Would you dress like this in the office?

As the end of the year approaches, it’s common in a number of offices to reflect on what went well and what didn’t go so well in the year just gone.

The bosses of the Australian Tax service will have an interesting bit of reflecting to do.

office wearSome of the 23,000 Australian tax office workers were reportedly sent a memo by taxation service delivery chief Robert Ravanello telling them that there were too many “street casual outfits” being worn and too much “bare flesh” was on display.

Mr Ravenello told his staff that some of them were “dressing too casually or immodestly, therefore impacting on the perceptions of the professionalism of the Australian Tax Office (ATO)”.

He went on to say that items of clothing including thongs, board shorts and revealing attire were inappropriate for the ATO workplace.

Now before some of you get alarmed that people are walking around in thongs in the tax office it’s worth pointing out that in Australia the word “thongs” refers to flip-flops (sandals) and not underwear.

While some people would argue it doesn’t matter what you wear in the office of long as you can do your job properly and that tax is exciting enough without all this showing off of “bare flesh”, I guess the key message is that you should dress professionally and appropriately for wherever you work.

All of this is interesting but if you are like me and are based in Europe where its currently winter I think it’s unlikely I’ll be walking around in board shorts, showing off bare flesh and looking out the office window in my thongs (whether they are on my feet or around my waist).

The team here at ExP are now heading off on our Christmas break and so on behalf of everyone here at ExP I’d like to thank all of you that read our blog and especially those of you that have got in touch with your kind words and comments.

Thank you also if you’re one of our 125,000 Facebook fans and have a great festive season and we’ll be back blogging in January 2015.

It’s the little things that count but was this woman nuts?

There’s a saying that if you look after the little things, the big things look after themselves.

Personally I’m not so sure about this as arguably it’s more important to get the big things right.

critical-success-factorsUsing business terminology, Critical Success Factors are (wait for it …..) factors which are critical for the success of an organisation (probably not the most detailed definition of a Critical Success Factor (CSF) you’ve ever heard but on the positive side it is easy to remember).

An airline for example could have CSFs such as safe flights, in demand routes, on-time flights, etc.

CSF are measured using KPI’s (Key Performance Indicators).

KPIs are monitored for each CSF and if they fall below a set figure it could mean there is a potential problem which would need to be investigated – eg if the KPI for on-time flights falls below say 95% it would need investigating.

There was an interesting situation at Korean Air recently.

Cho Hyun-ah was vice president of the Korean national airline and was on board a Korean Air plane sat in the first-class section. As the plane taxied for take-off she was served some macadamia nuts without being asked whether she wanted any. The nuts were also served in a paper bag rather than on a plate.

Ms Cho was responsible for cabin service for the whole airline and when she saw this breach of in-flight service etiquette (apparently the nuts should be served on a plate in Korean air’s first-class cabin) she reportedly screamed at the flight attendant who served the nuts.

Some people may argue that attention to detail is very important in areas such as first-class travel but the manner in which he dealt with it leaves a lot to be desired.

Rather than reprimand the flight attendant who made the mistake in private she insisted that the plane return to the terminal so that the flight attendant who served the nuts could be removed from the flight!

So, which do you think is going to be more helpful for the success of the airline – disciplining an employee by removing him from the plane or delaying the flight for 300 people together with the associated bad press the airline has received?

Ms Cho has no doubt realised her mistake and she has now resigned from her position as vice president of Korean air. In hindsight, the decision to order the plane back was a Critical Failure Factor in her career.

How much does a Big 4 partner earn?

Different types of organisations have different rules regarding the disclosure of pay details of senior executives.

If you are a director of a quoted company in the UK, details of your remuneration package must be shown in the published annual report.

big 4 salaryIf you’re a partner in a professional services firm on the other hand then there isn’t such a disclosure requirement.

A recent report called Cheques and the City (a great play on names and would sound familiar to those of you who are fans of the American television sitcom starring Sarah Jessica Parker) by the High Pay Centre has provided more information about the leading Accounting and Law firms in the UK.

The report is an interesting read and some of the points raised are:

– approximately 1,400 of the 4,500 equity partners from the Big 4 and the 5 leading law firms were paid over £1m in the UK last year (there are roughly 11,000 people in the UK with incomes of more than £1m so this means that 13% of the individuals in the UK with income greater than £1m were from the top accounting and law firms).

– The senior partners at PwC, Deloitte and KPMG were each paid £3.6m, £2.7m and £2.4m respectively last year (there was no news on how much the senior partner of EY received last year but I think it’s safe to say he should have enough money to buy a coffee on the way to the office).

– The Big 4 are responsible for auditing 99% of the FTSE 100 and 96% of the FTSE 350 (the largest 100 and 350 quoted companies in the UK).

– The type of work undertaken by each of the Big 4 was as follows (figures shown are £m):

Big 4 revenue share

 

For those of you good with figures you’ll notice from the above table that KPMG is far ahead of the others in terms of the proportion of consulting work they undertake compared to audit and tax work (more than 50% of KPMG’s revenue was from consulting compared to just over 20% at PwC).

The Cheques and the City report can be found here.

Would you wear the same suit for a year?

Whilst many countries are making positive strides in terms of removing discrimination between men and women there are still areas where there are big differences.

Whilst differences in pay often make the headlines there was an interesting illustration recently of a form of discrimination that doesn’t often make the news.

Karl Stefanovic, an Australian TV presenter, wore the same suit for a year and nobody noticed.

Mr Stefanovic (or Mr stinky as he probably became known to his colleagues) said he did it to highlight the different pressures that women face over men and I have to admit he’s made a good point.

Whilst no one noticed the man wearing the same suit for a year what would the reaction have been if a female presenter had worn the same outfit for a year?

I’m sure the newspapers would have been full of criticism and the producers of the programme would have told her to wear different outfits.

It’s not all bad news to ladies though as a report recently released showed that women are much more likely to get helped if they wear high heels.

Research by French Professor Nicholas Gueguen found that only 25 men out of 60 stopped to help a woman who was undertaking research in the street and was wearing flat shoes compared to 49 out of 60 when the lady was wearing 4 inch heels.

Whilst nothing was mentioned about the length of skirt worn during the two parts of the experiment, it does appear to indicate that women are likely to get more help around the office if they wear high heels.

I am all in favour of equal rights in the workplace as it benefits both the company (through having access to the full range of human capital) and the individual but if I’m honest I think the smell would be unpleasant if a man or woman wore the same outfit for a year.

Also, as a man I’d be concerned that walking back from the coffee machine in my high heels could result in a nasty accident in the office due to stability issues.

December 2014 ACCA exam tips released but don’t do this…

Professional exams are tough. It’s not easy passing them but to be honest they should be difficult as if they are too easy then everybody could become a Chartered Accountant and the value of the qualification would be downgraded.

december-2014-acca-exam-tipsThat’s easy for me to say now that I’m qualified but in the run-up to my exams I can vividly remember wishing they were a lot easier!

It’s important in the final run-up to the exam to remain focused and concentrate on practicing exam standard questions.

There’s a lot of pressure when it comes to sitting professional exams. All your hard work is compressed into a few hours where you try to prove to the markers that you know what you’re talking about.

We’ve just released our December 2014 ACCA exam tips and whilst it’s only the examiners who know what’s in the exams, our tips show areas of the syllabus that we would pay particular attention to if we were sitting the exams ourselves.

Our ACCA exam tips are below but one thing you should definitely do during the exam is to remain calm. Whilst some of the topics in a number of the exams can be relatively predictable, there will always be surprises that can crop up.

The gentleman in the video below showed a remarkable level of calmness even though there were early signs that things were starting to go wrong. Let’s just hope that nothing like this happens to you in your exams and that you can remain as composed as the interviewer.

If you’re after any last-minute exam tips for the ACCA exams then here are our December 2014 ACCA exam tips (follow the link, choose the paper you are interested in and the exam tips can be downloaded on the right hand side of the page).

This is one way to keep busy as you get older.

Whilst most 79-year-olds would be happy falling asleep in front of the TV or annoying the grandchildren by repeating stories they’ve told 100 times before, Leonardo Del Vecchio has other things on his mind.

50 years ago he founded Luxottia.

cat with glassesWho? I hear you say.

Whilst most of you probably haven’t heard of Luxottia I’m sure that lots of you know their products.

The company is a leading eye wear company and makes sunglasses including Rayban and Oakley brands.

Things haven’t been going smoothly for the company recently though. Whilst the company has had some great financial results with sales reaching £5.8 billion last year, they are suffering some classic problems which face quoted companies whose founding family members have maintained significant shareholdings.

A couple of months ago, Andrea Guerra, the CEO resigned due to reported disagreements with Mr Del Vecchio over Mr Del Vecchio’s plans to resume a more active role in the company.

