2009 VSB Media Report

February 2010

Dear Faculty and Staff, On behalf of VSB’s marketing & public relations team, I am pleased to share with you our 2009 media report. I'd like to take this opportunity to thank and congratulate those of you who continue to devote your time, effort, and energies to promote VSB in the media.

In 2009, VSB achieved great success in generating increased brand awareness. The school reached nearly two million people through appearances in international, national, and local media. Some 35 faculty members appearing in more than 100 various publications and on news programs around the world offered reactions to the news of the day or authored articles based on their research. Faulty and staff published almost 10 opinion pieces in major education outlets such as the Chronicle for Higher Education (a VSB first!), The Financial Times, and BusinessWeek.

Your participation in media opportunities plays an important role in enhancing VSB's reputation. This increased media attention coupled with our #11 ranking validates the outstanding work of our students, alumni, faculty, and staff, and increases the value of the degrees already earned by Villanova University alumni.

The start of 2010 is proving to be just as successful for VSB. We hope this momentum will continue throughout the year to increase media coverage and build reputation.

Thank you again for your support.

Liz H. Field Director of Communication Villanova School of Business

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Broadcast Media Highlights

On February 19, 2009 Professor Nicholas Rongione was featured on WHYY Radio to speak about business ethics.

On March 20, 2009 Finance professor Michael Pagano was a guest on PBS’s Nightly Business Report discussing the sell of toxic assets

On May 29, VSB Alumnus, Joseph Mancari is featured on CNN as a recent college graduate hired by accounting firm Ernst & Young

On June 17, 2009, Michael Pagano was featured on National Public Radio’s Marketplace Radio discussing newly proposed financial service regulations.

On July 14, 2009 Professor Greg Bonner was featured on WHYY Radio to discuss consumer behavior.

On June 9, 2009, Professor Ronald Hill was featured on Fox 29 discussing consumer privacy when participating in customer service surveys.

On May 29, VSB Alumnus, Joseph Mancari is featured on CNN as a recent college graduate hired by accounting firm Ernst & Young Villanova School of Business 2009 Media Report

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Michelle Obama Confronts ‘Extra Burden’ in New, Historic Role

By Heidi Przybyla and Kim Chipman Jan. 15 (Bloomberg) -- Michelle Obama comes to global prominence bearing the weight of expectations that she’ll be every woman’s role model, representing every mother of young children and every professional trying to balance career and family.

There’ll be another burden too: Beginning with next week’s inaugural ceremonies, everything about the nation’s first black first lady will be dissected, from her policy positions to her parenting to her wardrobe.

Eleanor Roosevelt introduced the notion of first lady as activist; Jacqueline Kennedy brought a sense of élan and high fashion; Nancy Reagan spoke out against drugs; Hillary Clinton came in as a policy maker attempting to overhaul health care.

But none of them broke a barrier as formidable as does Obama: the barrier of race.

“Is there an extra burden?” said Valerie Jarrett, who will serve President-elect Barack Obama as a senior White House adviser and has known the Obamas professionally and personally for 17 years. “Yeah, there is. But Michelle is a pragmatist” who “understood that going into this,” Jarrett said during an interview in her Chicago office last week.

Cautious Agenda A cautious agenda reflects this practical sense. Jarrett said the new first lady will focus on being an advocate for military families, raising awareness for work-family balance and promoting volunteerism.

Obama, the subject of at least four biographies, may try to do the opposite of Clinton, first cultivating a softer image and then playing a more active role in the administration, said Earl Ofari Hutchinson, author of a book called “How Obama Won.” “It’s going to take a huge amount of adjustment on behalf of the country to get used to the sight of a black woman as first lady,” he said.

In part that is because so few black women have held any kind of high office, and in the civil rights movement most were behind-the-scenes participants.

“For some people, it will be kind of a culture shock,” said Paul Taylor, chairman of the Philosophy Department at Temple University in Philadelphia.

Conventional Roles

Villanova School of Business 2009 Media Report

6 Most first ladies have played conventional roles, serving as hosts to the White House, making ceremonial appearances and presiding over state dinners.

“As much progress as women have made in electoral politics, the role of first lady has evolved more slowly,” said Quinetta Roberson, a Villanova School of Business scholar who co-authored a study about Michelle Obama.

“To the extent that first ladies fail to conform to traditional gender roles, the more criticism they tend to get from the media and public,” said Roberson.

In his book “The President’s Wives,” Robert P. Watson categorizes first ladies on a scale from non-partners to full partners. He argues that only Roosevelt, Rosalynn Carter and Clinton obtained full partnership.

The risks are significant for Obama. The daughter of a city pump operator and a secretary from the South Side of Chicago, the 44-year-old corporate lawyer attended Princeton University and Harvard Law School.

‘Neck Snap’ “She’s got to deal with the stereotype about black women being bossy and too strong and domineering,” said Emory University political scientist Andra Gillespie. “If you see her neck snap too much, people are going to say ‘that’s a little too sister or too ghetto.’ That’s different than anything her predecessors had to deal with.”

Jarrett rejects the word “outspoken” to describe Obama. “I would call her thoughtful and honest and candid,” she said.

The issue of racial stereotypes is probably more defining for the incoming first lady than it is for her husband. A descendant of slaves in South Carolina, Michelle Robinson was raised in a neighborhood transformed by white flight.

At Princeton, she wasn’t shy about her views on race. Obama’s senior thesis was on “Princeton-Educated Blacks and the Black Community.” At Harvard, she protested the lack of minority students and professors.

“She cannot escape race the way her husband can escape race,” said Gillespie. “She cannot invoke a white parent or an exotic upbringing to deflect racial anxiety.”

‘Mom-in-Chief’ News coverage of her was limited until last February when, in commenting on her husband’s early victories in the Democratic presidential race, she told an audience she was proud of her country for the first time as an adult. That prompted critics to call her unpatriotic. Obama later said her remark had been poorly worded.

Villanova School of Business 2009 Media Report

7 Beginning with an appearance on The View in June, Obama sought to soften her image.

Days before November’s election, she made clear she wasn’t interested in a policy role in her husband’s administration and would instead be “mom-in-chief.”

Obama, who turns 45 on Jan. 17, will be the youngest first lady since Jacqueline Kennedy in an age in which the media glare has never been stronger, dialing up the degree of public interest in her every move.

“She’s referred to as a young woman, but she’s really defining what it is to be middleaged,” said Marian Salzman, the New York-based marketing and trendsetting expert who coined the term “metro sexual.”

Obama is “going to live her 40s under the spotlight of the media,” said Salzman. Obama, who’s already been featured in magazines like Essence, is being celebrated as a modernday Kennedy for her youthful look, A-line dresses, string of pearls and hair flip.

Obama must also grapple with the scrutiny of her daughters, Malia, 10, and Sasha, 7.

Temple University’s Taylor says even the Obama girls’ hair may become a public fascination. “Hair has always been a vexed issue for African-American women,” he said.

Will Michelle continue to allow Malia to wear cornrows? “It’ll be interesting to see how they deal with that.”

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Citigroup posts $8.29B loss, splits up the company

By MADLEN READ – 41 minutes ago NEW YORK (AP) — Citigroup said Friday it is splitting up into two businesses as it reported a fourth-quarter net loss of $8.29 billion — its fifth straight quarterly loss.

In Citigroup's reorganization, one business, Citicorp, will focus on traditional banking around the world, while the other, Citi Holdings, will hold the company's riskier assets.

CEO Vikram Pandit's move will allow Citigroup to sell or spin off the Citi Holdings assets to raise cash. It also reveals the company's growing focus on back-to-basics lending and deposit-gathering, and dismantles the "financial supermarket" created a decade ago.

Shares rose about 14 percent in pre-market trading.

Some investors have been calling for a breakup of Citigroup for years, as the bank struggled to keep up with its Wall Street peers. Those calls grew louder as the mortgage crisis caused the company's troubles to mount.

There has been harsh blame for Citigroup's woes directed at the board, too — and the company said Friday it plans to get rid of more board members after the recent departure of long-time director and former Treasury Secretary Robert Rubin.

"There has been one announced departure from the board. Together with other anticipated departures, this gives us the opportunity to reconstitute the board and we will do so as quickly as possible," said Richard Parsons, Citi's lead director, in a statement.

The New York-based bank's fourth-quarter loss amounted to $1.72 per share. Analysts expected a loss of $1.31 per share. While the per-share loss was higher than the consensus estimate, the total loss was smaller than the $10 billion many investors feared.

For the year-ago fourth quarter, Citigroup had a net loss of $9.83 billion, or $1.99 per share.

For the latest quarter, Citigroup marked down $7.8 billion in securities and banking revenue, and $5.3 billion on the value of credit derivatives. It also lost $2.5 billion in private equity and equity investments, $2 billion in restructuring costs, and $6 billion to add to reserves.

Villanova School of Business 2009 Media Report

9 It also booked more than $4 billion in gains, after taxes, from selling its German retail bank and its India-based outsourcing business.

Revenue fell 13 percent to $5.6 billion from a year ago. At its peak performance in the second quarter of 2007, Citigroup was pulling in $25.8 billion in revenue.

After massive layoffs and business sales in 2008, the bank's work force dropped by about 52,000 to 323,000 in 2008, the company said. Last fall, Pandit announced Citigroup would shed a total 75,000 employees — meaning there are 23,000 employees still to be let go.

The cuts come as Citigroup has racked up losses for the past five quarters. For all of 2008, Citi suffered a net loss of $18.72 billion, or $3.88 per share. This compares with a profit of $3.62 billion, or 72 cents per share, in 2007.

The new Citicorp will include the retail bank; the corporate and investment bank; the private bank, which serves wealthy individuals; and global transaction services.

Citi Holdings will include Citi's asset management and consumer finance segments, including CitiMortgage and CitiFinancial. It will also be in charge of Citi's 49 percent stake in the joint brokerage with Morgan Stanley, and the pool of about $300 billion in mortgages and other risky assets that the U.S. government agreed to backstop late last year.

Citigroup said it entered a definitive agreement on that deal with the government on Thursday. The government has already lent the bank $45 billion.

The company's new structure is practically a reversal back to 1998, when John Reed's Citicorp merged in 1998 with Sandy Weill's financial services conglomerate Travelers Group. Travelers Group at the time had an insurance business, an asset management business, the retail brokerage Smith Barney, and the investment bank and bond trader Salomon Brothers.

The 1998 combination was Weill's idea, and was made possible by the partial repeal of the Glass-Steagall Act of 1933 — which prohibited banks from also getting involved in investing and insurance.

Reed agreed to the deal, saying that average people did not want to have to shop around for financial products. The culture and technology over the past decade, however, seem to have shot down that forecast.

"In this day and age, with the Internet and access to information, a lot of savvy consumers have figured out that it's better to shop around," said Michael Pagano, a finance professor at Villanova University School of Business. "The reality is there are some customers, but not enough, to justify this comprehensive set of services that are out there."

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10 It's not the model itself that clobbered Citigroup, though, said Bert Ely, a banking industry consultant in based in Alexandria, Va. "Possibly, Citigroup bit off too much too quickly to make it work," Ely said. "It was more focused on doing deals ... and not focused on the nitty gritty of integration and execution, of making it work day in and day out."

Now that Citigroup will be relying more on basic banking, its weaknesses in that area present an even bigger obstacle. Citigroup recently lost the opportunity to buy Wachovia Corp.'s deposit base to Wells Fargo & Co. Meanwhile, JPMorgan Chase & Co.'s deposit base soared after it bought Washington Mutual Inc. And the bank's results Friday showed that credit deterioration was severe in the fourth quarter, from North America to Europe to Latin America to Asia. Even if Citigroup separates its "bad" assets from its "good" assets, the bank still faces strong headwinds to profitability.

"A major challenge," Ely said, "is how are they going to build a meaningful domestic banking business?"

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January 23rd, 2009 | 1:00 pm

More Than a Fashion Icon: What We Can Learn About Work/Life Balance from Michelle Obama

By Anna T. Collins, Esquire (Portland, Maine) What will Michelle Obama wear on inauguration day? Who designed her ball gown?

These have been the questions de jour, on our mental menus for weeks. Americans are now bombarded by coverage of Michelle Obama’s style from all mediums, perhaps most intensely on-line at Mrs. O, where up-to-the-minute coverage includes analysis of Michelle Obama’s dresses, jewelry, shoes, and hair. The site lets Americans hone their voyeuristic skills, as visitors contribute their best photos detailing every aspect of the person some believe will be as legendary in her fashion choices as the first Mrs. O, Jacqueline Kennedy Onassis.

Now, fashion certainly deserves some attention due to its pivotal place in the heart of American pop culture. Michelle Obama has also not spoken publically since becoming First Lady, which inevitably shifts the public lens on the only aspect of her persona the media can currently access: her style. Yet, there is so much more to Michelle Obama than her appreciation of American immigrant designers, unique antique jewelry, or practical flat shoes.

When asked to describe the meaning of Michelle Obama to women, Catherine WrightDilbert of the National Association of Mothers’ Centers explains that as the embodiment of a three dimensional presidential spouse, whose role is “not purely derivative, secondary, nor supportive,” Michelle Obama can be the catalyst for a national dialogue “on the multiple societal roles women play, and how our laws, institutions, and policies can support and facilitate them.”

In the spirit of such dialogue, we turned to experts for an analysis of Michelle Obama beyond the purely aesthetic. The experts highlighted the significance of Michelle Obama’s education and professional accomplishments, as well as the meaning of our First Lady to the cultural and sociopolitical ascent of all women. They also acknowledged Michelle Obama’s unique approach to work and marriage, both vital to analyze because of Michelle Obama’s experience with work/life balance.

The Politics of Higher Education Michelle Obama’s educational accomplishments are impressive. As salutatorian of her high school class, she went on to major in sociology and minor in African American Villanova School of Business 2009 Media Report

12 studies at Princeton University, where she graduated cum laude. She then obtained her law degree from Harvard Law School in 1988, which now makes her the third First Lady with a postgraduate degree, following Hillary Clinton and Laura Bush.

In regard to the significance of Obama’s high level of educational accomplishment for all women, Terry Neese summarizes as follows: “You might say that higher education is leaving men behind.” Neese, a Distinguished Fellow with the National Center for Policy Analysis, points to studies showing that by 2020 the number of women that will earn B.A’s will be 156 for each 100 men. In addition, more than 50% of all degrees in recent years have been earned by women. Neese notes, however, that there is still a gap when it comes to bachelor degrees in political science and government (about 52% for men and 47% women), in part because women still feel politics “is dirty and they do not want to get involved.” Michelle Obama’s high education may thus serve not only as an example of women’s advancement, but also an inspiration for women as they aim to overcome the challenges of balancing work and family in a political environment.

The Flexibility of a Working Mother Autumn Stephens, author of Feisty First Ladies and Other Unforgettable White House Women, agrees that Michelle Obama is an impressive woman in many ways, but says that “the intelligence, education, and influence she brings to the White House are not unprecedented, either among First Ladies or among American women as a whole.”

Stephens believes that what is unprecedented, perhaps, is “the degree to which our society appears ready to accept a woman like Obama, rather than viewing her as a threat.”

Stephens believes the public’s willingness to accept Obama may be due in part to the fact that she is not blatantly political or careerist. Instead, she has stated she aims to be “Mom-in-Chief,” focused on her two young children. “It is a huge asset for approval,” Stephens explains “that she has these two young kids for whom she is obviously in a maternal role. If she didn’t have kids, she would be more threatening. People would wonder ‘what is she going to do with all that energy?’”

Yet, Stephens acknowledges that the personal can become political. If she focuses on her children and national issues relating to family, Obama may quietly define what it means to be a modern working mother. Despite her maternal focus, Obama remains a highly accomplished professional with background in both private and non-profit sectors.

Stephens wonders what Obama will do after her turn in the White House or when her children are older. By focusing on family issues while her children are young, whether on the personal or national level, Obama can show Americans that “working mothers are flexible and a woman’s working cycle is often very different from that of a man.”

A Marriage of “Full Partners” According to Quinetta Roberson, professor of management at the Villanova School of Business, Michelle Obama is only the 4th First Lady in history to qualify as a Villanova School of Business 2009 Media Report

13 “full partner” using the “Watson Typology,” which categorizes First Ladies on a continuum from non-partner to full partner with their husbands. In that role, Obama joins the ranks of Eleanor Roosevelt, Rosalyn Carter and Hillary Clinton.

Roberson believes that Obama is in that “full partner” role more naturally than prior First Ladies due to changes in our society and the unique nature of her marriage. Roberson explains that the role of First Lady evolved substantially when Hillary Clinton wanted to be involved in sociopolitical issues, such as healthcare.

“For Clinton,” Roberson explains “that was a choice. It had a little bit to do with changes in society, as women had entered the workforce.” Roberson believes that Obama, on the other hand, is not merely making a choice. She is also being brought to the foreground by her husband, who appears to look at her as a “full partner.”

“We have never had a President before,” Roberson explains, “calling the First Lady ‘the Rock of our family’ or ‘my best friend’.”

Roberson concludes that full partnership appears to be natural for the Obamas, creating a new type of marriage for the public to analyze, one of two “best friends.”

“I have heard men say they are looking for a Michelle Obama,” Roberson shares, “…an accomplished woman who can carry the load, have his back, be his partner.”

This type of marriage not only makes the Obamas feel accessible, but underlines a new type of marriage sought out by some accomplished women and men.

Bottom Line: A Modern Approach to Work/Life Balance Michelle Obama has openly discussed the importance of her family’s extended support system, including her mother and friends, to her achievement of work/life balance. In light of Obama’s educational and professional accomplishments, her approach to work and family, and the unique nature of her marriage, it is not surprising experts agree she will highlight a modern approach to work/life balance – one that requires the support of many, as well as flexibility to focus on family or career if necessary.

It is thus not surprisingly that organizations such as the National Association of Mothers’ Centers will be looking to Michelle Obama, as well as her husband, to “promote the idea that workers are also caregivers, and [that] the need to be economically self-sufficient coexists with the need to care for children, the ill, elderly, and disabled.” Michelle Obama, after all, “embodies the myriad talents, abilities, and obligations of women in today’s society.” And, she wears practical flat shoes.

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Super Bowl XLIII: Fourth and Goal Observers say NBC will have to resort to a field goal, but it may still sneak into the end zone Jan 26, 2009 -By Anthony Crupi, Mediaweek and Steve McClellan, Adweek It was perhaps the most bone-rattling hit of the 2008 NFL season, a devastating missile strike by free safety Ryan Clark that effectively clinched a seventh trip to the Super Bowl for the Pittsburgh Steelers. With 3:34 to go in the fourth quarter of the Jan. 18 AFC Championship game, Clark launched himself at Willis McGahee, propelling his right shoulder pad and the top of his helmet into the Baltimore Ravens running back's face mask.

The force of the collision whiplashed McGahee's head back on its stalk like a crash-test dummy's and knocked both players out cold.

The hit, while especially vicious -- on an HD set you could practically see the cerebrospinal fluid dribbling out of McGahee's ear holes -- was also perfectly legitimate under the NFL's bylaws governing helmet-to-helmet contact. While it's padded with arcana about shoelaces and 'do-rags, the NFL Rule Book is fairly unambiguous on whether the helmet may be deployed as an agent of chaos. Yet it's safe to say that most of the tongue-cluckers who called for Clark's head later that night never bothered to consult the text. (It's spelled out rather nicely in Rule 12, Section 2, Article 8.)

All of which, in an admittedly circuitous fashion, brings us to NBC. Since before the playoffs began, the network has faced a relentless tide of uninformed speculation about how it's been managing its inventory for Super Bowl XLIII, with commentators issuing dire bulletins about NBC's inability to close on the last remaining 8-12 spots. And yet students of the game say NBC is hardly in dire straits, a reassuring assessment given the twin burdens of a monster recession and a record-high rate card.

"Last year Fox was sold out by Thanksgiving. Take that out of the equation and there's nothing different about where NBC is today," says Larry Novenstern, executive vp, director of national electronic media at Optimedia. "There are always a few spots available heading into the last week before the Super Bowl."

As of late last week, NBC said it had yet to move 10 percent of its Super Bowl inventory, in line with media buyers' estimates. "All things considered, they're in pretty good shape," one national TV buyer notes. "The economy is brutal, and just in terms of perception, there's a risk of consumer backlash for anybody plunking down $3 million for Villanova School of Business 2009 Media Report

15 30 seconds of commercial time. How many paychecks is that?"

While buyers say NBC has held its ground on pricing, the much-cited rate isn't exactly an absolute. Top-drawer clients like Anheuser-Busch and PepsiCo paid less than $2.4 million for each 30-second spot, as both bought in bulk and are longstanding NFL partners. "There's this misperception that it was $3 million, take it or leave it," says Seth Winter, senior vp of sales and marketing, NBC Sports & Olympics. "If you just wanted the Super Bowl, the cost was $3 million. But we're looking for a larger investment across NBC Sports, so the approach was, give us a reason to modify the price."

With 4.5 minutes worth of ad time, A-B remains the most loyal sponsor of the NFL's marquee matchup, although there is some concern the brewer will scale back future Super Bowl commitments, now that the $52 billion InBev takeover is complete. "We haven't seen any impact yet because they have multiyear deals, but once those expire the big question is, what happens when inBev gets involved in day-to-day operations?"

Novenstern says. "They could tell Budweiser to pull out of the Super Bowl altogether, or cut back from 10 spots to two. If that happens, MillerCoors will buy in."

Per terms of a series of earlier deals with NBC, CBS and Fox, A-B enjoys category exclusivity through Super Bowl XLVI (2012). The company has had a lock on the alcohol category since 1989.

In keeping with A-B's traditional game plan, its spots will offer a mix of offbeat humor and equine iconography. As many as three spots will feature the Budweiser Clydesdales, according to A-B chief creative officer Bob Lachky. Produced by DDB, Chicago, the ads under consideration are designed to prop up the Budweiser and Bud Light flagships, although a spot for the malty offshoot Budweiser American Ale is also in the running for a late-game airing.

The increased emphasis on the big-hoofed mascots could have a palliative effect on Bud partisans anxious about the influence of the brand's new Belgian overlords. "The best thing we can do is assure people that the things they love about our brands will remain intact," Lachky explains. "The Clydesdales reinforce...our brand, tradition and heritage."

NBC has balanced some early defections (General Motors, FedEx, Garmin, SalesGenie.com) with first-time investors such as Mars Inc.'s Pedigree, Teleflora and Denny's. The restaurant chain will bow the first collaboration with its new creative agency, Goodby, Silverstein & Partners, San Francisco, in a 30-second spot that Novenstern says will run in the third quarter of the game.

"They have some big news they want to get out there and the time was right to get the message out in one fell swoop," Novenstern adds. "[Denny's chief marketing officer] Mark Chmiel realizes the value of TV and the impact it has on their sales."

Novenstern did not put a dollar figure on the Denny's deal, although he emphasizes that his client did not shell out "anywhere near $3 million" for the :30. That a first-time Super Villanova School of Business 2009 Media Report

16 Bowl client could trim a few bucks off the price tag suggests that NBC's position has softened a bit as the pre-game clock winds down.

Winter confirms the average price is now in "the high twos," which translates to $2.8 million or $2.9 million, or about 5 to 7 percent higher than Fox's Super Bowl XLII base rate of $2.7 million. While sales got off to a fast start last summer, September's global financial meltdown kicked the legs out from under the market. "We were 85 percent sold when we boarded the plane for Beijing," Winter recalls. "When we came back, the world had suddenly changed."

Sources say NBC is expected to clear half of its remaining spot load before using the final five avails to pay down some prime-time delivery shortfalls. Latecomers are likely to include a telecom player -- Sprint is said to be sniffing around for a deal; moreover, the operator already has an exclusive "in" via its NFL Mobile Live application -- while those who may be the beneficiary of audience deficiency units include Unilever and Procter & Gamble.

"There are always a few spots available the Friday before the game, so NBC isn't in a bind," says Gibbs Haljun, managing partner, director of national broadcast, Mediaedge:cia. "We should see things play out along the lines of the first-quarter scatter market, where you have people releasing money much closer to air-date. Anyone still looking to get in are holding their cards and waiting to see what happens."

Come Feb. 1, those marketers that do find themselves with a seat on the 50-yard line will enjoy exposure on television's last great reach vehicle. Last year's game drew a record 97.5 million viewers, per Nielsen ratings data, and the 2007 contest ranked as the third most-watched Super Bowl, serving up some 93 million viewers. And while the advantages of reaching such a mass audience are manifest, with great exposure comes even greater scrutiny.

"If you're advertising in the Super Bowl, you simply cannot afford a misstep," says William Madway, professor of marketing at Villanova School of Business. "There are too many people watching and too much attention being paid afterwards. The game is not a one-shot deal, but is instead the means with which these marketers kick off entire campaigns. If they get it wrong, they put future earnings at risk."

The sheer scale of the event, coupled with the NFL's draconian licensing policies -- the league prohibits its broadcast partners from streaming game highlights on their Web sites -- effectively takes a lot of digital media off the table. Once the final whistle is sounded next Sunday, any association a brand enjoys with the Super Bowl will be purely anecdotal.

"The Super Bowl is really just a one-off, and the opportunities to do the kind of integrations NBC offered during the Summer Olympics just aren't there," says Haljun.

"It's such a different model that there's a limit to what clients can do on the digital side."

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17 If marketers' long-tail efforts will have to begin away from the gridiron, NBC has picked up a great deal of business by appealing to the clients' competitive instincts. "Budgeting is often a factor of competitive parity," Madway says.

"This is one reason why the Super Bowl still does well even in a recession. Companies can take advantage of relative scarcity. If there's a lack of voice, they can own the conversation by buying into this one game."

By way of illustration, there is the beleaguered automotive category. On the home front, the Big Three are in no position to plop down a few million dollars for a single 30-second spot. (When you're out there begging for alms, tin cup in hand, you can't exactly justify that sort of promotional outlay.) With GM, Ford and Chrysler out of the picture, foreign automakers like Audi and Hyundai have jumped in with both feet.

Audi's 60-second spot for its A6 sedan will run in the first commercial pod following the 6:18 p.m. EST kickoff, appearing after Budweiser's opening salvo and a teaser for Sony Pictures' Angels & Demons. The ad pokes fun at the stock Hollywood chase sequence, tailing actor Jason Statham as he tear-asses his way from the San Francisco of the Bullitt era to Dade County circa its Miami Vice heyday.

While Audi crashes its way through cinematic history, Hyundai is taking the highbrow route, enlisting cellist Yo-Yo Ma to perform a Bach composition over glam shots of the 2009 Genesis sedan. Created by Goodby, Silverstein & Partners, the pair of 30-second spots will also be available at Hyundai.com, where consumers will be invited to edit the creative.

While classical music may not seem like an intuitive match for the ritualized violence of pro football, Haljun says that context isn't always obvious: "You have to look at everything in terms of a price-value relationship. Can you use this to reach someone who you wouldn't normally reach? If they're in the right frame of mind and it's relevant, then you may have something."

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MSNBC.com Super Bowl advertisers seek balance

Given economic pain facing Americans, Super Bowl ads may seek balance

By Allison Linn Senior writer updated 8:40 a.m. ET, Fri., Jan. 30, 2009

With tens of millions of Americans watching and millions of dollars on the line, the Super Bowl is already one of the most high-stakes moments of the year for American advertisers.

This year, the risks are even greater, as advertisers grapple with how to strike the right tone for an audience stung by the worst recession in decades, and yet perhaps not wanting to be hammered by that reality on Super Bowl Sunday.

“There’s going to be even more scrutiny than usual,” said Tim Calkins, clinical professor of marketing with Northwestern University’s Kellogg School of Management, and a longtime follower of Super Bowl advertising.

In addition to striking a tone that doesn’t offend viewers, experts say advertisers need to produce a spot that appears to justify the high cost of advertising during the Super Bowl at a time when workers are losing their jobs and shareholders are seeing their investments diminish.

A 30-second spot reportedly will cost $3 million this year, meaning advertisers will pay as much per second as many Americans would be happy to earn in a year.

“You’ve got these brands that indulge in what can only be called conspicuous media consumption,” said Robert Passikoff, president of the consulting firm Brand Keys.

While spending a huge amount of money on a humorous new ad may make sense in a good economy, Passikoff thinks it could be a mistake at a time when many people are worried about paying the bills, and companies are watching their budgets extremely closely.

“Entertaining people is fine, but a laugh is not a return on investment,” Passikoff said.

Some longtime Super Bowl advertisers have decided to opt out entirely this year, perhaps because they don’t want to appear ostentatious or because they simply don’t have the money.

Those include beleaguered carmaker GM and shipping company FedEx.

Villanova School of Business 2009 Media Report

19 For those who are advertising, experts say the challenge will be to entertain people during breaks in the matchup between the Arizona Cardinals and the Pittsburgh Steelers while not sounding too flippant or over-the-top.

“I definitely think the economy is going to have an impact on the type of message, the tone of the message itself,” said William Madway, an instructor of marketing at Villanova University. “You have to address consumers and what their current mindset is.”

Madway also thinks advertisers will be less likely to take huge risks this year. That’s partly because advertisers don’t want to appear extravagant in tough times. But they also may want to avoid spending money on something that might backfire and need to be pulled.

Two years ago, for example, Snickers was forced to bench a Super Bowl ad featuring two men accidentally kissing after complaints that it was homophobic.

Passikoff believes the advertisers who are most successful will be the ones that do seem to offer folks a good value in this economy. Those include Denny’s, whose ad touting its Grand Slam breakfast is slated to end with a surprise offer, and Hyundai, whose lineup includes an ad touting its promise to buy back a new car if its owner loses his or her job.

Nevertheless, most advertisers are expected to aim for that Super Bowl staple — making people laugh. Calkins thinks it would be ideal to find a way to give people a much-needed dose of humor while also recognizing the difficult economy. But he admits that’s a tough job, and that’s why many advertisers may not even try.

“It’s very hard to figure out exactly how one would address (the economy),” Calkins said. “It is much safer, in a way, to stick with the tried-and-true formula of a lot of humor and a lot of more entertaining spots.”

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Citi Field controversy shows how crisis is casting a new light on banks' marketing efforts

By MADLEN READ | Associated Press | Feb 4, 09 5:21 PM CST

When the economy was healthy, no one batted an eye at Citigroup Inc.'s agreement to spend millions of dollars to put its name on the New York Mets' new stadium.

But in a recession that has seen the bank accept $45 billion in government bailout money, the move is viewed by some lawmakers as an example of lavish spending _ akin to millions of dollars spent on corporate jets.

Business experts say advertising and other marketing efforts are not luxuries at all. To the contrary, they say, strong marketing strategies are even more important in tough economic times.

According to Mark Peroff, an intellectual property attorney at Hiscock & Barclay in New York, a stadium deal is "probably the most economical way to advertise because of the number of people that you capture."

The question, though, is how appropriate the deal is now that the landscape has drastically changed.

"You have to have the right tone. People in these times have very sensitive ears," said Don Sexton, a professor of marketing at Columbia Business School and a principal at the The Arrow Group Ltd., a marketing consulting firm. "Perceptions rule."

Citigroup's contract with the Mets is the biggest stadium naming rights deal ever. The bank is paying the team $400 million over 20 years to call the ballpark Citi Field. Citigroup is not alone _ another bank operating with the help of government capital, Bank of America Corp., is reportedly paying $7 million a year for naming rights to the Carolina Panthers stadium.

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Bank of America spokesman Joe Goode said a bank's team sponsorships aren't just marketing tools, but also business relationships. BofA does sports-themed bank and card accounts for consumers, as well as financial services for the teams, he said. He estimated that every dollar spent on the company's sports-related deals generates $10 in revenue and $3 in income.

Sexton said, however, that from a branding perspective, there's no hard data to prove how effective stadium naming rights are for financial services firms.

"I have not seen that putting a name on a field elevates your brand," Sexton said. "The basic idea of a brand is not that they know your name, but what your name stands for."

Citigroup has been a well-known bank for years. Its image, however, along with many companies in the financial services industry, has been sullied as the financial crisis throttled the economy. The company reported five straight quarters of losses, got a rescue package from the government, eliminated 75,000 jobs and got heavy play in the headlines for its plans to buy a $50 million corporate jet _ which it soon scrapped after the government cried foul.

William Madway, marketing instructor at Villanova School of Business, agreed there is little data to show the efficacy of stadium deals. But, he says, the Citi Field deal could be very lucrative as long as the bank takes advantage of what the deal represents: supporting the great American pastime, for example, or riffing off the Mets' reputation as an underdog team that has made some great comebacks.

"This is not a silly thing. This is not an indulgence. This is not a corporate jet," Madway said. But, he added, "If they just have the name, and that's all they do, it's not going to work."

Citigroup, which said it has no plans to abandon the contract, noted back in 2006 the deal will not only include naming rights, but also ATMs at the ballpark; promotional programs for fans, Citigroup clients and employees; the creation of a Jackie Robinson Foundation Museum and Education Center in Manhattan; and other ventures.

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Part of the reason it's hard to predict the value of a sports team sponsorship for a bank's bottom line is that, simply, sponsorships have tended not to last very long. The financial services industry has seen huge changes even before the financial crisis hit.

Philadelphia's arena for the 76ers and the Flyers is a prime example. It's called the Wachovia Center, but Wells Fargo & Co. acquired Wachovia Corp. on Jan. 1. Five years ago, the arena was named after First Union, which bought Wachovia and took over the Wachovia name. Five years prior to that, it was named after CoreStates Bank, which First Union took over.

But even in good economic times, there can be dissent from fans who don't like their team's venue plastered with corporate branding. When it was time to replace the old Boston Garden, the new arena was called the Shawmut Center, then the FleetCenter, and finally TD Banknorth Garden.

"Purely personally, it annoys me as a Celtics fan," Sexton said.

But to Peroff, Citi Field appears to be a smart investment. He said $20 million a year for 20 years is "a drop in the bucket" when you consider Citigroup's revenues, which last year exceeded $52 billion. He pointed to the millions of people attending Mets games, watching the games on television, and those driving by the stadium every day.

Furthermore, some lawmakers' argument over the appropriateness of the deal does not even touch the issue of encouraging a major company to scrap a contract _ a bad precedent to set, Peroff said.

A company's image, however, is driven by many factors. And the people in charge of marketing at big banks using taxpayer money cannot operate as they did a few years ago, said Sexton.

He said it would make more sense if banks spent money on ads and efforts at the branch level to educate consumers about how to handle their finances in a downturn.

"Nowadays, managers need to be especially sensitive to the fact that there's a big chunk of the country that is really badly hurt," Sexton said.

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SEM and the Small Biz: Desperately Seeking Success, Part 1

By Erika Morphy E-Commerce Times 02/11/09 4:00 AM PT Small businesses no longer have to agonize over whether the potential returns of a search engine marketing campaign merit the investment. Low-cost -- or even free -- analytics tools tell the story, allowing them to assess a campaign's effectiveness and adjust it on the fly to achieve stronger results.

For a long time, small businesses were reluctant to embrace the latest in search engine marketing and other online advertising tactics. The SEM industry was unable to deliver to this group of typically local-interest, cost-conscious companies what they wanted the most: a means to assess how their investments were performing.

"Small businesses are a skeptical bunch. For years, they relied on the Yellow Pages for their traffic," David Glaubke, director of corporate communications with ReachLocal, told the E-Commerce Times. More than any other constituency using online advertising and marketing, he said, small businesses want to see progress quantified. The ability to change on a dime if a campaign is not working is another requirement.

These needs can now be met, thanks to a new generation of free or low-cost technologies that can accurately measure performance Error! Hyperlink reference not valid.and then tweak campaigns for improvements. Indeed, the latest tools are unlike any that have been available to SMBs before, Wendy Pearson, senior director of marketing and communications at Verio, told the E-Commerce Times.

At the same time, small businesses have closely watched their larger counterparts use comparable tools, and they have learned from their strategic mistakes and successes.

"SMBs are finding that it is a new era for search engine marketing for them," Pearson said.

Google Reigns Not surprisingly, many of the new tools for campaign tracking -- at least the ones that fit in most small business budgets -- come from Google (Nasdaq: GOOG) .

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24 Assuming that the business in question is selling its products or services online, Google AdWords and Google Analytics work together to allow business owners to track the number of sales that result from each ad or ad variation that they post on the Internet, Jonathan Stark, principal of Jonathan Stark Consulting, told the E-Commerce Times.

"Having near real-time feedback about which ad variations are being ignored, which are generating clicks, and which are resulting in sales allows business owners to make adjustments to advertising campaigns on the fly. This level of control is completely unprecedented and can have enormous implications to the bottom line," he observed.

It is the flexibility and granularity of these tools that allow users to develop very agile campaigns. For example, Google provides conversion-tracking code for Pay Per Click Adwords account holders, said Lutze Consulting CEO Heather Lutze, author of the newly released book, The FindAbility Formula: The Simple and Non-Technical Approach To Search Engine Marketing.

"It will tell you from this specific keyword that you received "X" amount of Actions or "Yes's" on your site: "Yes" I downloaded your white paper, "Yes" I viewed your video, or "Yes" I filled out your contact form," she told the E-Commerce Times.

Google Editor can be used to make changes based on performance. "This is a tool you download and keep on your computer," Lutze continued. "This syncs with your Google Adwords Pay Per Click account and let's you see what is working by keyword, ad text and conversions."

There are other free options as well. "My agency loves Website Grader to see search scores," Lorrie Thomas, principal of Lorrie Thomas Web Market, told the E-Commerce Times. "It is a nifty, nerdy tool that we can plug in to clients' Web sites. It gives you a good idea of the baseline and, from there, how you can improve performance. It shows them 'here is where you are right now,' and 'this is where you can go.'"

From Here to There The discussion about where a company is right now in its marketing campaign -- if anywhere -- should take place before any choice of tools is made, Thomas said. "There are a number of areas a company needs to examine and make decisions about, before it launches on any systematic campaign."

The first task is to determine what a customer is actually worth to your business -before you set about spending money on acquiring it, Eric Karson, associate professor of marketing and business law at Villanova University, told the ECommerce Times.

"Let's face it. For a product like a regular contract service -- such as pest treatments, utilities, housekeeping -- one customer provides a pretty steady income stream, and it may be worth it to spend a lot to get these customers," he suggested.

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25 "Companies like Amazon (Nasdaq: AMZN) and E*Trade (NYSE: ET) , or banks and credit cards, can spend a lot -- upwards of $50 to $100 -- to acquire one customer, as that customer will pay that back over time."

Indeed, one of the most-asked questions is what is the "right" amount to spend to acquire a customer, Verio's Pearson said. "You can't answer until you know how much that potential customer is worth to you. Once you have that answer in place, you can move forward in any number of directions."

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Posted on Tue, Feb. 24, 2009

Archdiocese outlines $200 million capital campaign

By David O'Reilly Inquirer Staff Writer While acknowledging that the depressed economy is "cause for concern," Cardinal Justin Rigali yesterday unveiled a $200 million capital campaign for the Roman Catholic Archdiocese of Philadelphia.

"Some may say this is not a good time," he said at a news conference at St. Barnabas Parish in Southeast Philadelphia. "But the needs of the archdiocese cannot wait for the future."

Called "Heritage of Faith - Vision of Hope," the drive seeks to raise $70 million directly for parish needs, with the rest for schools and tuition assistance, improvements to the Cathedral Basilica of SS. Peter and Paul and St. Charles Borromeo Seminary, and support of retired clergy and the archdiocese's broad array of human services.

