Archive for the ‘The Buzz’ Category

Shopping Made Easier
October 13, 2007

Have you ever wished that you could shop through a virtual aisle at Target? Have you daydreamed about having a device that could follow your every glance and a handle that you could push forward for a video to simulate your progress down the aisle? Well you must wait no longer. Kimberly-Clark has developed this exact tool. Kimberly-Clark designed these virtual shopping aisles to “better understand consumer behavior and make the testing of new products faster, more convenient, and more precise.”

This tool has many uses. For example, it can be used in presentations to executives in bids to win shelf space. Don Quigley, Kimberly-Clark’s president of consumer sales and customer development, used a another great example: “What if you just spent a lot of money on a package’s shade of red but it doesn’t look good in their store?” he asked. “This is where you can spot that before you ship a single case of product.”

It also allows researchers and designers to receive quick results on new products without having to stage real-life tests in the early stages of development. It’s a great way to test ideas faster, cheaper, and better. It allows you to do the research somewhere other than an actual test market which avoids tipping off competitors early in the development process.

I think it’s a fantastic idea and will be a great way to get products on the shelves. However, my concern is that there will soon be no stores for consumers to visit. I foresee only large warehouses with employees that do the shopping for you once you put everything in your virtual cart. And consumers will then pick up their bags from a small pick-up area.

I’m afraid I won’t be able to flip a box over for nutritional ingredients, shake the Pringles to find the container with the fewest broken chips, or shuffle to the back of the shelf to find the freshest milk. What happened to the nice old ladies that reminded me of my grandmother that would offer wonderful smelling samples at the end of the aisles? It began with the adandonment of samples and I’m afraid it won’t end with anything short of the complete elimination of shopping all together.

It will more difficult to try new things from a virtual aisle. And what happens to the kids that are used to riding on the end of the cart and grabbing every package of junk food they can when Mom isn’t looking? Although this technology can bring a lot to the table to contribute to more efficient research, I’m afraid that this will bring us one step closer to a technology catastrophe.



.                                          The Wall Street Journal

.                                   Make-up Blog from Wednesday


“Wealth Phenomenon”
October 12, 2007

Dan Gilbert was in class last week and brought up an interesting subject. We had a long discussion about the “wealth phenomenon” as he calls it. So how is wealth created? Dan actually used a great example.

Pretend James has $10,000 and Antonella has no money, but paints a picture. If James buys that painting from Antonella for $10,000, there is now $20,000 of wealth between the two. James has a $10,000 painting and Antonella has $10,000. In this scenario, $10,000 of wealth was created. What a phenomenon.

The 25th Anniversary issue in Forbes of the “400 Richest People in America” further captivated my interest on the subject. Dan Gilbert was mysteriously one of the 57 that got knocked from this list. Next to his name says “Richer than last year, but can’t keep up.” If Dan Gilbert was #384 with a net worth of $900 million in 2006, how did he get booted from the list a year later with a net worth of over $1.2 billion? The answer is, “one billion dollars is no longer enough.” In order to make it on the Forbes 400 list this year, one’s net worth must be $1.3 billion. So if you’re wondering how the net worth of this list miraculously rose $290 billion from last year, it’s a wealth phenomenon.

It really is amazing when you think about it. These billionaires created their own wealth. William Pulte created wealth from building homes. For example, he would take $150,000 in materials and $150,000 in labor and build a home that would sell for $600,000. He doubled the wealth.

In 1982, the minimum to get on the list was less than $500 million and the total wealth was $200 billion. Today, the minimum to get on the list is $1.3 billion and the total wealth is $1.5 trillion.

In the same respect though, wealth also disappears. For example, the value of my investment property has decreased about $100,000 in a year’s time. There are 26 properties within the subdivision that have each decreased the same amount. On this block alone, $2.6 million worth of wealth has simply disappeared. The disappearance of wealth is just as amazing to me as the creation.

