This article by Oxford Analytical suggests that in fact the financial locus of the world is shifting away from New York.  Other than SARBOX, it mentions the difficulty of foreign execs traveling to the US since 9/11.  From that standpoint, I guess Usama did accomplish part of his objective.  Anyway a good article and another indication that Tom Friedman, the world is getting flatter all the time.

Westinghouse Digital  is not the same Westinghouse that made that room airconditioner Dad bought for us back in the 1950s.  Nope it’s a virtual company.  With annual sales of $650 M and just 120 employees, WD owns no manufacturing facilities and little or no ad budget, Best Buy and other reatilers do that for them.  Check out the article in the 2/26/07 Busines Week on page 50 or click on the URL at the start of this article to learn more.  Point is, this is the perfect example of Tom Friedman’s World is Flat.  The tvs can be assembled anywhere and UPS and Fed Ex stand by to ship.  So you are a virtual manufacturer with out the employees and trucks.  And guess what, the prices are lower which  is how they go into the top three.

Low price, quality, low cost, low ad budget, KACHING  goes the cash register.  This  is a great example of what Managerial accounting is all about. 

DLE

Well whaddya know

I don’t know how long this link will be up on the DMN site, probably just for today but today you can read about the Dallas Design and Arts District.   Yes we have one and gee talk about conincidence, none other than one Gary Elam formed the Dallas Design and Arts Dist Assoc.  I don’t thnk we are direct kin but I will be contacting him this week.

Anyway, Gary wandered into the antique business back in the 1970s. He  is now afraid that spiralling rents will force some of the dealers out of the area as Victory Park expands-so dealers need to get ready now. 

At any rate, some of you are warming and I think seeing the point of my pushing design as an instructional construct. Take a read, interesting.

DLE

Sometimes this blog actually predicts the trend instead of just following, which frankly is all any economist ever did or will ever do.  How do we do it, well by following socionomic and business trends, part of the reason for all this is to attempt to train you to do so.   Go back to my entry on Oct 29 2006 and read the suggestion about boning up on Sherlock Holmes, nothing like sharpening your powers of observation.

The grad class did manage to score a perfect 100 or 0 Saturday morning depending on how you look at it.  Which is to say that not a single person had logged on the Hunter or MacGregor to investigate job order or process costing in action.  I also listed the site for www.cpi-usa.com on the syllabus and have for the last several  semesters.  This is a site for imported Chinese Motorbikes.  CPI hired an Italian design firm (there’s that design thing again) who made their motor scooters look like a motor cycle, eliminating some of the ‘geek’quotient’ from the product.  Well if you open this Sunday’s DMN to the business section, you will see  a dozen different scooter/ATV importers listed here in the Dallas area. It makes sense, DFW is center of the country geographically and telephone wise in the Central Time Zone.  I listed the site after noticing that a bicycle shop in San Marcos had started handling Asian import motorscooters.  THis is also part of the Vespa retro craze.

My point was that there is always a lower priced competitor coming into the markte to take the place of someone else that started low cost, and then went up market.  Note that Honda and Suzuki and Yamaha all started with scooters, Honda and Suzuki are now in the car business, Yamaha has done a lot of engineering work on car engines such as the SHO V 6 DOHC for the Taurus (why didn’t Ford put that engine in the Mustang?)  Well now here are other examples

Woolco, K Mart, WMT, TGT and now the new kid, Dollar General and other dollar stores
Honda and Vespa, now 12 Chinese imports
Church’s and Popeye’s now Williams Chicken and grocery store
Three big tv networks, now 100 and still nothing to watch on saturday nite….now YouTube
Big movie studios, fearing tv would eliminate movies, now more movies than ever as cable tv cranks them out
Nike and Adidas, now a $15 basketball shoe
Traditional newspaper, now the Thrifty Nickel
Honda and Nissan, now Kia and Hyundai, soon Chery and Tata!

Firms moving up market leave an opening for others to come in beneath them.  This can only be done with successful design, quality, and market research.
My point-to be a successful entrepreneur you have to find your niche, Roger MacGregor did and owns the 26 foot sailboat market, it ain’t a great saliboat but by golly Roger can laugh all the way to the bank.

DLE

I am learning the quirks of H M along with all of you.  The end date for chapter 5 needs to be changed.  But I have tried to access that twice yesterday and early this morn. It tells me tha two students are active there and will not let me change anything.  I can only guess that means that two students have not logged out of the assignment and left it open on their computers. Would you please log out so I can change the end date for Chatper 5.  Otherwise best I can do is call M H tomorrow and see what remedies are available. 

Just so there is no misunderstanding I will send an e mail to the grad class via WEB CT about where we are and what I expect you to do.

DLE

Go to the Fair Tax Website. One student asked how a national sales tax would affect lower income folks. The answer is that there is a threshold before the tax applies to anyone so that the necessities of life so to speak would be tax free.  The government would rebate those amounts up to a level to individuals, I don’t care for any more govt involvement and don’t like that way to solve the problem as it would just allow some congressman to insert himself into some vote buying scheme.

The Fair Tax was proposed by Congressman John Linder Georgia and talk show host Neal Boortz (www.boortz.com).  The idea is to eliminate the IRS, the tax forms, the odious compilation requirements, and the worthless work that produces not goods or services but consumes lots of money and time.  A sales tax does that.

Now, I would propose one more addition to a national sales tax but give credit to the originator of the idea-Dr. Tom Sowell.  Limit the Federal Budget to 10% of the Gross Domestic Product.  That would at least put a limit on govt spending that tied to the amount of goods and serivces available to tax. Otherwise there is no limit the the amount the Feds will attempt to extract from the economy.  Bush’s comment that no one should have to pay more than 35% income tax raises the question, for what George?

