2011 in review

The WordPress.com stats helper monkeys prepared a 2011 annual report for this blog.

Here’s an excerpt:

The concert hall at the Syndey Opera House holds 2,700 people. This blog was viewed about 23,000 times in 2011. If it were a concert at Sydney Opera House, it would take about 9 sold-out performances for that many people to see it.

Click here to see the complete report.

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ROWE Program at Best Buy

This document presents a discussion about the ROWE Program at Best Buy. Best Buy Co., Inc. is a specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada, China, Turkey and the United Kingdom. The company’s subsidiaries include Geek Squad, Magnolia Audio Video, Pacific Sales, and, in Canada operates under both the Best Buy and Future Shop label. Together these operate more than 1,150 stores in the United States, Puerto Rico, Canada, China, Mexico, and Turkey.

On March 9, 2009, Best Buy became the primary electronics retail store (online and bricks and mortar) in the eastern United States, after smaller rival Circuit City went out of business. Fry’s Electronics remains a major competitor in the western United States. Many locations feature in-store pickup, which can be arranged through the company’s website.

The Culture of Best Buy

Best Buy has embraced the use of social media to empower its employees and reaped massive productivity gains as a result. Traditionally, we associate companies like this with classic top-down management approaches. Top management points out that as their business challenge shifted from simply distributing product to ensuring customer delight under countless usage scenarios, only a method that tapped the wisdom of everybody made sense.

Three of the social media tools they use are: The ‘Loop Marketplace’ which replaces the suggestion box with a market where employees can submit and share ideas, and often get them funded. A prediction market which was apparently dead on in predicting Christmas sales, and an internal social network called Blue Shirt Nation which they use to solve corporate problems from how to increase use of the company’s pension scheme to changing IT systems.

The results: 40% more employees enrolled in the 401k pension scheme, millions of dollars saved on a new in-store IT system and employee turnover reduced by over 50%. Underpinning the success of these tools is a strong corporate culture and very visible support from the CEO. A strong culture is born from strong values that everyone can see embodied in the everyday words and actions of senior management.

The Best Buy’s values are: have fun while being the best, learn, from challenge and change, show respect, humility and integrity and unleash the power of our people.

Strong values are essential to guide employees for corporations who are serious about empowering the edge. This is also true in small companies, where having a strong positive culture is a big driver of success.  There are some differences at small companies; it is not usually necessary to have a written set of values and the culture will change more quickly as the business grows, but the same basic logic applies.

The approach to organizational change that the ROWE program illustrates

Best Buy used to be known for its killer hours, herd-riding bosses, and high turnover. Now it is home to a workplace revolution called ROWE, for “results-only work environment,” that seeks to demolish decades-old business dogma that equates physical presence with productivity. According to a recent article on ROWE in Business Week (“Smashing the Clock“), the goal of the program is to judge performance on output instead of hours spent at the office or in meetings.

In practical terms, ROWE lets Best Buy employees get up and leave in the middle of the workday to attend a matinee or Little League game. Workers pulling into the company’s headquarters at 2 p.m. aren’t considered late. Nor are those pulling out at 2 p.m. seen as leaving early. There are no schedules. No mandatory meetings. In short, work is no longer a place where you go, but something you do. As long as the work gets done and get’s done well, it’s okay to take conference calls while you hunt, collaborate from your lakeside cabin, or log on after dinner so you can spend the afternoon with your kid.

The crazy thing is that ROWE wasn’t authorized by the CEO, Brad Anderson, but began as a “guerilla” initiative nurtured by innovative employees that eventually transformed the company (to be sure, Anderson encourages such bottom-up, stealth innovation).

The results of ROWE speak for themselves: since the program’s implementation, average voluntary turnover has fallen drastically, while productivity is up an average 35% in departments that have switched to ROWE. Overall employee satisfaction is up too, according to the Gallup Organization, which audits corporate cultures.

The resistance that the ROWE program had to overcome

ROWE is not for every company (though ROWE consultants will insist it is!), but it can make a big difference in productivity and employee satisfaction in the firms that implement it. After a research, you would be surprised by resistance from some staff who appeared to be flexible and resilient. It is also amazing, how well this works in many of our areas. The goal is to have it work well everywhere and Best Buy is trying to get there.

Having migrations take place over two years is a challenge because staff are in so many different places in the change (some migrated, some not) but they have gained great skills in handling just about any issue that comes along. One surprise is the number of “converts” that we see: people who really didn’t like ROWE but have completely changed their minds.

Based on that research, we find out some “cons” of the ROWE program: for some people can be difficult to manage, besides that, employees who are not disciplined find it difficult to work in this type of environment and there is an internal push back from some employees.

Sources of stress that is apparent in the case

Although every company will respond to ROWE differently, the core tenets are unchanging and non-negotiable. Best Buy has developed and copyrighted the strategy that helps an organization overcome inertia and move forward. The strategy is based on three things: the power of time, the judgments that people make about time in the work environment, and how work needs to happen.

The approach may be radical, but it’s right on target for today’s employees, there is a real need for a flexible program such as this that eliminates stress and engages workers. On March 2010, a research took the emotional temperature of 400,000 U.S. employees annually and has found that stress is increasing. In 2006, 31% said they find it difficult to balance work and personal responsibilities, compared to 25% in 2005. Forty-three percent now think their workload is excessive, up from 39%, and 46% are bothered by excessive pressure on the job, up from 41%.

Best Buy clearly show concerns around stress, workload and work-life balance. This goes to the heart of what ROWE is addressing, says one of the logistics managers. But while employers need to be more flexible, they also should beware of letting employees become detached. With traditional telework, there are some risks that workers will feel less connected to the company. The goal should be to keep stress low and engagement high.

According to this, Best Buy has evidence showing companies that have taken care of their employees’ stress and engaged them in their work enjoy the biggest financial benefits. In contrast, companies that just get one of those right, for example, they engage employees, but stress them out, do not realize optimal results.

Has the organizational culture helped with the change?

Using ROWE, 80% of Best Buy’s corporate staff now come and go as they please as long as the work gets done on time. The premise of ROWE is that employees are paid for results rather than hours worked. This provides both freedom for employees and results for employers. ROWE is based on the assumption that employees will do more and better work when given the latitude to decide how and when it is done.

ROWE is employee controlled not management controlled. ROWE requires accountability and clear goals, while flextime requires policies and guidelines. ROWE has unlimited options and is fluid, while flextime has limited options and ultimately is inflexible. Most importantly, ROWE is based on the work and not the hours.

The concept of ROWE is a bit like college where you decide when and where to study and write papers. In most workplaces today, employees are treated more like grade scholars with strict policies on when to show up, where to sit, how to do the work and when to leave. No wonder recent graduates become disillusioned when entering the “real world.”

Now that aging Baby Boomers are mixing with Generations X and Y, it seems a perfect time to initiate a different approach to how work is performed. We certainly have the technology (teleconferencing, emailing, text messaging, and cell phone calling) to extend the workplace location and flexibility on when to do the tasks. Now it’s just a matter of will.

ROWE is not an entirely new concept. Piece work, where workers are paid a fixed rate for each unit produced or action performed, has been around for more than a century. And then there is performance-rated pay, where money is paid directly on how well a worker performs in the workplace. A commission-based sale is a form of this type of compensation.

Conclusions

ROWE builds upon other models to provide employees with more opportunities to do the job their own way and this can lead to greater employee engagement and higher productivity. But ROWE is not without its challenges. Measuring output for some jobs (overhead, administration) can be very difficult. Some people have a hard time working with others if they are not face-to-face. And overall management can be challenging.

Nevertheless, ROWE is proving to be effective returning an average of 35% increase in productivity while reducing voluntary turnover by as much as 90%. In addition, research by the Flexible-Work and Well Being Center at the University of Minnesota found that more ROWE employees than comparable employees:

• Have greater organizational commitment
• Report higher job satisfaction
• View the culture as family friendly
• Report increased job security

References

http://www.businessweek.com/magazine/content/06_50/b4013001.htm

http://www.jerm.com/2010/01/implementing-a-results-only-work-environment/

http://www.americanprogress.org/issues/2010/11/rowe111010.html

http://ebn.benefitnews.com/news/new-dawn-best-buys-rowe-brings-64150-1.html

Conflict Resolution at General Hospital

This document presents a discussion about the conflict resolution at the General Hospital. Conflict happens daily, whether it happens individually or between two or more individuals. Conflict can be bad or good depending on how an individual or group respond and understand that conflict. Also, conflict depends on different perspectives.