Not only does this wealth magically appear and vanish, but it constantly shifts. Oil and manufacturing fortunes ruled the first Forbes 400 list 25 years ago. These days “Wall Street is King.” More than one-quarter of the fortunes on this year’s Forbes 400 are from finance and investments. Nearly half of the 45 new members made their fortunes in hedge funds and private equity.

Where will tomorrow’s wealth be?


.                                                       The Forbes 400

.                                      Make-up Blog from Monday’s Class

Do The Right Thing: Money or Ethics?
October 12, 2007


The Chairman and CEO of Countrywide Financial, Angelo Mozilo, is currently being investigated for insider trading. He has cashed in $138 million in stock options and switched his trading plans multiple times as the mortgage company tumbled. He began a stock sale plan in October 2006 in a manner designed to protect him against accusations of insider trading. But Mozilo raised the number of shares that could be sold on two different occasions. The first time was in December 2006. Shares were over $40 and he almost doubled the shares he was able to sell per month. He did the same thing in February when they hit a high of $45.03. Mozilo sold 4.9 million Countrywide shares right before the market fell apart. Since then, shares in Countrywide have fallen to less than $19, and the company announced that second-quarter profits had declined by 33%.

Although we are still unsure that the timing of these sales and the changes to his trading plans were a mere coincidence, there have been many thoughts. According to Thom F. Carroll, a financial planner, “If a guy is changing his plan around so often in a short period, I would think that would send up a red flag. I wouldn’t allow my clients to do it.” However, Sandy Samuels, Countrywide’s chief legal officer, said “The trading plans were put into place in consultation with Mr. Mozilo’s financial adviser, without regard to any non-public or market information.”

The question whether it was illegal insider trading or if it was in fact “in accordance with company policy” has yet to be answered. However, it is clear that Mozilo did not “do the right thing.” Mozilo sold millions of shares right before Countrywide’s stock plunged.

Ironically, Barron’s listed Mozilo as one of the 30 most respected CEOs in the world for the past three years. Mozilo is very well respected and has won many awards. So, why would such a wealthy and well established man unethically, and borderline illegally, risk it all?

I think Mozilo’s choice to manipulate his trading plans to cash in just as the housing crisis was escalating and Countrywide’s stock was dropping was a mistake in itself. He lost all credibility and has brought a lot of negative publicity to the company. This will hurt both him and the company drastically.

The company recently said it will eliminate as many as 12,000 jobs in the coming months and its stock is down more than 50 percent from February. But, I think the most detrimental part will be Mozilo facing the unethical decisions he made. He simply can’t take these decisions back. When the sub-prime market does recover, his decisions won’t be forgotten. I believe Countrywide can recover, but Mozilo’s decisions will haunt him for a lifetime.

.                                                 The Times Online

.                                 Make-up Blog From Tuesday’s Class

Hangin’ by a String
September 26, 2007


I’ve heard it from Dan Gilbert, Magic Johnson, Dave Bing, and many more: Customer service is a must. Everyone says how important it is, but Mike Himes can vouch that customer service is the only thing that has kept his business from going under.

Between the very steep discounts from big box stores and the music downloading over the Internet, small record stores have been struggling to stay open for years. It is continuously becoming more and more difficult. According to the research group Almighty Institute of Music Retail, over 2700 record stores have closed since 2003. According to an article in the Detroit Free Press last month, over 70% of music sales now take place in big box stores such as Wal-Mart and Best Buy, which have a much more limited selection. Himes has used this information to focus on some of the best practices he have recently learned about. Himes has acknowledged the brutal facts and applied his energy toward getting to know his customers, offering excellent customer service, and re-framing his target market.

First Himes really stayed close to his business, noticing certain purchasing trends between his two stores. His Ferndale locations attracts Detroit techno fans, meanwhile his Roseville location attracts the rap and hip hop lovers. So, as Dave Bing suggests, Himes gives the customers what they want, so they don’t go elsewhere. Himes says he looks beyond what he can’t control and focuses his attention on who comes into his stores. And as we learned, it’s a lot easier to retain your current customers than to attract new ones.

