Alert student John Hunter made this post linking  to Dr. Deming. Take a look, clearly Deming’s ideas are alive and well. This makes it clear that his ideas spawned the whole CQM SIx SIgma Toyta Production Lean Management culture. As one who has lived throught the decades of GM and Ford losing leadership, it is oh so ironic to see Toyota employing Americans to beat Ford and GM at their own game. GM as Jerry Flint notes seems to have a plan and the new Malibu is getting rave reviews even compared to Honda and Toyota.  Ford does not seem to have a new winner car model and is still trumpeting the F 150, has anyone noticed the light truck and SUV inventory piling up on the Big Three lots?

While Toyota will never admit it, I always thought their move to buid the big Tundra was a strategic mistake. Now they are having to offer Tundra discounts and sales have not hit their mark, hello $3 gas. I would have left the big pickups to the Big Three instead concentrating on the smaller ones, Nissan and Toyota pretty much have all that market. Instead they should be working on what they do best, economical cars.   But speaking of goes around comes around, the new Accord and Camry weigh a porky 3,500 pounds.  No wonder KIA found a niche. This cycle of a company finding a niche and then becoming the very thing they sought to avoid, never seems to fade.  One could argue that KIA or Hyundai is becoming a value leader while the new Big Three are Toyota NIssan Honda. For example, how many of you bet on the N Y Giants?

We see plenty of them but how many Americans really need a Ford F 450 that hauls / pulls 24,000 pounds?

Has anyone noticed that the Jerry Jones F 450 pickup in the tv ad has an empty bed?  Now there is symbolism for you!

The FED Govt will spend over three trillion this year.   This article explains just what that number means. Incredibly I heard a politician suggesting that budget contained draconian cuts, how much would congress like to spend I wonder?

Two of the ratios we look are are inventory turnover and tines inventory turns per year.  The reciprocal of the latter, the number of  times it tuns, is the days supply. Jerry Flint  shows a good example of how important this can be to the auto industry especially  with an economic slowdown looming.  He also mentions the January barometer, as January goes so goes the year. So far judging by the stock market, the year is not shaping up very well.  Another issue he mentions is how sales are allocated between years. This relates to year end cut off by companies. 

In the past Congress has created special tax credits for the purchase of vehicles to try to move cars off the lot. It will be interesting to see what other ‘incentives’ Congress and the admin can create. The stimulus does not seem to be stimulating thus far, the stock market dropped over three hundred points yesterday.

Who needs video games about violent control of the world when you have MSFT trying to gobble YHOO?

GOOG asserts that MSFT will use YHOO to steer everyone to you guessed it, MSFT operating systems to the exclusion of everyone else. This is what continually lands MSFT in court. Let the games begin, interestingly GOOG asserts that this is illegal. I mentinoned in a previous post that counterfiet iPhones are illegal but China does nothing about it.  Intellectual Property IP only has value in a world that respects those rights.

This of course raises the question about control of the internet and what is legal.  Anti Trust anyone?

Now GOOG is helping rival YHOO fend off MSFT, gee strange bedfellows, no?

Christine Lagarde in  classic understatement. says that internal controls failed to detect a $7.2 B loss at France’s largest bank.  No kidding Christine!  We study IC in Intermediate Acct I as well as Audit and Systems. This is the largest single fraud in baning history.  Increasingly crime will be committed via the bypas of IC and using computers.  Interestingly our Ciminal Justice majors (and presumably everyone else’s) are not required to take an accounting or statistics course as undergrads.  That leave accountants as the  only forensic experts on the job. Christine by the way is a lawyer, and she is doing what lawers usually do, report on gate locking after the cows have wandered into the pasture…….

Please remind me to show a graphy of the oil prices in class Tuesday. There is nothing difficult to predict here, the weekly chart of oil prices has turned down.  Oil prices have turned down simply because demand has turned down.  A student mentioned a few months back that now she was using net flicks instead of driving to the video store. This same idea of millions of individuals making the same collective decision is having an effect, on prices and on employment. One student employed in retail notes that sales are down for the dept store that employs her.  And so the store looks at laying folks off, and as she notes, then those employees have less to spend and do not buy as much gasoline and, here we go.

