http://online.wsj.com/article/SB10001424052748704587004576243042477019926.html?mod=WSJ_hp_LEFTTopStories
It seems that some people never learn. Barry Minkow, the fraudster who gave us ZZZZ Best, is likely headed to prison for another extended stay. As if 7 years the first time around wasn't enough, he could get up to 5 more. What happened this time? Minkow started a company that would look for undiscovered fraud at companies, and then short sell them after announcing his findings. As long as the trading came after the announcement, I don't see anything wrong with this; in fact, it seems pretty savvy.
What happened this time, though, is that in the case of Lennar Co, Minkow just straight-up lied. Although he lead investors to believe that there was serious fraud at Lennar, that was not the case, and it seems that he did this knowingly, which is the key. Minkow personally benefited from disseminating information that he knew to be incorrect and caused harm to the financial well-being of another company and individual.
Minkow, just like the rest of us, needs to learn the line between "brilliant strategy" and "purely self-interested and illegal fraud." We are not above the law, and we should not act like it.
Tuesday, April 5, 2011
Thursday, March 17, 2011
Lessons Learned from Randy Moss
For people familiar with the NFL, Randy Moss is an entirely familiar name. He is a deep threat receiver who gives nightmares to cornerbacks and safeties whenever he is on the field. As a player for the Patriots, he was a favorite target for quarterback Tom Brady. The Patriots had great success with Moss on their team.
In October of 2010, in what came as a surprise move to many, the Patriots traded Moss to the Minnesota Vikings (http://content.usatoday.com/communities/thehuddle/post/2010/10/patriots-finalize-trade-of-randy-moss-to-vikings/1). Moss was considered by many to be the Patriots best receiver. Why on Earth would he be traded? Well, the Patriots wouldn't extend his contract, and Moss--feeling a little underappreciated as a result--asked to be traded after Week 1. Also, it was more beneficial to the Patriots to trade him while they could still get something in return rather than letting him become a free agent at the end of the season.
This all makes sense, I suppose, but the really confusing turn of events was when, after just 4 GAMES with the Vikings, Moss was traded again. The NFL isn't like European Soccer where players get sent on loan to other teams on a somewhat regular basis. Players like Moss don't get traded very often at all, but to be traded after a mere quarter of the regular season--after a team made a sacrifice to acquire him, no less--was mind-boggling.
I look at the trade of Randy Moss as a merger-acquisition arrangement. Well, it's more like an acquisition than a merger, but the point still holds true. Randy Moss certainly had the skills to fit in with the Vikings (and provide Hall-of-Fame-lock QB Brett Favre with a deep threat), he was a hard worker, and had just as strong of a desire to win as the Vikings. What was the problem? Minnesota couldn't absorb or control Randy Moss' ego. It was the purest of style/culture misfits. Under Bill Belichek's system of winning-is-everything-and-we-work-hard-or-die-and-we-are-a-one-unit-team, Moss was controlled by the iron gaze of Hoodie Bill and the demands of paired up with an equally talented team. In Minnesota, for whatever reason, the system was a little different, and Moss' huge ego inflated unchecked. Deciding he couldn't handle it any more, the head coach of the Vikings had Moss traded after a glorious 4 weeks in which the Vikings were 0-4.
Get the right people on the bus, kick the wrong people off. Make sure that cultures will align in a merger or acquisition.
What is Moss saying now, from Tennessee? He wants to be back in New England.
In October of 2010, in what came as a surprise move to many, the Patriots traded Moss to the Minnesota Vikings (http://content.usatoday.com/communities/thehuddle/post/2010/10/patriots-finalize-trade-of-randy-moss-to-vikings/1). Moss was considered by many to be the Patriots best receiver. Why on Earth would he be traded? Well, the Patriots wouldn't extend his contract, and Moss--feeling a little underappreciated as a result--asked to be traded after Week 1. Also, it was more beneficial to the Patriots to trade him while they could still get something in return rather than letting him become a free agent at the end of the season.
