Professor Sanjay Putrevu

Sanjay Putrevu obtained his doctorate in Marketing from the University at Buffalo. He has been at UAlbany since fall 2005 and has taught full-time at universities in the U.S., Canada, Australia, France, and India. He has published widely in the areas of consumer behavior, advertising, retailing, and international marketing. His current research explores consumer response to advertising/IMC, cross-cultural differences, effectiveness of retail and marketing strategies, gender differences in information processing, and the impact of corporate social responsibility on consumer patronage/loyalty. Putrevu serves on the editorial boards of the Journal of Advertising, Journal of Business Research, Journal of Current Issues and Research in Advertising, Journal of Consumer Behavior, and Academy of Marketing Science Review.

Professor Donald O'Neal

Donald O'Neal, professor of Management at the University of Illinois at Springfield, is the author of If Not Now, When?, a new book that is designed to help people stop procrastinating and actively pursue their lives' dreams. O'Neal has previously co-edited six volumes of strategic management papers and published a strategic management textbook. Explaining what prompted him to write a book that some might see as a departure from his established areas of expertise, he noted that nearly everything worthwhile that he has accomplished has been through dreaming big, setting goals, and perhaps most important, ignoring naysayers.
"Research has found that when people look back on their lives, what they regret most are the things they didn't do," said O'Neal. "I was fortunate to learn, early in life, that we can do almost anything we set our minds to, even if nobody else believes we can. With this book I hope to help others believe in themselves, and show them how to pursue their dreams."
He continued, "Dreams don't come true by themselves. We have to help them along, one goal at a time. It's fun to dream about the things you hope to do, someday. But if you don't do something about them now, how can you be sure you ever will?"
O'Neal speaks from experience. After a successful career, with executive positions ranging from engineering to sales to vice president of human resources, he took early retirement to complete a doctorate and began a second career in teaching. He has been a member of the UIS faculty since 1992.
At UIS, O'Neal teaches courses in leadership and strategy, organization theory, human resource management, and business ethics. He also serves as a visiting professor in the UIUC China Executive Leadership Program, where he focuses on strategic management, human resource management, and organization design.
He has consulted with a variety of corporate, not-for-profit, and governmental organizations and served as a scholar-in-residence and senior member of the Governor's Illinois Strategic Planning Advisory Council.

Professor Feng-Shun (Leo) Bin

Professor Leo Bin was originally born on the Sun, and then recycled onto the Earth at Guangzhou, China in August 1970. He graduated with a B.A. degree in Economics from Zhongshan University, Guangzhou, China, and then worked at computerizing the financial accounting system for PengCheng Co. Ltd., an international trade company. He came to the US in 1993 for graduate studies at the University of Mississippi and earned his M.A. degree in Economics and Ph.D. in Finance (with two minors in Accounting Theories and Quantitative Methods).
Dr. Bin came to the University of Illinois at Springfield in 2001 and is currently an associate professor in the Business Administration Department. His primary teaching areas include corporate financial management (BUS 302 & BUS 502), financial investment analysis (BUS 443 & BUS 505), financial institution management (BUS 445) and capital budgeting (BUS 446). Dr. Bin has published various journal articles about financial analysis and international investment, focusing on exchange-rate risk, interest-rate risk, market risk, political risk, foreign stocks listed in the US market, and the US policy changes in financial reporting practices.
Leo has also been actively involved in serving the business community. For example, in November 2002, he invited and welcomed executive officials from China's Agricultural Bank to Springfield. Professor Bin and Professor Leonard Branson arranged for Chinese bankers to meet with UIS College of Business and Management faculty and the local banking community (Fifth-Third Bank and National City Bank) regarding US banking practices and Chinese banking reforms. Leo is currently the president of the UIS Chapter of Sigma Beta Delta International Honor Society and also holds the candidateship of the Chartered Financial Analyst Institute. He is a member of the Midwest Finance Association, the St. Louis Society of Financial Analysts, and the Financial Management Association.
Hobbies: Fencing, watching sci-fi movies & TV series, playing computer games, stock picking, teaching people how not to lose money too fast.
Favorite Words: "Put your mouth where your mind is. Put your mind where your money is. Put your money where your mouth is."