Rigali said he decided to go ahead with the campaign in light of a very positive response last year to "pilot" fund drives in 12 parishes, and because of the high level of giving by donors prior to yesterday's announcement.

The donors and pilot parishes have raised $43 million in pledges and gifts, the cardinal said, adding that he was "confident this campaign will succeed."

Some dioceses elsewhere are not so confident, said professor Charles Zech, director of the Center for the Study of Church Management at Villanova University.

The Dioceses of Marquette, Mich., and Davenport, Iowa, recently decided to postpone capital campaigns in light of the economic downturn, according to Zech, who teaches economics and statistics. In the Archdiocese of Milwaukee, he said, only 20 of 47 parishes met their goals in an early phase of its capital campaign.

"More power to them if they can pull it off," Zech said of the Philadelphia effort. "They couldn't have picked a worse time."

Launched in September, the campaign's pilot phase did show broadly positive results.

Of the dozen parishes, seven raised pledges at least 10 percent above the assessments set by the archdiocese. Two received pledges 35 percent and 64 percent above their goals.

Msgr. Francis Beach, chairman of the priests' advisory committee, said the pilot parishes were chosen because they were geographically and demographically representative of the whole.

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27 Founded in 1808, the archdiocese counts about 1.46 million baptized Catholics in Philadelphia and the four Pennsylvania suburban counties. Its 269 parishes serve about 415,000 Catholic households.

Auxiliary Bishop Joseph McFadden said at the news conference that 35 percent of the amount each parish raises would remain in that parish. Parishes that exceed their assessments will keep 65 percent of that surplus.

If it meets its goals, the campaign will provide: $10 million for the support of poor parishes. $50 million for schools, including "seed money" for the construction of two new high schools in Bucks and Montgomery Counties, with the remainder used as tuition endowments to assist elementary school students and youngsters in five special education schools. $25 million for renovations at the 150-year-old Cathedral Basilica in Center City, including repairs to the roof and its brownstone exterior. $20 million for tuition assistance for seminarians and for improvements to the seminary in Wynnewood, which serves 31 dioceses, including Philadelphia. $15 million to expand the priests' pension fund and renovate Villa St. Joseph, the priests' retirement home in Darby. $10 million to expand services provide by Catholic Social Services, Catholic Health Care Services, and the Nutritional Development Services of the archdiocese, which serve area residents of all faiths.

Even if the capital campaign meets its goals, McFadden said, the archdiocese could choose to close some parishes or schools in the years ahead.

Zech, the Villanova economist, noted that the archdiocese last released a financial statement in 2003, soon after Rigali became archbishop here. "How can they justify this [capital campaign] when they won't tell us how they spend what they already take in?" Zech asked.

McFadden said yesterday that the archdiocese would release a financial statement this year, and that it had created a nonprofit corporation to manage the flow of funds into and from the campaign, which he said would be "transparent."

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IHE's Connectathon shows interoperability 'coming of age' February 27, 2009 | John Andrews, Contributing writer

CHICAGO – After 10 years, the North American Connectathon is hitting an impressive stride, Integrating the Healthcare Enterprise organizers say. As the size of the IHE interoperability demonstration continues to grow, this year's participants won the admiration of event leaders because they were "confident, wellprepared and cooperative."

The 2009 Connectathon Conference on Feb. 24 featured 350 engineers and technical support staff from 72 vendors and three universities sitting shoulder-to-shoulder at long tables in a basement show hall of the Chicago Hyatt Regency. The interoperability demonstration tested more than 170 profiles, compared to just one the first year and 12 in 2003.

"The vendors were better prepared this year - this group hit the ground running," observed Stephen Moore, demonstration coordinator and research assistant professor with the Mallinckrodt Institute of Radiology in St. Louis. "In previous years they had more questions about the network than the applications and that wasn't the case this year."

To be sure, "there is more confidence" this year, agreed Charles Parisot, manager of architecture and standards for GE Healthcare and board member for the Electronic Health Records Vendor Association.

"Tremendous progress has been made and it will only accelerate," he said. "This is the real coming of age for interoperability, the result of a lot of hard work."

IHE co-chairs Elliot Sloane and David Mendelson, MD, oversaw the proceedings. Sloane, assistant professor with the Villanova School of Business, used a cruise ship analogy to compare the Connectathon and the Interoperability Showcase at HIMSS09, April 4-8, in Chicago.

"The Connectathon is the 'coal room' tour while the Interoperability Showcase is the 'leisure deck,'" he said. More than half of the participating vendors - 49 - will take part in the Interoperability Showcase.

Among the things that have impressed Sloane the most about the Connectathon's progress is how the profiles have expanded to include medical devices such as infusion pumps and anesthesia monitors, along with what he calls "a spirit of cooperation" among competing vendors.

"The engineers and technical people from competing companies have forged relationships to the point where they have each others' cell phone numbers," he said.

Sloane stopped short of saying the heavy lifting has been done on making interoperability a reality for healthcare.

"Some heavy lifting has been done, but certainly not all," he said. "The foundation has been laid."

Mendelson, chief of clinical informatics and director of radiology information systems for Mount Sinai Medical Center in New York, observed that the progress could be measured in the type of tests being conducted.

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29 "It is very much real world now," he said. "It's about determining which profiles are useful in the real world and which ones may not be."

Demonstration docents Mike Nusbaum and Mike Glickman said the serious commitment by vendors is making a huge difference in moving the interoperability project forward.

"We're talking about tens of thousands of transactions and 11,200 engineer hours, equaling $1 million in time investment by vendors," said Nusbaum, IHE International board director and president of Victoria, BCbased M.H. Nusbaum & Associates.

Glickman, president of Rockville, MD-based Computer Network Architects, said the key to success is "a massive amount of testing - you can't do too much testing."

In recent years, the Connectathon has gone international, with demonstrations now held in Europe and Asia along with the North American event.

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Short-Sale Rule Undermined as Bernanke Backs Review (Update3)

By Edgar Ortega

March 4 (Bloomberg) -- The revival of Securities and Exchange Commission rules aimed at curbing speculators who seek to drive down stocks may be hindered by a report from the agency’s own economists.

Daniel Aromi and Cecilia Caglio, economists at the SEC in Washington, said in a December report to former Chairman Christopher Cox that the so-called uptick rule was less effective when needed most, during panics that drive prices down and volatility up.

Even with delays imposed by the curb, short sellers in a simulation executed trades 25 percent faster on average when stocks plunged than when prices were steady, according to the study.

“The uptick rule is not going to slow down the market that much,” said Michael Pagano, a finance professor at Villanova University in Villanova, Pennsylvania, who read the report. “The time when you’d want to see the uptick rule become more binding is exactly when you have high volatility, and particularly when you have large negative returns.”

Regulators are considering restrictions on speculators after the Standard & Poor’s 500 Index fell 53 percent in the 20 months since the uptick rule was eliminated. Mary Schapiro, who succeeded Cox, said in January during her confirmation hearings that examining the rule is “one of the things that I would be committed to doing very quickly.” Federal Reserve Chairman Ben S. Bernanke told Congress last week that the measure, removed after 69 years on the books, should be revisited.

‘Some Benefit’ “My sense is that it’s worth looking at, and I would say that to the new chairwoman if she asks me about it,” Bernanke told the House Financial Services Committee on Feb. 25.

The rule “might have had some benefit,” he said.

In a short sale, traders borrow stock and sell it, hoping to profit by replacing the shares at a lower price. The uptick rule required bearish traders to wait for a price increase in the stock they wanted to short, and prevented so-called bear raids where successive short sales drive prices down.

Members of Congress, New York-based banks Citigroup Inc. and Morgan Stanley, and Charles Schwab Corp. in San Francisco have blamed abusive short selling for exacerbating losses last year. The S&P 500 gained 2.4 percent today, rebounding from a 12-year low of 696.33 yesterday.

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31 Cox failed to convince a majority of SEC commissioners last year to reinstate the regulation or create a modified version that was easier for brokerages to implement. The agency eliminated the uptick rule after SEC and academic studies showed it didn’t work in markets dominated by electronic trading.

‘Psychologically Damaged’ NYSE Euronext Chief Executive Officer Duncan Niederauer said late yesterday that he supports bringing back the uptick rule.

“When markets are psychologically damaged like they are right now, I actually think it would go a long way to adding confidence,” he said at the Museum of American Finance in New York. “We at least owe the investing community an answer. No more rhetoric, no more maybes, just what are we going to do.”

The December SEC report examined the benefits of barring short sales unless they were done at prices at least 1 cent higher than the last trade. While more than 58 percent of short sales would be delayed or barred by such a requirement, the impact lessens in times of panics, according to the 28-page study. Short sellers would be able to execute as much as 57 percent more trades in certain stocks when the market slides, compared with times when prices are steady, the report shows.

Effective Ban The SEC also considered raising the threshold to as much as 5 cents. For increments of 4 cents or more, the uptick rule would effectively ban short sales, a policy counter to the agency’s position. In October, the SEC said short selling plays an “important role” by increasing liquidity, helping traders hedge other assets and curbing speculation.

A separate SEC analysis concluded that in September, when the S&P 500 lost 9.1 percent, short sales were more common during rallies than declines.

“We found that a short-sale price test would be most restrictive during periods with little volatility,” Aromi and Caglio wrote in the report. “Our results are inconsistent with the notion that, on a regular basis, episodes of extreme negative returns are the result of short selling activity.”

John Nester, a spokesman for the SEC, said that while Schapiro plans to review the issue, there is no specific proposal under consideration. Aromi didn’t return a call seeking comment, and Caglio referred questions to Nester. Fed spokeswoman Michelle Smith didn’t respond to a request for comment.

Prudent Bear Fund David Tice, who sold his short-selling fund to Pittsburgh- based Federated Investors Inc. last year, said he wouldn’t be hampered if the uptick rule were brought back. The $1.28 Villanova School of Business 2009 Media Report

32 billion Federated Prudent Bear Fund has returned 17 percent in 2009 after gaining 27 percent in 2008.

“We functioned just fine when the uptick rule existed before and, in fact, we wouldn’t mind if the uptick rule was reinstated,” he told Bloomberg Television today.

Regulators from Washington to London last year cracked down on short selling. In the U.K., a Financial Services Authority prohibition on shorting 34 financial companies expired in January. The SEC eliminated a similar measure Oct. 9 after exchange data showed the prohibition fueled volatility and made it more costly to trade.

“What we have right now is a banking and credit crisis, and the equity markets were functioning quite well before they started tampering with short sales,” said Stephen J. Nelson, a lawyer in White Plains, New York, who represents brokerages and investment advisers. “There is a lot to do with financial service regulation, which is going to involve thousands of issues that are much more important than an uptick rule.”

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Amid Economic Carnage, Business Schools Mull Fixes In and outside the classroom, students and professors are debating the causes of, and cures for, the economic crisis.

Wanted: ethics and jobs

By Francesca Di Meglio Until recently, the world's business schools have been largely sheltered from the gale force winds that have buffeted the global economy, but that's starting to change.

In and out of the classroom, business school professors and their students are struggling to make intellectual sense of a crisis few of them anticipated. Workable solutions remain elusive, but ideas are plentiful, particularly about the causes of the crisis—a perfect storm that saw the simultaneous collapse of the banking system, the bursting of the housing bubble, and the rapid evaporation of trillions of dollars in shareholder wealth.

At the same time, students themselves are confronting a stark new economic reality of their own. Burdened with debt and entering a market for MBA talent that's getting grimmer by the day, many are questioning their reasons for getting an MBA. "There's no way the economic crisis doesn't make every single person rethink what he or she wants to do and whether it's a good time to do it," says Guy Turner, a first-year student at the University of Chicago Booth School of Business.

A vibrant crisis blog at MIT Although the official history of this crisis will be written by economists many years from now, what's happening on business school campuses today—in classrooms, faculty offices, and hurried campus walks—amounts to a rough first draft. For many business school professors the quest for causes is by far the most appealing aspect of the crisis.

"The most interesting conversation is trying to sort out the reasons, the why of it," says Susan Chaplinsky, professor of Business Administration at University of Virginia Darden School of Business. "What safeguard wasn't tripped and why was there this 'group' thinking?"

Causes of the crisis were a topic students grappled with in a course offered last fall by Simon Johnson, professor of entrepreneurship and global economics at Massachusetts Institute of Technology's Sloan School of Management. About 180 students weighed in Villanova School of Business 2009 Media Report

34 on the crisis by posting on Johnson's blog at various points in the semester, and the discussion has continued there.

Some from outside the course have joined the discussion. A roaring debate last fall as to whether automakers should be bailed out helped convince Johnson that a loan was a good idea, he says. His site gets about 20,000 to 25,000 page views per day. One of its most popular pages is the section Financial Crisis for Beginners, which explains mortgagebacked securities, credit default swaps, and other technical terms in the news. Johnson says students—and others—appreciate the ongoing nature of this inquiry. The class really never stops because people can always log on and find answers to questions or state opinions as the news unfolds. "I have a big responsibility to help with the discussion and thinking, not just to prevent the next crisis but to help us get out of this one," says Johnson.

Spotlight on CEOs For many professors and students taking part in business school debates, the causes of the crisis are both institutional and personal: absurd risk taking, irrational decision making, and CEO pay packages that encourage both. Lack of personal responsibility and ethical lapses on the part of top executives are two others that come up frequently.

In fact, if there is one positive to come out of this turmoil, it would be a healthy skepticism on the part of business students—MBAs and undergrads alike—concerning the motives and actions of CEOs, the people they aspire to be. Chicago's Guy Turner says he understands that CEOs need to be paid well to make them significant shareholders who will act in the interest of shareholders, but he wonders how much is too much: "CEOs acted in the interest of shareholders with risky loans, but the problem was when you added it up across the whole economy, it fell apart."

While finger-pointing is easy, solutions are not. There seems to be general agreement that getting the nation's banks back on their feet is the key to resolving the crisis, but there's no broad agreement among professors or students about whether companies like American International Group or the Big Three automakers deserve bailouts, whether the stimulus package will work, and whether the country needs more or less regulation to prevent a further financial apocalypse.

Obama: a case study in change The search for a solution is proceeding apace. At Northeastern College of Business in Boston, one student proposed a plan to have the government provide mortgage assistance to individuals for a period of two years, arguing that it would cost less than bailing out the banks while giving the markets time to recuperate. And at the University of Pennsylvania's Wharton School, research on the most effective way to stimulate the economy is finding that stimulus checks are less than ideal because families typically use the cash to pay off debt rather than make new purchases. Reducing payroll taxes paid by employers might better stimulate the economy by trimming payroll costs and making it Villanova School of Business 2009 Media Report

35 easier for employers to create jobs, says Mauro Guillen, director of the Lauder Institute at Wharton.

As they struggle to make sense of the crisis, some professors are taking advantage of a teachable moment by using it to hammer home important management lessons. David Bowen, a professor of management at Thunderbird School of Global Management, is offering a course with Professor Caren Siehl on how to lead change, using President Barack Obama as a live case study. In the class, students learn an eight-step model of change by watching Obama—whose inauguration coincided with the semester's start— handle the economic crisis, from creating a shared sense of urgency to getting his stimulus package passed.

For business school students, the crisis exists in both the life of the mind and in real life.

Many have been touched personally by the downturn, whether it's a stalled job search or troubles in the housing market. To calm their jittery nerves, business schools are pulling out all the stops.

Jobs are the biggest concern At a recent town hall meeting at Darden, Dean Robert Bruner answered questions from students about how the crisis would affect them and their careers. His message, says Christine Bohle, a second-year student at Darden, was that students could continue to dream big about their careers but they might have to find more creative avenues for fulfilling their goals. Laura Pearson, a first-year MBA student at Darden, added that faculty are not sugar-coating the problems students will face. "It's been an honest discussion of what we're going through, how long it might last, the impact, and how to find solutions," she said.

Students, who may have invested more than $100,000 in their education, are most concerned about how long the crisis will last and how they will find jobs. With the economy shedding more than 650,000 positions in February, unemployment hitting a 25year high of 8.1%, on-campus MBA recruiting taking a nosedive, and some of the biggest MBA employers on Wall Street having ceased to exist, they have good reason to worry.

Career services teams at business schools across the country geared up for this crisis in the fall. They sent S.O.S. messages to alumni asking them to provide leads for students currently seeking jobs, helped students retool their resumes, and shifted their strategies.

Some schools are asking professors to help their finance students pursue careers outside of Wall Street. At the Villanova School of Business, John Kozup, associate professor of marketing and director of the Center for Marketing and Public Policy Research, created an undergraduate class that addressed the crisis in real time. Taught by 10 different professors and distinguished speakers from a variety of businesses, the course also has students learning about job opportunities in the public sector, one of the few areas where demand for MBAs is growing.

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A memorable Ethics lesson?

"One of the most valuable things I have gotten out of the bailout course is the notion that Washington, D.C. is the new New York City," writes Sameer Khosla, a senior at Villanova, in an e-mail. "Many of the speakers we have had so far in our class have strong ties to D.C. and have provided us with a wealth of information about a rapidly growing number of opportunities that are being created at places like the Federal Reserve and the Securities and Exchange Commission in an effort to help revamp the banking industry and put new and improved regulations in place to help prevent another financial disaster from occurring."

For students about to graduate, taking personal responsibility for worldwide economic calamity may be the most difficult and important lesson. It's already causing a great deal of soul-searching. Professors hope it's a lesson that sticks, and that this unfortunate chapter in the nation's economic history isn't soon repeated. "I hope students' memories aren't short," says Villanova's Kozup. "I hope they remember what happens if they allow ethical lapses to happen again."

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B-Schools and the 'Almighty Dollar' A business school dean argues that students should be taught the societal value of business, not profit at any cost

By James Danko In his $3.6 trillion budget proposal, President Barack Obama put forth his spending agenda for the next several years. The agenda, unlike those from Presidents of years' past, maintains a salient theme rooted in ethics and moral obligations. In fact, the proposal itself is aptly entitled, "A New Era of Responsibility."

As I listened to the President outline his spending plans, one line in particular caught my attention: "For decades, too many on Wall Street threw caution to the wind, chased profits with blind optimism and little regard for serious risks—and with even less regard for the public good."

As a business school dean, it was impossible to ignore the personal responsibility this statement implied. As someone who has been in the b-school industry for more than a decade at some of the world's leading business schools, I was involved in helping to mold and produce some of the very students who the President casts as having little regard for the public good.

While I suggest an appropriate level of caution in accepting President Obama's statement at face value, he is on to something: Business educators must acknowledge some accountability for the current economic conditions.

Radical Change Needed The problem is that the education of ethics is not pervasive enough in the business school industry. Corporate social responsibility, ethics, and accountability are all buzzwords that have grown increasingly popular in the post-Enron era, but the reality is that the concepts rarely permeate business school curricula.

Our business students cannot merely spend a minimal period of time in a business class touching on ethics and then be done with it. Rather, our responsibility as business educators is to influence behavior over the long term. This requires a deeper, broader approach to ethics education and a holistic understanding of what corporate social responsibility means in the context of business and society. To do this, business education is in need of a structural makeover.

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38 Just as President Obama intends to make changes in Washington, b-schools are in dire need of radical change. Nearly all undergraduate business curricula in the nation were built upon an educational model that grew out of the 1950s. While this approach was acceptable within a U.S.-centric manufacturing economy, it is no longer suitable within the global knowledge-and-experience economy that students face today.

Teaching the Bigger View As part of a completely new style of teaching that we've adopted at the Villanova School of Business, students are rigorously challenged in class and presented with modern-day business quandaries. Their reasoning is pushed to the limit to make them come to terms with the full implications of their decision-making instead of a simple, superficial context.

The flagship of the new curriculum is a new, team-taught freshmen course—Business Dynamics—designed around these issues. The year-long, 6-credit course emphasizes the overarching purpose of business within society. The course highlights the skills of effective leaders and underscores innovation and openness to change as fundamental business and personal skills. The rationale for the new Business Dynamics course is simple: Once students understand the overarching purpose of business in society—and start to view challenges in this context—they are on the right track. Functional knowledge not only then makes sense, it serves a larger purpose.

Current conditions and the direction in which President Obama hopes to take the country show that we have to be more serious about these issues in business and higher education.

Our students need to understand that as a society, we can't sell out our future for some short-term profits on a balance sheet or short-term gains by some individuals.

In the end, we're not here to change unethical people. That's not our role as educators. But we do have a responsibility to educate young people on the societal value of business, not just the pursuit of the almighty dollar.

Danko is dean of the Villanova School of Business. He has held leadership positions at several top business schools including those at the University of Michigan and Dartmouth College.

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Friday, March 13, 2009

Teaching the bailout: A moving target Philadelphia Business Journal - by G.W. Miller III Special to the Business Journal

G.W. Miller III

Villanova professor John Pearce speaking to students enrolled in Villanova’s new course, 'Understanding the Global Marketplace in a Post-Bailout Economy.'

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Professor John Pearce strolled around the classroom at Villanova University and posed a question to his 50 rapt students.

“If good business practices two years ago are still good practices today, why are we here?” Pearce bellowed, referring to the tenuous state of the global economy.

After a brief moment of silence, he continued.

“The game has not changed,” he said. “But the way we keep score looks a little different now.”

With a new presidential administration in office, a shift in political power, a newly implemented economic stimulus package, changing business regulations and tax structures, and overall global economic uncertainty, the business of doing business is evolving.

To address the needs of students preparing to enter the working world during this tumultuous time, Villanova’s school of business created a multidisciplinary, real-time study of the economic collapse and the way businesses and governments are reacting.

The three-credit course, “Understanding the Global Marketplace in a Post-Bailout Economy,” features 12 of the university’s faculty members collaborating with area business leaders to discuss issues ranging from identifying who’s at fault for the current crisis, to growing an economy in the 21st century.

“There’s been so much going on in this post-economic-turmoil world and there are many implications to students,” said James Danko, dean of the Villanova School of

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40 Business. “We’re not going to pretend to know the answers even six months from now. But we’re bringing forth the issues that aren’t stale, that aren’t 10 or 12 years old. These are very much new issues that are changing every day.”

The idea for the course was hatched in October when John Kozup, associate professor of marketing and business law, and director of the Center for Marketing & Public Policy Research, met with a group of advisers. Kozup took the idea to the faculty who crafted the course within two weeks, in time for spring registration.

“The class filled up in less than one day,” said Kozup, who is the primary instructor for the class. “We’ve got another 25 or 30 trying to get in.”

Professors immediately volunteered to participate. Guests stepped up quickly.

Among the visitors expected are Herb Taylor, vice president of the Federal Reserve Bank of Philadelphia; Larry McWilliams, senior vice president of Campbell Soup Co., and Vern Farnsworth, a senior adviser for the National Foundation for Debt Management.

“There are going to be fundamental changes in finance, financial services, food regulations, media, everything,” said Kozup. “We have a diverse group of folks coming in to talk about real-time training and the challenges facing businesses.”

Historically, academia has waited for such unusual circumstances — like 9/11, the Enron and WorldCom scandals, and the savings-and-loan crisis of the ’80s — to play out before courses are built around them, said John Fernandes, president and CEO of the Association to Advance Collegiate Schools of Business.

“When something disruptive happens, schools tend to take the learning experiences of the occurrence and weave it into the curriculum as it applies to existing courses,” said Fernandes. “You don’t see courses built as sort of a quick fix very often.”

The mortgage crisis, financial collapse and the bailout are in steady discussion in area business programs but few of the region’s universities have designed new courses around the subject.

The Wharton School at the University of Pennsylvania offered a half-credit course called “The Economic and Financial Crisis: Causes, Consequences, and Policy Options,” which follows a similar, multi-disciplinary approach involving numerous faculty members. Lehigh University offered a one-credit, abbreviated course during the fall semester titled, “Managing the Financial Crisis.”

“These types of classes will be a lot of fun for the students and probably, the students will be a lot wiser,” Fernandes said. “They’ll see some of the difficulties that

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41 governments have in restarting business. The downside is, who’s to know what’s right? We’ll know in a couple of years.”

Solutions aside, the class discussions create a stimulating atmosphere, students report.

“As a student, you’re looking for answers right now,” said Michael Cali, a Villanova senior finance and marketing major from Marlboro, N.J. “You read the papers and there are conflicting answers. Even the teachers are asking just as many questions as the students. It’s an exciting time.”

Sameer Khosla, a senior double majoring in finance and marketing and minoring in international business, said that during job interviews, potential employers constantly ask for opinions on the contemporary business landscape.

“Being exposed to speakers who share their own understanding and outlook on the future of the global marketplace will surely help me to define my own perspective,” said Khosla, a Moorestown, N.J., native who interned at Goldman Sachs last summer.

The course, Kozup said, is intended to teach students to be entrepreneurial, to recognize trends and identify opportunities.

“The route to getting a job has changed from going north to New York to going south to DC,” said Colleen Furman, a senior from Akron, Ohio. “The jobs are still there, just in a different capacity and location.”

Furman said that the class has been completely different from the others she has taken — a different instructor every week, various guests, and a syllabus that changes as events unfold.

“As a senior in the business school,” she added, “I was thrilled to have the opportunity to take a truly relevant class that evolves in congruence with the economy and on a daily basis.”

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Leadership

It's Time For Radical Change In Business Education James Danko 03.25.09, 6:30 PM ET Ever since the Enron debacle, business schools across the nation have been trying to incorporate ethics into their programs more effectively at both the undergraduate and graduate levels, through a variety of improvements.

Well, we've now learned something: It hasn't worked. Today's economic crisis underscores the fact that although American business and business education have symbiotically thrived over the past century, their relationship is fundamentally flawed. Superficial improvements to business school programs, although genuinely well-meaning, are no longer enough. Radical change--in the form of reinventing, reframing and rebuilding the education of our future business leaders--is now necessary.

As we recognize our role in the deterioration of business institutions on Wall Street, on Main Street and in Detroit, we must ask ourselves: How could we have done a better job of preparing our students? And, more important: Where do we go from here?

Although we can't serve as parents, instilling foundational value systems into our young people through their coursework, we can broaden their perspectives and positively influence their behavior over the long term. Doing this within business curricula requires a highly integrated, creative and agile approach. It requires us to provide our students with a holistic understanding of ethics, corporate social responsibility and sustainability, within the context of global business and society.

Most American business curricula were built on an educational model that grew up in the 1950s.

This model divides learning into disparate functional areas and, more recently, combines them with overarching soft skills like communication and teamwork. It's an approach that was acceptable in a U.S.-centric manufacturing economy, but it's no longer appropriate. The enormity of the challenges our young people now face--the financial crisis, intractable geopolitical and environmental problems, a knowledge-and-experience economy that changes every day and technology that changes every minute--obligate us to provide a very different educational experience.

As part of the new approach we've adopted at the Villanova School of Business in an effort to meet this obligation, we've reinvented the undergraduate curriculum. We have a new teamtaught, year-long, flagship course, Business Dynamics, that teaches first-year students about the overarching purpose of business within society. The rationale is simple: Once students understand the big picture of business and its effect on the welfare of people worldwide--and they start to view every challenge and question in that context--they are on the right track. Then the functional knowledge they gain not only makes more sense, it serves a larger purpose. They begin to understand that they can't sell out the long-term public good for short-term profit.

There are three things to bear in mind when considering this entrepreneurial approach. First, there is no evidence yet to suggest that Villanova is doing this right, or that this is the particular avenue that other business schools should take. We introduced the new curriculum in the fall of

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43 2008, and we will track our students' learning experiences and outcomes. We plan to openly share the good, the bad and the unknown as we proceed. But one thing is certain: It's a thoughtfully planned, dramatic change at a time when such change is needed. And we are optimistic.

Second, we're implementing this change with our eyes wide open. We know that business education doesn't exist in a vacuum. Our graduates must go on to succeed in a competitive world in which the very pressures that have caused the downfall of thousands of companies and individuals will still exist. We have addressed this reality in the content and design of our new curriculum. We know that our graduates will have an obligation to restructure the practice of business for the welfare (and survival) of the global community--just as schools now have an obligation to restructure business education.

Third, Villanova is by no means the only--or the first--business school to implement such sweeping curricular change; it's one of a smattering of schools that have done so. There are pockets of brilliant change throughout business education, both within the U.S. and beyond, and some of our best schools have been ahead of the curve for years. They've been genuinely successful innovators. Unfortunately, they're in the minority.

Just as we need to reassess the business models that have landed us in our current predicament, we need to reassess the manner in which business schools are operated. The concept of students as customers, for example, is anathema to many school leaders and faculty members nationwide. But resistance to this concept is something we can no longer afford. Even if we only define them as such when they're outside of the classroom, the reality is that our students are our customers--and the public is too. No matter what programs our schools offer, or what markets we are serving, we are selling our prospective students, parents and the public at large a product: the preparation of students for successful, responsible careers that will contribute to the greater good.

Faculty members are the heart and soul of every business school. Their talent drives every student's learning experience, and their research enriches and advances the global practice of business. Today's financial crisis has proved, however, that there is no longer room (or time) for intra-academic quibbles over turf or departments or for clinging to historical practices that may not be optimally suited to the needs of incoming students. Business schools need to be as innovative, agile and creative as possible to provide students with the best education possible.

We've reached a turning point in our cultural and economic history. Fundamental change to American institutions and industries has become unavoidable. Business schools have a unique opportunity to contribute to this change in an important and positive way--by enabling young people to develop as responsible, ethical leaders who can build a new model of business success in society. Their ideal of business will look dramatically different from today's. It will value solid, long-term benefits to humankind in addition to shareholder profits, and it will represent a departure from the fallen house of cards we have all helped to create, both as business educators and practitioners, over the last several decades.

James Danko, a former entrepreneur, is dean of the Villanova School of Business. He has held leadership positions at several top business schools, including those at the University of Michigan and Dartmouth College.

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Villanova offers M.B.A. classes in Philadelphia

By Miriam Hill INQUIRER STAFF WRITER Businesspeople who want to brush up on their skills without leaving Center City have a new place to go.

Today, Villanova University said it would expand its part-time M.B.A. program to Center City starting this fall.

The suburban-to-urban expansion is aimed at luring city workers and residents.

"It's for working professionals who want to partake in their M.B.A. in the evening, and as we started to look at where we pull students from, we thought we'd have better traction in Center City," said Robert Bonner, associate dean at Villanova's business school.

The Center City location will be easier for students in South Jersey. Some of them commute for more than an hour to Villanova now, said Rachel Garonzik, Villanova's director of graduate recruitment and marketing.

Villanova's Philadelphia classes will come cloaked in big-city attitude.

Classrooms will be in The United Plaza Building at 30 S. 17th St. in rooms run by The Hub, a company that provides space for business meetings.

At that location, students will be able to use free wireless Internet in a space with city views and funky features, including a wall-size world map that students can write on as they chart their courses to global domination.

"The Hub has great venues. Their exclusive caterer is Stephen Starr, for example, so it kind of fits with the reputation of Villanova as a high-end program," Bonner said.

The school also chose The Hub believing its open, sleek designs would encourage free thinking.

"The idea is to create this innovative space so that if you are there, it would help you think a little differently," Garonzik said.

About 500 students are enrolled in the two-year, part-time M.B.A. program. Once this expansion is off the ground, Villanova hopes to add more graduate business programs in the city. Bonner said enrollment continued to grow strongly, despite the economy.

The Center City location also will allow Villanova to compete directly with other universities with part-time master's of business administration programs in the city, including Drexel and Temple Universities.

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45 Many part-time programs have more than one location. Temple, for example, offers its part-time M.B.A. at its city campus and in Fort Washington. St. Joseph's University offers classes on its campus and at satellites at Ursinus College and in Lafayette Hill.

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Today’s tip comes from Dr. James Klingler. Dr. Klingler is a Professor at the Villanova School of Business. Recently his teaching has focused on entrepreneurship; specifically in the areas of organizational culture and change, as well as entrepreneurial ethics.

Often new ventures will live or die because of one critical “must have” capability (e.g., a machine that actually works, a killer web site, marketing ability to reach a difficult market.)

I call these game-breakers, and game-breaker positions.

If you don’t have it covered by your own set of skills (be truthful now!) you must get it from your team. Don’t skimp on the people you bring into these positions. Get the most experienced, proven people you can attract, and find a way for them to earn an equity stake so they will share in the venture’s success. B level players rarely succeed in positions that demand A level capabilities. Young entrepreneurs are often wary of bringing in “gray hair” — seasoned veterans – and often use friends. These entrepreneurs often end up reinventing the wheel and making avoidable mistakes – often lethal ones.

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•

April 24, 2009, 3:45 PM ET

Crying Wolf: Bank Systemic Risk Edition “Systemic risk” has been the gift that keeps on giving in the financial-system bailouts, the motivation the government has most often cited for controversial moves ranging from forcing Bear Stearns into the arms of J.P. Morgan Chase to rescuing American International Group to forcing Bank of America to buy Merrill Lynch.

A new study from the Villanova School of Business shows that the government might want to go easy on sounding the systemic risk tocsin, as investors become inured to dire warnings if they are repeated.

The study from Villanova School of Business Professors Mike Pagano and Shawn Strother looked at stock market reactions to post 9/11 changes in the “terror alert status” for the country as a whole and for particular regions.

Pagano and Strother examined the 16 times that the U.S. terror alert status changed from 2002 to 2006, and compared the trading on alert-change days and nonalert-change days to the Options Exchange Volatility Index, or VIX, the so-called fear gauge that measures volatility in the S&P 500. Pagano and Strother found that the early terror-alert changes increased trading volatility in the equity markets for 10 days after the alert, but that after a while, alert changes stopped moving the markets.

“This could be due to two possible reasons: that investors and traders think the Office of Homeland Security is “crying wolf” and began to ignore the warnings, or that the terror threats became less informative about the nature of the threat, warranting a collective shrug from the markets,” the research shows.

Pagano explained the results to Deal Journal this way: “There was shock after 9/11, but after that people became accustomed to taking their shoes off at the airport.”

Interestingly, Pagano and Strother found that alert changes were accompanied by increased trading by “informed” market participants such as hedge funds. “They seem to become more active when these decisions are made,” Pagano said. “This kind of turbulence allowed them to exploit the chaos going on around them.”

The last alert change was in 2006, when the U.S. alert status was lowered to “yellow.”

(The airline industry appears to be on permanent “orange” alert, according to Pagano.)

Deal Journal asked if Pagano felt the findings were applicable to the shocks of the credit crisis and the sword of systemic risk hanging over the country. “You can think of the crisis we had as a shock to the system, just like 9/11 events were a shock to the system,” he said, though he added that he hasn’t researched the links to the credit crisis.

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Market moved by terror alerts Changes in terror alert levels by the U.S. Department of Homeland Security sway the stock market, but not always in expected ways, according to a new academic study co-written

by Villanova University finance professor Michael S. Pagano.

The article measured how stock indices and the CBOE Volatility Index (VIX) reacted to 16 terror alert changes (i.e., orange to red) from 2002 to 2006. Airline stocks fell when the U.S. government raised warnings, but the S&P 500 gained ground. Most importantly, the VIX climbed after such warnings as traders paid more for S&P 500 options the following 10 days, a pattern that has weakened in recent years.

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By David O'Reilly Inquirer Staff Writer Shortly after 11 yesterday morning, Bishop Joseph Galante stood over Lawrence Polansky and John Rossi as the two prostrated themselves before the altar of St. Peter Celestine Church in Cherry Hill.

"Hear us, Lord, our God," Galante prayed, "and pour out on these servants of yours the blessing of the Holy Spirit."

Moments later, he lay hands on their heads, and called on both to stand as the newest priests in the Roman Catholic Diocese of Camden.

Ordinations are joyous moments in the life of a diocese, and yesterday's were no exception.

Yet the sight of only two new priests was a jarring contrast to an era - one that flourished as recently as the 1960s - when the Camden Diocese ordained 10 to 20 each year.

Driven in part by a rapidly dwindling priest supply, Galante is weeks away from a seismic parish reorganization. This summer he expects to issue the first decrees that will merge nearly half the parishes in the six-county diocese.

Over the next year, the number of parishes will be reduced from 124 to 68, with 40 additional churches remaining as sites for occasional Masses and other liturgies.

"I couldn't leave it to my successors," Galante, 70, said in an interview Wednesday. "It would have been irresponsible."

Even after five years in Camden, he acknowledged, he misses the friends he made during his 12 years as a bishop in the Texas dioceses of Beaumont, San Antonio, and Dallas. But he was "happily surprised" when Pope John Paul II appointed him here, across the river from the Archdiocese of Philadelphia, where he grew up and where three of his brothers live.

Installed April 30, 2004, as Camden's seventh diocesan bishop, Galante said he soon realized that 41 of his parishes "could not pay their basic bills," such as utilities, insurance, and health benefits.

He also inherited a diocese with the steepest decline in priest population of any in the nation: 43 percent since 1995.

The trend shows no signs of abating. By 2015, death and retirement are expected to nearly halve the number of active diocesan priests, from 162 to 85. And with nearly 400,000 of the 500,000 Catholics in his diocese skipping regular Sunday Mass and sacraments, "something had to be done," he said. "The situation, if not acute, was immediate."

Galante's radical parish reorganization, announced April 3, 2008, launched protest demonstrations in all six counties - Atlantic, Camden, Cape May, Cumberland, Gloucester, and Salem - and at least a half-dozen formal appeals to the Vatican.

But as shocking as Galante's sweeping approach had seemed a year ago, it already is "the model for other Catholic dioceses," said Charles Zech, professor of economics at Villanova University and an authority on church finance.

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51 He described Galante last week as the "poster boy for parish closings."

A lot of other bishops "are recognizing you've got to do it the way Galante did, rather than drag it out over years," said Zech, author of a new book on Catholic parish reorganization, Listening to the People of God, with Robert Miller, director of planning for the Philadelphia Archdiocese.

"It's painful," Zech said, "but dragging it out is worse."

In an independent survey of priests in the diocese last year, 72 percent supported Galante's efforts, and 19 percent said they were "neutral."

Still, interviews with lay Catholics in South Jersey suggest Galante's vision of fewer but larger, more "vibrant" parishes - with the resources to become inviting spiritual and social hubs for families - has not yet won over his flock.

"He's got to do what he's got to do," Joe Scott, 52, of Audubon, said last week.

Scott described himself as an "occasional" Catholic who knew little about Galante's motives. "It's all about personnel and economics. He doesn't have enough priests," he said. But the imminent parish closings "have a lot of people, especially the older people, really upset."

Joyce Buckley, 56, a Barrington homemaker, said that "most people don't know" what Galante hopes to achieve - herself included. She described herself as a "holiday Catholic" who had not studied the plan.

Maureen Brand, 48, a veterinary technician who goes to Sunday Mass "pretty regularly" at St. Rose of Lima parish in Haddon Heights, said she was "not up to date" on the bishop's broad objectives, but called the closings a "shame."

"We need prayer and religion," Brand said.

Harry Gerald Whitaker, a union carpenter who attends Sunday Mass regularly at St. Francis de Sales in Barrington - "I feel guilty if I don't" - acknowledged he didn't know Galante's vision for renewed parish life.

But something, he asserted, needs fixing.

"At the 8 o'clock Mass, there's maybe 14, 15 people," said Whitaker, 57. "Go back 20 years, and if you got there late, you couldn't find a seat."

Yet he said he goes to Mass more out of duty than engagement. "Mass every day is the same," he said. "It's not exciting."

Standing in the parking lot of Sacred Heart School at St. Francis de Sales, Megan O'Donnell, 43, said she "gets" why Galante is closing parishes, including hers.

