What experiences have you had with commercial banks? Describe.
My experiences with banks are through personal and business checking, mortgages for personal and business, as well as loans for cars and personal lines of credit. They provide a service that is adequate for most issues, etc. The on-line banking has come a long way and makes it much easier to access and obtain information quickly. They also issue credit cards, which allow personal and business to acquire noncollateralized debt, which is helpful in many transactions. Floating debt helps a small business equalize cash flow, etc and allows large purchases to be spread out over time.
What have you observed about a merger/acquisition in the commercial bank sector in your geographic region?
The most recent one was Hunnington Bank acquiring Skybank. But there has been numerous mergers over time. First USA is now part of Chase, which is part of JP Morgan-Chase. MBA has been snapped up by Bank of America. You are also seeing Fifth Third and National City spreading into Florida and other states. Also these banks, due to the deregulation, offer financial services and retirement planning services. Their services offer the purchase of stocks, bonds, mutual funds, etc. They do not offer direct insurance plans, but offer life insurance etc through independent quotes etc on the open market. All of this allow the consumer to have all of their accounts in one place, which helps when transferring money from one account/place to another. Accounts/monies in different institutions cause lags in your availability to your money.
Saturday, September 8, 2007
Saturday, September 1, 2007
MBA 820 Reflections on Module 4
Have you had an experience in buying stocks, bonds, or other investment instruments including mutual funds, retirement plans, 401K, 403B, pension plans, or even government bonds? Reflect on these experiences. Why did you choose one over the other? What information did you use to make your decisions?
I have had experience with stocks, mutual funds, IRAs - traditional and Roth, some bonds (mainly govern savings bonds), and 401Ks - traditional and Roth.
401K offer great retirement benefits since you can put up $15,000 in 2007 and $15,500 in 2008 total. Split it up into traditional and Roth or 100% in one over the other. IRAs exist for me due to transferring 401K and various other retirement instruments into transportable instruments like IRA.
Mutual funds typically are safer than individual stocks, due to the diversification of them and supposedly professionally managed by extremely well paid finance professionals. Unfortunately these managers of mutual funds make their huge sums of money regardless of the performance of the fund. So choosing mutual funds is probably best done by looking at funds with 10yrs or more history and a manager or managers that have been running that fund for that long. New managers do not mean that the fund continue doing well or poorly. I have used mutual funds as savings accounts in the past with great success. A good, stable balanced fund like Fidelity Puritan will earn around 8 to 20% before tax interest and you can get your money transferred to you within 72 hrs - not bad on the liquidity front. Nice thing is that this service can all be done by your local bank, due to the deregulation and consolidations within the market. Allows your checking, business checking, savings, mutual funds, etc all to be with one bank and still have the flexibility to invest in anything you wish.
Govern bonds, etc are OK - I would prefer to just invest in a bond mutual fund if I was going to invest solely in bonds, otherwise a good balanced fund gives you about 30 to 50% exposure to bonds.
The decisions are all based on your personal comfort level for risk and reward. Bottom line is to preserve the principal and have the money grow faster than inflation eats it up. At this time, it appears that inflation with oil etc is probably running 4 to 5% per year, so you need to earn around 8% annual to have your money truly grow.
I have had experience with stocks, mutual funds, IRAs - traditional and Roth, some bonds (mainly govern savings bonds), and 401Ks - traditional and Roth.
401K offer great retirement benefits since you can put up $15,000 in 2007 and $15,500 in 2008 total. Split it up into traditional and Roth or 100% in one over the other. IRAs exist for me due to transferring 401K and various other retirement instruments into transportable instruments like IRA.
Mutual funds typically are safer than individual stocks, due to the diversification of them and supposedly professionally managed by extremely well paid finance professionals. Unfortunately these managers of mutual funds make their huge sums of money regardless of the performance of the fund. So choosing mutual funds is probably best done by looking at funds with 10yrs or more history and a manager or managers that have been running that fund for that long. New managers do not mean that the fund continue doing well or poorly. I have used mutual funds as savings accounts in the past with great success. A good, stable balanced fund like Fidelity Puritan will earn around 8 to 20% before tax interest and you can get your money transferred to you within 72 hrs - not bad on the liquidity front. Nice thing is that this service can all be done by your local bank, due to the deregulation and consolidations within the market. Allows your checking, business checking, savings, mutual funds, etc all to be with one bank and still have the flexibility to invest in anything you wish.
Govern bonds, etc are OK - I would prefer to just invest in a bond mutual fund if I was going to invest solely in bonds, otherwise a good balanced fund gives you about 30 to 50% exposure to bonds.
The decisions are all based on your personal comfort level for risk and reward. Bottom line is to preserve the principal and have the money grow faster than inflation eats it up. At this time, it appears that inflation with oil etc is probably running 4 to 5% per year, so you need to earn around 8% annual to have your money truly grow.
