Remember Driver’s Ed? Things have Changed!

Mercedes-Benz has long been at the forefront of creating safer cars and now they are aiming to create safer drivers. In December 2011, the company opened the its first driving school in the U.S. called Mercedes-Benz Driving Academy. Mercedes has three more in Europe). This school is located on Third Street in downtown Los Angeles. Open to drivers of all ages, its primary focus is teenagers, who want to get their California driver’s licenses and drive Mercedes in the process. The cost of the academy’s integrated program is $1,390, which includes 15 hours of online training, 10 hours in the classroom, five hours of workshops and 16 hours of behind the wheel coaching. The driving schools that the Bloomberg video showed are typically more expensive and generally focus on defensive driving skills of more experienced drivers.

Questions:

1. Based on the video, what types of return investments do you think the luxury car makers are receiving from their “driving schools”?
2. What types of costs would be involved in the luxury car driving schools shown in the video?
3. Go to http://exoticsracing.com/ and customize your ultimate driving experience. What was the most interesting thing you noticed about this company?
4. For the Mercedes-Benz Driving Academy, what would be some fixed costs and what would be some variable costs? Can you think of any mixed costs that the company might have? Would these be different for Exotics Racing School?

Source:

Bloomberg Video. (2012). Extreme Test Drives, May 10.

Jorrey, K. (2012) Luxury car maker sets new standard for driving school. The Acorn, April 26 (Retrievable online at http://www.theacorn.com/news/2012-04-26/Business/Luxury_car_maker_sets_new_standard_for_driving_sch.html)

Student debt

Ninety-four percent of students who earn a bachelor’s degree borrow to pay for higher education. This is up from the 1993 statistics that show only 45 percent of students borrowed money to pay for a bachelor’s degree. This borrowing includes loans from the federal government, private lenders and relatives.

Questions:

1. Explain why Rajeev V. Date, deputy director of the Consumer Financial Protection Bureau, likens excessive student borrowing to risky mortgages. Do you agree or disagree? Discuss.
2. According to the article the average 2011 student debt is $23,300. Look at the interactive map and find your university. How does the 2010 debt for your university compare to this amount?
3. Go through all colleges for all years (2004-2010). What do you notice about the change in the distribution of the data over this period? Be as specific as possible.
4. Look at the related slide show about Kelsey Griffith (http://www.nytimes.com/slideshow/2012/05/13/business/20120513DEBT_SS.html?ref=business). How does her debt compare to the debt on the interactive map for her university?
5. Realistically, how much will Kelsey have to earn per month in order to live and pay back her student loan? What is the typical length of a school loan?

Sources:

Staff (2012). Student Debt at Colleges and Universities across the Nation, Interactive Map – The New York Times, May 12 (Retrievable online at http://www.nytimes.com/interactive/2012/05/13/business/student-debt-at-colleges-and-universities.html?ref=business)

Martin, A. and A. Lehren. (2012). A Generation Hobbled by the Soaring Cost of College. The New York Times, May 12 (Retrievable online at http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?_r=1)

Bloomberg Video. (2012) Student Loan Debt.

Hospital Costs

Two years ago, Augie Hong, who works for an investment firm in San Francisco, awoke with severe abdominal pains. He went to an ER at the hospital closest to his house and was diagnosed with acute appendicitis. He wasn’t worried about the cost because he had health insurance from his employer. However, when he got the bill, it was $59,283, including $5,264 for the doctors. According to the Healthcare Blue Book, this amount was six times the fair price for his area.

Questions:

1. What is the range of fees for a routine appendectomy in California?
2. What was Mr. Hong’s mistake and what should he have done?
3. Under the Affordable Care Act, what are hospitals suppose to do by 2014?
4. What do experts advise consumers to do regarding hospital charges?

Source:

Rabin, R.C. (2012). The Confusion of Hospital Pricing. The New York Times, April 23 (Retrievable online at http://well.blogs.nytimes.com/2012/04/23/the-confusion-of-hospital-pricing/?ref=health)

General Services Administration (GSA) Scandal

A hearing on an extravagant government conference in Las Vegas will enter its second day on Capitol Hill on Tuesday, April 17. During Monday’s session, a House committee heard from officials accused of wasting taxpayer money on fancy meals and over-the-top entertainment. The GSA inspector general, Brian Miller, says he believes the behavior he uncovered could possibly be criminal and he wants the Justice Department to investigate possible bribes and kickbacks.

Questions:

1. According to the video, what were some of the reasons for out-of-control spending?
2. Compare this government scandal to a similar corporate scandal. Discuss any differences or similarities.
3. What types of controls should have been in place to prevent this overspending situation?
4. What issues do identify as criminal offenses? Discuss.

