Out of the pwc girls and the Deloitte guys who do you think are the most attractive?

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When I was younger I was given some good advice.

“Never write something about somebody else in an email that you would feel embarrassed about if that message ended up pinned to the office noticeboard”.

The thought behind this was that it’s easy to fire off an email but once it’s sent it can quickly be forwarded by other people and isn’t always guaranteed to remain confidential.

A certain male member of staff at the pwc Dublin office will no doubt from now on be thinking twice before he hits the send button on any of his messages.

A couple of weeks ago on what must have been a quiet afternoon in the office he sent an email to 14 male colleagues.

Sending emails to colleagues isn’t in itself a bad thing but the message was in fact asking his friends to rate the attractiveness of some recent female new joiners to the firm.

It also included staff photos of the ladies in question, all of whom were trainee accountants.

The subject line of the email was “this would be my shortlist for the Top 10”.

A colleague replied an hour later after obviously undertaking a detailed peer review and came up with a somewhat un-gentlemanly comment about whether one of the ladies justified being in the top 10.

Such is the ease with which emails are sent that within a few days the message had been forwarded to thousands of people and had “gone viral” around the globe.

My guess is that over the years the majority of employees in most companies have at one stage or another got together over a drink after work and debated the attractiveness of their colleagues.

Taking photos from the staff directory and emailing them though is probably on a different level. pwc are understandably taking this matter seriously and have reportedly launched an investigation.

Now before any ladies out there start accusing this of being purely a male problem it’s worth reminding people about former Deloitte employee, Ms. Holly Leam-Taylor.

In an email sent last December Ms Leam-Taylor’s message entitled “Deloitte first year analysts Christmas awards” asked her female colleagues to vote on which men in the office they considered to be the most attractive.

This message also “went viral” and became a global internet hit.

The conclusion to this article?

Well I guess it’s not to preach about whether or not you should make top 10 lists but rather if you do then don’t put it in an email as it may well end up being pinned on a global noticeboard.

A bank run? Don’t worry, it’s only a bit of fun…

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It hardly seems possible that the bank run on the UK bank Northern Rock happened over 3 years ago but last week some people thought that there was a similar run on the Spanish bank BBVA.

A bank run occurs when a large number of people with deposits at a particular bank head to branches of the bank to get their money out as quick as possible.

It often follows a rumour about problems with the bank and can lead to a self fulfilling prophecy.

Large numbers of people withdraw money. This can cause liquidity problems at the bank which in turn causes more concern which leads to more people rushing to withdraw their money which leads to liquidity problems with leads to….. and so on until a vicious circle develops.

A bank makes its money from lending.

If it just keeps depositors money without using the deposits to generate revenue by for example lending to borrowers then the bank is in effect just a safe deposit box for the deposits.

In the great depression of the 1930s sudden withdrawals by panicky depositors caused liquidity problems to such an extent that a number of healthy banks were forced to close.

Nowadays, as long as the bank is solvent, any short term liquidity problems should be resolved by borrowing cash from its central bank as a “lender of last resort”.

Bank runs can still happen though and last week the queues of people outside of BBVA bank in Madrid caused rumours that resulted in the share price falling sharply.

It took a while for the markets to identify what was going on and it wasn’t so much a bank run that was causing the queues but rather a “fun run”

There was a 10km fun run sponsored by BBVA and joggers were queuing up to get their race numbers and t-shirts from the bank for the run on the Sunday.

Unfortunately rumours quickly spread around the financial markets that there were large queues outside the bank and in the jittery post financial crisis atmosphere the share price plummeted by nearly 4%.

Luckily a hour or so later the markets realised that the bank withdrawals were race t-shirts rather than cash and the share price recovered.

Finally, to test your knowledge of the financial markets there are two pictures in this blog entry. One shows a bank run whilst the other shows a fun run. Can you tell the difference…

According to Apple there’s an App for…something that I shouldn’t say…

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Apple is an extremely successful company. Earlier this week they released their latest set of results.

For the first time their quarterly sales exceeded $20 billion. In my opinion though the really impressive thing about the published figures was their cash balance.

They have total cash and marketable securities (stocks and shares, etc that can be readily converted to cash) amounting to a staggering $51 billion.

To put this amount of money in perspective, if they took their cash and put it in an empty company and then listed this “cash only company” on the London Stock Exchange, it would not only make it into the FTSE 100 but the “Apple cash company” would in fact be the 18th largest company quoted on the London Stock Exchange!

