Check out this Business Week article comparing IPOs this past year.

China $53 B

Britain $48.3 B

NY NASD $45.8 B

Companies are wanting to go public in their country of origin.  Nothing speaks to globaliztion more than the above statistic.  Not helping are onerous SARBOX requirements for public companies here, none of that overseas, and in fact the London Stock Exchange touts just that advantage.  Perhaps the recent actions of Mayor Bloomberg are a precursor to what is happening, a couple of years back he banned smoking in NY restaurants, now he is telling fast fooders what can of oil they can use. Such meddling results in people voting, usually with their feet as investment banking scurries overseas.

DLE

It was once said that the Sun Never Sets On the British Empire.  The insinuation was that Britain had imperial power over so many different nations that as the earth turned round, the sun literally never set on one country before it shone on another.  No longer. 

Not only has Britain lost India and Hong Kong, this past two years saw the  last British owned automobile manufacturer bite the dust. Our point about globalization is that you either continue to improve or more often cease to exist.  Consider

Rover the last of the British firms went under in the last two years.

Bentley is now owned by VW.

Rolls Royce cars is owned and in fact powered by BMW.  BMW has successfully re debuted the Mini Cooper brand with good success.

Jaguar, Aston Martin and Land Rover are owned by Ford.  Ford denies that Jag is for sale, Aston is.

Triumph gave it up in the early 1980s after selling more TR 7s than any other car ever produced

MG gave it up in 1980 but will soon be built in, are you ready, in Ardmore, OK by the Chinese!

George Will often uses more syllables than necessary, but this is an interesting take on the Ford problem  First George notes that since Americans have on average gained over 20 pounds since 1960, we consume more gasoline just riding around.  Like Jerry Flint, George notes that cost cutting only takes one so far.  Finally a car that sells like hotcakes has to be introduced.  Do you see anything wrong with George’s analysis in terms of what we learn in the Cost Accounting Course?  Hint, wonders why Ford is still making Mercury when the average buyer is 55 years old, well why indeed?  Let’s get some posts going on this.

Yes I talk a good deal about Ford and GM but rarely has such a corporate decline been on such a public display.  Everything we study in accounting is on the line here.  Ford has mortgaged the entire company to raise what it believes is enough cash to hang on till new products save the day.  The Cash Flow statement we study in Cost and Intermed II tells the story here.  Ford has to stop the hemorrhaging of money with a new model.  Will the cavalry arrive in time?  If not Ford goes the way of Studebaker, the last company to actually call it quits.  American Motors was actually purchased by Chrysler which only salvaged Jeep out of the deal.  Which finally raises the question, if the borrowers had to foreclose, what would they do with  the factories and the name plate?

There was another front page story on Ford in the WSJ this past week, very good reading.  The new president has a War Room with various problems color coded.  As the problems improve, the colors change.  He is frustrated that different models use for example different ways of turning on the lights and wipers, he thinks that should be standard.  Indeed, this is why all Walgreens and Wal Marts are laid out alike, so you know where you  are in any store. This is all fine and good but as I have said, it will be DESIGN that wins the day here.  Meanwhile Toyota is scheduled to surpass GM as the biggest manufacturer of cars this next year.  Quite a feat for a company that arrived here in the early 1970s.

DLE

The dearth of news over the Holiday Week has pushed the marginal stuff to center stage.  Yes, in case you had not heard, Donald Trump, the most overexposed capitalist of our time, has given Tara Conner , the current Miss USA, a reprieve  and a second chance. The Donald owns both the Miss USA and the Miss Universe contests.   A reprieve from what you say?

Seems Ms. Conner has been shall we say partying into the wee hours in the Big Apple.  I cannot find any particular court other than the court of shall we say public opinion, read tabloids, that advanced this bit of news.

But here is the good part.  Tara who is just turning 21 and is from a small town in Kentucky, well at least before she embarked on turning herself into a beauty contestant.  But the official line from The Donald is that Tara, after a long talk with The Donald, will be going into, yep, Rehab.  And so she will serve as a, er ahm well, good example for others.