I look forward t more input from all of you along those lines on the blog and discussion sites, what are you seeing in your jobs that relates to the belief that we are going for recession or expanison?

Here is the latest on prices.

In commenting on your papers about regulation and stimulation, I mentioned the Panic of 1907.  Click here to read a summary of the book as well as view  a short video. The authors describe the time errily similar to today, one hundred years later. I have not read this one yet but it looks like the authors do a good job of painting larger than life real world humans that had a hand in creating and calming this crisis.

The trusts decribed in the book would be simillar to today’s hedge funds. In the video  note that Morgan demands to see the books, then as now, accounting is key to understanding business health.

We are now studying Total Quality Management ala Dr. Deming.  As you can read, it is the story of the rise of the entire Japanese post WW II economy. Well, still, the business cycle has not been repealed.

Japan backslides, losing economic powerhouse status.   This article details how Japan now ranks 20th in GDP per capita. Its share of the world economy peaked in 1994 at 18%, today it is less than 10%.

People there are however ‘rich, happy, safe, and clean.’  And they have money in the bank.  However the population demographics mean that by 2050 population and economic growth will be zero.

Yet in the 1980s a you will read (in my handout) we produced a tv show entitled If Japan can, why can’t we?  The big story here is that the business cycle is never repealed. This creative destruction concept, that jobs have to be destroyed to pave the way for new technologies, also applies to the nation’s economic cycle.  The hard working, okay they still work hard, Japanese work ethic is now just that much harder in Malaysia or India or China. 

Think world history for a bit.  Egypt, Greece, Rome, math and science move to the Islamic and Indian culture during the Middle Ages, then the Renaissance, Italy again, Spain/Portugal, Holland, France, England, the USA, the rise of Japan Inc and now the rest of Asia.  These days the world waits for no one. The shift in power has been accelerated at a pace the Egyptians could not and still do not grasp.

The Unions are still beating up on Wal Mart. Hillary used to sit on their board and now decries them as a company.  Yet as we write WMT is fading from the perch it once held.  It has grown large enough to be its own competition, lawsuits and scandals plague it reputation, and many areas shun its very existence. As Tom Sowell noted  a few years back, the Atlantic and Pacific Tea Company A & P used to dominate grocery stores, no more, why would WMT be any different?

As usual Dr. Sowell was right.

Click here for information on a DFW instructor led CMA review course.  I would mention that you can eliminate various features such as the audio CDs and cut the cost of materials.  The cost of the CMA exam is considerably less than the CPA exam, and it only requires a Bachelor degree  not 150 hours.  Okay there are more requirements than that but overall it is cheaper and more accessible than the CPA exam. CMA is an increasinly valuable certificate.

comWe study accounting to better understand the world of business.  Now takeover hedge fund MSFT has offered cash for YHOO.  It just hit me that MSFT is as much a hedge fund as anything else. From the day it bought the software from Seattle Computing for $50 K that would become MSFT DOS to this deal, MSFT has always bought out the competition.  With a cash rich hoard of billions, MSFT is in the position to buy nearly anyone, this is after all a $44 B deal.  And note they are offering cash not stock, that will be hard for lagging YHOO shareholders to turn down.

Note that MSFT sees ‘billions in savings.’  Prof. Elam translation, fire the YHOO employees. You can always find yourself on the losing end of a takeover, and the takeover formula is always the same. We take your operating system whatever that is ( in this case an online search and sales engine) and we use our employees firing yours. YHOO employees are guilty of no more than being on the wrong team.  And so many will find themselves out of work. Perhaps they are in their 40s with mortgages and kids on the way or in college. What to do?

This is when a knowledge of managerial accounting can literally save your bacon. This discipline gives you break even and target profit tools to allow you to understand how to shape your own business to profitablity.  The latest COSTCO magazine contrasts successful versus unsuccessful franchise owners. The winners were able to analyze what it took to be profitable, the losers guessed wrong.  And guess would be the operative verb, that will not work.

As Jimmy Buffet put it, every now and then when I’m in the grocery I’ll take a litle but not much

cause you never know when those hard times will hit ya

and I don’t want to lose my touch.

with managerial accounting we never lose our touch…..