"If you attached a string to this parish and drew a circle, you'd intersect a half-dozen other parishes" in neighboring towns, she said, naming a few. "I understand that.

"But that said, you've got the 'heart' problem: We love St. Francis," said O'Donnell, whose four children range in age from 7 to 17.

Although the brick church will survive as a "secondary" worship site, its parish boundaries will soon dissolve into a new entity centered on Mary Mother of the Church parish in Bellmawr. The new boundaries will include St. Gregory's in Magnolia.

A graphic designer and sign maker, O'Donnell said Galante's idea of bigger, busier "hub" parishes "makes sense," but predicted it would "take at least five years" for most Catholics to connect emotionally with the concept.

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52 Galante, due to retire in five years, acknowledged last week that his new vision for the diocese would take time.

"I said from the beginning this will not happen overnight," he said. "As I told the priests recently, I won't be here to see the full flowering." He said he hoped whoever followed him sustained his plan, but the Vatican not he - will choose his successor.

"I can write a letter describing the state of the diocese before I go . . . ," he said, finishing his sentence with a shrug.

Galante stressed that his plan reflected the wishes of the laity, whose members repeatedly told him in his first years here that they wanted more programs for youths and young families and better faith training for adults.

About 200 adult lay leaders already are learning to teach the faith, and, Galante said, he is eager to create a system of parish-based "mentor couples" to be guides and role models to newlyweds.

Ultimately, however, his vision for the parishes is not social but spiritual, he said.

"I take my role as bishop very seriously. I'm distressed at the number of Catholics who don't participate in weekly Mass, or the life of the church, or even know what the Catholic Church teaches.

"If it stays that way," he said, "they lose out on a relationship with Jesus. And that's my biggest concern."

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INSERT MAY ISSUE OF WORKING MOTHER MAGAZINE – QUINETTA ROBERSON – BY LISA ARMSTRONG

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Cross-National CSR Programs Can Be Effective Charles R. Taylor, May 21, 2009 12:00 PM A research study my colleague, Ronald Hill, and I are working on in conjunction with lead research Karen Becker Olsen of the College of New Jersey demonstrates that corporate social responsibility (CSR) programs that are run cross-nationally can be effective for a company in terms of consumer perceptions. The study examined the reactions of consumers in both the U.S. and Mexico to Nokia's global CSR initiative called "Make a Connection."

Run in cooperation with the International Youth Foundation and supported by a $6 million annual donation from Nokia, the program has supported more than 140 projects in 20 countries. Its primary purpose is to promote positive youth development by improving educational opportunities and focusing on the development of life skills.

The study involved an experiment in which the source of the message (company vs. non-profit organization) and the reach of the message (global impact vs. local impact) were varied in the context of a press release of about the CSR program. Data was collected from 480 consumers in New York City and Mexico.

Both Mexican and U.S. consumers reported favorable attitudes toward company involvement in CSR programs in general, with Mexicans responding even more favorably than their U.S. counterparts.

However, U.S. consumers were significantly more likely to have an expectation that firms engage in CSR efforts. In both countries, however, involvement in CSR programs was viewed positively.

Notably, the source of the message made no difference in terms of attitude toward the sponsoring company and purchase intention in either country. Thus, the findings support the notion that promotional messages about a CSR program that involve the message being communicated from either the non-profit organization, company, or both, can be effective.

A major finding of the study is that, in both countries, consumers had more positive reactions in terms of attitude enhancement, brand identification, and perception of firm reputation when exposed to a message indicating that the program had global reach. This means that global programs actually enhance company reputation more than local programs and suggests that it may be possible for large multinationals to standardize the use of global reach in communications about CSR programs.

In summary, our results support the notion that companies can achieve positive results from promoting a CSR program that operates on a multi-nation scale and build brand equity in the process.

The specific program studied here, "Make a Connection," was well received in both the U.S. and Mexico. Whether the company or non-profit organization was identified by the sponsor in the press release did not make a difference. The one major difference found was that, in both countries, a focus on the global aspects of the program performed better than a focus on local successes.

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Business School, with a Family in Tow For applicants who have families, the B-school choice is complex. Geography, finances, and the job market all come into play

By Francesca Di Meglio For many business school applicants, spring is about more than just nice weather and long days. It's also decision-making time. As MBA programs notify applicants about their admissions decisions, the mental calculus begins. But in the rush to decide on a school, pack up, and move to campus, an important decision-making factor often gets lost in the shuffle: the impact of the two-year B-school sojourn on a family.

Applicants who overlook family considerations in their quest for the perfect B-school do so at their peril. After all, an MBA program puts a lot of stress on everybody, not just the student. In many cases, entire families are uprooted, new jobs must be found for spouses, and new schools for children. A happy and contented family can make the difference between a miserable B-school experience and one that will be remembered, fondly, forever.

That's why, in addition to finding the best program in the best town for accomplishing their personal and professional goals, prospective students should consider the needs and lifestyle of those around them, too.

It all starts with communication. Applicants with families should share their motivation for going back to school and how the MBA fits into the plan they have for themselves and their families. Doing so increases the likelihood that family members will accept the move. Discussing where you want to live and the impact of the move on the family's finances and relationships is a must. "If the family is not happy, [the move] will not be a successful experience," says Anna Millar, associate director of the MBA program at the University of North Carolina's Kenan-Flagler Business School (Kenan-Flagler Full-Time MBA Profile).

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56 To ensure smiles all around, partners and families of applicants must be part of the application process from the very beginning. What follows is a checklist of what families of applicants should be taking into consideration when deciding where to go to business school.

GEOGRAPHY When Ashley Patrick's husband applied to B-school, she wanted to visit every campus. "I think it all goes back to the culture," says Patrick. "You can tell what life is going to be like when you visit." But she says one school to which her husband applied was too far north for these Southerners, so she refused to even consider it. She wanted them to be in a place where they could easily travel to and from their family in Atlanta. Ultimately, they wound up at UNC's Kenan-Flagler Business School, where Patrick is the vice-president of Kenan Connection, a club for spouses and partners of Kenan-Flagler students.

Before deciding where to apply, applicants should decide where their family would like to live during and even after B-school, since in many cases the location of the school may dictate where you'll find a job at graduation. If you want to be in New York, but your wife would rather be in Illinois near your extended family, then you'll have to come up with a compromise or risk marital discord. These discussions should begin in the earliest stages of the application process.

Cost of living is another bit of the geography puzzle that all applicants must consider but especially families supporting young children. Living in Hanover, N.H., while you attend Dartmouth's Tuck School of Business (Tuck Full-Time MBA Profile) will have a much lighter effect on your wallet than moving to Los Angeles for the MBA program at the UCLA Anderson School of Management (UCLA Anderson Full-Time MBA Profile).

You'll want to know how much you're likely to be spending on rent or a mortgage as well as items such as groceries, especially if you're planning on enrolling in a full-time program that will have at least one of you earning no income for the next two years.

FINANCES A top business school, which can easily cost upwards of $80,000 in tuition for two years, is a huge investment. That's why money will play a part in every family's decision about where to go to school. In addition to considering geography and cost of living, families should talk about how much money will need to be borrowed and how they'll make loan payments in the years during and after business school. Looking at your accumulated savings, current living expenses, and the likely return on the MBA investment will help determine if this is feasible. Planning ahead and talking openly about financial aid is a surefire way to prevent family fights. Making an appointment with the financial aid office at the schools that interest you is a must, says Rachel Garonzik, director of graduate recruitment and marketing at the Villanova School of Business.

When Cathy Reeves' husband was deciding where to go to business school, she was pregnant with their first child. The couple knew that they wanted to be in the Midwest, which is closer to their families than New York, where they both had previously been living and working. But they also knew that Reeves wanted to stay home with the baby Villanova School of Business 2009 Media Report

57 while her husband attended school, which would mean they would have no income for two years. The thought was terrifying, Reeves says, but they mapped out a plan that allowed them to get by on savings and student loans. Now that they have ended up at Northwestern's Kellogg School of Management (Kellogg Full-Time MBA Profile), she says, they have the added bonus of seeing each other more often than they did in New York, where they both had hectic jobs and were rarely home. "The lifestyle change was an improvement," says Reeves.

HOUSING As couples start to consider the campuses and communities where they might live, they need to think about the actual housing available to them. Does the campus provide housing for families? Will they have to live off campus? Will they rent or buy?

After all, the first step to imagining yourself supporting a spouse at business school is picturing where you might actually live and what that might entail. You can usually get information about the available housing for graduate students from the school's Web site or the admissions or housing office.

JOBS Usually, the spouse or partner who is not attending business school needs to find a job in this new city or town. In addition to conducting your own independent research online, you should find out if the school helps spouses or partners find work. Many do.

Patrick, for instance, found a job at Kenan-Flagler as the MBA assistant registrar.

Business schools, however, can't employ every partner or spouse themselves.

At Kellogg, administrators provide assistance and networking opportunities, even from a distance, for partners and spouses of students, says Wendy Metter, associate director of student affairs at Kellogg. Although most foreign partners can't work because they don't have the necessary government approval, the school still helps them find volunteer work to add to their rĂŠsumĂŠs, adds Metter. Partners at Kellogg can join student clubs and help with student conferences, too. "There are lots of perks for students' partners," says Metter.

THE KIDS If you have children, you probably will need to learn about the nearby schools and child-care options available while you and your spouse are studying or working. Many B-schools have systems in place to put families in touch with the local community to have their questions answered and enroll their children in various programs. Finding out about school and child-care alternatives earlier works to your advantage because it will help you make informed decisions as the acceptance letters roll in. It also gives you a better chance of securing a spot for your child if there are waiting lists of any kind.

One of your greatest resources when it comes to getting information about community services are current students, recent alumni, and their families. During visits to campus, says Millar, you should ask as many questions as you can about the community and anything else that's on your mind. You can also reach out to people by e-mail and phone.

B-SCHOOL SUPPORT During campus visits, notice how supportive the culture is of families. Millar shares her job at Kenan-Flagler with Meghan Gosk, so they can both Villanova School of Business 2009 Media Report

58 better balance work and career, something MBA candidates will have to do. They say they hope their job sharing, which they have been doing for the last five years, speaks to the family friendliness of the campus, and serves as an example of family-friendly policies that will impress the business school's managers to be.

Indeed, B-schools seem to hold the key to success for families who have a member in their programs. From the first time you visit a school's Web site, you should be looking to see if there are groups dedicated to helping the families of students. At Kellogg, for instance, Reeves is the co-president of Kellogg Kids, a group for families and children of students. She says she didn't realize how important the support group was going to be for her until she got to campus. Other people are "going through the same thing you are," Reeves says. "Their husband is back in school, and their income isn't what it used to be."

Visit schools as your spouse or partner is going through the application process, but be sure to keep attending events that are open to families, such as orientation programs and admit weekends, to make friends of your own and see what kind of experience your partner is going to have. While it is important to find a rigorous program with a good reputation, Patrick says, the decision on where to go is not all about which program is ranked number one. She adds that you both have to feel comfortable on campus and with the people in the community.

When the decision is finally made about which program to attend, the student's family should feel as though it fits in as much as the MBA candidate. "Look at the opportunities of which you can take advantage," says Metter. "Ask yourselves, 'Could this strengthen our relationship and bond as a family? Do we have other families as friends?'" In the end, say those who've gone through this process, you should pick the school that accepts you and makes you and your family feel at home.

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When parishes close, there's more to deal with than just logistics

By Dennis Sadowski Catholic News Service WASHINGTON (CNS) -- Charles Zech and Robert Miller have some advice for parishes going through what some have characterized as the greatest period of change in the history of the American Catholic Church brought on by the recent closing and merging of hundreds of parishes across the country.

First, they said, it's important to recognize that people who lose their parishes are experiencing a trauma that can be as great as the loss of kin.

Second, Zech and Miller advised that when people come together in a new parish the dynamics that emerge are similar to those that surface when a man and a woman with children from previous marriages get married and face blending two family units into one.

Merging parishes involves not just making sure individuals get along and minimizing the appearance of favoritism, but especially requires integrating the experiences, culture and history of both communities into a new Catholic community, said Zech, director of the Center for the Study of Church Management at Villanova University School of Business in Pennsylvania.

Such tasks rarely have been done well, said Miller, director of the Office of Research and Planning for the Archdiocese of Philadelphia. He said mergers often are done under deadlines that do not allow people to fully plan for how two or more communities might become one.

Zech and Miller address many of the issues that have surfaced in the 15 years since parish closings and mergers became more commonplace in their 2008 book, "Listening to the People of God: Closing, Rebuilding and Revitalizing Parishes."

They said the model of parish life to which Americans have grown accustomed is changing rapidly. For example, in 2006 fully one-quarter of Catholic parishes were organized in a nontraditional manner, meaning they had no resident pastor.

Further, between 1995 and 2000, Zech and Miller report, 72 percent of dioceses restructured by either clustering or linking parishes, merging two or more parishes, closing parishes or, in areas of massive growth, opening new parishes with large membership rolls.

At some point, every Catholic parish will face changes that can prove to be troublesome, Miller told Catholic News Service.

"The idea is that we need to live our lives in such a way that we expect change," he said. "We are called to change. We are called to transform our hearts. We are called to transform our communities."

Mergers and closings are not new, but have become more commonplace as dioceses seek to

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60 "right size" to meet changing demographics, financial realities and the declining number of clergy.

In the 1970s it was a shift of rural populations as people left farms and small communities for better opportunities closer to urban centers.

The realities of closings and mergers have shifted today primarily to urban centers in the Northeast and Midwest where Catholic populations are dwindling as people with the financial resources abandon central-city life to seek the American dream in the suburbs.

Zech and Miller expect there will be demographic shifts in the future that will lead to more of the same across the country.

No matter the situation, people in large part are attached to their parishes. For many, losing a parish can be a traumatic experience. The closing or merger of a parish can leave people bitter, even alienated.

"Our parish is a family and when our parish is closed we feel like we've lost an important part of our family," Zech said. "We have to treat it that way. Diocesan officials need to treat it as if there's a death in the family."

Miller said he has seen few examples of where the merging of individual Catholic communities has been done well. In most cases, he said, neither community has been prepared for what merging truly involves.

"It seems to me that in the parish mergers going on across the country we're spending an awful lot of time on Good Friday but we're not getting to Easter Sunday," he said.

Echoing Zech and Miller, Marti Jewell, the outgoing director of Emerging Models of Pastoral Leadership, a six-year-old collaborative effort among six national organizations studying the changing structure of parishes, said the massive changes the church is undergoing today can be traumatic and lead to anger, confusion and grief. "(It's) the grief that comes from change, whether you embrace it or not," she said. "We can't be afraid of the grief and we need to recognize that the anger we are feeling is a product of grief.

"Until we address the grief we can't move on. We have to become ministers of grief, agents of change in that way, and care for that," she said.

To help overcome the feeling of loss, Jewell suggests that parishioners must be engaged so they feel they have a voice in whatever new parish structure evolves out of the old.

Throughout his studies of parish restructuring, Miller said he has seen time and again that even a parish that absorbs a smaller community eventually will undergo significant changes of its own, just not as quickly. Roles are going to change, relationships with the newcomers will be awkward and certain routines will be disrupted, he said.

"If people are not prepared for that, then they're wondering why they're so uncomfortable," he explained. "We try to get them to recognize (parish life) is going to change for them too."

Miller suggested that mergers need time to develop and that they cannot be thrust onto parish communities in a matter of weeks. He proposed that there be at least a year for communities to prepare for the transition and then as many as five years afterward before communities are fully integrated.

"We need to put a lot of energy into the building up and not building down (of parish life)," he said.

"It's the creation of a new parish."

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Regional Catholic finances stable

By Bruce Nolan, The Times-Picayune June 26, 2009, 9:49PM The Archdiocese of New Orleans' first financial report on operations since Hurricane Katrina shows the regional church running in the black, with parish collections not only stable, but comparable to pre-storm levels, even though the church estimates it lost about 20 percent of its members.

The data released over the weekend in the Catholic newspaper, the Clarion Herald, were more detailed than any previous statement of church finances in years.

Some data about specific church operations or ministries were reported for the first time, making comparisons to pre-storm conditions impossible.

Church spokeswoman Sarah Comiskey said the report painted a picture of the church as "cautiously stable" financially.

The data cover two fiscal years, from July 1, 2006, the difficult first summer after Katrina, to June 30, 2008, when the church was just beginning to implement its controversial long-term parish reorganization plan that reconfigured, merged and closed dozens of parishes.

Generally, the church said its central offices and major ministries closed out fiscal 2008 about $510,000 in the black, having collected $36 million. The church had run a $6.2 million deficit the year before.

Perhaps more remarkably, however, the church said that in 2007-08 Catholics contributed $48.2 million in collection plates for the support of the archdiocese, as well as their own parishes and schools. The comparable number the year before was $45.4 million.

And for the pre-Katrina year ending the summer of 2004, the last year for which figures are available, the collections total was $46.8 million, the church said in an early 2005 report that was not part of the weekend's disclosure.

This despite the church's estimate that Katrina shrank the Catholic population from 491,000 to 387,000.

Moreover, Comiskey said data collected since the economic downturn began in September indicates that collection plate income continues to hold steady.

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62 The report showed that the costs of running parochial schools outstripped school income by about 5 percent, cutting a collective surplus for schools in the parishes from $2 million to $500,000.

Income flowing into Catholic Charities collapsed from $121.7 million to $75.4 million, almost all of that due to a tail-off in Katrina-motivated giving from the national church and other sources, Comiskey said.

And while the church's fundraising arm, the Catholic Foundation, reported a sharp fall-off in income from $19 million in 2006-07 to just $2.8 million last year, that was largely because the organization was the recipient of an extraordinary number of gifts in the earlier year -- none Katrina-related -- and the following year reverted to a more normal pattern, said executive director Peter Quirk.

In addition, he said, investment losses for 2007-08 totaled nearly $3 million.

Comiskey said the income data also demonstrated that Archbishop Alfred Hughes' consolidation of church parishes after the storm was not motivated by a desire to buttress the church treasury, as critics contended.

"To look at this and say the pastoral plan was dreamed up for financial purposes, you cannot draw that conclusion from this report,� she said.

Charles Zech, a church finance expert at Villanova University, gave the archdiocese high marks for its disclosure.

He said while it raised a number of questions -- such as how the church covered its operating deficits in 2006-07 -- it generally provided useful information.

Across the country, by contrast, "it's an embarrassment how United States (Catholic) dioceses are not accountable for their finances,� said Zech, who heads the Center for Church Management, which tries to promote good business practices in the Catholic Church.

"Any time a diocese posts its financials I have my grad students grab it, just because it's so rare. If a quarter of dioceses issue reports in any year, that's a good year."

However, Zech said he was troubled that the figures were not audited by an independent third party.

An accompanying letter by the accounting firm of Ericksen Krentel & LaPorte points out that the report is not an audited financial statement.

In some cases the firm said it depended on the archdiocese to provide financial data; in other cases, the firm used data from financial statements that had previously been audited by its staff or by other firms.

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As probe continues, supporters stand by their pastor Sunday, June 28, 2009

Joe Ryan STAR-LEDGER STAFF With his buoyant charm and country-club connections, Monsignor Patrick Brown has long been a prodigious fundraiser for Catholic causes.

The 58-year-old pastor of a bustling Morris County church sits on 11 charitable boards, his lawyer said. He hosts benefits at an exclusive golf course. And church officials said he taps Wall Street executives to fund inner-city Catholic schools in Passaic and Paterson.

But after years of raising money, the prominent clergyman is now under federal investigation for the way he spends it, according to Paterson Diocese officials.

They announced earlier this month that Brown had taken leave June 4 from St. Vincent de Paul Church in Stirling after federal agents began investigating what the diocese has described simply as "financial matters."

Within the last few weeks, the FBI has subpoenaed sales records from a Morristown jewelry store Brown frequented for gifts, according to the shop's owner. Agents have also requested records from banks holding St. Vincent de Paul Church's accounts and have asked to interview members of the parish's finance council, according to a lawyer for the diocese.

The probe has apparently delved into the occasionally gray realm of Catholic parish finances, where pastors with often limited fiscal training and inconsistent oversight have broad authority to spend money donated to the church or collected each Sunday from the pews.

Brown, who spent 25 years as a chaplain at Morris County Jail, has not been charged with anything.

Tomorrow, he is scheduled to meet with diocese officials to discuss resuming his duties as pastor while the investigation plays itself out.

The probe, meanwhile, has jolted North Jersey's Catholic community, where supporters say Brown is a pious and humble man who may have been tripped up by his own generosity and, perhaps, shoddy bookkeeping.

In addition to his public philanthropy, Brown has quietly donated significant sums of parish money to cashstrapped churches and to families struggling financially, said Kenneth Mullaney, a lawyer for the Paterson Diocese. In some cases, Mullaney said, Brown has even helped families meet mortgage and tuition payments. Perhaps, the lawyer said, that swirl of giving led to a misunderstanding.

"Is it possible he might have been sloppier than a CPA might otherwise have been? It's possible," Mullaney said. "But that doesn't mean there was any criminal conduct. And that's why I have to believe 100 percent that whatever questions the FBI has, there are answers to those questions."

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64 An FBI spokesman declined to confirm whether or not Brown was under investigation. A lawyer for Brown said the priest declined to be interviewed.

With his graying blond hair, boyish grin and ruddy cheeks, Brown is a fixture in Morris County, particularly in the halls of government. On Ash Wednesdays, he used to walk the county administration building, rubbing ashes on Catholic officials' foreheads. He has delivered the invocation at virtually every county government reorganization meeting for the last decade. And days before the FBI visited the diocese, Brown gave a blessing at the Morris County police and fire training academy.

"I have nothing but good things to say about Monsignor Brown," said Edward Rochford, the Morris County sheriff. "Whenever we needed help, he was always there. I hope the allegations about him prove not to be true.''

Brown earns a less-than-$30,000 annual stipend from the parish, but manages several luxuries nevertheless, his lawyers said. He drives an Audi A6. He travels occasionally to Europe. He belongs to the Canoe Brook Country Club in Summit, which has a two-year waiting list and requires applicants to be sponsored by existing members. And for 15 years, he has shopped almost monthly for gifts at Braunschweiger Jewelers in Morristown, buying crucifixes and other items.

"They were gifts for people and not extravagant. Nothing huge. He's not buying expensive Rolex watches for himself," said Bill Braunschweiger, the shop's owner.

Brown's lawyer, Michael Critchley, said the Audi, trips, country club and jewelry paint a false picture of the priest's lifestyle, which he said was austere and marked by unassuming charity.

"His good deeds are done in the quiet of the moment and are only known by those who are suffering from many different life experiences, be it sickness, death, poverty and marital problems," Critchley said.

Brown pays for the Audi with his stipend, leasing it at a "very good" rate from a friend, Critchley said. He travels to Europe as a guest of parishioners. The country club membership, which he uses to raise money for worthy causes, is honorary and costs him nothing, the lawyer said. As for the gifts from Braunschweiger, Critchley said Brown uses them to reward hard-working teachers and volunteers at St. Vincent de Paul.

They ranged in cost from roughly $79 to $400, according Critchley and Brown's second lawyer, John P. Lacey.

"These are people who volunteer year-round," Critchley said. "It's nice when you get recognition for it."

St. Vincent de Paul Church is a round and modern building off Central Avenue in Stirling, a section of Long Hill Township about 10 miles south of Morristown. The cornerstone says 1986.

The manicured and spacious grounds also include a school, a "technology center" and a rectory -- a modest-looking brick ranch where Brown lived before taking leave. He had his own bedroom, but shared the kitchen and living room with others in the rectory. At the doorstep, a large stone on the cement porch says, "Monsignor Brown is rock solid."

The parish has more than 1,500 families, which is relatively big for the Paterson Diocese. They come from Long Hill and several other towns in southern Morris County, where yards are wooded and spacious and average household incomes are measured in six figures.

Brown commented in a 2007 Star-Ledger article that working with inmates at the county jail helped keep him grounded while leading an affluent parish.

As pastor, Brown held the purse strings. But under Catholic Church law, he was supposed to consult with his parish finance council. The body, which varies in size from church to church, comprises parishioners with accounting or business experience who are supposed to guide the pastor on financial matters. But the council's role is only advisory.

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65 Mullaney, the diocese lawyer, said he did not know how closely Brown worked with his finance council.

Attempts to reach council members were unsuccessful.

"Was there picture-perfect bookkeeping? I don't know," Mullaney said. "That is one of those things that will come out in the wash."

Charles Zech is a Villanova University economics professor who specializes in church finance. He was not familiar with Brown's case, but said the key issue is probably whether the pastor disclosed all his spending to the council. Helping someone pay their mortgage might be permissible -- but the finance council should know about it, Zech said.

On the other hand, $400 jewelry is bothersome, he said.

"And if he was using the money for himself, I would say it's not only inappropriate but illegal," Zech said.

Patrick Brown grew up in New York City and was ordained in 1978. He received his master's of theology from the Immaculate Conception Seminary at Seton Hall University.

He served four years at Our Lady of the Lake in Sparta and 10 years at Christ the King in New Vernon before arriving at St. Vincent de Paul in 1992. Six years later, Pope John Paul II gave him the honorary title of monsignor.

Effervescent and gifted at storytelling, Brown is popular among parishioners. "He's always there for everybody," said Rose Terrie, 78. "Everybody in the parish loves him."

The investigation began several weeks ago with an anonymous tip to the FBI, Mullaney said. Two agents visited diocese headquarters June 3. The next day, Brown was removed as pastor, and the diocese assumed control of the parish's finances.

Mullaney said he believes Brown -- who has also been removed as jail chaplain -- is now staying with relatives.

Because authorities have declined to comment, it is not entirely clear why the FBI is handling the case instead of state or local investigators. The agency investigates federal crimes, which can involve multiple states, the postal service, telephone lines, internet or wire transfers.

Brown's lawyer has requested a meeting with the U.S. Attorney's Office in Newark to learn about the scope of the investigation.

At St. Vincent de Paul, a retired priest has been appointed temporary administrator. Mullaney said he plans to recommend that the pastor be reinstated. "We feel that it is very unfair to Monsignor Brown to leave him hanging in the wind," Mullaney said.

In the meantime, Brown's supporters wait. They have long viewed the priest as generous and devout. Now they hope he is being misunderstood.

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Google Chrome OS: Web Platform To Rule Them All With Chrome OS, Google aims to make the Web the primary platform for software development.

By Thomas Claburn, InformationWeek July 10, 2009 URL: http://www.informationweek.com/story/showArticle.jhtml?articleID=218401568

Google's plan to release its own operating system based on its Chrome browser is at once audacious and laughable. Microsoft Windows represents slightly less than 90% of the personal computer operating system market, a position it has held for years.

Google's industry ally, Apple, has managed to steal a few percentage points of market share away from Microsoft in the past twelve years under the singular leadership of CEO Steve Jobs. But Windows remains the dominant operating system, more dominant even than Google is in search.

And with the forthcoming release of Windows 7, Microsoft appears to be well-prepared to defend its empire.

It's hard to imagine a less promising business for Google to enter, especially given that Google plans to give Chrome OS away for free. And Google's grand plan to shake up the operating system market isn't made more credible by the absence of any actual programming code or substantive information about Chrome OS. Yet, the fact that Google has partners that share its vision says something about the shakiness of Microsoft's position. Acer, Adobe, ASUS, Freescale, Hewlett-Packard, Lenovo, Qualcomm, Texas Instruments, and Toshiba are all working with Google to help it re-imagine the operating system. So too is Intel, as The Register reports.

Google's decision to target the netbook market may help the prospects of Chrome OS. Although Microsoft has made a concerted effort to push Windows on netbooks to fend off low-cost Linux-based challengers, Google may find it easier to compete in the netbook market because access to cloud-based services and software is more valuable on devices with constrained resources than on high-powered desktop computers.

Steve Andriole, professor of information technologies at the Villanova School of Business, observed in an e-mail that Google's announcement comes at the right time, just as the industry is moving to smaller, more mobile devices.

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67 He believes that both pricing and Google's vendor relationships will play major roles in determining the acceptance of Chrome OS. The fact that Chrome OS applications will be written using open Web standards like JavaScript, HTML, and CSS might seem like a liability because Web applications still aren't as capable as applications written for specific devices and operating systems.

But Google is betting that will change and is working to effect the change on which its bet depends. Within a year or two, Web browsers will gain access to peripherals, through an infrastructure layer above the level of device drivers. Google's work with standards bodies is making that happen.

According to Matt Womer, the "ubiquitous Web activity lead" for W3C, the Web standards consortium, Web protocol groups are working to codify ways to access peripherals like digital cameras, the messaging stack, calendar data, and contact data.

There's now a JavaScript API that Web developers can use to get GPS information from mobile phones using the phone's browser, he points out. What that means is that device drivers for Chrome OS will emerge as HTML 5 and related standards mature. Without these, consumers would never use Chrome OS because devices like digital cameras wouldn't be able to transfer data.

Womer said the standardization work could move quite quickly, but won't be done until there's an actual implementation. That would be Chrome OS. And as the long-foretold Internet of Things emerges -- allowing everyday objects to be addressed via online queries -- Chrome OS will be well positioned to help Google organize even more of the world's information than the company already handles.

Chrome OS will sell itself to developers because, as Google puts it, writing applications for the Web gives "developers the largest user base of any platform."

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Framing Of Cause Critical To Consumers Jeremy Kees, Jul 15, 2009 11:29 AM With Cause-Related Marketing (CRM) growing increasingly more popular as Fortune 500 companies "go green" and try to be socially responsible, advertisers and marketers should be aware that the "framing" or presentation of the cause is critical to consumers. People are more willing to purchase products and support causes that have an immediate or short-term benefit to a non-profit than a future or long-term benefit.

Even those CRM programs presenting long-term benefits can be made to seem more immediate, spiking consumer interest and purchase intent, i.e., assure consumers that "your dollar this month will help alleviate suffering" is better than a less-defined, long-term goal.

Many people discount the risk of the future and focus only on short-term gains for a variety of lifestyle choices (i.e., smoking, drinking, not eating healthy). These consumers stated in the beginning of the research we conducted that they discounted the benefits to the long-term CRM programs.

Counter to our expectations, the results of the field research showed that those consumers who described themselves at "future oriented" in their lifestyle choices liked the immediate and the long-term CRM programs equally. Thus, we found that if cause-related marketers want to appeal to the largest possible audience of both types of consumer groups, the presentation of the advertising should emphasize short-term gains over long-term gains.

I conducted a study along with Andrea Heintz Tangari and Scot Burton, both at the University of Arkansas, and Judith Anne Garretson Folse at Louisiana State University. Our paper, "The Framing of Societal Needs and Corporate Responses in Cause-Related Marketing Campaigns," is slated to be published in the Journal of Advertising later this year.

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Cable ads star Shaq 'N Stein

By Bob Fernandez Inquirer Staff Writer Basketball great Shaquille O'Neal dons an afro and bell bottoms and spoofs Starsky & Hutch, with droll sidekick Ben Stein in a trench coat.

The goofy ad should be a slam dunk for Comcast, which has a success on its hands with Shaq 'N Stein.

This latest installment of Comcast Corp.'s new advertising campaign harkens back to a Hollywood staple - a white-guy black-guy buddy movie. It has produced a surprising buzz for the nation's cable giant, advertising experts say. The newest TV advertisement is a variation on the 1980s buddy cop movies Beverly Hills Cop and Lethal Weapon, and will launch Aug. 3 on national television.

"When you can provide entertainment along with your product message . . . that's a great idea," said a pleased Peter Intermaggio, senior vice president for advertising at Comcast.

The advertising campaign, which may be the most memorable for the company since Comcastic, has led to sales gains for Comcast's cable-TV service, Intermaggio said. He wouldn't disclose details.

Shaq 'N Stein was conceived earlier this year at the Comcast headquarters, with assistance from New York ad firm Digitas, said Intermaggio. The idea was a dialogue between two celebrity opposites about Comcast's cable-TV service. One would focus on entertainment and the other on promotional prices.

The campaign evolved when Stein, an older lawyer, and O'Neal, a dominating NBA center, mucked it up after meeting in the Hollywood studio Margarita Mix to record radio advertisements for Comcast. The two also appear in newspaper display advertisements.

O'Neal confirmed in a phone interview from Los Angeles that he hadn't previously known Stein. The basketball star, who has feuded publicly with former Los Angeles Lakers teammate Kobe Bryant, said his rapport with Stein was real. He spoke during a break in filming the newest Shaq 'N Stein advertisement last week and was jetting off the next day to China to promote basketball.

As for Stein, the Comcast ads seem to have elevated his obscure celebrity profile. The former host of Win Ben Stein's Money has commented that the commercials are so popular that people in airports recognize him as someone other than the economics teacher in Ferris Bueller's Day Off, a 1986 movie with Matthew Broderick.

The first TV spot introduced the handcuffed O'Neal and Stein in late April entering a minicar and playing basketball. O'Neal and Stein metaphorically represent the best in entertainment (O'Neal) and the best price (Stein). The current "Locked and Loaded" ad has a western theme, in the vein of the movie comedy Blazing Saddles.

The advertisements, for the most part, walk a fine line between humorous and bust-your-gut funny, experts say.

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70 "You want to use humor but you don't want to make it so funny you overwhelm the message," said P. Greg Bonner, the chair of the marketing and law department at the Villanova Business School.

An ad campaign for Alka-Seltzer - "I can't believe I ate the whole thing" - resonated with consumers.

They recalled the punchline but not the product, Bonner said. Bonner could not comment directly on the Comcast commercials because he hadn't seen them.

Villanova marketing professor Charles R. Taylor watched the advertisements on YouTube and said he doesn't believe the humor overshadows Comcast's commercial message. In a cluttered media field, the concept of two guys of such different stature handcuffed is simple and communicates an idea quickly, he said. "It's a creative idea and probably is pretty effective."

William Madway, a lecturer in the marketing department at the Wharton School of the University of Pennsylvania, said he considers the Comcast advertisements annoying, and he questioned the use of Stein and O'Neal as spokesmen for Comcast. O'Neal is a superstar but he could play for a sport or team people don't like. Stein is an aging TV personality. But Madway noted, the advertisements have "stopping power" and "get the message across."

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Amazon Sinks Close to $900M Into Zappos Deal

By Erika Morphy E-Commerce Times 07/23/09 11:51 AM PT There are ramifications to Amazon's nearly $900 million stock-and-cash deal to acquire Zappos that go far beyond adding a market-leading etailer to its sprawling e-commerce operations. The overall positive response to the acquisition is a boon for e-commerce as a whole, according to Gunster attorney David Bates, as it should encourage VC and private equity investment.

Amazon (Nasdaq: AMZN) is making its biggest acquisition yet, having inked an agreement to acquire online shoe retailer Zappos for close to US$900 million in stock and cash. Under the terms of the agreement, Amazon will acquire Zappos shares in exchange for approximately 10 million shares of Amazon common stock, valued at approximately $807 million. It will also provide Zappos employees with $40 million in cash and restricted stock units. The deal is expected to close this fall.

Zappos will remain an independently operated unit, still headquartered in Las Vegas.

Amazon did not respond to the E-Commerce Times' request for comment in time for publication.

In any economic environment -- but even more so in a recessionary one -- a transaction upwards of $850 million represents a major move. Amazon appears to be approaching this one with a great deal of foresight, said N. Venkat Venkatraman, a business professor at Boston University.

Beyond Shoes Clearly, this is much more than just adding a popular retailer to Amazon's already-huge stable.

Villanova School of Business 2009 Media Report

72 "I look at it less as a channel for selling shoes but more as adding e-commerce and customer service capability," Venkatraman told the E-Commerce Times..

"To me, what is impressive is that Zappos has doubled its sales Error! Hyperlink reference not valid.between 2006 and 2008 to nearly $1 billion in total gross sales online. That growth shows that the company has core capabilities in e-commerce and customer service that will be valuable to Amazon as it charters growth plans."

The two companies' needs and strengths are very complementary, Eric J. Karson, associate professor of marketing at Villanova School of Business, told the ECommerce Times.

"While Zappos may have been content with the traffic they were able to generate, there is no doubt the Amazon deal will increase traffic substantially," said Karson.

Greater Efficiencies Amazon, for its part, will hopefully absorb the efficiencies and service that Zappos brings to its fulfillment operations, he said.

"Remember, some big names have -- or used to -- rely on Amazon for their ordertaking, stocking and customer service," he said, pointing to the Target and Toys 'R' Us relationships, which ended badly. "No doubt there are some efficiencies to be picked up here."

Also, "high-touch" consumer items like shoes will require that the new organization keep Zappos' approach to customer service, Karson pointed out. "800 numbers and 'free shipping both ways' -- prominent on the Zappos' current site -- are not Amazon's strengths."

There are other benefits to the deal, noted David Bates, chairman of Gunster's technology and emerging company practice.

For one, it eliminates a potential source of serious competition.

"Amazon not only acquires a category-killer e-commerce site in Zappos, but also avoids the current threat of Zappos as a competitor to Amazon's own Endless Shoes and the potential future threat of Zappos expanding into selling other product [areas] and further competing with Amazon," Bates told the E-Commerce Times.

Good for E-Commerce Also, the successful financial exit this transaction is giving to Zappos' financial backers -including Sequoia Capital -- should help encourage venture capitalists and private equity firms to further invest in e-commerce.

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73 "An emerging e-commerce company may very well be able to look at this acquisition as the reason they receive funding," observed Bates.

Indeed, Amazon's stock has been performing well -- at least relative to other e-commerce companies such as eBay (Nasdaq: EBAY) -- something that it strategically leveraged in this deal, according to Boston University's Venkatraman.

It's a judicious use of an attractively priced stock as the currency to acquire critical capabilities, he said.

Using stock to pay for the acquisition also sat well with Zappos, whose management team apparently requested that, added Gunster's Bates. It "demonstrates that Zappos' management also believe this transaction adds tremendous value to Amazon."

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Minimum wage hike: More money or fewer jobs?

On Friday the federal minimum wage jumps to $7.25 an hour from $6.55.

Economists differ as to whether that will hurt or help low-income workers.

By Aaron Smith, CNNMoney.com staff writer Last Updated: July 27, 2009: 10:08 AM ET

NEW YORK (CNNMoney.com) -- On Friday, the federal minimum wage rises for the third year in a row, sparking the perennial argument among economists: Will it help workers at the bottom of the ladder, or will it kill their jobs?

The U.S. minimum wage goes to $7.25 an hour, from $6.55, according to the U.S. Department of Labor. Most states have their own minimum wage, and employers are required to pay whichever is higher. That means minimum wage workers will get a raise in 29 states and Washington, D.C. In the remaining 21 states, they'll see no change.

In some states, the increase will be more modest. In New York, the state minimum wage is $7.15 an hour, so workers there will be paid an extra dime an hour, which means another $4 for a 40-hour week. But in states like Georgia, Virginia and Texas, workers are paid the current federal minimum of $6.55, so they'll get the largest raise of 70 cents, which translates into a $28 bump for a full-time week, or more than $1,400 a year.

Injecting money into the economy?

Kai Filion, an economist with the Economic Policy Institute in Washington, estimated that more than 2.8 million workers will have their wages lifted to $7.25 an hour on Friday. More than 1.6 million workers will also be indirectly affected, according to Filion, meaning their above-minimum wages will increase as the rising tide lifts all boats.

That adds up to nearly 4.5 million workers who would get a raise. The impact varies widely from state to state, depending on state minimum wages and population. In New York, with its $7.10-an-hour state minimum, 63,000 workers would be directly impacted, according to the EPI, compared with 632,000 workers in Texas.

