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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.

What’s the link between George Bush and the ACCA exams next month?

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George W Bush is a controversial figure.  Two years after leaving office, his policies during his presidency of the United States still stir controversy, both within the USA and around the world.

He has just published his autobiography.  Perhaps surprisingly, he appears to be rather frank in his admission that he personally authorised the use of “water boarding” techniques, in which the subject believes themselves to be drowning.

Although no permanent physical damage occurs in this process, it’s designed to be traumatic. The current US president, Barak Obama has banned its use.

The justification given by the former president for authorising the use of torture was that he believed that the information extracted from the subjects of this process saved lives elsewhere.

We’re not commenting on whether we agree with this or not as an ethical standpoint.

For people taking an ethics exam, such as ACCA paper P1, this could be an interesting example of ethical stances and especially the difference between deontological and teleological (consequentialist ethics).

President Bush’s viewpoint is an example of utilitarian teleological ethics.

In teleological ethics, the rightness or wrongness of the action is assessed by investigating its consequences.  Utilitarianism looks at the greatest benefit to the greatest number of people.  So if great, but non-lethal, suffering of one person saves the life of another, it’s justifiable, even if the act itself may be repugnant to some people.

Compare that with deontological ethics and particularly the three maxims of Emmanuel Kant.

In deontological ethics, water boarding is probably never justifiable.

Deontology looks at the rightness or wrongness of the action itself, regardless of its consequences.  It would be possible to express a duty (“imperative”) if it passes the three maxims of Kant:

Consistency: Would it be possible for everybody to follow the rule of “no waterboarding”?  The answer here seems to be yes.

Respect for human dignity: Does the rule respect the dignity of others.  A no torture rule easily passes this test.

Universality: Would it be possible for somebody to understand that breaking the rule would bring the disapproval of society as a whole?  Again, the answer here is yes.  If torture were universally accepted as wrong, it would be possible for a violator of that rule to anticipate society’s disapproval.

There are no conclusions to this article.  It’s just pointing out an example of the two different ethical approaches and how we are each prone to prefer one over the other in different circumstances.

It could be a good example for people taking the P1 exam to use if asked to explain the differences in the deontological and teleological approaches to ethics.

Don’t worry about the £117 million you can’t find. Instead, just go on a nice long holiday…

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Paul Bowtell, the CFO of Europe’s largest travel company TUI Travel will soon be able to go on a very long holiday.

TUI recently announced that Mr Bowtell will leave the company at the end of the year.

Why is this I hear you ask?

Put bluntly, the reason is that he messed things up in a big way when he was in charge of the finances of the company.

TUI stated that they would be writing off £117 million of “irrecoverable balances” and restating their prior year financial results.

£117 million is a significant write off in anyone’s books. The share price of TUI fell by over 10% as a result.

It also highlights one of the challenges faced by organisations that merge.

The write down originates from “failures to reconcile balances adequately in legacy systems in the retail and tour operator businesses in TUI UK”. In other words, back in 2007 when TUI merged with First Choice Holidays they had to integrate different systems and simply didn’t manage it.

Questions have got to be asked as to why they couldn’t reconcile the systems. After all, given there’s been a recession on for a few years there must have been a few IT consultants available to work on the reconciliation of the systems and who would have charged a lot less than £117 million.

Mergers often have problems with integrating areas such as the culture of the companies but it’s clear now that the integration of these IT systems has also been far from easy. Being unable to reconcile £117 million makes for a spectacular suspense account.

Publicity around mergers tend to focus on their advantages, real or perceived, but the behind-the-scenes work that has to be done can be substantial.

It no doubt proved to be a real headache for Mr Bowtell. For his sake we hope that this will prove to be the biggest write off he has to oversee in his career.

Was it a good bet or not? 10 years and £1.4 billion later and the answer seems to be…

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Although people have been gambling for a long time, the profile of the betting industry has changed dramatically over recent years.

The bookmakers that were seen on many a high street seem to be gradually disappearing.

People are still gambling though but the delivery method of the industry is switching to internet based gambling rather than placing bets at a physical bookmakers.

Ten years ago former professional gambler Andrew Black and former JP Morgan trader Edward Wray started up a betting business that addressed matters in a new novel way.

For years the typical approach to gambling had been where a bookmaker set the odds and it was up to the individual gambler whether or not he or she accepted these odds and placed the bet.

Betfair pioneered the concept of person to person betting whereby individuals bet against each other rather than the bookmaker. Betfair provide the platform for the betting and take a commission on each transaction.

A gambler will say that they want to bet on a certain event happening (or not happening) and if another gambler wants to accept the bet then the transaction goes ahead. Betfair provide the mechanism for this to happen.

This is known as a betting exchange and is a great example of where first mover advantage really counts.

In order for the business model to work there has to be a critical mass of gamblers that are willing to offer and accept bets. Without this critical mass the business simply would not work.

