Critique of Unique's "Is a Bachelor's Degree Losing its Merit"

Hello, again and for the last time. I’ve really enjoyed enlightening all my loyal followers over the past three months, but all good things must come to an end. So, on with the show. I read Unique’s blog once again and I happen to disagree with her stance on the topic of advanced education. I disagree with her opinion on how a Bachelors Degree is the same as a high school diploma. Now more than ever, every credential is a strong asset to have considering the poor economic times. Although as Unique stated that entry level jobs are available for graduates equally to non-graduates, the benefit of a degree results in future promotions and upper management positions. Also, in a competitive job market, with a degree employers view your work ethic and problem solving skills to be a greater advantage to their company’s success.

According to 2006 statistics, in a lifetime a person with a bachelor’s degree earns on average $67,766 than someone that does not complete college. Bachelor degree recipients earn over 60% of non-graduates. Even an associate’s degree increases overall salary by 20% in ones lifetime. Job security and advancement are two of the most important reasons, in my opinion, that a college investment is critical to ones future growth.

College enforces the ideas of discipline and rewarding effort. Also, learning different ideas and concepts and repeatedly applying them to specific projects and tests are important skills to have in the real world. This gives a graduate a competitive edge to offer an employer. Employers hire people who have accomplished the task of earning a degree because they know that if that employee is focused and works hard enough through college then they will allocate the same efforts to the organizations success. It is critical to be able to provide confidence in the hiring and promoting manager’s decision by the simple fact that you worked hard achieve excellence.


Sources:
1. http://bachelordegree.lifetips.com/cat/65327/benefits-of-earning-a-bachelor-degree/index.html

2. http://www.anthemcollege.com/about/importance-of-a-degree.php
3. http://www.collegeview.com/importance_of_college_education.html

Fraud

Hey everybody! I’ve got good news and bad news. First, I’ll give you the good: another exciting edition of Mike Talkin’! Now the bad news: this is the second to last blog ever. I do feel bad since your lives won’t be as complete as before, but life goes on. Today’s topic concerns corporate fraud and the dangers associated with it. Fraud is a growing epidemic among American businesses. It is an internal depletion of a corporation’s assets by theft, embezzlement and other dishonest practices which robs their livelihood. For example, in 2003 U.S. businesses lost 600 billion in assets, a significant increase of $200 billion from a time frame shy of a decade. Enron violated internal ethic practices by buying and selling stocks based on information that was not available to the public. They practiced creative accounting by inflating the value of their assets to gain greater profits and advantages in the market. Arthur Anderson, Eron’s accounting firm also committed fraud in their weak efforts to sufficiently audit their client based off of the higher margins of profit gained from having them as a client.

Fraud also exists in non-profit organizations by workers taking donations, allocating funds to places not agreed upon and paying personal debts with funds that are intended to go to the charities. This practice of dishonesty by creating fake vendors and invoice sheets to allocate monies can exist with any charitable organization. For example, the American Cancer Society’s New York branch created a system in which allowed them to receive a massive volume of 4 million dollars in tax deductions by falsely writing off their tax income returns.

The prevention of fraud lies in a company’s effort to continue to do extensive background checks on their employees along with allocating a strong internal auditing of their assets. Also, by not letting one manager or accountant control most of the cash flow and delegating this responsibility, this would enforce a greater checks and balances system to lower the risk of fraud. Assessing a corporation’s current fraud risk can help with the prevention of dishonest practices by allowing a company to examine which aspects of business need the most security. I think that the most effective and low cost prevention is for the mission of the company to be honesty and for the leaders of the company to set an example of how an organization can be successful without cheating.