Villanova School of Business 2009 Media Report

75 "Because it's not a big increase, any impact will be modest, but it will be good," said Heidi Shierholz, a minimum wage expert with the EPI. "You're seeing people say this is a wrong time to do this, but I think that is entirely wrong-headed. They could not have planned this for a better time."

Based on Filion's estimates, the wage increase will inject $5.5 billion worth of extra spending into the economy over the next year.

"It gets additional money to low-wage workers," said Shierholz. "These are workers who are mostly struggling to get by and will spend that extra cash. This is actually stimulus."

Or fewer jobs for low-wage workers?

Back in 2007, before the current recession began, Congress passed a bill to increase the minimum wage, which was then $5.15 an hour, three times over three years.

Some economists believe that the Friday increase couldn't be happening at a worse time.

The U.S. economy lost nearly 3.4 million jobs in the first half of 2009, which is more than the 3.1 million lost in all of 2008.

Suzanne Clain, professor and living wage expert at the Villanova School of Business in Pennsylvania, said that increasing the minimum wage would create additional financial hardships for employers, driving the nationwide unemployment rate above its current 9.5%.

"My feeling is that increasing the minimum wage is going to put additional strain on the economy," she said. "Additional jobs will be lost as a result. It puts stress on employers who are currently having very small profit margins."

Clain conducted an analysis showing that the 13 states with the highest minimum wage -- exceeding the upcoming federal minimum of $7.25 an hour -- experienced higher unemployment levels than the other 37 states. She said the unemployment rates were higher by an average of between 1.75% and 2% in those 13 states during the three-month period ending in May. "Raising minimum wage rates will generally discourage businesses from employing people," Clain said. "We're already suffering from a downturn phase."

What about the waitresses?

Regardless of whether Friday's increase has a beneficial or negative effect on minimumwage workers, there is one group that it always seems to leave behind, according to the National Employment Law Project: waiters, waitresses and other workers who rely on tips.

Villanova School of Business 2009 Media Report

76 NELP, a New York and Washington-based advocacy group for low-wage workers, released a recent study highlighting the fact that the minimum wage for tip workers has remained frozen at $2.13 an hour since 1991. According to NELP, the buying power of this wage has fallen 36% over the last 18 years.

"This disproportionately affects women," said Raj Nayak, a lawyer with NELP. "Waiters around the country have three times the poverty level of other workers. It's hard to depend on tips."

To NELP, the solution is obvious: Raise the minimum wage for tipped workers. In the study, the group said the federal government could follow the lead of some 13 states that guarantee tipped workers 60% of the minimum wage, which was actually a federal policy until 20 years ago.

Better yet, the study suggests, the government could extend the same federal minimum wage to tipped workers as to any other wage earners, noting that this is already practiced in seven states, including California and Nevada.

First Published: July 24, 2009: 3:36 AM ET

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Minimum wage inches higher - will it help?

Friday, July 24, 2009 Post a comment | E-mail this story | Print

The Economic Policy Institute in Washington estimates that more than 2.8 million workers will have their wages lifted to $7.25 an hour on Friday.

HILLSBOROUGH COUNTY (Bay News 9) -- Florida's minimum wage is going up by four cents per hour.

The increase is due to an increase in the federal minimum wage to $7.25 per hour.

The federal rate will supersede Florida's, at least until next year.

Florida law requires the Agency for Workforce Innovation to calculate a new minimum wage each year on Sept. 30 based on the Consumer Price Index.

If that figure is higher than the federal rate it will go into effect in January.

Juan Davis, the owner of Fast Lane Clothing in Tampa, said the change won't affect his company much.

"This four-cent one almost is a non-issue," Davis said. "Even if you had thousands of employees at that level, it's not going to make a substantial impact. But when the bump is bigger, you do have something to worry about."

A help or a hindrance?

Will the new minimum wage help workers at the bottom of the ladder, or will it kill their jobs?

Most states have their own minimum wage, and employers are required to pay whichever is higher. That means minimum wage workers will get a raise in 29 states. In the remaining 21 states and Washington, D.C., they'll see no change.

In some states, the increase will be more modest. In New York, the state minimum wage is $7.15 an hour, so workers there will be paid an extra dime an hour, which means Villanova School of Business 2009 Media Report

78 another $4 for a 40-hour week. But in states like Georgia, Virginia and Texas, workers are paid the current federal minimum of $6.55, so they'll get the largest raise of 70 cents, which translates into a $28 bump for a full-time week, or more than $1,400 a year.

Kai Filion, an economist with the Economic Policy Institute in Washington, estimated that more than 2.8 million workers will have their wages lifted to $7.25 an hour on Friday. More than 1.6 million workers will also be indirectly affected, according to Filion, meaning their above-minimum wages will increase as the rising tide lifts all boats.

That adds up to nearly 4.5 million workers who would get a raise. The impact varies widely from state to state, depending on state minimum wages and population. In New York, with its $7.10-an-hour state minimum, 63,000 workers would be directly impacted, according to the EPI, compared with 632,000 workers in Texas.

Juan Davis, the owner of Fast Lane Clothing in Tampa, said the change won't affect his company much.

"Because it's not a big increase, any impact will be modest, but it will be good," said Heidi Shierholz, a minimum wage expert with the EPI. "You're seeing people say this is a wrong time to do this, but I think that is entirely wrong-headed. They could not have planned this for a better time."

Based on Filion's estimates, the wage increase will inject $5.5 billion worth of extra spending into the economy over the next year.

"It gets additional money to low-wage workers," said Shierholz. "These are workers who are mostly struggling to get by and will spend that extra cash. This is actually stimulus."

Fewer jobs for low-wage workers?

Back in 2007, before the current recession began, Congress passed a bill to increase the minimum wage, which was then $5.15 an hour, three times over three years.

More Information •

Labor secretary says wage hike will boost spending

•

Minimum wage hike could threaten low earners' jobs

Some economists believe that the Friday increase couldn't be happening at a worse time.

The U.S. economy lost nearly 3.4 million jobs in the first half of 2009, which is more than the 3.1 million lost in all of 2008.

Suzanne Clain, professor and living wage expert at the Villanova School of Business in Pennsylvania, said that increasing the minimum wage would create additional Villanova School of Business 2009 Media Report

79 financial hardships for employers, driving the nationwide unemployment rate above its current 9.5 percent.

"My feeling is that increasing the minimum wage is going to put additional strain on the economy," she said. "Additional jobs will be lost as a result. It puts stress on employers who are currently having very small profit margins.'

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Does today’s minimum wage hike mean fewer jobs?

By Steve Adcock · July 24, 2009 · comment

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The federal minimum wage hike went into effect today for the third straight year, raising the wage limit from $6.55 per hour to $7.25. In today’s economy where small businesses are struggling to remain afloat, does the minimum wage end up hurting the economy more than it helps?

2009 has already seen a net loss of 3.4 million jobs, and many economists fear what further government regulation of wages will do for the prospects of finding work for those who are unemployed.

“My feeling is that increasing the minimum wage is going to put additional strain on the economy,” said Suzanne Clain, a professor at the Villanova School of Business.

She predicts more job losses as a result of this latest wage increase due to further stress on already-small profit margins.

According to Clain, states with the highest minimum wages suffered more job losses than those states with lower wage minimums during a three-month study conducted earlier this year. “Raising minimum wage rates will generally discourage businesses from employing people,” Clain added. “We’re already suffering from a downturn phase.”

Richard Burkhauser, a Cornell University economist, argues there are better ways to help the working poor while avoiding increased pressure on struggling small businesses, like the Earned Income Tax Credit, for example.

“This is absolutely the worst time to raise the minimum wage,” he says.

This is the last wage increase after passage of the “Fair Minimum Wage Act of 2007”, which mandated three separate minimum wage increases in as many years – first to $5.85 in 2007, then to $6.55 in 2008 and finally $7.25 in 2009.

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Why Business Schools Should Focus on Emerging Markets Too many B-schools are preparing students for the last century.

To ready them for this one, they should focus on China, India, and the rest of the developing world

By Jonathan Doh Many business students study or work in another country as part of their overall academic programs. Often these experiences stimulate a curiosity and lifelong interest in global business. At the Villanova School of Business (Villanova Undergraduate Business Profile), more than half of our undergraduate business students engage in a study abroad or an international internship experience during the course of their time with us. This is something we are proud of.

Yet too few of our students—and those of other B-schools in North America and Europe—take advantage of opportunities to experience the emerging markets of the world, markets that are already important components of the global economy and whose role and influence will continue to grow in the decades to come.

As we near the second decade of the 21st century, the balance of global economic power is shifting toward the developing and emerging regions of the world. By one measure, the developing and emerging world is already producing nearly 50% of global economic output.

The BRIC countries—Brazil, Russia, India, and China—along with the rapidly growing economies of Mexico, Malaysia, Indonesia, and others, are now driving global growth.

China is predicted to become the largest economy in the world by 2040, if not sooner.

India's economy will soon eclipse that of Japan's. Brazil is a global leader in commodities but also a major contributor in more advanced industries, including regional passenger aircraft (Embraer). Even African countries are becoming more attractive locations for trade and investment, despite continued underdevelopment and social challenges.

The Emerging Markets Century Along with the growing economic power comes a commensurate shift in political influence for large emerging markets, with dramatic consequences for traditional military and strategic alliances. For these reasons, Antoine van Agtmael, who first coined the term "emerging markets," argues the coming century will be "the Emerging Markets Century."

Villanova School of Business 2009 Media Report

82 Interestingly, the global economic crisis has not slowed this trend; if anything, it may accelerate it. To be sure, some regions, such as Central and Eastern Europe, are suffering particularly badly from the crisis. But the large emerging markets, notably China and India, continue to experience rapid growth, albeit at a slower pace than in previous years.

Although the World Bank is now predicting that global economic output will decline for the first time in decades, the East Asia and Pacific region, which grew at 8% in 2008, is predicted to expand by 5.3% in 2009. Although China's growth will decline to 6.5% in 2009 (from 9% in 2008) and India's will fall to 4% (from 5.5% in 2008), these are impressive growth figures during a period of global economic downturn. Compare this with GDP declines in 2009 of 6% in the U.S. and as much as 13% in Japan.

As a professor of international management, I can help students understand the emerging markets of the world; for instance, I teach a course on emerging markets at the undergraduate, graduate, and executive levels. But there is nothing like traveling to rural India to observe firsthand not only the infrastructure challenges facing the country but also how the offshoring phenomenon has moved beyond the major cities to touch other parts of the economy, making India a leader in the provision of IT and other services.

Villanova's Global Strategy The same can be said for visiting one of the many electronics or apparel manufacturing plants in southern China to understand why and how that country has become the "workshop of the world." Or talking to a farmer at a sugarcane plantation to learn how, by harnessing a basic agricultural commodity, Brazil has emerged as a global leader in cheap, efficient ethanol production as we in the U.S. stumble in our efforts to harness alternative fuels. Or to witness the struggles of street-corner entrepreneurs around the world, such as those selling nothing more than chewing gum on the major thoroughfares of Mexico City, and appreciate the hardship—and tenacity—of businesspeople in circumstances that are radically different from our own.

At the Villanova School of Business, we have a strategy in place that prioritizes program initiatives among regions of the world. The strategy emphasizes the large emerging markets (BRIC+Mexico) first, followed by the "second tier" developing countries, and then other countries that remain important players in the global economy. In the immersion trips that are an integral part of our executive MBA program (Villanova Executive MBA Profile), our students travel exclusively to emerging markets.

More recently, our business students have formed Business Without Borders, an association modeled on Engineers Without Borders (which, in turn, was inspired by Doctors Without Borders), that is committed to interacting with the developing and emerging countries of the world through service learning and other means. Its first initiative is a rural development project in Kenya with a group of engineers and a local NGO. We are also incorporating international consulting projects into our MBA program that emphasize support to entrepreneurs in emerging markets.

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83 We have a long way to go. But, by putting a stake in the ground and committing ourselves to emerging markets, we believe we are preparing our students for this—and not the previous—century.

Jonathan Doh is a professor of management and director of the Center for Global Leadership at the Villanova School of Business. His most recent books are Multinationals and Development with Alan Rugman (Yale University Press, 2008) and NGOs and Corporations with Michael Yaziji (Cambridge University Press, 2009).

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http://www.ecommercetimes.com/

Microsoft and Yahoo Tie a Loose Knot

By Erika Morphy E-Commerce Times 07/30/09 4:00 AM PT Microsoft and Yahoo have put a punctuation mark on their stormy relationship over the past two years with a deal that seems anticlimactic, considering the high drama that led up to it. Still, it could mean the beginning of some serious competition for Google in the search advertising space.

Microsoft (Nasdaq: MSFT) and Yahoo (Nasdaq: YHOO) have inked an Internet search advertising agreement, finally entering a partnership that seemed to die more than one death over the past two years.

In broad terms, the deal gives Microsoft access to Yahoo's content and advertisers, with its AdCenter platform serving as the interface. Yahoo will be the front-end face of the partnership, focusing on building sales Error! Hyperlink reference not valid.with advertisers.

The 10-year deal will have to clear a high hurdle, as it is certain to come under rigorous scrutiny by regulators. The two companies are hopeful it will close by early 2010.

Neither Microsoft nor Yahoo responded to the E-Commerce Times' requests for comments in time for publication.

Some of the terms of the deal are surprising; for one thing, Microsoft will not be making a cash payout to Yahoo. There was rampant speculation that a possible deal would be worth US$1 billion or more -- indeed, in 2008 Microsoft attempted to acquire Yahoo for a whopping $44.6 billion.

Instead, Microsoft will be paying traffic acquisition costs to Yahoo at a rate of 88 percent of search revenue generated from Yahoo's sites for the first five years of the 10-year agreement.

Yahoo estimates the agreement will increase its annual operating income by $500 million and boost annual operating cash flow by about $275 million.

Each company will maintain its own separate display advertising business.

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Taking Aim at Google With the details now finalized, the partnership will allow the duo to concentrate on Google (Nasdaq: GOOG) , the formidable dominator of the search industry.

Yahoo, for all its enhancements to its search product, has yet to come within striking distance of Google. Microsoft has fared even worse, despite out-of-the-gate buzz generated by its new search engine, Bing.

However, overtaking Google is a long-term goal, and regardless of its immediate effect on the playing field, the deal appears to be a win for both companies.

Who Wins?

"This is how I see it right now," N. Venkat Venkatraman, a business professor at Boston University. told the E-Commerce Times.

"Microsoft wins because it is not buying Yahoo and is getting a prominent site to use Bing.

Yahoo wins in the sense that it can rationalize its resources to focus on display ads and see how far it can compete against Google in this area where it has kept its separate identity."

Yahoo also wins because of a revenue-sharing agreement that on its face, seems to favor it, he added.

There are efficiencies to the deal, but taking on Google is another matter entirely, Eric Karson, associate professor of marketing at the Villanova School of Business, told the E-Commerce Times.

"The big question is, how do you slow a moving freight train? By partnering, at best, Bing and Yahoo can try and stay relevant as a weak second -- maybe a 30 percent share of searches from home, versus the 70 percent for Google."

Also, he added, consider this: There will be a certain percentage of Bing users or Yahoo users that will not like the new-to-them format, and go to Google. Yahoo and Microsoft "still haven't given Google users any real reason to switch, so any success is likely to be limited."

Advertisers Ponder As Microsoft and Yahoo have been circling each other for a year or more attempting to forge an agreement, advertisers have had plenty of time to consider the ramifications of a tie-up between the two. From their perspective, the deal could mean anything from better choices and greater efficiencies to -- on the other end of the spectrum -- less competition and higher rates. For the most part, though, there is cautious optimism that a Yahoo-Microsoft partnership will benefit advertisers.

Villanova School of Business 2009 Media Report

86 "Google has too much control," Daniel Yomtobian, founder and CEO of Error! Hyperlink reference not valid., told the E-Commerce Times. "This balances out the power. Now, both Google and Yahoo/Bing will have to work harder to compete for user market share and advertisers, which will ultimately raise revenue for the search engines."

There has been a tremendous level of interest in the deal.

"Most advertisers see it to be in their interests to have a two-horse race," Mike James, CEO of FanSnap, told the E-Commerce Times. For them, there is an additional investment and administrative cost working with multiple search engines, and so the ability to work with both Microsoft and Yahoo at the same time is important."

It will also lead to access to a larger pool of prospects for advertisers, he added.

The deal will expand search engine advertising, said Michael McVeigh, vice president of search engine marketing at Zeta Interactive.

"There are many marketers who have not bothered to venture past Google AdWords, and they will be attracted by the acquisition opportunity in the combined Yahoo/MSN search marketplace," he told the E-Commerce Times.

The industry has always suspected that there are valuable incremental customers to be won via sponsored search with Yahoo and Microsoft, but marketers could not justify the allocation of time and resources to manage two additional channels, he said. "This consolidation this will change that."

Google could also use the competition, J. Brooke Aker, CEO of Expert System USA, told the ECommerce Times.

"Bing surprised many with its new features, clean interface and the way they made use of some semantic processing without having to be a rocket scientist," Aker said, adding that he would love to see Yahoo and Microsoft make a run at Google. "It would force Google to wake up a bit and not feel so comfortable and smug in their market leading position."

Still, there are voices expressing hesitation, including that of Scott Smigler, president of Exclusive Concepts and an authorized Yahoo Small Business Partner.

"As an e-commerce SEO, almost all of our focus has gone to Google because of their dominant market share," he told the E-Commerce Times.

"The partnership between Yahoo Search and Bing is a big deal, because Bing will now have a much broader reach in the search space. Bing will no longer be an afterthought," Smigler said.

The big question for him is whether Bing can deliver search results that are as or more relevant than Yahoo's engine.

"Bing is too new to know the answer to that question for sure," Smigler concluded.

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In Pictures: Top 10 Skinny-Food Myths Chaniga Vorasarun

Š iStockphoto

Low-Fat When something is low-fat, usually something else like carbs or sugar is added in to make up for the loss of flavor.

"The problem is low fat is not necessarily low calorie," says Greg Bonner, chair of the marketing department at Villanova School of Business. "Since it is low fat, people think they can eat a bit more and still come out ahead."

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How parishes can cope with the 'Great Recession' Aug. 05, 2009

By Charles Zech

(Pat Marrin)

VIEWPOINT As the country reels from the effects of our current recession, as people struggle amid soaring housing foreclosures, increasing unemployment and stock markets in turmoil, a natural place to seek refuge is in a place of worship.

But churches are also experiencing many of the same problems as the private sector. As the director of the Center for the Study of Church Management at the Villanova School of Business in Pennsylvania, I deal with Catholic and Protestant clergy and laity at all levels, ranging from parish ministry to diocesan officials. All churches are feeling the pinch of reduced financial giving and decreased investment income.

The current cohort pursuing our master’s degree in church management is dealing with an entirely different landscape than our inaugural class in 2008 faced, and a new set of skills needs to be taught when it comes to managing the parish or church.

Pastors recognize the bind they are in: saving souls while meeting the temporal needs of their parish. Some of our students wonder what the most effective strategy is to carry out their mission in an era of declining resources.

It is difficult to answer that question in the abstract, since every parish is different. Here are some general guidelines that every parish should consider:

Villanova School of Business 2009 Media Report

89 Do: Be transparent and accountable in your finances. The more information parishioners have, the more willing they are to work with the pastor and staff in coming up with some satisfactory solutions. As a counter example, recently the pastor of my parish announced that as the fiscal year was rapidly coming to a close, the parish found itself with a significant budgetary shortfall, even though every effort had been made to slash expenses. Then he asked, “Would everyone consider increasing their weekly contribution by a significant amount for these next few weeks?” Not only was this appeal clumsy, but it could have been avoided. If my pastor and our parish finance council had chosen to be transparent and kept parishioners informed of the budget situation regularly, a discussion with parishioners (and it should be a discussion) could have taken place to consider options and prevent our unfortunate financial situation. Parishes should be transparent and accountable at all times, not just in times of financial stress, but transparency is even more critical in times like these.

Don’t: Decide that this is a good time to introduce stewardship to your parish.

Stewardship is about changing people’s minds and hearts. It is not about giving to cover a temporary budget shortfall. Pastors looking for a quick solution will often turn to the concept of stewardship to raise money quickly. They are usually disappointed.

Stewardship is not a euphemism for fundraising. It takes time to develop. Any attempt to use it solely as a fundraising scheme will turn parishioners off to the concept, both now and in the future.

Do: Try to avoid layoffs of parish staff. Most parish staff members consider their position to be more than a job -- it is a ministry. Laying them off sends a signal to them (and to parishioners) that this ministry isn’t really needed. This can destroy the selfimage of the laid-off staff member. A parish is like a family. Most go to great lengths to avoid laying off a family member. Furthermore, any bitterness felt by a laid-off staff member (“Why me?”) could be disruptive to the entire parish.

Don’t: Be reluctant to try other, innovative, cost-saving measures. While layoffs are a bad idea, furloughs (unpaid vacations) are generally accepted by staff members, especially those with a ministry perspective. A similar approach is to reduce the workweek to four paid days. Some of the work in the parish that is currently outsourced (like cutting the grass) could be performed by volunteers. Again, the importance of transparency: The more information parishioners have and the sooner they receive it, the greater the likelihood that they can work with the pastor to be innovative in maintaining parish ministries while cutting costs.

The bottom line is that most parishes have better control over their expenditures than their revenues. I’m not suggesting that parishioners be let off the hook in increasing their contributions. We have a responsibility to contribute to the financial solvency of our parish. Rather, since many parishioners are struggling financially themselves,

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90 reducing expenses will likely be a more successful approach to the current financial situation in which many parishes find themselves.

Professor Charles Zech is the director of the Center for the Study of Church Management at the Villanova School of Business.

Last updated: August 13, 2009 12:49pm

Interest Rates, General Economic Environment Remain the Same

By Erika Morphy

WASHINGTON, DC-There was a time when executives from all sectors of the economy would watch with baited breath to see what the Federal Reserve Bank would do with interest rates. This, of course, was before the federal funds rate was effectively lowered to zero last year in response to the global financial free fall the world suddenly was in.

Capitol Hill

At their most recent two-day meeting, which ended

Wednesday, Fed policy makers opted to keep interest rates where they were. That was not surprising; this time, though, Fed watchers waited to see what signals would be sent regarding the Fed’s exist strategy from its unprecedented and aggressive reach into the economy.

Small signs are there that the Fed will be disengaging, albeit slowly. It has said it will slow the pace of the program to buy $300 billion in US Treasuries for example. By October, it said, it anticipates the full amount will be purchased, one month later than the program was scheduled to end. Left in place, and not extended beyond the end of this year, is the cornerstone of the Fed’s plan to stabilize the markets. That is, its purchase of $1.25 trillion of GSE mortgage-backed securities and $200 billion of agency debt.

With the Fed showing little signs of extending its economic rescue program beyond 2009, an analysis of where the commercial real estate industry is right now and will likely be by the end of the year is in order.

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91 For starters, the industry cannot look to assistance from the Fed even if the bank authority was inclined to extend itself further, according to Aaron Moskowitz, a business planning for commercial property companies, based in Los Angeles.

The Fed will not be bailing out any more companies, because it cannot, he tells GlobeSt.com.

“Nobody can explain what happened with AIG and Goldman Sachs, but our borrowing capacity through the Fed has now hit a brick wall. Other countries are implementing programs to offset their losses on possessing dollars, and there is no room for the Fed to budge, except through continued lowering of interest rates.”

And the level of interest rates has become almost meaningless to borrowers who are seeking to refinance, the immediate crisis in the industry right now.

Even if liquidity were available, “we are currently in a situation where commercial valuations are being based more on historical rent histories rather than the more speculative 12 months pro-forma method,” Moskowitz says. “This is creating a significant effect within the commercial lending industry as the banks are seeing values fluctuate significantly and interest rates become less significant then vacancies realized within current bank and fund portfolios.”

Unfortunately the consensus among the majority in the commercial real estate community is the government programs, including the Fed’s actions, have not addressed their particular crisis.

The Fed has noted that the economy is beginning to stabilize or level out as the most recent statement from the Federal Open Market Committee said. “Conditions in financial markets have improved further in recent weeks,” it read.

However that stability is not translating into more active lending.

It is a little to early to see signs of stabilization in the commercial real estate market in a climate where commercial real estate values continue to decline, access to financing, particularly for larger transactions, is very limited, and loan defaults are rising at an increasing rate, Eugene Balshem, a partner with Stroock, tells GlobeSt.com.

“This will continue to be an issue as more and more commercial real estate loans, in particular, CMBS loans, mature this year and next.”

It may be that the programs put in place will just take longer for the CRE industry to see their effect, Shawn Howton, director of the Daniel DiLella Center for Real Estate at the Villanova School of Business, tells GlobeSt.com.

“The CRE market generally lags the rest of the economy so if we see improvement in the broader economy by the fourth quarter this year or early in 2010, it will take a few quarters for that improvement to work its way into the CRE market.”

There will be pockets of stability around the country as CRE is largely a local or regional market, he predicted, with retail leading out first then followed by the office sector as

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92 unemployment lessens. But the broad trend in CRE is not positive in the near term and a little brighter in the intermediate term depending on economic activity, he concludes.

If stabilization is supposed to be a reflection of lending activity, then no, we are not stabilizing, says Steven Pepper, partner with Arnall Golden Gregory in Atlanta. “There is no lending on a day to day basis unless the sponsor has put in a significant amount of equity,” he tells GlobeSt.com.

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AUGUST 17, 2009

SECURITY

Getting Real About Fakes If companies want to cut into sales of counterfeit products, they need to understand why consumers buy them in the first place

By PEGGY E. CHAUDHRY And STEPHEN A. STUMPF

As the counterfeit trade booms, companies are rolling out massive campaigns to get people to stop buying fakes. But the messages they use are often off the mark.

Companies have tried everything from threatening prosecution to linking phony products with organized crime. But marketers often don't pay attention to what actually drives people in particular markets to buy counterfeits and what messages will actually work to curb demand of fake goods.

Companies, for instance, might roll out ads in a country stressing that fake products are of poor quality. But those ads might ignore the fact that local consumers have little disposable income and consider knockoffs a bargain—so they are willing to accept a price-quality trade-off. A better approach might be to stress that the phony goods, such as fake cigarettes, are funding terrorism or, in the case of counterfeit pharmaceuticals, are actually killing people.

To figure out how companies can improve their antipiracy marketing, we surveyed consumers in five large markets—Brazil, Russia, India, China and the U.S.—to see what would make them opt for knockoffs. Then we used that information to figure out what messages might get people to stop buying the illegitimate goods.

Why Consumers Buy We presented consumers in each market with five possible motivations for buying counterfeits in two categories—movies and drugs—and asked them to rank the factors on a seven-point scale of importance. Here's what they said about each.

1. Quality and performance. Consumers would buy a fake if they thought it was just as good as a legitimate product.

Only U.S. consumers ranked this as an important factor that would influence them. Elsewhere, this attribute was just "somewhat" important—and Russian consumers ranked it not important at all. Astonishingly, consumers in these country markets valued the quality of the fake medicine less than they did factors such as reduced price and availability.

WHO and MPAA

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93 Anti-counterfeit advertisements from the World Health Organization and the Motion Picture Association of America On the other hand, the quality of bootleg movies was ranked as very important for Russian, Brazilian and Chinese consumers, and less so for people in the U.S. and India.

2. Cost. Consumers would buy a fake because they cannot afford a genuine product.

Not surprisingly, almost all consumers ranked this as a very important motivation for pursuing fake drugs and bootleg movies alike. The two exceptions: Chinese consumers said this factor was only somewhat important when it came to drugs; U.S. consumers said the same about movies.

3. Sentiment. Consumers would buy a fake because they do not like the big businesses that make the authentic products.

We expected some resentment here, since drugs and movies are usually produced by large corporations, and the people who buy counterfeits may believe that the industry is price-gouging consumers. But only in China did consumers express disapproval of the large movie studios as a significant motivator for buying bootlegs. And only U.S. consumers showed an anti-big-business sentiment for both the movie and drug industries.

Their Brazilian, Russian and Indian counterparts did not concur, and rated this as an unimportant justification.

4. Ethics. Consumers would buy a fake because they do not think it is illegal or immoral to do so.

In this area, consumers had very different attitudes about movies and drugs.

Reality Check •

Ineffective Messages: The global trade in counterfeits is booming, but most attempts to get people to stop buying have not worked

•

Listening to Consumers: Companies need to pay attention to the factors that drive people in a particular market to seek out fakes—not simply decide on a standardized message and spread it across the globe.

•

The Real Story: Our survey of consumers in five large country markets found a range of reasons why people opt for counterfeits. It also suggested a range of messages companies could use to get people to stop buying.

In Brazil, India and the U.S., consumers said that consumption of fake pharmaceuticals was an unethical behavior. In Russia and China, it was not important at all—in effect, consumers would buy the fake pharmaceuticals even if they realized it was an immoral or illegal act.

With movies, on the other hand, consumers in all markets but Brazil said that ethical behavior was unimportant when it came to obtaining counterfeit movies. (In Brazil, it was just somewhat unimportant.) These consumers simply do not see bootlegged movies as illegal or morally wrong, perhaps because of the ease and anonymity of Internet downloads and the widespread consumer acceptance of obtaining fake movies. In our survey, 50% of 1,910 consumers readily admitted to obtaining a bootleg movie.

5. Ease. Consumers would buy a fake because it is easy to obtain.

As with ethics, this factor brought up a big divide between movies and drugs. The ease of obtaining fake movies was a very important motivation in each market. However, with drugs, ease was an important factor only in the U.S., just somewhat significant in Brazil and India, and not significant at all in China and Russia.

Consumers, in other words, face different degrees of easy market access to counterfeit drugs and may pursue counterfeit drugs even if they are tougher to obtain.

WHAT COMPANIES CAN DO

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94 So, how can companies craft their marketing to answer these attitudes? Here are some messages they might want to push

.

1. Fakes Are Poor Substitutes.

In countries where people don't place a high priority on the quality of phony drugs, companies should inform the public about the dangers the drugs pose, especially when treating critical conditions. Companies should hammer home the idea that fake drugs are not generics—a common misperception—but dangerous lookalikes that can kill. For instance, one recent report says that pirates in countries such as China and India have used chalk, dust and contaminated water to make counterfeit drugs.

Drug makers should also highlight the fact that phony drugs could pose serious health risks not only to individuals but to nations.

In some African countries, for instance, there are large counterfeit markets for treatments of malaria, among other serious conditions. If the antimalarial counterfeit contains a low dose of the active ingredient, it is actually helping the parasite to develop a resistance to the genuine medicine.

Movie makers have taken a similar strategy, and used trailers that reinforce the idea that quality is much worse for bootlegs. For instance, movies shot with camcorders in a theater usually have a herky-jerky picture and intrusive audience noises.

2. Pirates Are Not Robin Hoods.

Companies should emphasize that pirates are not philanthropists and are lured by the high profits of selling fakes. Even if, say, pirated movies are offered free on the Internet, suppliers at the top of the piracy supply chain often provide the digital fakes more as a challenge to the companies that own the intellectual property.

What's more, many consumers think that counterfeit drugs help poor people by offering them a bargain. So, drug companies should stress that fakes end up hurting people by giving them potentially ineffective or dangerous treatments and many consumers unknowingly obtain counterfeit drugs.

Movie studios, meanwhile, should look to China's successful antipiracy efforts for ideas. One antipiracy campaign plays up nationalism to get the Chinese consumers to buy legitimate movies. The effort links counterfeiting to organized crime and shows how the revenue lost to piracy hurts the nation's film industry, robbing it of funds that could be used to produce smaller, independent movies.

Some Western film companies, meanwhile, have come up with their own successful measures for the Chinese market, such as offering prizes and contests for people who buy legitimate movies.

Behind the Study We investigated how consumers viewed two booming categories of pirated goods: movies and pharmaceuticals. We chose these two, in part, for contrast. They elicit very different responses from consumers, so it takes very different strategies to battle these counterfeits.

For instance, movies are bought purely for entertainment. They can be widely obtained and shared at little or no cost, without health or safety risks. Drugs, on the other hand, are often bought out of need, whether "lifestyle" products such as erectiledysfunction medicine or treatments for serious conditions such as cancer, HIV/AIDS and heart disease. These products are often easy to obtain online, but using them carries considerable health risks. And, needless to say, if you buy the drugs for your own use, you can't share them.

For all their differences, both categories have one thing in common: popularity. The World Health Organization has estimated that counterfeit drug sales will reach $75 billion world-wide in 2010, up more than 90% from 2005. (The WHO defines counterfeit medicines in a number of ways: products with the correct ingredients but fake packaging; products with incorrect ingredients; products lacking sufficient active ingredients, or having no active ingredients at all.)

Pinning down the spread of counterfeit movies is tougher, since many bootlegs are widely copied and distributed online, often free of charge. For one snapshot, the Motion Picture Association of America estimates that $6.1 billion was lost to bootlegging, illegal copying and Internet piracy in 2005.

As for the markets we looked at, we wanted areas with large numbers of consumers but big differences in gross domestic product per capita, intellectual-property protection and culture (which includes factors such as governance, personal values and religion).

Each market also has a substantial estimated traffic in counterfeits. India comes in at $7 billion, with Brazil at $15 billion and Russia at $21 billion. Towering over the rest are China, at $80 billion, and the U.S., at $290 billion.

--Peggy E. Chaudhry and Stephen A. Stumpf 3. We’re Not Faceless Corporations.

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95 Dislike of big business is a factor only in China and the U.S. China's antipiracy campaign addresses this attitude, once again, with nationalism: If you steal movies, the message goes, you're robbing resources from the country's culture—not just big, impersonal companies.

In the U.S., one possible solution is for big businesses to carefully publicize their good works—and give solid reasons why their prices are so high. Pharmaceutical companies, for instance, should emphasize that they rely on a few blockbuster drugs to fund future research. So, seemingly high drug prices are actually underwriting potential advances that might help countless people.

4. Push Ethical Concerns.

In Brazil, India and the U.S., a clear conscience is a somewhat important motivation for buying counterfeit drugs; consumers think the practice is morally and legally sound. In these markets, drug makers should emphasize that the sale of fakes is not only against the law but also unethical, since counterfeits can end up harming consumers.

It might also help to stress the connection between counterfeits and organized crime. The pirates are not philanthropists helping the underprivileged, but profit-seeking criminals who provide useless or harmful medications with very few legal repercussions.

With movies—where an overwhelming majority of consumers in all markets studied had a clear conscience about buying fakes— getting people to change their ways is potentially tougher. Bootleg movies are not a matter of life and death, and they can be obtained even more easily and anonymously than drugs. The best approach may be to appeal to people's basic sense of right and wrong, civic responsibility, and their personal risk of both civil and criminal penalties levied for engaging in this illicit consumption.

Clearly, many people want to believe that counterfeits are ethically and legally sound. Remind them that the opposite is true.

5. We’re Making Things Tougher.

Unfortunately, the final motivation—counterfeits are easy to obtain—will be tough to battle with marketing alone.

As long as people know they can go online and get fake products with a few clicks, they will laugh off advertisements warning them about, say, digital copyright protection. (Some say that digital piracy actually provides a distancing effect for consumers, since they feel their illicit behavior is anonymous.) Likewise, as long as policing of counterfeits is spotty, people will not respond to ads warning them about the legal risks of buying fakes.

For these messages to have teeth, companies must push for tougher, more effective policing of both the legitimate and illicit supply chain, and sharper penalties. They must also come up with speed bumps that make it harder for crooks to copy their goods. For example, the Food and Drug Administration advocates the E-Pedigree system for prescription drugs, which documents each prior sale, purchase or trade of the drug to protect U.S. consumers from counterfeit pharmaceuticals.

--Dr. Chaudhry is an associate professor of international business at the Villanova School of Business, Villanova, Pa. Dr. Stumpf is a professor of management and the Fred J. Springer chair of leadership at the school. They can be reached at reports@wsj.com.

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Villanova Taps IDS Scheer and Cognos Apps for BPM Course • •

By Dian Schaffhauser 08/17/09

The Villanova University School of Business has adopted software from IDS Scheer and IBM for use in one of its courses. "Business Intelligence for Performance Management," first offered in Spring 2009, features IDS Scheer's business process management (BPM) application, ARIS PPM (process performance manager), and IBM Cognos 8.3 BI (business intelligence) software. According to the faculty member who designed the course, the class covers business intelligence with a focus on performance management. It will be offered again in Spring 2010.

"I was looking for various business intelligence software tools and packages," said Wenhong Luo. "Besides ARIS PPM and IBM Cognos, I also evaluated Hyperion, MicroStrategy, and Microsoft SQL Server (Analysis and Reporting Services). Although I could have substituted IBM Cognos with one of the other packages, ARIS PPM is unique in its process focus. While other packages are great in slicing and dicing multidimensional data, ARIS PPM allows us to gain insights from business process data, show relationships among process KPIs, and integrate with SAP."

As part of the first course, students presented BPM projects to a panel of judges, which included a BPM architect from pharma firm Wyeth, an IDS Scheer customer.

"With ARIS PPM, I was able to show students business process intelligence," said Luo. "Business intelligence is not just about interactive reports and dashboards. It is about actionable insights.

Students learned how to generate business insights from process data, present the insights using reports and dashboards, and implement business insights through process change."

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In October 2008 Villanova joined IDS Scheer's academic network, which provides the ARIS technology at a discount, as well as course materials including case studies, exercises, documentation, and a tutorial to set up a demonstration client. Besides process intelligence and performance management, the network also offers partnerships that feature IDS Scheer's process design and analysis software, ARIS Business Architect, and Simulator. Other institutions in the network include Ecole Polytechnique in Montreal, Widener University in Chester, PA, and Stevens Institute of Technology in Hoboken, NJ, among many others.

Villanova is located in Villanova, PA and has about 6,400 students.

•

AUGUST 20, 2009

Lessons That Fit the Times

By ANNELENA LOBB, ALINA DIZIK and JANE PORTER

As MBA students return to campus on the eve of the financial meltdown's anniversary in the U.S., business schools are incorporating lessons from the crisis into their programs.

Schools are adding and revamping classes on the meltdown, its roots and consequences. Professors say they want students to avoid repeating mistakes blamed for the blow-up.

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New York University NYU's Stern School of Business Among the class lessons: Question assumptions behind financial models. Probe for better information about complex products.

Don't let greed motivate decisions. Better understand the role of regulatory agencies and governments.

Schools began introducing these themes last school year, but now are incorporating them more systematically. "It would be a mistake to go into the classroom in today's world and not offer very serious reflection of these issues," says Stuart Gabriel, a finance professor at UCLA's Anderson School of Management. Students need "an understanding of the profound earthquake that has rumbled through these areas."

Main Topic on Campus

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98 A leading topic at many campuses: financial modeling. As a result of the crisis, professional investors and analysts were criticized for not adequately considering potential flaws in the assumptions behind their models.

"What's missing is the thought process of, 'What if I'm wrong,' " says Greg Hallman, a senior lecturer at the University of Texas at Austin's McCombs School of Business. In his valuation course, a finance-track requirement, he says he'll spend more time urging students to question models' assumptions.

At Cornell University's Johnson School, finance professor Andrew Karolyi strikes a similar note. He'll remind students that realworld events don't always play out the way a model indicates. "Our models and our perceptions of financial systems are more fragile than we realize," he says.