Okay, now let me get this straight.  It’s okay for Ms. Universe to go into rehab during her reign.  Apparently running into rehab is now deriguer for celebrities seeking a quick way both off center stage and out of their problems. In the last few months we have seen Mel Gibson, Congressman Foley, Mike Richards, and now Tara all headed for Rehab .  Just imagine, the 2007 Miss USA contest.

And now the Betty Ford Center for Recovering Just About Everybody presents,

Formerly a showcase for genetically near perfect women, the contest has now expanded to include those stricken with chemical dependency.  We think this Big Tent inclusionary focus will appeal to the millions of chemically dependent viewers who can now better relate to the contestants and their problems.

Now for the really big irony here.  You will recall that The Donald was originally married to Ivana Trump. But he started carrying on with Marla Maples and in fact installed her in the same hotel that Ivana was managing at the time.  He subsequently married and divorced Marla and just this year married Slovenian model Melanie Knauss.  Is there an ethics problem here?

IN granting Tara a reprieve, Donald stated  that everyone deserves a second chance.  This will no doubt come as a surprise to Carolyn Kepcher . Caroly was featured as Trump’s top aid on the Apprentice until he feared her popularity might challenge his, so he fired her.  Gee no second chance here.  Maybe Carolyn should have claimed substance abuse, being around the substance of  The Donald would be abusive to most anyone I would think.

DLE

I have tried some other music sites, is it just me or does everyone find the ones besides iTunes
like say napster, overburdened with ads and constantly trying to sell you something else, the ads get in the way of using the site.  At iTunes the focus seems to be solely on the product, no annoying you gotta do this you gotta download that, oh quick by the way don’t proceed until you do such and such

Is it just me or have you had the same reactions?

Hey, post your thoughts, we’re on holidays after all!

DLE

I am hesitant to discuss grades. But on the other hand after asking you to take a personal inventory of yourself, I can hardly avoid it.  So let’s look at the Intermed Final.

You will recall that the grades on the last examination were, ah er well,  less than what we all had hoped for.  I am extremely pleased to inform you that the grades on the final exam were considerably better.  Indeed, my conclusion is that you have taken me at my word that the review suggestions will in fact prepare you for the final exam.  And so apparently the class did just that.

The results were a stellar improvement over the last exam.  The class average was an 84.  The modal (most frequently occurring grade in the series) was an 84.  Two individuals got every one of the ten multiple choice about depreciation.  Many got 8 or more on that and the fill in the blank question.  Two individuals in particular won the Break Out of the Middle of the Pack Award with much better scores than previous efforts, one in fact made the high grade in the class on the final, a 96!  There were only two or three  grades below 80.

The Cost Grades were similar, I mention this as I know many of you were OK on cost but concerned about Intermed I.  Now before you get your turbans all tied up in a knot about  what specifically you made in the class, think about this.

As I said in the previous post, you arrived in various states of preparation and experience for the study of accounting.  But you have accomplished much this semester, not only in terms of awareness but in terms of study habits and more importantly, CONTENT MASTERY.   I define this as the ability to finish a problem start to finish correctly on a blank sheet of paper.

The conclusion you should make is that yes, you can conquer Accounting.  There is much to learn and a great deal of satisfaction to gain in that pursuit.  The demand for individuals who can do this is high.  Like Hart in Paper Chase, you are coming to grips with what success requires.

One of my favorite Christmas films is the new standard, A Christmas Story . Written by the great humorist, Jean Shepherd, it describes his own childhood growing up in Detroit in the 1940s.   Ralphie wants a Red Ryder BB Gun for Christmas.  And so he writes his School Theme on what a great present that would make for Christmas.  Day Dreaming, he envisions the teacher, disgusted with the other papers and then reading his.  Delighted she fills the Board with A++++++++++++ as his grade.  Alas, he gets a C+ with the admonition, You’ll shoot your eye out!

