£1 million for two weeks work? Not bad, but what about exchange rates and discrimination?

, , , ,

One of the highlights of the summer as far as I’m concerned is the Wimbledon tennis tournament that takes place in London in June.  The atmosphere, the skills of the players and the event itself are fantastic.

Whilst tennis clearly gets priority, running the Wimbledon event is very much a business.

Earlier this week the All England Club (the organisation that runs Wimbledon) announced increases in the prize money for the 2010 championship.

The total prize money for the event will be £13.725 million. Both the men’s and ladies’ champions will each receive £1m, an increase of £150,000 over last year.

The increases over recent years emphasise that tennis is now big business. Roger Federer, the 2009 men’s champion, for example, was born in 1981. In 1981 the prize money was nowhere near £1million being only £21,600.

Tim Phillips, Chairman of the All England Club was quoted as saying “Wimbledon exists in a highly competitive global marketplace ….  it is important that we offer a level of prize money which is both appropriate to the prestige of the event and which gives the players full and fair reward.”

It certainly is a global marketplace with players and spectators coming from all over the world and TV rights being sold to many countries.

It was also reported that there were pressures to increase the value of the prize in sterling terms due to sterling weakening against the dollar and euro over the last year. It remains to be seen though if they would decrease the value of the prize in future years if sterling strengthens!

As well as currency issues there’s also an interesting debate to be had concerning discrimination between the men’s and ladies’ championship. Up until 2007 the men’s champion was paid more than the ladies’ champion. This was then changed to avoid discrimination but as every tennis fan knows the men’s game is played over 5 sets whilst the ladies’ is over 3. Does this mean that the men are being paid proportionately less?

An interesting debate but I’m sure that when it comes to the finals this year the players will be more concerned with winning the championship than discussing discrimination issues!

So, what does the Eyjafjallajoekull volcano eruption in Iceland have to do with your exams?

, , , ,

This is our 100th blog posting and a big thank you to all of you for following this blog and for all your kind comments. They’re much appreciated!

Please do contact us with any thoughts or suggestions on what you’d like to see on this blog going forward.

The news over the weekend has been full of the flight disruptions over Europe. The cloud of volcanic dust from the eruption of the Eyjafjallajoekull volcano in Iceland has resulted in airspace in nearly 20 European countries being closed with thousands of flights cancelled.

This is unprecedented in recent history but what does this have to do with your exams? There are some nice links to some of your papers.

Certain businesses are obviously impacted more than others (a nice topical link to a short term environment issue within PESTEL analysis). Airlines for example are estimated to be losing £130 million a day as a result of their planes being grounded. The courier companies such as TNT and DHL are also facing pressures as their planes cannot take off.

The ash cloud has also had some other less direct consequences. Just in time stock control methods are used by supermarkets for a number of their perishable products. Whilst supermarkets source a lot of their products from within the UK where delivery is made by road, there are a number of “exotic” goods that have to be shipped by air into the UK.

Heavier, lower value items that do not have a particularly short perishable life are generally shipped to the UK by road or sea freight. Items such as bananas are shipped by boat rather than plane although as mentioned in a previous blog entry they have their own issues to look at!

It’s likely however that the supermarket shelves will soon be empty of perishable items such as exotic fruits and flowers that are prepared and packed overseas and then shipped to the UK by air freight.

Whilst customers will miss out on their purchases of these exotic items, it’s less clear what the impact will be on the supermarkets. The reports are that whilst less than 1% of British imports by quantity are transported by air freight, this figure increases to approximately 25% when looking at it as a percentage of British imports by value.

Will the customers switch to less exotic but available alternatives? From a personal point of view, my favourite fruit is a banana so I’m lucky!

Free drinks at work but not too much otherwise you’ll get locked out…

, ,

Denmark is famous for many things. One of them is that it is home to one of the most recognized beer brands in the world, Carlsberg.

Carlsberg beer was first brewed in the mid 1800s and today is drunk around the world in 140 countries.

They have been in the news recently when nearly 800 workers in Denmark went on strike as a result of proposed changes to Carlsberg’s rules for drinking beer at work.

Currently, there is free beer (and soft drinks) in the canteen at lunchtime but the drivers of the delivery vehicles are eligible to have up to three free beers per day outside of lunch hours. The argument for this is that as they are on the road a lot they do not have the opportunity to have free beers in the canteen.

The warehouse staff went on a five day strike arguing that they should also be entitled to the additional free beers that the drivers get. Earlier this week the strike came to an end with an agreement to discuss matters.

Having an awareness of current worker relations issues is important in a number of exam papers but walking out on strike as a result of not having free beer is probably a relatively unusual issue! The vast majority of organizations have a no drinking policy in place.

There is also a big health and safety issue present. Having drivers that drink beer when they are on the road has some obvious dangers.

Carlsberg though have already thought about this and have identified a novel solution. All of their delivery trucks are fitted with alcohol sensing ignition locks that will not start if the driver is drunk.