Source:

MSNBC video. (2012). GSA Under Investigation for Frivolous Spending, April 16. (Retrievable online at http://www.msnbc.msn.com/id/31510813/ns/msnbc_tv-the_dylan_ratigan_show/#47066004)
Cordes, N. (2012). Bribes, kickbacks in GSA Scandal? CBS News, April 17 (Retrievable online at http://www.cbsnews.com/8301-505267_162-57415052/bribes-kickbacks-in-gsa-scandal/)

Visit msnbc.com for breaking news, world news, and news about the economy

Here comes Scoot!

Singapore Airlines’ wholly-owned budget carrier Scoot will begin flights into China, with flights between Singapore and Tianjin during August. Two more Chinese destinations are also being considered, but the capital of Beijing is not one of them.

Questions:

1. How much is S$88 in U.S. dollars? How does this compare to the fares offered by Southwest Airlines?
2. What is being used by consumers as the reference price for the company in helping to set prices?
3. Compare Scoot’s model to Hong Kong Airline’s new niche model. What are some of the variables that cost analysts must take into consideration for these two models?

Source:
Cnn video.com. (2012). Asia’s low-cost carrier boom (Retrievable online at http://www.cnn.com/video/#/video/international/2012/03/14/business-traveller-asia-low-cost-airlines.cnn)

Tan, V. (2012). Scoot to Launch Tianjin-S’pore Flights in August. Channel News Asia.com, March 27. (Retrievable online at http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1191503/1/.html)

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)

Look into Auto Refinancing

In the past few years, millions of homeowners have realized huge savings by refinancing their mortgages. Now, the refinancing craze is catching on in the car loans industry. According to this article refinancing could same your car might save you big time bucks.

Questions:

1. According to the article, by how much have auto refinancing applications risen?
2. What does the phrase mean if “a loan has turned upside down”?
3. One refinancer offers an interest rate of 2.625% with an APR of 2.795% Explain what this means.

Source:

Caplinger, D. (2012). The Money-Saving Refinancing Move You’ve Never Considered, Daily Finance, March 5 (Retrievable online at http://www.dailyfinance.com/2012/03/05/the-money-saving-refinancing-move-youve-never-considered/)

Coinstar and Self-Service Retailing

Coinstar is a company that was founded just over two decades ago by Jens Molbak, who as a Stanford University graduate student, realized there wasn’t an easy way to spend the spare change piled up in a jar on top of his dresser. Since that time the company has become known for its Redbox kiosks, its movie rental subsidiary. Redbox has largely overshadowed its parent company’s broader ambitions to reinvent vending machines by applying them to new categories of retailing.

Questions:

1. What percentage of Coinstar’s revenue came from Redbox last year?

2. Based on the percentage of Redbox’s investment in Verizon’s online movie services, how should this be accounted for in Redbox’s financial statements?

3. According to the article, Coinstar has about eight or nine kiosk ideas in various stages of development. In general, how should the company account for these?

4. In 2009, Redbox signed Sony to $460 Million distribution agreement, which was a five-year deal that guarantees that the studio would provide DVDs to the kiosk rental company. How do you think Redbox accounted for this agreement? How do you think Sony accounted for this agreement?

Source:
Wingfield, N. (2012) Thinking outside the Redbox. The New York Times, Feb. 17 (Retrievable online at http://www.nytimes.com/2012/02/18/business/coinstar-ventures-beyond-its-redbox-success.html?_r=1&ref=business)

Are you a 5 percenter?

In a recent move, AT&T has reduced the speed it supplies to its heaviest users of data for the iPhone 4. Although customers thought they had an unlimited data plan, under a new policy, AT&T has started cutting their data speeds as part of an attempt to manage data usage on its network. Unlimited plans were discontinued by the company in 2010 and 17 million customers with “unlimited data” plans are now subject to throttling, representing just under half of its smartphone users.

Questions:

1. In the article, what was the amount of data limit that the company set before throttling occurred?
2. According to the article, how many customers were affected by the policy last month?
3. Explain how the company might attempt a cost/benefit analysis of this policy. What components would you include regarding competitors?

Source:

Associated Press. (2012). AT&T Surprises Customers with Limits for ‘Unlimited data’ usage; heat is on “5 percenters.” The Washington Post, Feb. 13 (Retrievable online at http://www.washingtonpost.com/business/technology/atandt-surprises-customers-with-limits-for-unlimited-data-usage-heat-is-on-5-percenters/2012/02/13/gIQABFHHAR_story.html?tid=pm_business_pop)

Is it Really February?

The warm and sunny weather is raising spirits all over the upper Midwest in January and February, but not for some businesses.

Questions:

1. What businesses did the video profile?
2. Can you think of other types of businesses that would be affected, both favorably and unfavorably? Discuss whether you mean in terms of profits, variable costs, fixed costs, mixed costs, etc.
3. Discuss how you believe the warm weather could either hurt or help our recessionary economy.
4. Contrast and compare by performing a brief cost/benefit analysis for a snow plow company and then a city government under this warm weather scenario.

Source:

You Tube Video. Warm Wisconsin winter hurts area businesses.mp4, Jan 31, 2012 (Retrievable online at http://www.youtube.com/watch?v=3aG6vO40cYs).

 

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