come back. Muslims have boycotted any company that it associated with Denmark. If a company owns any strategic assets with any link to Denmark it is facing a bad time.

In a post entitled "Democracy", Hassan makes clear that he sees a role for both Danish companies and the Danish government in handling this crisis and that he places the "religion concept" above the "democracy issue":

On the other hand, for the Danish base companies, they have to satisfy their Muslim customers by refusing and denying the cartoons because these cartoons may affect the economy in these countries as a whole. In my opinion, the Danish and Norwegian governments should have an instant act toward this issue because it is not a democracy issue when touching the religion concept.

Mohammed A notes that Danish businesses and the Danish economy more generally are being hurt by the boycott of goods in several Muslim countries. His advice:

In order for the Danish manufacturer to stay in business they should support their customer. They should send an official apology to the Muslims and donate some money to promote their religion. For example, building couples of Mosques in Denmark and Muslim’s countries. This reaction will cost less than one million dollars which is better than keep losing thousands of millions. The Muslims will see the good faith of the manufacturers and obviously will stop the boycott.

In discussing the boycott of Danish goods by the Saudi's, Abdul Aziz recalls that there was a time when American products were supposed to be boycotted and how that worked out:

The boycott however, will only be proven to be beneficial or “real” as time goes by, I recall a time when American products were to be boycotted, and that didn’t last for long. Share prices have fallen for Saudi dairy, in a country were share prices are governed more by rumors than they are by financial statements, no one knows what will happen next. One thing is for certain though, people in Saudi Arabia are thinking twice before buying anything “Danish”.

Loulwah sees the boycott as "absolutely a reasonable reaction" and thinks that Danish companies " as customers of the newspapers and magazines, (should) force the magazine to apologize."

The title of Mohammed M's post, "Freedom of expression doesn’t contradict the fact that Religions should be respected" pretty much sums up his point of view on the legitimacy of the boycott. As for its economic impacts, he sees little loss of benefit to consumers due to the low switching costs and generic nature of the products being removed:

The Danish products boycott has been escalated throughout the Muslim nations. As for the buyer power, it is evident that the Saudi market (buyer group) is powerful since it faces few switching costs. Not buying Danish products such as cheese and milk are not obstacles for them. They could easily switch to other alternative products of a non-Danish origin without facing high switching cost.

Continue reading "Middle-Eastern Students Speak about the Danish Boycott" »

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Five days ago I asked the question "Will the Boycott of Danish Goods Work?" One of the points I raised in that post was that in order for the Danish economy as a whole or certain Danish companies to be hurt economically, there needs to be more than outrage, there also needs to be:

patience, a carefully-crafted strategy for the management of public perception, and a sophisticated understanding of the incentive structure of the target.

While it is not clear yet whether the boycott is under any central command or has any overall strategy, one thing is apparent- the boycott is having a short-term impact detrimental to Danish firms:

So far, Arla Foods, one of Europe’s largest dairy companies, is suffering most, but the effects could spread. Danish goods are threatened in 20 Muslim countries, representing 10 billion kroner (û1.3 billion; $1.6 billion) annually, said Steen Bocian, a chief analyst with Danske Bank.

The boycott of Danish goods called by Islamic countries to protest the publication of Prophet Muhammad (peace be upon him) caricatures is costing Danish businesses millions of kroner (more than a million euros, dollars) a day, analysts and companies said.

So far, Arla Foods, one of Europe’s largest dairy companies, is suffering most, but the effects could spread. Danish goods are threatened in 20 Muslim countries, representing 10 billion kroner (û1.3 billion; $1.6 billion) annually, said Steen Bocian, a chief analyst with Danske Bank.

My search of the Middle Eastern press reveals that as of Feburary 9th, the countries protesting the cartoons and/or boycotting Danish goods include:

Continue reading "Boycott of the Danes" »

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Last month I and thousands of others piled on Google for its collaboration with the Chinese government's censorship of web searches just days after its refusal to comply with subpeonas in the Justice Department's investigation of searches for child pornography. Today we learn that Yahoo has not only caved into the Chinese government's efforts to limit freedom of speech and access to information, it has gone one step further- it rolled over:

Yahoo Inc. provided evidence to Chinese authorities that led to the imprisonment of an Internet writer, lawyers and activists said on Thursday, the second such case involving the U.S. Internet giant.

The latest storm over Western Internet companies in China comes just weeks after Web search giant Google Inc. came under fire for saying it would block politically sensitive terms on its new China site, bowing to conditions set by Beijing.

Writer and veteran activist Liu Xiaobo said Yahoo had co-operated with Chinese police in a case that led to the 2003 arrest of Li Zhi, who was charged with subverting state power and sentenced to eight years in prison after trying to join the dissident China Democracy Party.

Yahoo gave public security agents details of Li's registration as a Yahoo user, Liu said in an article posted on U.S.-based Chinese-language news portal Boxun, citing a defense statement from Li's lawyers.

Of course, Yahoo has its own version events:

Continue reading "Yahoo's New Slogan: Let's Roll! ...Over" »

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The Washington Post has an article today drawing seven crucial distinctions between the lending practices of credit card issuers and loan sharks. If the information is accurate the shylocks look pretty good by comparison:

There's a new law that forces credit card issuers to increase the minimum monthly payments borrowers must make. The good news is that borrowers will pay much less in interest over time. Nevertheless, many consumers might still be better off owing a loan shark money than a credit card company. Here are seven ruthless practices that credit card issuers engage in and loan sharks don't:

1. Loan sharks don't raise your interest rate if you're late paying a bill to another creditor.

2. Loan sharks don't solicit.

3. Loan sharks don't change the terms whenever they want.

4. Loan sharks don't penalize you for paying off your debt.

5. Loan sharks don't charge you for not borrowing more money.

6. Loan sharks don't make you sign a document that says that you can't sue them.

7. Loan sharks don't lobby the government to make it harder for you to go bankrupt.

Commentary

As I read this article, I wondered what was the author's agenda. The comments following his 7th list item, along with his concluding paragraph, answered my question: he's after greater regulation of the industry, presumably to allow borrowers to more easily declare banruptcy:

Continue reading "Card Sharks" »

Posted by Starling Hunter at 9:42 AM | Permalink | Comments (5) | TrackBacks (1)

A rather short Belmont post, "Danish Solodarity Dinner", read as follows:

Those who want to support the Danes for their defense of freedom of speech can serve Samizdata's sample menu. Nope. Not just butter cookies and canned ham.