There are now further issues with the 79 -year-old announcing his plans to hand his shares to his six children and for them to have more of a role in the running of the company.

The end result is that the new CEO who replaced the previous CEO only a couple of months ago has also resigned.

So, in summary, not a typical 79-year-old. Losing two CEOs in a couple of months and handing the family business to your six children. Oh, and did I mention the reports that his wife is looking for a 25% shareholding which would need to come from the children’s shares.

Now, where are those slippers and the TV controller?

Will you meet your future partner at a segmentation event?

Online dating sites are big business.

Years ago you would more than likely have met your future partner face to face at some social event whereas nowadays there is a high chance that you’ll meet your future husband or wife on the internet.

anonymous_coupleThe online dating industry is also great at segmenting the market. In addition to the more mainstream sites such as match.com and friendfinder.com there are more niche dating sites out there including for example:

tallfriends.com – where as the name suggests, you can meet tall people;

farmersonly.com – to meet people that work in the farming industry;

meetingmillionaires.com – where yes, they do check your wealth when you join up, and

womenbehindbars.com – where you can meet women that are currently in jail (this has the added advantage of not having to pay for an expensive meal on your first date).

One particular dating site in America called Positive Singles has been in the news for the wrong reasons recently.

The market segment that it is aiming for is people who have sexually transmitted infections and who want to meet potential partners who have the same infections.

Understandably, people who sign up to the site are keen to keep their situation confidential and don’t want their details made public. Unfortunately for some of the members of the site their images and certain information were made public by Successful Match, the company that ran PositiveSingles.com.

The end result was that some of these individuals took the company to court claiming that they were misled about their privacy when they joined the site and a jury has just ordered the dating company to pay $1.5m in compensation and $15m in damages to one particular individual.

So in summary, from a business point of view the company was pretty good at segmentation techniques but not very good about maintaining privacy policies.

And whilst the one gentleman that complained about his details being released was no doubt very upset, hopefully the $16.5m he received as a result of the breech of confidentiality is making it easier for him to find a girlfriend and in fact he may well be switching from the positivesingles.com site to the meetingmillionaires.com site.

Who needs champagne for a celebration?

Gin and tonic is a drink that has caused a number of hangovers over the years but for two individuals it is going to make them very wealthy.

tonic waterGin is often credited with being a traditional English drink but the first recorded date for the production of gin was actually in the Netherlands in the 17th Century.

One of the key ingredients of tonic water is quinine.

Quinine is said to have many medicinal purposes and was first discovered by local tribes in Peru and Bolivia. Some people claim that quinine has medicinal purposes which helps various ailments including malaria.

The bringing together of gin and tonic happened in the early 1800s when British army officers in India were using quinine in an anti-malarial capacity and decided to hide the bitter quinine taste by mixing it with tonic water and then hiding the taste even further by adding gin.

The drink “gin and tonic” then came into existence.

Fast forward to 2005 and the company Fever Tree which was set up by Charles Rolls and Tim Warrillow produced their first bottle of upmarket tonic water.

Fever Tree tonic water has been selling very well since then and the company is now being quoted on the AIM (AIM is the Alternative Investment Market which is a sub-market of the London Stock Exchange and allows smaller companies to float shares with a more flexible regulatory system than is applicable to the main market).

The Fever Tree company has been valued at £154 million. That’s not a bad valuation for a company that’s selling tonic water.

There will no doubt be happy faces at the company and the success of the flotation will be toasted by a glass or two of champagne. Or should that be a glass or two of gin and tonics?

This idea by Levis is certainly a good fit.

The first pair of blue jeans to be made in the world were made by Levi Strauss in 1873.

levi jeansSince then, the company Levi Strauss has gone on to sell millions of pairs of jeans and their turnover last year was $4.6 billion.

Interestingly the shares of the company are not publicly traded as the company is a private company owned by the descendants of the family of Levi Strauss.

As well as being a company with an 141 year history it is also leading the way in terms of the ethical treatment of its suppliers.

It has recently announced that it will start offering low-cost working capital to its suppliers who meet certain environmental, labour and safety standards.

It was announced that the company will provide loans with progressively lower interest rates to those of its 550 suppliers who perform well in terms of their environmental and safety standards.

This is an admirable move by the company.

Their suppliers are often from developing markets such as Bangladesh and to encourage their suppliers to adhere to better ethical conditions they will provide loans to them at interest rates that get lower the better the suppliers perform in terms of their environmental and safety standards.

A great idea and will we see other companies introducing similar schemes to encourage ethical approaches to their supply chain?

This is how not to cheat in the exams…

Passing professional exams is a tough exercise. You’ll only pass them if you work hard and put in the hours of studying that are required.

Occasionally people will no doubt try to cheat and maybe try to grab a quick glance over at the person next to them to see what they are writing. The advice is simple. Don’t do it and instead focus on preparing properly in the first place.

Ok, speech over with and now let’s look at the husband of Finland’s president who if I’m honest would be rubbish at trying to sneak a look at the answers of the person next to him.

Mr Arajarv is married to the President of Finland and together with his wife was recently attending an official function where he was sat next to Princess Mary of Denmark.

Now frisky Mr Arajarv didn’t try to have a sneaky look at Princess Mary’s exam paper. No, he tried to look at something more… how can I say it… but more personal.

Alas for Mr Arajarv his attempts to grab a quick look at Princess Mary’s “exam scripts” were spotted by the Princess and his attempts to look innocently at the ceiling afterwards are hilarious or pathetic depending on your point of view.

Unfortunately for Mr Arajarv (but fortunately for all of us) his performance was caught on TV and can be seen below.

Would you make your boss drink water from the toilet?

It’s a fact of life that in any job you are likely to receive some form of criticism from your boss.

If criticism is done well then it really isn’t criticism but instead is a form of feedback.

Making sure that the feedback is fair and reasonable can help ensure a productive workplace exists.

It’s also important how you react to receiving feedback. If you take the points on board and can learn from things then it will no doubt help you improve your performance.

It’s not always the case however that people take criticism or feedback that well.

Jonathan Oliver, a 40 year old from Hampshire in the UK had a job whereby he created designs for gravestones.  Note that I said “had a job” rather than “has a job”.

The reason he no longer has a job is that his boss criticised his work and he reacted in a far from professional way to her criticism.

After the criticism he secretly filled the sports style water drinking bottle that his boss brought to work with water from the toilet.

Luckily for his boss she noticed that the water tasted a bit funny and didn’t drink enough to make herself seriously ill.

His boss wasn’t flushed with happiness over this though and was understandably pretty upset. The police were called and further investigation led them to Mr Oliver who admitted filling her bottle with water from the toilet.

He was recently sentenced to a four month suspended prison sentence and has to carry out 150 hours of unpaid community service work.

The lawyer defending him was quoted as saying that his client had reacted to problems at work in “an entirely inappropriate fashion”.

It’s not a Lamborghini it’s a Volkswagen…

, , , , , ,

When it comes to cars, things used to be simple. Most brands were known for a certain type of car.

For example, Mercedes produced luxury limousine cars, Porsche produced sports cars, Toyota produced mid range cars and Land Rover made 4×4 off road cars.

But that was a while ago and things have changed dramatically within the car industry.

The famous Maserati sports car brand for example is working on the Maserati Kubang and as the photo shows it’s clearly not a low slung sports car.

It’s a 4×4 off-roader and whilst there’s a good chance that the only time it will actually go off road is when the owner parks on the pavement it’s definitely more 4×4 than sportscar.

So why the introduction of the new product? (For those of you studying the various strategy papers then why the product development in Ansoff’s Matrix?)

Well it seems that they are hoping to follow in the footsteps of Porsche whose off road Cayenne model has proved to be a best seller.

As well as introducing new types of cars the car industry has also seen a number of major conglomerates appear with some serious car brands within them.

When people used to talk about Volkswagen for example they were generally referring to the ubiquitous VW golf but the Volkswagen Group is now home to far more cars than VW cars.

The VW Group with its headquarters in Germany is the largest carmaker in Europe and nearly one in four new cars bought in Europe are VW Group cars.

So does this mean that 25% of the new cars have VW badges on them?

Far from it in fact as the following car brands are all part of the Volkswagen Group:

Audi, Bentley, Bugatti, Lamborghini, Scania, SEAT, Skoda and of course Volkswagen.

So all of the above car makes are in fact part of the VW group.

Now if you’re an executive working for the VW Group and were offered a company car which one would you choose.

Now let me think.

Bugatti or Lamborghini. Which one would I go for…

ACCA or CIMA? …or MICE?

ACCA and CIMA are two of the leading professional bodies and as providers of some of the best finance and business qualifications in the world they have ethics at their core.

If you take a step back though, they are arguably in competition with each other and here’s an important question:

Have they been ethical in their approach to competing with each other?