Goal theory and Behavioral Accounting

There are public goals which are higher order goals and there are private goals which represent lower order goals. To be effective (measured by goal accomplishment) the two goals need to be aligned to achieve goal congruence between the divergent paths. One goal setting factor that affects performance is feedback, both external and self-generated.
However, self-generated feedback is a more effective motivator. The other factor is participation in the goal setting process which can help obtain superior performance. This is related to goal acceptance and commitment. Other factors that have an affect on performance are self -efficacy about whether they can accomplish the goals under the given conditions, are they committed to the goals, the nature of the task itself, and cultural factors.

Expectancy Theory and Behavioral Accounting Research

Vroom's expectancy theory, motivation = valence x instrumentality x expectancy, where valence measures the value an individual places in the reward, instrumentality refers to the whether the individual will actually receive the promised reward, and expectancy quantifies the expectation that the individual perceives in attaining a successful outcome. Vroom understood that employee performance is based on many individual factors such as motivation, skills and experience. VET has been used to study the effect of human behavior on accounting control systems and goal setting in the budget process.

Congratulations Joy!

I would like to congratulate one of my fellow classmates on her accomplishment of being recognized as one of the 2008 "40 Leaders under 40" by iBi Magazine. Great job Joy, and congratulations!

http://www.peoriamagazines.com/ibi/2008/nov/joy-ledbetter

Collaborative Planning, Forecasting, and Replenishment

Collaborative Planning, Forecasting, and Replenishment (CPFR) is a methodology of supply chain management (SCM) and integration which combines the collective knowledge resources of multiple supply partners throughout the planning and fulfillment stages of customer demand.

The CPFR model provides an adaptable template for intra-supply chain collaboration of the aspects of planning , forecasting and replenishment. The template can be used in many disparate industries and is centered around the concepts of Strategy and Planning, Demand and Supply Management, Execution, and Analysis.

Strategy and Planning
encompasses business goals for the relationship, defining the scope of collaboration and assigning roles, responsibilities, checkpoints and escalation procedures. The Joint Business Plan then identifies the significant events that affect supply and demand in the planning period, such as promotions, inventory policy changes, store openings/closings, and product introductions.

Demand and Supply Management
which includes Sales Forecasting, which projects consumer demand at the point of sale, and Order Planning and Forecasting, which determines future product ordering and delivery requirements based upon the sales forecast, inventory positions, transit lead times, and other factors.

Execution
consisting of Order Generation, which transitions forecasts to firm demand, and Order Fulfillment, the process of producing, shipping, delivering, and stocking products for consumer purchase.

Analysis
tasks include Exception Management, the active monitoring of planning and operations for out-of-bounds conditions, and performance Assessment, the calculation of key metrics to evaluate the achievement of business goals, uncover trends or develop alternative strategies.

The goals are to improve the collaboration between the various supply chain players, manufacturers, distributors, and retailers, to effect the delivery of products is a positive way through the reduction of barriers within the supply chain relationships. This will lead to better inventory management, lower out-of- stocks, better forecasting and timely replenishment which support the company goals of reducing working capital used for inventory, reducing fixed capital and infrastructure expenses, reducing operating expenses, and by growing sales each year, consistent with the expectations of the stockholders.

Summery of The Role Of The Management Accountant by Robert Kaplan

The article by Robert Kaplan is a concise detailed presentation of the development of the practice and profession known as management accounting. He also challenges the current practitioners to realize that most of the key aspects of cost accounting had been developed around 1925. In light of this knowledge Kaplan encourages a reexamination of current processes that are being applied in today's business climate, and may not be appropriate for contemporary business needs.

