Deciphering the Latest Business Research
In this video interview, David M. Smith, PhD, Associate Dean of Academic Affairs and Associate Professor of Economics at the Graziadio School of Business and Management discusses the impact the proposed Employee Free Choice Act (EFCA) would have on employers, unions, and the workforce. Continue reading ‘The Employee Free Choice Act: Playing the Union Card’
(Left to Right: Roberta Romero (Drucker), Jenny Sheng, Tanya Stevens, Candace Olfati (all CGU/Keck Graduate Institute), Joyce Zhang, Sirish Upadhyay (both Graziadio), Henry Du (Drucker), Jaya Soedradjat (Graziadio), Me)
On May 2nd, the world gathered in Omaha, Nebraska to listen to Warren Buffet at the 2009 Berkshire Hathaway Shareholder Meeting. We tried to parse the future from his words, and wondered if this was the most optimistic that Charlie (Vice Chairman of Berkshire Hathaway Corporation) has ever been. Some hailed the new format as much more focused, giving the audience a better chance to understand the genius of Warren Buffet.
Two days later, the market reacted with the Dow posting a 200+ point advance. And since Warren doesn’t really care about the market, let’s just say that the reviews have been uniformly—cautiously—optimistic.
This year, I attended the meeting with 7 students and recent graduates from the Peter F. Drucker and Masatoshi Ito Graduate School of Management, the Keck Graduate Institute, and Pepperdine’s Graziadio School of Management. I teach as an adjunct professor at Drucker and the Graziadio School and it was a delight to be joined by a group of delightful, energetic, and bright leaders of our future.
I’ll try to avoid the usual reporting (you can read several media reports on what was said during the meeting), but here are some of the my takeaways: Continue reading ‘Impressions from the 2009 Berkshire Hathaway Shareholder Meeting’
If you were anywhere near Dodger Stadium on March 23 for the World Baseball Classic (WBC) finals, you heard the drums and the thunder sticks of 45,000 South Korean fans drowning out the 5,000 Japanese fans—not to mention the 4,816 Americans there just to watch a good ball game. And a good ball game it was, a nail biter ending in the 10th inning when global superstar Ichiro Suzuki (Japan) singled home the two winning runs.
ESPN broadcast the game with expert commentary and the dialogue shifted toward Team USA—why weren’t they in the finals? And what can Major League Baseball (MLB) do to change the attitude of the team owners who refused to part with their best players during the spring?
“It’s our egos that refuse to believe that anything coming from a foreign country can be better than our own,” sports commentator Steve Phillips claimed during a previous game. His colleague Orel Hersheiser responded, “I wouldn’t call it that. It’s just that we have different priorities.”
Or maybe it’s as commentator Joe Morgan said: Hey, this WBC stuff is great, but it’s just an exhibition. Meanwhile, down on the field, the Korean base stealer slid into second base head-first coming up with a cracked helmet and a splitting headache. Just an exhibition game indeed.
In that earlier game, the announcer asked Orel if he had had a chance to pitch for the USA in the WBC during his MLB days, would he do it? When Orel answered, “No,” the announcer probably wished he had some of those thunder sticks to drown out the silence in the booth.
In business, we throw around the word “corporate culture” like it is the magical explanation for anything organizational that we don’t understand.
“AIG had a culture of corruption.” “Citigroup had a culture of overspending.” “Lehman Brothers had a culture of taking unnecessary risks.”
Today, we live in a real-world corporate culture of self interest, and nowhere is it more obvious than on Wall Street.
Continue reading ‘The World Baseball Classic, Corporate Culture, and Short-Sightedness’
Joseph Lee
Barack Obama swept into the nation’s capitol, and with a few scribbles of his name, started the process of dismantling eight years of Bush policies. He faces a Congress that will largely embrace his changes, mostly because the Democrats have a comfortable majority in the House and only a 2-seat deficit to get to the filibuster proof super majority in the Senate. The economic stimulus package was passed after a hard fought battle. Washington will get its change.
The news from the business world continues to disappoint, but perhaps most surprising is not that the economy is tanking, but the fact that even in these tough times (or perhaps because the times are tough), we discover Madoff’s brazen $50 billion ponzi-scheme, the $1 million renovation of Merrill Lynch’s CEO Office, or the $18 billion of bonuses paid to managers of those very financial institutions that are begging for bail-out funds. Obama instituted a $500,000 max on executives from companies that receive bail-out funds, but it just seems business executives simply “don’t get it.”