Sources:
1. http://www.super-solutions.com/EmployeeFraudandWorkplaceEthics.asp
2. http://encarta.msn.com/encyclopedia_701610398_2/Enron_Scandal.html

3. http://www.protiviti.com/portal/site/pro-us/menuitem.38fa3ddccd35956bbdd22d10f5ffbfa0?showGray=yes&file_name=%2FKnowledge%2FFeature_Articles%2FFeatureArticle_20090327.html

4. http://www.nysscpa.org/cpajournal/2006/106/essentials/p56.htm

Critique of George's Critique of Jessica's M's "Obama Says No More"

Good day everyone. Today I thought to myself, "I should critique a critique", and that's exactly what I did. First, I came across George's critique of Jessica Morse's blog and it was such an interesting topic, I felt compelled to give my two cents. I agree with Jessica and George on Barack Obama’s decision to make strict loan guidelines to the auto industry giants Chrysler, GM and Ford. One reason is because there is a future with these companies to consolidate and restructure their business if forced to because money is not simply handed to them by the government. Not every company gets a bailout and yes, the nation is dependent on the success of the auto industry because it allows us to compete in the global market. However, the production of new lines of vehicles is not worth the nation falling into a deeper deficit. The government’s decision is based on the lack of the auto giants’ abilities to sharpen their focus on marketing, which is what is crucial to making a profit, therefore satisfying bondholders.

Another interesting factor in why the bailout should not just be “handed” to these giants is the prevention of innovation. This struggle will force the corporations to think outside of the box, breaking the monopolistic hold on the technology that would come from companies such as Fiberforge, Aptera and Tesla Motors. These companies have the ability to create more earth friendly, fuel efficient vehicles which would lower the cost of manufacturing. This brings more of a benefit to consumers because with reduced costs of production, it would allow a lower sticker price. Also, outsourcing technological production needs to these smaller companies would enable more consumers to purchase cars that are safer for the environment, electronic in nature (lower gas expense), thereby improving the economic welfare of the nation.

The restricted bailout term appointed by President Obama would force GM, Chrysler and Ford to restructure on their company’s budgets, instead of wasting the government’s money. I believe that if these companies are given large sums of money at the consumer’s expense that the same result of non-profitable investing and wasteful allocation of funds will continue to occur. Unless and until they are forced to recognize that the inner-structuring of their operations in the financial and management strategies are in dire need, they will inevitably fail. Appreciation for the assets obtained by efficient production and possibly outsourcing to more cost-effective smaller companies will most likely drive future success.

Sources:
1 http://usnews.rankingsandreviews.com/cars-trucks/Auto-Bailout/

2 http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/03/EDSN14G1SR.DTL&type=autos

3 http://abcnews.go.com/Politics/story?id=6431621&page=1

Subprime Mortgage Crisis

Hello all! Today I decided to touch on an issue that has probably affected someone you know, the subprime mortgage crisis. Subprime mortgages have created an unstable economy as a result of lenders loaning funds under unrestrained guidelines. These loans were based off of lenient credit requirements and limited documentation. One type of subprime loan, a no documentation loan, was provided to the borrower for 100% of the residential property’s value. This created a large risk for the lenders because the income of the person was not verified and a credit score of less than 660 was accepted. The majority of these people had low credit scores for lack of responsibility in past debts owed; however, the lender’s raise in overall profit made for their acceleration of practices in loaning money to unqualified candidates.

An interest only loan was also a popular loan program made to entice borrowers of low loan payments. The risk was that they were able to qualify for a loan, never being able to pay down the principal value in the home. One missed paycheck or a family member falling ill and incurring substantial medical bills could cause an unavoidable foreclosure. The economic welfare of the nation suffered considerably because of declining values in comparable sales used for an appraisal to assess the value of a property. This was harmful because it discouraged the purchase of homes and the repayment of monies owed to banks. Also, refinancing for subprime mortgages allowed consumers to borrow against the equity in their home. One missed payment would also force these borrowers into foreclosure, obligating the lender to take ownership of the house and not the money owed.