Kaplan traces key innovations in the early years of the Second Industrial Revolution circa 1850 through the culmination in 1925 with the management control improvements of DuPont and Sloan. The modern aspects began with the growth of large factory mills, railroad, and distribution concerns that needed reliable methods to track conversions costs and related efficiencies. Railroads were vast organizations that handled considerable dollar amounts and transactions. Subsequently, methods were developed to manage and record the operational results. About 20 years later, these new cost accounting procedures were applied to the emerging industries of mass distribution and production enterprises. Of main importance was the application of the voucher system in the steel industry, especially Andrew Carnegie's steel company. The next major development was accounting for the "factory burden" or factory overhead. J Maurice Clark of the University of Chicago made chief contributions regarding factory overhead cost analysis and treatment. He also proposed the use of statistical methods in cost behavior analysis and warned against over-reliance on such methods. Thus, through these academic discussions of Clark, refined cost accounting theories had been developed by 1925.
The next major innovation was the managerial control systems that were initiated at the DuPont Company. Kaplan outlines the history of the reorganization of the DuPont Powder Company and the best practices that were implemented during the period between 1903-1910. These organizational breakthroughs, decentralized departmental leadership, return on investment formula, prioritized capital allocation, and systemic budgeting and forecasting procedures allowed the successful organization of large industrial corporations. The basic application of ROI concepts at the departmental level is still in use today. The work Pierre DuPont and Alfred Sloan began at GM was basically a codification of modern managerial control practices. By 1925, decentralization, ROI performance evaluations, capital appropriation process, budgeting and planning cycles, flexible budgeting and other innovations were firmly in place.

After the major improvements preceding 1925, Kaplan writes there have been little new innovations outside of academia. Some of these ideas are modern capital budgeting processes, the use of discounted cash flows, transfer-pricing analysis, and the application of quantitative techniques such as regression analysis, linear programming, and probability theory to cost accounting problems. Kaplan states that firms have not accepted many of the academic developments because much of the research is not linked to actual companies, such as the innovations with DuPont and GM. Therefore, the academic models were not corporately developed or tested in actual firms.

Kaplan then proceeds to discuss some of the problems that have arisen from the profit center concept that treats each division like a miniature company, mainly the short-term management decisions. Often, decisions are made for short-term financial gain at the expense of the long-term competitive position of the enterprise. Kaplan raises the question; why did this problem not reveal itself sooner? Several potential reasons are given. First, there was less pressure on short-term profit goals in 1920s than in the 1980s. Secondly, the frequency of manager turnover has increased; therefore there is greater focus on short-term financial objectives than in the past. Thirdly, today's larger organizations are more susceptible to short-term profit maximization decisions by profit center managers if the control systems have changed to accommodate the larger enterprise. Forth, a possible shift in hiring practices during the last 60 years. Employees in the past tended to stay with the firm longer and subsequently would look after the long-run interests of the organization. The current situation is the opposite. A fifth reason is the wide use of executive compensation schemes, which place operational focus on achieving annual profit goals in order to meet personal bonus objectives. Sixth, the overall business environment of the 1980's and beyond is substantially different then that of the 1920s and likewise the management control system that worked well previously are inadequate for today's needs. Kaplan explains that financial measures alone will continue to be important factors in determining performance in profit center operations. But, a more balanced approach will need to be utilized to better serve the long-term objectives of the firm.

Kaplan states that the inclusion of non-financial measures in an organizations control and planning systems will be unfamiliar and uncomfortable for managerial accountants. Financial performance measures are easy to manipulate, therefore, other more ambiguous measures will need to be utilized for performance evaluation.

Six Sigma Primer

Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process -- from manufacturing to transactional and from product to service.

To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect.

Two Six Sigma sub-methodologies: DMAIC and DMADV.

The DMAIC processes (define, measure, analyze, improve, control) is an improvement system for existing processes falling below specification and looking for incremental improvement.

The DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels

Roles and Responsibilities:

Quality Leader/Manager (QL/QM) - The quality leader's responsibility is to represent the needs of the customer and to improve the operational effectiveness of the organization. The Quality function is typically separated from the manufacturing or transactional processing functions in order to maintain impartiality. The quality manager sits on the CEO/President's staff, and has equal authority to all other direct reports.