In this case, most of you have like Ralphie, hit the target. Let’s not get too comfortable in our success.  Again, consider reading a business book over the holidays.  Do not hesitate to begin reading Chapter 12 and 13 in the Intermed Book, ie, read ahead.    I will also be asking you to review a movie with an ethical theme.  I will post a list of suggestions. The point is not to so much recount the plot of the movie but to relate the theme to the Rule of Principle as opposed to just following rules that may or may not really be ethical.  (Note, Jeff Skilling failed to get a stay on going to jail….)

So a very Merry Christmas.  Let’s  look forward to our new Year in the new building.

DLE

Walter Williams  weighs in on the The Fair Tax in this column. While we have a course in income tax, I advise you to skip it and spend more time on accounting,  You can learn tax more easily by buying the $15 Arthur Young Paperback on preparing your taxes at Hastings or B & N.  Still, taxes are synonymous with CPAs, so the Fair Tax and our horrible income tax system is something you need to understand. Yet the time and money spent preparing tax returns is a huge waste of time and money, prepare tax returns for a while and you will see what I mean, I did for over twenty years.

The Fair Tax is a proposal to junk the entire existing system and replace it with a national sales tax, that way everyone is actually subject to the same thing.  While Williams does not mention it, there are rebates and exclusions so the tax is not paid on basic purchases.  Williams has three important requirements but still thinks it will never pass.  Why, well the same reason the Chinese Communists hold on to communism knowing capitalism creates more wealth. Ah, but communism creates more power, for the rulers.  And our tax system creates more dispensable power (read contribute to my campaign) than a sales tax. 

It is an abomination.  If a potential candidate for President would seize on abolishing the Income Tax, that campaign would move front and center.  But don’t expect it from the Dems with their class warfare ideas, and the Republicans had over a dozen years and they produced nothing, sigh……

Several of you read one of Jim Rogers’ books this past semester.  I urge others to do so and those that read one, complete the other-Investment Biker and Adventure Capitalist, I have two copies each.  It is no accident I picked them for you, check out page B1 of the Dec 9 2006 WSJ.  Jim is as bullish as ever on comodities. Remember our discussion in class that a falling dollar raises commodity prices to keep values constant?  And that eventually this leads to higher not lower interest rates.  He is still of that view.

Those of you that enjoyed your trip with him can learn more reading this article or of course visiting his website, http://www.jimrogers.com.

I also have a copy of his latest book, Hot Commodities, referenced in this article.

DLE

The creation of the Iraq Study Group reflects the vain hope that well meaning senior former public officials can have new ideas that redeem incompetent execution  and  insufficient resources..

WE do not know if the situation in Iraq can be turned around.
Lee Hamilton, co chair Iraq Study GroupI

It is not my intention to get political on the topic of Iraq. However, war, like business, is a human endeavor.  Strategy, tactics, surprise, no wonder The Art of War  has become popular with both politicians and business folk. 

I heartily recommend the first three paragraphs of Prof. Cohen’s column to you. It is the sort of thing that I think historians will point to when, the US involvement has ended and whatever chaos befalls Iraq has happened.

Cohen recommends a behind the scenes evaluation right down to visiting with sergeants and lieutenants, traveling in convoys at personal risk, interviewing Iraqis, and then a report to the President in a no opinion barred result. What we got, he notes, is quite different. This war may well define your generation as the Viet Nam war did mine.

Yet they are far different. North Viet Nam never invaded or attacked the USA, terrorists did indeed attack the USA on 9/11 and at Pearl Harbor, note Mr. Cohen’s column appears on Pearl Harbor Day.

Clearly the Study Group has given up on Victory, indeed the word does not appear in the report.  But consider our response in WW II.  We have some 135,000 troops in Iraq.  Be the end of WWII we had some seven million men and women in the armed forces. We had enough vehicles for each and every one of them to ride to battle with seats left over for a couple of million.  Our commitment on Iwo Jima (see previous post) and Okinawa and with the A bomb saw that to an end.  I will leave it up to you to make parallel conclusions.