Okay, it’s been ten years since you got your degree from UNT. You’ve done well.  An internship at Nostrum’s landed you a job and then up the ladder to regional buyer for men’s fashions.  Target beckoned and you got the job as regional manager for its western division.  Now a major retailer is in trouble and looking for a savvy retail team to turn them around.  Do you leave the comfort of TGT and give it a go? How often does a chance like this present it self?  Sure you’re doing well with TGT, the retirement plan and all, but if your team can turn the other company around the stock options will likely take you from comfortable directly to  the High Roller Enclave of Business.

So, how would you do it?  Hmm, how about improving DESIGN!  Check out the article on page B6 of the 2/13/07 WSJ. Penney has doubled the number of designers to 100 last year in an effort to be more nimbleand  is churning out clothing that follows fashion trends.  Now say retailing experts and image consultants, Penney is perceived as a more fashionable brand, able to compete with such places as Federated Dept Stores or TGT.

Once again DESIGN trumps supply chain micro management.  I firmly believe that DESIGN should be a new component of a re focused MBA program. Check out these articles for inspiration in Fast Company

I’m not quite sure what the motivation for an MBA is anymore, I suppose the folks seeking it believe that having it will earn them more money.  Well, I don’t know, if you end up working for yourself it will be hard to give yourself a raise out of sheer self admiration.  So what are we learning here?

Nick in Fitzgerald’s the Great Gatsby went to New York to (well to do what, anyone remember) to learn the bond market.  A few decades later, Tom Wolfe’s Sherman McCoy was a Master of the Universe.  McCoy was also a bond trader but considerably more successful that Nick. So with the idea that you are wanting to become your own Master of the Universe and learn a thing or two about the application of all this, I have two articles to recommend.

Seriously, but not trying to take myself that way, I spent some time before class today explaining  the article on page C1 of the 2/8/07 WSJ Debt DRiven Deals Shake UP Holders of Highly Rated Bonds.  I also suggest you read page C12 of the 2/12/07 WSJ, For Ford It Doesn’t Add Up,  The first article explores the current fad of junk bond take overs. It then sort of explains why the high rate bond holders in such deals are worried, do you know why?  The second is a reasoned analysis of the real value of Ford Stock. My point is that an MBA should prepare you to use the tools in the book to make these kinds of real world assessments. I wil put the articles on reserve in the library if you can get here to read them. I will be in 170 by 8:15 Saturday morning for those that want to come early.  No this is outside managerial acounting, well, not really but I realize some of you cannot get here early and no this will not be on the ACCT 5130 test, but such issues will be on that bigger test, Business Life 101. 

DLE

I opened the grad class ACCT 5130 asking about the biggest real estate deal ever done-Equity Office Partners\, no one of course knew anything about it. Since then the question batted about in the financial press has been, who is the smartest? Sam Zell owner of EOP who sold, Vornado Realty that withdrew its bid, or Blackstone Group that won the bid at $55.50 per share. AT that price the REIT ( do you know what an REIT is, if not better look it up!) is yielding about 5% which one can get in T Bills and not have a worry in the world. 

Click on the graph at left to see just how successful Sam was!  Word of the bidding war got round at about $38-40.  Suspicion was that $45 would take the deal, but as you can see, Sam was considerably more clever in extracting a higher price.

Check out the article on page C18 ofhte 2/8/07 WSJ for more on this.

So who was the smartest here?  Well, for a a different take log on to Pete Kendall’s site-Socio Times. You may have to go back a day or two, see sidebar on the right of his site.  Pete makes the point that the skyscraper theory has buildings or the plans for the tallest buildings always occurring at market tops, each is a mirror of the other reflecting unbounded optimism.  HE even has a link to Sam Zell’s post of several year’s ago. It features a jingle about the markets set to the tune oif 50 Ways to Lose Your Lover.  Great Stuff that, and it perfectly caught the euphoria of 1999. 

Meanwhile, another sub prime lender has filed for bankruptcy. Gee could there be a connection between over speculation in residentail real estate and Sam’s decision to sell at the top of commercial real estate?  We report, you decide.

B/W has an interesting commentary on page 40 of the 1/29/07 issue.  Supposedly GM is not stil tied to the idea of being number one automaker no matter what. The author wonders if Rick Wagoner is ready to let go or notmentioning whether GM will buy Malaysian automaker Proton.  Toyota’s tear of new models et al has increased the number of recalls. And GM has ditched both mini vans and small pickups deciding it cannot compete there.  Is GM ready to be number two?

Which brings me to another issue. If you were Toyota, would you have entered the big pickup, read Tundra, market.  Doing so required entirely new plants and advertising. It flies in the face of the general reputation that Toyota has of being a ‘green’ car company.  Conceivably it could turn off green customers.  Another issue is whether this is really smart in the US. Toyota et al have won the car wars with most Americans believing Japanese quality is better. Trucks are the last stand for GM Ford Dodge. Might it be smarter to just let those three have the big pickup market with its bad publicity of high gas mileage facing increasing CAFE standards. If you have a fuel eficient fleet, why get into the 5,000 pound 5.7L V 8 market, especially knowing that even bigger trucks using huge diesel engines will be required to field a complete lineup?  Frankly especially with GM And Ford giving up the smaller pickup market, I think I would have taken a pass on this one. After all Honda and BMW don’t make pickups, Honda finally came out with the Ridgeline but it is a sort of Japanese El Camino really.

DLE