This all makes sense, I suppose, but the really confusing turn of events was when, after just 4 GAMES with the Vikings, Moss was traded again. The NFL isn't like European Soccer where players get sent on loan to other teams on a somewhat regular basis. Players like Moss don't get traded very often at all, but to be traded after a mere quarter of the regular season--after a team made a sacrifice to acquire him, no less--was mind-boggling.
I look at the trade of Randy Moss as a merger-acquisition arrangement. Well, it's more like an acquisition than a merger, but the point still holds true. Randy Moss certainly had the skills to fit in with the Vikings (and provide Hall-of-Fame-lock QB Brett Favre with a deep threat), he was a hard worker, and had just as strong of a desire to win as the Vikings. What was the problem? Minnesota couldn't absorb or control Randy Moss' ego. It was the purest of style/culture misfits. Under Bill Belichek's system of winning-is-everything-and-we-work-hard-or-die-and-we-are-a-one-unit-team, Moss was controlled by the iron gaze of Hoodie Bill and the demands of paired up with an equally talented team. In Minnesota, for whatever reason, the system was a little different, and Moss' huge ego inflated unchecked. Deciding he couldn't handle it any more, the head coach of the Vikings had Moss traded after a glorious 4 weeks in which the Vikings were 0-4.
Get the right people on the bus, kick the wrong people off. Make sure that cultures will align in a merger or acquisition.
What is Moss saying now, from Tennessee? He wants to be back in New England.
Friday, March 11, 2011
311 Day
Or, in other words, my post due March 11.
As we've talked about the 7 S's this week, I've thought about the company I used to work for--GCom2 Solutions--and what happened with them when they were acquired by Bowne.
GCom was a mutual fund administration software company, and Bowne was a printer. Bowne figured that by acquiring GCom, it could attain the skillset and technology necessary to both prepare the regulatory financial statements AND then print them off and mail them for the client. It was a sort of vertical integration (to an extent)--but not necessarily a true one since GCom already had printing facilities and Bowne and GCom had very little--if not ZERO--previous work agreements.
Shortly after Bowne made the acquisition, half of GCom's employees were let go--those that were involved in the redundant printing operation. This certainly didn't do a whole heck of a lot for employee morale, and after several rounds of layoffs, Bowne is a shell of what it once was in the pre-acquisition days, and the handful of GCom holdovers (out of what used to be 200+ people) are just pure programming people.
Why didn't the acquisition work? Well, as someone who was close to the situation to some extent, I'd have to say that an important consideration is the culture, fostered by GCom's President who was forced to quit shortly before the sale of the company. His personal connection with countless of the employees who were nervous about the safety of their jobs would have gone a long way toward facilitating a less painful merger. He was in a position of trust--retaining him would have been in Bowne's best interest. He could have helped merge GCom into the Bowne culture. However, the powers that be at Bowne and GCom decided they didn't care for that option. Bowne went into a death spiral because it had bet the ranch on acquiring GCom.
What do I learn from this? STYLE MATTERS. Make sure cultures are compatible.
As we've talked about the 7 S's this week, I've thought about the company I used to work for--GCom2 Solutions--and what happened with them when they were acquired by Bowne.
GCom was a mutual fund administration software company, and Bowne was a printer. Bowne figured that by acquiring GCom, it could attain the skillset and technology necessary to both prepare the regulatory financial statements AND then print them off and mail them for the client. It was a sort of vertical integration (to an extent)--but not necessarily a true one since GCom already had printing facilities and Bowne and GCom had very little--if not ZERO--previous work agreements.
Shortly after Bowne made the acquisition, half of GCom's employees were let go--those that were involved in the redundant printing operation. This certainly didn't do a whole heck of a lot for employee morale, and after several rounds of layoffs, Bowne is a shell of what it once was in the pre-acquisition days, and the handful of GCom holdovers (out of what used to be 200+ people) are just pure programming people.