The blog entry here provides some thoughts on what else Apple could do with their cash if they decided to go on a shopping trip.

One of the growth areas of Apple can be found within their Apps business. Apps are “applications” (in effect software to use on their devices). 3 billion apps were downloaded in the first 18 months after their launch.

Apple has a very slick and professional marketing strategy.

Apple’s iPhone adverts such as the one below famously state “There’s an app for that” and finish with “There’s an app for just about anything”.

As well as having a very creative approach to their advertising Apple has also taken a very commercial and sensible approach to matters.

Last week the phrase “There’s an app for that” was officially classified as a trademark of Apple.

This means they will be able to prevent competitors benefiting from the phrase.

It will probably result in adverts such as the one below by US network carrier Verizon being prohibited. Verizon parodied it’s competitor  A&T (a carrier for the iPhone in the US) with this “There’s a map for that” advert.

We all make mistakes at work and I know you shouldn’t laugh but…

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On Tuesday, Microsoft were due to launch their much anticipated Windows 7 phone system. The launch event was scheduled to take place in New York with a start time of 3.30pm.

“Joe O” works for the electronics firm LG who were one of a number of phone companies that were expected to launch Windows 7 phones to coincide with the Microsoft event.

The phone companies however were under strict instructions not to announce anything until after Microsoft’s big launch.

Alas, poor Joe who is based in the UK made a slight mistake when he thought the launch time was 3.30pm UK time rather than 3.30pm New York time. The end result was that LG’s official UK blog revealed details of the phone and what it was capable of doing under the new Microsoft system some 5 hours before Microsoft started the official event.

The error was spotted by LG pretty quickly and the post was withdrawn but it was too late as it had already been picked up by a number of other websites.

Now, picture the scene. You’re part of a project team that has been working on a major project for some time. The “partner” to your company on this project is none other than the mighty Microsoft. The world’s press are anxiously awaiting the launch event and then you press a button which releases the news to the world some 5 hours early.

What would you do?

No, honestly, what would you do?

Deny it? Blame it on somebody else? Say it was a technical error?

Joe did the honourable thing and posted the following on the LG blog:

Yes, that early slip may have been my fault, I may have failed to notice the time zone was EDT, not BST, but let’s not kick a man when he’s down. And I was down, literally hiding under my desk ignoring my constantly ringing phone.

Please consider this my public confession… And remember “to err is human; to forgive divine”.

Showing that Joe has a good sense of humour he also posted the following animated GIF on the blog.

In today’s ever increasing global business environment this is a useful reminder that it’s important to remember the more simple areas of international business.

We all make mistakes though and well done to Joe for his excellent recovery!

Do you own a iPhone or is it a Hiphone, an Ephone or a Ciphone?

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On Saturday Apple officially launched the iPhone 4 in China. They also opened up two new flagship stores in Shanghai and Beijing.

China is the world’s largest mobile market with more than 800 million subscribers so it would seem to make sense that Apple sell their products there.

Why has is taken them so long to launch the iPhone 4 in China though? After all, the iPhone 4 was originally launched in the US back in June and in countries such as Australia, Netherlands and Singapore in July.

The handsets themselves are manufactured in China so it’s not as though they haven’t had any experience of doing business in the country.

There are various reasons why companies have phased product roll outs in different countries. The sheer scale of a “global launch” for a company like Apple would be extremely challenging. Having sufficient inventory in stock on global launch day would not only be a logistical nightmare but would probably be physically impossible.

An additional challenge for Apple is that they need to agree matters with their strategic communication service providers in each territory (in other words, the mobile phone operator they will be partnering with in each particular country). This also takes time.

Anyway, from now onwards we’ll be seeing the iPhone 4 in China but anyone that has been to China recently though could be forgiven for thinking that the iPhone 4 has already been in the country for a while.

A significant issue for Apple is the increase in the number of iPhone clone companies.

As well as clone companies that produce illegal fake copies of the phone there are also businesses that produce reasonable quality phones which are very similar to the iPhone. They are designed so that they try not to break any patent protection that Apple has set up. I’m sure though that Apple’s patent lawyers are monitoring these products very closely!

A quick search on the internet for example shows websites selling products such as the HiPhone, the Ephone and the Ciphone. With prices starting at less than $100 there will be a significant number of people opting for these items.