When each person involved in the conflict needs something, all of them should make an effort to work this out. Each person becomes frustrated because he or she realized that he or she has to give up something that he or she likes or cannot obtain something that he or she desires.

Conflict and the need to manage it occur every day in organizations. But the conflict management refers to the diagnostic processes, interpersonal styles and negotiation strategies that are designed to avoid unnecessary conflict and reduce or resolve excessive conflict.

The Conflict

The General Hospital was founded in 1968. Over the last years, the rate of patient occupancy has dropped to 65 percent and the first measure that the CEO is considering regards the cost control to make some improvements in the organization. General Hospital’s CEO Mike Hammer believes that physicians are a major factor, but they are not interested in the role of the costs in determining the viability of the hospital.

In the past, Hammer tried to control physician-driven costs but all his attempts failed. Now, he hired a new chief operating officer, Marge Harding, who will make the entire job to cut some costs at this hospital. They have chosen to play the “good cop-bad cop” strategy with the doctors. However, looks like Ms. Harding has a biased vision over the physician’s role at the hospital. Her personal goal is become CEO within the next 5 years.

The first measure taken by Harding is to computerize the interpretation of EKG reading. By doing this, the hospital would save $100,000 in doctor’s salary over the next three years and provide nearly instantaneous results.

Without any prior research or practice, Harding signed a contract for one year and technicians were trained. Then, she fired the cardiologist who was doing the EKG interpretation and takes a plane to her vacation. However, on its first week, the new EKG interpretation system is incorrect in 25 percent of the reports. The Hospital might face legal liabilities from inaccurate readings, a factor that seems was not considered by Harding before she left.

Hammer and Harding keep their decision to stay with the new system but the physicians are furious not only because one of the staff was fired, but also because they were completely ignored before making any changes in the new EKG reading implementation.

The Conflict Management Styles in the Case

Choosing a conflict management style is important in many areas of life, especially in business and the workplace. Any manager or owner of a company will need to choose a conflict management style to handle problems between employees, as well as between an employee and the management.

From my point of view, ate the very beginning, Mike Hammer started with the collaborating style for conflict management. Using this method, he would sit down with the individuals involved in the issue, in this case the physicians and hear their concerns, as well as voice their own. Once each party has had a chance to have their say, the manager or owner would then try to find a solution that would make both parties happy if possible. If not, they would choose the solution that is best for the company.

Later on, Hammer and Harding were using the forcing style. Using this method, one would use their position as the manager or owner to make a decision regarding the conflict, no matter how the physicians feel about the situation. Without hearing everyone’s side or taking anyone’s feelings into account, the manager whose conflict management style is forcing will make his own decision in what would be best and that decision would not be up for discussion.

This style would not be best for those who are trying to work with their employees so as to be a leader who influences them and is looked up to by them because forcing will tend to alienate those who are affected by the decision and make them feel as if their thoughts and feelings are unimportant.

Finally, when the physicians complained about Harding firing Dr. Boyer to implement the new EKG system, Hammer uses the avoiding approach. Using this method, Hammer would completely ignore the conflict or issue at hand. Furthermore, Hammer would not take any steps to eliminate the conflict or issue. Like the accommodating conflict management style, avoiding can be very harmful to a business and set it on a downward slope.

This is because the employees will see this person of authority as someone who either does not care or someone who will not take action against them when they do something that is not good for the company, such as become habitually late with assignments or become sloppy and produce substandard work.

How General Hospital Can Use Teams to Address the Cost Reductions

Teamwork and cooperation are essential in an organization which aims to be effective and efficient, and not likely to be divided by conflicting factions. The best teamwork usually comes from having a shared vision or goal, so that leaders and members are all committed to the same objectives and understand their roles in achieving those objectives.

Important behaviors in achieving teamwork and minimizing potential conflict include a commitment by team members to share information by keeping people in the group up-to-date with current issues, express positive expectations about each other, empower each other publicly crediting colleagues who have performed well and encouraging each other to achieve results, building teams by promoting good morale and protecting the group’s reputation with outsiders. Finally, resolving potential conflict by bringing differences of opinion and facilitating resolution of conflicts.

How Hammer Can Use Negotiation Skills

Effective negotiation helps you to resolve situations where what you want conflicts with what someone else wants. The aim of win-win negotiation is to find a solution that is acceptable to both parties, and leaves both parties feeling that they’ve won, in some way, after the event.

There are different styles of negotiation, depending on circumstances.

Where you do not expect to deal with people ever again and you do not need their goodwill, then it may be appropriate to “play hardball”, seeking to win a negotiation while the other person loses out. Many people go through this when they buy or sell a house – this is why house-buying can be such a confrontational and unpleasant experience.

Similarly, where there is a great deal at stake in a negotiation, then it may be appropriate to prepare in detail and legitimate “gamesmanship” to gain advantage. Anyone who has been involved with large sales negotiations will be familiar with this.

Neither of these approaches is usually much good for resolving disputes with people with whom you have an ongoing relationship: If one person plays hardball, then this disadvantages the other person – this may, quite fairly, lead to reprisal later. Similarly, using tricks and manipulation during a negotiation can undermine trust and damage teamwork. While a manipulative person may not get caught out if negotiation is infrequent, this is not the case when people work together routinely. Here, honesty and openness are almost always the best policies.

The negotiation itself is a careful exploration of your position and the other person’s position, with the goal of finding a mutually acceptable compromise that gives you both as much of what you want as possible. People’s positions are rarely as fundamentally opposed as they may initially appear – the other person may have very different goals from the ones you expect.

A Strategy to Resolve the Problem

Even though renovations are in order, this should be a process which evaluates any and all cost reduction purposes for all the areas, not only addressed to physicians’ salaries. Also, the physicians who would like to stay at the General Hospital should understand the situation of this organization. With selfishness and arrogance, no one would get any benefit.

The “good cop – bad cop” strategy seems to be terrible. In a professional environment that approach is inappropriate. A manager cannot threat people as a way of negotiate about any situation. Marge Harding should change the approach. From the reading, I believe she is more focused on her long term career expectations, instead of the Hospital’s goals. That fact disqualifies her as an unbiased manager.

The EKG interpretation system should have been reviewed before being implemented. This fiasco proved the lack of knowledge of those who suggested this alternative procedure as a solution, instead of focus on the service the Hospital is supposed to provide.

Mike Hammer cannot brush off the physician’s team. Instead, he should explain the Hospital’s real situation. A manager who performs without explanation is using an authoritarian approach and he cannot be seen as a leader.

References

·         http://www.mindtools.com/CommSkll/NegotiationSkills.htm

·         http://library.findlaw.com/2001/Jan/1/130785.html

·         http://www.innovativeteambuilding.co.uk/pages/articles/conflicts.htm

Alan Mulally, CEO, Ford Motor Company

This document presents a discussion about Alan Roger Mulally (born August 4, 1945), who is an American engineer and businessman. Mulally is currently the President and Chief Executive Officer of the Ford Motor Company. Ford, which had been struggling during the late-2000s recession, returned to profitability under Mulally and was the only major car manufacturer to avoid government-sponsored bankruptcy.

Mulally moved to Ford in 2006. He had worked at Boeing since 1969. He had been chief engineer for development of the 777, and was later Vice President of Engineering for commercial aircraft. Mulally had no sales experience, and he was not a “Detroit car man,” much less a car man at all. He sold his Lexus after moving to Dearborn.

What is most impressive is Mulally’s “results oriented” leadership style. His management is crisp and authoritative, although he defers to the firm’s design experts on the minutiae of the product lines. But on the big questions of the company’s past mistakes and where it’s headed, Mulally made key decisions that placed Ford in good stead. When Mulally testified before Congress in December 2008, along with GM’s Rick Wagoner and Chrysler’s Robert Nardelli, he announced that Ford would be able to survive the recession without a bailout.