Another subprime mortgage which was most responsible for creating the economic downfall, in my opinion, was ARMs, adjustable rate mortgages. This had the terrible effect of increasing foreclosures because of a lack of planning from the borrowers which had this loan program. The lenders would lock in an interest rate at a fixed value for two to ten years and then when the fixed rate term was over, the mortgage would adjust upwards. This increased the risk of foreclosure because the borrowers were qualified only on the basis of their debt-to-income ratio for the fixed portion of the loan. After the term had expired, their monthly payments would increase by hundreds of dollars. This was yet another reason why foreclosures did occur. In the future, the economy will not incur the great risk of failure if there are stricter lending standards enforced. Loaning money to people with low credit scores, high debt, lack of income and negligible down payments are factors which caused them to default on the loans given to them. The banks should have better standards, which in turn would better ensure the repayment of these loans.

Sources:
1. http://useconomy.about.com/od/economicindicators/tp/Subprime-Mortgage-Primer.htm

2. http://community.investopedia.com/news/IA/2007/Subprime_Reality_Check.aspx

3. http://news.bbc.co.uk/2/hi/business/7073131.stm

Critque of Unique L.'s "Specialization vs. diversification"

Hope everyone’s having a good day today, and if not, it’s about to be. Luckily for you, I’ve been checking out all the different blogs out there and came across one that’s, let’s just say, unique. Actually, that’s just a corny play on words since the blog I am critiquing is Unique L.’s. The link for her site is http://uniquebl0gs.blogspot.com/ and I will certainly recommend it to everyone I know, it is really that good. The specific blog that interested me was titled “Specialization vs. diversification” and wouldn’t you know it, that’s what it was about. Unique made the argument that specialization allows for greater efficiency. While that may be true, if a company is thinking big, diversification is a must. Here’s my take on the topic.

Diversification in a market is more beneficial to a company’s success than specialization because it allows for a greater possibility of satisfying broader markets with a more diverse base. Diversification allows you to earn more profits from channeling different avenues sparking the buyer interest in product they rarely find through specialization. Specialization is risky because if the niche is not successful the entire business fails to produce a “backup”. Competition is greater with specialization carrying the risk of failure in the market opposed to diversification.
http://www.greensheet.com/gs_online.php?issue_number=071002

Many strategies are associated with successful diversification. I believe that capitalizing on core competencies is the most important because it relieves the threat of competitors by forming a competitive advantage. For instance, Coke offered a diverse product Coke Zero which created a different market for no calorie drinks, diversifying their product (Coke, Diet Coke), extending a value of taste similar to regular Coke feeding the market’s desire for healthier soft drinks. If Coke focused on specialization of their one product, Pepsi and other competitors would have depleted that specific “health” market.
http://www.1000ventures.com/business_guide/im_diversification_strategies.html

Diversification allows for a smaller need of reinvention of the product because of the lesser threat of duplication which specialized markets carry. Concentric diversification is the relation of a new product to an existing one. Another example of this is the creation of the hybrid car. When gas prices and the well-being of the environment become a growing concern, diversification of the auto industry to provide fuel efficient, “green” cars pays off. Conglomerate diversification carries the most risk because it creates a need for a company to diversify outside of its means of production. As discussed in the “reference for business” article, Phillip Morris’ act of joining with Miller Brewing company to gain a broad spectrum of consumers was challenging because neither had experience in the production of their products. In the long run, if this type of business venture is successful, the payoff exceeds the risk.
http://www.gulfnews.com/business/Commerce/10185500.html

http://www.referenceforbusiness.com/management/De-Ele/Diversification-Strategy.html

Bankruptcy

Hello, once again! Today's topic is a very interesting one: How does a company handle going bankrupt. Bankruptcy is becoming more of a reality in this volatile economy for many families and businesses. It is a means of clearing debt to establish financial stability. The purpose of bankruptcy is to build and restructure a business by liquidating assets to clear monies owed, also offering relief of harassment from creditors. Reduction of debt occurs by the organization or individual making an effort through the courts to satisfy and writing off accounts in arrears.

Organizations manage the risk of bankruptcy to maintain current operations and to build the existing business without closing because of the allocation of income to debt. In my humble opinion, Chapter 11 is the most efficient for corporations partly because it relieves financial commitments to outstanding contracts and leases. It allows businesses to allocate a plan for reorganization of debts owed. This lowers the risk of failure because it forces the organization to create a restructuring plan to analyze current financial scheduling downfalls (i.e. income, expenses and liabilities) which forced them into the initial filing of bankruptcy.