Oh, and in case you were wondering the photo above is of the Hiphone.

Is this your shopping list: bread, milk, eggs and Viagra?

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Monday could be a big day for a lot of people.

Tesco, one of the leading UK supermarkets, will commence selling the erectile dysfunction drug Viagra.

Viagra has been a huge success for Pfizer. It’s one of their blockbuster drugs and millions of the little blue tablets have been sold over the last 10 years.

One of the drawbacks though for a lot of men that want the drug is where to get hold of it from. In the UK you generally need either a doctors prescription or to risk buying it from potentially suspect internet sites.

Tesco are one of the most successful supermarket chains in the world. In strategic Ansoff’s Matrix terminology they have done very well with market development (4,811 stores in 14 countries with an amazing 2,482 stores in the UK alone) together with product development (an estimated 40,000 product lines ranging from pizza to petrol to perfume).

Tesco are about to add another product line to their offerings and from next Monday shoppers will be able to pick up Viagra from over 300 Tesco stores.

As finance people we know all about the challenge of getting pricing decisions right.

Tesco are not the first mainstream chain of stores to stock Viagra. Last year, the high street chemist Boots became the first store in the UK to sell Viagra without a prescription. You can currently buy 4 of the blue pills from Boots for £55.

A price skimming or premium pricing strategy for Tesco wouldn’t really work as the Viagra market is a mature market. Tesco has instead undertaken a classic penetration pricing strategy whereby they price the product at an attractive price with the aim of growing its market share.

From Monday, you will be able to buy 8 of the blue pills at Tesco for £52.

Whilst the per tablet charge at Tesco is a lot lower than what can be found at Boots, £52 is still a significant amount of money. There’s a recession on and times are hard for a lot of people. Only time will tell whether Tesco made the correct pricing decision.

Has the Big 4 become the Big 3?

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Things have changed. You won’t be hearing much about PricewaterhouseCoopers any more.

Is this breaking news? Does this mean that we will be talking about the Big 3 rather than the Big 4?

Should PricewaterhouseCoopers partners and staff be rushing to recruitment consultants to get another job?

There’s no need to panic as all is well with the company. What they have done though is undertaken a rebranding exercise.

The company has commonly been referred to as PwC since it was established via a merger back in 1998 between Price Waterhouse and Coopers & Lybrand. With effect from Monday though they will now officially go by the name of pwc.

As part of a multi-million pound make over not only will the company be known as pwc but the corporate logo and corporate colours have changed.

The new logo incorporates the letters “pwc” in lower case along with a 6 rectangle symbol in shades of orange and red.

According to pwc, the brand was refreshed “in order to strengthen, and modernise how it represents its worldwide network to its clients, its people and the communities in which it operates.”

Global brand consultants Wolff Olins designed the logo in collaboration with PwC employees and clients. The complete rebranding process reportedly took two years.

From a personal point of view, I like the new logo and orange/red spectrum colours which I think are nice fresh, clean colours.

What about people from some of the other accounting firms? My guess is that they must be relieved. With KPMG having blue/white, Ernst & Young black/yellow and Deloitte navy/green it must have been a relief all round that pwc went for orange/red.

PwC in the UK have just released their results. So how much did each partner make?

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PricewaterhouseCoopers is a great company. It’s one of the top companies in the world and it’s also a truly global company. The latest reported figures show over 160,000 PwC people working around the world including 8,500 partners.

On Monday PwC released their UK results for the year ended June 2010.

So, how did they do?

First of all the good news. Their turnover in the UK rose 4% to £2.33 billion.

Their profit before tax in the UK however fell 3% to £665 million.

This fall in profit was put down to some significant investment during the year including recruiting 1,750 staff, appointing 57 new partners and moving into a new environmentally friendly office in London (incidentally, there’s a previous blog entry on the proximity of a PwC office to a Ernst & Young office here).

As maybe a positive sign on their view as to which direction the economy is heading they also stated that they were planning on creating 800 new jobs in the UK over the next year as well as continuing with their significant graduate recruitment by taking on 1,200 new graduate level joiners.

Now onto the exciting bit that I’m sure lots of people are interested in and that is what is the average payout for each of the 820 PwC UK partners?

Although it was down by 2% on the previous year it was still a healthy average figure of £759,000 per partner.

PwC’s UK chairman, Ian Powell, was reported as receiving £3.6 million.