The Role of Leadership and How It Can Impact Organizational Performance

Leadership is an art, and like other arts, requires discipline, good techniques and self-expression. There are some basic rules or formulas connected with an art, but these are primarily guides to self-expressions.  Techniques used successfully by some, are perhaps usable by others.  However, an individual learning the art must first convert knowledge to techniques, and then perhaps blend them with personal characteristics that lead to self-expression.

Perfection in leadership, as in any art is never achieved.  There is always room for improvement.  Techniques of leading must changes with changing times, with variance in customs, and with the differences in the ideals of the society of our day.  Too, applied in research in psychology, sociology, and related fields render some of the previous accepted techniques as invalid and in need of change.  This then, means that leadership is not necessarily measured in terms of what a person does, but rather in terms of the effects of what he does.

Leadership actions must be developed which fit individual and group personalities and bring effective results when used by an individual in a particular manner. This is not intended to indicate that knowledge of leadership patterns is not important.  Quite the contrary, for the greater the knowledge of the leader, the more probable are his chances of selecting and developing a pattern which will mean success for him.  Knowledge is valuable.  Techniques are valuable.  Patterns are valuable.  However, in the future analysis, the results achieved determine the success or failure of an individual placed in a position requiring leadership.

Mulally’s Leadership Style At Ford Motor Company

Mulally’s being “this way” has, at least for now, kept Ford ahead of GM and Chrysler in the fight for survival. Unlike its traditional rivals, Mulally’s Ford insists it has enough cash to ride out the economic downturn and does not want the government loans that the other two companies have accepted. Ford’s financial independence is largely due to a new operational discipline that Mulally has installed, as well as some timely strategic moves he initiated.

So while GM suffered the ignominy of seeing the Treasury Department’s auto task force depose chairman and CEO Rick Wagoner, and Chrysler has declared bankruptcy, Ford stands alone as an independent company and, potentially, a Detroit survivor. Ford Motor is still losing money, like nearly every other automaker, but it shows signs of recovery.

In the U.S. its market share of retail sales to individuals (as opposed to wholesale sales to fleet customers) has gone up in six of the past seven months. It has negotiated four new agreements with the United Auto Workers, bringing its hourly labor cost down from $76 an hour to $55 an hour and, Ford says, promising to make it competitive with Toyota (TM). While GM and Chrysler are hoarding cash, Ford actually laid out $2.4 billion in March to pay down $10.1 billion in long-term debt. Its share price has increased nearly fivefold since hitting a low in November.

How Goal Setting Helped Ford Improve Its Performance

Mulally was hired as CEO in September 2006. He has not engineered, designed, or built any cars. But he has devised a plan that identifies specific goals for the company, created a process that moves it toward those goals, and installed a system to make sure it gets there. Mulally watches all this with intensity – and demands weekly, sometimes daily, updates.

The Mulally method has pointed Ford to some smart strategic moves. Sensing a recession in 2006, Mulally decided to borrow $23.6 billion against Ford’s assets. Piling on more debt wasn’t an easy call, but the extra cash meant that Ford could say no to government loans when sales fell apart last year. Mulally is moving to integrate the company globally, despite several failed attempts in the past. In 2010, Ford was selling small cars in the U.S. that were developed in Europe.

Mulally persuaded Bill Ford to dispose of Jaguar and Land Rover and focus its resources on the Ford brand, and by moving quickly he managed to sell them to India’s Tata in 2007 when there was still a market for makers of luxury vehicles. He took longer to untangle Volvo from the rest of the company, but he has now put that up for sale too. All those moves have helped Ford to separate from GM and Chrysler, and Mulally is pumped.

He has promised that Ford’s core North American operations, as well as the entire company, will turn profitable by 2011. It had better, because it can’t keep losing money indefinitely. Ford recorded a loss of $14.7 billion last year and another $1.4 billion in 2009’s first quarter. If the U.S. and the rest of the global economy continue to slump, Ford’s survival could be endangered.

Assessing Mulally in communication openness

For Alan Mulally, everyone has to know the plan, its status, and areas that need special attention. For instance, he is determined that Ford reduces its dependence on light trucks as gas becomes more expensive, and he has let the entire organization know it in the bluntest possible language.

Mulally’s openness seems to have won him support throughout the organization. Arriving at Ford, Mulally boned up on the company like a student cramming for an exam, interviewing dozens of employees, analysts, and consultants, and filling those five binders with his typed notes. The research allowed him to develop a point of view about the auto business that now frames all his decisions.

Its pillars draw heavily from his experience at Boeing: Focus on the Ford brand (“nobody buys a house of brands”); compete in every market segment with carefully defined products (small, medium, and large; cars, utilities, and trucks); market fewer nameplates (40 worldwide by 2013, down from 97 worldwide in 2006); and become best in class in quality, fuel efficiency, safety, and value.

The Effectiveness of Mulally’s Leadership Style and Recommendations

So far, Mulally has been mostly managing the hand dealt him when he arrived. The first new model to bear his fingerprints will be the restyled 2010 Taurus that goes on sale in June. His plan for “One Ford” won’t get a real test until next year when two small, fuel-efficient cars, the Fiesta and the Focus, make their way from Europe to the U.S. It remains an open question whether Americans will be willing to pay more for the smaller, higher-content vehicles.

They will have to if Mulally is to succeed in reducing Ford’s dependence on pickup truck profits. The biggest unanswered questions about Mulally are how long he will stay at Ford and who will succeed him. Bill Ford has been saying that he hopes Mulally never leaves, but having spent nearly four decades in Seattle, he isn’t likely to settle in Dearborn, and in fact, the company spent $344,109 in 2008 flying Mulally and his family between the two cities and elsewhere. Now that Ford is running more smoothly, there shouldn’t be a need to look outside again for his successor.

If Mulally leaves when he turns 65, the betting is that he will be succeeded by Booth, who is 60. If Mulally stays longer, then 48-year-old Fields would likely be the choice.

Mulally talks as if he has found a home and is doing the work he was always intended to do. At one of his early meetings with employees upon joining Ford in 2006, Mulally was asked whether Ford would be able to remain in business: “Was Ford going to make it?” “I don’t know,” Mulally replied. “But we have a plan, and the plan says we are going to make it.” It was a moment Mulally’s mother would have appreciated.

Conclusions

Based on the previous information and research, here are five Mulally success factors I have come up with that I think apply to any leader charged with leading a turnaround in their organization:

Preparation: Before he took the job at Ford, Mulally spent a lot of time with Chairman Bill Ford and every member of the senior management team to learn as much as he could about the culture of the firm and its competitive position.  That time spent up front allowed him to come to the table with a clear sense of what he needed to do from day one.

Clear Plan: Upon his arrival at Ford, Mulally’s intent was to focus the company on its core brand, Ford, and to divest other brands they owned such as Volvo and Jaguar. His plan was to invest in the long term future of the core brand and, sensing the recession that eventually came; he established $23 billion in lines of credit within 90 days of taking the CEO job. Those credit lines have enabled Ford to invest in new product development while avoiding the government assistance that GM and Chrysler both had to take.

Clear Point of View: Mulally is a very effective communicator.  He speaks in a down to earth tone with a very clear point of view on his business and his plan. As an example, he says in the New Yorker interview that fuel efficiency, safety, quality and value are going to drive consumer decisions on car purchases.  That’s the kind of clear, concise, easily repeatable point of view that an organization can use as a guidepost.

Align the Culture with the Plan: Mulally is pushing for consistency of purpose, transparency and collaboration in the management culture at Ford.  He has put an end to calendar based rotations of executives into new assignments so that they have enough time to prove themselves in the jobs they’re in.  He is insisting that managers put their cards on the table in weekly update meetings so that everyone has the opportunity to help solve small problems before they become bigger ones.

Focus and Follow Through: Mulally has set up clear systems that keep him and his team accountable to their plans. Every initiative and its major tasks are color coded as green for on target, yellow for questionable and red for a problem.  Charts are left on the conference room walls and updated weekly for all to see the changes in status.
References

http://americanpowerblog.blogspot.com/2009/05/how-alan-mulally-is-saving-ford-motor.html

http://blogs.govexec.com/executivecoach/2009/09/five_things_alan_mulally_is_do.php

http://money.cnn.com/2009/05/11/news/companies/mulally_ford.fortune/index.htm

ALLSTATE INSURANCE COMPANY

This document presents a discussion about the Allstate goal setting process. With goals that are vague or poorly thought out, it is easy to work hard to achieve an outcome that you dislike once you get it. Or you might succeed, but not notice that you did. Plenty of workaholics have that problem.