Reflections on the Sub-Prime Fallout and Bernanke
Symptoms of the Sub-Prime fallout, sign of deflation
Derivatives and structured products have exploded
The downside of spreading risk
It's hard to understand the risks involved,
Derivatives are like power tools
There is lots of ignorance and fear
People are confused about the complexity of debt
C.D.O.-squared. C.D.O.-cubed.
$2 trillion in global C.D.O.’s
Dangerous amounts of leverage
Confidence crisis
It also looks like the bond insurers, Ambac and MBIA are in real trouble. Between them they insure about 14.5 billion dollar in bonds. About 2% is at risk. The other "investments" I was talking about was stated as"enhanced cash funds known as "cash plus", strategic cash", "enhanced income", "ultra-short bond funds", and money market substitutes"" What are these? Seems to be different from CDOs and CLOs. This is what has people worried about the money market fund expose to the sub prime.
To me, Bernanke is between and rock and a hard place. Productivity gains has significantly slowed down coupled with a tight labor market that will severe shortages by 2010 or so. Raw material continue to go up. Where I work, our suppliers have risen prices on the average of about 10% the last two years. Part of this comes from aluminium metal prices pushing up aluminium unit prices. Most ceramics and refractories are aluminia based products. Also P&G announced lower earning going forward due to rm prices going up 6 to 7% and an inability to pass all of it on to consumers. This is about twice what they originally forecasted. Allied, where I work, has been giving quarterly price increases to our customers as well, about 3% at a time.
So really what can Bernanke do? Inflation is occurring and will continue coupled with the tight labor. Any tightening of money will likely cause a recession. A recession may even occur if the Fed does drop the rates. The housing market slump has put a serious hurting on many manufacturing companies as well as retail. Another bit of information. Vessel rates of product coming over from China has about doubled and this is coupled with barge fleet prices about doubling as well. A large percentage of barges were sunk and lost with Katrina and they still have not recovered. So cost of bringing in goods from China has increased over the past couple of years. Also China around beginning of August placed a 8% export tax on goods, including refractories, to keep the goods inside of China for consumption and to cool off their economy. This has lead to many Taiwanese iron/steel foundries to move to Vietnam. Vietnam is quickly becoming a haven for cheap labor and manufacturing. It seems like the one thing that will help us stay out of a recession,besides what the Fed does, is the weak dollar. If the dollar starts to strengthen, then I think we are in big trouble.
A Deflationary Spiral
It is beginning to dawn upon people how a deflationary spiral works. It all starts with the need and request to satisfy creditors, debtors will sell all they can, even their best assets, to raise cash. That’s one reason why gold and silver are not going up. When the sub-prime mortgage market crashed, guess what: other bonds, including supposedly safe municipal and corporate bonds, also fell. Most commentators believe that forced liquidation is the only reason that perfectly good investments fell in price. As one report dated August 24 said, “There’s really no credit-related reason behind the decline.”
But there is potential possibility that a large portion of currently outstanding corporate and municipal debt will become worthless. Every trend has to begin somewhere, and its ultimate outcomes are never evident at the start of a move. By the end of the price decline in these bonds, when a bit of glue on the back of them will aid their use as wallpaper, observers will finally postulate why the bear market started in the first place. Even if most of the recent price declines are due to forced sales, those sales in turn are decreasing the total value of investments, which in turn will curtail individuals’ and companies’ economic activity, which will lead to an economic contraction, which will stress the issuers of such bonds to the point that they will be unable to make interest payments or return principal. In other words, whether investors understand it now or not, the forced sale of bonds is itself enough reason to sell them also on the basis of default risk.
Every step of the way seems to have an immediate causal precursor, but like credit inflation, credit deflation is in fact an intricate, interwoven process, whose initial impetus is a change in social mood from optimism toward pessimism. If you are still on the fence about this idea, ask yourself: What changed in the so-called “fundamentals” between June and August? The answer is: absolutely nothing. Interest rates did not budge; there were no indications of recession; there were no changes in bank lending policies; there were no chilling government edicts. The only thing that changed was people’s minds. One day sub-prime mortgages were a fine investment, and the next day they were toxic waste....
The following is some comments and concerns:
By Vadim Pokhlebkin
Probably the biggest reason why people in the United States live as well as they do is credit. Without credit cards, easy bank loans and convenient repayment plans few people could afford a car, a house, college education, and some couldn't even afford a pair of pants. Easy access to credit makes Americans seem rich in the eyes of the world, while in reality almost everyone is in debt up to their eyeballs.
The flip side of America's credit-based prosperity is that people who shouldn't be borrowing are able to do so. A certain percentage of borrowers will always default on their loans; for banks it's one of the costs of doing business. But loose lending standards of the past few years pushed the number of unqualified borrowers to an all-time high, and you know what happened next: say hello to the ongoing U.S. subprime mortgage crisis.
The only other Western country that comes close to the U.S. in terms of its widespread use of consumer credit is Great Britain. Lately, the British have grown so "extremely comfortable" with credit cards that in 2003 the number of cards in circulation surpassed the number of U.K. citizens (BBC). Just like Americans, Britons widely use mortgages to purchase homes, and they are also fond of borrowing against their homes' value to spend the money elsewhere.