Actually, they do get it. The truth is that self interest is the surest way to get ahead in our society. Business leaders simply follow in the footsteps of their bosses, and those bosses are the ones that have shown the rest how to rig the system in their own favor. Board members, even outside directors, are executives of companies who do not want their boards to clamp down on their own compensation packages—it is simply not in their self interest.
Continue reading ‘Why Change Happens in Politics–NOT in Business’
Joetta Forsyth, PhD
Listeners from across the country submitted questions to Graziadio School faculty during the conference call on America’s Financial Crisis this Tuesday.
With over 200 participants on the call, there were too many questions for the panel to answer in the short time.
Below are responses from panelist, Dr. Joetta Forsyth, Assistant Professor of Finance, to just some of these questions. (Read why she believed a bailout was necessary)
Now that Congress has passed the bailout plan, we are working on answering more of these questions and posting the responses shortly.
1. The Bush Tax Cuts mixed with a boom economy and lack of fiscal leadership led to the largest deficit of our time and the current economic condition. What would you do as the incoming President to improve our situation?
I have a different interpretation of what happened. There are a number of factors that lead to this crisis, and the list is staggering:
Continue reading ‘Questions on the Financial Meltdown Answered (1)’
John Paglia, PhD
The recently approved bailout is yet another attempt to prop up the markets with an election around that corner that will only delay and worsen the inevitable pain ahead…
There is definitely a lack of trust and confidence in the markets, but it is due to the blatant lies and unethical representations. How many times have we heard an NAR (National Association of Realtors) economist call the bottom in housing? How many times have we heard the reporters on CNBC call a bottom in the equity markets? How many times have we heard phrases like “subprime is contained,” “we’re comfortable with our capital position,” “we have adequate liquidity,” and “the economy is fundamentally sound?”
The benefits of this package are being oversold to Main Street. And many don’t realize that a large part of this funding will be channeled to foreign banks through our domestic institutions. Furthermore, distribution of funds will not be exclusively through reverse auction; therefore preferential distribution—both in funds provided and responsibilities assigned to select agents—is a negative consequence. It is a disaster in the making and we will be left with a really bad hangover in a few months once we realize what happened.
Continue reading ‘Why I’m Against the Bailout’
This is a guest post by Linnea B. McCord, JD, MBA, Associate Professor of Business Law
We are only just beginning to comprehend how bad an ethics mess we’re in—but it’s likely to be a real doozy.
Failing CEOs walk away with more than $100 million and Wall Street investment bankers pay themselves many billions of dollars in bonuses even as investors’ returns plummet. State and federal politicians with little or no money when they enter public life are worth tens of millions of dollars just a few short years after leaving office. All of this is against the backdrop of the worst housing downturn since the Great Depression, a massive credit crunch that threatens to wreak havoc on our financial system, mounting layoffs, the possibility of millions losing their homes, rapidly declining state budgets, crushing personal, corporate and federal debt and jihadist Islamic groups that wish to destroy us.
While our first inclination may be to blame “them” for all of our current ethics fiascoes—and there are plenty of “thems” to choose from these days—as a free nation and a free people, we bear the ultimate responsibility for allowing ourselves to get into this ethics mess.
How did we do this you might ask?
The answer is simple—by allowing ourselves to become so ethically confused over the past forty years.
Continue reading ‘Our Ethics Mess’
This is a guest post by Richard M. McCabe, PhD, supporting faculty in Strategy at the Graziadio School of Business and Management, Pepperdine University
A recent Air Travel Consumer Report (February 2008) describes the continuing decline in service experienced by airline passengers in the United States. More than 24 percent of scheduled flights by U.S. airlines were late arriving at their destinations in 2007. That is almost 7 percent more late arrivals than in 2006 and continues a five-year history of increases in late arrivals. And when flights arrive late they often leave late for the next flight, over 21 percent of flights departed late in 2007. That is almost 6 percent worse than in 2006, and again continues a five-year history of increases in late departures.
Over seven checked bags were mishandled in 2007 for every 1,000 passengers, an increase of more than 4 percent over 2006. There was a 12 percent increase in involuntary denied boardings in 2007 versus 2006. Denied boardings is an indicator of selling more tickets than seats available. And consumer complaints increased about 59 percent in 2007 over 2006.
So now a merger of Delta Air Lines and Northwest Airlines appears imminent. Continental Airlines and United Airlines are reportedly discussing a merger, particularly if the Delta-Northwest merger is formally pursued. Other combinations have been discussed.
What can the various stakeholders expect if there is a significant consolidation in the U. S. airline industry?
Continue reading ‘Will U. S. Airline Consolidation Help the Industry?’