Societies make these mistakes too. Traffic jams make cars slower than the trolleys they replaced. Citizens overthrow oppressive governments, only to install worse ones. Automation reduces toil but throws millions out of work.

On the other hand, some people and groups do a great job of wanting things worth having, and getting what they want in ways that really work. This isn’t magic. These people are doing something different that helps them succeed. You too can learn to set goals in ways that work.

Allstate Goal Setting Process

The Allstate Corporation is the second-largest personal lines insurer in the United States (behind State Farm) and the largest that is publicly held. The company also has personal lines insurance operations in Canada. Allstate was founded in 1931 as part of Sears, Roebuck and Co., and was spun off in 1993. The company has its headquarters in Northfield Township, Illinois, near Northbrook. Its current advertising campaign, in use since 2004, asks, “Are you in good hands?”

Allstate has developed a four stage program for personal development. These stages are:

Step One. – Succession Programming: Many candidates are identified and developed for each key position. This system enables to track more than 36,000 employees, ensuring that the company’s future will be diverse at all levels.

Step Two. – Development: All employees receive an assessment of their current job skills and a road map for developing the critical skills necessary for advancement. Options include education, coaching and mentoring and classroom training.

Step Three. – Measurement: Twice a year the company makes a survey amongst all the employees using the Diversity Index and the QLMS (Quarterly Leadership Measurement System).

Step Four. – Accountability and Reward: To link compensation to the company’s diversity goals, 25 percent of each manager’s merit pay is based on the Diversity Index and the QLMS.

Allstate’s Competitive Advantage

In Allstate, the keyword is “Diversity”. Allstate was the only Illinois based company to make it to the Top 10 list for African Americans and one of two Illinois based companies to make it to the Top 10 list for Recruitment and Retention. Allstate was one of four Illinois based companies to make it to the Top 50 list.

Women make up 60.4% and minorities 28.6% of Allstate’s 40,000-employee workforce. Of notable significance to Diversity Inc. magazine was Allstate’s ability to recruit and retain a diverse workforce.

At Allstate, diversity is a business strategy to gain a competitive advantage in the marketplace and workplace, By leveraging differences, Allstate would be are able to attract and retain the best talent, drive high performance, provide tailored service to a diverse customer base and strengthen our corporate brand in the marketplace and labor market.

Also, Allstate demonstrates their commitment to diversity in several ways such as diversity training is mandatory for all employees. The employee perceptions on diversity and the work environment are measured through an annual employee survey. Allstate’s CEO regularly communicates the importance of diversity through Allstate publications, videos and employee meetings.

Affirmative action is integrated into employee processes such as succession management, recruitment and leadership development. Senior leadership is held accountable for affirmative action results through performance management. Besides that, Allstate has a strong recruitment program for minorities working closely with higher education institutions that have a diverse student enrollment. Allstate executives also take active roles on the boards of some of these institutions.

Adoption assistance, flexible hours, the ability to work at home and/or telecommute, on-site child care and dependent care benefits are some of the work life programs that help Allstate to recruit and retain a diverse workforce. In addition, Allstate’s diverse workforce helps it to better serve and attract its diverse customer base. Allstate is one of the first property & casualty insurance companies to aggressively seek growth in the emerging markets.

There are now more than 3200 Allstate agencies that speak languages other than English (a total of 62 different languages), over 300 point of sale collateral materials that are culturally relevant to African-American, Asian-American and Hispanic consumers, customer service lines for Spanish-speaking customers, product information in Spanish on www.allstate.com/spanish/ and an in-language website for Chinese consumers at www.chinese.allstate.com.

Recommendations for Allstate Reward System

Unfortunately, not everything is working out at Allstate, In July 2008, the American Association for Justice ranked Allstate No. 1 among nation’s worst insurers. This ranking was given because: “While Allstate publicly touts its ‘good hands’ approach, it has instead privately instructed its agents to employ a ‘boxing gloves’ strategy against its policyholders,” said American Association for Justice CEO Jon Haber. So, the first task is improving the customer service.

Also, this company is well known to be focused on profits instead of service. For many insurance experts, Allstate dodges and weaves to avoid paying claims to increase its profits. Another common practice for Allstate is offering low-ball claims so that desperate customers in dire straits would be more likely to accept a settlement offer while Allstate continued to make a profit and collect interest on the insurance payment. Allstate would offer its “good hands” in the way of a low-ball claim and, if the customer did not accept, to get out “boxing gloves.

How my motivation would be influenced by Diversity Index and QLMS

A diversity index is a statistic which is intended to measure the local members of a set consisting of various types of objects. Diversity indices can be used in many fields of study to assess the diversity of any population in which each member belongs to a unique group, type or species.

For instance, it is used in ecology to measure biodiversity in an ecosystem, in demography to measure the distribution of population of various demographic groups, in economics to measure the distribution over sectors of economic activity in a region, and in information science to describe the complexity of a set of information.

Allstate’s annual Quality Leadership Measurement Survey (QLMS) is a detailed survey that drills down to the unit level with specific measures as to how the individual manager is performing on leadership aspects of the job, including diversity execution. Questions range from whether people are treated with “dignity and respect” and if individuals are allowed to advance “regardless of race or gender” in that manager’s unit. All levels of managers are held accountable for diversity through the QLMS and organizational success factors, which is part of their annual performance review that determines pay decisions.

Conclusions

When it comes to creating accountability for diversity and inclusion, experts suggests:

–          Keep the process clear, simple and understandable. Make sure that the idea of scorecards and accountability is aligned with the culture of your organization, like a manager said. “If you don’t have metrics and scorecards for other things you can’t just have them for diversity.”

–          Think carefully about the behaviors that you want. An X company first focused heavily on outcome or “quota” metrics such as recruiting, retention and promotion, when in retrospect, another financial manager said: “We should have focused more on the qualitative measures because those are the behavior changers.”

–          Remember that measures are fine, to a point. “We have certainly learned over time that you can have too many measures,” said a CEO. “Although as a financial services company results are everything, and we measure everything, having too many can be overwhelming.”

References

–          http://www.shrm.org/hrdisciplines/Diversity/Articles/Pages/MoreThanNumbers.aspx

–          http://www.managingwholes.com/good-goals.htm

–          http://en.wikipedia.org/wiki/Allstate

–          http://en.wikipedia.org/wiki/Diversity_index

How personal can ethics get?

This document presents a discussion about an ethical dilemma in a fragrance company. Ethical dilemmas, also known as moral dilemmas, have been a problem for ethical theorists as far back as Plato. An ethical dilemma is a situation wherein moral precepts or ethical obligations conflict in such a way that any possible resolution to the dilemma is morally intolerable. In other words, an ethical dilemma is any situation in which guiding moral principles cannot determine which course of action is right or wrong.

Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia.

For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings such as ethics codes and social responsibility charters. In some cases, corporations have redefined their core values in the light of business ethical considerations. And the discussion on ethics in business is necessary because business can become unethical, and there are plenty of evidences today on unethical corporate practices

How personal differences and preference can impact organizational ethics

In some circumstances, some people have power over other people. For example, a therapist has more power than a patient. In a situation in which people are not equal in terms of their power, it may be important not to treat people as if they were morally equal.

Ordinarily, while it might be acceptable for someone who happens to be a therapist to ask another person for a date, it would not be acceptable for a therapist to ask a patient for a date (because there would be unusual pressure on the patient to accept due to the patient’s status in therapy). That shows the difference between personal ethics and professional ethics.

Ethics have nothing to do with being nice. Ethics is motivation based on ideas of right or wrong. The “right conduct” has nothing to do with being friendly. It is very possible to be an ethical ignorant. Or be a very nice person with no sense of personal or professional ethics.

But let’s explain the definition of ethics and what ethics are to us. Business ethics can be defined as written and unwritten codes of principles and values that govern decisions and actions within a company. In the business world, the organization’s culture sets standards for determining the difference between good and bad decision making and behavior.