British are also filing more personal bankruptcies than ever before, dragging down bank profits. So naturally, when the U.S. subprime crisis hit in July, the question that became very relevant for Great Britain was, "Can it happen here, too?"
No, say some analysts, because "the UK property market is not like the U.S. market: there has been no boom in building." Others – for example, the International Monetary Fund and ABN AMRO – say that on the contrary, the UK "is even more vulnerable to a property market slowdown that the U.S." (InvestmentAndBusinessNews.co.uk)
The debate continues, and only time will tell who's right. But Elliott wave analysis may offer you more clarity right now. Back in 2002, here at Elliott Wave International we published a study plotting real estate prices in the U.S. against those of U.S. stocks, as represented by the DJIA. The chart revealed a fascinating relationship: Historically, the U.S. real estate market has always lagged the stock market.
If you think about it, this makes sense. Prices of both stocks and homes fluctuate in response to shifts in mass psychology of stock and real estate investors. Real estate lags because homes are less liquid than stocks, but they both follow the collective mindset.
One thing is for sure: When stocks head higher or lower, eventually so do home prices. For that reason, instead of worrying about interest rates, British analysts and homeowners would be well served to keep an eye on the FTSE-100, the country's main stock index.
Derivatives and structured products have exploded
The downside of spreading risk
It's hard to understand the risks involved,
Derivatives are like power tools
There is lots of ignorance and fear
People are confused about the complexity of debt
C.D.O.-squared. C.D.O.-cubed.
$2 trillion in global C.D.O.’s
Dangerous amounts of leverage
Confidence crisis
It also looks like the bond insurers, Ambac and MBIA are in real trouble. Between them they insure about 14.5 billion dollar in bonds. About 2% is at risk. The other "investments" I was talking about was stated as"enhanced cash funds known as "cash plus", strategic cash", "enhanced income", "ultra-short bond funds", and money market substitutes"" What are these? Seems to be different from CDOs and CLOs. This is what has people worried about the money market fund expose to the sub prime.
To me, Bernanke is between and rock and a hard place. Productivity gains has significantly slowed down coupled with a tight labor market that will severe shortages by 2010 or so. Raw material continue to go up. Where I work, our suppliers have risen prices on the average of about 10% the last two years. Part of this comes from aluminium metal prices pushing up aluminium unit prices. Most ceramics and refractories are aluminia based products. Also P&G announced lower earning going forward due to rm prices going up 6 to 7% and an inability to pass all of it on to consumers. This is about twice what they originally forecasted. Allied, where I work, has been giving quarterly price increases to our customers as well, about 3% at a time.
So really what can Bernanke do? Inflation is occurring and will continue coupled with the tight labor. Any tightening of money will likely cause a recession. A recession may even occur if the Fed does drop the rates. The housing market slump has put a serious hurting on many manufacturing companies as well as retail. Another bit of information. Vessel rates of product coming over from China has about doubled and this is coupled with barge fleet prices about doubling as well. A large percentage of barges were sunk and lost with Katrina and they still have not recovered. So cost of bringing in goods from China has increased over the past couple of years. Also China around beginning of August placed a 8% export tax on goods, including refractories, to keep the goods inside of China for consumption and to cool off their economy. This has lead to many Taiwanese iron/steel foundries to move to Vietnam. Vietnam is quickly becoming a haven for cheap labor and manufacturing. It seems like the one thing that will help us stay out of a recession,besides what the Fed does, is the weak dollar. If the dollar starts to strengthen, then I think we are in big trouble.
A Deflationary Spiral
It is beginning to dawn upon people how a deflationary spiral works. It all starts with the need and request to satisfy creditors, debtors will sell all they can, even their best assets, to raise cash. That’s one reason why gold and silver are not going up. When the sub-prime mortgage market crashed, guess what: other bonds, including supposedly safe municipal and corporate bonds, also fell. Most commentators believe that forced liquidation is the only reason that perfectly good investments fell in price. As one report dated August 24 said, “There’s really no credit-related reason behind the decline.”
But there is potential possibility that a large portion of currently outstanding corporate and municipal debt will become worthless. Every trend has to begin somewhere, and its ultimate outcomes are never evident at the start of a move. By the end of the price decline in these bonds, when a bit of glue on the back of them will aid their use as wallpaper, observers will finally postulate why the bear market started in the first place. Even if most of the recent price declines are due to forced sales, those sales in turn are decreasing the total value of investments, which in turn will curtail individuals’ and companies’ economic activity, which will lead to an economic contraction, which will stress the issuers of such bonds to the point that they will be unable to make interest payments or return principal. In other words, whether investors understand it now or not, the forced sale of bonds is itself enough reason to sell them also on the basis of default risk.