Master Black Belt (MBB) - Master Black Belts are typically assigned to a specific area or function of a business or organization. It may be a functional area such as human resources or legal, or process specific area such as billing or tube rolling. MBBs work with the owners of the process to ensure that quality objectives and targets are set, plans are determined, progress is tracked, and education is provided. In the best Six Sigma organizations, process owners and MBBs work very closely and share information daily.

Process Owner (PO) - Process owners are exactly as the name sounds – they are the responsible individuals for a specific process. For instance, in the legal department there is usually one person in charge -- maybe the VP of Legal -- that's the process owner. There may be a chief marketing officer for your business -- that's the process owner for marketing. Depending on the size of your business and core activities, you may have process owners at lower levels of your organizational structure. If you are a credit card company with processes around billing, accounts receivable, audit, billing fraud, etc., you wouldn't just have the process owner be the chief financial officer, you would want to go much deeper into the organization where the work is being accomplished and you can make a big difference.

Black Belt (BB) - Black Belts are the heart and soul of the Six Sigma quality initiative. Their main purpose is to lead quality projects and work full time until they are complete. Black Belts can typically complete four to six projects per year with savings of approximately $230,000 per project. Black Belts also coach Green Belts on their projects, and while coaching may seem innocuous, it can require a significant amount of time and energy.

Green Belt (GB) - Green Belts are employees trained in Six Sigma who spends a portion of their time completing projects, but maintain their regular work role and responsibilities. Depending on their workload, they can spend anywhere from 10% to 50% of their time on their project(s). As your Six Sigma quality program evolves, employees will begin to include the Six Sigma methodology in their daily activities and it will no longer become a percentage of their time -- it will be the way their work is accomplished 100% of the time.

Summary of Revolutionary Wealth by Alvin and Heidi Toffler

The Toffler's conduct a brief synopsis of the wealth creation development through the ages. They explore the different elements of the wealth equation including the underlying fundamentals, speed of economic advances, synchronization industry, flexible and irregular economic patterns, and new concepts of time usage in society, business and culture. Chapter 3 begins with a quick history of wealth systems. These wealth systems are described as three distinct waves, beginning with the First Wave and the related agrarian structure of production over hunting. The first wave additionally divided labor by creating a need of exchange. These first wealth waves are primitive and many exist today in less developed areas of the world. The second wave was ushered in by way of the Industrial Revolution. This wave is constructed through common notions of standards, specialization, central management, and advantages of scale. These economies are considered developed and comprise the second wealth wave. According to the Toffler's, today's advanced economies have entered the Third Wealth Wave. This wave is marked by challenging the institutions and processes of traditional factors of production that existed in previous generations. The third wave recasts production, markets and societies. The functions of manufacturing are simplified into a low value added activity. In contrast, ethereal functions like designing, planning, managing and similar roles are more complex, but add greater value and produce more profit then raw muscle power. This is the profound change we are witnessing through globalization and its accompanying philosophies that are shaking the very core of society by radically altering the traditional order of the family structure, and relationships between opposing sectors of the economy. The end result of all this fundamental upheaval is a reordering of the lives of the people who function in these disparate wealth systems. What type of future are we headed toward under this revolution? Chapter 4 is about the deep fundamentals that are undergoing evolution of definition. The ideas of time, work, job, and division of labor are all under radical mutations as tasks become super-specialized and refined they become complicated to integrate in an innovation-driven, highly competitive economic system. Other fundamentals are also changing (collapsing?) including the family structure, which is a microcosm of society. These high-speed changes shake at the core of everyday life and have real consequences to people's lives. Chapter 5 describes the clash of speeds in which virtually all facets of life are affected by the differing rates of change by which they operate. Business is operating at a 100 mph, while the systems of support rush to keep up. Right behind is civil society moving along at 90 mph, represented by the collective institutions that embody the divergent views of civil society. In third place at 60 mph is the American family that is currently being altered in many ways, and is driving much of the upheaval in other organizational structures. Stuck in the past at thirty miles are labor unions, followed by government and regulatory agencies at 25 mph, and the American School System at 10 pathetic mph. How can such a backwards system prepare students for the 100 mph jobs they will be competing for? Also, in single digits are the IGO's, U.S. political institutions, and American legal systems. These disparate ratios highlight the problem of desynchronization.Which leads to chapter 6, the Synchronization Industry, which is currently in embryonic form. This industry is addressing some of the problems outline in the last chapter. SAP and other companies sell software that enables greater synchronization across the value chain and increases performance and profits. This industry will continue to thrive as the need for synchronization becomes greater through rising competitive forces make demands on existing supply chain models. Chapter 7, The Arrhythmic Economy, outlines the asynchronous nature of the economy and how the "ecology of time" effects organizations in the high speeds of change. The fluctuation of synchronization in the economy carries a "time tax", an additional cost of doing business due to delays in product of service delivery. In this third wave of wealth, we must learn to better comprehend time's effect on wealth creation or we will face a massive competitive disadvantage, along with amplified costs. In chapter 8, the New Timescape, more implications of the changing nature of time are presented with examples. Our main institutions are out of synchronization with one another, acceleration is continuing, along with this timing irregularity come increased tensions, productivity that is not directly linked to time, such as with factory work, and each unit of time potentially worth more than the last unit. All of these factors converge to revolutionary thinking about the creation of wealth. Finally, Chapter 15, The Edge Of Knowledge, gives an overview of what comprises knowledge and its very nature. The use, dissemination, and management of knowledge are another deep fundamental that is transforming wealth creation. All of the concepts discussed give an idea about the relationships between time, space and knowledge. Overall, there is a revolutionary wealth system that is transforming the very nature of our existence. But does it conform to the inherent dignity of the human person, and will it lead to the true end of mankind, God?