In the most basic terms, a definition for business ethics boils down to knowing the difference between right and wrong and choosing to do what is right. The phrase ‘business ethics’ can be used to describe the actions of individuals within an organization, as well as the organization as a whole.

People live in environments that affect them in many ways. They have their own religion, their own point of view toward an issue. What we should concern is not at the boundary but the way that a person interacts with environment.  For example, for catholic people, when your company forces the staff to work in Christmas day, what are they supposed to do? Work or go to the church?

Another example, let’s say that your company harms the environment. As a manager, would you accuse the company? Or keep your work and continue receive salary. There are a lot of situations when your personal preferences are confronted with corporate policies.

How organizational policies and procedures can impact ethics

Most of an individual’s ethical development occurs before entering an organization. The influence of family, church, community, and school will determine individual values. The organization, to a large extent, is dealing with individuals whose value base has been established. This might imply that ethical organizations are those fortunate enough to bring in ethical individuals, while unethical organizations brought in unethical people.

But it is not that simple. While the internalized values of individuals are important, the organization has a major impact on the behavior of its members, and can have a positive or negative influence on their values. One example of the development of ethical individuals is the service academies. In their admissions processes, the academies attempt to get individuals of good character with the values integral to the military profession.

However, the academies also recognize that their core values may be different than those prevalent in society, and they devote considerable effort to the development and internalization of their core values. As is evident from periodic breaches of integrity at the academies, e.g., cheating scandals, these attempts to instill core values do not always succeed.

There are three qualities individuals must possess to make ethical decisions. The first is the ability to recognize ethical issues and to reason through the ethical consequences of decisions. The ability to see second and third order effects, one of the elements of strategic thinking, is very important. The second is the ability to look at alternative points of view, deciding what is right in a particular set of circumstances. This is similar to the ability to reframe.

The third one is the ability to deal with ambiguity and uncertainty; making a decision on the best information available. As important as these individual characteristics are, the influence of the organization is equally important. The ethical standards that one observes in the organization will have a significant effect on individual behavior.

The organization has its greatest impact in the standards it establishes for ethical and unethical conduct in its formal reward systems. Informal norms also have a strong influence on individuals’ behavior as do the actions of the leaders of the organization. Strategic leaders must understand that their actions, more than words alone, will determine the operating values in the organization.

Ethical dilemmas Valerie is facing

The position as a marketing manager is a link between the Board of Directors and the operations area. Valerie is facing the dilemma of blow the whistle and tells the CEO everything about Waters, or keeps the status quo, just the way it is.

Basically, Valerie is supposed to report this situation to the company’s CEO.  However, she is undecided because she does not have the same rights as any U.S. citizen. Valerie is just an alien with authorization to work and reside in the U.S. In the worst-case scenario, she would loss her work authorization and she will be asked to leave the country.

But that would not be the only one consequence of this annoying issue. She is attending school and she is enrolled in a Master of Science program. If she decides to go ahead, denounce this situation and become a martyr, she will have to quit school. Therefore, she would not be able to complete her career and she must go back to her country.

Lionel Waters is taking advantage of this situation and looks like he does not have any regrets about the kickbacks he is receiving, or the financial damage he is causing to the company. He designed a system to perpetuate these actions, without anyone who confront him. Blowing the whistle is not an easy decision for Valerie.

Suggestions for Valerie

Possibly one of the best suggestions for Valerie would be trying to break this sort of fragrances monopoly created by Lionel Waters. This is not going to be an easy job but it would help to give this company a different address. However, we are not completely sure about the liberty of action Valerie might have to do this.

Besides that, looks like no one in Wisson has been brave enough to confront Waters about his unprofessional behavior and about being completely indifferent about new projects and new fragrances. All the teams have become lackluster and Waters has showed an unethical behavior more than one time. If she reports to the CEO, Valerie might suggest a performance evaluation of Lionel Waters.

Now, before Valerie is going to take any chances, she should be aware about all the risks. No one besides her is knowledgeable about all these greedy attitudes from Mr. Waters. A marketing manager is usually hired to provide a new sales approach, develop new products, improve the brands, and if possible, to boost the revenue. How about someone from Human Resources doing this kind of job?

Conclusions

After reviewing the case, I would think: Blowing the whistle? This is not Valerie’s job. She is not Lionel Waters’ supervisor. That supervisor should confront him and make a formal demand for him to stop doing kickbacks or ultimately fired him. But also, not only Valerie but anyone in the company should be entitled to blow the whistle and stop this annoying situation. I am not suggesting for her to be cynical but there is a very difficult road for her if she tells anyone about it.


References

http://en.wikipedia.org/wiki/Business_ethics

http://business-ethics.com/

http://www.wisegeek.com/what-is-business-ethics.htm

http://www.businessethics.ca/

http://www.scu.edu/ethics/practicing/focusareas/business/

Financial Management: Coke vs. Pepsi

Coke vs. Pepsi

This document presents a discussion about the financial situation of two of the most important beverage companies in the world. Coca-Cola and Pepsi are the two most popular and widely recognized beverage brands in the world. Both companies try to market as part of a lifestyle. Coca-Cola uses phrases such as “Coke side of life” in their website, while Pepsi uses phrases such as “Hot stuff” in their web, to promote the idea that Pepsi is “in sync” with the cool side of life.

Ironically, both Pepsi and Coke have similar beginnings: both were created in the 19th century and both were the results of the experimental work of innovative pharmacists. Coke was created in 1886 by Atlanta pharmacist John Pemberton while Pepsi was developed in 1898 by North Carolina pharmacist and drugstore owner, Caleb Bradham. Little did these men know (Pemberton died in 1888) that their creations would spark a decades-long rivalry in the beverage industry.

Forced to choose between Pepsi and Coke, today’s restaurants and fast-food chains must carefully evaluate revenue potential based on the line of products available. Merchants are well-aware of the fact that they may lose customers who maintain strict loyalties to Pepsi or Coke if they offer the alternate line of beverages.

Ability to pay current liabilities

With a tight market in the United States, the two companies have been forced to vie for alternative sources of revenue to continue their growth and expansion. As a result, Pepsi has broken into the snack food market with products like Tostitos and Frito-Lay goods while Coke has boosted its efforts to out-do Pepsi on the international level. Nowadays, both companies are big multinational corporations

Over the last several years, Coca Cola stock has significantly outperformed PepsiCo. In

fact since 2005, Coke’s stock price has gained 35%, while Pepsi eked out only a marginal 3% gain. If you take into account dividend payments, Coke delivered a 52% return to investors while Pepsi’s 13% return paled in comparison.

However, as we enter a new decade, many on Wall Street believe that the tide is now turning in favor of Pepsi. Coca Cola’s market cap is currently 33% higher than Pepsi’s. The following is an analysis of the business fundamentals of the two consumer stocks.

The current ratio is mainly used to give an idea of the company’s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt, as there are many ways to access financing, but it is definitely not a good sign.

Based on the financial statements, Coke has a current ratio of 1.279 while Pepsi is at 1.436. The current ratio can give a sense of the efficiency of a company’s operating cycle or its ability to turn its product into cash. In this particular case, Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they are unable to alleviate their obligations.

Because business operations differ in each industry, it is always more useful to compare companies within the same industry. This is another side of the rivalry between these corporations. According to experts, PepsiCo is getting better results than Coca Cola. But we will another side of their financial statements.

Profits over the past three years

Pepsi currently generates over 40% more revenue than Coca Cola. This gap will widen further in 2010, when Wall Street expects Pepsi sales grow to more than double Coca Cola’s revenue growth. It’s also important to note that there is less risk to Pepsi’s revenues given their more diversified product portfolio.

The Return on Assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company’s annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as “return on investment”. The formula for return on assets is: ROA = Net income / Total Assets.

The Return on Equity is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. ROE is expressed as a percentage and calculated as: Return on Equity = Net Income/Shareholder’s Equity.

Based on their financial statements, in the last three years, Coca Cola got a return on assets of 13.82%, 14.33% and 14.02%. Over the same period, PepsiCo return of assets was 16.34%, 14.29% and 14.92%. The return on equity for Coca Cola was 29.24 while Pepsi’s was 36.03. All these numbers suggest that Pepsi is giving a better performance than Coca Cola.