“There’s no such thing as a free lunch” but will there be such a thing as a free drink or cheap drink in the future?

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Binge drinking in the UK is a major problem. City centres at the weekend can be full of people that are literally trying to drink as much as possible in as short a period of time. Violence and health issues often ensue.

As well as the disturbances to local residents there are also the costs both health-wise to the drinkers and financially to police forces, hospitals and society at large arising as a result of this binge drinking.

As a potential solution to this problem, the government is currently investigating whether to ban free or cheap drink promotions. One of the ideas being discussed is whether to make it illegal to sell alcohol below cost price. In other words to prevent businesses offering “loss leaders” on drinks so as to encourage higher spending at a later date.

If you’re an accountant, and assuming you’re not reading this in the middle of an actual binge drinking session yourself, this raises an interesting discussion on what exactly is meant by “below cost” and in particular the term “cost”.

The major alcoholic drinks manufacturers produce a range of drinks. Diageo for example produce drinks as varied as Smirnoff vodka, Johnnie Walker whisky and the famous Irish stout Guinness.

Identifying the cost of each particular drink would be challenging exercise. Whilst they no doubt have sophisticated management accounts which allocate overheads and indirect costs in certain ways, there would be a clear debate as to which was the “correct” allocation of these costs.

Apportioning overheads such as head office costs, R&D and marketing to individual products would result in a certain amount of flexibility in terms of identifying the cost figure to use for “below cost” purposes.

One solution to this inherent problem of identifying the cost of individual products has been proposed and that is setting the minimum cost of the drinks as equivalent to the duty and VAT that needs to be paid on the particular drinks.

So, the next time you’re out having a quiet drink with some non finance friends feel free to start a discussion about how much each of your drinks cost to make. You can then explain about the various possible methods of allocating indirect costs. Then again, talking about management accounting cost allocation whilst out with your friends may result in your  non finance friends starting a binge drinking session themselves…

Forget the sunshine, the beaches and the fantastic food – if you live in Australia sell your house and move to America…

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Asset valuation is a tricky business.  It is, however, a skill that accountants are often commissioned to use.  It’s also a useful one to have when making personal decisions, such as whether to buy a home or not.

Some people would argue that a major driver of the current economic slump in many countries is the collapse of house prices.

In a number of countries, house price bubbles were enormous.  There are lots of motivations for buying a home; principally as a place to live, a store of value for the future; certainty come retirement (when the mortgage is paid off so housing costs drop only to be maintenance).

Another motive has been speculation.  In my opinion, speculation in house prices is a bad thing, since it drives up house prices.  This means that new houses are not affordable for the young.  The more that house prices go up, the greater the transfer of wealth from the economically active young to the less economically active old.

Unsustainably high house prices cause uncertainty in an economy and when a crash eventually happens, it can cause people to be locked into homes with loans greater than the value of the asset (negative equity).  As well as a source of human misery, negative equity reduces labour mobility, which is bad for the economy as whole.

The Economist newspaper tracks house prices in different countries, using a method based on rental yields.  The assumption here is that rental markets react more readily to underlying supply and demand conditions.  If one had $500,000 to invest, would one use it to buy a house which could then be rented out, or buy other investments such as bonds?  If the rental yield (rent / initial value x 100) is less than the yield on bonds, then the house price is overvalued.  It’s a simple enough methodology that can give some revealing results.

A couple of years ago, this analysis suggested that UK property prices were 35% overvalued.  A crash followed.  There have been property crashes and recession in many countries where speculation is a big motive to buy property.  The alarming thing is that a recent analysis (Economist 10 July, page 75) revealed that properties are under and overvalued in certain countries:

UK: 33.8% overvalued (following a hard-to-explain recovery in house prices)
USA: 6.5% undervalued
Spain: 50.4% overvalued
Australia: 61.1% overvalued
Germany: 14.5% undervalued
Ireland: 15.7% overvalued.

This may be poor news indeed for the economy of countries with very overvalued property.  With these sorts of valuations, mortgages may become unaffordable the moment that interest rates rise to above the rock bottom levels we have at the moment.  This could release very big downward forces in the economy and dampen out any economic recovery.

On the plus side, the USA looks to have reacted quickly, albeit brutally, to the changed economic circumstances and it might be a good time to sell your home in Australia (cash out your investment while it’s arguably overvalued) and buy somewhere in America.  If you can get a visa.  Oh, and a mortgage!