In a managerial finance class that Prof. Karolyi is teaching this fall to executive MBA students, he'll put more emphasis on hotbutton crisis issues, such as liquidity in pricing securities, which came under scrutiny this past fall when it became almost impossible to determine values for certain complex financial instruments. He'll also have students look more closely at conflicts of interest among a firm's stakeholders, like between executives and shareholders -- a hot topic in regulating executive pay.

At UCLA, Prof. Gabriel is using real-world examples to help students test and understand theories. He plans to use a new case study on the subprime meltdown. For the midterm and final, students will have to show they've learned to question accepted models, which he says will help them notice signs that might point to future market collapses.

Other professors will push students to better understand complicated financial products. Reena Aggarwal will encourage students in her class on alternative investments at Georgetown University's McDonough School of Business to discuss ways to make those markets more transparent. Ahead of the crisis, she notes, markets for complex instruments such as credit-default swaps had ballooned. When the market plunged, investors realized the difficulty in putting a value on those products.

"It becomes extremely important to discuss these issues -- more than in the past -- because of events like the failure of AIG," whose problems stemmed in large part from its sale of credit-default swaps, she says.

Jason Schneider A Valuable Lesson For Mark Zupan, dean of University of Rochester's Simon Graduate School of Business, the crisis provides a vivid lesson on "agency theory," the notion that people make weaker choices when they have little or no "skin in the game," he says.

Home "flippers" who counted on rising real-estate prices and easy credit to make their investments pay off, for instance, often chose to take out risky mortgages with little or no down payment that they later found they couldn't afford. Mr. Zupan expects faculty to mine the crisis for examples that illustrate those dangers in order to teach students.

Some programs are boosting ethics and leadership courses.

Thunderbird School of Global Management in Glendale, Ariz., will double the length to six weeks of a required course on corporate governance, ethics and entrepreneurship. Provost Robert Widing says the crisis exposed leaders' shortcomings. "The roots were in greed and incompetence," he says.

University of North Carolina's Kenan-Flagler Business School is recasting its core ethics course in fall 2010 so that students can examine how, as managers, they would handle ethical dilemmas.

Reworking the Playbook Schools also want to give students a better grasp of the role of governments and regulatory bodies, and the close ties between world economies. New at Yale University's School of Management is "Washington and Wall Street: Markets, Policy and Politics."

New York University's Stern School of Business has added "Financial Crisis and the Policy Response."

Villanova University's School of Business is offering "Understanding the Global Marketplace in a Post-Bailout Economy," a team-taught class where professors bring in corporate and government leaders to offer perspectives on the crisis.

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99 Yale School of Management is making "The Global Macroeconomy" a required course. Dean Sharon Oster says the crisis exposed the interconnectedness of global economies; she wants to ensure students understand international ripple effects.

"One positive byproduct of the crisis may be that we start paying attention more to the importance of considering different models and different alternatives, not thinking about the American way or any one way of doing things as absolutely the best way," says Mauro Guillen, professor of international management at the University of Pennsylvania's Wharton School in Philadelphia, who organized a class taught by multiple professors on the crisis last year and is repeating it this year.

It's not the first time business schools have reworked their playbook after a crisis. After Enron's collapse, for instance, schools added a slew of ethics classes. Many of those standalone courses have since fallen by the wayside, as schools now often say it's better to integrate ethics lessons into other coursework.

After each crisis, students "always ask, 'how do we avoid this the next time around?' But crises are always different," says Georgetown's Prof. Aggarwal. "A couple years ago we spent a lot of time talking about Sarbanes-Oxley issues, we barely got away from it and now we have this whole new world."

For now, students say the crisis lessons help. Burleise Bailey, a second-year MBA student at Stern who worked as an engineer before returning to school, has added a specialization in finance to understand the meltdown better. "I'm just trying to soak it all in," says Ms. Bailey.

Web Giants Wage New Battle in Google Books Saga

By Erika Morphy E-Commerce Times 08/21/09 11:39 AM PT Google Book Search's problems didn't end with last October's settlement with the Association of American Publishers and the Author's Guild. A coalition called the "Open Book Alliance" opposes the agreement, and the group now reportedly has the support of three Internet Goliaths, each with its own axe to grind with Google.

A coalition of firms that oppose a settlement reached last year between Google (Nasdaq: GOOG) and some representatives of the publishing industry over its Google Books project is growing. New members now reportedly include a troika of Web giants: Amazon (Nasdaq: AMZN) , Microsoft (Nasdaq: MSFT) and Yahoo (Nasdaq: YHOO) .

The coalition, called the "Open Book Alliance," is backed by groups opposing the court settlement that Google reached last October with the Association of American Publishers and the Authors Guild. Other groups include Internet Archive and Consumer Watchdog.

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100 The members of Open Book Alliance will be formally disclosed over the next couple of weeks, Peter Brantley, a director at the Internet Archive, has told reporters. Brantley did not return a call to the E-Commerce Times.

If the reports are accurate, it would represent significantly more pushback against Google, which may have thought the major challenges to its goal of scanning and placing online millions of books from library collections -- many of which are still under copyright -- ended when it settled a suit with the two (then) main antagonists to its project.

Book Scanning Project The saga started some three years ago when the Association of American Publishers and the Authors Guild filed a lawsuit against Google to shut down its book-scanning project - or at least get compensation for copyright holders.

Last October, Google reached a US$45 million settlement agreement with the two groups in which it would establish a database through which authors may register works, approve the license of the works through Google, and collect royalties.

That settlement, however, was somewhat controversial; one criticism was that the plaintiffs in the case represented only some of the authors of works that Google would eventually publish in its Book Search project.

Other criticisms focused on the supposed monopoly Google would have over the online database of books. It was likely this issue that prompted the government to take a look at the agreement.

Earlier this year, the Department of Justice alerted the parties that it would be investing the agreement, which is still pending in the court.

Striking a Nerve Parties to the agreement have defended the deal they struck.

"We believe the settlement has enormous benefits for publishers, scholars, researchers and the general public," Association of American Publishers spokesperson Judy Platt told the E-Commerce Times. "It'll give access to published works that, right now, researchers can only dream about."

Advocates of the agreement -- including Google itself -- say the Open Book Alliance is merely a group of competitors worried that a savvy tech company is getting too far ahead.

The settlement is injecting more competition into the digital books space, which is why Amazon, Microsoft and Yahoo are fighting against it, said Gabriel Stricker, a Google spokesperson.

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101 "Ask yourself, who is opposing the settlement?" Platt said. "These are all competitors of Google, which did what they didn't do and negotiated an agreement with us -- an agreement that is not exclusive, I might add."

Fight Over Out-of-Print Books It is interesting that such a fuss would be kicked up over an agreement that largely covers books that have been out of general circulation for some time, Eric J. Karson, associate professor of marketing Error! Hyperlink reference not valid.with Villanova School of Business, told the E-Commerce Times.

"Most of what Google is digitizing now is out of print and inaccessible to most people -- not to mention, off their radar. Funny that now there is a fight over doing it," he said. The sad part is that no one even knows whether there is any positive revenue associated with these "long tail" types of publications, he added.

To be sure, Google is not approaching this endeavor from an entirely altruistic standpoint, Karson pointed out. "I believe competition is always good, but might it be more important to broaden the access to all work? Is Google doing this because they think they can profit from it, or because they can? To some extent, I think it is the latter."

A collective might be one possible happy compromise, Karson said. "These digital rights -- and potential but unlikely profits -- can be shared to further the goal of universal access to published works," he concluded.

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Posted on Mon, Aug. 24, 2009

On the Boards Antares Pharma Inc., a publicly held company based in Ewing, N.J., that specializes in pharmaceutical product development, has elected Eamonn P. Hobbs to the board. He is the president and chief executive officer of Delcath Systems Inc., New York, a medical-technology firm specializing in cancer treatment.

The American Heart Association, a Center City nonprofit health-advocacy organization, has elected four new members to its board: Harris T. Bock is director of The Dispute Resolution Institute, Philadelphia, and an adjunct professor of Alternative Dispute Resolution at Villanova Law School.

Joseph F. Coradino is president of Pennsylvania Real Estate Investment Trust Services and PREIT-Rubin Inc., Philadelphia.

Richard K. Murray is vice president of external medical and scientific affairs at Merck & Co. Inc., North Wales.

Jonathan M. Straub is president of Preventive Health Group L.L.C., of Delaware.

James M. Danko, The Helen & William O'Toole Dean of the Villanova School of Business, has been elected to the board of the Graduate Management Admission Council. The council is a nonprofit organization of graduate business schools based in McLean, Va., that owns and administers the GMAT exam, used as part of the graduate business school admissions process.

Community Interactions Inc., a Swarthmore nonprofit group serving people with disabilities in communityliving settings, has named Larry Clark and Michael Rainey to its board. Clark is corporate account manager of Professional Duplicating Inc., Media. Rainey is an insurance broker and employee-benefits consultant in Media.

Philadelphia University has named William C. Whitmore Jr. chairman of its board of trustees. He is chairman, president, and CEO of AlliedBarton Security Services L.P., Conshohocken, and has been a member of the Private Sector, Senior Advisory Council for Homeland Security.

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103 The university also appointed Moshe I. Meidar and Robert L. Nydick Jr. to its board. Meidar is founder, chairman, and CEO of MAG Industrial Automation Systems L.L.C., Sterling Heights, Mich. Nydick is professor of management and operations at Villanova University's School of Business.

Nancy Hoppe, associate director, Global Congress and Convention Management for Wyeth, Collegeville, has been named president of the Healthcare Convention & Exhibitors Association for 2009-10.

The Chester County Economic Development Council, a private Exton nonprofit economic-development organization, has appointed Craig A. Styer to its board. Styer is a partner in the Litigation Department of Fox Rothschild L.L.P. and is administrative chairman in that department in the firm's Exton office.

Martins Run, a senior-living community in Media, has appointed Ethel Hamburger, Blanche Rednor, and Barbara Wald as new resident trustees on its board of trustees. Hamburger is a retired teacher, while Rednor, a CPA, ran an accounting practice. Wald, also a retired teacher, ran her own computer-software consulting business.

Kardon Institute for Arts Therapy, a Philadelphia nonprofit group that assists people with special needs through the arts, has named Harriet C. Williams to its board. She is a consultant for Elwyn Inc., Elwyn, and the Women's Law Project, Philadelphia.

Matthew A. White has been named to serve on the board of managers at Pennsylvania Hospital. He is a litigator whose practice focuses on commercial litigation at Ballard, Spahr, Andrews & Ingersoll L.L.P., Philadelphia.

Susan Buchwald has been named to the board of New Jersey Alliance for Children, Youth & Families, a nonprofit human-services organization that represents 39 private organizations that serve at-risk children and adolescents throughout the state. She is president and CEO of Community Treatment Solutions, Moorestown.

Cozen O'Connor member Mark J. Foley was recently appointed to the Red Cross, Southeastern Pennsylvania Chapter board of directors. He is chairman of the labor and employment practice group in the law firm's Philadelphia office. - Mike Zebe

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Get Ready for Gruesome Cigarette Warnings Graphic images of diseased body parts could become the norm on packaging

By Jennifer Thomas HealthDay Reporter THURSDAY, Aug. 27 (HealthDay News) -- Would a gruesome picture of a cancer-ravaged mouth with rotting teeth make you think twice about buying a pack of cigarettes?

That's the goal of new federal regulations expected to go into effect within three years. The rules will require tobacco companies to cover at least half of the front and back of packages with graphic -- and possibly gruesome -- images illustrating the dangers of smoking.

If U.S. regulations are modeled after those already in place in Canada and other countries, the warnings will be shocking: blackened lungs, gangrenous feet, bleeding brains and people breathing through tracheotomies.

Though hard to look at, the more graphic the image, the more effective in discouraging smoking, said Stanton Glantz, a professor of medicine at the University of California, San Francisco and director of the university's Center for Tobacco Control, Research and Education.

"The graphic warnings really work," Glantz said. "They substantially increase the likelihood someone will quit smoking. They substantially decrease the chances a kid will smoke. And they really screw up the ability of the tobacco industry to use the packaging as a marketing tool."

Over the last decade, countries as varied as Canada, Australia, Chile, Brazil, Iran and Singapore, among others, have adopted graphic warnings on tobacco products. Some are downright disturbing: in Brazil, cigarette packages come with pictures of dead babies and a gangrened foot with blackened toes.

In the United States, the authority to force packaging changes was granted on June 22, when President Barack Obama, who has struggled with cigarette addiction since he was a teen, signed into law the Family Smoking Prevention and Tobacco Control Act. The landmark legislation gives the U.S. Food and Drug Administration broad new authority to regulate the marketing of tobacco products.

Under the law, the FDA has two years to issue specifics about the new graphic warnings tobacco products will be required to carry. Tobacco companies then have 18 months to get

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105 them onto packages.

Currently, the United States has some of the weakest requirements for cigarette package warnings in the world, said David Hammond, an assistant professor in the department of health studies at the University of Waterloo in Ontario, Canada. The text-only warnings on packages have changed little since 1984.

"Consumers in many Third World countries are getting more and better information about the risks of cigarettes off their packs," Hammond said.

With much at stake for tobacco companies, there will be much wrangling over the details, Glantz said.

Yet research shows the FDA shouldn't compromise, Glantz said. The more frightening the image, the greater the anti-smoking effect, he said.

Despite some research that has suggested images that are too stomach-turning may backfire because people eventually ignore them, new research is showing the most graphic images pack the most punch, said Jeremy Kees, an assistant professor of marketing at Villanova University.

In a yet-to-be published study, Kees had 541 adult smokers in the United States and Canada view a mild image of a smoker's mouth with yellowed teeth; a moderately graphic image of a diseased mouth; and a third photo of a grotesque, disfigured mouth.

The most disturbing photo evoked the most fear, prompting more smokers to say they intended to quit, Kees said.

While the new regulations may also include no-nonsense, text warnings such as "Smoking Makes You Impotent" and "Smoking Kills," the images will have the broadest reach, Hammond said.

Non-English speakers can understand the picture of a diseased mouth, as can people who are illiterate. Smokers tend to have lower literacy levels, Hammond noted.

And kids will get the message too, potentially stopping them from ever lighting up. "You have 4-year-olds and 5-year-olds who can understand that picture," Hammond said.

Elsewhere, graphic warnings seem to be helping to drive down smoking rates. In Canada, about 13 percent of the population smokes daily, a 5 percent drop since the graphic warnings were adopted in 2000, Hammond said.

About 21 percent of the U.S. population smokes daily, according to the U.S. Centers for Disease Control and Prevention.

While powerful, the gruesome warnings won't get everyone to quit.

"Nicotine is highly addictive," Hammond said. "Health warnings are not a magic bullet, but they help move people closer to quitting and provide a constant reminder of why many people want to change."

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106 SOURCES: Jeremy Kees, Ph.D., M.B.A., assistant professor, marketing, Villanova University, Villanova, Pa.; David Hammond, Ph.D., assistant professor, department of health studies, University of Waterloo, Ontario, Canada; Stanton Glantz, Ph.D., professor, medicine, University of California, San Francisco

Fed thinks disclosure is a bad idea

The Federal Reserve Board is trying to head off a court order to reveal, by the end of the month, which banks accepted trillions of dollars worth of emergency loans from the Fed to stay afloat. John Dimsdale reports Tess Vigeland: The Federal Reserve Board is trying to head off a court order to reveal which banks accepted emergency loans. Earlier this week, a U.S. District Judge granted a Freedom of Information Act request by Bloomberg News. John Dimsdale reports the Fed, and the banks, think disclosure is a bad idea.

JOHN DIMSDALE: Banks say that going public would undermine their credibility, scaring away customers and investors and causing more bank failures. The Fed also supports keeping the list of banks secret. Villanova business school professor Victor Li suspects it's a question of timing.

VICTOR LI: We're at the point where the economy is beginning to show signs of stabilization and perhaps the Fed doesn't want to introduce additional elements of instability or at least unpredictability.

If the courts back off, Congress might require disclosure anyway. The Senate has approved an amendment that would force the Fed to reveal the banks. Vermont Independent Senator Bernie Sanders sponsored the provision.

BERNIE SANDERS: It is simply insane that you have an institution, the Fed, that is lending out trillions of taxpayer dollars, at zero interest rates, and then when asked, they refuse to tell us who has received this money.

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107 So far, U.S. District Court Judge Loretta Preska is standing by her August 31st deadline for a list of banks that took emergency loans and the amounts they borrowed.

In Washington, I'm John Dimsdale for Marketplace.

Accountability reports track time, talent and treasure They can encourage participation by letting people see all the good works of a parish Each year after its audit, the Diocese of Austin, Texas, publishes a report indicating how it used funds during the previous fiscal period. Since the Code of Canon Law requires financial reporting, such a document is typical in the Church.

Yet, the Diocese of Austin strays from the norm. Along with figures such as totals from its annual appeal, it publishes photos and stories chronicling its budget in action. In short, it accounts for its parishioners' time and talent -- not just their treasure.

The diocese publishes more than a financial statement. It releases an accountability report.

Human resources "An accountability report is a publication of the parish [or diocese] that is made available to all parishioners, and it renders an account of the stewardship of the human and temporal resources of the parish over the past year," said Father Daniel J. Mahan, executive director of the Marian College Center for Catholic Stewardship in Indianapolis. "A typical accountability report will include data about the parish finances along with some type of narrative explanation of the financial resources, but, more importantly, it will show the use of the human resources within the parish."

Not all accountability reports have photos and stories, but a typical one uses numbers to illustrate aspects of Church life people often do not count. "It will show in a quantitative manner the number of ministries, the number of people involved in parish activities and projects, [and] the number of people served in parish ministries," Father Mahan said. These figures account for the time and talent aspects of stewardship.

Benefits of reports Mary Beth Koenig, chief financial officer for the Diocese of Austin, told Our Sunday Visitor, "I believe that donors feel more connected to the overall mission of the Catholic Church by

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108 understanding specifically how their contributions serve the needs of the larger Church through the information presented in the accountability reports."

Patrick D. O'Meara, president of the Catholic financial services company O'Meara Ferguson, added two more benefits -- it gives a sense of the breadth of participation in parish life and it's something that can be an inspirational activity. When people know the activities of their parish, they feel called to participate.

"You'd be amazed at the amount of stuff that happens in a typical parish hall and, by the way, when you show that, the people themselves are amazed at what goes on," O'Meara said.

Generosity is another benefit, Charles Zech, director of the Villanova University Center for the Study of Church Management, told OSV. "Parishioners expect their church leadership -- parish and diocesan -- to be transparent and accountable," he said. "If a church wants its members to be generous in their stewardship, they need to not only show them how the resources they contribute were used, but also give them a voice -- consultation -- in how they are used."

Unfortunately, he said, parishes and dioceses often underutilize reporting as a stewardship tool and, therefore, might fail to reap its benefits.

Accountable to God Since these reports have "accountability" in their title, the question arises: Who is being accountable to whom?

Father Mahan proposed: "Those who put the report together are showing that the leadership of the parish -- the pastor, the parish staff, the parish council -- [is] being accountable for its activities and is welcoming comments, concerns, ideas, questions -- that it's open to further input."

Though finance committees prepare fiscal numbers for accountability reports, other parish leaders help compile nonfinancial figures from various ministries, he said. In that way, parish leaders are accountable to the parish in the reports.

On the other hand, Zech said, "Staff has a right for parishioners to be accountable through their support of the parish [or diocese], which becomes the parishioners' obligation."

Moreover, everyone answers to a third party: God. "There's a sense in which we are all accountable to our good and loving God for all he gives to us, and we know that we will all be asked to render an account of our stewardship on the last day," Father Mahan said. "The accountability report is a specific document that shows parishioners that the parish is indeed accountable for the wise use of the human and fiscal resources it has received through the past year."

As O'Meara put it: "When the master returns after being away from the vineyard, what does he do? He calls for an accounting."

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109 Amy Kiley writes from Illinois.

Pharmaceutical industry welcomes reform Thursday, September 10th, 2009

By: Kerry Grens kgrens@whyy.org

The President's proposals on health care reform mentioned little about an industry that stands to gain millions of new customers: Pharmaceuticals. But that absence could signal victory.

In his address to Congress the President mentioned that the drug industry will pitch in to help support reform. Previously the industry has promised $80 billion in cost savings. But Wednesday, the industry escaped much attention, unlike other groups, says George Sillup. He's a professor at St. Joseph's University.

Sillup: So much vilifying big insurance as opposed to virtually no mention of big pharma. And sometimes no mention is a good thing.

Obama didn't advocate price controls, which Sillup says signaled a win for the pharmaceutical industry, and a defeat for those who say more savings should come from drug companies. Michael Capella is a professor at Villanova.

Capella: I think the fact that the industry has been at the negotiating table from the beginning and they've been seen as more of a partner in getting this done‌is one of the reasons that the administration has seen fit to not try to paint them in a negative light.

One source of funds to pay for the President's proposals will be to siphon pharmaceutical company profits, an approach drug companies actually support. Analysts say that's because, overall, companies will have a net benefit from potentially millions of new customers with health insurance.

David Nicoli is a spokesman for AstraZeneca in Wilmington, Delaware. He says pharmaceutical firms support health care reform and they say it will strengthen an industry vital to region.

Nicoli: What's going to be good for patient health which is expanded health insurance and prescription drug coverage will also help different sectors of the healthcare industry including the pharmaceutical industry.

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110

Bernanke to discuss growth risks Tue Mar 27, 2007 6:18pm EDT

By Mark Felsenthal - Analysis WASHINGTON (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke is likely to tell Congress on Wednesday that while the Fed sees new risks to economic growth, it remains on guard lest inflation tick any higher.

Bernanke, who appears before the congressional Joint Economic Committee at 10:30 a.m. (1430 GMT), will likely be asked why the Fed ditched an explicit reference to the possibility of interest rate increases from a recent policy statement. He will also be pressed on how hard the housing downturn will hit the economy.

The central bank chief is expected to describe an economy that is behaving much as the Fed had said it would in a report to lawmakers in mid-February, when it forecast moderate growth and gradually declining core inflation. But he is likely to admit uncertainties on both sides of the forecast have grown.

"What we expect him to do is to go out and acknowledge some weakness but to say what they have been saying for three months, that their expectation is that growth will firm mid-year and that they think the primary risk still lies with inflation," said Joseph Brusuelas, chief economist for IDEAglobal in New York.

In recent weeks, the U.S. economy has exhibited greater weakness than most economists had expected.

New orders for big-ticket U.S.-made durable goods fell steeply in January, with orders for nondefense capital goods excluding aircraft -- a proxy for business spending -- off 6 percent, the steepest slide since early 2004.

Reports on housing also point to lingering weakness. New home sales fell unexpectedly in February and a report on Tuesday showed prices for single-family homes in January were down from year-ago levels for the first time in more than a decade.

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111 Adding to concerns about the housing market, rising foreclosures in subprime mortgage markets threaten to provide an additional impediment to recovery.

Financial markets initially saw the Fed's shift in language at its meeting last week as a sign it was moving closer to cutting rates. Now, many analysts believe the Fed will hold rates steady for a while to make sure inflation dips.

"There's no clear indication that there's an impending recession on the way," said Victor Li, an economics professor at the Villanova University School of Business.

"With core inflation at the higher end of the comfort zone, that's keeping them from cutting or lower rates."

The Fed said last week that inflation is its "predominant" concern, and noted that unemployment remains low. Bernanke, an advocate of clearer Fed communications, may provide more insight on Wednesday into how policy-makers feel about prices.

Some officials say they would prefer core inflation, as measured by the 12-month change in the so-called core PCE price index, to be between 1 percent and 2 percent. But that measure rose to 2.3 percent in January from December's 2.2 percent.

But a speech by Fed Governor Frederic Mishkin late on Friday suggested the central bank may be comfortable with inflation at around 2 percent, rather than much lower. Mishkin said he was not optimistic about core inflation falling below 2 percent without a determined monetary policy effort.

The Fed may not be ready to make that push, which would likely result in slower growth and higher unemployment.

"The Fed will find it hard to explain to Congress and the public why it should put a million people out of work for two years to reduce inflation by half a point," Morgan Stanley economist Richard Berner wrote in a note to clients.

Markets are betting the Fed is willing to live with slightly higher core inflation.

Inflation expectations, as reflected in the difference between yields on 10-year Treasury notes US10YT=RR and 10-year Treasury Inflation-protected Securities US912828FL9=RR, have widened to 2.48 percentage points, the widest gap in six months.

The spread widened 7 basis points after the Fed's policy-setting meeting March 21. A basis point is 1/100th of a percentage point.

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Monday, September 14, 2009 Villanova marks Lehman blow-up Villanova University's business college plans to mark the one-year anniversary of Lehman Bros.'s collapse with a symposium tomorrow featuring a grad who was there when it happened, and will presumably have good advice for students who entered Bschool thinking the mid-2000s financial boom would make them hot properties, only to find it's now a tough job market for youngsters.

"It's the one year anniversary of the collapse," Dean Jim Danko told me. "We've got to learn from the stuff that's happening, how it affects business and society and government."

The program features two VU alumni - Charles Ellinwood, "who was at Bear Stearns when it went under, hopped to Lehman Bros. until it went under, and is now part of Barclays Capital," as Danko put it, and Villanova trustee Terry O'Toole, a veteran Goldman Sachs partner who's now a partner at the Tinicum private-equity firm in New York.

They'll be joined by Vanguard Group chairman Jack Brennan, who's a Dartmouth guy and no Wildcat; but he lives nearby, and hires a lot of Villanova grads. The event, hosted

by Economics Department chairman Wen Mao, is closed to outsiders.

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Villanova joins investors, builders to talk real estate collapse To talk about the troubled property markets: Villanova University's business school is hosting: Dan DiLella, chief executive of office landlord BPG Properties; Brent Morris, of Capmark Investments; Joel Rassman, chief financial officer at homebuilder Toll Bros.; Richard Parkus of Deutsche Bank; Brian DiDonato of Sorin Capital Management; and UNC Prof. David Hartzell, at Connelly Center's Villanova Room, 800 Lancaster Ave., 6 pm tomorrow, Thursday Oct. 1, says Shawn D. Howton, finance prof and director of the Daniel M. DiLella Center for Real Estate.

"We have 145 registered, as of now," Howton told me. UPDATE: "We're full," says Associate Director Tim Hoffman, no walk-ins. But people can watch an archive version, in about a week, at www.villanova.edu/business/excellence/realestate .

They'll talk about TARP, raising equity and debt, the frozen Commercial MortgageBacked Securities market, and "potential trades" for distressed properties.

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Interview Consumers from less-developed countries that are poorer appear to be more ready to buy counterfeits.

You say a standardized approach is not viable, so should international brand owners consider tailormaking their anti-counterfeiting efforts to countries’ individual economic profiles, and with the current economic climate leaving us all feeling short of cash, should special efforts to stem the counterfeit tide be made right now?

Dr. Chaudhry Yes, tailored anti-counterfeiting efforts are needed, and yes, this needs to be done now. Here is why. We were able to reach about 400 consumers using an Internet based survey in each of five countries: Brazil, Russia, India, China, and the U.S. According to GDP these countries are among the richest in the world and score either high or medium with respect to development on the Human Development Index.

Yet, the GDP/capita varies greatly across these countries, with Indian and Chinese consumers clearly being the poorest. Across these five countries, two-thirds of consumers reported complicity with counterfeit products. This means that they willingly obtained, shared, or used a counterfeit product. One-third of our sample of nearly 2,000 consumers reported a high level of complicity. This varied by country, with 52% of Chinese consumers being highly complicit, 47% of Russian consumers, 33% for Brazil, 27% for India, and 11% for the U.S. This data shows that consumers from affluent and developed countries are also willing to purchase counterfeit products.

Dr. Stumpf Consumers in different countries seem to have very different views as to the appropriateness of acquiring, using, and sharing counterfeits. To capture the degree of consumer complicity (none, some, high) among consumers, we constructed a complicity index that provides an overall measure of complicit consumer behavior taking into account intentions and actions across multiple product categories. Using this index, we segmented consumers into three mutually exclusive and exhaustive categories: non complicit, some complicity, and high complicity. By grouping consumers based on their complicity, we were able to estimate the size of these consumer segments by country for comparison purposes. This type of data yields insight into the value of tailoring anti-counterfeiting strategies to a specific country’s consumers.

Based on these data, it would be in the best interest of firms to focus their anti-counterfeiting programs in those countries with the highest propensity of consumer complicity.

Dr. Chaudhry We understand that regardless of the economic climate it is a costly initiative for organizations to tailor their anti-counterfeiting initiatives to each country. To protect their intellectual property, brand owners must commit resources to devise and execute a strategy to reduce consumer demand for illicit products. Even when the strategy involves collaboration with public or private law enforcement agencies, brand owners need to lead the initiative. This is essential in order to protect high-risk consumers, such as those acquiring fake pharmaceuticals via legitimate supply chains. Brand owners should have begun this process already. A successful execution of such focused strategies will help businesses to recoup revenues lost to pirates, and provide governments with increased taxes paid by both legitimate businesses and consumers to offset enforcement costs of attacking product counterfeiting.

Your survey suggests that some consumers would consider buying counterfeit drugs.

Did it surprise you that some people knowingly buy counterfeit drugs, rather than just

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115 being landed with them?

Dr. Chaudhry We did expect significant complicity with fake movies, and 50% of the sample reported that they had acquired a counterfeit movie. I did not expect 10% of the respondents to report that they had acquired a counterfeit pharmaceutical. The average frequency of acquiring any counterfeit product over the past two years was about 3 times. The average complicity rate for both pharmaceuticals and movies varied significantly by country – with 17% of Chinese and 9% of Indian consumers expressing a willingness to be complicit with pharmaceuticals, compared to 80% of Russian and 17% of US consumers expressing a willingness to be complicit with movies. In terms of measuring this type of complicity, we know that a selfpositivity bias may affect consumer responses. Self-positivity would underreport complicity. So the actual levels are likely to be higher than those we report for both products.

Dr. Stumpf Even more surprising was that in some countries over 25% of the consumers indicated an intention to be complicit with a counterfeit pharmaceutical. Such consumers were receptive to acquiring a counterfeit pharmaceutical, sharing it with a friend, and/or using it themselves knowing the potential risk of ingesting counterfeit drugs that do not work, or worse yet, cause harm. Since our study involved self report of actual complicity, we are not addressing the unknowing use of a counterfeit; we may be under-representing illicit pharmaceutical consumption by 50% or more.

When it comes to counterfeit drugs, it would seem that targeted education programs are needed. Should pharmaceutical companies themselves be responsible for these sorts of campaigns or, as it is a health issue, would it heighten the impact and the subsequent effects if an official government stand was made?

Dr. Stumpf Although the government, private doctors, and other organizations can help education citizens about the dangers of illicit pharmaceuticals, the manufacturer is responsible to ensure consumers know the danger of using counterfeit pharmaceuticals. Learning from successful marketing campaigns that used education to decrease consumption of alcohol and cigarettes, some proactive pharmaceutical companies have already begun using ‘de-marketing’ techniques to demonstrate the danger of taking counterfeit pharmaceuticals. For example, Pfizer launched a ‘regurgitated rat’ campaign in the UK that shows a consumer of fake drugs pulling a dead rat out of his mouth to build awareness of poisons sometimes used to manufacture fake drugs, and to demonstrate the importance of purchasing drugs from a reliable source. Pfizer tied this campaign to a company website designed to further educate consumers.

Dr. Chaudhry In addition to ads targeted at consumers, pharmaceutical trade associations and governments, such as the European Federation of Pharmaceutical Industries and Associations and the European Commission, are targeting the supply chain of pharmaceuticals to address the counterfeit dilemma. In May 2009, the EFPIA announced a pilot program with the Swedish retail chain, Apoteket AB and wholesalers Tamro and KD to comply with the European Commission’s new traceability requirement for pharmaceuticals in the international supply chain. The European Commission reports the success of its European Union-funded BRIDGE (building radio frequency identification solution for the global environment) pilot to provide patient safety using track and trace technology of pharmaceuticals. After reading Katherine Eban’s book, Dangerous Doses, I am skeptical about pedigrees keeping out the pirates in the supply chain. Eban gives several examples of how pirates created fake paper pedigrees for the pharmaceuticals that they were selling across multiple state lines and various wholesalers in

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116 the U.S. I am not sure how long the newer technology will keep the counterfeiters out of the legitimate supply channel since the profit incentive is just so large.

Companies need to work with government officials to identify consumer risk through what we are calling a “Matrix of Corporate/ Government Social Responsibility” that uses a straightforward way to assess corporate/government solutions by way of assessing: (1) the level of consumer involvement – whether the counterfeit purchase is deceptive (e.g., fake pharmaceuticals obtained through internet pharmacies) or complicit (e.g., illegal purchases of pharmaceuticals on the internet); and (2) the type of product – whether the counterfeit good is harmful to the consumer (pharmaceuticals) or non-harmful. In the specific case of fake pharmaceuticals, which we know may be harmful to the end users, the government should assist pharmaceutical companies in educating the public about the hazards of participating in this market; this assistance might be in the form of a tax credit. The government could also increase criminal penalties for knowing users of illicit drugs in addition to manufactures and distributors. Government and corporate inaction to complicity will be costly, sometimes including sickness and death of unknowing consumers.

Consumers are being encouraged to buy ‘fair trade’ products, to recycle their packaging, to reduce their carbon footprint and not buy imported products but, on the basis of your survey, how ‘ethical’ do you feel the average consumer is in terms of their complicity with counterfeit products? Did you uncover a difference in the ethical perceptions of consumers in the country markets that you studied?

Dr. Chaudhry One variable we examined was a consumer’s ethical concern in being complicit with counterfeit products. Ethical concern is the extent of consumer agreement that complicity infringes on the owner’s intellectual property rights or damages the industry, and whether they perceive this behavior to be illegal or unethical. The lack of ethical concern is an attitude of perceived lawfulness found to be a justification of consumer illicit purchases. The lack of ethical concerns for the movie industry in each country market we studied predicts complicity; consumers do not see violating intellectual property laws as unethical. Although there may be many reasons for this, highly complicit consumers report a negative attitude toward the movie industry. This opinion was universal. Because highly complicit consumers reported less ethical concern, we suggest that practitioners create a salient connection between obtaining a counterfeit and the ethical implications. For example, the Motion Picture Association (MPA) has been using a campaign featuring two black Labrador dogs “Lucky and Flo” to remind the public, especially children that purchasing counterfeit movies is illegal. The ultimate goal is to influence the way consumers think about the illicit act and get them to equate pirating a movie to a more offensive act, such as shoplifting.

Dr. Stumpf As expected, non-complicit consumers have a higher degree of ethical concern for movies and pharmaceuticals than those who are complicit. They also tend to perceive that a fake movie or pharmaceutical is of lower quality, and believe in the likely effectiveness of anticounterfeiting tactics such as product-specific strategies, a reduced price, social marketing, and product cues indicating a counterfeit. While the high complicit consumers view these tactics as less likely to be successful, they still see them as worthwhile efforts by brand owners. It may well be the nature and quality of the message and anti-counterfeiting tactic will work some of the time with even the most complicit consumers. For example, those expressing a willingness to obtain fake pharmaceuticals also indicated that they perceived a ‘fear’ advertisement identifying the health risk to be effective.

Your survey focuses on movie piracy and counterfeit drugs but what are your feelings about fake luxury brands and how should those brand owners be tackling their anticounterfeiting campaigns?

Dr. Chaudhry I have never conducted market research on luxury brands, but I feel that counterfeit trade is really almost synonymous with consumer perceptions of fake Prada, Louis Vuitton purses and other high-fashion items. I personally think brand owners are in a really

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117 difficult situation in terms of defraying the myth that ‘fakes are fun’ with consumers and will continue to face difficulties in litigation across global markets. Brand owners, such as Burberry are losing their cachet in places like London since the wrong consumer is sporting their fake Burberry’s in the clubs reinforcing the fact that even though this consumer cannot afford the genuine product, the company is suffering revenue losses from brand dilution of its products.

The recent divergent outcomes of the litigation filed against EBay for selling counterfeit goods at its internet auction site by both Tiffany’s and Louis Vuitton is testimony to the legal quagmire facing brand owners. In July 2008, after 4 years in the U.S. court system, a U.S. judge declined the liability of EBay regarding counterfeit jewelry sold at its site. However, in June 2008, a French court awarded Louis Vuitton €38 million for failure to block the sale of this luxury goods manufacturers items on EBay. Dr. Stumpf As a result of our recent publication, “Getting Real with Fakes,” in the Wall Street Journal, we were contacted by the Public Relations staff at Hearst Magazines, who informed us about the advent of “Fakes are Never in Fashion” campaign launched in Harper’s Bazaar. Their goal is to raise consumer awareness about identifying a fake and to educate consumers about the human cost of obtaining counterfeit products, such as using child labor, funding terrorist activities, and losing tax dollars and jobs. Their advertisement is very creative, such as their current “Crimes of Fashion” and I understand that they held a successful contest to encourage their readers to send a fake purse to them in exchange for the chance to win a real luxury handbag. Hearst Magazines hosts an annual Anti-Counterfeiting Summit in New York City and provides the “Luxury Report” in its January Issue to further bolster awareness of the key issues.

Generating peer pressure to diminish consumer complacency about counterfeits and exposing the unethical practices associated with this market could help luxury brand owners decrease demand for their fake counterparts.

You have also studied executive perceptions of counterfeit trade in several different countries. How do company leaders perceive the problem – do they think consumers are aware a product is counterfeit before becoming complicit? What product cues do they think 'tell' a consumer a product is counterfeit? What do executives think drives consumer complicity? What anti-counterfeiting actions do they think will be successful—and might this vary by country or product?

Dr. Chaudhry In 2009, I published a book (with Dr. Alan Zimmerman), The Economics of Counterfeit Trade: Governments, Consumers, Pirates and Intellectual Property Rights that provides an in-depth review of a survey we conducted regarding US managerial views of the counterfeit problem, which includes an analysis of the efficacy of an array of anticounterfeiting tactics targeted at governments, pirates, and consumers. One of our major findings in the U.S. study was a difference in anti-counterfeiting stratagems directed at pirates in terms of the level of counterfeiting activity in the country where the firm was experiencing the highest level of illicit trade. In markets where managers perceived a high-level of piracy, firms were more likely to employ tailor-made actions designed to combat the pirates in that foreign market. In addition, the companies were more likely to use lobbying tactics targeted at both the foreign and U.S. government to alleviate the problem of this type of crime. The firm was also more likely to participate in an international organization, such as the World Trade Organization (WTO). Overall, there was a strong indication that managers do not perceive curbing the demand side of the problem as effective. That is, consumer complicity is not regarded as an actionable item warranting significant management behavior. However, the managers do view deterring the pirates to be an actionable item warranting proactive behavior. They are statistically more likely to use the following tactics: lobbying the U.S. government, lobbying the host country government, participating with international organizations, using company enforcement teams to curtail indigenous pirates, and educating their employees about the counterfeit problem.

Dr. Stumpf I have interviewed over 300 managers in Australia, New Zealand, Tahiti, South Africa, and the United States about their views of the mounting counterfeit problem. Executives

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118 in Australia, Tahiti, and the U.S. have somewhat similar perspectives. They view the seller as the main driver of counterfeit trade primarily for reasons of profits. They view the demand for counterfeits to be driven by desirable product attributes and convenience. Two anticounterfeiting actions (site licenses and reduced price or rebates) are believed to reduce the demand for illicit products. In contrast, South African executives see weak enforcement as the main reason for piracy, followed by its profitability, and convenience plus the low disposable income or being less educated as the main reasons for consumer complicity. Other than the use of special packaging to deter consumer complicity, they see little value in anticounterfeiting actions. New Zealanders are the most optimistic believing that piracy and complicity can be reduced by many anti-counterfeiting actions, including special packaging, reducing price, emphasizing product benefits and warranties, stressing harmful effects, offering site licenses, and listing of authorized sellers.