Saving money on college textbooks

New textbooks are a scam in the digital age. I am in the process of buying the textbooks for next semester. So far I have been able to buy them at greatly reduced prices as long as you follow a few rules. First, start looking early. As the semester approaches, the supply of books gets constrained and the prices go up. Next, I have a few great sources for books, one is amazon.com, only the used book sellers however have good prices. That's alright, buy used, if your like most people you're rarely going to open the spine again after your done with it anyway. Also, the purchases you make are covered by amazon's return policy if you are not happy with your items. eBay is another source of nice international editions that are the same in content as the US versions but usually are of reduced quality such as no color, no CD, or soft-cover. Also, don't be afraid to buy from an international supplier as they often have more choices at better prices. I bought my accounting text from India last semester. Sometimes if I can't find what I want at the acceptable price, I will look for a previous edition of the text. Check first with the professor to make sure it will work for their purposes and/or you can work with your fellow classmates to get a copy of the required homework from the new version. There are many other sellers out there that claim to offer cheap textbooks, but I have had excellent experiences with the two mentioned above and I will continue to recommend and use them. Another note, I never buy anymore from the college bookstore unless a custom edition is required, as the prices are simply unacceptable.

Here's what I found so far:


The Effective Executive (Paperback)byPeter F. Drucker (Author) ISBN 9780060833459

A used copy at amazon.com for $0.01 plus $3.99 shipping!

Financial Management: Theory and Practice [IMPORT] (Paperback) 11th Ed. ISBN 9780324422696

A used copy at amazon.com for $22.00 plus $3.99 shipping!

Marketing Management, 13th ed. International Ed. ISBN 9780136009986

A new copy at eBay for $24.99 plus $4.00 shipping from Mumbai.

Retail price on these books from amazon is $285.49, the above total is $58.98 for a savings of $226.51!

Self-Fulfilling prophecy

Now is a great time to visit the concept of a self-fulfilling prophecy since so many are playing out in current events. I think many people have heard about this, but rarely have a understanding of the power that it holds over their actions. The classic run on the bank is a common example. It goes like this; the bank has enough reserves to conduct business as usual, but there is a false rumor going around that the bank may be on the verge of collapse and depositors should pull out their money to protect their interests. Next, on the advice of the false information the depositors in large numbers start to withdraw their money and in the process the bank is now in real trouble. Thus, what was originally not true has become true through the expectations that the bank would fail and the actions of the depositors which ultimately led the the bank collapse. There is a vast body of research on this subject in the workplace (an employee thinks they may get fired, and by changing their behavior because of this expectation, actually does get fired) and classroom (certain students are promoted as above-average, and this expectation leads teachers to expect and elicit better performance, thus getting above-average results because of the additional attention). Parents may do it to their own children even, based on generalizations of behavior (she's smart and and he's good at sports) which alters the outcomes for the child based on the same principal. Now it is happening in the market, stocks have a few bad weeks and more and more investors pull out their money which perpetuates further declines.