Now, consider the article on page 1 of the Dec 9, 2006 WSJ. The President of Toyota is not satisfied with its cost structure.  A graph indicates just how well the Americans have caught up in hours to manufacture a car.  Yet the President of Toyota wants more common components to further cut costs and stay competitive.  Meanwhile Ford has mortgaged all its plants refusing to mortgage Mazda.  One article says this gives Ford more time and room.  If so this will be the first time in history someone awash in debt had more rather than fewer options.

My point is, if the Iraq Study Group were looking at Ford, would they give up their also?  You be the judge.  I think I will save the Toyota column as required reading as we begin the next cost course.It’s all there, everything Dr. Deming discussed in TQM, and it is not going away. 

Class

We have ended our first semester together, three more, at least, lie ahead to finish your BBA.  Since this is the day before the final in Intermed I, this may be my last chance to really get your attention before January 16, 2007.  So, let’s visit a moment about your favorite topic-YOU.

You have arrived in various mental and academic states of perparation, that’s understandable.  Some of you are recently from community colleges, others have taken the path more slowly.  Whatever, we have spent some time attempting to ramp everyone up to a base of common accounting knowledge.  That’s a start.

My bigger charge, however, has been to disarm you of the K-12 testing notion, that all is required is to know the answer on the test.  That is not and has never been the point of a university education.  Indeed it was not the point of a high school education until the Legislature started telling teachers how to teach.  My aim has been to get you to look up, see the larger picture, put what we are doing in context, listen to outside speakers, read and appraise the outside world.

To achieve that moving target of a goal, I have asked you to subscribe and read the WSJ and Business Week.  To further that end I have started this Blog attempting to link what we study to what is happening.   Coach Grant Teaff in his remarks on Leadership at UNT Dallas said the joy of this is
"’when they get it.’"  I would say about one third of you are already getting it.  Which is to say that you do respond to the Blog, you do come to class with questions and observations, and you are doing considerable more outside reading than you did before this semester. Ditto the book reports, indeed, I honestly believe that many of you enjoyed the books you read and found this a worthwhile pursuit. PS, book reports will be required next semester, why not come by and pick one up and read it over the break?   We have brought some great speakers to campus in Grant Teaff and Richard Allen.  Arianne Auschler and Ken H. also added to your dimension of how business relates to class. Indeed one of you reported that he had ordred a copy of Dale Carnegie’s book, after all it had come up twice in their comments as well as mine, we must be on to something.

You will recall the clip I showed from the Movie, The Paper Chase . You can click that hyperlink to order from Amazon.com, the best ten bucks you will spend this Christmas.  If I thought I could get an audience, I would certainly screen the film at school with time for a discussion afterwards.  In the film,  Timothy Bottoms remarks to Lindsey Waggoneer that it is only early October and already the class has divided into thirds. The first group engages the Professor.  The second group is not necessarily less bright, but lacks the intellectural courage to do so.  The last group has settled into the back seats, dodging being called on and hoping to avoid the experience of being grilled in class. It’s the courage of the first group, that’s the thing.  Our class will however continue next semester, no dodging alloowed.

What I am getting at here is, take a personal inventory of yourself.  How has your perception of both your potential and how and what you know about the business world changed this semester?  I hope you are happy and a bit surprised with the outcome.  Now, using the tools you have gained, how will you aproach next semester?  We will be ramping up our expectations of your performance.  There’s lots of competition out there-UT Arlington, SMU, UT Tyler, UT Dallas, etc.  My goal is that you be as well prepared as anyone you encounter from any of those schools in your career.  That is not a challenge I take lightly.

I am open to your constructive suggestions. I will be preparing the syllabi for next semester over th break.  Do not hesitate to drop me an e mail and I will send them to you.   And let me take this opportunity to say that I have very much enjoyed meeting all of you and participating in your , er make that our, learning process.

Dennis Elam