Cash Flow and Investment valuation ratio

Pepsi and Coke both offer similar dividend yields of 3%. Although Pepsi’s dividend payout ratio is slightly lower than Coca Cola’s, the difference is marginal.

Coca Cola’s currently trades at 16x consensus 2010 earnings estimates. However, Pepsi’s shares trade at less than 15x 2010 EPS consensus. While Wall Street is expecting both consumer giants to grow earnings at a similar 12% rate in 2010, Pepsi’s stronger revenue growth provides more opportunity for upside surprises.

The Dividend Payout Ratio means the percentage of earnings paid to shareholders in dividends. The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio. This ratio is calculated as Dividends per share / Earnings per share.

The price/earnings ratio (P/E) is the best known of the investment valuation indicators. The P/E ratio has its imperfections, but it is nevertheless the most widely reported and used valuation by investment professionals and the investing public. The financial reporting of both companies and investment research services use a basic earnings per share (EPS) figure divided into the current stock price to calculate the P/E multiple (i.e. how many times a stock is trading (its price) per each dollar of EPS).

According to our research, Coca Cola is getting better results here. The Dividend payout ratio for Coca Cola is 53% while PepsiCo is 47%. Besides that, the price/earnings ratio for Coca Cola is 19.7 while PepsiCo is 16.3.

Decision about which company is better for an investment

Possibly one of the biggest rivals in Corporate America today, the battle between Coca-Cola (KO) and PepsiCo (PEP) continues to baffle not only consumers but investors as well in determining which product is a better buy. While both companies have had recent problems in emerging nations such as India by having their products be condemned for improper ingredients, a shakeup like this might be necessary to promote future growth for possibly undersold equities.

While both Pepsi and Coke stand to benefit from a recovery in consumer spending, it appears that Pepsi has stronger fundamentals. For investors looking for safe dividend stocks with strong growth potential, Pepsi looks like the better choice.

In terms of fundamentals, Pepsi seems to have the slight advantage. While Coca-Cola does have the higher figures, Pepsi has the better margins in terms of operating margins, revenue, and profit which is more important for growing companies. Pepsi also has, according to Yahoo Finance, been upgraded more times than Coca-Cola during the last few months, signaling a favorable sentiment among investment banks. In terms of guidance, both companies look to secure better procedures in the emerging markets with their products which should hurt earnings for a while but eventually boost them due to economies of scale.

However, recently Pepsi has had positive surprise EPS statements during its quarterly results. While Coca-Cola has also reported similar reports, the findings were at a much smaller margin, barely affecting shares.

What is more important, in determining a choice between these equities, is the technical analysis involved. During the past year Coca-Cola has only remain in a five dollar range, showing little fluctuation patterns for speculators or investors. While such a figure may be encouraging for fixed income advocates, in reality, since 2000, Coca-Cola has barely fluctuated at all in its 20 point range, showing no signs of potential growth. While the situation is unfortunate, it looks as if, like Microsoft, Coca-Cola has increased in terms of value to its maximum, and pretty soon diseconomies of scale may be evident for this once prosperous company causing shares to drop in the future.

On the other hand, Pepsi has seen continued growth throughout its tenure in a nice steady growth pattern. While speculators may not be encourage by the slow appreciation of the stock, long term investors may favor such a pattern as it does not seem the price of Pepsi has peaked. The company is still in the prime of its career and should carry the stock to higher numbers in both fundamentals and shares for at least one more decade. By investing now, investors have the opportunity to see Pepsi rise to near 80-100 points by 2010 and possibly even further by 2015.

While the wait may be more tedious than other penny-stocks, the process will be relativity stress free as investors will be allowed to see their capital gains appreciate over the years. Such as a process is also favorable with its dividend payoff which allows for reinvestments to increase gains.

Non-Financial criteria to consider

About Pepsi, recently has appointed a CEO with an Indian background who may look more favorable than Coca-Cola to the emerging markets. Such a basic presence may add increased pressure to Coca-Cola to spend more money on advertisements and other apparels to strike a similar chord in these markets as its soft drink counterpart. While it is genuinely assumed that Coca-Cola is the king of its industry, times are slowly changing for the worse for this tremendous corporation and looking more and more favorable its hated rival in PepsiCo.

According to stock analysts, Pepsi has a lot more exposure to commodities with respect to its Frito-Lays and Quaker Oats, when commodity prices were falling; it gave more wiggle room on the bottom line. But now that commodity prices are probably going to increase in the next year to year and a half, which opens up the door for Coke to expand their lead. Coke always held the bigger market share in the United States. But at times, Pepsi fueled by smarter and more aggressive advertising campaigns, moved ahead. U.S. Consumption of carbonated soft drinks has steadily declined in the past decade. Part of that comes down to the array of alternative beverages the market now offers.

References

–          http://www.investopedia.com/university/ratios/operating-performance/ratio1.asp

–          http://moneycentral.msn.com/detail/stock_quote?Symbol=ko&getquote=Get+Quote

–          http://en.wikipedia.org/wiki/The_Coca-Cola_Company

–          http://en.wikipedia.org/wiki/PepsiCo

–          http://www.investopedia.com/articles/04/022504.asp

–          http://www.investopedia.com/articles/04/031004.asp

Ipad’s security breach

IPAD’S SECURITY BREACH

This document presents a discussion about the Ipad’s security breach on June 2010. One of the purposes of this document is to analyze the vulnerability within the AT&T website. AT&T is the only provider of 3G service for Apple’s iPad in the United States.

The iPad is a tablet computer designed and developed by Apple. It is particularly marketed as a platform for audio and visual media such as books, periodicals, movies, music, and games, as well as web content. At about 1.5 pounds (680 grams), its size and weight are between those of most contemporary Smartphones and laptop computers. Apple released the iPad in April 2010, and sold 3 million of the devices in 80 days.

It is also important to remember that Apple Inc. is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company’s best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad.

Possible objectives of Goatse Security for hacking the AT&T web site

Goatse Security is not a security firm. This is a loose-knit, nine-person hacker group that specializes in uncovering security flaws. Its nature has been variously described as white hat, gray hat, or black hat. The group was formed in December 2009. Goatse Security derives its name from the Goatse.cx shock site.

The group’s slogan is “Gaping Holes Exposed.” In 2010, it exposed vulnerabilities in the Mozilla Firefox and Apple Safari web browsers. In June 2010, Goatse Security exposed the Email addresses of 114,000 Apple iPad users. This led to an FBI investigation and the arrest of one of the group’s members. Several members of the group claim to be members of an Internet trolling organization known as the Gay Nigger Association of America (GNAA).

In March 2010, Goatse Security discovered an integer overflow vulnerability within the Apple Safari and posted an exploit on Encyclopedia Dramatica. They found out that a person could access a blocked port by adding 65,536 to the port number. This vulnerability was also found in Arora, iCab, OmniWeb, and Stainless. Although Apple fixed the glitch for desktop versions of Safari in March, the company left the glitch unfixed in mobile versions of the browser.

Goatse Security claimed that a hacker could exploit the mobile Safari flaw in order to gain access and cause harm to the Apple iPad. Later on, in June 2010, Goatse Security uncovered vulnerability within the AT&T website. AT&T was the only provider of 3G service for Apple’s iPad in the United States. When signing up for AT&T’s 3G service from an iPad, AT&T retrieves the ICC-ID from the iPad’s SIM card and associates it with the Email address provided during sign-up.

Goatse was out for publicity, and they should have made a more responsible disclosure. The accepted way to disclose security problems is in private, to the organization responsible. Not to a media outlet, especially not to an outlet that prides itself on its ‘edginess’ (in this case, Gawker Media). But it does not warrant these sorts of defensive, ignorant public statements from AT&T. It is AT&T who made a mistake here, not the researchers.

You might think: What is the big deal? It is only some email addresses. But there is a more general problem here: Companies leaking email addresses. Spammers love to acquire new victim email addresses. Especially valuable to some spammers are targeted addresses, in this case, iPad users. Some spammers would pay good money to get hold of this list, so they can hawk advertisements for iPad accessories or paid applications.