In my opinion the answer is a resounding yes, and it’s a good example of how competition can and should be undertaken ethically.

Ethical competitive approaches include for example focussing on your strengths rather than deliberately trying to harm or damage your competitors.

If you’re looking for the other extreme though and want an example of how to compete unethically then head over to Philadelphia in America.

Nickolas Galiatsatos, the owner of Nina’s Bella Pizzeria in Philadelphia came up with an extremely unusual and completely unethical approach to winning business from his competitors.

Mr Galiatsatos was spotted by the owner of Verona Pizza, a competing restaurant, heading to the toilet of the competitor restaurant carrying a full plastic bag but then emerged a couple of minutes later minus the bag.

Doing nothing to dispel the stereotypical view of US policemen spending a lot of time at Donut bars and Pizza restaurants, there just happened to be two policemen sat in the restaurant eating pizza at that time.

Further investigation by the police found a number of mice in and around the empty bag in the toilet and when they headed out of the restaurant to find Mr Galiatsatos they found him depositing some more mice around the back of another nearby restaurant.

Mr Galiatsatos has now been charged with criminal mischief, harassment and disorderly conduct as well as cruelty to animals.

Importantly therefore if you’re thinking of ways to get ahead of your competitors please don’t involve bags of mice…

These boots are made for walking, or should that be, these boots are made for getting off quickly?

,

Students of the “people papers” within the various professional exams should be aware of the joint responsibility for “health & safety” within an organization.

In other words, a number of legal systems around the world place the responsibility for health and safety on both the employer AND the employee.

Employers have various obligations such as providing safe equipment to use. For example, they should undertake regular electrical checking of any IT equipment that is used.

Employees’ duties include being responsible for their own health and safety and not acting in a manner that may endanger a colleague.

A product from Levi Strauss, the famous jeans and clothing company has a nice link to health & safety.

One of the styles of boots sold by Levis are based on the shoes that were worn by Californian railway workers in the 1800s. Their design is such that they are easy to get off. This enabled any railway worker that got his foot stuck in the tracks as a train was speeding towards him to get his boot off quickly so as to avoid being hit by the fast approaching train.

An early example of health & safety at work!

I wonder though how many people that buy these boots at the Levi’s stores work on the railways? Either way, it’s always nice to be able to easily kick off your boots after a hard day of chatting to friends!

IKEA and Porter’s value chain analyis (and the hot-dog at the end…)

,

At the weekend I bought some furniture at the local IKEA. For those of you not familiar with IKEA it’s a very successful home furnishings group with over 650 million people visiting 300 stores in over 35 countries last year and producing sales of Euro 23 billion. They specialise in “flat pack”, self assembly furniture.

I’m a great fan of IKEA. You know exactly what you are getting with them. A great design, good quality and a reasonable price. IKEA make a great strategy case study and I’ll no doubt be referring to them as this blog progresses. I’ll highlight a couple of things I liked about the whole experience of shopping with them and them briefly link it into a strategic model.

As any of you that have been to an IKEA store before will verify, a trip there can turn into a day long event if you’re not careful. You are guided through a labyrinth of nice displays which will get your design thought processes working nicely. You are then funneled towards the checkouts tils where straight afterwards if the fancy takes you you can enjoy one of the classic IKEA hot-dogs!

Using Porter’s Value Chain when analyzing IKEA and linking it to my purchase shows what worked for me. (See our free P3 ExPress notes for more detail on the value chain)

I didn’t want to spend too much time at the store so what was useful for me was in that their website was very user friendly and easy to find what I wanted. They had up to date stock levels and estimates for the next few days. I could simply go to the website, highlight the item I wanted along, identify my local store and it would tell me the actual stock levels.

Each box within the Value Chain has numerous items in it but for me this element of “sales and marketing” was exactly what I wanted.

Another part of the Value Chain which is important for IKEA but I’m relieved to say I didn’t need it was the “after sales service”. As well as the normal guarantees and warranties that are provided, IKEA have a helpline for people to call if they get stuck when building the self assembly furniture. This could prove to be a key component of the value chain!

This is only a brief post about IKEA and the Value Chain but I always tell my students to look out for real life situations that link to the syllabus. Ok, so my purchase of furniture at IKEA is not the most exciting thing in the world but for anyone who has struggled to put together flat packed furniture “after sales service” component of IKEA’s value chain could save a frustrated hour or so!

Have you ever wondered why you can only find the one sock?

There are good bosses, there are bad bosses and there are, well let’s put it this way, slightly strange bosses.

socksAmerican Apparel founder Dov Charney famously once attended a staff meeting wearing a single sock… and nothing else.

In what was almost certainly one of the more memorable workdays for the other people at the meeting, Mr Charney fine-tuned his outfit by leaving both his feet bare (I’ll give you a couple of minutes to work out where his only piece of clothing, the sock, was strategically placed).

Mr Charney has been in the news again recently as he has been sacked by his fellow board members after claims of sexual harassment. It’s not been reported what the allegations of sexual harassment were in respect of but it sends an important message that even if you’re the millionaire founder of a global brand you still can’t get away with sexual harassment of your staff.

On a separate note, there is still no news on whether any action will be taken by the “fair treatment for socks” action group.

Location, Location, Louboutins.

There’s a saying that the best place to open a restaurant is next to a really good restaurant. The reasoning behind this is that people who go to the existing restaurant will see the new restaurant and are more likely to try it out.

When well-known organisations move to an area there can be lots of other businesses that benefit.

louboutinConde Nast, the publishers of numerous magazines including arguably the world’s most famous ladies fashion magazine Vogue, are just about to complete a move from times square in midtown Manhattan to the new World Trade Centre in the South of Manhattan.

According to reports in the New York Times, local businesses offering services such as hairdressing, manicures and lunchtime spas were feeling very pleased with themselves that the 2,300 mainly female staff of Conde Nast would be working in the same local area as them.

Unfortunately though the definition of “local area” isn’t the same for all people and the NYT reported that a number of businesses who originally thought they would be well-placed to serve the employees because they were only a 15 minute walk from the new offices have now realised that 15 minutes is too far.

And the reason 15 minutes’ walk is too far?

Well the reason has been put down to the fact that most of the employees of Conde Nast are wearing fashionable high heel shoes such as the £545 Louboutin shoes pictured above.

As any self-respecting Louboutin loving female (or Louboutin loving male for that matter) knows very well, it just isn’t possible to walk more than a couple of minutes in your killer 6 inch heels.

Not even if it means missing out on the new organic Amazonian vegan Bulgar wheat facial that the trendy spa 15 minutes’ walk away is offering.

This crackdown has caused a bit of a headache.

When governments try to crackdown on corruption and bribery it is normally good news for the “good people” and bad news for the “bad people”.

ShuiJingFangUnfortunately for Diageo, the world’s largest spirits maker, they haven’t done anything wrong but have been caught up in an anticorruption drive in China.

Diageo make the world-famous Johnnie Walker whiskey and Smirnoff vodka but they also make the Chinese spirit “Baijiu”. To most people outside of China, Baijiu is unknown but for people in China it’s extremely well known and is considered to be an expensive luxurious drink.

Chinese president Xi Jinping has led an anticorruption drive which has seen businesses reducing the level of luxurious gifts that they give out. Expensive watches, fine food and expensive cigars were all commonly gifted by companies to encourage business and win favours.

The Baijiu drink was also commonly bought by companies to give away as gifts but following the anticorruption clampdown sales have collapsed in the last year.

Diageo owns nearly 40% of Shui Jing Fang, the Chinese company that manufactures Baijiu and the sales of Shui Jing Fang fell by nearly 80%. As a result, Diageo has written down the value of the investment in Shui Jing Fang by £264 million.

Have a break. Have a fish and chip flavoured chocolate bar…

, , , , , , ,

Nestlé’s Kit Kat is one of the world’s best selling chocolate bars.

It is estimated that over 400 Kit Kat fingers are consumed every second worldwide and every 5 minutes enough Kit Kat fingers are produced to out stack the Eiffel Tower.

Whilst most people associate Kit Kat with its red wrapper alongside the classic wafer and chocolate taste, Nestlé actually segment the market rather nicely in a number of countries. They produce a range of flavours which are only available in certain countries according to local tastes. In simple terms they are dividing the market (segmenting) and then adjusting the marketing mix accordingly.

In Japan for example, Nestlé recently launched 19 new flavours. These flavours reflect the food specialities of certain districts and are only sold in these specific districts.

For example, you can buy a yubari melon flavour Kit Kat in the Hokkaido district, a strawberry cheesecake flavour in the Yokohama district and a cherry flavour one in the Yamagata district.

Different flavours are available in other countries (segments). For example, peanut butter flavour can be bought in Canada.

Now, originating from Scotland where my favourite dish was crispy cod and chips my obvious question to Nestlé is:

“When will a fish and chip flavoured Kit Kat be released in Scotland?”