Recap from http://www.businessdictionary.com/definition/self-fulfilling-prophecy.html:

Positive or negative expectations about circumstances, events, or people that may affect a person's behavior toward them in a manner that he or she (unknowingly) creates situations in which those expectations are fulfilled. An employer
who, for example, expects the employees to be disloyal and shirkers, will likely treat them in a way that will elicit the very response he or she expects. Positive or negative expectations about circumstances, events, or people that may affect a person's behavior toward them in a manner that he or she (unknowingly) creates situations in which those expectations are fulfilled. An employer who, for example,
expects the employees to be disloyal and shirkers, will likely treat them in a way that will elicit the very response he or she expects.

Confidence crisis

I keep hearing about a credit crisis and the banks need to get off their butts and start lending again, but I think the problem now is one of confidence. If the market can tank so quickly and the housing boom was basically an Enron type scheme that artificially drove up prices on properties and subsequently lost all of the gains in a rapid decline, you have to ask the question; how much of this is real wealth to begin with and how much was manipulation? Can we say the wealth existed in the first place if it was based on flawed or fraudulent practices? I don't think so. Did the equity that the shareholders of Enron really disappear or was it like a bank robber with a few bags of money, sure he might be rich on paper but it is not legitimate. The government is attacking the credit crisis from many angles, but I think they are missing or unwilling to admit that the American consumer/investor does not trust what is going on. Can there really be much confidence in a system that has been so volatile (i.e risky) over the last decade and filled with bad financial examples such as the dot com collapse, the accounting scandals, and now the housing mess? The shake out has only begun and government intervention may only serve to extend the life of many terminal patients before they die and in the process misspend a staggering amount of money on certain players as deemed appropriate by King Paulson.

Marketing Terminology

Environmental scanning is used to continuously monitor and respond to changes in events external to the organization, which may impact the business. Changes can be drastic such as Hurricane Ike, or they can occur over time like demographic data. Sudden changes require quick action, like ordering gas cans and water before Ike hit Texas. Demographic changes allow for better planning and product development for the new markets, like Hispanic products or Baby Boomer services.

Price Freedom is the concept that the more a marketer can differentiate the product the more can be charged for said product. For example, Heinz Ketchup is the standard for the venerable tomato condiment and thus can charge more for their ketchup than competitors. Another example is the Toyota Prius which has defined itself through great design and engineering in addition to great marketing is able to charge more for each car than a comparable vehicle.

IAO variables or psychographics are demographics which include factors such as age, gender, income and education, and including additional variables like interests, values, lifestyles and behaviors. Psychographics give the marketer a more detailed set of data on which allow for better targeting of the market and a more efficient use of marketing dollars.

Exercise equipment

Never buy new exercise equipment. The secondary marketplace is littered with all types of barely used treadmills, bikes, elliptical and stuff marketed by celebrities. Stay away from aids like Ab Roller, Bun Machine, Thigh Max, and any similarly named appliance as they are marketing creations and have no real value to you unless you are selling them. However, if you really want to get in shape, try this first. Develop a exercise routine without spending any money and do it for at least a month. Go for a daily run or walk outside, lift gallons of water, or do some stretches or push-ups. If you like your progress AND you still need some def equipment like I do because I live in Illinois and the weather is getting nasty, BUY used. All those people from last years failed resolutions are probably selling some fine equipment at about half-price. Why I'm looking on craigslist and the classifieds right now and there is a nice selection. I post my deal when I get it. Stay fit and don't use your new used equipment as a clothes hanger!

Vending machines, et al.

