I Know Where You Live and I Know What you Donated Last Summer!

No, it’s not a new horror flick, but it is scary. As private schools, like Upper East Side preschool hit the upper limits of what they can charge for tuition (or $21,000 per year), fund raising has become more intense and aggressive. In fact, the “development offices” for these schools are mining online data for details about parents’ homes, luxury cars, private planes, stock holdings and donations to other charities.

Questions:

1. What percentage of their time do the heads of the private schools surveyed spend on fundraising? Comment.
2. Explain why Rae Goldsmith sees the strategy of going after the richest parents in a school as short-sighted.
3. Based on the “back-of-the-envelope assumption” mentioned in the article, what percentage do families with more than $5 million in assets give away annually?

Source:

Anderson, J. (2012). Private Schools Mine Parents’ Data and Wallets. The New York Times, March 26 (Retrievable online at http://www.nytimes.com/2012/03/27/nyregion/private-schools-mine-parents-data-and-wallets.html?pagewanted=1&_r=1&ref=todayspaper)

People: The Number One Asset

What radical thinking! Cashiers barred from interacting with customers until they have completed 40 hours of training? Hundreds of staffers sent on trips around the U.S. and world to become experts in their products? No mandatory retirement age? Never laying off workers? All profits reinvested in the company or shared with employees? This is the Wegman model, as a $6.2 billion-a-year, 79-store-supermarket chain with cult-like loyalty among its customers.

Questions:

1. Can you buy shares of stock in Wegman? Discuss.
2. How many stores does the company open per year? Why?
3. Wegman’s vice-president says that “Our employees are our number one asset.” So where are employees listed on the financial statements? Discuss.

Source:
Rohde, D. (2012) The Anti-Wal-Mart: The Secret Sauce of Wegmans is People, The Atlantic, March 23 (Retrievable online at http://www.theatlantic.com/business/archive/2012/03/the-anti-walmart-the-secret-sauce-of-wegmans-is-people/254994/#.T3Eu451pn0M.mailto)

Embrace Change

Kodak, the 131-year-old film pioneer, filed for bankruptcy protection last month. News got worse this week when the company announced they would stop doing what they were the first to ever do – manufacture digital cameras. Then on Feb. 15, Apple asked a bankruptcy court for permission to sue Kodak for patent infringement, resulting from Kodak’s efforts to import printers and digital camera.

Questions:

1. Why did the video say that this should be a business school case study?
2. What specific signs should Kodak have recognized as roadmarks for change?
3. What is Kodak’s strategy going forward under bankruptcy protection? Discuss what other avenues you believe Kodak could take going forward.
4. If Apple is successful, how should the company account for any proceeds gained from the patent infringement lawsuit?

Source:

The New York Times video.(2012). Kodak Declares Bankruptcy, Jan.19 (Retrievable online at http://video.nytimes.com/video/2012/01/19/business/100000001296658/kodak-declares-banruptcy.html)

Passikoff, R. (2012). No More Kodak Moments. Forbes.com, Feb. 13 (Retrievable online at http://www.forbes.com/sites/marketshare/2012/02/13/no-more-kodak-moments/)

Reuters staff. (2012). Apple Inc. has asked a bankruptcy court for permission to sue Eastman Kodak, accusing it of infringing its patents. Reuters.com, Feb. 15 (Retrievable online at http://www.reuters.com/article/2012/02/16/us-apple-kodak-idUSTRE81F05V20120216)

Can Debt Ruin Your Relationship?

When Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he broke off their engagement within three days. Although she had told him early in their relationship that she had over $100,000 of debt, when she found that the amount was actually about $170,000, he accused her of lying and walked away from their impending nuptials.

 
Questions:
1. The article mentions that Ms. Eastman pays $1,100 a month for her student loan debt. Assuming that no interest is involved, how many years will it take her to pay off the $170,000?

 
2. Assume that Ms. Eastman must pay 6% interest on the declining balance of the loan. Based on this assumption, how many years will it take her to pay off the $170,000?

 
3. Do you agree with New York divorce law that advanced degrees acquired during the marriage, as well as the earnings power they bring, should be treated as assets to be divided in case of divorce? Why or why not?

 
Source:

 
Lieber, R. (2010). How Debt Can Destroy A Budding Relationship. The New York Times, September 3 (Retrievable at http://www.nytimes.com/2010/09/04/your-money/04money.html?ex=1299643200&en=297c3a5871503c4b&ei=5087&WT.mc_id=BU-D-I-NYT-MOD-MOD-M166-ROS-0910-L2&WT.mc_ev=click)

New Accounting Rules for Off-Balance Sheet Assets

New accounting rules governing off-balance-sheet transactions went into effect for most companies in January 2010. The rules force companies to put assets, like mortgage servicing rights, back on their balance sheets.

Questions:

1. What financial accounting standards (FASs) are forcing companies to put such assets back on their balance sheets?
2. What are some of the reasons that these assets are returning to the balance sheet?
3. Since their enactment, which industry is most impacted by the new accounting rules?
4. Can you speculate why companies, like Harley Davidson and Marriott International, showed big jumps in assets, due to these new rules?

Source: Leone, Marie. (2010). Balance Sheets Are Busting Out All Over, CFO.com, April 23.
(Retrievable online at http://www.cfo.com/article.cfm/14492562?f=most_read)