I feel it’s only a matter of time so if any marketing executives from Nestlé are reading this then over to you…

Would you accept this money?

Now this is an unusual one. It involves an accountant that wouldn’t accept money…

Baverstocks Accountants is a small firm of accountants in the UK that recently fell out with one of their clients.

Their client, a Mr Fitzpatrick, got into a dispute with the accountants and withdrew his business from them with an outstanding debt of £804.

The (ex) client apparently wasn’t overly happy with things and decided to settle his debt by payment in cash. Now this wasn’t 80 crisp £10 notes together with four pound coins. No, he decided to pay his £804 by dropping off five big boxes full of 1p and 2p coins.

I don’t know the exact split of coins but if we assume that the £804 was settled by way of 2p coins this meant that there were over 40,000 coins in the five crates!

Now whilst the disgruntled client was no doubt feeling very pleased with himself that he had settled the debt and left a mess of thousands of coins at the accountants, the accountants decided not to take this sitting down.

As a result, they took Mr Fitzpatrick to court and sued him, arguing that it was illegal to pay off debts higher than £10 with coins.

The accountants were successful and the judge ruled in their favour.

Apparently, under the Coinage Act 1971 (no, I didn’t realise that existed either), copper coins (1p and 2p coins) are only legal tender up to the value of 20 pence, coins worth up to 10p can only be used for payments up to £5 and coins worth more than 10p can only be used payments up to £10.

The end result is that whilst the unhappy client probably felt quite pleased with himself when he dropped off the thousands of coins, he has now been told by a judge that he has to settle the debt correctly (and collected the coins…)

Mobile phone plus food equals…

Mobile phones have revolutionized the world. It’s not just communication where they have changed things dramatically but if you think about it then a Smartphone is in effect a computer in your pocket.

Today’s Smartphones are more powerful than some of the computers we saw only a few years ago and are capable of doing lots of things.

So, they have lots of benefits but there’s one particular business that is trying to improve their results by encouraging their customers not to use their phones.

Over in America, a Los Angeles restaurant is offering diners a 5% discount on their meals if they don’t use their phones in the restaurant.

Now, in my mind this is a pretty good idea. I’ve been to some restaurants where it felt that I was the only person that was not speaking or texting on the phone (admittedly that was because my phone battery was dead but even so…).

Eva Restaurant in LA will offer a 5% discount if you hand over your phone for safe keeping as you enter the restaurant.

According to KPCC, owner Mark Gold said “For us, it’s really not about people disrupting other guests. Eva is home, and we want to create that environment of home, and we want people to connect again,” he explained. “It’s about two people sitting together and just connecting, without the distraction of a phone, and we’re trying to create an ambience where you come in and really enjoy the experience and the food and the company.”

I think this is a great idea and although I haven’t seen the small print of the terms and conditions of the offer then surely if I could get together 20 mobile phones to check in at the restaurant then 20 x 5% discount = 100% discount = equals free meals?

This EY partner has been a bit naughty.

Well it seems like an EY partner was working late with a client and it was more than the audit files that they were reviewing.

office relationsNew York stock exchange quoted Ventas Inc has announced that it has removed EY as their auditor due to an “inappropriate personal relationship” between a (now former) EY partner and Ventas’s (now former) Chief Accounting Officer and Controller, Robert Brehl.

It looks like discussing the audit files wasn’t exciting enough for both of them and one thing led to another and before you could say “prudence concept” they were ripping each other’s clothes off having inappropriate personal relationships.

Now, as any self-respecting finance professional will know, a core characteristic of auditing should be “independence”.

[Words deleted so as not to upset people of a sensitive nature] with the Chief Accounting Officer when you’re an audit partner is clearly not a characteristic of independence.

KPMG have now replaced EY as the auditors of Ventas and my guess is that both the ex-EY partner and Mr Brehl will soon get a reminder of what independence means as if they are married their husband/wife will soon be independent of them.

And the prize goes to… the taxman.

Tax evasion is a major problem for lots of countries. The tax authorities of the Central European country Slovakia though have come up with an ingenious way to reduce tax evasion.

restaurant moneyRestaurants can be notorious for not declaring all of their sales. With lots of customers paying for their meals in cash it can be very difficult for the tax authorities to ensure that all the revenue is properly reported by restaurants.

The Slovakian tax authorities have come up with a clever way to limit the non disclosure of income by restaurants. They have launched a lottery with a monthly top prize of €10,000. The twist in this lottery though is that you don’t buy a ticket to enter. Instead, you enter the lottery by submitting your receipt from the restaurant.

Yes, your receipt acts as the ticket for the lottery. You therefore have happy members of the public who get free chances to enter a lottery to win €10,000 and a happy taxman who now has copy receipts which they can check against the tax records of the restaurant to ensure that the sales have been properly declared in the tax returns.

So far over 60 million receipts have been submitted by 450,000 people.

A very good idea.

You’re not an auditor, you’re a financial detective…

, , ,

I’m an accountant and I’m proud of it.

I think the education and knowledge that you acquire both during your studies and continuing professional education are fantastic.

At the start of my career when I worked for one of the Big 4 I spent several years in the Audit department and this was a great opportunity to find out how a variety of different companies worked.

Sometimes though it has to be said that the term “auditor” doesn’t always have the most exciting of images to the general public. People may think that an auditor is merely somebody who checks other people’s work.

To be honest though a simple piece of rebranding whereby “auditors” were known as “financial detectives” would go a long way to removing some of the negative perceptions that some people have in terms of the excitement of the profession and could create a whole new generation who want to become auditors financial detectives.

Now, whilst most people have heard of the term “auditor” a lot of people don’t really fully appreciate how it works.

The Institute of Chartered Accountants in England and Wales (ICAEW) have got a website called “True and Fair” which in their own words aims to “help you find out anything you would like to know about the process known as audit – or to use its full title “Audit of Financial Statements”.”

I think it’s an excellent site and if you are an auditor and want friends or family to find out what your job entails then you should direct them to it (although admittedly if you’re on a first date with somebody and they ask you what you do then maybe say you’re a financial detective).

For any of you that are attempting an ACCA or CIMA paper with an auditing content it also makes for very good background reading.

The site can be found at www.trueandfair.org.uk

You get a safe hotel and a great bed. The towels and TV will cost you extra but what about the toilet paper?

, , , , , , , , ,

The Tune Hotel chain has just opened up its first hotel in the UK. The chain already has 7 hotels in Malaysia and 2 in Indonesia and they claim they offer 5 star beds at 1 star prices.

Their policy is to offer the essentials that people look for in a hotel such as safety, cleanliness and comfortable beds whilst at the same time removing a number of “extras” that some customers don’t necessarily want.

With rooms starting at £35 it certainly offers great value for London hotels. It wouldn’t suit everyone’s taste though as some of the things that people take for granted at a hotel are not included in the standard price.

There are a number of optional extras that guests can purchase. A towel for example can be provided for £1.50 per stay whilst the use of a hairdryer will set you back £2. If you want to watch TV you’ll need to pay £3 a day.

If you’re the type of person that likes to take your own towel to a hotel or is relaxed about whether or not you wash then you could end up with a very cheap room.

Whilst this hotel wouldn’t be everyone’s “cup of tea” (incidentally there are no coffee or tea making facilities in the rooms) there will certainly be a market for people that only want a clean and safe hotel room to sleep in and are not bothered about the extras.

In the past we’ve blogged about the BMI Weymouth hospital that was adopting a differentiation approach to business. With Tunes Hotels adopting a hospitality industry equivalent to the low cost airline models of Easy Jet and Ryan Air, this is a great example of either a cost leadership approach or Bowman’s no-frills strategy.

Guests can rest assured though that toilet paper is included in the price and is not an optional extra.

Husband hides money in oven and then wife decides to…

There’s a saying that “money makes the world go around” and as finance professionals we should all have a good solid understanding of the importance of cash flow and treasury functions.

With the recent history of banks failing and the turmoil that is currently taking place in certain European countries there is also the question as to how safe is your money.

Both companies and individuals should therefore make sure that their money is kept in a safe place.

Now, this doesn’t just mean ensuring your bank account is with a reputable bank. No, it also means don’t try and hide your money in a pretty stupid place…

As an illustration of where not to “invest” your money, according to press reports in Australia, a gentleman in Sydney stored his money in what must rank as one of the most stupid places to store money.

Due to the slowdown of the building industry that he was working in, the unnamed individual had been forced to sell his sports car to pay various bills and mortgage obligations.

The individual had just sold his Toyota Supra for AU$15,000 and when he was looking for a place to hide it until he could get to the bank the following day he decided that the best place would be to put the cash into the kitchen oven.