People are talking up multiple income streams for individuals that have traditionally relied on one or two sources of income, mainly their full-time job. However, this has exposed them to the risk of putting all their eggs in one basket syndrome. If someone loses their job all the income goes with it. Now the trend of the entrepreneurial age is to earn your living from many different sources such as a second job, vending machines, rental property, online sales, blogging, freelance writing or photography and many others. Businesses have been doing this for decades and I think this is a great way to incrementally move into owning your own business after you get the feel for the fundamentals. I currently have two vending machines that pull in about $600 net each year. That's not much money I know, but I also have involved my kids in filling them so they get the entrepreneurial experience. In my particular case the machines are provided all I have to do is fill them as needed so there is only the product cost and my time that I need to manage. My wife has done a lot of eBay sales over the last few years and she has netted about $3000 and cleaned up the house in the process. She is currently pursuing freelance writing and I think she will do very well. Just find your niche, be patient and get started. You are your own boss!

Money as Debt

This video was recommended by my finance professor Dr. Ranjan Karri. He said it accurately depicts how money is created and how the fractional reserve system operates. In the interest of full disclosure he stated the it was biased against investment bankers, although these days the criticism seems warranted. This is only the first part of five, but a quick search will locate the remaining chapters.

Time value of money

This weekend at class we reviewed the elements of Finance. If you teach your kids one thing about money, make sure this is it. If you don't know what it is teach yourself! You will be better prepared next time you get a loan or are faced with an investing decision. How money grows is a relatively simple concept but few people seem to really grasp how it can impact their lives if it is properly maneged and understood. Money today is worth more than money in the future and it must be grown in some way. There are always five variables (present value, interest rate, payment, periods, and future value) in the TVM formula and with a little practice you can create scenarios with a financial calculator, a spreadsheet or on websites using the online calculators. People make bad financial decisions because they don't understand these concepts. Don't be one of them!

Free software

Another good way to save money is to use free software. Now I'm not talking about ripped off versions of Office, but legitimate choices like Open Office. I have been on strike with Microsoft products since they put that crummy little .x at the end of everything produced with Office 2007. Now Open Office isn't quite as fully functional as MS Office, but it is pretty darn close, and here's the good part...IT'S FREE. They just came out with the version for Apple Mac's, so there are options for Mac users. Another good one, but kind of buggy is Docs from Google. The best feature with Docs is that you can work from any computer and you don't need anything but a web browser. Sometimes you just have to have MS Office so when that happens I just mooch off someone else. It seems like almost everyone has some version hanging around. Look around the web there are tons of great free goodies that are excellent products, and I'll share more in future posts.

Need a new car?

Here is one of my money saving tips to think about when buying a used car. First, don’t wait until your vehicle is almost dead before you start looking. That way you won’t be in a desperate situation, and salespeople love distressed and frantic customers to take advantage of. Most people make inferior decisions because of time pressure. Also, a car/van/truck is at best temporary. All vehicles will break down at some point and you need to accept this and plan for it, which means save some money for new tires, repairs, and general maintenance. When you a ready to buy a new used vehicle, you will save thousands of dollars if you avoid brands that have great resell. This means forgoing the Toyotas and Hondas, which carry much higher resell value, and looking at somewhat generic, but functional brands like Chevrolet, Mitsubishi and Dodge. I recently bought a 2004 Chevy Venture that seats eight and was in great condition for about half the price of a comparably equipped Honda Odyssey. The resell on the Chevy dropped like rock and it was over half off of its original retail. Now I liked the way the Honda drove and its styling better than the Chevy, but I like to save money more. I know that Consumer Reports regularly skewers most of the domestic automakers, but how much more are you willing to pay for a better trim package and marginally better quality standards? Do the research into your next potential purchase (you don’t want a lemon) by using Edmunds.com, CarFax, and others and be disciplined about how much you are willing to spend. Look at all the options between brands and compare carefully. If you don’t like the deal on the car you really like never be afraid to walk away. Finally, don’t forget to test drive some of the fun stuff while your at it! You can save tons of money by using this strategy and in the process, get more car then if you paid full price.

Something to think about...