Why didn't the acquisition work? Well, as someone who was close to the situation to some extent, I'd have to say that an important consideration is the culture, fostered by GCom's President who was forced to quit shortly before the sale of the company. His personal connection with countless of the employees who were nervous about the safety of their jobs would have gone a long way toward facilitating a less painful merger. He was in a position of trust--retaining him would have been in Bowne's best interest. He could have helped merge GCom into the Bowne culture. However, the powers that be at Bowne and GCom decided they didn't care for that option. Bowne went into a death spiral because it had bet the ranch on acquiring GCom.
What do I learn from this? STYLE MATTERS. Make sure cultures are compatible.
Friday, January 28, 2011
Strategy Lessons from the Egyptian Riots
As most people in the world are by now aware, there is serious unrest in northern Africa and some countries in the Middle East right now. The President of Tunisia was removed from office, and protests are going on in Egypt and Lebanon. While the Lebanese protests are mainly peaceful, the Egyptian uprising has escalated to serious levels lately. There doesn't appear to be any unifying thread to the revolt (such as leadership by the Muslim Brotherhood or Al Queda or any other organized group) other than that the people protesting are protesting as Egyptians.
It might be tempting to focus the strategy focus on the responses of President Mubarak, who is escalating by shutting down the internet, cell phone communication, and sending out the military, but I am more fascinated by the stance the US is taking on this. As the rioting spread from Tunisia to Egypt, the US encouraged Mubarak to avoid doing 2 things--shutting down communication (like the internet and cell phones) and involving the military. Sounds familiar, doesn't it? Those are the 2 things that Mubarak has done. What hasn't he done? Talked. Communicated with the Egyptian people. Anything, really, that would placate the feelings of deprivation and unrest.
Egypt has been an important country to America for years. While not necessarily an ally, they have certainly been the go-to Arab nation for pushing peace in the Middle East, and outside of Israel, are the Middle Eastern nation that has received the greatest amount of military aid. President Mubarak has been in power for about 30 years, which correlated very closely to the amount of time that Egypt and the US have been on friendly terms. Why did Hilary Clinton come right out and support the Egyptian people instead of the Egyptian President?
I think that the US is taking a good look at the bigger picture here, especially since Mubarak is not only choosing not to follow the advice of the US, he's not even communicating with the US right now. The Muslim world seems to be undergoing a democratic revolution of sorts--Iran had the Twitter-fueled green revolution after last year's elections, a long-standing Tunisian leader was overthrown, and now a revolution rising in Egypt--and the US wants to 1) promote democracy 2) maintain friendly relations with nations instead of just people 3) keep military ties to the area. This may be the future that the Bush administration envisioned when it entered Iraq--destabilization of tyrannical regimes in the region and the spreading of democracy.
What strategy lessons do we take from this? Take a long-term approach, and be aware of the situation in other similar markets/companies. Adapt to the use of new technology. The US encouraged Egypt to keep the Internet running for 2 reasons, in my opinion--to help placate the mobs AND to encourage their communication. If the rioters could be calmed down by not cutting them off, maybe the riots would die down and Mubarak (who is, as mentioned, somewhat US-friendly) could retain power. But if they couldn't be calmed down, then the US could encourage uprising among people who were rioting on a sense of nationalism rather than religious radicalism and could potentially be even friendlier to the US. We learn from this that it is important to keep one's options open and be willing and able to capitalize on whatever situations develop.
NOTE: As I wrote this, Mubarak announced the dissolution of his current government to be replaced by a new government tomorrow (though he will remain).
It might be tempting to focus the strategy focus on the responses of President Mubarak, who is escalating by shutting down the internet, cell phone communication, and sending out the military, but I am more fascinated by the stance the US is taking on this. As the rioting spread from Tunisia to Egypt, the US encouraged Mubarak to avoid doing 2 things--shutting down communication (like the internet and cell phones) and involving the military. Sounds familiar, doesn't it? Those are the 2 things that Mubarak has done. What hasn't he done? Talked. Communicated with the Egyptian people. Anything, really, that would placate the feelings of deprivation and unrest.