Have you ever knowingly or unknowingly bought a fake? If so, what was it and what was your impression of the product? Did any aspect of the experience resonate with the findings from your survey and recent analysis?

Dr. Chaudhry In 1999, I purchased my first counterfeit products, a variety of Beanie Babies in the infamous shopping area “Silk Alley” in Beijing, China. At that time, the Ty Company had severely limited the distribution of its Beanie Babies and the secondary market value for a Princess Diana Beanie Baby at that time was over $400 at internet auction sites in the U.S. In China, I paid about $3 for each fake Beanie Baby and took them back to the U.S. to have the collectors figure out whether they were true counterfeits or a gray market product. The bears were so close to the genuine product that it was hard to differentiate, but, it was the incorrect labeling of the product in poor English grammar that was the final clue that the bears were counterfeits. I have also visited the counterfeit markets in several countries, such as Egypt and Tunisia, and often wonder whether I am looking at gray market or production overruns of the legitimate supplier. The fake Lacoste shirts for sale around Canal Street in New York City even had the store bar code tags and their quality was very good. As our consumers suggested in the survey, I did experience a hedonic shopping experience in these counterfeit markets and was surprised by the quality of some of the fake products. However, what worries me more as a consumer is the encroachment of counterfeits into non-traditional goods, such as pharmaceuticals, perfumes, alcoholic beverages, baby formula, cigarettes, and the like since these products represent that area of our matrix where most purchases are deceptive and can harm the consumer.

Dr. Stumpf I bought a ‘handful’ of fake watches on a trip to Bangkok back in 1990 or so. I clearly knew that they were not real; they were going to be gag gifts for friends. The US Customs officer noticed them and asked me about them. When she took a closer look, she also knew that they were fakes and just let me pass. Most of these watches stopped working within a couple of weeks. That was my first and only purchase of counterfeits. Since then I’ve been given CDs and software that was pirated, which also tended not to be of high quality. For the past decade, I’ve gone cold turkey – I just say no to fakes.

Before we leave this question, I felt that we should consider the experiences of younger researchers, so I asked Leeann Perretta, a Villanova School of Business MBA student who has work experience with two pharmaceutical firms, about her experience with fakes. Here is what she said, “I've never acquired or used a counterfeit pharmaceutical, but I once went to Canal Street in New York City with my boss and a coworker from my first post-college job. Although I am much more of a bargain shopper than a name brand shopper, and pretty much hate shopping all together, I decided that it would be a good bonding experience to tag along for the trip with my new colleagues. It was actually a little scary, being with two women that I hardly knew asking street vendors in hushed voices if they had any “Coach” or “Prada” bags before being whisked away by a shady looking guy to a locked basement with an assortment of knockoffs. I did get an adorable Prada bag for $20, a great bargain even if as a counterfeit. I was informed that its only flaw is that the inside label does not have the brand name printed on

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119 it. Since then, due in part to my work experience and business education, I have not repeated the event."

In each of your studies you have collected data on consumer values and the pleasure derived from the shopping experience. How do these factors help us understand consumer complicity?

Dr Chaudhry We need to further develop our understanding of the market segmentation of complicit consumers. The majority of academic studies on consumers who are willing players in counterfeit trade do not provide any statistically significant outcomes on profiling these consumers by traditional demographics [e.g., age, income, education]. Even the widely reported LEK study conducted for the Motion Picture Association of America (MPAA) could only profile complicit consumers as young, male, and living in urban areas, too broad of a demographic for any type of market segmentation. We are currently working on this problem with our BRIC and U.S. research that looks at demographics and consumer behavior (e.g., personal values that shape whether they obtain counterfeits; level of hedonic shopping behavior when obtaining a counterfeit good) to look at complicity across countries. In our study, BRIC and U.S. consumers who were complicit shopped for illicit goods in part because they found the experience enjoyable whether they were in a virtual or physical market. National market segmentation did not differentiate whether a consumer in Brazil will take greater pleasure in shopping for counterfeits than a buyer in Russia. Firm initiated anti-counterfeiting actions might attack the hedonic buying stimulus, for example showing consumers being arrested in a well-known counterfeit shopping district or attending a fake-purse party, may diminish the sense of pleasure associated with acquiring a counterfeit product in that shopping environment.

Dr. Stumpf The high complicit consumers tend to have a greater hedonic shopping experience in both physical and virtual markets, and have a lower ethical concern that their complicit behavior negatively affects the movie and pharmaceutical industries. This is not a statement that these consumers are unethical people; they do not view the illegal activity of purchasing counterfeit products as an unethical action. This suggests that complicity may be as much of a consumer attribute as it is a behavior.

About Dr. Peggy Chaudhry and Dr. Stephen A. Stumpf

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120 Dr. Peggy E. Chaudhry is an Associate Professor of International Business at the Villanova School of Business at Villanova University, where she also serves as a faculty associate for the Center for Global Leadership and the Marketing & Public Policy Center.

Dr. Chaudhry has taught at the EMBA, MBA, and undergraduate level courses in Consumer Behavior, European Business Management, International Business Management, International Marketing, Managing Multinational Workforces, Marketing Management, and Organization and Management. She is Program Coordinator of a Villanova University study abroad program in London with the London School of Economics and Political Science and European Study Abroad (EUSA).

In 2004, she led a symposium at Villanova University on the Global Protection of Intellectual Property Rights. In 2007, together with Dr. Stephen Stumpf, she was given the Academic Reader’s Article Award 2007 by an award jury of the Graduate School of Business Administration, Zürich, Switzerland for her work on product counterfeiting and, in 2009, her book (with Dr. Alan Zimmerman), The Economics of Counterfeit Trade—Governments, Consumers, Pirates and Intellectual Property Rights was published.

She currently serves on the Editorial Board of Business Horizons and was a member of the Editorial Board of Marketing Health Services for 10 years. She has published various articles in publications such as Business Horizons, Columbia Journal of World Business, European Management Journal , Marketing Health Services and the Wall Street Journal, to name but a few.

Dr. Chaudhry received her Ph.D. in International Business with minors in International Economics and Marketing at the University of Wisconsin at Madison (1992). peggy.chaudhry@villanova.edu Dr. Stephen A. Stumpf is professor of management at Villanova School of Business (VSB), where he has served as both interim dean and Management Department Chair. Dr. Stumpf holds the Fred J. Springer Chair in Business Leadership and is involved in the activities of the Center for Global Leadership and with Wharton Executive Education.

From 1993-96, Dr. Stumpf was a professor of management at The University of Tampa, founded its Center for Leadership, and served as dean of the College of Business and Graduate Studies. Prior to this, he was professor at the Leonard N. Stern Schools of Business at New York University for 16 years. During this time, he received the David L. Bradford National Award for outstanding teaching from the Organizational Behavior Teaching Society and the S. Rains Wallace Award from the American Psychological Association for his research. He has served as adjunct professor in the Graduate School of Business Administration in Zurich, Switzerland, EMBA program. Dr. Stumpf founded the MSP Institute in 1988; non-profit research and development organization that serves the educational, public, and business communities with technologies for leadership development. He currently chairs the MSP Institute’s Board.

In 2007, he and Dr. Peggy Chaudhry were given the Academic Reader’s Article Award 2007 by an award jury of the Graduate School of Business Administration, Zürich, Switzerland for his work on product counterfeiting.

He has authored/edited many books and journal articles and is a frequent speaker and facilitator on the topics of leadership and relationship building, as well as working as an advisor for CitiGroup, Deutsche Bank, Merrill Lynch, Philip Morris, Publicis, Shire, and Tampa Electric.

Dr. Stumpf earned a B.S. degree in chemical engineering from Rensselaer Polytechnic Institute (1971), a M.B.A. from the University of Rochester (1972), and a M. Phil. and Ph.D. in organizational behavior and industrial psychology from New York University (1978). steve.stumpf@villanova.edu

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Posted: Friday, 02 October 2009 11:26AM

TD Bank Says It Has Eradicated Last of Computer Problems KYW Newsradio Team Coverage

by Michelle Durham, Ian Bush, and Al Novack TD Bank said on Friday afternoon that its computer operations were back to normal after three trying days during which customers reported being unable to access deposits or account information.

Fred Graziano, executive vice president and head of retail banking at TD Bank, says that when the system first slowed down several days ago, officials asked themselves a number of questions: "I think the first question was, was any of the data an issue? And that has not been an issue, so we've captured the customer's data appropriately. The issue has just been the volume through the batch process."

And he admits that the volume has caused major headaches for customers: "On behalf of the entire organization, we are truly apologetic for the inconvenience, and we recognize the frustration levels."

And he says they are adding more lines to the customer service call center so that if an emergency should arise in the future, more people will be able to get through to get their questions answered.

A spokeswoman for the Cherry Hill, NJ-based company said on Friday morning that the bank was making progress in catching up with a series of computer problems that left depositors unable to access their balances or their funds. She said that everyone's transactions as of Thursday have been posted and customers could see their balances as of the end of the day Thursday.

Rebecca Acevedo said the bank was making direct deposits a priority and she expected bank customers to have access to those funds sometime on Friday. By about 2:30pm, she said the bank's records appeared to be back to normal.

She reiterated that TD Bank would reimburse customers for any bounced-check fees they incurred.

Villanova University IT professor Sue Metzger says the bank will be dealing with the aftereffects of this situation for months: "I think what is interesting about this particular case is that we're really seeing how social media has really highlighted the problems. You have people on Facebook and other social tools

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122 declaring their issues."

The problem, which seems to have begun Wednesday, resulted in a delay in what they call "overnight transaction postings" -- when debits you make or direct deposits you receive are reconciled with your account balance.

Customers reported incorrect balances and unavailable funds. And on Thursday morning the bank's tollfree help line was experiencing technical difficulties, perhaps from the crush of calls.

The problem was especially acute because of the timing, as end-of-the-month paychecks that would normally arrive via direct deposit in the early morning hours of Wednesday still were not posted to many accounts as of Thursday morning. Some customers complained that funds they needed to make end-ofmonth mortgage payments were unexpectedly not available.

Some TD Bank customers said they had been having account issues for several days, which coincided with the end of the transition period that saw Commerce Bank merge with TD Banknorth.

Acevedo said TD Bank had to shut down Internet banking for all customers for a time during their computer fiasco.

As of Thursday morning, as the problems persisted, TD Bank issued the following statement: "Unfortunately, we experienced an unusual delay in our overnight batch posting again last evening. All postings are up to date as of Wednesday evening but now we are having an issue with last night's batch posting. We are working nonstop to resolve this issue. We are sorry about the inconvenience and we thank our customers for their patience and understanding.

"Currently customers can see account balances as of Wednesday evening. We expect to complete our transaction processing and have current account balances later today. We will reverse fees, charges, or interest incurred as a result of this disruption. We are working to solve the problem as soon as we can.

We have empowered our employees to work with customers individually to resolve any outstanding issues that arose as a result of this delay. We continue to operate on full tilt to get this resolved."

Dr. Munir Mandviwalla, Temple University's chair of the management information systems department, says the source of the problem may be more about coordination than technical specifications: "It's not that the people are incompetent. What often happens is that the IT people who could actually think this through are not given enough time, and they don't have a seat at the table. The financial engineers are the ones who make this decision, and then the problem is thrown into the laps of the IT people."

And Chris Leone, president of Correlative Inc., an information technology consulting firm in Marlton, NJ, says that such problems sometimes snowball: "What probably complicates things, too, is if people are banging on the system or trying to access the system, it could slow down or even prevent any remedial actions."

TD Bank has customers over much of the Atlantic seaboard.

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Posted on Tue, Oct. 6, 2009

Seeing a recovery, and challenges

By Bob Fernandez Inquirer Staff Writer Almost two years into the current job-killing recession, a tentative economic recovery is here, and the stock markets could climb an additional 5 percent by year's end, says John E. Silvia, chief economist for Wells Fargo Securities L.L.C. But a double-dip recession could slam the nation in 2010, and there are structural economic problems that have to be addressed in Washington to solve the nation's longrun flaws, the economist warned a Union League crowd of wealth managers, lawyers, and consultants here last week.

The shift to professional and service jobs from blue-collar factory jobs appears to be finally catching up with the U.S. economy and has become painfully apparent in the current recession, Silvia said, noting that this shift was "starting to overwhelm American society." He noted in an interview that "a lot of people don't have the right skills or are not located in the right place for new jobs, and that is a great challenge."

Silvia's message last Tuesday at the club on South Broad Street was one of cautious optimism. It was joined by an exuberant prediction by Byron Wien of Blackstone Group L.P. that the S&P would hit 1,200 by year's end - it closed at 1,040 yesterday. The markets sagged last week on doubts about the strength of the recovery. A survey of economists by Bloomberg predicted the S&P to be at 1,037 come Jan. 1.

The Inquirer asked five other economists to predict where the S&P would be at the end of 2009 and on July 1 2010. It also asked when they thought the S&P would be back over 1,400.

Silvia says there's a recovery. It's fueled by federal deficit spending, which can't be sustained, and inventory restocking by big corporations that anticipated "Armageddon" earlier in the year and drastically curtailed orders. That restocking doesn't indicate higher demand from consumers or businesses.

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124 Fourth-quarter growth should be respectable, Silvia said, and the major stock-market indexes should rise on the optimism.

But the U.S. economy, Silvia said, is living with the excesses of overbuilt housing and commercial markets, higher federal deficits, overextended consumers, and a weak job picture. Unemployment, even when the economy confidently enters a sustained recovery, is likely to be permanently higher. He estimates the longer-run rate at 6 percent.

"We are nowhere near the typical recovery in terms of jobs," said Silvia, who spoke in a second-floor Union League meeting room of plush carpets and oil paintings. About 25 professionals gathered to hear him and eat lunch of tilapia, chicken, and steamed vegetables.

Silvia estimated in his presentation that the U.S. economy would shed 200,000 jobs in September. When the number was released three days later, on Friday, the government reported the economy had lost far more - 263,000 jobs. Unemployment overall climbed to 9.8 percent.

Silvia says some businesses are looking at soaring health costs and deciding to buy automation equipment instead of hiring workers.

The nation is at a crossroads of economic growth, Silvia said. If the government tightens credit standards on consumers and homeowners to strengthen the nation's banks and financial institutions, this tightening would lead to fewer new-home starts and lower home-equity loans and lower national economic growth, he said.

"I wish you the best," Silvia told the Union League crowd, "because I think there will be huge adjustment in American society."

Where, what, and when?

Bill Stone of PNC Financial Services Group "It's impossible to say what the market's going to do over the short term. . . . Put a gun to my head, I'd still say, in the short run we may be overbought."

"If the economy is not sustainable, if the W happens [a second recession], stocks will get hammered pretty hard. That's not our forecast."

"Our biggest overweight [bet] is in technology. The other . . . is cyclical."

"We don't own autos."

No prediction.

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125 - Joseph N. DiStefano Peter Zaleski, professor of economics and statistics at Villanova School of Business "The market could finish up another 3 to 5 percent from here on out. S&P at 1,200 by year's end is quite a stretch of the imagination."

"The S&P could hit 1,100, optimistically. . . . I would not expect to see a buying binge in the stock market any time soon."

"Maybe 40 percent in a broad-based stock fund, 40 percent in intermediate-term high-quality corporate bonds, and the remainder in a mix of short-term cash and precious metals."

"Sticking the majority of your funds into a single investment, especially one that you do not fully understand."

"We might get a more stable return to 1,400 that could occur over a five-year period perhaps."

Joel Naroff, president of Naroff Economic Advisors No higher than 1,090.

At 1,145.

Health care and green technology. "I don't think there's going to be a backing off in the drive toward a green economy."

Anything to do with communications or other businesses that could be strongly affected by the Internet. "We don't know what the Internet is going to bring to a whole variety of businesses."

Not for the next two to three years. "Maybe 2012 to 2013."

- Jeff Gelles Mark Zandi, chief economist, Moody's Economy.com "I expect the S&P 500 to end this year at 1,050."

"It will rise to 1,150 by mid-year 2010."

"I think TIPS - Treasury Inflation Protected Securities. These are Treasury securities that compensate the investor for inflation; [they] are a very safe investment."

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126 "Gold is a very dicey one. Of course, this answer really depends on one's risk tolerance and investment horizon." ". . . it will top 1,400 by year-end 2012."

- Suzette Parmley Holly Guthrie, senior research analyst, retail specialist, Boenning & Scattergood Inc. Boenning & Scattergood has not issued S&P projections, she said.

No projection.

"Ann Taylor closed a lot of stores and their stock has still done incredibly well. In February, it was at $3.80. It's now $16." Other movers: A.C. Moore. Urban Outfitters Inc. Nordstrom Inc. Investors are pushing those stocks back up.

"Where I would look for potential slowdown would really be companies that fared well last year during the recession.�

No projection.

- Maria Panaritis

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Survey examines unemployment and mental illness Wednesday, October 7th, 2009

By: Maiken Scott mscott@whyy.org

Mental health experts are worried that the tough economy is putting people at higher risk for mental illness. A new survey of over 1000 people takes a look at the impact of unemployment.

Listen: Conducted by several mental health organizations, the new survey finds that people who are unemployed are four times as likely as their employed peers to experience symptoms of mental illness.

Dr. David Shern, President of Mental Health America, says the chronic stress of not knowing what's next can cause depression and anxiety. He says feeling depressed over job loss and change can also result in a vicious cycle: Shern: Part of the insidious nature of depression is that it makes it even more difficult for people to get into action to address important issues in their life. They then observe themselves in terms of their inability, the difficulty to get back into action and that makes them even more depressed.

Villanova University Business professor Ronald Hill says how lay-offs are handled is very important for the well-being of employees: Hill: How would you want somebody to let your mother or father or somebody you love very deeply go – and when you use that frame of reference, you begin to use a different kind of humanity.

He says employers can offer help and hope to their former employees:

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128 Hill: In some cases, they even look to their competitors and say we have good people available we just can't use them at this time. The other thing that can happen in a lay-off too is to let them know that they are going to be invited back, that they are first people who will come back when the economy changes.

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Entrepreneurs create their own recovery Hardy business owners are running uphill, growing their companies despite the recession.

By Ian Mount October 8, 2009: 3:41 PM ET Using $2 bills and "buy local" promotions, these 6 towns have launched their own campaigns to keep local businesses alive.

View photos (Fortune Small Business) -- Back in August, Federal Reserve officials suggested that the Great Recession was ending and the U.S. could expect "a gradual resumption of sustainable economic growth." But even with stock market indexes and the bottom lines of large financial firms bouncing back, small businesses can expect a longer slog to economic health.

"Small business performance is a lagging indicator of recovery in the same way that unemployment is," says Villanova University business school professor John Pearce II. And it's likely that small businesses will find this recovery even slower than previous ones. The downturn has especially hurt construction firms, retailers and food service providers, the vast majority of which employ fewer than 20 workers. To make matters worse, more than 110 banks have failed since early 2008, most of them community thrifts catering to the financial needs of local firms.

Here's how a few savvy entrepreneurs are turning these headwinds to their advantage.

Penny pinchers. The prolonged recession, paired with expectations that recovery will be slow at best, has been particularly damaging to premium firms that sell high-margin products and services.

On the flip side, companies that offer affordable consumer products or business services aimed at helping firms cut costs are faring better. For example, Joe DiVittorio, owner of Eddie's Pizza in Hyde Park, N.Y., saw revenues increase slightly this year even as his customers clutched their piggy banks. "We haven't raised our prices in more than a year," he says. "We think people will keep their lifestyles at a lower scale."

And Evolve IP, a Wayne, Pa., firm that manages computer networks and VoIP telephone systems, signed some $30 million in contracts during the recession. Why? Largely

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130 because its services help clients trim their tech staffs, says co-founder and COO Guy Fardone.

Left behind. "The U.S. hasn't led the way out of the recession -- it's been China and, to some degree, Europe," says Mark Zandi, chief economist and co-founder of Moody's Economy.com.

In the U.S., Zandi predicts, the industrial Midwest and states slammed by foreclosures will continue to lag, while such tech centers as Austin, Boston, Seattle and Washington, D.C. -- as well as globalized businesses -- will do better.

Take Alpha Software, a Burlington, Mass., firm that helps companies automate tasks like insurance-quote generation. Co-founder Richard Rabins expects a 10% revenue boost in 2009, in part because nearly a third of his sales come from Asia, Australia and the U.K. Corporate meltdown. An 18.7% drop in business investment during the first half of 2009 rocked the small businesses that provide their larger brethren with buildings, equipment and software. But the $400 billion in contract spending in the American Recovery and Reinvestment Act -- 23% of which is supposed to go to small businesses -has turned government into a savior for some.

(According to stimulus-tracking site Recovery.org, $103 billion in stimulus had been disbursed through mid-September. Although Uncle Sam is notorious for failing to meet contracting set-aside quotas for women, minorities and small businesses, it's fair to assume that at least part of this sum made it to small firms.)

Austin-based flooring seller and contractor Commercial Flooring Systems once got 80% of its business from corporate and high-tech clients. But after business slid 27% during the first quarter of 2008, company president and founder Scott Coll, 47, shifted four project managers and salespeople to work with architects and designers who specialize in government and healthcare contracts. That move spurred 13% revenue growth in the second quarter. Although 2009 revenue is down about 15% from 2008's $8 million total, 60% of Coll's business now comes from government and the healthcare sector.

To write a note to the editor about this article, click here.

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PA businesses unhappy with tax increase Monday, October 12th, 2009

By: Tom MacDonald tmacdonald@whyy.org PA businesses unhappy with tax increase 5.051 The increase in the sales tax in Philadelphia is likely to hurt merchants and residents alike.

Listen: Philadelphia businesses are now collecting 8% sales tax as part of the effort to balance the city's budget. Greg Bonner is a professor at Villanova University's School of Business. He says the one percentage point increase will drive people out of Philadelphia to make major purchases.

Bonner: People who live near Delaware it just exacerbates their interest in going to Delaware where there is no sales tax. When you are at 1%, going to Delaware might not be worth the trip. When you are now up to an 8%, so not only is it bad for business, it's bad for the people who live in Philadelphia.

Businesses aren't very happy about the tax increase. The head of the Manayunk Development Association says they are going to have to offer more competitive pricing to offset the tax hike.

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Commentary Home Opinion & Ideas Commentary

October 12, 2009 GMAT vs. GRE: a New Question for Business Schools

By James M. Danko As a business-school dean, I have followed with interest the current debate about the Graduate Record Examinations' becoming an acceptable alternative to the GMAT, or Graduate Management Admission Test, as a key quality indicator of applicants to graduate business programs. In the spirit of full disclosure, I am a member of the Board of Directors of the Graduate Management Admission Council, which administers the GMAT. Irrespective of my connection to the council, as a business-school dean I hope to see a broader dialogue about factors that might motivate a business school to move away from a model in which the GMAT is the sole test used in the admissions process.

Some business-school deans are concerned that a primary motivation for wanting to accept the GRE is the likelihood that doing so would increase the overall applicant pool, since the GRE may be more accessible or palatable to younger or international applicants. For example, a college senior might decide to take the GRE while still in an academic frame of mind, which would leave open the option to apply to a graduate business program in the future—with one less hurdle at the time of application.

In conversations with some business-school deans, however, I have discovered that they are motivated to make the change not because it expands the applicant pool, but because of the potential impact on a school's rankings performance. Applicants opting to take the GRE because they view the GMAT as too difficult and not playing to their academic strengths would probably score in the lower ranges of GMAT takers. Thus, with lower GMAT scores removed from the incoming-class pool, the average GMAT scores of a school's accepted students would be pushed higher. Not wanting to risk losing any advantage to the competition, even top business schools would feel compelled to imitate the early adopters and accept alternate exams in a sort of rankings arms race. Since U.S. News & World Report's top-10 business schools all boast GMAT averages above 700, with very small differences in score ranges, they would be understandably concerned about losing ground in the rankings.

We must not only be sensitive to the factors that motivate business schools to change their use of tests; we must also consider the issue of integrity on the part of business-school applicants. In recent years, M.B.A. programs have been called to task for their alleged failure to ensure the development of ethical business leaders. In my view, that responsibility starts at the time we assess applicants for admission. We must do our best to ensure that those who enter our business schools demonstrate a high degree of ethical behavior. In turn, we also want assurance that those same high standards are inherent in our testing process.

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133 While I cannot comment on the practices of the Educational Testing Service (which administers the GRE) and am not implying that ETS does not hold to the same rigorous standards as does the GMAC, it is a fact that many business-school administrators know that the council is committed to integrity in the testing process and has a zero-tolerance policy toward cheating. For example, when GMAC discovered Scoretop, a Web site that posted live test questions from a number of key admissions tests, GMAC aggressively pursued Scoretop until the site was shut down, and then went directly after those people who were stealing and posting live questions. GMAC took steps to cancel their scores and to directly notify business schools in cases where there was a clear violation of ethical standards.

As another example, last month the French National Commission for Information Technology and Liberty granted GMAC approval to collect biometric data through its palm-vein-pattern reading technology, as part of the effort to guarantee the highest level of security for the GMAT exams. The GMAT is the only private examination ever to be awarded this right. As business schools consider alternative tests, we should confirm that any other providers demonstrate and maintain comparable security standards.

Debate is healthy, as is innovation. An industry conversation about admission testing, including exploration of the GRE as an additional option, is most welcome. However, a much more thorough analysis is needed in this case—along with an open, thoughtful debate that takes both rankings implications and testing integrity into account— before such a shift in our overall testing model should occur.

James M. Danko is dean of the Villanova School of Business and a member of the Graduate Management Admission Council's international Board of Directors.

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As They See It: Will commercial real estate lead the economy to a double-dip recession?

Friday, October 16, 2009 The U.S. economy appears to be heading out of the worst economic period since the 1940s with the recession showing evidence of slowing or ending late this summer. There are many questions surrounding the potential strength of any recovery, perhaps the biggest being the health of the commercial real estate (CRE) market. Commercial real estate is largely an income-producing asset owned by large institutional investors.

The value of CRE is dependent on both the income generated by the property through rents and what investors are willing to pay for the income stream. In 2006 and 2007 CRE values surged fueled by cheap debt and lax lending standards. A vibrant commercial mortgage-backed security market (CMBS) provided fuel for this fire. The underlying fundamentals of solid rents and low vacancies were strong at this time but the increasing valuations were due to cheap money and not increasing income streams. Lenders provided loans on these properties that exceeded 90 percent of inflated values. If this all sounds familiar it is because this same scenario played out in the residential real-estate market. The collapse of that market was the impetus of our current economic crisis.

The last 18 months has seen a sharp pullback in the CRE market. Valuations have fallen at least 40 percent and probably much more in most regions. This fall has been fueled by deteriorating fundamentals and a complete shutdown of liquidity to CRE. The question is will this create a similar environment to last spring where institutions begin to fail and we spiral back into recession and maybe worse. CRE will almost certainly provide a drag on economic growth but it will not necessarily create a crisis like that following the residential market collapse.

The severity of the impact of CRE depends largely on the economy itself. If the consumer comes out of hiding and the job picture improves then the CRE should work through its problems with plenty of pain in the industry but in a manner that doesn’t devastate the broader economy. If the residential housing market doesn’t stabilize, the consumer continues to retreat and employment is soft, we could see institutions failing due to CRE exposure and a rehashing of the events of the spring of 2008.

Shawn D. Howton, Director, Daniel M. DiLella Center for Real Estate at the Villanova School of Business

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Last updated: October 22, 2009 12:33pm Question Marks Still Remain for PPIP FEATURED SPONSORS FEATURED WEBINAR Real Estate in Recovery: What Can Be Done to Prepare for a Turnaround Presented By: Schulte Roth & Zabel and GlobeSt.com The troubled real estate market has created a buyers’ market for mortgage loan portfolios, RMBS and CMBS, foreclosed real estate, real estate in corporate turnaround situations, equity and debt of housing-related retailers, and equity, debt and assets of distressed builders. Hear a panel of experts share their insights on market timing and the importance of proactive planning to achieve investment success.

Tuesday, November 10, 2009 12:30 PM ET WASHINGTON, DC-With five of the selected nine asset managers for the Treasury Departments Public Private Investment Program now fully funded with their debt and equity capital commitments, there is some $12.27 billion in purchasing power aimed at the socalled legacy – or to be more precise, toxic – assets still clogging the real estate markets. In short, the program is close to execution as the Capitol Hill asset managers now begin what they were ultimately chosen to do: seek out and purchase toxic debt.

That will be almost as equally as long a process as ramping up the funding was, if not longer. More than likely deals won't start to close in any significant number until Q1 2010 and until that starts to happen the true value of this particular government initiative will not be known.

That has not stopped the industry from speculating on whether PPIP was worth the capital, both financial and political, that had to be expended on its behalf. Opinions, some six months after the program began to take shape, still range across the board, at least based on an informal survey by GlobeSt.com.

One common hope is that PPIP will finally inject some transparency into distressed asset pricing.

With the stock market coming back to life, the returns for these asset managers in distressed assets will not be as great as they would have been ten months ago, says Greg Villanova School of Business 2009 Media Report

136 Genovese, president of the securities division at the Irvine, CA-based Thompson National Properties LLC, which specializes in providing value-added real estate investment opportunities and asset management. "The best return typically go to investors that dive into the pool first," he tells GlobeSt.com. "In this case, however, because the stakes are so high even the big risk takers are waiting for other investors to go first.

For that reason, the greatest overall benefit PPIP will deliver to the market will be to prime the pump, so to speak, he says. "There are a lot of people waiting on the sidelines for TARP and PPIP to provide better transparency into pricing."

However, there are those who believe pricing transparency will not be so easily realized even when the PPIP investors start purchasing assets.

There will be two types of impact on the pricing and sales of commercial real estate assets when that happens, says Jeffrey Rogers, COO and president of Integra Realty Resources in New York City: psychological and actual. And the former may cancel out the latter.

The psychological impact will be a feeling that there is liquidity in the marketplace, which will lead to increased prices, he tells GlobeSt.com. "This initial push is small relative to the market of maturing mortgage debt, thus, the actual impact will be small.

But, as prices climb, the banks will be reluctant to sell as they wait and pray for even a higher rebound."

PPIP will not be a panacea for the billions of defaulted CMBS loans that will be coming down the pike in the next 12-18 months, says John Long, CEO and founder of Highridge Partners, in El Segundo, CA, a privately held, international real estate investment company. "While the AAA slice may benefit somewhat, the lower rated pieces will still be greatly stressed in terms of pricing and liquidity."

Shawn Howton, director of the Daniel M. DiLella Center for Real Estate and associate professor of Finance at the Villanova School of Business in Villanova, PA, is on the other end of the spectrum in his belief that PPIP, as well as TALF, will have a positive pricing effect on senior CMBS that are eligible for the program.

"There is money moving into these markets with the hope of flipping the mortgages to PPIP investors once the groups start buying. Many private equity groups have been formed or are being formed for just this purpose." Unfortunately, the market for origination is still non-existent and in this respect will have little impact. "Senior and super senior CMBS tranches have seen spreads contract by as much as 25 basis points in the last week and 50-100 basis points in the last few months."

PPIP is after all a new source of liquidity in a world that has been drained of capital, and there is a large contingency of real estate experts that say PPIP was a bad idea from the beginning.

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137 "The reality is that uncertainty caused by the prospect of further government involvement is a primary reason that so little is trading in the distressed commercial real estate market," Paul Lyons, SVP at BigBidder.com, an online auction marketplace for mortgage notes in Newport Beach, CA, tells GlobeSt.com.

Why would a seller lower prices if it believes that the government might eventually bail it out of its problems, or at the least, that it will be able to continue managing its balance sheets based on inflated prices and improper accounting methods without any repercussions, he says. "Unfortunately, this is a lose-lose for sellers. If they deal with their problems now, and sell their distressed assets at current market value, they could lose their jobs, or even bankrupt their company. If they choose to wait, they will only face greater losses down the road. Government involvement is only postponing the inevitable." From a buyer’s perspective, it is equally as difficult to assess the current cycle. "Even long-term value investors are afraid of paying too much."

The government assistance will cloud any realistic picture of the market's well-being, agrees Vanessa Grout, VP of Acquisitions for real estate investment firm New Valley, headquartered in Miami.

"With the amount of leverage the government is willing to pay, the private investor stands to lose very little in the event of a drop in value," she tells GlobeSt.com. "There is a great deal of [private sector] capital prepared to pay all cash for the true market value of a bank's troubled assets. Leverage simply enables the investor to pay more than the property is actually worth, which leads to less equity contribution, and a greater appetite for risk."

Tino Korologos, Deloitte's distressed debt leader in New York City, thinks that PPIP will have some positive effect on market recovery. However, "the distress is so deep and so complicated there is no one silver bullet solution. PPIP will help facilitate the relationship between investors and the government and create some traction for transaction activity, but it remains difficult for values to hit the level where there is a comfort for investors to step in and acquire assets."

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Investing October 29, 2009, 8:55PM EST text size: TT

Are Investors Ready for Higher Interest Rates?

If the economy keeps growing, it hastens the day when the Federal Reserve ends the era of 0% interest rates

By Ben Steverman Data showing the U.S. economy is growing again has renewed the debate about where interest rates are headed—a question with big implications for both the economy and investors.

The U.S. gross domestic product report released Oct. 29 showed that the economy grew by 3.5% last quarter, a higher percentage than many were expecting, and fixed-income markets took it as a sign that a rate increase will happen sooner. Treasury prices fell after the release of the GDP figure, and the yield on 10-year U.S. Treasuries rose 0.08 points to 3.5%.

That's still a historically low rate, reflecting the fact that the Federal Reserve is holding the short-term federal funds rate near zero in order to stimulate the economy. It's the reason why yields on bank savings and money market accounts are so paltry.

Such low rates aren't sustainable for long periods of time out of fear, among other things, that low rates can overheat the economy, spark inflation, or drastically devalue the U.S. dollar. "At some point the Fed needs to be thinking about tightening monetary policy," says Villanova School of Business economics professor Victor Li.

Reason to Worry About Inflation?

So far the Federal Reserve has given no such clues. The Fed's Open Market Committee said in a statement Sept. 23 that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." Few expect the Fed to change its stance drastically at its Nov. 3-4 policy meeting.

Many market participants believe the Fed could be forced to raise interest rates much sooner, perhaps in early 2010. Others think the Fed will keep rates steady for several months or even years. The split between these two sides is mostly determined by how quickly they believe the economy can recover from the worst recession in a generation.

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139 "There is some economic momentum that the market hasn't acknowledged," says LPL Financial Chief Market Strategist Jeff Kleintop, who believes the Fed could start raising rates in 2010. The Fed has pumped trillions of dollars into the financial system. A recovery will push that money out into the economy, where it can spike fears of inflation, he says.

By contrast, those who believe rates will stay low are far more worried about the slow economy than rising inflation.

The Fed is "going to find it difficult to raise [rates] much, if at all," argues William Rutherford, president of Rutherford Investment Management. "The economy is still not very strong in spite of the GDP numbers."

First American Funds chief economist Keith Hembre says high unemployment is the main reason not to worry about inflation. "Labor costs are by far the biggest costs in the economy," Hembre says, and the large number of jobless Americans should continue to keep the cost of labor down.

The Fed's Very Fine Line Some worry the high federal budget deficit could push up interest rates. But Hembre argues the deficit could end up constraining economic growth in future years, as the government is forced to raise taxes or cut spending to fill it, a process that could further slow the economy.

The Fed is walking a tightrope: Make clear that it takes the inflation threat seriously, but make sure it doesn't end economic growth before it really begins.

"If they tighten [rates] too soon, before the recovery is stable enough, then they risk further weakening the economy," Li says. "If they do it too late, inflation becomes a problem."

The direction of interest rates can have a big effect on investors.

For example, the financial sector has benefited from lower rates, which has helped banks begin recovering from the huge losses of the last two years. "As rates rise, it raises the cost of borrowing for banks," Kleintop says. "Is our financial sector able to sustain a higher cost to their lending?" he asks, especially if those higher rates occur relatively soon—like in 2010.

Lower interest rates hurt the value of bonds and might also damage the appeal of utility stocks and other equities prized for their dividend yields, Kleintop adds.

Rutherford, who believes interest rates will stay relatively low, is investing money overseas. The reason is that low interest rates would tend to weaken the dollar, which

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140 boosts the value of overseas investments. Of course, a weak dollar can also push higher the prices of commodities like raw materials or oil.

An Inflection Point So much of the interest rate outlook depends on where the economy is headed. And, having just moved from recession to growth—for one quarter at least—the economy is at an inflection point. Such moments can be difficult to interpret, says Jerry Webman, chief economist at Oppenheimer Funds. "It's always difficult to know if we're building a trend or seeing a blip," he says. "The question is whether the momentum picks up—or not," he adds.

Interest rates right now are well below normal levels. "If the economy goes back to normal, you can make a case for going back to normal for policy," says Brian Reynolds, chief market strategist at WJB Capital Group.

In other words, Reynolds adds, the Fed's approach is more likely to follow the economy and the financial markets than the other way around. For now, the Fed and investors are both taking a wait-and see-approach, stuck in the same interest rate limbo.

Steverman is a reporter for BusinessWeek's Investing channel.

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Self-checkout machines cause 'stage fright' in shoppers MERCEDES CARDONA Posted 12:00 PM 10/30/09 Technology, Economy, Wal-Mart Stores Do you ever use the self-checkout at your local store? And when you do, are you one of those fumblers who has to get a cashier to help? Or are you the annoying guy right behind, tapping his foot and sighing loudly?

A new study has found the fear of looking stupid stops people from using self-service checkout machines -- but hiding in a crowd helps. And that could give stores some tips on how to handle self-checkout, which is becoming a very popular cost-cutting tool among retailers.

Researchers studied the patterns at a lane of self-checkout machines in a Kroger Co. (KR) grocery store in North Carolina, and interviewed the users afterward. They found that shoppers felt more comfortable ringing up their own purchases if they were alone or in a crowd. But if there was just one other person waiting in line behind them, they felt more pressured and less confident and were less likely to use the machine again or recommend it to others.

"It's almost like stage fright," said Michael Capella, assistant professor of marketing at the Villanova School of Business, one of the study's authors. The study, co-authored with professors Brian Kinard of the University of North Carolina-Wilmington and Jerry Kinard of Western Carolina University, was published in the journal Services Marketing Quarterly.

But surprisingly, the study found a small crowd of three of more other shoppers diluted the potential embarrassment and brought the shoppers' pressure and confidence ratings to the same level as when they were ringing up groceries by themselves. The study theorized that shoppers feel their mistakes using the machine won't be noticed if they're in a group of people, so they're less self-conscious hiding in a crowd.

Many retailers, from Wal-Mart Stores Inc. (WMT) to your local supermarket, now offer self-checkout lanes. A recent study from London-based consultants Retail Banking Research estimated the number of self-checkout machines in the U.S. will grow to nearly 192,000 in 2011, more than tripling the 59,000 that were in use in 2007, when the recession started.

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The self-checkout is a no-brainer for retailers: They need to cut costs to weather this recession, and one of the few places where they have some flexibility is in staffing. If you want to keep staff levels low, but have enough employees to deal with customer service and stock, then you have to take them off the cash registers -- but then you get long lines at checkout that turn off your customers. You can have one cashier staffing a register or one looking over a bank of four to six self-checkout machines.