Now let’s just stop for a moment and think. Was this a good idea? Was there any chance that the oven could get turned on, become very hot and as a result the cash become pretty worthless??

Yes, you guessed it.

His wife came home and decided to preheat the oven so that she could cook some chicken nuggets for their children.

20 minutes later and as she went to put the nuggets in the oven she found a pile of melted money (interestingly, Australia has plastic banknotes which last longer than the traditional paper banknotes although not if baked to 200°C).

The gentlemen went to the bank the following day to see if they would replace the damaged money. In some countries the central bank will replace damaged bank notes with new bank notes but it’s unclear how much if anything the individual got back in this case.

So, the moral of the story is if you’re going to put your cash in a safe place then make sure it is safe.

Instead of hiding it in the oven then why not try hiding it in the trash bin…

The viewers won’t be talking about this new TV channel.

Do you have a favourite TV programme? Is there one particular programme that you really like and watch it as much as you can?

Before you start answering those questions I should say that I’m not talking to you but am instead talking to the dog.

Before you start questioning my sanity (or asking the dog if he thinks I’m mad) I should point out that a new TV channel is launching this month called Dog TV.

The channel isn’t aimed at owners of dogs. Instead, it’s aimed at the dogs themselves. It’s a 24 hours a day, seven days a week channel which has been specifically designed for dogs that are left at home whilst their owners are out of the house.

Instead of showing dog action movies or dog romantic comedies the programmes will aim to soothe and relax dogs who are alone at home.

If you look at the typical revenue stream of the TV channel it’s generally advertising revenue and subscription income.

The brighter amongst you will have probably realised already that advertising on a TV channel aimed at dogs and not humans isn’t likely to be that successful. After all, if Fido your faithful hound sees an advert for the latest dog food it will be tricky for him to tell the owner about it when he or she gets home from work.

So that leaves the subscription option and Dog TV will be open to subscribers for a monthly fee of $4.99.

It’s certainly a novel business idea and we wish the Tel Aviv company behind it all the best. If it is a success and the subscriptions go well then the company will be happy, the dog owners will be pleased and the dogs themselves will be soothed and relaxed.

It does of course raise the question, “what about the cats of the household and where is their TV channel? Where is Cat TV?”

Maybe this is in the company’s product development expansion plans??

Forget about Harry Potter. What about Alan the Accountant and his pants?

The Harry Potter books are a publishing phenomenon. Who would have thought that a story about a boy wizard would be so successful? Here we are more than 10 years after the first film in the series, Harry Potter and the Philosopher’s Stone, and the movies alone have earned more than £4 billion worldwide. Add in the books, merchandise and rights and you have a hefty sum.

But will there be a challenger to the Harry Potter crown?

I’ve just come across another children’s book and forget about wizard characters such as Harry, Hermione and Ron and instead welcome in “Alan the Accountant”.

Author Jinky Fox has produced a book about the likeable accountant Alan and whilst I haven’t yet managed to find a “window of opportunity” to read the book yet it does sound an exciting read.

Publishers Flaneur said that “as a student the author Jinky Fox planned to become an accountant, but was sidetracked into fine art”.

‘The series of books planned for Alan the Accountant will help me examine the exciting world of Accountancy that I turned my back on,’ commented Jinky.

So, as an accountant myself I’m pleased to see this potential challenger to the Harry Potter crown.

As one of the publicity shots for the book shows on the left he even looks like a fashionable accountant when he’s in his trendy pants.

A colleague in our marketing department though joked that seeing as it’s a book for children starring an accountant it will no doubt help children to fall asleep at night.

Forget about the football, what about the shoes?

The football World Cup is well under way and as well as being the world’s leading football fiesta it’s also one of the top events for sportswear sponsors to showcase their goods.

As an England supporter I haven’t been overly impressed with England’s attempt to save hotel costs by minimizing their stay in Brazil and Luis Suarez showing his favourite food is Italian wasn’t the most sporting action I’ve witnessed.

329839One area of the event which has been interesting though is the competition between the big sportswear brands.

Perhaps the most eye catching footwear has been Puma’s new evoPOWER Tricks 2014 boots which feature two different colours – pink for the right foot and blue for the left foot.

Ignoring the question as to whether the 2015 version will feature blue for the right foot and pink for the left foot, it certainly has raised awareness of Puma boots during the event.

The Puma company has an interesting history.

In the 1920s in Germany, brothers Adolf and Rudolf Dassler set up a shoe making business but soon fell out with each other and went their separate ways.

Adolf (Adi) Dassler kept the original company but renamed it Adidas (named after his first name and part of his surname) whilst Rudolf left and set up Puma.

Whilst Adidas and Puma were set up by brothers, the other big player at the finals, Nike has an altogether different background.

Nike, was established in 1962 by Phil Knight, who incidentally was an accounting major, and is one of the best companies in the world in terms of getting its marketing just right.

They have a long history of having a certain flair for marketing. After the 1972 Olympic marathon trials for example they proudly announced that 4 of the top 7 finishers had worn Nike shoes. They neatly ignored the fact that the top 3 were wearing Adidas shoes!

Students of strategy papers will be aware of Michael Porter’s generic strategies whereby organisations compete either by way of cost leadership or differentiation (see our ExPress notes for a refresher if you’re unsure about these terms).

It can be argued however that Nike take the best of both of these approaches.

They focus on the differentiation side of things by investing heavily in R&D, design and marketing. As a result they can charge a premium for being “different”.

On the cost leadership side of things then Nike use external manufacturers rather than internal production. This means that they can source their manufacturing via approved suppliers which they will select for each product on the basis of the best price offered by these suppliers. It enables them to shop around for the best price whilst still guaranteeing the quality.

All in all a very smart business model but I’m sure that fans of the World Cup are more interested in the goals that are scored with the football boots rather than the business models behind them.

An easy mistake to make?

You may laugh but would you really be able to spot the difference between a fully grown 180 kg gorilla and a middle aged man dressed in a gorilla suit?

gorillaNow, whilst most of you are probably thinking to yourself that yes, you would be able to tell the difference, unfortunately for an employee of Loro Parque Zoo on the Spanish Island of Tenerife, the Zoo vet didn’t spot the difference.

Any business should ensure that procedures are in place to minimise danger to members of the public. In the case of zoos this includes having practice drills to ensure that if an animal escapes the staff know what to do and have practiced it beforehand.

The zoo started a practice drill where a 35 year old zoo employee was dressed as a gorilla. He then “escaped” from an area of the zoo and the alarms were raised. Unfortunately for the “man dressed in a gorilla costume” the zoo had told all the people involved in the emergency drill that it was a practice except the zoo vet who as soon as he heard the alarm sounds grabbed his tranquiliser gun and proceeded to shoot the zoo employee with a tranquiliser which had been designed to knock out a 180 kg gorilla.

The zoo employee was rushed to hospital where he was treated and fortunately made a full recovery.

Somehow I doubt whether he will volunteer to dress as a gorilla at the next practice.

Getting the wrong measurements can be expensive.

In any project it’s important to take a step back and check that important things haven’t been missed.

The French train operator SNCF has just discovered that 2,000 new trains it had ordered are too wide for some of their platforms. The trains cost €15 billion.

The error arose because the national rail operator RFF gave the wrong platform dimensions to the train company SNCF. The national rail operators measured a number of platforms but all the platforms they measured were built within the last 30 years.

Unfortunately, they didn’t measure any platforms which were built more than 30 years ago as these were designed for slimmer trains and are too wide for the new trains to pass through.

It must have been a stressful day in the office when the mistake was identified and the solution to the error will be far from simple. Over 1,000 platforms will need to be adjusted before the new trains can become fully operational.

The total cost of amending the platforms will be more than €50 million.

Would you perform an operation on yourself?

Delegating work has lots of benefits.

For example, if you delegate work you can focus your attention on more important areas and for the person receiving the delegated work it can be an opportunity to learn new skills and to prove themselves. Ultimately it can result in increased productivity for the organisation as a whole.

I would argue that some things though should always be delegated to others and this includes performing a medical operation on yourself.

Unfortunately for Dr Rogozov, delegating an operation was not possible and he was faced with the somewhat awkward prospect of having to operate on himself and remove his appendix.

The amazing story of a Soviet surgeon who was on an Antarctic research trip in the 1960s has been released by the British Medical Journal.

The task of the research team was to build a new Antarctic Polar base and after 9 weeks the new base was open. As expected, their ship was frozen in so they had to spend the winter at the base.

Dr Rogozov was the doctor that was with the team to deal with any medical problems that they had.

Unfortunately he was the one that was taken ill and developed Appendicitis. He had no choice but to operate on himself and an extract from his diary is as follows:

8 May 1961

“I worked without gloves. It was hard to see. The mirror helps, but it also hinders—after all, it’s showing things backwards. I work mainly by touch. The bleeding is quite heavy, but I take my time—I try to work surely. Opening the peritoneum, I injured the blind gut and had to sew it up. Suddenly it flashed through my mind: there are more injuries here and I didn’t notice them . . . I grow weaker and weaker, my head starts to spin.