Every step of the way seems to have an immediate causal precursor, but like credit inflation, credit deflation is in fact an intricate, interwoven process, whose initial impetus is a change in social mood from optimism toward pessimism. If you are still on the fence about this idea, ask yourself: What changed in the so-called “fundamentals” between June and August? The answer is: absolutely nothing. Interest rates did not budge; there were no indications of recession; there were no changes in bank lending policies; there were no chilling government edicts. The only thing that changed was people’s minds. One day sub-prime mortgages were a fine investment, and the next day they were toxic waste....
The following is some comments and concerns:
By Vadim Pokhlebkin
Probably the biggest reason why people in the United States live as well as they do is credit. Without credit cards, easy bank loans and convenient repayment plans few people could afford a car, a house, college education, and some couldn't even afford a pair of pants. Easy access to credit makes Americans seem rich in the eyes of the world, while in reality almost everyone is in debt up to their eyeballs.
The flip side of America's credit-based prosperity is that people who shouldn't be borrowing are able to do so. A certain percentage of borrowers will always default on their loans; for banks it's one of the costs of doing business. But loose lending standards of the past few years pushed the number of unqualified borrowers to an all-time high, and you know what happened next: say hello to the ongoing U.S. subprime mortgage crisis.
The only other Western country that comes close to the U.S. in terms of its widespread use of consumer credit is Great Britain. Lately, the British have grown so "extremely comfortable" with credit cards that in 2003 the number of cards in circulation surpassed the number of U.K. citizens (BBC). Just like Americans, Britons widely use mortgages to purchase homes, and they are also fond of borrowing against their homes' value to spend the money elsewhere.
British are also filing more personal bankruptcies than ever before, dragging down bank profits. So naturally, when the U.S. subprime crisis hit in July, the question that became very relevant for Great Britain was, "Can it happen here, too?"
No, say some analysts, because "the UK property market is not like the U.S. market: there has been no boom in building." Others – for example, the International Monetary Fund and ABN AMRO – say that on the contrary, the UK "is even more vulnerable to a property market slowdown that the U.S." (InvestmentAndBusinessNews.co.uk)
The debate continues, and only time will tell who's right. But Elliott wave analysis may offer you more clarity right now. Back in 2002, here at Elliott Wave International we published a study plotting real estate prices in the U.S. against those of U.S. stocks, as represented by the DJIA. The chart revealed a fascinating relationship: Historically, the U.S. real estate market has always lagged the stock market.
If you think about it, this makes sense. Prices of both stocks and homes fluctuate in response to shifts in mass psychology of stock and real estate investors. Real estate lags because homes are less liquid than stocks, but they both follow the collective mindset.
One thing is for sure: When stocks head higher or lower, eventually so do home prices. For that reason, instead of worrying about interest rates, British analysts and homeowners would be well served to keep an eye on the FTSE-100, the country's main stock index.
Saturday, August 25, 2007
MBA 820 - Reflections on Module 3
Answer the following question in your learning journal to stimulate your thinking. Your response should demonstrate reflective thought.
How does the Fed impact your daily life? Use the tools and theories in this module to support your answer.
Note: If you need more support in your reflection, do a general Internet search on Yahoo! or Google with the key words "Fed Actions", "Fed Policy", or "Fed Interest Rates".
The fed impact our daily in various ways. The main way is their effect on the money supply and interest rates. Expansionary economy's fuel company expansions and consumer spending. This will lead to lower unemployment, but the potential for inflation creeps in the picture. Additionally, since a large majority of people's retirement is in the equity market as well as the bond market - the fed's policies directly affect the stock market. The performance of mutual funds and/or individual stocks directly effects the consumer's confidence in the economy and thus their spending habits. This is mainly control by the fed's use of open market operations. The discount rate and reserve requirement ratio have an affect as well, but not as much as the open market operations. The fed's actions or inactions to global movements in the financial market also effect us. The monetary polices of the fed directly effect the currency rates of the dollar relative to other currencies, all things staying equal.
The way the fed's approach, Keynesian or Monetarist, also effect the markets, interest rates, and comsumer confidence in the eonomy. Unemployment and inflation will always be present, so a combination of these two approaches needs to used in order to stabilze the economy. They must also, as previously mentioned, pay attention to the monetary policies of other countries and then understand their motives.
How does the Fed impact your daily life? Use the tools and theories in this module to support your answer.
Note: If you need more support in your reflection, do a general Internet search on Yahoo! or Google with the key words "Fed Actions", "Fed Policy", or "Fed Interest Rates".
The fed impact our daily in various ways. The main way is their effect on the money supply and interest rates. Expansionary economy's fuel company expansions and consumer spending. This will lead to lower unemployment, but the potential for inflation creeps in the picture. Additionally, since a large majority of people's retirement is in the equity market as well as the bond market - the fed's policies directly affect the stock market. The performance of mutual funds and/or individual stocks directly effects the consumer's confidence in the economy and thus their spending habits. This is mainly control by the fed's use of open market operations. The discount rate and reserve requirement ratio have an affect as well, but not as much as the open market operations. The fed's actions or inactions to global movements in the financial market also effect us. The monetary polices of the fed directly effect the currency rates of the dollar relative to other currencies, all things staying equal.