Another example of where first mover advantage has been critical to business success is in online auctions. After all, who are the main competitors to eBay?

Back to Betfair though and it certainly is a good business model. Risk for example, is nicely reduced as the company is not standing to lose on the bet but instead takes a nice commission on each transaction.

So how well has it done over the last 10 years?

The answer to this can be found last Friday when 15% of the company was floated on the London stock market and the company was valued at £1.4bn.

Betfair’s advisors were some of the biggest names in the business and included Goldman Sachs, Morgan Stanley and Barclays Capital to name a few.

Amongst other things their job was to identify the price range of the proposed offer. Initial indications were that it would be between £11 to £14. The final initial public offering (IPO) price was set at £13.

With some of the top investment bankers involved and Betfair being in the gambling industry (which is not necessarily renowned for being generous to gamblers) it was something of a surprise to some people to see the share price rise by nearly 20% in the first day of initial trading after the IPO. After all, this could imply that the IPO was undervalued if there was such an initial jump in price.

I wonder what odds you would have got from Betfair that the IPO share price would rise by 20% on the first day of trading?

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!

Should you do a u-turn if you see a GAP in the market and it’s out of the blue?

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According to dictionary.com the definition of a U-turn is

1. a U -shaped turn made by a vehicle so as to head in the opposite direction from its original course.

2. a reversal of policy, tactics, or the like, resembling such a maneuver.

For anyone that’s looking for a current example of a branding u-turn then I’d recommend looking at what has happened since the US clothing and accessories retailer GAP introduced their new logo last week.

GAP Inc, which was founded in 1969 in San Francisco, is home to a number of brands including Old Navy and Banana Republic. Their most famous brand though is that of GAP itself.

GAP has approximately 3,100 stores around the world and last year had revenue of nearly $15 billion.

They are a great brand and their “blue box logo” (shown above on the GAP shopping bag) is one of the best known logos in the fashion world.

They decided however to change the logo and introduced the new logo shown below. Now, what do you think of the new logo? Which one do you prefer – the original one or the new one?

Personally I think that the new one looks as though it would be more suited to a high tech or consultancy company. The original one seems to better match their concept of clothing being laid back and traditional.

Following the launch of the new logo last week there was uproar on social media sites such as Twitter and Facebook with people demanding that the old logo be brought back.

The upshot is that on Monday GAP released a press release where they announced that the new logo would be withdrawn and the previous one reinstated.

In the words of the President of GAP Brand North America there was “an outpouring of comments from customers and the online community in support of the iconic blue box logo.”

A decision was therefore made not to use the new logo but to revert back to the previous one.

Was this a company listening to its customers and giving them what they wanted or was it a company that didn’t speak to their customers enough before making the change? There will be arguments both ways.

We shouldn’t forget the cost of this u-turn.

There would have course have been the fee GAP paid to their branding agency (probably ex-branding agency now). A quick straw poll in the office felt that the fee paid for this particular design should have been in the region of £10.

There would also have been the costs of redesigned packaging and signage with the new (now old) logo on it plus of course all the management time.

They say that “there’s no such thing as bad publicity”. I’m not sure GAP’s Branding agency would agree with this.

Get out your sketch pad if you want to overcome a barrier…

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If an organisation can create a successful barrier to entry then it will have a great competitive advantage.

In simple terms, a barrier to entry can prevent competitors entering the market.

We’ve blogged before about a good example of a barrier in the Indian telecommunication market but a recent attempt to create a barrier by Southampton Football Club in the UK was met by a truly artistic response.

Southampton FC decided that they would try to boost their income by preventing any non Southampton FC photographers from taking photos of their match with Plymouth Argyle.

This barrier meant that the only photographers present were official Southampton FC photographers and hence any photos of the match would have to be purchased from the official agency. A nice revenue source for the club.

Ignoring the rights and wrongs of this in terms of impact on other clubs and setting a precedent, this is indeed a pretty tough barrier to overcome.

Understandably upset at having to pay for photos of their local team, the Plymouth Herald newspaper approached well known local artist Chris Robinson.

Chris watched the match on television and then drew “comic strip style” pictures of the football action which were then published in the paper instead of photos.

As you can see, the results were pretty impressive.

It also resulted in a pretty unusual answer to the question of “How do you overcome a barrier to entry”.

The answer now includes, “Draw some cartoons”.

Marks & Spencer – the figures weren’t padded out but what about…

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Marks & Spencer (M&S) are one of the best known retailers in the UK. First established back in 1884 they have been a mainstay of British fashion for as long as anyone can remember.

They have however had a turbulent journey over the last few years but yesterday they announced their results for the quarter ended 2 October and a number of things were quite impressive.

First of all, the ability to release their figures within 3 working days of the end of the quarter was in itself no mean feat.