Egypt has been an important country to America for years. While not necessarily an ally, they have certainly been the go-to Arab nation for pushing peace in the Middle East, and outside of Israel, are the Middle Eastern nation that has received the greatest amount of military aid. President Mubarak has been in power for about 30 years, which correlated very closely to the amount of time that Egypt and the US have been on friendly terms. Why did Hilary Clinton come right out and support the Egyptian people instead of the Egyptian President?
I think that the US is taking a good look at the bigger picture here, especially since Mubarak is not only choosing not to follow the advice of the US, he's not even communicating with the US right now. The Muslim world seems to be undergoing a democratic revolution of sorts--Iran had the Twitter-fueled green revolution after last year's elections, a long-standing Tunisian leader was overthrown, and now a revolution rising in Egypt--and the US wants to 1) promote democracy 2) maintain friendly relations with nations instead of just people 3) keep military ties to the area. This may be the future that the Bush administration envisioned when it entered Iraq--destabilization of tyrannical regimes in the region and the spreading of democracy.
What strategy lessons do we take from this? Take a long-term approach, and be aware of the situation in other similar markets/companies. Adapt to the use of new technology. The US encouraged Egypt to keep the Internet running for 2 reasons, in my opinion--to help placate the mobs AND to encourage their communication. If the rioters could be calmed down by not cutting them off, maybe the riots would die down and Mubarak (who is, as mentioned, somewhat US-friendly) could retain power. But if they couldn't be calmed down, then the US could encourage uprising among people who were rioting on a sense of nationalism rather than religious radicalism and could potentially be even friendlier to the US. We learn from this that it is important to keep one's options open and be willing and able to capitalize on whatever situations develop.
NOTE: As I wrote this, Mubarak announced the dissolution of his current government to be replaced by a new government tomorrow (though he will remain).
Friday, January 21, 2011
1.21.2011
As we discussed in class this week, two predominant strategies companies can take is to compete on price or to compete through differentiation--being so unique at producing a good or service that they can command a price premium. Ducati differentiates. Coke and Pepsi are primarily focused on price. Thinking about what companies do to make the most money leads me to think about myself--what is my personal strategy.
If I were to be a cost leader, I would be working for as little as possible to ensure that I keep my job. While my current job in the BYU Laundry has me working for little more than minimum wage, I wouldn't be in a graduate program if I was planning on sticking with the cost leadership strategy.
Anyone who goes to college (or a great majority of them) are shelling out large sums of money to receive specific training. I'm not earning a MAcc to be a long-term pant-presser, nor am I learning how to teach children. I am learning skills that will help me in the business world, specifically the audit profession. I am trying to differentiate myself as much as possible so that my services are a must-have and companies are willing to surrender inordinate amounts of money to me to keep me happy.
If I was going for cost leadership, I'd go work in a sweatshop. Heck, I'd work for free! While that would almost certainly ensure that I was perpetually employed, it would do me no good. I want to be the Ducati of the business world, the Rolls Royce of accounting--not the Yugo or the Bic.
If I were to be a cost leader, I would be working for as little as possible to ensure that I keep my job. While my current job in the BYU Laundry has me working for little more than minimum wage, I wouldn't be in a graduate program if I was planning on sticking with the cost leadership strategy.
Anyone who goes to college (or a great majority of them) are shelling out large sums of money to receive specific training. I'm not earning a MAcc to be a long-term pant-presser, nor am I learning how to teach children. I am learning skills that will help me in the business world, specifically the audit profession. I am trying to differentiate myself as much as possible so that my services are a must-have and companies are willing to surrender inordinate amounts of money to me to keep me happy.
If I was going for cost leadership, I'd go work in a sweatshop. Heck, I'd work for free! While that would almost certainly ensure that I was perpetually employed, it would do me no good. I want to be the Ducati of the business world, the Rolls Royce of accounting--not the Yugo or the Bic.
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