There’s trouble brewing with PESTEL

, , ,

Last week the UK chancellor unveiled his budget. The general consensus seems to be that it wasn’t a particularly exciting budget with the chancellor playing safe on most things.

What has caught the public eye though is the announcement that duty on cider (an apple based alcoholic drink) would increase by 10% above inflation. This would add approximately 5p to a litre bottle of cider. This has upset the cider drinkers and thousands have joined facebook groups hoping to get the decision reversed.

We mentioned the C&C group in a previous blog about spreadsheets. The C&C group own the Magners cider brand which is one of the best known cider brands in the UK.

The change in duty imposed by the chancellor is a classic case of how the “P” (Political) in PESTEL can impact on a company. Magners has reacted quickly to this though by launching  a press campaign saying that they will cover the increase in duty and will not increase their prices.

The C&C group may meet the “P” again soon though as there is discussion about the Scottish government introducing minimum unit pricing for alcohol in order to try to curb the health problems involving alcohol that are present in Scotland. The C&C group dominates the Scottish lager market with the brand Tennents.

So, if somebody asks you what is the link between cider, lager and PESTEL you now know the answer.

Are Go-GO Hamsters skimming into my Christmas shopping?

, , ,

My 9 year old niece is a lovely girl and has some great characteristics. One of my favourites is that she’s a determined little girl who knows exactly what she wants! Christmas is fast approaching and top of her Christmas present list this year is a “Go-Go Hamster”.

For those of you outside of the UK you may not have heard of these toys. They are small battery operated hamsters with a retail price of £10. They are the latest must have toys for Christmas. I was determined not to leave Christmas shopping until the last minute this year and went off in search of some Go Go Hamsters. A slight problem however in that the shops have sold out of them! The big chains such as Toys R Us have sold out and even exclusive Hamleys in London has sold out.

A quick look on certain websites such as E-bay however shows that it is in fact possible to buy Go Go Hamsters. Some are being sold for more than £50 which when comparing to their retail price is a hefty mark up.

Anyway, back to ACCA Paper F5 and CIMA P2 and what exactly does my Christmas shopping list have to do with these papers? Students should be aware that Price skimming is where prices are set at a high price to catch customers willing and able to pay the price. Are we seeing an unofficial price skimming approach by individuals selling Go Go Hamsters?? Some may argue that it is simply individuals taking advantage of supply and demand and selling at a profit. The important thing for paper F5 though is to be aware of the concept of price skimming as well as all the other pricing strategies that a company can adopt (if you’ve forgotten then have a quick look at pages 14 and 15 of our ExPress notes).

In conclusion, I won’t tell you whether I actually bought a Go Go Hamster or not in case a certain 9 year old niece is studying F5 at an early age….

Cider and spreadsheets

, ,

Cider drinks and spreadsheets – what’s the link?

Cider is an alcoholic drink made out of apples and has become more popular in recent years in the UK. One of the most popular brands of cider in the UK is Magners cider, the brand owned by the C&C Group.

We all know that there are lots of benefits of using spreadsheets such as Excel (e.g. speed of use, quantity of data that can be analyzed, etc) but we should all be aware that mistakes do happen with spreadsheet.

Earlier this summer shares in the C&C Group fell approximately 15% after the group said that revenue in the 4 months to the end of June had fallen by 5% rather than the 3% increase that had been reported a week earlier!

The group’s Finance Director said that the error in the earlier announcement occurred after data was incorrectly transferred from an accounting system to a spreadsheet used to produce the trading statement. Quite an embarrassing mistake and a valuable lesson in that even if spreadsheets are extremely powerful tools in business if the wrong data is inputted you will receive misleading results.

Also, it should be stated that consuming excessive amounts of cider when using excel could result in unpredictable results…

My 85kg and ratio analysis…

, , , ,

I weigh 85kg (approx 13.5 stone or 187lbs).

So, how am I doing weight wise? More to the point, what has this got to do with the exams?

Ratio analysis is an important area of the syllabus and one overriding principle to remember when looking at ratio analysis is that a ratio is irrelevant when looked at in isolation. Ratios must be looked at against comparatives or benchmarks in order to interpret them and then to look at the underlying causes.

So, back to my weight of 85kg. How am I doing? Is my weight ok?

85kg by itself is irrelevant. We need to look at comparatives for somebody who is my gender and my height. For example, 85kg for an adult male with a height of 1.90m (6 foot, 3 inches) is a healthy weight. 85kg for an adult female with a height of 1.60m (5 foot, 3 inches) is an unhealthy weight with the person being classified as obese.

Using my example of 85kg, by comparing it with people who are the same height as me is in effect comparing it with “industry standards”.

What about my performance over time? Is my weight increasing, decreasing or remaining static when compared to last year and the year before. Comparing movements within this personal ratio analysis unfortunately reveals that my weight has increased.

Now onto the important issue behind ratio analysis and that is of looking at the underlying cause of the movement in the ratio. Unfortunately, it looks like the cake I have with my afternoon tea could be on the way out…