The way the fed's approach, Keynesian or Monetarist, also effect the markets, interest rates, and comsumer confidence in the eonomy. Unemployment and inflation will always be present, so a combination of these two approaches needs to used in order to stabilze the economy. They must also, as previously mentioned, pay attention to the monetary policies of other countries and then understand their motives.
Thursday, August 16, 2007
MBA 820 - Reflections on Module 2
Answer the following questions in your learning journal to stimulate your thinking. Your responses should demonstrate reflective thought.
What is the importance of interest rates to your organization?
My current organization is not affected by interest rates as much as other companies. AMP has great cash flow and operates with its use of cash. The company does not enter into many long-term debt situations. It uses short-term debt, which is probably used to keep their credit risk down, etc. AMP mainly enters into capital projects and expansion through use of their cash reserves and less through the use of long-term loans.
How do interest rates impact your ability to make purchases of durable goods and real estate?
Rising interest rates make it more difficult to enter into long-term projects or purchasing of real estate, especially for investment purposes. This will also increase the cost of car loans, etc, which will result in consumer spending dropping - leading to possible recession.
What is the importance of interest rates to your organization?
My current organization is not affected by interest rates as much as other companies. AMP has great cash flow and operates with its use of cash. The company does not enter into many long-term debt situations. It uses short-term debt, which is probably used to keep their credit risk down, etc. AMP mainly enters into capital projects and expansion through use of their cash reserves and less through the use of long-term loans.
How do interest rates impact your ability to make purchases of durable goods and real estate?
Rising interest rates make it more difficult to enter into long-term projects or purchasing of real estate, especially for investment purposes. This will also increase the cost of car loans, etc, which will result in consumer spending dropping - leading to possible recession.
Wednesday, August 8, 2007
MBA 820 Reflections on Module 1
Answer the following questions in your learning journal to stimulate your thinking. Your responses should demonstrate reflective thought.
What aspects of your life (personal and professional) are impacted by financial institutions? Briefly describe.
Personal aspects impacted are the commercial banks in which I have a checking account and brokerage services (stocks, mutual funds, etc.). Professionally aspects aspects are the money supply and availability of money to secure loans to purchase investment properties. At the company I work for, availability of money and short term loans fuel growth and expansions within the USA and abroad.
The last few years, money has started to tighten. The sub-prime mortgage business and the large investments by hedge funds in the sub prime business has melted down, leading to the further tightening of money. This will potentially make it difficult to purchase investment properties at 95 to 100% loan to value, due to the perceived higher risk in the real estate market. Most areas have depreciated in value (real estate), but others have continued to rise or even just stabilize. The information is not complete in most cases and financial institutions are not allowing as much leverage any more.
Personally this has also lead to increased rates in loans and credit cards, which leads to making sure balances are paid off. Deals of 0% interest for 6 months or even a year are gone, so the ability to leverage money for the short-term is gone. The easy money or cheap money is gone - no more loose credit lines.
Finance companies have even raised their rates, which has been speculated to tighten money supply more dramatically than the fed raising rates. This may be why the Fed held the rates and did not raise them - there are even talks of the fed lowering them before the year. The effects small businesses and companies using short to mid term loans to pay for capital projects, etc. It also effects the accounts receivable for many companies, like the one I work for. Some customers rely on these short term loans to pay for supplies of capital projects. This creates risk of greater chances of default or "longer" loans to customers via accounts receivable days outstanding dramatically increasing - effecting the cash flow of the company overall. This all leads to reduction in capital spending and lower profitability.
What financial institutions or markets have you interacted with? Elaborate on the differences in those institutions and their importance to your financial well-being.
I have interacted with commercial banks, saving and loan institutions, brokerages - securities firms, mutual fund institutions, and insurance companies. Really have not had direct involvement with Finance companies, credit unions, or pension funds.
Saving and loans mainly help individuals and investor of real estate (small) with loans for mortgages, line of credit, and car loans. Commercial banks offer some services for individuals, but have historically targeted businesses. Recently the commercial banks are looking at small businesses and investors as well as offering financial investment services. Banks have migrated over to the roll held by securities firms and mutual funds. Commercial banks can now offer all of these services as well as checking accounts, business checking accounts, savings accounts, CDs, etc. They have evolved into many services with a wide variety of products. Insurance companies make money by their investment department playing the market better than the average. Insurance companies also offer a variety of services and products that help with the long term planning of your estate. Life insurance polices have evolved into making sure almost every situation is covered for the short term and long term.
This helps my well being due to competition being fierce among these players and information being more timely available. Many of the commercial banks are not tied or paid to represent certain companies' products like the past days. Securities firms and mutual funds were paid to push certain stocks and products to unknowing customers. The manipulation of hedge funds and other institutional funds has become more difficult due to the financial conglomeration of the financial market place. The various life insurance polices allow many choices for the different stages of my life and situations, which is great.