But it won't help if shoppers don't use the machines. So the study recommends that stores place self-checkouts in low-traffic areas and away from any cringe-inducing products like condoms, which could amplify the shoppers' self-consciousness. Capella said the study also suggested advertising or in-store communications that promote the ease of using self-checkout would help.

"I don't have any doubt that they're going to become more prevalent," he said. "Face it, that's going to be a real benefit for (retailers), but none of this is going to benefit them if they can't get consumers to use them."

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Study Finds Self-Conscious Self-Checkout Users Nov 16, 2009 12:00 PM, By MICHAEL GARRY By: By MICHAEL GARRY A research study on shopper attitudes toward self-checkout systems suggests that some shoppers may feel self-conscious about using the technology in the presence of another user.

The study, funded by Villanova University here, concluded that in an area consisting of four self-checkout machines, a shopper's comfort level would be adversely affected by the presence of one other self-checkout user, but not by three other users, or if the other terminals were unoccupied.

Conducted at a Kroger store in Starksville, Miss., the study was based on surveys of 114 shoppers, two-thirds of whom are women, with an average age of 39, who were each paid $5 to use a self-checkout and fill out a questionnaire afterwards. About 90% of participants reported having used self-checkout in the past.

"Our hypothesis was that the more people using adjacent terminals, the less comfortable the [study subjects] would be," said Michael Capella, assistant professor of marketing at the Villanova School of Business, a division of Villanova University, and one of the three authors of the study. "But we found they were least comfortable in the presence of one additional person while with three others it went back to being like nobody else was there."

The study results suggest that retailers should, through marketing and advertising, "encourage and educate shoppers on how easy the technology is to use," said Capella.

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UPDATE 2-Citigroup shares down after report on Q4 writedown By: AFX | 30 Oct 2009 | 04:58 PM ET

By Dan Wilchins and Steve Eder NEW YORK, Oct 30 (Reuters) - Citigroup Inc shares tumbled on Friday after accounting expert Robert Willens said the bank was likely to have a $10 billion fourth-quarter charge on its deferred tax assets. A $10 billion charge would amount to about 10 percent of Citigroup's tangible equity and about 25 percent of its $38 billion in deferred tax assets, CLSA analyst Mike Mayo said on the conference call, which he hosted. "We have no idea how any analyst could have arrived at this estimate," Citigroup spokesman Stephen Cohen said. Citigroup shares closed down 5.1 percent at $4.09. On a separate conference call hosted by Morgan Stanley, accounting expert Tony Catanach said the bank appears to have real strategies to prevent it from taking a hit on its deferred tax assets. On CLSA's conference call, Willens said: "I would be surprised if in year end, we didn't find that a valuation allowance would be taken here," noting that he had expected such a step to happen at the end of last year. Willens, formerly an accounting analyst at Lehman Brothers, now publishes "The Willens Report." Deferred tax assets arise because companies keep two sets of books: one for taxes and one for reporting to investors. Income in these two books may be different at different times. If a company has a loss on the income it reports to investors, but cannot record the loss for tax purposes until the future, it records a deferred tax asset, which reflects the future cash flow from paying lower taxes. But if a company is unlikely to generate enough taxable income in the future, it must essentially write down the deferred tax asset, which it does by creating a "valuation allowance" on its balance sheet. That valuation allowance cuts into income reported to investors and can hit a portion of a bank's regulatory capital, as well. Citigroup has a plan for harvesting its deferred tax assets and the plan is detailed and flexible enough that it seems like the bank can execute it, Catanach

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145 said. "It sounds doable, it really sounds doable," he added. After generating more than a year of losses, many banks have substantial deferred tax assets.

(Reporting by Steve Eder and Rodrigo Campos; editing by Leslie Gevirtz and Andre Grenon) Keywords: CITI/ (rodrigo.campos@thomsonreuters.com + 1-646-223-6344; Reuters Messaging: rodrigo.campos.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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NOVEMBER 02, 2009

IT snake oil: Six tech cure-alls that went bunk Legendary promises, little delivery -- IT history is fraught with "transformational" sales pitches that fell far short

By Dan Tynan | InfoWorld Share or Email | Print | 9 comments| 43 Recommendations ‚ previous next › 123456 "Where ERP fails," says Roger Hockenberry, EVP for IT services provider Criterion Systems, "is when you try to apply best-practices business process that are empirically created to an organically grown enterprise.

Replacing process that was developed internally, over a long period of time is not an easy thing for any organization."

Your choice? Either change your people and processes to match the software (good luck with that) or customize the software to match your business (hope you brought your checkbook).

As a result, implementing an ERP project is "like teaching an elephant to do the hootchy-kootchy," in the words of CIO magazine senior editor Thomas Wailgum. Millions of dollars later, most massive ERP projects end up half finished or largely ignored by the people they were supposed to help.

A 2006 report by the Cutter Consortium found that application software packages -- predominately ERP -are fully implemented less than a third of the time. Forty percent of businesses reported that squeezing the promised benefits out of this software ranged from "quite difficult" to "extremely difficult." More than 90

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percent of ERP projects take longer than expected to implement, and nearly 60 percent go over budget, according to the Panorama Consulting Group.

But many of ERP's failings lie with enterprises that weren't mature enough to handle the concept of integrated data flow, says Sue Metzger, management information instructor at Villanova University's School of Business. "The Y2K crisis of the late 1990s gave [ERP vendors] a great opportunity to come into enterprises and replace existing technology," she says. "Sure, some of them may have oversold and overcharged. Those were fat and happy times for many ERP providers. Organizations that had the fear of Y2K instilled in them felt ERP was the way to go, even if they weren't mature enough to handle it."

Though they never fully delivered on their promise, ERP systems are now common across large enterprises, as is the concept of data integration. "The challenge today is what to do with all that data," she says. "How do you make decisions based on that information?"

5. B-to-b marketplaces Era: 1999 to 2002 The pitch: "By 2005, 35 percent of the Internet b-to-b trade volume will be conducted via a net market or a consortium of buyers or sellers. ... The value proposition of the Internet is on a grander scale for the b-to-b space; the sheer size of b-to-b trade, coupled with inefficient processes, makes the Internet migration of business strategies very attractive." -- Jupiter Research, June 2000 They were supposed to revolutionize the way organizations did business on the Net -- matching buyers and sellers in a dynamic, interactive bazaar that would dramatically cut procurement costs while boosting efficiency. According to Gartner, by the middle of this decade some $8.5 trillion of trades would occur annually via automated B-to-B exchanges.

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Social Credit For CSR Purchases Key To Consumers

by ArontĂŠ Bennett, Friday, November 6, 2009, 5:04 PM

In new research with my colleague Amitaz Chakravraki of New York University titled "Self and Social Signaling Explanations for Consumption of CSR-Associated Products," we examine the purchase intent of consumers for corporate social responsibility (CSR) products based on the product's "social signaling" potential to others.

The National Breast Cancer Awareness Month campaign illustrated the importance of social signaling with their tremendous job in turning October pink. Corporate social responsible products were ubiquitous, from cosmetics to clothing -- even on the feet and hands of NFL players.

What makes BCAM successful is that people prefer products that send out highly visible, social signals to their relatives, friends and peers regarding their benevolence. Consumers who buy or wear "pink" think of themselves as being more charitable than those who don't.

To these consumers, it's important to wear their charity on their sleeve -- literally.

It is well-documented that products with a CSR-association are extremely popular; consumers will even pay a premium for them. In the past decade, consumers have increasingly bought products that have a CSR association, such as cell phones that give a portion of proceeds to cancer or AIDS research. But our interest and research delved into the lesser-known specific motivations underlying a consumer's purchasing decision.

In a variety of experiments, our research found that consumers like CSR-associated products for two distinct reasons.

First, the fact that these products send out highly visible, social signals to their friends, family and co-workers regarding their kindness and charitable nature.

Second, they like the more private, self-signaling potential associated with the purchases of these products, even when a strong public social signal is absent to others.

In the research, we did three studies.

First, we manipulated the social signaling potential of the product by varying its coloring to gauge differences in responses due to visibility. We found that consumers generally

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149 preferred less colorful products. However, a sizable preference shift occurs when CSR attachment is added to products; preference then moves toward more colorful products.

Second, we kept the color of the product the same, but altered its visibility by changing the location of its use. The products were described as being used in a room that was used for entertaining friends or relaxing alone. The results matched those of the previous study -- consumers preferred CSR products that were used in highly visible situations. The interesting finding is that visibility can be increased by making the product more colorful or using it in more public situations.

Third, we examined how possible self-signals of CSR products influenced consumers. For example, we reminded consumers that each time they saw their CSR-associated purchase, they would remember that they contributed to a good cause. This did not alter the visibility or social signaling potential of the product, but appears to have influenced selfsignaling potential. Consumers showed increased preference for the products that came with a reminder of their benevolent deed; this increase was greatest when the product was also highly visible.

Across all three studies, when products had a CSR-association, like donating a portion of proceeds to LIVESTRONG, the products with high social signaling potential were evaluated more favorably. Embedding a CSR-associated product with high visibility, such as color -the yellow headphones on iPods for LIVESTRONG, or the pink products for BCAM -- is key.

Consumers derive greater self-signaling benefits from more visible CSR-associated products.

Marketers that are eager to tap consumers willing to pay a premium for CSR-branded products should rethink all aspects of their messages to include larger graphics, brighter colors and emphatic reminders that to purchase a CSR product is to "do good."

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AV Tech Powers Financial Simulations at Villanova's Applied Finance Lab •

11/11/09

Nawrocki and colleagues developed a student-managed investment fund program that includes 40-50 students in two classes for academic credit, and about 100 students in a student club, the Villanova Equity Society. The students manage five different portfolios of about $100,000 each.

"We developed a market microstructure course (trading) using material developed at Baruch College," he said, and we also developed a new masters program, the Masters of Science in Finance (MSF) that uses the resources in the room."

The technology is sophisticated enough to be intimidating to new students, so they installed softer lighting than most labs, which tend to use uncomfortable lighting that glares, and student interns man the labs during open hours to offer assistance. "This allows students to work with students in overcoming the information overload that the lab represents," he said.

The lab is a powerful recruiting tool for prospective students, and usage has grown from 20 students to more than 80 students earning Bloomberg certification annually. In addition, Villanova ranks in the top five universities in the country in terms of Bloomberg certifications.

"Bloomberg certification is a powerful addition to a student's resume when interviewing for summer internships and for jobs," said Nawrocki. "Being able to quickly access almost any information from a Bloomberg terminal is a very marketable skill."

Trading simulation software provides students with a better idea of how markets operate and it provides another skill set that is attractive to investment firms.

"Reuters and Bloomberg in conjunction with the five investment funds that we manage motivates students to keep up to date with market developments and market statistics," he said. "Most interviewers for investment jobs really look for students who are able to discuss current market events."

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As for the university, he believes the lab has increased the value of a Villanova diploma. "The Villanova School of Business has been consistently ranked in the top 20 undergraduate business schools the past five years and the lab was a factor when the Princeton Review and PC Magazine named Villanova the number one most wired campus a few years back. The most recent Princeton Review placed us in the top 15 college campuses for computer technology."

Personally, Nawrocki said the lab was a great adventure from the planning and design to the implementation and new curriculum. "The professional growth that I have seen in our students the past five years has made it one of the most rewarding experiences in my career."

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Unemployment Hits 10.2 Percent

November 06, 2009 October jobless rates continue upward trend

By Stacy Straczynski Recent economic gains in consumer spending were shadowed with the news that unemployment hit 10.2 percent nationally. The U.S. Bureau of Labor Statistics reported today that the number of jobless persons increased in October by 558,000 individuals to, marking a 0.4 percent increase from 9.8 percent in September. Currently, 15.7 million Americans are unemployed.

The total of long-term unemployed persons--those out of work for at least 27 weeks-showed little change (35.6 percent), increasing to 5.6 million from 5.4 million the previous month.

Losses were felt the greatest among the adult men (10.7 percent) and white (9.5 percent) demographics. Unemployment among women (8.1 percent), Hispanics (13.1 percent), blacks (15.7 percent) and teenagers (27.6 percent) remained steady from September levels.

In terms of industry, construction (down 67,000), manufacturing (down 61,000) and retail (down 40,000) sectors saw the greatest job losses, while job increases were seen in healthcare (up 29,000) and temporary help services (up 34,000).

According to Peter Zaleski, professor of economics at the Villanova School of Business, believes that hiring will return, but only after real economic recovery is seen. "The jobs will follow as firms have faith in the permanent jump in demand," he said. "How long before this occurs? It’s hard to say, but it will happen when consumer confidence returns, people begin to spend again, and firms have confidence that it's not just a blip."

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Ask the experts: The future of business schools Published: November 13 2009 18:31 | Last updated: November 18 2009 15:35

The past year of turmoil in management education has caused a knee-jerk reaction with many corporate managers and business school professors alike questioning the value of what is taught and its relevance to business. Are business schools providing corporations with the advice they need on strategy? Are MBA students fit for purpose? Is business school research written to conform to the standards of academic publishing or to actually help managers run their business?

On Wednesday November 18, between 14.00 and 15.00 GMT, a panel of businessmen turned business school deans answered your questions in a live Ask the Experts online session. They are: Della Bradshaw, Business Education Editor of the Financial Times Louis Lataif, dean of the Boston University School of Management Prof Lataif became dean in 1991 after working for 27 years with Ford Motor Company. In 1981, when he was named corporate vice president, he was Ford’s youngest officer. Four years later, he was appointed vice president, North American Sales Operations and in 1988 became president of Ford of Europe.

James Danko, dean of the Villanova School of Business Prof Danko spent nearly 20 years as an entrepreneur before moving into higher education.

As well as Villanova, he has taught at Tuck at Dartmouth College, UNC Chapel-Hill and Babson. Prof Danko set up his first company, a surgical supply company at the age of 19, in 1973. His business expanded to include physical therapy, exercise rehabilitation and orthopedic products. In 1990 he sold the parent company and divested himself of all affiliated companies.

Chris Bones, dean of Henley Business School at the University of Reading We are sorry to say that Prof Bones was unable to take part in the Q&A.

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154 In his 22 years in business, he has worked for Shell, Diageo and Cadbury Schweppes.

“At their best business schools are critical friends who hold up the mirror and provide thoughtful, talented people who do the right thing not just for themselves and their organisations but also for the wider communities in which these organisations exist,” says Prof Bones. “Too often however, perhaps in the face of the economic pressures we all face, they act as cheerleaders for organisations who represent poor business practice and the people they produce are selfcentred, egotistic and over-confident in their own abilities.” .....................................................................................................................

Is it time to revise the MBA model to be geared towards a blend of general education, quantitative tools for problem solving and training in business strategy?

Jack Aschkenazi, IL, USA James Danko: I do not believe it is prudent to assume that there should be a single MBA model with a common set of foundational elements. The needs of MBA students and business leaders across the global spectrum are quite different, and the skills necessary for success are subject to evolution with the changing realities of global business. In fact, a criticism aimed at business schools, on occasion, has been their inability to change while rooted in an undifferentiated, outdated core curriculum, so it may be unwise to pursue a universal model that supposedly works effectively in all cases. There needs to be a variety of MBA programs and specializations available in the market, dependent upon demand, interest and the capabilities of specific schools.

I view such diversity as valuable.

That being said, yes – such a foundation is very valuable, if not required, for success in a chosen profession. Of course, some of those elements, such as a “general education” or liberal arts foundation, may be required in advance of the MBA program, and not necessarily part of the program itself. I would argue that in addition to these, we need to emphasize creativity, agility, and, above all, context as part of “complete business strategy.” Providing context is critical for seasoned executives, for the increasing number of younger, less experienced students admitted into full-time MBA programs, and for undergraduate business students.

Della Bradshaw: I am at a bit of a loss to understand what you mean by ”general education”. As most MBA students will be in their late twenties, I assume they will have had enough general education. I think most of the business schools I talk to are working on how they can get students to learn more in the available time.

Louis Lataif: For a number of years, Boston University’s MBA program has focused on “fusing the art, science, and technology of business”. The “science” of business is what business schools do well; there are PhDs in the various sciences of business. But there are no PhDs in the “art” of business—and yet most business failings do not result from poor quantitative analyses; they result from a lack of appreciation of what the data does NOT show. So our curricular revisions are now in their second decade. We aim to graduate students who can think systemically, rather than functionally, who are adept at quantitative analysis, who understand the limitations of the data, who know how important it is to “get dirty” in learning a business in order to gain a “feel”, an informed intuition about a business, and to understand how technology is fundamentally affecting both strategy and operations.

If graduates are, in fact, wired to think systemically, then they naturally consider the ethical, societal, environmental, and human implications of business decisions. .....................................................................................................................

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155 What are the main things Deans have to focus on to educate better a young generation of highly skilled business leaders in serving the ever increasing needs of knowledge intensive industries?

E.g., such industries include nanotechnology, biotechnology, information technology, telecommunications technology, quantum computing technology and space technology, in well educated and experienced human capital in the era of globalisation.

Viktor O. Ledenyov, Ukraine Della Bradshaw: That’s the $64m question, isn’t it? Clearly business schools can never teach within a generalist MBA programme the kind of technical know-how to which I infer you are referring - though there are many specialist MBA and MSc programmes that will deal with these topics. But I suspect most business schools would say that they teach the general skills needed to run such businesses.

James Danko: This is an outstanding question, and one that the Villanova faculty and I have contemplated extensively during the past three years while we revamped our graduate and undergraduate curricula. Recognizing that our future leaders need to manage issues unprecedented in the history of management, we understand the importance of assuring that a technological, innovative, and analytical perspective permeates our curricula. Even as we are making changes to our curricula, we realize curricular change and innovation must be an ongoing process, driven by the ever-increasing needs of knowledge-intensive industries.

As business school deans, we must encourage innovation and an openness to the evolving realities of the global business world. We may also want to rethink the pervasiveness of the traditional b-school concept of graduating “general managers” who are prepared to manage various functional departments. Today’s business environment calls for a mix of leadership talent and insight coupled with more specialized knowledge, whether such talent is represented by medical doctors, scientific researchers, engineers, or quantum physicists.

We are also seeing growth in dual degree programs in fields which can be helpful in serving certain knowledge intensive industries. Such programs - the MBA/MD and MBA/MIS programs, for example - combine business and specific scientific and technological fields. Their goal is to produce organizational leaders who understand the intricacies of their fields and who play a dual management/practitioner role within them. Although on the surface this concept is appealing in many ways, the risk I see is the possible dichotomy in the training and talents required to excel in leadership versus those required to excel in such high-level scientific and technological fields.

Louis Lataif: If a business school graduate does not have a good understanding of digital technologies, he/she is under educated and at a serious disadvantage in today’s world. Such an understanding is as fundamental as knowing accounting. So all sophisticated MBA programs need to include a significant dose of technology exposure. That’s why we introduced, in 2000, the MS-MBA program, undertaken in the same 21 months as a full-time MBA degree, but requiring 84 academic credits (instead of 64), and allowing the ambitious students to earn an MBA (with whatever business concentration they wish) along with a Master of Science degree in information systems. .....................................................................................................................

Would the new to be elected President of the European Union be able to consolidate all the efforts by Deans from leading European business schools towards the creation of a framework of new common policies with the goal to reform the business education programmes at European universities? Also, to introduce the innovative approaches to business education in Europe, and share the best educational practices with North American business schools with the aim to speed up the education of a new generation of business leaders, who will be capable of dealing with the

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156 challenges posed by globalisation as well as capitalising on the opportunities originated from globalisation?

Viktor O. Ledenyov, Ukraine Della Bradshaw: Short answer: no. Long answer: no, never.

Louis Lataif: The EU may well establish some overall commercial or growth goals for Europe which all European business schools would react to in their various ways. But it would be wrong (in my view) to think that a central governmental body could or should standardize how or what business schools teach. The market is a much efficient regulator about graduate degree programs. Those that are effective attract students and those that fall short of high-value, highimpact education wither and die. That free market system works as well for business schools as it does for all other consumer products. .....................................................................................................................

In the US, the MBA is seen as the upper level of business education. In the UK, where does an MBA stand among employers wishing to hire business students? Has the perceived importance of an MBA education increased in the UK marketplace over the past five years? Do you have evidence of such a trend?

Salvatore Viola, UK Della Bradshaw: To be honest, I would question whether an MBA is seen as the pinnacle of management education in the US - I’m sure programmes such as the Harvard Advanced Management Programme (AMP) would hold greater kudos. But clearly in the US the MBA is the established management qualification, unlike in Europe, where there are undergraduate and masters programmes as well as MBAs and executive education. Certainly the number of people applying for MBA programmes would suggest that such programmes are gaining in reputation, as would the decision by lots of big UK companies - such as BT or HSBC - to recruit MBA graduates. However, the travails of the past couple of years make it difficult to come up with any hard statistics. .....................................................................................................................

Do you think the focus for business schools should be changing from preparing students for large organisations, towards encouraging them to be entrepreneurial by providing them with the skills to start new businesses suited to operate within the current economic climate?

Caspar Jackson, London James Danko: As a former entrepreneur (17 years as owner of my own business in Ohio), who is now a business school dean, I have given considerable thought to this issue. While I do believe there is great value in teaching our students the basics of--and systematic approach to--starting a new business, I believe we need to go beyond this, and enhance all of our students’ abilities to think creatively and to understand the process of innovation, skills increasingly necessary in pursuit of new opportunities in both small or large organizations. Whether a student opts to pursue a traditional career or an entrepreneurial opportunity, business schools should focus on both the creative “right brain” skills as well as the quantitative “left brain” skills.

The point inherent in this question is a very important one; our schools need to encourage entrepreneurship in the current economic climate. New ideas and start-up businesses have the greatest potential to accelerate improvements to the global economy. Over the past couple of years there has been a decrease in risk-taking, and this hurts our economic recovery. During great economic times, when investors have the resources and willingness to take risk, many big

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157 ideas are pursued. While not all ideas are good ones, the overall energy and creativity that results is very positive in advancing the well-being of society.

Della Bradshaw: I think there’s always going to be a need for both, isn’t there? And I think most business schools, or at least the most market-orientated ones, already offer electives in entrepreneurial skills as well as corporate skills. I think one area where business schools are woefully lacking is in teaching managers from family businesses, who arguably create 75 per cent of the world’s wealth.

Louis Lataif: The basic preparation afforded by a first-rate MBA program relates essentially to understanding, evaluating, analyzing, and affecting workable solutions to business challenges.

Those skills should apply to large and small organizations alike. Where a student chooses to work has more to do with his/her attitude toward risk, their comfort levels in dealing with larger organizations systems, and their life goals. If they are naturally entrepreneurial, they can certainly concentrate in MBA subject areas that will give them exposure to the unique problems of start-up or small firms. .....................................................................................................................

Is it worth studying for an MBA in this day and age as it is so expensive? Is the degree too theoretical? Is one better off studying for a vocational qualification, short executive course or specialising, e.g., Masters in Economics?

Louis Lataif: An MBA education is an experience that changes the way one addresses problems and develops solutions. It’s an experience that teaches a person about themselves—how to envision possibilities, how to communicate a vision, how to gain consensus, how to give and accept constructive criticism, how to appreciate various talents and enable those talents to shine, how to understand one’s own limitations - in short, how to lead. This learning is difficult if not impossible to “teach” in individual technical courses. Properly educated MBAs should deal with all of life’s issues in a more wholesome way. So the degree is still very much worth the investment.

Having said that, not all MBA degrees are created equal and it would be worthwhile to research various programs carefully to select one that fits an individual’s needs.

James Danko: There is no doubt in my mind as to the value of an MBA. From my analysis over the years, especially at the top MBA programs, the average starting salary continues to be well correlated to the cost of tuition. But it is not just about cost - it is a positive investment in the individual. I have yet to speak to an alumni of one of my programs over the years who regrets her or his decision. There is no doubt the person is better prepared to lead and manage. As for whether or not the MBA is too theoretical, I simply do not agree that is the case, and in fact, most business schools have been particularly progressive with making positive changes to their programs to assure the relevance of the education.

As for the value of a more specialized Masters degree, I do think that depends on the individual if the person is so focused and sure of their career path, say as an accountant, then a Masters in a specific area may be fine. However, if the person wants to maintain some degree of freedom, and leave options open, especially to advance to a senior leadership position, then the MBA makes the most sense, and it is an investment that stays with you for a lifetime.

Della Bradshaw: I think the answer, as always, is that it depends what you want to do at the end of the qualification. If you want to specialise in the financial or accounting sectors, than a professional qualification would be an obvious choice. The MBA by definition is a generalist degree and often characterised as a degree for career changers. There are also some sectors management consultancy is arguably one - where there is a ceiling on promotion for those

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158 without an MBA. It is understandable to concentrate on the cost, but I have never met any MBA graduate who didn’t say how much fun it was. .....................................................................................................................

Given the persistent under-representation of women on MBA programmes as well as in top executive jobs, should business schools be doing more to address this imbalance?

Louis Lataif: In the US, females outnumber males in college enrolment. For their graduate studies, they select industries and careers that they find appealing. Of the folks who opt for an MBA degree here at Boston University, about 40% of them are women (and that proportion has been rising).

James Danko: It is my sense most business schools want to do their very best to have a diverse class of students, one that is representative of the work force, and the issue of attracting more women applicants to our MBA programs has been a continuous one over many years. Of course, there is the reality that the average age of is 27 for most full-time students entering a program, and for a women applicant this leads to serious introspection about career and life balance issues, and decisions about having a family. Given the investment of tuition, a prospective student needs to think about the ROI, and that certainly increases if they are committed to a longer-term, uninterrupted career. I know that this has caused some women applicants to decide to stay the course in their careers, and forgo the MBA. No doubt b-schools will continue their efforts to cast a wide net, but there are practical realities.

Della Bradshaw: Yes. There was a survey done a few years ago by the Association of MBAs in London about why women made the choices they did. One of the answers seemed to be that women were put off if the applications folk were unhelpful or unfriendly. Male respondents said they also noticed that the applications folk were unhelpful, but it didn’t affect their decision in any way. Another comment was that while men tended to plan for an MBA several years in advance as required by most of the top schools given the need to take the GMAT, apply a year in advance etc - for women the decision process was much shorter and was more in reaction to their circumstances at the time. Perhaps they are two issues that business schools should address? .....................................................................................................................

There has been an explosion in the number of MBA programs available at the same time that many companies have made the degree a de facto pre-requisite for advancement. Many students are pursuing the degree solely to get their ticket punched. In addition, in the aftermath of the financial meltdown, the perception of the MBA has taken a serious hit. How will all this impact the value proposition for getting an MBA degree?

Doug Barg, Philadelphia James Danko: First off, I would like to see clear evidence that the perception of the MBA has taken a ”serious hit.” I have not spoken to any recruiter or senior business executive who has indicated they value the MBA any less. In fact, our increased number of applications at Villanova would indicate otherwise. I wonder if this is just media noise.

As for the explosion of MBA programs available, indeed there are more options available, and more companies tend to respect the degree, but I do think discriminating employers, especially those companies who have a long tradition of hiring from top business schools, understand the difference in the quality of MBA degrees across various schools, whether they be from the more traditional programs, or some of the new on-line start-ups.

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159 Della Bradshaw: You’re right to say that over the past few years there has been an explosion in MBA programmes and there is continued growth in geographical areas which are underserved primarily Asia. But there has also been quite a fall-out in programmes in well-developed markets we have seen quite a few full-time MBA programmes put on ice in Europe, for example. But as you say, demand for top MBA programmes increases despite all the adverse publicity. And talking to recruiters, as I have been doing recently, it would seem that many of the traditional jobs in finance and consultancy will be on offer to graduates in 2010 and 2011.

Are business schools and banks going back to their good old ways? I hope not.

Louis Lataif: Yes, MBA degree programs have proliferated. When I received mine in l964, there were about 5000 MBA degrees awarded in the U.S. This year, there will be about 140,000 MBA graduates! So prospective graduate business students should research carefully the kind of MBA programs that might be available, the composition of the typical class (work experience, age, college grades, GMAT scores, international and gender mix, nature of curriculum, etc.) and attempt to find one that meets the individual needs. .....................................................................................................................

Further to the answer given by Mr. Danko on my last question, I wonder if there is room for MBA courses to include design classes intended to generate ideas rather than just bring out their business potential? I recently read about an MBA attending a design course post Business School as she felt there was a gap in her overall learning around innovation.

Caspar Jackson, London Della Bradshaw: There are lots of business schools that build design into the curriculum - Esade in Barcelona, Rotman in Toronto, Imperial College in London and Insead are just a few that spring to mind. Here is an article that a colleague of mine, Ursula Milton, wrote on the subject MBA students have designs on innovation.

James Danko: Many programs allow students to take courses in other divisions of the university while working on their MBA. I strongly encourage courses that challenge students to expand their creative sides, such as the design course you mentioned. At Villanova, we recently did a survey of all courses on campus that have a creative dimension, for example, an improv course in the Theatre department, or design course within our Engineering College. We found quite a few that we would encourage our students to pursue.

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Execs Want Focus On Goals, Not Just Metrics They're still using analytic dashboards, but tying the data to strategic goals.

By Doug Henschen, InformationWeek Nov. 13, 2009

It's 7 a.m. in San Antonio, Texas, and Rich Marcogliese, chief operating officer of Valero Energy, is holding his usual morning meeting with the plant managers of 16 major refineries throughout the United States and Canada. On the walls of the HQ operations center are a series of monitors centered by a giant screen with a live display of the company's Refining Dashboard. Whether the executives are in the room or connected remotely, all eyes are trained on the Web-accessible gauges and charts, which are refreshed with the latest data every five minutes.

"They review how each plant and unit is performing compared to the plan," says Valero CIO Hal Zesch, "and if there is any deviation, the manager explains what's going on at their plant."

For Valero, surprisingly little-known for a Fortune 10 (that's right, one-zero) company with more than $118 billion (with a "b") in revenue, just one dashboard needle moving from green to red might signal millions of dollars at stake. The point of the dashboard isn't to call managers out; it's to give executives timely information so that they can take corrective action.

Valero's Refining Dashboard is just the sort of cutting-edge decision-support tool that thousands, if not tens of thousands, of companies are now attempting to create. Those companies have embraced the idea that decisions based on fact will consistently beat those based on gut. Business bestsellers including "Competing on Analytics," "Super Crunchers," and "The Numerati" have documented that it's an approach that works.

Financial analysts, board members, and even the news media increasingly expect sound, data-backed analyses from top management. And when things go wrong, regulators and, in some cases, even district attorneys follow the numbers to trace bad decisions.

Plenty of obstacles stand in the way of better decision support, from backward-looking metrics and ill-advised goals to antiquated budgeting approaches and technophobic executives. For management teams that can make use of the data--and these days there's always plenty of data--there are huge opportunities to improve efficiency, develop innovative products, get closer to customers, and outsell competitors.

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161 Start With Goals Valero rolled out its dashboard in early 2008 at the behest of COO Marcogliese. He had launched a Commitment to Excellence program aimed at improving performance, and he wanted to see real-time data related to plant and equipment reliability, inventory management, safety, and energy consumption.

Whether driven by Total Quality Management (TQM) programs, Balanced Scorecards, or another methodology (more on those later), information-driven companies tend to succeed by establishing clear goals and expectations that are aligned from the top of the organization down to departments and individual employees. When results start coming up short, executives can manage the exceptions along the way rather than hoping for the best and reacting to surprises at the end of a quarter.

Valero's goals and measures were inspired by Solomon benchmark performance studies well known in the oil and gas industry. Real-time performance data is compared against daily and monthly targets, and there are executive-level, refinery-level, and even individual system-operator-level dashboard views. It's rare among business intelligence deployments to get fresh data every five minutes, but Valero has tapped directly into "process historian" systems at each plant in a six-month deployment of SAP's Manufacturing Integration and Intelligence application. The data is aggregated and displayed using SAP BusinessObjects Xcelsius software.

A major focus of Valero's Commitment to Excellence program is reducing energy consumption, so the company is rolling out separate dashboards that show detailed statistics on power consumption by unit and plant. "Based on the data, managers can share best practices and make changes in operations to reduce energy consumption while maintaining production levels," CIO Zesch explains. Estimated savings to date: $140 million per year for the seven plants where the dashboards are in use, with expected total savings of $230 million per year once the dashboards are rolled out at all 16 refineries.

The successes have created dashboard-envy within Valero, so IT is working on similar dashboard programs for sales and marketing as well as the strategic sourcing unit.

Focus On The Right Measures The terms "scorecard" and "dashboard" are often used interchangeably, but there's an important distinction. Scorecards are all about tracking against defined metrics, and most scorecards are attached to a methodology, such as the Balanced Scorecard or TQM, says Mychelle Mollot, VP of worldwide marketing, analytics, and performance management at IBM. "Top executives have actually laid out a map for where they want to drive the business, and they've created metrics that will drive the behavior that will get them there," Mollot says.

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162 Dashboards display key performance metrics and perhaps green, yellow, and red zones, but they don't tend to show predefined targets or goals established by management and aligned to strategy.

Whether they call their decision-support tools scorecards or dashboards, only a small percentage of leading companies have actually mapped out enterprise-wide goals with a formal methodology. (The Balanced Scorecard Hall of Fame currently lists only about 120 members, including Best Buy, Hilton, UPS, and Wells Fargo.) Some companies come up with their own methodologies, but the key question is whether it's a comparative decision-support interface --does it track performance trends relative to predefined goals?

A much larger chunk of companies use dashboard-style interfaces that simply monitor the health of the business. "These types of decision-support tools aren't often attached to a grand methodology or linked down to the bottom of the organization," Mollot says.

It's not that monitoring-oriented dashboards can't be effective. But without high-level business strategizing (as Valero has done), there's a danger you'll end up sharing the wrong metrics. Sales stats and financial measures, for instance, can be lagging indicators, and decisions based on this data might miss a looming shortfall that might be obvious in sales pipeline information.

At Elkay Manufacturing, a $1 billion plumbing fixture and cabinetry maker, the CFO has led the company to embrace both the Balanced Scorecard (taught by The Palladium Group) and the Beyond Budgeting/Continuous Planning Framework (promoted by the Beyond Budgeting Round Table). The idea behind continuous planning is to be adaptive, revising plans and forecasts each quarter and always looking out six quarters rather than four.

The conventional budgeting process, by contrast, often takes too long, it's a fixed contract, and "compensation schemes tied to it tend to encourage all sorts of bad behavior, like people sandbagging or just budgeting amounts based on last year's budget," says Adam Bauer, corporate planning manager at Elkay.

Elkay's stated strategy is to grow profitably, so its sales-related scorecards and dashboards include profit metrics so that salespeople don't just drive revenue at the expense of the bottom line. Controller John Hrudicka says the company's decisionsupport tools have identified initiatives that produced more than $13 million in harddollar profit improvements while "helping us transform our culture to a profit mind-set."

Elkay put most of its decision-support technologies in place over the last two years. It tapped Host Analytics' software-as-a-service financial performance management system, which it uses for budgeting, planning, reporting, and end-of-quarter financial consolidation. The system also supported the move, completed in September, to 18month budgeting and planning cycles. Elkay chose Acorn Performance Analyzer software for activity-based costing--analyses that reveal the true cost of delivering products (including manufacturing, distribution, sales and marketing, and warranty

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163 claims) as well as the true cost of sustaining customers (including products purchased, discounts applied, and ongoing service and support costs).

Elkay already had both Oracle (PeopleSoft) and SAP ERP systems in place as well as an Oracle data warehouse. For decision support, Oracle Business Intelligence Enterprise Edition pulls information from all of these systems to deliver multilevel scorecards and dashboards. "It starts with the corporate scorecard and it rolls down from there to the divisions and all the way down to individual-employee goals that affect bonuses at the end of the year," Bauer says. Bottom-up feedback, he says, is gathered during quarterly strategy reviews.

Foster A Data-Driven Culture Few companies have worked as hard or as long at data-driven decision-making as Johnson & Johnson. In the 1980s, J&J embraced TQM and Phil Crosby's Zero Defects approach. In the '90s it moved on to Malcolm Baldrige-type criteria for performance excellence. Early in this decade, J&J focused on process excellence, and by mid-decade it had embraced powerful improvement tools including Six Sigma, Lean, Value-Stream Mapping, and Design Excellence. What most of these approaches have in common is an iterative process of assessing opportunities, developing goals, implementing improvements, and then monitoring their success with the aid of decision-support tools.

Indeed, fact-based decision-making is now "part of the culture at J&J," says Karl Schmidt, VP of business improvement, who leads a nine-person internal management consulting group.

J&J is decentralized, so there's no single, overarching corporate dashboard. There are separate dashboards--or in some cases, balanced scorecards--within the pharmaceutical, consumer, and medical device and diagnostics product divisions and the dozens of companies in each of those groups. The key performance indicators include a mix of financial metrics (revenue, net income, cash flow); customer metrics (satisfaction, loyalty, market share); internal process metrics (product development, manufacturing efficiency, fulfillment); and employee measures (engagement, satisfaction).

As late as 2006, J&J estimated that all the top-line and bottom-line improvements rolled up across the company totaled more than $1 billion a year in "value creation," Schmidt says. But more recently, those improvements haven't been enough to insulate J&J from what he describes as "brutal economic conditions." Early this month, J&J announced a restructuring that will cut up to 7,000 of its 117,000 employees worldwide. Restructuring is rife across the pharmaceutical industry, and Schmidt says having good decisionsupport tools is more important than ever.

"It comes down to fact-based decision making," he says. "In tough economic times, you want the best available data and analysis to make better decisions."

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164 Cater To The Audience Maine Medical Center created a dashboard this year to help it win reaccreditation as a Magnet-Designated Hospital for nursing, an elite distinction. The dashboard delivers eight key metrics on patient safety and satisfaction by hospital operating unit, so that nurses, nurse directors, and administrators can log on and check personal performance, unit performance, and rollups for the entire hospital.

But Maine Medical's deployment underscores the decision-support truism that some executives are more savvy than others when it comes to using these tools. "I walked into the chief nursing officer's office one day, and she had about 50 paper printouts of dashboard views wallpapering an entire wall," says Doug Salvador, the center's associate chief medical officer. "It's nice that she valued the information that much, but I had to show her that she could always access historical views."

Over the last three years, the medical center has used SAS Institute's balanced scorecard software to codify patient-care quality and safety strategies as well as supporting goals and measures. Most goals are delivered though performance-improvement dashboards, which seem to be getting the job done. Maine Medical has been named to the U.S. News and World Report Best Hospitals list three times (for gynecology, orthopedics, and heart care), and its Cancer Institute in Scarborough, Maine, was selected this year as one of five model cancer programs in the United States by the Association of Community Cancer Centers.

Salvador says his group spends most of its time asking front-line caregivers how they can improve reports, scorecards, and dashboards, but the team is also "picking off" once techaverse executives by making their decision-support tools more useful to them. In the past, the chiefs of surgery and medicine barely used the decision-support tools, he says, "but they now have access to physician-specific scorecards with performance data that they need when it's time to re-credential doctors within their departments. They used to get emailed reports that weren't very complete. Now they're getting more data, and it's presented in a more useful format."

Look To The Internet Some of the most decision-support-savvy executives can be found in e-commerce. For example, Patrick Byrne, CEO of Overstock.com, is said to use dashboards to help set his daily schedule. If the problem of the day is gross profit margins, that will drive who he calls in for a discussion. "If you get invited into a meeting with that kind of metricsoriented CEO, you better have your hands on the data, including the detail at the next level down," says David Schrader, director of strategy and marketing at Teradata, the vendor behind Overstock's data warehousing environment.