I replied with an excerpt from my "Will the Boycott of Danish Goods Work?"

With all the apologies and recriminations and warnings flying back and forth, scant attention has been devoted to the question of whether boycotts even work and if so, how well. At first it seems like a no-brainer. In theory, you stop buying goods from some offensive or obnoxious company or country and you hit them where it hurts- in the pocketbook. In practice, it is not that simple. Here is a sample of abstracts taken from three research papers published in the last several years on the efficacy of boycotts, research that points out the need for patience, a carefully-crafted strategy for the management of public perception, and a sophisticated understanding of the incentive structure of the target. One other aspect of the story that is not being discussed is that it was the Danes that led a boycott of their own against a highly unpopular Middle Eastern country in 2002 - Israel.

Posted by Starling Hunter at 9:42 PM | Permalink | Comments (0) | TrackBacks (0)

Caption: A Jordanian Muslim woman poses with a received message on her mobile phone saying ‘If we keep boycotting Danish Products till next summer they will lose at least 36 billion EURO’, in Amman Jordan, Febuary 1, 2006. A French newspaper reprinted on Wednesday a series of 12 Danish newspaper cartoons depicting the Prophet Mohammad that have sparked protests in the Muslim world and prompted Saudi Arabia to recall its ambassador from Denmark. REUTERS/Ali Jarekji (Hat Tip: JunkYard Blog)

The row over the publication by several European newspapers of images depicting the Prophet Mohammed, images widely regarded by Muslims as blasphemous, continues to make headlines around the world. Several groups and individuals angered by the printing of the images have called for boycotts on goods produced in and by countries where newspapers have printed the images, Denmark in particular. In return, the EU has "warned Saudi Arabia it will take action at the World Trade Organization, if the kingdom supports a widening Muslim boycott of Danish products."

With all the apologies and recriminations and warnings flying back and forth, scant attention has been devoted to the question of whether boycotts even work and if so, how well. At first it seems like a no-brainer. In theory, you stop buying goods from some offensive or obnoxious company or country and you hit them where it hurts- in the pocketbook. In practice, it is not that simple. Here is a sample of abstracts taken from three research papers published in the last several years on the efficacy of boycotts, research that points out the need for patience, a carefully-crafted strategy for the management of public perception, and a sophisticated understanding of the incentive structure of the target.

Continue reading "Will the Boycott of Danish Goods Work?" »

Posted by Starling Hunter at 6:19 PM | Permalink | Comments (7) | TrackBacks (3)

The second article in Assignment #3 involved examining the first of the Beat the Beast articles from Fortune Small Business. Here are the first two paragraphs.

Wake up and sell the coffee: that was the message that entrepreneur Mike Sheldrake got a few years back when he concluded, "I was going to have to either do something radical or close my doors." His 22-year-old business, Polly's Gourmet Coffee in Long Beach, Calif., was under attack by Starbucks. Sheldrake had ignored the opening of a Starbucks nine blocks away, even though the chain outlet quickly proved popular. Sheldrake's 1,700-square-foot store, which had been stirring up $1 million a year in revenues, saw sales drop by more than 5% a month, until he was losing money on sales of $800,000. Then when another Starbucks opened, only 78 yards away, "I was just kind of lost," says Sheldrake, 57.

Sheldrake has since found his way. Polly's is now netting around 15% pretax profit on annual revenues of $1.1 million. The competition didn't go away. In fact, Sheldrake now counts 11 businesses selling coffee within 900 yards of his own. But he has figured out how to make his business stand out, especially in its look and service. He had to retrain employees (to greet regular customers by name, among other things) and add performance incentives to their compensation. He placed an eye-catching 1929-vintage coffee roaster at the store's center. And in many small ways—selling warm beans right out of the roaster, for instance—he learned to get better at what he does. "A lot of these steps are things that I should have been doing anyway," he admits.

Your question was as follows:

Which statement seems most accurate to you? Explain you answer.

a. Sheldrake increased Polly’s profits by increasing the power of its suppliers.
b. Sheldrake increased Polly’s profits by decreasing the power of its customers.
c. Sheldrake increased Polly’s profits by raising barriers to entry.
d. Sheldrake increased Polly’s profits by lowering barriers to entry.
e. Sheldrake increased Polly’s profits by creating substitutes for Starbucks’ coffee.
f. Sheldrake increased Polly’s profits by increasing rivalry with Starbucks.

Continue reading "Polly's Gourmet (Assignment #3)" »

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Continue reading "Walking Contradiction" »

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Continue reading "Miss Management" »

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Continue reading "Clerical Error" »

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

A student in MGT 406, Business Policy & Strategy, sent this question via email (at 1:12 AM no less).

"I wanted to ask... when it comes to applying Porter's five factor model, should all the sub-points apply so the case would hold true. Like for example under threat of entry/ Barries to entry there are six major sources. Is one source enough, for example product differentiation to say barriers to entry are important?"

Here's my answer:

Continue reading "Points and sub-points in Porter's Five Forces" »

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