Every 4-5 minutes I rest for 20-25 seconds. Finally, here it is, the cursed appendage! With horror I notice the dark stain at its base. That means just a day longer and it would have burst and . . .

“At the worst moment of removing the appendix I flagged: my heart seized up and noticeably slowed; my hands felt like rubber. Well, I thought, it’s going to end badly. And all that was left was removing the appendix . . .

“And then I realised that, basically, I was already saved.”

Wow! That’s what I call a tough day’s work.

If you ever feel a bit stressed that you have to do your own photocopying because there’s nobody to delegate it to then think yourself lucky that you’re not having to sharpen your scalpel and prepare yourself for an operation.

The full story can be found here at the British Medical Journal although be aware that some of the photos are not for the squeamish.

Listen – your pets can make their own purchase decisions…

Who makes the purchase decisions in your household? Is it you, your husband or wife, or perhaps your dog?

Nestle, one of the world’s largest producers of pet food recently undertook an interesting marketing approach by producing adverts aimed directly at the pet as opposed to the owner.

TV commercials screened on Austrian television used high frequency tones which could be heard by dogs but not humans.

According to Anna Rabanus, Brand Manager of Beneful for Nestle Purina PetCare Germany, they “wanted to create a TV commercial that our four-legged friends can enjoy and listen to, but also allow the owner and dog to experience it together.”

Now, whilst it’s not clear whether that many dogs had read the TV listings to know that the adverts were going to be on or in fact whether the dogs themselves were already engrossed in the latest episode of Animal Cops Houston on another channel and missed the adverts, it certainly was a novel approach to advertising by Nestle.

This wasn’t the first innovative pet food advertising that Nestle had undertaken though.

Last year, Nestle Purina launched an award winning “Stop sniffing” campaign that enabled dogs to sniff the scent of Beneful dog food from special posters on advertising boards in German towns and cities whilst out for a walk with their owners.

Although not related to Nestle, a few years ago there was another advertising campaign which utilised the sniffing habits of dogs.

Small posters scented with… (let’s just say a smell produced by dogs that other dogs find attractive) were put on lampposts at ground level.

Whilst the dogs stopped to sniff these posters there was a bigger poster at human eye level advertising the Animal Planet TV channel which was aimed at the dog owner that was stood there waiting for their dog to finish sniffing.

Luckily for the advertising production team the smell that was put on the small poster to attract the dog was artificially created in a laboratory.

Is it a character from Star Wars? Is it a new form of transport in the latest James Bond movie? No, it’s…

… a great example of the marketing mix.

For students of strategy papers within the various exams the concept of the marketing mix and the 4Ps should be well known.

Philips, the global electronics giant with its headquarters in the Netherlands has just released a new clothes iron that well and truly adjusts the “Product” part of the 4Ps so that it is aimed directly at men.

They saw a gap in the market whereby they felt that men wanted a robust, “heavy duty tool like” iron. As a result they have just launched a more masculine looking iron by the code name of the GC4490.

As well as being stealth fighter black in colour, the GC4490 also has the same style of heavy duty protective case that expensive power tools come in. The product is clearly directed at men but what about the remaining three Ps of the 4Ps?

Well, in terms of the “P – Promotion” side of things, some of the promotional pictures make it look like a bit like a Star Wars fighter plane which will no doubt make ironing more exciting!

The “P – Price” is Euro 79.99 which is towards the top end of prices for irons. Some would argue that this must be justified on the basis of the “fighter plane technology” that was possibly included in the technical specs of the GC4490?

As regards, the “P – Place” then should we expect to see the GC4490 being sold at your local builders merchants?

Leaving aside the sexual politics debate, you have to admire the great use of the 4Ps by Philips to exploit a gap in the clothes iron market.

Lap-dancing, land and VAT.

What’s the link between lap-dancing, land and VAT?

It’s an interesting question and one which a VAT tribunal has recently been considering.

old-ladyDancers at the Sugar & Spice club in the UK have to make payments to the club for the use of their facilities and the dancers earn their income directly from customers for dancing on the dance floor or private dancing in separate rooms.

The dancers pay the club a fee of £40 together with a commission of 25% on the fee they receive for private dances in the separate rooms.

When it came to completing their VAT return, the club argued that the fee of £40 charged to the dancers was a taxable supply (i.e. VAT would be charged) but the commission charged was for an exempt supply of land (i.e. they argued that the payment was for the provision of the room which they claimed was land and as a result VAT would not be charged).

Perhaps unsurprisingly, the tax authorities argued that the commission was a taxable supply and was in respect of services provided to the dancers such as advertising, music, heating and security. They argued that this amount should be liable to VAT at the standard rate.

A decision couldn’t be reached between the Sugar & Spice club and the tax authorities so the situation went to a VAT tribunal.

The tribunal concluded that it was more than a simple provision of land (i.e. because of the provision of advertising, security, etc) and as a result VAT would be chargeable on the total amount.

So there you go. The next time you happen to be in a lap dancing club you can ask the young lady in front of you whether she knew that the room she is dancing in involves a standard rated supply rather than an exempt supply…

This poster came in handy.

Although some of the less ethical students may be tempted, it’s never a good idea to cheat in your exams.

plymouth-university2

 

The time and energy spent in trying to devise a method of cheating would be far better spent by revising the key areas in the syllabus.

Plus of course, the professional exams are very well invigilated and as a result there is a high probability that anyone who does cheat will get caught and that doesn’t bode well for a long term career in that particular area.

Plymouth University decided to emphasise to their students that cheating was not a good idea. Unfortunately, their good intentions didn’t really work out as planned.

They prepared anti-cheating posters and put these on the walls of their exam rooms.

Reddit reader hazzaap123 who was a student sitting an exam at the University took the photo above and posted on Reddit that “Just took a maths final with this on the wall of the exam room. It has formulas on that were needed in the exam. The poster got me an extra 10% on the paper”.

Yes, the anti-cheating poster prepared by the University included a picture of a hand with a formula written on it and that formula was needed in the exam that was taking place…

Royal Navy seize inelastic items.

, , ,

A joint operation by the British and Australian navies last month resulted in the largest ever haul of heroin at sea. The drugs weighing 1,032 kilogrammes had an estimated British street value of more than £140 million and were found on a boat 30 miles off the coast of East Africa near Kenya and Tanzania.

This is great news for the authorities but what link does this have with the exams?

HMS EdinburghPrice elasticity of demand (PED) is a core area of pricing theory. PED measures the sensitivity of customer demand to a change in prices and is calculated as

PED  =    % change in demand
% change in price

There is usually an inverse relationship: when price goes up, demand goes down (and vice versa).

Addictive drugs such as the heroin seized by the British and Australian navies however are an inelastic product and in fact are approaching perfect inelasticity. A perfectly inelastic product is a situation where price goes up but the quantity demanded stays the same. In the case of addictive drugs, the drug addicts will still need their “fix” so the quantity demanded by them is largely unaffected by price increases.

Which way, left or right?

It’s amazing how much you know. Whether you’re fully qualified or part qualified the professional exams with ACCA and CIMA are very comprehensive and as such anybody who has passed exams has proved that they have the ability to learn, comprehend and explain various technical topics.

left_rightAs we progress through our studies we soon start to take certain things for granted. Take debits and credits for example. Ask any qualified accountant which side debits and credits go and they will tell you (hopefully!) without even thinking.

I was recently teaching a group that were new to the joys of double entry. Some of them were initially finding it a bit of a struggle to remember which side the debit and credit went.

A couple of quick memory techniques for anyone starting out on double entry bookkeeping which will help you remember that debits go on the left and credits on the right:

1. AC/DC

Think of the Australian rock band AC/DC or the electrical system AC/DC and then remember that A/C’s = D’s and C’s [Accounts = Debits (on the left) and Credits (on the right)].

2. The driving reminder.

WARNING – I’d only recommend that you use this is you’re from one of the countries that drive on the left such as the UK, Australia, Hong Kong, Bangladesh, Malaysia and South Africa (there are other countries that drive on the left but for brevity sake I won’t list them all here!)

If you think that you Drive on the left but Crash on the right then it should help you remember that you Debit on the left but Credit on the right.

Again, it’s probably not worth using this memory technique if you’re from one of those countries that drive on the right!

So what made me think of the marketing mix in the shower this morning?

, , ,

I’m lucky enough to be teaching in Asia at the moment. The students are great and I’m convinced they will pass their exams (if any of them are reading this then good luck in the exam!)

shower-headI’m staying at a lovely hotel and this morning in the shower I was reminded of marketing and the 4 Ps. The shower gel that is provided by the hotel is a well known international brand and I’ve bought it myself before.

