Coinstar and Self-Service Retailing

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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)

Chose Me

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Have you ever wondered how some people get chosen to be profiled on a commercial? You may have seen the American Express Gold Card commercial featuring Sammy’s Fish Box, Sam Chernin’s flagship restaurant on City Island in the Bronx (one of five eateries he currently owns). Most small businesses would like to be featured on this type of very professionally produced commercial for the free publicity (rather than the low-budget commercials they can afford), but it may not be that easy.

As the author of this article explained, maybe Sammy was chosen because he had obtained millions of rewards points through his purchases of supplies for the business. But she later discovered that it requires much more than just using a product. As American Express’ chief marketing officer explained, AMEX looks for business owners who not only use their products to help businesses grow, but do this in an especially unusual way that may influence other business owners.

Questions:
1. Since this commercial began airing, how much have the restaurants’ revenues increased?
2. If Mr. Chernin exchanged his rewards points for cash, how should he account for the cash?
3. How should Mr. Chernin account for the rewards points that he exchanges for trips for his employees?

Source:

Fisher, A. (2011). Entrepreneur gets credit-card star treatment. Crain’s New York Business.com, March 25 (Retrievable online at http://mycrains.crainsnewyork.com/blogs/executive-inbox/2011/03/entrepreneur-gets-credit-card/)

Youtube.com Sammy’s Fish Box (Retrievable online at youtube.com)

Traveling Electronically Naked

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When Kenneth G. Lieberthal travels to China, he leaves his cellphone and laptop at home.  As an expert at the Brookings Institute, he instead brings “loaner” devices, which he erases before he leaves the United States and then wipes clean the minute he returns. In China, he disables Bluetooth and Wi-Fi, never lets his phone out of his sight and, in meetings, not only turns off his phone but also removes the battery, for fear his microphone could be turned on remotely. He connects to the Internet only through an encrypted, password-protected channel, and copies and pastes his password from a USB thumb drive.  While all of this sounds like a spy thriller, the threat to data security is very real!

Questions:

1. Why does Mr. Lieberthal cut and paste in his passwords from a thumb drive?

2. What was the most interesting point you found in the article that relates to controls for corporations with employees who travel abroad?

3. The article mentions that Federal lawmakers are considering bills aimed at thwarting cybertheft of trade secrets.  Discuss whether you think that this legislation could ever deter problems arising from business dealings abroad.

 

Source:

Perlroth, N. (2012). Traveling Light in a Time of Digital Thievery, Feb. 10 (Retrievable online at http://www.nytimes.com/2012/02/11/technology/electronic-security-a-worry-in-an-age-of-digital-espionage.html?hpw)

YouTube.com (2012). Laptop Anti-Theft: Travel Identity Theft (Retrievable online at http://youtu.be/5d_O-36r9X0)

Audit Irregularities

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According to a report released on Feb. 15 in San Francisco county, about 400 recent foreclosures were determined to involve either legal violations or suspicious documentation.  This recent report suggests how pervasive foreclosure irregularities may be across the nation.

Questions:

1.  What is the acronym for the mortgage database that was started in 1995 to track information for lenders?

2.  What types of legal violations did the report indicate?

3.  Where did the greatest number of improprieties occur?  What internal controls could have prevented this?

Source:

Morgenson, G. (2012). Audit Uncovers Extensive Flaws in Foreclosures. The New York Times, Feb. 15 (Retrievable online at http://www.nytimes.com/2012/02/16/business/california-audit-finds-broad-irregularities-in-foreclosures.html?_r=2&hp)

 

Are you a 5 percenter?

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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?

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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).

 

The Judge Says So

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Just days ago, it appeared that a hundred low-wage workers at a Walmart-contracted warehouse in California would lose their jobs after publicly accusing their employer of shorting them on pay and forcing them to work in harsh conditions. But after the workers argued that the layoffs amounted to illegal retaliation, a state judge ordered this week that the contractors keep the mostly immigrant workers employed at the warehouse.

Questions:

  1. What was the name of the company that Wal-Mart contracted with?  What is a common name for this arrangement?
  2. Why won’t Wal-Mart be included in the litigation regarding this situation?
  3. Explain what type of journal entries Wal-Mart would make with respect to this arrangement.

Source:

Jamieson, D. (2012). Wal-Mart-Contracted Warehouse Jobs Saved By Judge, The Huffington Post, Feb. 3 (Retrievable online at http://www.huffingtonpost.com/2012/02/03/walmart-warehouse-workers-california_n_1253267.html?ref=business)

Check out the Change in the Beer Industry!

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The U.S. beer market is in the midst of a transition. Smaller, micobreweries are taking market share from global giants like Anheuser Busch InBev, which has a 47 percent share of the U.S. beer market. These smaller companies target discerning, and often affluent, customers who are the foodies of the beer world.

Questions:

  1.  According to the article, what are the demographic characteristics of the typical craft beer buyer?
  2. What is the strategic trend for the larger global breweries?
  3. Discuss the P/E ratios and dividend yields mentioned in the article and explain what they mean.

Source:

Randall, D.K. (2012) Super Bowl 2012: Microbrews Make A Run At Big-Time Beer Makers, Feb. 3 (Retrievable online at http://www.huffingtonpost.com/2012/02/05/super-bowl-microbrews-make-run-big-time-beer-makers_n_1253285.html?ref=business)

Super Bowl Sunday!

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Well it’s almost time for the Super Bowl again.  So get the snacks ready in front of the big screen TV.  But what comes with the game and half-time?  Of course, the commercials.  However, the hoopla behind Super Bowl ads has spawned a team of skeptics. Growing research shows the $3.5 million that advertisers pay for 30 seconds during Sunday’s game between the New England Patriots and New York Giants often isn’t worth the cost.

 

Questions:

1.  What companies are lined up to advertise on the Super Bowl 2012?

2.  Why does the article say that companies would be better off advertising somewhere else?

3. How would you record, in the accounting records, the $3.5 M paid to a network for airing a Super Bowl ad?  Are there any other costs other than the airing costs?  Discuss what they are and how you would record them in the accounting records.

Source:

Dicker, R. (2012). Super Bowl: Are Ads Worth the Millions? The Huffington Post, Jan. 31 (Retrievable online at http://www.huffingtonpost.com/2012/01/30/super-bowl-are-ads-worth-_n_1241677.html?ref=business)

M’Hudi Winery

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A clinical psychologist, her ‘armchair farmer’ husband and their family launched an internationally successful wine label — without capital, farming experience or wine-making knowledge. The company is the first South African winery wholly owned and managed by a Black South African family.

Question:

1. How did the Rangaka’s decide on their particular farm? Discuss the costs or benefits of this approach?
2. How long did it take before the farm was producing a drinkable wine? How did Malmsey keep the winery afloat financially during the early years?
3. From a strategic perspective, does naiveté usually benefit a new entrepreneur? How does the article contend that this helped in this particular case?
4. One hectare is equivalent to 2.47 acres and the Rangaka’s have 21 hectares that produce 14,000 cases (12 per case) of wine per year. If the average price of 6 bottles is $52.38, what is the winery’s total revenue per year?

Source:

Pitman, J. (2011). M’hudi Wines: Malmsey Rangaka, Entrepreneur Magazine: South Africa, Dec. 14 (Retrievable online at http://www.entrepreneurmag.co.za/advice/women-entrepreneurs/women-entrepreneur-successes/m%E2%80%99hudi-wines-malmsey-rangaka/)
CNN Video. (2012). A Family of Winemakers. Jan. 30 (Retrievable online at www.cnn.com/videos).