The figures themselves were also very good with group sales up by 6.5% and all the major divisions showing impressive growth. So, how have they managed this? After all, although we’re coming to the end of the recession people are still being careful about money.

According to Marc Bolland, the Chief Executive of M&S, “Customers are returning to quality. In Food they are responding well to our better value and innovation, and in Clothing are increasingly choosing M&S’s great fashions and quality that lasts.”

They were also successful in introducing “innovative new products” (classic Ansoff’s Product Development). For example, they have just announced that they will be the first to launch men’s “enhancing underpants” on the UK high street.

On the ladies side of things the success of the “Wonderbra phenomenon” has been well documented since they were introduced in the 1990s but in the words of M&S the Bodymax enhancement pants for men have a number of advantages.

The “frontal enhancement pants” are “specifically designed to visibly enhance your shape” and the “bum lift pants” are said to “lift and shape your buttocks for a visibly sculpted look”.

Mr Bolland also said that there had been “a positive response to increased investment in marketing”. It will be interesting to see how they market the enhancement pants.

Now, you’re possibly thinking what sort of person would buy these enhancement pants? You may also be wondering how comfortable they are to wear.

In answer to this final point I’ll let you know as soon as my pair are delivered.

That’s some obligation – it will take 180,000 years to repay it…

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Yesterday, the so called “Rogue Trader”, Jerome Kerviel, whose unauthorised trades cost his former employer Societe Generale vast losses was sentenced.

Whilst this has got a serious element to it (he was jailed for 5 years) it also has a certain element of farce. As well as the jail sentence he was ordered to pay compensation to his former employer.

Now, this wasn’t any “normal” compensation we’re talking about here. It was the princely sum of €4.9 billion. Yes, Mr Kerviel was told that he has to pay nearly €5,000,000,000 to his former employer.

Based on his annual earnings before going to jail it would take him nearly 180,000 years to pay that amount! Societe Generale have sensibly announced that they will not be pursuing the money.

Control environments don’t generally strike students as the most scintillating area of their studies.  A number of ACCA and CIMA Papers however place considerable emphasis on controls, using Sarbanes-Oxley and the COSO frameworks.

Respecting controls might slow down an employee’s daily work routine and may feel sometimes like a constraint on innovation and enterprise.  Sometimes, it may be tempting to circumvent controls, especially if it generally appears to result in making quicker profits.

Anybody tempted to do this might be interested to note the Paris court’s decision to sentence Mr Kervie.  Although the hapless gentleman alleged that the bank had been complicit in allowing him to trade beyond his authority limits, this seemed to be little defence in either showing innocence or getting a more lenient sentence.

The lesson seems to be fairly clear.  Even if the tone appears to be one of disregarding controls because management don’t take them seriously, if anything then goes wrong, management will most probably not agree that controls were considered to be unimportant!

The safest thing to do is to assume that any controls are meant to be respected, even if it doesn’t feel that way.

It could literally be your “get out of jail” card.

£2.5 billion but can you have your cake and eat it?

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On Monday it was reported that China’s Bright Food Group was investigating the potential purchase of Britain’s United Biscuits for up to £2.5 billion.

Whilst on the face of it one food company buying another food company isn’t that exciting it does raise some interesting points.

Importantly, it also makes you think of whether Jaffa Cakes are in fact biscuits rather than cakes…

First of all though in classic Michael Porter’s Competitive Advantage of Nations terms then particular countries are considered to be strong in certain industries.

Germany for example is renowned for the production of high powered cars such as Audi, BMW and Porsche. Japan is a world leader in high tech cameras such as Canon, Nikon and Pentax.

Britain on the other hand is a powerhouse in the production of biscuits. After all, who needs luxury cars and high tech cameras when you can have a lovely cup of tea with a nice biscuit or two?

Secondly, the fact that another company from a so called emerging market is now potentially making a significant acquisition of a company in a more developed market sends an interesting signal about the current trend of globalisation.

Both these points are all very well and good but what’s this all about a biscuit or cake discussion?

United Biscuits produce some household name products including McVitie’s biscuits, Hula Hoops and Twiglets. They also produce Jaffa Cakes.

Jaffa Cakes were the subject of an infamous tax case a few years ago. To cut a long story short the debate was whether a Jaffa Cake was a cake (considered to be a basic foodstuff and hence not liable to VAT) or a chocolate covered biscuit (considered to be a luxury food product and hence liable for lots of VAT).

So, how on earth can you decide whether a food product is a cake or a biscuit?

The deciding factor was that when a cake is left to go stale it gets hard whereas when a biscuit is left to go stale it goes soft.

The argument went to a VAT tribunal (which is in effect a type of Court) and as part of the evidence put forward a 30cm Jaffa Cake was baked and left to go stale (and hard) so as to convince the tribunal that it was in fact a cake.

The final result was that Jaffa Cakes are indeed cakes so you can now have your cake and eat it (VAT free).