Once he gets his customers in the store, he always provides an experience with great customer service. “We do the song and dance and treat people the best we can,” he said. He went on to talk about how you won’t get that over the Internet or in Wal-Mart. He personally makes sure his customers leave happy.

And finally, Himes restructured his target market. His target market, once being the average music lover, is now the “super fan.” The super fan is someone that still loves music in its physical sense. These serious music fans “want to own everything, even the hard-to-find music that chain and big box stores don’t carry.”

Himes realized that his market was quickly being introduced to more appealing options. So focusing on customer service and the appropriate target market may have been the wisest decision that he could have made. Himes now not only offers music, but he offers a great experience. He has also realized that the Internet is soaring, and in turn expanded its web presence, now offering a web based store. Himes in now looking for a smaller location, due to his drop in sales, however he is still hangin’ by a string.

. . . . Replacing the guest speaker from September 25, 2007 . . . .

. . . . . . . . . . Source: Oakland Business Review . . . . . . . . . .

Will CD’s be Replaced Entirely?
August 9, 2007

CD sales have been dropping for 8 consecutive years and are now dropping faster than ever. And while legal music download sales are increasing by about 50% each year, overall industry revenue is still down over 30% from last year. Local record stores and other chains have had to reinvent their core businesses with other products such as DVD’s, videos, and other specialty merchandise in order to stay profitable.

Music labels need to realize their extremely profitable days are over. Digital music sales are not going to make up for lost revenue. Suing their customer base is not going to make up for lost revenue. In fact, absolutely nothing is going to make up that lost revenue. The industry, revenue-wise, is going to continue to shrink.

The problem is that their main product, recorded music, has a minute marginal cost to produce. It’s so cheap, and easy, to make that consumers can actually make it themselves. And they do. One billion songs a month are downloaded, though most are done illegally.

As the marginal price of recorded music continues to fall, bands will need to make money elsewhere. I believe live concerts will become more and more popular, and will be the largest source of revenue for many artists. Recorded music will be used to promote those live events. Many popular artists will still make a very good living and others may have to decide if love of their art is enough to keep going.

However, some artists outside of the major label will only benefit from digital distribution. Major labels essentially monopolized distribution in the past, making it virtually impossible for musicians to make it on their own. I believe digital distribution will create a “middle-class” of artists who will create a sustainable living making music. While the recording itself might get closer and closer to free, savvy artists will know how to build enough of a fan base to turn profits from licensing, merchandising, video content, and other such revenue sources we haven’t even begun to imagine. Digital music has essentially changed the market.

                        Source: Inc.


Healthy Food, Unhealthy Ethics
July 24, 2007


John Mackey, who built the Whole Foods Market chain, does not practice the “ethical” methods that he preaches. Mr Mackey, who admitted last month promoting his health food chain through an alias on a Yahoo forum, has been found privately contradicting his company’s public claims. Mr Mackey admitted making hundreds of internet posts, mostly praising Whole Foods and trashing Wild Oats, posing as a character named Rahodeb. He posted comments like, “No company would want to buy Wild Oats Markets Inc., a natural-foods grocer, at its price then of about $8 a share.” He also said Whole Foods would never buy Wild Oats because the locations were far too small. He speculated that Wild Oats eventually would be sold after sliding into bankruptcy or when its stock fell below $5. A month later, “Rahodeb” began slashing management and other areas of Wild Oats. Yet, now Mr. Mackey is trying to buy the company?

Mr. Mackey argues that the acquisition will not push up prices of so-called natural foods. Yet, the Federal Trade Commission (FTC), which wants to block the deal on competition grounds, produced evidence that it said proved that Mr Mackey does not believe his public arguments. Central to the FTC’s argument is an e-mail that Mr Mackey sent to his board in February, the month in which the deal was agreed, which said that the Wild Oats acquisition would allow Whole Foods to “avoid nasty price wars”. The FTC’s lawyers cited Mr Mackey as telling his board that Wild Oats “is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space . . . Eliminating them means eliminating this threat forever, or almost forever.”