What aspects of your life (personal and professional) are impacted by financial institutions? Briefly describe.
Personal aspects impacted are the commercial banks in which I have a checking account and brokerage services (stocks, mutual funds, etc.). Professionally aspects aspects are the money supply and availability of money to secure loans to purchase investment properties. At the company I work for, availability of money and short term loans fuel growth and expansions within the USA and abroad.
The last few years, money has started to tighten. The sub-prime mortgage business and the large investments by hedge funds in the sub prime business has melted down, leading to the further tightening of money. This will potentially make it difficult to purchase investment properties at 95 to 100% loan to value, due to the perceived higher risk in the real estate market. Most areas have depreciated in value (real estate), but others have continued to rise or even just stabilize. The information is not complete in most cases and financial institutions are not allowing as much leverage any more.
Personally this has also lead to increased rates in loans and credit cards, which leads to making sure balances are paid off. Deals of 0% interest for 6 months or even a year are gone, so the ability to leverage money for the short-term is gone. The easy money or cheap money is gone - no more loose credit lines.
Finance companies have even raised their rates, which has been speculated to tighten money supply more dramatically than the fed raising rates. This may be why the Fed held the rates and did not raise them - there are even talks of the fed lowering them before the year. The effects small businesses and companies using short to mid term loans to pay for capital projects, etc. It also effects the accounts receivable for many companies, like the one I work for. Some customers rely on these short term loans to pay for supplies of capital projects. This creates risk of greater chances of default or "longer" loans to customers via accounts receivable days outstanding dramatically increasing - effecting the cash flow of the company overall. This all leads to reduction in capital spending and lower profitability.
What financial institutions or markets have you interacted with? Elaborate on the differences in those institutions and their importance to your financial well-being.
I have interacted with commercial banks, saving and loan institutions, brokerages - securities firms, mutual fund institutions, and insurance companies. Really have not had direct involvement with Finance companies, credit unions, or pension funds.
Saving and loans mainly help individuals and investor of real estate (small) with loans for mortgages, line of credit, and car loans. Commercial banks offer some services for individuals, but have historically targeted businesses. Recently the commercial banks are looking at small businesses and investors as well as offering financial investment services. Banks have migrated over to the roll held by securities firms and mutual funds. Commercial banks can now offer all of these services as well as checking accounts, business checking accounts, savings accounts, CDs, etc. They have evolved into many services with a wide variety of products. Insurance companies make money by their investment department playing the market better than the average. Insurance companies also offer a variety of services and products that help with the long term planning of your estate. Life insurance polices have evolved into making sure almost every situation is covered for the short term and long term.
This helps my well being due to competition being fierce among these players and information being more timely available. Many of the commercial banks are not tied or paid to represent certain companies' products like the past days. Securities firms and mutual funds were paid to push certain stocks and products to unknowing customers. The manipulation of hedge funds and other institutional funds has become more difficult due to the financial conglomeration of the financial market place. The various life insurance polices allow many choices for the different stages of my life and situations, which is great.
Tuesday, August 7, 2007
MBA765 - Week 6 - Synthesis of Vantage Program
Five topics and concepts learned through the Vantage MBA Program
1. Importance of Communication Skills
Establish information technology (IT) systems that facilitate information and knowledge sharing among employees, customers, and suppliers.
Sparking creativity and innovation through open dialogue.
Focusing on the needs and wants of others and not the self through empathetic listening.
Ability to effectively listen, conveying ideas and opinions clearly and concisely.
Facilitate open dialogue to eliminate self-protection, secrecy, denial, and establish accountability.
Communicating expectations and setting clear performance goals.
Communicate to external stakeholders about important milestones, strategic directions, and specific challenges.
Understanding enough to ask the right questions.
Open communication allows creative and innovative ideas, thoughts, and concepts to grow and multiple. This will lead to high quality and strong profits, which are sustainable elements of a business.
Allows groups of people to work together synergistically with a synchronization that drives creativity and innovation to higher levels not achievable through individuals.
2. Ability to execute
Ability to lead through change and navigate the ambiguity of chaos and uncertainty of the environment.
Alignment of people with goals and objectives that are based on the vision and mission.
Attacking the inefficiencies in productivity, homogeneity (consistency), and process and system flows.
Setting priorities between new product development, diversification of products and product lines, while increasing productivity simultaneously.
Capturing the spirit of objectives and empowering others to achieve goals and objectives through your ability to build confidence and energize them.
Results orientated with a focus on achieving goal and not the possibility of failure. Effort and trying is not the same as achieving executable results.
Establishing leader’s intent and clarifying through steps, creating a path of goals that lead to the achievement of objectives.
3. Ability of learning how to learn
Research and acknowledge emerging trends and changes in customer preferences.
Utilizing SWOT, Porter Five Forces, and value chain analysis to remain competitive in the rapidly changing market environment.