One method for the avoidance of financial corruption is through asset management. Flaster/Greenber focuses on the prevention of bankruptcy through careful risk management solutions. They evaluate the existing financial conditions and counsel on ways to reduce the risk of losing assets. The “privatize your life using asset protection strategy” article offers similar insights of protecting assets by methods separating assets and identity, creating a structured plan, timely protection of assets and knowing the opposition. I believe that with these methods of analyzing and evaluating risks, organizations can better control and prevent disrupting business practices.

(1) http://bankruptcy.lawyers.com/commercial-bankruptcy/Business-Bankruptcy-FAQ.html

(2)http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html

(3)http://www.flastergreenberg.com/

(4)http://asset-management.bestmanagementarticles.com/a-29495-privatize-your-life-using-asset-protection-strategy.aspx

Critique of "Risk Maps" by Anna R.

Hello, again. Today must be your lucky day, a double dose of Mike Talkin is what's in store for y'all. Once again, I surfed the net for a blog other than mine, and came across Anna's. Overall I loved all her blogs and will recommend it to everyone I know. The link for the specific blog I chose to critique is http://act-alr.blogspot.com/2009/03/risk-maps.html . The title of this blog is "Risk Maps" and concerns how to go about making a risk map and their use by companies. First, I'd like to explain as best as I can my understanding of the risk map. This will be followed by a short critique of Anna's original blog.

Risk maps help define the certainty of occurrence, using the measures of severity and frequency of risks. Financial, operational and business risks are just a few controlling factors in a business’s success to which mapping would define the most efficient way to prevent these risks. Various forms exist to assess different types of uncertain risks. The risk map is important for assessing “high-stakes” risk. Unexpected risks are the most incorrectly mapped because of their low frequency.

Flood mapping is a very common risk management procedure because it provides the basis of the amount of coverage needed on commercial and residential buildings. FEMA is a government agency which manages risk in daily assessment of property values in a flood zone or flood prone areas. This allows proper coverage on a building and its contents in case of a flood which can cause substantial property damage and unpaid claims. They hire cartographers and engineers to determine special flood hazard area and risk zones. The NFIP, National Flood Insurance Program, uses FEMA’s risk assessment in the flood plan management program consisting of FIRM’s, SFHAs (Special Flood Hazard Areas).

Risk Maps exist to help improve the ecosystem and the environment by assessing factors such as insects, disease and mapping forests to measure the life and death rate of trees. The Geographic Information System database derives evaluated information for the improvement of healing the problems forests tend to have. This process is a “long-term” Forest Health Monitoring program analysis which compiles data into risk maps and models. Forest risk mapping allows more accurate predictions to which forests are prone to drought and fire. Defining these occurrences caused by insects or disease lowers the risk of forest and possibly home consumption by disasters such as massive wild fires and disease outbreaks caused by insects.

As far as Anna's take on the topic, I can't say I disagree with much. I do however disagree with her stance on the correlation between seasonality and car accidents. The weather is tied to certain seasons, which would therefore make the higher rate of accidents in winter correlated to winter itself. The snowy weather is a defining characteristic of winter in a lot of places. I don't think anyone is trying to say that the months of December to February are inherently more likely to have more car fatalities for the simple fact that they are those months. Those months have the bad weather, therefore I don't think it's incorrect to say that the season and car accidents are correlated.

Additional Sources:
http://www.shelterislandrisk.com/resources/documents/RiskMapsMadePractical.pdf
http://www.msc.fema.gov/webapp/wcs/stores/servlet/info?storeId=10001&catalogId=10001&langId=-1&content=productFIRM&title=NFIP%20Flood%20Maps&parent=productInfo&parentTitle=Product%20Information
http://www.srs.fs.usda.gov/sustain/conf/abs/lewis.htm