What was different about it though when comparing the product (one of the 4 Ps) as purchased by the hotel and the product when purchased by me as an individual? The aroma and texture was exactly the same whereas the packaging was different. The key difference being how the packaging was designed in terms of the ease with which the gel could be poured.

Whether it was me but the version I personally bought appeared to dispense the gel a lot quicker than the hotel version. The hotel version took a lot more effort to get the gel out.

It’s maybe my imagination but if the design of the packaging that is on the public product is in fact different then it would encourage me to use it up quickly and buy a replacement. The packaging on the version that the hotel was using however would “discourage” guests from using a lot of gel and hence save the hotel the cost of replacing the gel as quickly as with the “standard public packaging”.

I’m not sure whether this was a deliberate policy of the shower gel manufacturer but if it wasn’t then maybe they should be considering it…

Is now a good time to eat more chocolate?

It’s Easter weekend and in many countries around the world people celebrate by giving each other chocolate Easter eggs.

There could be some worrying news though for people who enjoy eating these chocolate eggs as well as anyone who enjoys eating chocolate in general.

chocolate-pricesThe price of chocolate is rocketing and in the last year alone cocoa prices have risen by 20% and it seems that the price rises will continue.

So, what is causing the increase in chocolate price?

The answer is that it is a simple case of supply and demand.

In December, the International Cocoa Organisation said there could be a 150,000 tonne deficit in the amount of cocoa beans produced in 2014.

There is a significant lead time in cultivating cocoa crops so the supply of cocoa will remain relatively static. In addition, the supply problems are being compounded by prospects of an El Nino weather pattern which can result in crop damaging dry winds in some of the leading cocoa growing countries in West Africa such as Ghana and the Ivory Coast.

Demand on the other hand is surging.

According to Euromonitor the value of chocolate consumption in major emerging markets such as Asia and Latin America will grow at more than double the rate of the world average in the next 5 years.

It’s estimated that consumers in the Asia Pacific region will eat 1.096 million tonnes of chocolate by 2018. This represents a 27% increase from 2013 and compares to a 5% increase in Western Europe (the biggest current buyer of chocolate) over the same period.

So in conclusion, there are supply problems, rocketing demand and higher chocolate prices seem inevitable.

What better excuse therefore is needed to buy that extra chocolate bar now before prices rise?

It looks like Saturday could be a record day…

When I was younger I can remember queuing with friends to get the latest album by my favourite group. At the risk of showing my age though it’s been a long, long time since I last did that.

It’s not because I don’t like music anymore but rather that it’s now so much easier to buy music online.

PrintThings have changed quite dramatically for the music industry when it comes to their distribution methods.

In my youth it was pretty simple. Record companies would distribute the albums via the record shops.

Fast forward several years and over the last decade music has been increasingly distributed online via platforms such as iTunes and Amazon. There’s also the not insignificant impact of illegal downloads of music.

Even if you still want to buy the more traditional CD versions of the albums rather than the digital version, then supermarkets such as Tesco sell the leading CDs at very cheap prices.

The high street music shops have struggled to stay alive. Several high street music shops such as Virgin Megastores, Our Price and Zavvi have all gone out of business.

Students of strategy though would not really be surprised by this as according to Michael Porter’s generic strategies there are two main ways of competing. Namely, cost leadership or differentiation.

In simple terms, cost leadership is where a company can produce something at a lower cost than its rivals whilst differentiation is where an organisation can charge a premium for its product as it’s “different”.

A high street chain of music shops is going to have a significantly higher cost base compared to companies that sell music over the internet. Property costs are going to be significant and will make it impossible for high street record chains to ever win the cost leadership battle.

Whilst it’s not looking good for the big chains of record shops what about the smaller independent record shops? Clearly they could never compete via cost leadership so what about differentiation?

On Saturday the seventh annual UK Independent Record Store Day will be held.

More than 240 stores have signed up to this year’s Record Store Day and tomorrow’s event is aimed at reinvigorating interest in the independent music stores.

At last year’s event people were queuing to get into the shops. Not to buy the cheap music but to savour the atmosphere, talk to people who were interested in similar types of music and to buy some of the more unusual music.

Hopefully this differentiation approach will work as in my opinion it will be a sad day if all the independent music shops disappear and we can only buy the music online or at a supermarket when buying our weekly shop.

The Chief Economist or the Chief Escaper?

It looks like whoever was in charge of recruitment at this Museum didn’t do their job properly. The end result is that the museum is now worse off by $500,000.

cheif economistWhen the National Agriculture Museum in the Czech Republic was looking for a new Chief Economist they interviewed Vladimir Prokop. The interview obviously went well as Mr Prokop was offered the job and accepted it to become the new Chief Economist of the museum.

One of the key things that should always be done when recruiting people is to ensure that suitable references and background checks are made.

It looks like in this situation though the reference checks weren’t done properly as Mr Prokop had applied for the job with a fake name and far from having a perfect background for a career as a Chief Economist, his background was that he was a convicted fraudster who was on the run from prison.

He had in fact escaped from prison last year whilst he was serving a sentence for stealing 10 million Czech crowns from the Evangelical Church of Czech Brethren.

He continued this approach to life in his new job and stole $500,000 from the museum.

That was not part of the job description of a Chief Economist.

In fact, far from being a Chief Economist he was more of a Chief Escaper as when the police came to arrest him at his office he managed to avoid arrest by running through the museum exhibition halls, jumping down an emergency exit staircase and then hailing a taxi before escaping.

My guess is that when the museum looks to recruit the next Chief Economist they’ll pay more attention to getting the proper references.

100,000 thanks plus your chance to win a free ACCA or CIMA course.

Wow – it only seems like yesterday that we started our blog and Facebook page and yet here we are this week celebrating 100,000 fans on Facebook so a big, big thank you to all of you that read the blog and follow us on facebook.

free-acca-cima-coursesOur blog readers really do come from all around the world. Our latest readership report showed that our blog has been read in 180 countries in the last 30 days!

So, thank you, dankie, shukran, do jeh, grazie, gracias, asante, merci (in fact sorry but we can’t do 180 languages but thank you all anyway!)

We’ve also got a little something to give back to you. We’ve got a short 2 minute survey and 5 people who complete it will be selected at random to win a free online ACCA or CIMA course.

If you’ve passed all of your exams or aren’t studying for them then don’t worry as if you are lucky enough to win the free ACCA or CIMA online course prize draw you can transfer the course to the person of your choice.

To complete the 2 minute questionnaire to stand a chance of winning a free ACCA or CIMA online course click here.

Thank you again for all the nice messages you’ve sent us over the years and here’s to the next 100,000 Facebook fans.

Good luck in the draw for a free ACCA or CIMA online course.

Are Manchester United getting it wrong?

Manchester United are dropping down the table.

Now, I’m not talking about the Premier League table where at the time of writing they are 7th in the League and are guaranteed to obtain their lowest points total in a season in the Premier League era. No, instead I’m talking about the Deloitte Football Money League.

man-utd-financesDeloitte are arguably the top accounting firm when it comes to dealing with UK football teams and each year they profile the highest earning clubs in the world.

The 17th edition of their report highlights the financial results from the 2012/13 season and it seems that Man Utd falling down league tables isn’t restricted to the Premier League table.

For the first time since the Deloitte Football Money League began they have fallen out of the top 3 big earners in the world. European champions Bayern Munich from Germany, leapfrogged Man Utd into third place behind Real Madrid and Barcelona.

Like most clubs in the top 20, Man Utd did generate more money than the previous year and the financial position going forward in the short term should be ok as there is a new Premier League television contract as well as some lucrative commercial deals present.

The problem could come though if they fail to qualify for the Champions League over the next few seasons. Dan Jones, partner in the Sports Business Group at Deloitte, said: “Consistent non-qualification for the Champions League would be a problem because, in round number terms, it is worth circa €50 million”.

So, it’s potentially a rough couple of years ahead for United.

The top 10 earners according to the Deloitte report are:

1. Real Madrid: €519 m
2. Barcelona: €483 m
3. Bayern Munich: €431 m
4. Man Utd: €424 m
5. Paris Saint Germain: €399 m
6. Manchester City: €316 m
7. Chelsea: €303 m
8. Arsenal: €284 m
9. Juventus: €272 m
10. AC Milan: €264 m

A copy of the full report can be seen here.

Things will now be different for you if you eat chocolate…

Sometimes it’s the simple ideas in business that work.

24 years ago in April 1990, the retailer Poundland was set up. On the face of it their approach was pretty simple – all the items in their shops would retail at £1 (hence the name “Poundland”).

tobleroneThey now have over 500 stores and sell 3,000 different products which all retail at £1.

They have been incredibly successful and the company has just been floated on the London Stock Exchange with a value of £750 million.