Understanding and application of financial and accounting techniques. What all the costs are and how to follow the money.
Understanding the cash flow characteristics of the market and your business.
Using technology as a tool and a means to increase the flexibility and responsiveness to the needs of customers and employees.
Strategic thinking, the endless pursuit of understanding the relevant markets, development of competitive strategies, and creating possibility scenarios for future market changes.
Reflecting on the implications and consequences of actions and decisions in order to learn from these experiences and develop wisdom.
4. Importance of Vantage Leadership
Showing respect for others and appreciation for different views.
Customer orientation, the understanding of customer’s motivation, their challenges presently and in the future, which capabilities that are missing, and how you bridge that gap for them.
Ability to make good decisions and sound judgments based on thorough understanding of financial implications, strategic initiatives, and tactical deployments.
The understanding that symbiotic relationships exist between society, business, and mankind. Science, economics, and ecology are melding together, which is a convergence of this knowledge into one.
Taking the collaborative approach to problem solving that includes all of the relevant stakeholders and assessing the consequences of actions up front.
Bold enough to take risks on new possibilities and approaches.
Integrity above all else with fairness for everyone and the courage of conviction for what you believes. Standing up for your values, beliefs, and principles.
Your behavior creates a model for the entire organization, its culture and values.
Focus on the soft skills, the people aspect of leadership. Embrace conflict and confrontation, demanding an open and truthful forum.
Commitment is facilitated by the ability to speak openly and actively be listen to as well as clearly understood.
Build and foster teams through empowerment and coaching
5. Importance and awareness of Human Capital
Synergy of people to work together cohesively and effectively.
Capturing, applying, and exploiting the intellectual property.
Knowledge management systems to capture the valuable and possible irreplaceable knowledge when people leave or retire.
Competitive advantages will be people related and driven.
Population growth of educated and skilled people will not keep up with the present and future global job growth.
The new dimension of wealth for the future will be through people and their motivations.
Interview Questions for Assignment Part
1) What do you feel is one of the most important skills as COO?
Importance of Communication Skills
a) Establish information technology (IT) systems that facilitate information and knowledge sharing among employees, customers, and suppliers.
b) Sparking creativity and innovation through open dialogue.
c) Focusing on the needs and wants of others and not the self through empathetic listening.
d) Ability to effectively listen, conveying ideas and opinions clearly and concisely.
e) Facilitate open dialogue to eliminate self-protection, secrecy, denial, and establish accountability.
f) Communicating expectations and setting clear performance goals.
g) Communicate to external stakeholders about important milestones, strategic directions, and specific challenges.
h) Understanding enough to ask the right questions.
i) Open communication allows creative and innovative ideas, thoughts, and concepts to grow and multiple. This will lead to high quality and strong profits, which are sustainable elements of a business.
j) Allows groups of people to work together synergistically with a synchronization that drives creativity and innovation to higher levels not achievable through individuals.
Ability to execute
a) Ability to lead through change and navigate the ambiguity of chaos and uncertainty of the environment.
b) Alignment of people with goals and objectives that are based on the vision and mission.
c) Attacking the inefficiencies in productivity, homogeneity (consistency), and process and system flows.
d) Setting priorities between new product development, diversification of products and product lines, while increasing productivity simultaneously.
e) Capturing the spirit of objectives and empowering others to achieve goals and objectives through your ability to build confidence and energize them.
f) Results orientated with a focus on achieving goal and not the possibility of failure. Effort and trying is not the same as achieving executable results.
g) Establishing leader's intent and clarifying through steps, creating a path of goals that lead to the achievement of objectives.
Ability of learning how to learn
a) Research and acknowledge emerging trends and changes in customer preferences.
b) Utilizing SWOT, Porter Five Forces, and value chain analysis to remain competitive in the rapidly changing market environment.
c) Understanding and application of financial and accounting techniques. What all the costs are and how to follow the money.
d) Understanding the cash flow characteristics of the market and your business.
e) Using technology as a tool and a means to increase the flexibility and responsiveness to the needs of customers and employees.
f) Strategic thinking, the endless pursuit of understanding the relevant markets, development of competitive strategies, and creating possibility scenarios for future market changes.
g) Reflecting on the implications and consequences of actions and decisions in order to learn from these experiences and develop wisdom.
2) Some say that cash is king. At TBS we feel that the customer is king. How do you feel about this business philosophy?
a) Showing respect for others and appreciation for different views.
b) Customer orientation, the understanding of customer's motivation, their challenges presently and in the future, which capabilities that are missing, and how you bridge that gap for them. Communication strategies must view the customer base with a 4-lens perspective.
c) Ability to make good decisions and sound judgments based on thorough understanding of financial implications, strategic initiatives, and tactical deployments.
d) The understanding that symbiotic relationships exist between society, business, and mankind. Science, economics, and ecology are melding together, which is a convergence of this knowledge into one.
e) Taking the collaborative approach to problem solving that includes all of the relevant stakeholders and assessing the consequences of actions up front.
f) Strong cash flow is vital to ensure momentum and superior service to customers.