Matthew Kelly

The video's on the bottom are of motivational speaker Matthew Kelly. If you ever get a chance to see him, GO. He has some excellent common sense approaches to life that are grounded not in today's fads, but on the great thinkers and ideas that have endured throughout history. Plus he is funny, entertaining and has an Australian accent. If you can't see him live, he has some books for sale. Here is some more information from his website:

Matthew Kelly was born in Sydney, Australia, on July 12, 1973. Over the past ten years more than three million people in fifty countries have attended his talks, seminars, and retreats. Against the backdrop of his travel to fifty countries, millions more have been touched by his writings and appearances on radio and television programs.
In the wake of devoting the past decade of his life to his international speaking schedule, Kelly has also gained acclaim as an author. His most recent books include: The Rhythm of Life, The Book of Courage, Rediscovering Catholicism, The Shepherd, A Call to Joy, and Mustard Seeds. Collectively his titles have been published in over a dozen languages and have sold more than one million copies.
Both as a speaker and as an author, Kelly possesses a powerful ability to combine the ageless tool of storytelling with a profound understanding of today's culture and the common yearnings of the human heart. As a result he captures our imaginations and helps us to see the challenges and opportunities of our everyday lives in a new light. With a keen sense of humor and heartwarming charm, Kelly seems to effortlessly elevate and energize people to pursue the highest values of the human spirit and become "the-best-version-of-themselves."
From amidst a culture preoccupied with speed, noise, and activity, has emerged a man with a unique vision of life and a tireless passion for sharing that vision. Dynamic, and extraordinarily engaging, Matthew Kelly comes to the aid of a generation searching for some meaning in life deeper than the pursuit of pleasure and possessions. He clarifies the hazy path of right-living in our world of compromised values with a message that is too clear to be confusing and too persuasive to be ignored - "Who you become is infinitely more important than what you do, or what you have."
Matthew Kelly's message is both timely and timeless. His example is authentic and inspiring. His passion for life is refreshing and challenging. It is certain that he will continue to be, with increasing influence, one of the most sought-after and endearing spiritual voices of our time.

Source: http://www.matthewkelly.org/about_mk.html

Pay is NOT a motivator!

According to Herzberg's Two-Factor theory of job satisfaction there are hygiene factors and motivator factors. Hygiene factors are things an employee needs NOT to be dissatisfied with their job. These HF include pay and benefits, job security and status. The motivation factors are something different. They are growth, promotion, the job itself, recognition, and achievement. Don't confuse the two when you are trying to motivate your employees! Giving them a raise won't do it. Now, if the pay and benefits they currently receive are not meeting their basic needs then they will be dissatisfied and start looking for another job!

Opportunities

Well, the economy is very volatile right now and conditions don't look very good for the next few quarters. However, I'm going to spend the next year looking at some ways to diversify your income stream, reduce your cost of living, and prepare yourself for future growth and opportunities. Stay tuned and hopeful! I suggest you start with a good book like, Influence: The Psychology Of Persuasion by Robert Caildini. Easy to read and scientifically sound this book is full of power. God Bless.

The Seven Practices Of Sucessful Organizations by Jeffery Pfeffer

I think these practices are of critical importance to us as employee's, students, and leaders of organizations. This is an overview of the seven principals in Pfeffer's excellent article so I can memorize them and firmly embed the concepts into my memory and lexicon. Here are the seven principles:

1. Employment security

2. Selective hiring of new personnel

3. Self-managed teams and decentralization of decision making as the basic principles of organizational design

4. Comparatively high compensation contingent on organizational performance

5. Extensive training

6. Reduced status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels

7. Extensive sharing of financial and performance information throughout the organization

R educed status distinctions and barriers, including dress, language, office arrangements, and wage differences across levels
E mployment security
C omparatively high compensation contingent on organizational performance
E xtensive trainingS elective hiring of new personnel
S elf-managed teams and decentralization of decision making as the basic principles of organizational design
E xtensive sharing of financial and performance information throughout the organization


I made up an acronym to help remember them; RECESSE, pronounced "recess". I think most organizations practice some of these, but very few all, which is unfortunate because they all need to be implemented to work together.