Overstock can roll up its profit and loss statement every two hours, "which is absolutely world class," Schrader says. That capability gives executives accurate, up-to-date insight Villanova School of Business 2009 Media Report

165 into the financial results they can expect, and it also drives operational decisions such as spot buys of TV advertising.

Whether a company is an e-commerce powerhouse or not, digital marketing channels like e-mail, social media, and online advertising networks are increasingly important. Thus, top executives should be watching forward-looking, upstream measures such as Web site performance, Web-driven lead generation, and sales pipeline information. Here, again, you must be careful to select the right metrics.

"A lot of people are measuring the wrong thing, like how many people came in the door," Schrader says. "What you really want to measure is how many people came in the door and became qualified leads."

And once prospects become customers, you'll want to know if they are good or bad customers. That's where analyses such as activity-based costing and customer segmentation come in. Lessons learned should come full circle and be reapplied to leadgeneration campaigns and marketing offers.

Tell A Story With The Data Considering all the IT systems now in place, the growing dominance of Internet-based marketing, and the intensely digital nature of services-based industries, there's no doubt that data-driven decision making is the way forward. But the key questions are, how prepared are these organizations to synthesize and share key performance indicators, and how prepared are executives to draw insight from information?

CIO surveys, software sales stats, and business bestsellers point to surging interest in business intelligence and business analytics. Villanova University's School of Business recently responded by changing its curriculum with data-centric decision making in mind. For example, it added an undergrad course on analytics and risk assessment, and it updated the statistics courses required at both the undergrad and MBA levels to be more practical and applied.

The curriculum changes were guided in part by extensive interviews with a group of 16 business leaders (including Schmidt of Johnson & Johnson). The resulting "Current State of Analytics in the Corporation" report says nearly as much about tech skills as it does about executive decision support: The sweet spot for new hires continues to be that elusive combination of technical and business know-how and the ability to "tell a story" with data.

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Monday, November 16, 2009 Why don't they teach sales at college?

"Business schools worry me," Glenn Porter, vice president for sales at LMC Software in Chadds Ford, complained recently in a talk he gave at the Huntsman School of Business out at Utah State.

"You can go through a two-year (MBA) course at Harvard, Chicago, Stanford or Wharton and not be required to take one course in Sales 101," Porter complained. "IBM, Proctor & Gamble, Goldman Sachs have cut back on sales training for new hires," and "few people who run companies have ever taken a course in sales." Even as US businesses feel ill-prepared for global competition, "the basic block and tackle of how to get real business is not taught."

Porter is calling on business schools to supply the slack by boosting courses in "Salesmanship 101 - how to conduct a structured sales call, how to progress a sale through the logical selling process and how to get customers to pay their invoices in a timely manner."

Wharton does offer a sales course - half a credit, at the undergraduate level. Joseph DiAngelo, dean of the Haub business school at St. Joseph University, says his school, with its hands-on emphasis in food and drug marketing, offers two courses, in Sales Technique and Sales Management.

Why no Sales majors alongside Accounting and Finance? "It's something you learn on the job," said Villanova University's Marketing department head, Gregory Bonner.

"It'd be hard to put out a major in sales. I don't think you'd have a kid take six or seven courses in sales, it's too microscopic. But within the Marketing department, we do have a sales track:" both sales, and sales management, like at St. Joe's.

"When people start off out of college, far more start off in sales than any other area," added Bonner, who consults for Campbell’s' on the side. "Kids who have had these courses have a leg up when they get out there." Maybe, he adds, "we ought to offer a third course�

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Posted: Tuesday, 17 November 2009 6:34AM

''Seinfeld'' Actor Talks Business With Villanova Students

by KYW's John Ostapkovich An actor who played a recurring character on ''Seinfeld'' gave a pep-talk to Villanova business students.

(Excerpt from Seinfeld): (Elaine): "Mr. Peterman, how are you feeling?"

(Peterman): "Elaine, I'll be blunt. I'm burnt out, I'm fried. My mind is a barren as the surface of the moon."

John O'Hurley (photo), J. Peterman of Seinfeld fame, host of Family Feud, Dancing with the Stars winner, addressed the inaugural presentation by the Innovation, Creativity, and Entrepreneurship Center. He prescribed accomplishment, balance and meaning as the cure for the ordinary life: "I wanted to have an extraordinary life. I don't think any of us have woken up today saying I want to have an ordinary life. I want to swing from the middle rung of the ladder of life, just like George Costanza."

O'Hurley advised daydreaming as a way to connect with your own unique ideas.

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Unions Get Snarky With Big Banks Questions Abound Whether Big Labor Is Gearing Up to Encourage Bank Employees to Form New Unions

By ALICE GOMSTYN ABC NEWS Business Unit Nov. 18, 2009 — As Bank of America continues its search for a new CEO, one of the nation's most powerful unions is giving it some unsolicited help: Since last week, the Service Employees International Union has been running online ads announcing a CEO vacancy at a "big bank" that may "reward failure with big $" and does not require a "basic understanding of the economy."

The ads, which the union says have attracted more than 300,000 clicks since Friday, are designed to pop up on some Google search results pages when the user searches the terms "Bank of America" and "BAC." "What we're saying is they don't just need a new CEO," said Stephen Lerner, who directs the SEIU's finance reform campaign. "They need a new business model that isn't based on excessive risk, massive compensation for a few people and ripping off consumers."

Bank of America declined to comment on the ads, but accused the union of having "misrepresented Bank of America's relationship with its customers and its associates" in the past.

The SEIU's snarky salvo is one of many fired by unions at major banks this year. Earlier this week, the SEIU staged a protest at Goldman Sachs' Washington, D.C., headquarters, arguing that the bank's multi-billion dollar bonus pool could be used to prevent foreclosures.

In October, the SEIU teamed up with its former parent labor federation, the AFL-CIO, and other groups for a demonstration denouncing bank greed at the annual American Bankers Association conference in Chicago.

Last spring, the Teamsters Union and the SEIU fomented a successful shareholder campaign to strip retiring Bank of America CEO Ken Lewis of his title as bank chairman.

While the unions insist that their actions are aimed primarily at encouraging regulation to address problems facing the average American worker -- like foreclosure and dwindling retirement accounts -- some say the unions have another goal in mind: attracting and unionizing bank employees.

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169 "If you're talking about the SEIU especially, I see this as their effort to take what is a popular, political issue and turn it to their advantage as it relates to their efforts to organize workers who are in these big banks who typically have not had exposure at any great extent to organized labor," said Dennis Kuhn, an associate professor of business law at Villanova University.

Big Bonuses Anger Rank-and-File Bank Employees The shrinking of the U.S. manufacturing sector, a key source of union membership, helped drive down the total proportion of U.S. wage and salary workers belonging to unions to just over 12 percent from a high of more than 30 percent in the 1950s.

Unions have been able to make up some of the ground they lost in the manufacturing sector by appealing to service sector employees such as hotel workers and hospital staff.

Kuhn said that bank employees could be next -- and furor over out-sized bonuses for top bank brass may be what brings rank-and-file bank employees into the union fold.

The unions could target everyone from bank tellers to those who process credit card applications, he said, because they're fed up with the disparity between their compensation and that of their company executives.

"You're likely to find a reasonably positive response from the people who are toiling in at the operations of a bank and not realizing much in the way of return of their efforts, at least not in their minds," Kuhn said.

Legislation pending before Congress should further boost any union efforts to organize bank employees. The Employee Free Choice Act would make it easier for workers to organize unions, Kuhn said.

"You have a very hospitable political environment coupled with an issue that garners headlines from every newspaper," he said. "So this is what they're working to exploit."

But the country's two major union groups, the AFL-CIO and SEIU, are playing coy when it comes to the question of unionizing bank employees.

Lerner told ABCNews.com that banks should not "stand in the way" if workers want to form unions, but stopped short of saying that the SEIU, which last year was reported to have considered bank unionization, would lead such efforts.

"The SEIU thinks that we cannot have an economic recovery unless workers have a right to form unions. (Then) we can start raising wages so we can stimulate the economy so people make a decent living -- part of that for bank workers and all workers is restoring the right to form a union and we don't think banks should stand in the way if workers want to unite together to organize a union to make their lives better," Lerner said.

Bank Unions: A Red Herring?

Daniel Pedrotty, head of the AFL-CIO's office of investment, called the unionization question a "red herring."

"It's a way to try to confuse the issue," he said.

Part of the reason the AFL-CIO is involved in demonstrations to encourage bank regulation, he said, is because bank investments directly affect current union members: Trillions of dollars of union members' pension and retirement funds are invested in financial products, he said, including stock in the big banks.

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170 "We're a labor federation -- yes, we're about organizing," he said. "We're about even more than that. We're about an economy that works for everyone."

Union experts say the unions' broader banking-related goals -- like fighting foreclosures and providing consumers more protection against bank fees -- fit with the unions' history of social activism.

The unions have staged "plenty of protests about the war, environmental issues, politics.

There have been plenty of instances where they've called for regulation," said Philip Dine, the author of the 2008 book, "State of the Unions: How Labor Can Strengthen the Middle Class, Improve Our Economy, and Regain Political Influence."

They were critical, he added, in helping President Obama win the 2008 election.

"Labor waged its biggest political effort" to help Obama get elected, he said.

Little Organization Among Bank Employees Right now, unionization at U.S. banks is rare and the few banks that do have collective bargaining agreements with employees may be at a disadvantage to their peers: A March study by the investment banking firm Griffin Financial Group reported on one unionized bank that had salary and benefits costs that were 7 percent to 8.5 percent higher than its peers and also spent more on legal and human resources expenses.

The pushback they would get from banks may make unions think twice about organizing there, some say.

"Banks will fight tooth and nail to keep unions out," said Lowell Turner, professor of international and comparative labor at Cornell University. "Unions have to be strategic about where they put their organizing resources."

Squeezing the Employer to Start a Union If unions do decide to organize bank employees, the demonstrations could be a good start.

"One of the things you sometimes see with activity like this is sometimes it is the beginning of signals of a corporate campaign," said Kevin Elliott, a senior vice president in charge of the labor practice at the public relations firm Hill & Knowlton.

Through corporate campaigns, he said, unions seek "to injure the reputation of the employer" as a means of pressuring them to allow unionization.

"The union squeezes the employer," Elliott said. "The employer says 'What do we have to do make this stop.' The union says, 'Give us more flexibility with organizing your workers.'"

Elliott said that while that's not something he sees happening with unions and banks right now, employers always have to be on guard for it. Banks may have to decide whether unions are, indeed, seeking to organize their employees or are just seeking to gain attention for their causes.

"If it's the former, you'd better get serious (and) make sure you're not going to be vulnerable," he said. "If it's the latter, then it is what it is."

Copyright Š 2009 ABC News Internet Ventures

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November 2009 http://www.intelligententerprise.com/showArticle.jhtml?articleID=221900778

Next Steps for Analytics in the Big-Data Era December events set agenda for education on analytics, business intelligence and data warehousing. Universities reset curricula.

By Doug Henschen With interest in analytics exploding along with the data that makes predictive analysis possible, there's no doubt that data-driven decision-making is the way forward for most organizations. But do these firms have the talent they need to pull important metrics and key performance indicators (KPIs) out of their data? And how prepared are executives to draw insights and make quick decisions based on their analyses? With CIO surveys, salary surveys and job listings all pointing toward surging interest in analytics, software vendors, commercial interests and universities are scrambling to develop the needed talent. •

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A soon-to-be-published report on "The Current State of Analytics in the Corporation" has been released by the Business School at Villanova University.

Using research gathered for the report, the university has revised its curriculum to better support data-oriented decision-making.

On December 14-15, the 2,000-member Teradata University Network is planning a Business Intelligence Congress in Phoenix. The goal of the event is to set top-10 agendas for research and course development on analytics.

On December 9, Fordham University and IBM will gather leaders from academia, the venture capital community, government and the health care industry for a twohour discussion on the coming wave of new jobs that will require analytics skills.

Reacting to growing interest in analytics in recent years, the Business School at Villanova University formed a Business Analytics Strategic Interest Group in late 2007. The group, which counts a dozen corporations, two integrators and two software companies among its members, provided feedback on changing the school's curriculum with data-centric decision-making in mind. For example, a new course on analytics and risk assessment was added for undergraduates and the statistics courses required at both the undergrad and MBA levels were updated to be more practical and applied.

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172 "From the point of view of business, what leaders really need is to be able to understand data, and we think these changes will give students a stronger preparation for the kinds of analyses they'll face in business," says Matthew Liberatore, a professor at Villanova who co-authored the report.

The University is also contemplating adding a minor in analytics because it could "supercharge" any business major, Liberatore asserts. "[Such a degree] would help them understand risk, what the possible outcomes are and what the range of possible rewards are for decisions within their disciplines," he says.

Setting a New Agenda Back in 2001, when the Teradata University Network was first organized, most business schools hadn't given data warehousing much attention. They were just beginning to peer into database issues related to database design, normalization and the writing of SQL queries. Today, business intelligence and analytics studies are fast replacing more generic Information Systems (IS) course work at universities.

"Between the dot-com failures early in the decade and the offshoring trend, enrollments in Information Systems have been declining," says Michael Goul, professor and chair of the Department of Information Systems, W. P. Carey School of Business, Arizona State University. "As faculty started to look for non-commodity IT skills that students would need, BI became the hot topic because it crosses the business world with the IT world.

The feeling is that it's not something that companies will quickly take offshore."

The first-ever Business Intelligence Congress has been organized to explore ways academia can provide theory-based methods and design sciences to advance BI and analytics while also giving industry a platform to steer research toward the most significant challenges. The network, which now counts more than 2,000 faculty members and 1,000 institutions from 75 countries among its members, has already done informal surveys on the topic and Goul says the group has several prospective topics on the agenda.

"Some schools are weaving business intelligence study into general business courses while others have developed targeted BI-specific courses, so that's one topic we want to discuss," he says. "We're also going to have panels on buzz topics like sensor networks, managing large volumes of data, and in-database analytics and what implications that has for the analytics development life cycle."

Keynote addresses at the Business Intelligence Congress will be offered by Tom Davenport, the well-known researcher and author of "Competing on Analytics: The New Science of Winning"; Hugh Watson, management information system professor at the University of Georgia and one of the founders of the Teradata University Network; and Scott Gnau, Teradata's chief development officer.

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173 Next-Wave Jobs To consider the next wave of jobs requiring analytic talents, IBM has invited a gaggle of business, government and academic leaders to a December 9 RSVP event at a Fordham University conference hall in Manhattan. Attendees will include Kamal Bherwani, CIO, New York Health and Human Services; Evangelos Simoudis, managing director, Trident Capital; Jonathan Bowles, director, Center for an Urban Future; Ambuj Goyal, general manager, Business Analytics and Process Optimization, IBM; and the deans of the Fordham College of Business Administration and Fordham Graduate School of Business Administration.

According to a recent study by IBM, 83 percent of executives ranked business analytics - "the ability to see patterns in vast amounts of data and extract actionable insight" -- as their top priority. IBM's report suggests that if training and education programs don't follow, "we may see a skills shortage as the economy rebounds and the technology needs of both the private sector and government agencies increases."

For those who can't wait for the next generation of college graduates to meet current demands, analytics expert Neil Raden suggests that corporations set up self-study programs aimed at developing the required math skills. "There is nothing so special about most 'advanced analytics' that someone with adequate training could not do," Raden writes in this blog post . "I'd urge companies to set up such a plan with an eye to ripening experts over a two- to three-year period with time at work to study."

The upshot of growing academic interest in analytics seems to be that more data-savvy analysts and business leaders are on their way to the job market. But for the problems practitioners may face over the next few years, Raden suggests that with a bit of continuing education, the best candidates may be the business-experienced people "standing right in front of you."

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After Black Friday: Where's the deal?

Comments: 2

By JAMES COVERT Last Updated: 10:35 AM, November 27, 2009 It's not just early-bird specials that will be hard to get this holiday season.

In the weeks leading up to today, stores have been promising eye-popping Black Friday discounts, such as a 50-inch flat-screen TV for $598 at Wal-Mart.

That's no surprise. Stores have long been advertising blockbuster deals that are in relatively short supply. They just "get you in the door to buy a lot of other things," said Randy Allen, a business professor at Cornell University's Johnson School.

This year, though, procrastinators won't be seeing as many last-minute markdowns in the final days before Christmas, either.

That's because retailers -- who in the middle of the Wall Street crisis a year ago were forced to burn off excess inventory by discounting heavily -- have been careful to keep inventories lean this year.

In addition, big chains like Kmart and Home Depot have been staging pre-Black Friday events in an effort to get the spending ball rolling.

"Halloween is the new Thanksgiving, and pretty soon I'm afraid it's going to be Fourth of July," said Eric Karson, a marketing professor at the Villanova School of Business. "They're doing everything they can to make sure they don't have to give stuff away during the last week."

Less cautious players include Toys "R" Us, which last month opened 350 "pop-up" stores to grab holiday business.

While those stores are going after customers left by now-defunct competitor KB Toys, whose brand it acquired earlier this year, Toys "R" Us is also gunning for Wal-Mart and Target.

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175 "Our inventory is actually up this year, and we're not worried," CEO Jerry Storch told The Post. "We're pleased with the momentum, and we keep hearing from vendors that we're gaining market share."

On the Web, analysts say eBay and Amazon.com are also likely to pick up more sales as wallet-conscious shoppers search for bargains online.

Read more: http://www.nypost.com/p/news/business/after_black_friday_where_the_deal_9edPsyygo pLHkLb0KOrjnO#ixzz0cW387oLx

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Black Friday sales barely up, online surges Sat, Nov 28 2009

By Jessica Wohl CHICAGO (Reuters) - In a worrisome sign for retailers, data released on Saturday showed that sales rose a scant 0.5 percent on the traditional kickoff to the holiday shopping season despite early signs of a strong showing.

A focus on bargains pulled shoppers into stores and onto websites over the Thanksgiving holiday weekend, but many said they would stick to their budgets and avoid purchases if they could not find a good deal.

Those trends appeared to play out in the results issued by ShopperTrak, which measures customer traffic in stores.

The firm said retail sales rose to $10.66 billion on Black Friday, which often is the single busiest shopping day of the holiday season and can set the tone for the weeks leading up to Christmas on December 25.

In 2008, Black Friday sales measured by ShopperTrak rose 3 percent compared to the prior year's Black Friday. Last year's entire holiday season marked the worst performance in nearly 40 years. The firm stuck by its forecast for total holiday sales to rise 1.6 percent this year compared to 2008.

"I figured Black Friday would be up 1 (percent or) maybe 2 percent, just because of the deal-consciousness of folks," said Patricia Edwards, founder and chief investment officer of Storehouse Partners, an investment advisory firm based in Bellevue, Washington. She noted that early November deals from stores and online promotions also may have diverted traffic.

"It's possible it took some of the glory out of the Friday number," she said.

Shoppers spent 35 percent more on Black Friday web purchases than a year earlier, with the average order value reaching $170.19, according to online retail analytics company Coremetrics. Those shoppers bought an average of 5.4 items per order, up from 4.6 items last year, Coremetrics said.

TOUGH HOLIDAY SEASON Villanova School of Business 2009 Media Report

177 Industry executives and analysts have predicted a tough holiday season that may show only a slight improvement over 2008 due to a weak economy and high unemployment.

But their optimism had crept up earlier this week. Analysts polled by Thomson Reuters Data on Friday had increased their forecast for November retail same-store sales to a 2.5 percent increase, from a previous view of 1.8 percent.

The National Retail Federation is due to release its early holiday data on Sunday.

"This will be the hardest holiday season ever to predict," said Eric Karson, associate professor of marketing at the Villanova University School of Business in Pennsylvania.

Retailers used to offer steep promotions on select items as the initial lure for shoppers, in the hopes they would buy more inside the store. Consumers now expect such discounts as a matter of course.

"We have this big game of chicken now evolving between the retailers and the customers," Karson said.

Claude Smith, a 45-year-old out-of-work plumber from Virginia, said he was trying to pay off his bills from his credit card, which now has a higher interest rate. He pays with cash when he visits stores such as TJX Cos's AJ Wright and Wal-Mart.

"Things are bad. Everybody's thinking about saving everything they have. I go out when there's sales and that's it," said Smith, who visited the Galleria at White Plains mall in New York with his two teenagers on Saturday.

BUYING ONLY WHAT'S NEEDED Many shoppers showed they were relying on lessons learned from the 2008 season, which began just after a global financial crisis erupted. A U.S. unemployment rate above 10 percent and other financial pressures also weighed on their minds.

"I have three children. I am a single mom. The economy is bad. I am getting only those things that we really need," said Natasha Walker, a 35-year-old telephone operator shopping in Times Square in New York. Her purchases included a GPS navigation system for her car, CD holders, movies for her children and clothing for herself.

Shawn Kravetz, president of hedge fund operator Esplanade Capital LLC, said retailers that slashed costs will do well.

"You can count companies with positive comps (an increase in existing store sales compared to the prior year) on two hands -- J Crew, Wal-Mart, Chico's and few others.

That is not a strong holiday," he said.

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178 Even though online sales are growing, they still account for less than 4 percent of total retail sales, Karson said.

Wal-Mart Stores Inc's site Walmart.com was the most popular retail site on Thanksgiving for the fifth year in a row, followed by Amazon.com Inc and Best Buy Inc, according to tracking firm Hitwise.

Liberty Interactive's QVC, best known for its TV shopping channel, rang up more than $32 million in orders for its biggest Black Friday ever, a 60 percent increase from 2008, QVC said. It added that more than 40 percent of the sales came from its web site, QVC.com.

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A Tax Credit? No Thanks Proposals to reward employers for creating jobs are winning few fans in Corporate America.

Russ Banham, CFO Magazine December 1, 2009 With more than 100,000 full- and part-time workers on his payroll, Costco Wholesale Corp. CFO Richard Galanti isn't opposed to a jobs tax credit that would offset a portion of new employees' salaries. But would he hire more people just to receive such a credit?

Probably not.

"Why would we hire someone for a hundred dollars to get a couple of dollars back?" he says. "We hire based on need, which is driven by demand and other market factors. If we were planning to hire six months from now, a tax credit might encourage us to do it sooner, but we would have hired anyway."

That seems to be the consensus among CFOs, but it hasn't stopped politicians and think tanks from considering a variety of jobs-creation tax-credit schemes as unemployment rises above 10%.

During the recession of the late 1970s, a jobs tax credit was enacted and ultimately claimed by more than a million companies. They hired 2.1 million workers, of which 700,000 were directly attributable to the tax credit, according to a 1979 study by American Economic Review. Yet many economists argued, after the fact, that the credit was unnecessary. "The question is, Would the companies that received the credit have hired anyway?" says Peter Peyser, managing principal at lobbying firm Blank Rome Government Relations. "If that's the case — and there was an honest debate about that — then they reaped a reward for no reason."

No one disputes that job loss is an issue: in the past two years the U.S. economy has lost 8 million jobs, the unemployment rate has reached a 26-year high, and, according to the Economic Policy Institute (EPI), it will take at least 29 months of job creation above 500,000 jobs per month to regain pre-recession levels.

Several tax-credit proposals are currently under scrutiny by a bipartisan panel headed by former Federal Reserve chairman Paul Volcker. One, being floated by the Administration, is intended to complement a WPA-style program to rebuild the nation's crumbling infrastructure. President Obama is hoping the tax break will nudge companies on the verge of hiring to take the plunge. "The government is saying that it will share the initial investment in more workers," Peyser explains, "but it will leave the hiring up to Villanova School of Business 2009 Media Report

180 employers. If it isn't economical for a company to hire, one presumes they will not make a foolish decision."

That means credit dollars may well flow to companies that would have hired anyway. "A government tax credit is not going to cause us or anybody else to hire if we're not planning to hire," says Roger Shannon, CFO and treasurer of privately held Steel Technologies Inc., a steel processor with 25 manufacturing facilities in the United States, Canada, and Mexico. "If we did get the credit, that would be nice — we'd take the money. But I don't see this as good policy. We'd just be contributing further to the massive federal deficit."

Senior executives, consultants, and academics may have serious doubts, but there is one constituency that is all for a jobs-creation tax credit: taxpayers. A September poll finds the public enthusiastically embracing the idea (see "Main Street Loves It" at the end of this article).

Prepare for Demand, or Wait for It? EPI, which unveiled its version of a jobs tax credit in October, claims the credit will result in the creation of 2.8 million jobs in 2010 alone. Under the two-year plan, companies would receive a 2010 tax credit per new hire equal to 15% of the net increase in the portion of their payroll subject to Social Security taxes. In 2011, this credit would fall to 10%. The proposal's authors stated that the plan "would encourage firms to hire sooner rather than later, and would provide a significant incentive for expanded employment."

EPI estimates that the program would have a net revenue cost of $28 billion in the first year and $26 billion in the second. Offsetting that would be reductions in spending on unemployment benefits and other safety-net programs, totaling $15 billion in the first year and $12 billion in the second.

That leaves a sizable gap at a time when the federal deficit is a staggering $1.42 trillion.

More problematic is whether or not a tax credit will succeed in its intent, spurring job creation. "Organizations whose financial results have improved and are now poised to increase hiring are going to do it irrespective of a federal stimulus bill," contends Laura Sejen, global practice director at consultancy Watson Wyatt Worldwide. "And those whose results haven't improved won't see the tax credit as sufficient enough to begin hiring."

Tim Bartik, a senior economist at the Upjohn Institute for Employment Research and a co-author of the EPI proposal, counters that "there is an in-between category of companies that may be uncertain whether they can sell more goods and services if it requires them to hire someone at $50,000, but may decide it makes sense if they can lower the cost of the hire to $42,500."

Bartik also points to the cash-flow boost a tax credit could provide. "We've designed it to pay quarterly," he says, "which can obviate cash-flow concerns. And since employees are Villanova School of Business 2009 Media Report

181 typically less productive at the time of hire than they are six months on, this can allow companies to hire them sooner and have them be more productive when demand picks up."

But even as Bartik argues for the benefits of hiring now to meet demand later, others say that the reverse is more sensible. "There needs to be an underlying trigger — an increase in demand," says Jason Jeffay, principal and global talent management leader at consultancy Mercer, "to compel the decision to hire. Unless the broader economy rebounds faster than it currently is, I wouldn't expect [a tax credit] to have a big effect on employment."

"Many companies are beating Wall Street's expectations by holding their costs in line," adds Jeff Burchill, CFO of insurer FM Global. "Building the top line remains the problem. Without an increase in demand for products and services, I find it hard to see companies creating jobs."

Even if the credit encouraged a spike in employment, some argue it would be temporary at best. "Once it runs out after two years, will there be enough incentive to keep new hires on?" questions Peter Zaleski, an economics professor at Villanova University.

"It's 'Cash for Clunkers' all over again."

Rather than a tax credit to create jobs, Zaleski says the federal government should seek to give U.S. companies relief from regulatory and tax burdens that impede employment. "If you look at payroll taxes, Medicare and Social Security alone account for a 15% differential between what a company pays and what a worker takes home," he says. "Add to that federal and state unemployment taxes and administrative costs. Then throw in income taxes. If we want to see a real lasting bump in employment, the differential between the employer's costs and the employee's pay needs to shrink. We need real tax policy, not a jobs tax credit that is temporary at best."

On November 6, President Obama said he had asked his economic advisers for additional ideas on how to create jobs quickly.

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Ten Ways to Create Jobs and Put America Back to Work as Unemployment Rate Drops to 10% As the Curtain Falls on White House Jobs Summit, a Range of Experts Weigh In; Local Mayors Set to Host Follow-Up Jobs Summits Next Week

By RICH BLAKE and ALICE GOMSTYN Dec. 4, 2009 — The U.S. economy got some very good and surprising news this morning: only 11,000 jobs were lost in November, a number much, much smaller than expected and a sign that the job market might have finally turned a corner.

More people are still unemployed than a month ago but the monthly losses were the smallest since December 2007 and Wall Street reacted favorably, with all major indexes shooting up in pre-market trading.

The unemployment rate also fell to 10 percent in November from 10.2 percent in October, thanks to government revisions to prior months' job losses. Economists had expected a loss of 125,000 jobs last month.

The Treasury Department's chief economist, Alan Krueger, said the news was "welcome" but cautioned that unemployment still remains "unacceptably high."

"We shouldn't put too much weight in one month's data," Krueger said at a briefing following the release of the November numbers. "Recoveries don't move in straight lines, although the overall trend continues to be improvements in the job market."

Investors, however, were quick to wonder if the showing is just a fluke month and how the nation can continue to improve the economy.

The White House yesterday sponsored a "Jobs and Economic Growth Forum" that, at minimum, sparked an important dialogue about finding some way to stem job losses that have caused the worst unemployment rate in nearly 30 years.

Now comes the hard part -- turning ideas into action.

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183 So where to start?

As President Obama and his gathering of economists and business leaders brainstormed in Washington, D.C., ABCNews.com interviewed a wide range of economic policy experts, academics, lawmakers, investors and other public figures to get some perspective on the kinds of meaningful job creation steps that can, and should, be taken immediately:

Extend Bush Tax Cuts At least until unemployment drops below 6 percent, says House Minority Whip Eric Cantor, R-Va., passing an extension to about-to-expire Bush era tax breaks will help small business owners keep more of their profits, and represents a "straightforward, common-sense solution that the president can put into place now."

Widen the TARP With the financial system seemingly stabilizing and a sizable chunk of TARP funds as yet unused, a number of politicians are angling to tap into that money for projects beyond the scope of shoring up bank balance sheets. Using TARP money there is nearly $210 billion as yet uncommitted and Bank of America has said it intends to pay back $45 billion more some say, for infrastructural improvements (road and bridge repairs).

House Speaker Nancy Pelosi, D-Calif., suggested today a national high-speed rail project should be put on the front burner.

Meanwhile, a number of decaying cities could use more direct federal funding for initiatives such as environmental cleanup projects or wholesale transformations of former industrial sites. One such project, in Buffalo, N.Y., recently created 400 or so new jobs.

"The EPA has a $250,000 cap on funding for individual cleanup projects," explained Byron Brown, mayor of Buffalo, and who is among a handful of local mayors and civic leaders set to host follow-up job summits next week. "One thing that can easily be done right now is to remove the cap or raise it significantly." Brown advocates funneling TARP money to agencies such as the EPA, as well as directly to cities such as Buffalo to be used for things like urban redevelopment and historic preservation projects.

Boost Unemployment Benefits Congress just passed another round of unemployment benefits extensions last month extending them by 20 weeks in states hardest hit by the economic downturn and by 14 weeks everywhere else yet, some policy watchers are calling for even further extensions.

Gus Faucher, the director of macroeconomics at Moody's Economy.com, notes that the latest extension won't cover people who lose their jobs in 2010. As a result, they will be stuck with traditional benefit limits. Providing more people with more unemployment insurance, he said, will keep them spending an important facet of economic recovery and more job growth. "We are seeing consumer spending start to improve," Faucher said.

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184 "If that continues, we will see job growth in industries like retail, food service, transportation, distribution and wholesaling." Unemployment checks aren't going to turn the economic tide, but as Faucher points out, "if people don't have that money, they won't be spending anything."

Create More Wind Farms Look no further than the flatlands of West Texas when wrestling with the jobs creation question. For the answer there may be blowing in the wind. From building a new power delivery infrastructure and grids, to the manufacturing of wind turbines, there are plenty of opportunities to create jobs within the wind power industry and clearing its path should be high priority, says billionaire entrepreneur Sam Wyly. "If other states followed the lead of Texas, especially in the middle of the country, here is an industry where literally the sky is the limit," noted Wyly, the Dallas-based founder of Green Mountain Energy and the author of "$1,000 Dollars and an Idea" (Newmarket Press). Wyly, a pal of alternative energy proponent and fellow Texas tycoon T. Boone Pickens, is a major supporter of tax incentives for wind energy companies and for a federal program to secure land rights for wind farms.

Fork Over the Food Stamps The liberal leaning Economic Policy Institute advocates for more spending on government "safety net" programs, such as food stamps. But exactly how does helping people buy more food help the country gain more jobs?

EPI labor economist Heidi Shierholz said that, as with unemployment insurance extension, providing Americans the means with which to buy more groceries will help stimulate consumer spending.

"That money is immediately spent on the local economy on food," she said. "If that person that receives that food stamp is then buying something that they wouldn't be able to buy otherwise, that saves the job of the checkout person who works at the grocery store they went to. That person has wages to spend on their necessities."

It's what economists calls the "multiplier" or "respending" effect, Shierholz said.

Target Aid to States Under the Obama administration's stimulus package, states received some $50 billion to ward off layoffs, mainly at schools. But even with that aid, some states are still having trouble making ends meet this year, and Faucher worries about what will happen next year.

He and others argue that states -- which unlike the federal government, can't go into debt to balance their budgets -- should receive more money to tide them through their fiscal hardships.

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185 "State and local governments are required to balance their budgets. If they have big budget deficits, they need to lay people off," Faucher said. "If someone who would have been laid off keeps his or her job, that's just as good as adding the new job."

Increase Relief for Small Businesses Experts agree that small businesses are a major driver of jobs growth in the U.S., but with many small businesses still struggling to obtain loans from banks, some argue that the government should be doing more to increase credit to small businesses beyond recent measures to make more TARP money available to community banks.

Cheryl Carleton, a labor economist and a professor at the Villanova School of Business, said the government should make loans directly to businesses, or the Federal Reserve should pressure banks to be less risk-averse when it comes to deciding whether to grant loans to small businesses.

"The Fed has to use its clout," Carleton said.

Faucher said the government could expand the Small Business Administration's loan guarantee program which insures 90 percent of a bank's loan to a small business to a guarantee rate of 95 percent. Those extra five percentage points, Faucher said, can make a difference.

"Given how tight credit is, and how reluctant banks are to lend, I think it could help," he said.

Tie Tax Credits to Hiring How do you convince a business to expand its payrolls? How about offering them a tax credit for each new hire? It's an idea making the rounds now, and it's got the support of EPI's Shierholz.

"It's a really smart way to do business tax credits," she said.

She conceded that some credits will go toward businesses that would have hired new employees even without the tax incentive. But given the current unemployment situation, she said, it's still worth it.

"It really is time to take big, bold action," she said.

Tackle Health Care Carleton won't play favorites when it comes to the various versions of health care reform churning through Capitol Hill. But when it comes to job creation, she said any health care reform package must do at least one thing: lower health care costs for businesses,

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186 particularly small businesses who don't qualify for reduced rates available to larger companies.

Carleton said that health care costs are a major reason companies may opt to have employees work overtime instead of making new hires to take on extra work.

"If you want them to hire more workers," she said, "you have to reduce the cost of hiring new workers."

Do Nothing "The government needs to accept the simple reality that it can't create jobs," pointed out former Minnesota Gov. Jesse Ventura. "What it can do is make things easier for the private sector and business community to do what they need to do this is the only source of job creation that we can count on. Get out of the way and let businessmen lead."

Addressing job growth concerns in the U.S. is simply a matter of time and patience, some say. "What little the government can do in the short term, it has already done," New York University economics professor Roy Smith said. "The government needs to be respectful of its own limitations."

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187

Audit Committee Comp Influences Auditor Support PHILADELPHIA (DECEMBER 7, 2009)

BY MICHAEL COHN

Audit committee members are more likely to support the auditor over management in an accounting disagreement when the compensation of members of the board audit committee includes long-term stock options, according to a new study.

The research, led by Villanova School of Business professor Jim Bierstaker, asked 56 public company audit committee members to complete a theoretical written case study describing an accounting disagreement between management and the external auditor. The audit committee member participants were told that their compensation was either one of three conditions: 100 percent cash, 20 percent cash and 80 percent short-term stock options vesting this year, or 20 percent cash and 80 percent long-term stock options vesting in five years.

Jim Bierstaker The study found that audit committee members are more likely to support the auditor, as opposed to management, in an accounting disagreement when audit committee compensation includes long-term stock options. The members perceive that failure to record the auditor’s adjustment is less fair to current shareholders.

On the other hand, audit committee members are less likely to support the auditor when they perceive they have more personal control over the outcome of the disagreement. If they feel they can influence the outcome, they tend to go with management.

“I teach financial auditing, and my students are amazed that audit committee members can receive stock options,” said Bierstaker. “They’re amazed that that’s not an independence issue.”

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188 He noted that other researchers have found similar findings. Companies whose audit committee members or directors received more stock options and short-term compensation tended to have more earnings restatements.

Bierstaker and the study co-authors decided to design an experiment with a hypothetical company case study, and still found a bias among the audit committee members who completed the survey. The compensation affects their feelings about fairness and whether they think an adjustment recommended by the auditors should be made.

“That’s kind of the amazing,” said Bierstaker. “It’s just a hypothetical case, yet we still find this highly significant effect.”

He hopes to conduct a follow-up study examining the effect of other forms of compensation, such as restricted stock. But he believes the study has implications, not only in the context of financial reporting scandals such as Enron and WorldCom, but also in terms of the subjectivity of professional judgment in accounting.

“People tend to think of accounting as very black and white,” said Bierstaker. “Certainly there are some accounting issues where there is a clear issue that needs to be followed, but a lot of times it comes down to some judgment.”

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Retail sales, consumer confidence climb, bolstering 4th-quarter outlook

By Luca Di Leo and Jeff Bater Dow Jones Newswires Posted: 12/12/2009 01:00:00 AM MST

Lisa Love of Casper shops for good deals on DVDs at an Aurora Best Buy on Black Friday. Retail sales jumped 1.3 percent in November, indicating consumers were buying aggressively. (John Prieto, The Denver Post ) WASHINGTON — U.S. retail sales surged in November and, for the first time in three months, consumer confidence rose, leading analysts to upgrade their economicgrowth forecasts Friday.

Retail sales rose 1.3 percent last month, suggesting consumers were buying aggressively and supporting the economy in the holiday shopping season, the Commerce Department said. Wall Street economists had predicted a 0.7 percent increase.

And, in a sign that consumers should continue to sustain the recovery by spending, the University of Michigan/Reuters preliminary consumer sentiment index moved to 73.4 in mid-December from 67.4 in November. It was expected to come in at 68.8.

"The risk of a double-dip recession is now looking less and less likely," said Victor Li, associate professor of economics at the Villanova School of Business.

The U.S. economy, emerging from its worst recession since the Great Depression, expanded by an annualized 2.8 percent in the third quarter, the first increase in more than a year. Strong data out Friday and earlier this week indicate that gross domestic product, a broad measure of economic activity, should grow by even more in the final three months of 2009.

A separate Commerce report Friday showed that U.S. business inventories rose 0.2 percent in October, the first increase since August 2008, signaling growing optimism among companies about the economy.

Following the data, analysts at JPMorgan Chase and Credit Suisse raised their fourthquarter GDP projection to an annualized 4.5 percent from a previous estimate of 3.5 percent growth.

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190 Car purchases and rising gasoline prices played a part in the surprisingly strong November retail-sales increase. Yet most other merchants had good gains, too.

Consumer spending makes up a large part of the economy. Data this week showed the net worth of Americans is rising, as people make some headway in their crawl out of the hole that the financial crisis put them in. The Federal Reserve on Thursday reported total net worth of households increased 5 percent in the July-to-September period, to $53.42 trillion from $50.76 trillion in the second quarter.

Villanova School of Business 2009 Media Report