Whilst the concept of everything in the shop being on sale for £1 has advantages such as creating a “value image” which has been successful in the recent economic downturn, there are clear challenges when it comes to what £1 can buy today compared to 24 years ago and importantly what £1 will be able to buy in 24 years time.

Looking at the 4Ps model then it’s clear that the Price has to remain at £1, Promotion is minimal with word of mouth being the preferred method and Place needs to be in the right location as people will not travel a long distance to buy something for £1.

That leaves Product.

People are attracted to Poundland because it sells recognised brands at a discount price so they can’t really switch to unknown brands. They have however identified an approach to maintaining their margins on well known products including the chocolate bar, the Toblerone (the chocolate bar with the hidden logo shown here).

Poundland have agreed with Kraft that a smaller Toblerone is produced. It is only slightly smaller than the standard bar – about one triangle shorter.

Importantly though, by reducing the size of the bar it enables the price to be held at £1.

It’s not just at Poundland where chocolate bars have been changing.

The chocolate industry as a whole is currently facing a number of challenges with Cocoa prices being very high.

So what do chocolate manufacturers do? Do they increase the prices to keep their margins or do they amend the product?

Well it seems that both Nestlé and Cadbury have been quietly shrinking the size of some of their chocolate bars on the market whilst at the same time pushing up some of their prices to maintain their profit margins.

A couple of years ago, some chunks of Cadbury’s famous Dairy Milk Bar were removed and the bar was reduced in size from 140g to 120g

Now whilst on the face of it some consumers may feel a bit cheated by this move it could arguably prove beneficial for waistlines.

Interestingly as well, will we see Poundland stocking a one chunk £1 Toblerone in a few years time?

What could possibly go wrong?

Ethics are seen as one of the core attributes of an accountant.

Let me ask you a question though – based on the following information do you thick Mr Darren Upton was an ethical accountant?

fraudMr Upton was in business with his wife and they ran Upton & Co, a firm of accountants based in England with over 800 clients.

Mr Upton decided that he wanted a bit of excitement in his life and after going onto an internet dating website and pretending to be single, the married father met a part-time model and started seeing her as his girlfriend.

Did he tell this lady that he was marred?

No, he didn’t tell her that he was married but what he did do was to buy her lots of presents.

Now, I’m not talking about the odd bunch of flowers or box of chocolates. No, I’m talking about gifts including a Mercedes, lingerie from Ann Summers, clothes from Harvey Nichols and he also rented an £800 a month flat for her.

In fact, he spent on average £10,000 per month on his girlfriend over an 18 month period.

So picture the scene.

He’s in business together with his wife. He meets another woman and starts spending significant amounts of money on her. How can he fund these gifts without his wife finding out?

Well, put it this way. There are some clever frauds and some pretty stupid frauds that have been used to fund unethical activities over the years.

Mr Upton’s money raising attempt fell well and truly into the “stupid fraud” category.

Mr Upton looked after the tax affairs of a number of clients. After the tax they owed had been calculated he told the clients to pay the tax but instead of giving the bank account details of the tax authorities he gave the clients his own personal bank details.

It doesn’t take a genius to notice that the fraud will be spotted as soon as the tax authorities send a late payment notice to the clients.

So, having an affair behind his wife’s back, not telling his girlfriend he was married, defrauding his clients and taking money that belonged to the tax authorities.

What could possibly go wrong??

Mr. Upton was jailed for 6 years so he’ll have plenty of time to think about that question.

Not the best thing to post on Facebook…

Some things just shouldn’t be posted on Facebook.

Confidentiality agreements are regularly seen in business. At the risk of stating the obvious, these agreements are set up to ensure that whatever was agreed between 2 parties remains confidential.

confidentiality agreementUnfortunately for a gentleman called Mr Snay, he broke a confidentiality agreement and as a result is now $80,000 worse off.

The background to the story is that Patrick Snay sued his former employer Gulliver Preparatory School in Miami for age discrimination. He won an $80,000 settlement from them.

There was a condition attached to this though and that was he had to keep it secret (or using business terminology, he had a “confidentiality agreement” with the other party).

Whilst Mr Snay was no doubt feeling very pleased with himself and his $80,000 award he’s probably regretting telling his daughter or to be more precise, he’s probably regretting telling his daughter not to post about it on her Facebook page.

Yes, his daughter Dana told her 1,200 Facebook friends about the news.

She posted that “”Mama and Papa Snay won the case against Gulliver,” and “Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”

As a result of this post the school didn’t pay the $80,000 settlement. They argued that Mr Snay had broken the confidentiality agreement. The Florida Appeals Court agreed with them and stated that the settlement does not have to be paid.

So, that one particular Facebook post by Dana cost her parents $80,000. Somehow I don’t think “Mama and Papa Snay” hit the like button on their daughters post.

Are things looking up after this advert?

The advertising profession is consistently under pressure to come up with new ways of promoting a product.

British Airways PlcOgilvy, a global creative agency, has recently developed a pretty impressive advert for British Airways.

These adverts utilise interactive digital screens and are located in certain areas in London including Piccadilly Circus. The nice thing about these advertising boards is that they interact with the British Airways planes flying overhead.

The system on the advertising boards tracks British Airways planes as they fly above the boards and interrupts the display to show a child on the screen pointing towards the actual plane flying above. The screen then shows details of where the plane is flying to.

The aim of the promotion is to remind people how magical flying can be by looking at it from a child’s perspective. Richard Tams, a British Airways spokesman was quoted as saying “we’ve all had conversations with friends and family wondering where the planes are going and dream of an amazing holiday or warm destination and this clever technology taps into that and reminds people how accessible the world can be.”

A video of the board in action can be seen below.

This got me thinking though and whilst the technology is certainly very impressive and the creative brains that thought it up deserve a round of applause, I do wonder whether all the rain we’ve had in the UK recently will result in the child on the digital screen merely pointing towards a dark raincloud with a plane nowhere to be seen.

After 118 years Barclays are saying farewell to pwc.

After getting to know each other 118 years ago in 1896 it’s looking like pwc’s relationship with the Barclays banking group is coming to an end.

barclaysBarclays has just released their 2013 Annual Report and the Report highlights that they are putting their audit out to tender and pwc will not be invited to tender.

They put this down to several reasons including being “mindful of investor sentiment regarding external audit firm tendering and rotation” and the fact that “2014 is likely to see new regulation in this area both from the UK Competition Commission (implementing its decision to mandate tendering at least every 10 years) and the European Union (requiring audit firm rotation at least every 20 years).”

Barclays is one of pwc’s major clients and the fees received by pwc were pretty significant.

In 2013 the total audit and non-audit fees paid to pwc by Barclays amounted to £45 million.

Interestingly, the non-audit fees paid to pwc represented 28.5% of the audit fee.

Allowable non-audit services are pre-approved up to £100,000, or £25,000 in the case of certain taxation services. Any proposed non-audit service that exceeds these thresholds requires the specific approval from the Chairman of the Audit Committee before pwc can be engaged.

Barclays said that during 2013 the Chairman of the Audit Committee scrutinised all such requests for approval, particularly those that concerned taxation-related services, and two requests for approval were declined.

Whilst losing the Barclay’s audit is no doubt a £45 million disappointment to pwc, it’s fair to say that the other accounting companies are looking forward to the opportunity of tendering for a £45 million audit.

This is one way to win a business argument.

Handmade cosmetics company Lush sells some great products such as the Rose Queen bath bomb and the Happy Hippy shower gel. Their latest product range though has a less glamorous name. It’s called the “Christopher North” range of toiletries.

davidandgoliathSo, who is Christopher North?

Mr North is in fact the MD of amazon.co.uk.

This unusual cosmetics name arose as a result of a dispute between Lush and the internet giant, Amazon.

If you search Amazon for “Lush Cosmetics”, you are redirected to other products which are not “Lush” products but instead are described as lush.

The cosmetics company doesn’t sell via Amazon and claimed the internet giant was misleading customers into thinking they were buying genuine Lush products.

Lush were upset about this and asked Amazon 17 times to remedy it but they refused. Mark Constantine, one of the co-owners of Lush, was quoted as saying “after a while you realise you’re being bullied”.

The matter went to Court and the Court held in favour of Lush. Amazon has refused to accept the decision though and are considering appealing against the decision.

Mr Constantine however was quoted as saying he was not going to put up with Amazon’s “bullying unpleasantness” anymore. As a result we could soon see a promotional push on the new Christopher North range of toiletries. Lush has said that any profits on the North range of products would be donated to charity.

Lush has been pretty creative on the packaging of the products.

The packaging for the Christopher North bright pink shower gel for example has some funny quotes aimed at Amazon’s claimed tax avoidance schemes.

The tagline for the Christopher North shower gel is “rich, thick and full of it”.