Computer Hacking as an Ethical Corporate Strategy for Computer Security Firms

In common usage, a hacker is a person who breaks into computers and computer networks, either for profit or motivated by the challenge. The subculture that has evolved around hackers is often referred to as the computer underground but is now an open community.

Now, when ethical hackers track down computer criminals, they are in risk of prosecution. Security researchers believe this is a danger, and that ethical hackers have to develop a uniform code of ethics for themselves before the federal government decides to take action on its own.

Security researchers may ultimately have no control over how law enforcement authorities view their actions. Still, the ethical hacking community should collaborate to develop a set of ethical guidelines that can be shown to government when and if it starts taking a greater role in oversight.

Gawker Media’s approach to report the security breach

Gawker Media is an American online media company and blog network founded and owned by Nick Denton based in New York City. It is considered to be one of the most visible and successful blog-oriented media companies. As of March 2010, it is the parent company for 10 different weblogs.

After verifying that security hole had been closed, Goatse Security disclosed 114,000 of these Email addresses to Gawker Media reporter Ryan Tate. Amongst the Emails disclosed were those belonging to CEO Janet Robinson, ABC News’ Diane Sawyer, film producer Harvey Weinstein, New York City mayor Michael Bloomberg, and White House Chief of Staff Rahm Emanuel.

According to one of the hackers, Goatse Security only disclosed the Email addresses to Ryan Tate because Tate promised to censor the ICC-IDs and the Email addresses in order to prevent compromising anything. On June 9, 2010, Ryan Tate published a story on the leak on Valleywag.  This is a Gawker Media blog with gossip and news about Silicon Valley personalities. However, this blog has been criticized for broadcasting unsubstantiated and damaging gossip about people who are not in the public eye.

Gawker Media was not socially responsible as an organization which has an obligation to act to benefit society at large. This responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by performing activities that directly advance social goals
Gawker Media never ask AT&T’s position about this issue.

How to Respond Differently to a Security Breach

In the 21st century business data are established, stored and evaluated mainly in digital form. That might imply that your whole business, all the secret information on clients, revenue statistics and the employee network, depends on a technological system that you are in control of. There exist smart technology systems that deliver applications to automatically operate with your company’s data storage and protection.

In case you do not have the investment capabilities to purchase or the faith in such smart data security systems, which often get installed by professionals in the IT field, ten basic steps might lead your enterprise to satisfactory data security. Keep in mind that data theft by professional hackers might ruin your businesses’ reputation within minutes.

–          Regular Software Updates: Nowadays, the globe witnesses vast developments in modern technology that cause the worry of some citizens that the technology will overtake its creators one day. So be aware that only regular updates for your installed programs guarantee sustainable security. Updates further include program improvements on side of the developers.

–          Monitoring: In order to monitor it is advisable to use data-leakage prevention software that systematically detects specific information from your internal network. Any weak point within your system can thus be discovered and removed. Even if you prefer not to monitor company internal information on colleagues or employees, the system might significantly detect errors before it is too late.

–          Responsible Web Use: Often a digital Trojan horse affects a whole network because one of its members opened a harmlessly seeming e-mail or downloaded an insecure file form the World Wide Web. Exactly this unawareness is strategically used by hackers to create mass viruses. Be aware yourself and your co-workers to pay attention to ‘warning boxes’ and alert them to potential threats while moving online.

–          Education: In order to maintain high security standards it is important to regularly research on the matter of data security and inform your inferiors on general guidelines and upcoming updates on the matter. Your network can only be protected if all involved members get involved in necessary prevention measures.

Draft of a public service announcement (PSA) informing the public of the breach

References

–          http://en.wikipedia.org/wiki/Goatse_Security

–          http://blogs.computerworld.com/16333/at_t_ipad_privacy_breach_goatse_email_theft_thoughts

–          http://en.wikipedia.org/wiki/Gawker_Media

–          http://en.wikipedia.org/wiki/IPad

–          http://valleywag.gawker.com/

Marathon Oil: PRODUCTION AND OPERATIONS MANAGEMENT

This document presents a discussion about the production and operations management for an oil company. One of the sides of this document is to analyze how our physical environment can be a challenge for business purposes.

Marathon Oil Corporation is a worldwide oil and natural gas exploration and production company. Principal exploration activities are in the United States, Norway, Equatorial Guinea, Angola and Canada. Principal development activities are in the United States, the United Kingdom, Norway, Equatorial Guinea, and Gabon.

In addition, Marathon operates other businesses that market and transport its own and third-party natural gas, crude oil and products manufactured from natural gas, such as liquefied natural gas and methanol, primarily in the United States, Europe and West Africa.

How to reduce the time involved in the production process?

One key element to speed up the production process would be accelerating the pipeline transport. Pipelines are generally the most economical way to transport large quantities of oil, refined oil products or natural gas over land. Compared to shipping by railroad, they have lower cost per unit and higher capacity.

Although pipelines can be built under the sea, that process is economically and technically demanding, so the majority of oil at sea is transported by tanker ships.

Oil pipelines are made from steel or plastic tubes with inner diameter typically from 4 to 48 inches (100 to 1,200 mm). Most pipelines are buried at a typical depth of about 3 to 6 feet (0.91 to 1.8 m). The oil is kept in motion by pump stations along the pipeline, and usually flows at speed of about 1 to 6 meters per second (3.3 to 20 ft/s).

Multi-product pipelines are used to transport two or more different products in sequence in the same pipeline. Usually in multi-product pipelines there is no physical separation between the different products. Some mixing of adjacent products occurs, producing interface. At the receiving facilities this interface is usually absorbed in one of the product based on pre-calculated absorption rates.

The relationship between the retail price of gasoline and the price of crude oil

When you go to the gas station, and see the prices, you might want to know: Why is it that gasoline prices seem to rise so quickly, but fall so slowly?

When you see the price of Crude Oil sell for $46, that barrel of Oil will not make it to your car as gasoline for as long as 3-6 months. Recall in May 2008, the price of oil pulled back into the high $30s. That is why gas dropped in price by more than a few cents in July.
There is actually a good reason for the phenomena of retail gasoline prices rising quickly, but falling so much more gradually. It is strictly a function of competition in the marketplace.

When crude prices rise, all the gas stations raise their prices accordingly. They have no choice; otherwise they would be losing money on each sale. They all pay (more or less) the same prices for refined gas, and make a relatively small mark up on the fuel they sell. As wholesale prices rise, they pass along the increase.

When the price of Crude eases, however, what forces gasoline prices back down is simply competition. One station lowers prices a few cents, and pulls in more traffic; that forces others to do the same, until prices gradually work their way back down to the earlier prices (assuming crude returns to its prior price).

While the retailers may make a greater profit for a few days, competition eventually forces them back to their original margins.
You may be surprised to learn that gas stations make the bulk of their profits on the quick mart or convenience store, or on automobile repairs, and not on fuel. They are greatly incentivized to keep the prices low enough to draw you in as a customer, where they can make their profits on.

How can Marathon keep the price without losing profits?

There are many strategies to keep the price without losing profits. One of them would be ordering materials in bulk. It is hard for Marathon to price their products competitively if they are buying materials from an expensive vendor. But also, they must be sure not to over buy – having too much money tied up in materials can cause cash flow problems.

Another way to take advantage of bulk discounts without the stress of extra materials is buying co-op. Marathon could join forces with several other oil companies to order similar products to get quantity breaks. Marathon can get a better price than what they would get if they were buying alone. I will suggest reviewing the cost of gas transportation.

Reducing labor time; this is where the old adage, work smarter, not harder comes in. Corporate offices should keep detailed time studies of their processes to see where they can reduce time. Other simple changes, like the layout of their workspace, can create huge time savings in the long run.

It is important to have talented people, but also, Marathon might need to hire employees at a lower hourly rate. If you need to pay $50 an hour, you can find someone to make the same job for you for $10 an hour; this can reduce your costs. But beware; if you hire an employee that works out of your company, you will have to pay additional costs such as taxes and insurance.

Instead, we recommend looking for an independent contractor, someone who can do the work for Marathon from their own plant or facility.