I wonder what would cause such a well respected organic food guru to do such a thing. Why wouldn’t buying the $670 million company, Wild Oats, in order to eliminate his competition, be enough? Was it really necessary to anonymously trash his rival for over 7 years? It’s not just about doing the right things, it’s about not doing the wrong things. Why would Mr. Mackey go out of his way to write hundreds of awful comments about his competition? If he truly believed in his business, he should have felt no reason to unethically trash his competition.


The Wall Street Journal                            Friday, July 20th 2007

Hands Up in Michigan, All Year Round!
July 18, 2007


Main Street America Inc. is only 2 steps away from beginning development on an 1,800-acre piece of state owned land right off the I-75 Interstate near Grayling, Michigan. First, Main Street America Inc. is planning to request zoning changes on July 31. After completion of that hurdle, the company will need a second appraisal on the land before arranging for purchase. This proposal has been in the making for over 5 years. The city and state have already given conceptual approval.

The theme park will have rollercoasters, multiplayer video games, an extreme sports exhibit, a farm, a children’s play area, resort hotel, toboggan ride, and train station. All of this will be open year-round, even in the “subfreezing temperatures.” A great deal of tourism and increased traffic is expected. This will be a great opportunity for Michigan.

The article stated that this amusement park is expected to bring in many tourists from out of state also. Though I think it will attract a great deal of Michiganders, I don’t know if many out of state tourists will travel to Grayling for this entertainment venue. I feel this way for several reasons. Due to the location of Grayling inside the state and the fact that Michigan is surrounded by the Great Lakes, you can’t easily or quickly access Grayling from any other state. Also, unlike Cedar Point, this theme park will be open year round, but it will be much smaller. Cedar Point has been slowly taking out all carnival rides to replace with new world famous roller coasters. Competing with Cedar Point, could be a dangerous road to take.

In addition, who wants to get off a roller coaster with frost bite? Cedar Point’s sales decrease dramatically by October, so I can imagine how few people would go to an outdoor theme park in January in a county that gets twice the amount of snow than a southern Michigan county. And why would people travel north in the subfreezing temperatures as appose to traveling south to the larger, more established parks including Six Flags and Disney World in the warm and sunny weather?

I think this theme park will be an incredible addition to the state of Michigan, however, I don’t feel that it will attract many customers nationwide.

.                         grayling2.png

Powerpoint Turns 20
June 22, 2007

PowerPoint is our most popular used presentation device at Bizdom U. It helps add a lot of flavor to presentations. It adds the visual aspect with pictures and colors. It’s hard for me to imagine life without PowerPoint.

According to Lee Gomes, a writer of the Wall Street Journal, “The program is one that the world loves to mock as much as it loves to use. ” Although this software has been responsible for many remarkable presentations, it has also allowed “an endless expanse of dimwit ideas to be dressed up with graphical respectability.”

PowerPoint’s two creators are appalled at the direction that this software took. “People very often make very bad use of PowerPoint,” according to Gaskins, one of the creators. Gaskins never intended for the PowerPoint presentation to be the entire proposal, just a “quick summary of something longer and better thought out.” Gaskin’s original business plan for the program was 53 pages long and only consisted of about 12 slides that included only the highlights.

I think PowerPoint is great and has really livened many of my presentations. Yet, I completely agree that it, along with most technology, has an evil side. PowerPoint is now being used by grade school students for their book reports. Children need to write in complete paragraphs, not bullets and pictures. Businessmen are replacing written business plans and reports with PowerPoint. This software was meant an an aid, not a replacement.

I have fallen guilty just as the school kids and businessmen, which is why I feel it’s so evil. Technology is already doing much of the work for us. The Internet has made it easier to research, contact people, etc. New software has made it easier to present graphs, data, and all other information. And now PowerPoint is the gateway to drop the expectations even lower by accepting bullet points and animation instead of written reports?

New Mall in Town?
June 14, 2007

There has been talks of opening a mall in the area of 8 mile and Woodward in Detroit since 2004. A major step was taken yesterday as a bill allowing for this retail development moved out of state Senate. Now it must be considered by the full Senate, which may pass it as early as next week.