Finally, Marathon should reduce expenses. Take a hard look at their costs and figure out where you can trim. Do you really need the giant corporate office in the high-rent district? Can they share a building or make some employees to work from home? They should look at every aspect of their business and ask themselves if there is a way to trim excess spending.

Strategies for US oil companies to remain competitive in the US market

Only the most fiscally fit companies can survive in the intensely competitive global marketplace for energy. A new study paints a troubling picture of how federal tax rules – and pending tax legislation – are weakening the ability of U.S.-based oil and natural gas companies to compete against international companies. This is putting American jobs in jeopardy at the very time we need to support, not undermine, American-based business.

The new study, “Fiscal Fitness: How Taxes at Home Determine Competitiveness Abroad,” found that American oil and gas companies have faced increasing challenges in competing with their international counterparts since the 1970s largely due to “the interaction between the fiscal arrangements in the home countries of IOCs [investor-owned companies] and the host countries in which they operate, and the home policy objectives.”

Simply put, U.S. oil and gas companies are at a competitive disadvantage because of tax policies in our home country, and we have been losing out to non-U.S.-based companies over the past several decades.

The study evaluated the competitiveness of U.S.-based oil and gas companies (including ExxonMobil, Chevron, and others) on a variety of factors and compared the results to those of our peers throughout Europe, Canada, Russia, and Asia (including BP, Shell, and others). Of the 10 countries studied, the researchers found that the U.S. government takes a larger share of oil and gas profits earned abroad than nearly all other governments, except for France and India.

The study also found that proposed tax legislation would make this already bad situation even worse: “Potential new rules to restrict credits for foreign taxes already paid to a host government, currently under discussion in the United States, would make the United States the least competitive among the analyzed peer group, excepting India.”

The study is referencing the Administration’s 2011 budget proposal to weaken or even eliminate the foreign tax credit only for U.S. oil and gas companies. This tax rule ensures that all U.S. companies can operate in other countries without being taxed twice – once by the host country and again at home. It helps to level the playing field when American businesses compete with non-U.S. companies whose countries have similar rules.

As the study shows, by removing it, the Administration would be imposing double taxation on our industry – and creating an enormous new competitive disadvantage on American companies.

Why does our ability to remain competitive globally matter? And why should the average American care if changing the tax rules for foreign income will disadvantage American companies competing for energy? Because if American companies can’t compete in these key areas, our national interest would be compromised on two fronts: our energy security would be compromised due to constraints on the industry’s ability to develop new supplies; and, we would lose jobs here at home that American companies provide, as there will be less need for American employees and contractors to support international operations.

If we are serious about American jobs and competitiveness, this is something that should concern all of us. Why should our own government offer BP, Shell, Total and many other international companies a head-start over U.S.-based firms?

References

http://www.score.org/business_toolbox.html
– Karlgaard Rich. (2004) Peter Drucker on Leadership. Forbes magazine. Retrieved October 17, 2010 from http://www.forbes.com/2004/11/19/cz_rk_1119drucker.html
http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2363
http://www.amanet.org/training/podcasts/James-Kouzes-on-rising-to-the-leadership-challenge-08-27.aspx

Has Amazon lost its identity by expanding into markets well beyond books?

Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3, downloads, computer software, video games, electronics, apparel, furniture, food, and toys.

Amazon has established separate websites in Canada, the United Kingdom, Germany, France, Japan, and China. It also provides international shipping to certain countries for some of its products. A 2009 survey found that Amazon was the UK’s favorite music and video retailer, and third overall retailer.

Amazon’s initial business plan was unusual: the company did not expect a profit for four to five years. Its “slow” growth provoked stockholder complaints that the company was not reaching profitability fast enough.

When the dot-com bubble burst, and many e-companies went out of business, Amazon persevered, and finally turned its first profit in the fourth quarter of 2001: $5 million or 1¢ per share, on revenues of more than $1 billion, but the modest profit was important in demonstrating the business model could be profitable.

What Amazon should do to protect its brand?

Amazon is allowing consumers to connect its website with Facebook. What is very interesting is the care Amazon is taking to inform consumers what this will mean to them and why they should do it. Given Facebook’s repeated stumbles on issues of consumer privacy, the approach being taken by Amazon is one every marketer should note and consider. What’s important about Amazon’s approach is that it’s not simply leaving the communication of important information to Facebook.

Trust is a vital brand attribute — even more so in today’s social world — and leaving issues of trust to Facebook’s “Permission” pop-up window is a pretty terrible idea. That is why Amazon’s approach demonstrates a best practice for offering the benefits of Facebook connections while still controlling the message and earning trust.

Amazon has launched a page where consumers can connect with Facebook, but more importantly this page is where consumers can learnabout the connection with Facebook. As you can see below, Amazon isn’t delegating important brand communications to Facebook but instead is controlling the message. Consumers are told in detail what will be shared and what will not, and the benefits are explicit and not assumed.

What Barnes & Noble and Borders should do to recapture some of their online market share?

Before Barnes & Noble created its web site, it sold books directly to customers through mail-order catalogs. It first began selling books online in the late 1980s, but the company’s website was not launched until May 1997. According to the site, it now carries over 1 million titles.

At the turn of the millennium, the biggest threat to Barnes & Noble’s position as the number one U.S. bookseller was clearly Amazon.com, which in mid-1999 had a market value of $18 billion, more than three times the value of Barnes & Noble and barnesandnoble.com combined.

In the Internet-crazed world of the late 1990s, the fact that Barnes & Noble held 15 percent of the total U.S. book market versus Amazon’s 2 percent mattered less than the companies’ respective online bookselling shares: 15 percent for Barnes & Noble, 75 percent for Amazon. Part of Barnes & Noble’s response to its upstart challenger was to slow its rapid rate of store expansion.

On the online side, Barnes & Noble in September 2003 bought out Bertelsmann’s interest in barnesandnoble.com. The company paid Bertelsmann $165.4 million to increase its stake in the venture to 75 percent. Then the following May, Barnes & Noble took full control of barnesandnoble.com, buying the publicly traded shares for an aggregate price of $158.8 million.

The shareholders received about $3 per share for a stock that had debuted at $18 a share during the Internet bubble and briefly traded above $25 a share. The online bookseller had yet to turn a profit, but its performance was steadily improving, and in 2004 its net loss narrowed by 18 percent.

Its revenues of $419.8 million were nevertheless far below those of Amazon.com, which remained the clear leader with about 70 percent of the online book market compared to Barnes & Noble’s 20 percent.

Will Amazon expanding its channel of distribution to include retail locations?

Amazon.com has transformed itself from the little bookstore on the corner to the mega-super-duper-full-of-stuff store that squats at the end of a monstrous parking lot, how good is the experience when you drop by for a visit? Well, the look and feel has stayed pretty much the same during the past eight years.

But the layout and navigation work well for a business like Amazon.com. There’s a big difference between mom-and-pops and monolithic retailers, but Amazon.com can increase its selection of products without intimidating the consumer with rows of products that stretch on forever.

Simply click the category you want and you’re whisked away to, say, the cell phone department, without wasting any energy trudging through the toy department.

One drawback to online retailing, though, is that you can’t browse the same way you can in a bricks-and-mortar store. Amazon.com tries to be helpful with plenty of recommendations based on the items you bought or even looked at recently.

The downside for the customer is recommendations based on gifts you bought for people whose taste is much different from your own; the downside for Amazon.com is missing the opportunity to introduce the customer to an out-of-category product or impulse buy along the way.

So what are the brand advantages of Amazon.com over other retail outlets? It excels at competitive pricing – an advantage of not having the overhead of a physical retail space. It makes up for the lack of in-store customer service by supplying reams of information about the product.

And it achieves global reach without a costly, risky roll out plan of physical storefronts. (Amazon.com includes four international sites— Amazon.com in the US, Amazon.co.uk in the UK; Amazon.de in Germany; Amazon.co.jp in Japan; and Amazon.fr in France.) When it comes time to check out, the company has done a fine job of streamlining the process for repeat consumers.

A click on “proceed to checkout” from the shopping cart screen brings you to a page with all your vital information on it, such as shipping address, payment method, and so forth. The shopper can easily revise the information before clicking “place your order,” which is a big improvement over the old method of clicking through several screens before completing an order.