An array of questions arose when the class heard about this retail development, and many arose from me. This has really interested me. The first question was, “Why would they add another mall in the area when there are already run-down ones in every directions. Is it going to be like the others with one decent department store, some discount clothing stores, and a dollar store down each hall?”

The project, The Shoppes of Gateway Park, is an outdoor mall contrary to our initial findings. More specifically, the The Shoppes of Gateway Park is actually being pitched as an outdoor lifestyle center, like The Village of Rochester Hills (shown below), which has attracted major retailers including Victoria’s Secret and the Gap, which leads to the anchor store, Parisian. The Shoppes of Gateway Park expects to replicate the layout of the center shown below with a bookstore, 4 chain restaurants, a JCPenney as an anchor store, and a variety of smaller retail shops. JCPenney has signed a letter of intent to be the anchor store and the developers have enganged in talks with Barnes and Nobles.


The second concern was, “How will the residents of the neighborhood feel about thisdevelopment.” One of my classmates had raised concerns about traffic levels highly increasing. My initial reaction was that it could only help the neighborhood. I feel it may be the beginning of an incredible revitalization of the neighborhood, helping homes to appreciate in value. Although some good points were addressed, my concerns are now at ease after overlooking some comments from residents in the area from an article written on Thursday, June 14 in the Detroit Free Press.

“As a Detroiter, I am excited, but as a neighbor who lives less than two blocks from this development, I am ecstatic,” Thomas, who represents the area of Detroit where the center will be located, said in a statement.

The center “would be terrific,” said Nancy Galster, president of the neighborhood association for Palmer Woods, which is less than a mile from the proposed project.

Galster said the developer invited representatives from her community to a dinner in April to hear feedback on the project.

“We felt like we had a voice in the matter,” Galster said.

Barbara Barefield has been a Palmer Woods resident for 20 years and said that the development would be welcome in her community and in neighboring ones.

“I think most people in our neighborhood are very excited at the possibility of having places to shop in Detroit,” Barefield said. “It’s about time. We’ve lost so many places to shop.”

The developers of this project are anticipating doors opening in the year 2011. I am anxiously awaiting this grand opening. Each baby step we take will help to revitalize Detroit into the unbelievably incredible city it was once.

How to Get a 2.85% Interest Rate
June 7, 2007

Homeowners around the world are taking currency gambles in loans.  These risk takers take out a mortgage in a foreign currency to gain lower interest rates.  This financial strategy to “borrow cheaply in one country to invest in a higher-yielding asset somewhere else” is usually used by “big-money speculators.”  Though I am not a Wall Street Trader, this “carry trade” tactic is very tempting to me.  It is know as the “carry trade” because the difference between two interest rates is the “carry.”    Currently, several wealthy London businessmen are taking out mortgages in Japanese yen to buy homes or investment properties in Florida.  Last year, Chris Papa borrowed the equivalent of $240,000 in yen from Lloyd’s TSB Bank PLC to buy a 7 bedroom home near Walt Disney World.  His interest rate is 2.85%, much below than the current rates in the United States. 

Although the benefits can be incredible, the risks are just as high.  Tomas Bencze from Budapest attempted the same maneuver as Papa.  Everything was great until exchange rates suddenly shifted, causing his monthly payment to increase dramatically.  In two months, Benczes’ interest rate jumped 10%.  This game isn’t for everyone.  It is for very high risk takers. 

What concerns me, is the high risk.  Though I might entangle myself in this risky game, I feel that it could easily cause an even higher default rate, causing more people to lose their homes.  Foreclosures are at its highest and such a game could cause it to continue rising.  If this currency gamble becomes more popular and begins to spread among blue collar families, trouble could transpire.  People might feel they can afford more with a lower rate.  But when exchange rates shift, they could be in for a detrimental surprise.    I love the idea, but I feel such loans pose a risk to the already struggling economy. 

            The Wall Street Journal   –   Tuesday, May 29, 2007