3) The role of COO is a huge responsibility, tell us why you have what it takes to run the operations of Tactical Business Solutions and why you feel this attribute is so important.
a) Bold enough to take risks on new possibilities and approaches.
b) Understand all of the accounting issues and consequences of federal, state, and local regulatory rules and laws.
c) Financial consequences of building, purchasing or leasing space for the business.
d) Financial considerations for manufacturing: renting equipment and temporary workers, purchasing equipment and permanent workers, or outsourcing to contract manufacturers?
e) Assessment of capital requirements for start up and growth.
f) Hiring the right people and ensuring that the right people are in the right position.
g) Continually assess the risks of new technology obsolescing your products.
4) There may be times in your job when you are tempted by vendors or others to do something that may not be ethical. Share with us how you would deal with a situation like this.
a) Integrity above all else with fairness for everyone and the courage of conviction for what you believes. Standing up for your values, beliefs, and principles.
b) Your behavior creates a model for the entire organization, its culture and values.
5) Connecting with TBS associates is paramount. Tell us how you will be successful.
a) Focus on the soft skills, the people aspect of leadership. Embrace conflict and confrontation, demanding an open and truthful forum.
b) Commitment is facilitated by the ability to speak openly and actively be listening to as well as clearly understood.
c) Build and foster teams through empowerment and coaching
d) Importance and awareness of Human Capital
e) Foster and build extraordinary teams by empowerment and coaching.
f) Establish strong and competent training programs for all employees, to establish consistency in the product.
g) Establish evaluation programs for these training programs.
h) Establish freedom and independence as part of the culture. This will facilitate innovation and give employees a voice in the company’s success. This protects knowledge and experience from leaving the company, due to loyal employees.
6) Delivering quality IT consulting services is a very challenging business, especially given the soft market and threatening competition. Knowing your leadership styles what message will you push to associates so that TBS becomes a better consultancy?
a) Synergy of people to work together cohesively and effectively.
b) Capturing, applying, and exploiting the intellectual property.
c) Knowledge management systems to capture the valuable and possible irreplaceable knowledge when people leave or retire.
d) Competitive advantages will be people related and driven.
e) Leadership style: Informal, flat or horizontal structure, and independent in nature.
f) Use a combination of both and become the pace setter, culture creator, a player as well as a coach.
g) Ability to keep the company balanced where gaps and threats exist internally and externally.
h) Keep the company sharply focused by staying true to marketing goals, targeted markets and customers, and the budget versus costs.
i)
j) Population growth of educated and skilled people will not keep up with the present and future global job growth.
k) The new dimension of wealth for the future will be through people and their motivations.
1. Importance of Communication Skills
Establish information technology (IT) systems that facilitate information and knowledge sharing among employees, customers, and suppliers.
Sparking creativity and innovation through open dialogue.
Focusing on the needs and wants of others and not the self through empathetic listening.
Ability to effectively listen, conveying ideas and opinions clearly and concisely.
Facilitate open dialogue to eliminate self-protection, secrecy, denial, and establish accountability.
Communicating expectations and setting clear performance goals.
Communicate to external stakeholders about important milestones, strategic directions, and specific challenges.
Understanding enough to ask the right questions.
Open communication allows creative and innovative ideas, thoughts, and concepts to grow and multiple. This will lead to high quality and strong profits, which are sustainable elements of a business.
Allows groups of people to work together synergistically with a synchronization that drives creativity and innovation to higher levels not achievable through individuals.
2. Ability to execute
Ability to lead through change and navigate the ambiguity of chaos and uncertainty of the environment.
Alignment of people with goals and objectives that are based on the vision and mission.
Attacking the inefficiencies in productivity, homogeneity (consistency), and process and system flows.
Setting priorities between new product development, diversification of products and product lines, while increasing productivity simultaneously.
Capturing the spirit of objectives and empowering others to achieve goals and objectives through your ability to build confidence and energize them.
Results orientated with a focus on achieving goal and not the possibility of failure. Effort and trying is not the same as achieving executable results.
Establishing leader’s intent and clarifying through steps, creating a path of goals that lead to the achievement of objectives.
3. Ability of learning how to learn
Research and acknowledge emerging trends and changes in customer preferences.
Utilizing SWOT, Porter Five Forces, and value chain analysis to remain competitive in the rapidly changing market environment.
Understanding and application of financial and accounting techniques. What all the costs are and how to follow the money.
Understanding the cash flow characteristics of the market and your business.
Using technology as a tool and a means to increase the flexibility and responsiveness to the needs of customers and employees.
Strategic thinking, the endless pursuit of understanding the relevant markets, development of competitive strategies, and creating possibility scenarios for future market changes.
Reflecting on the implications and consequences of actions and decisions in order to learn from these experiences and develop wisdom.
4. Importance of Vantage Leadership
Showing respect for others and appreciation for different views.
Customer orientation, the understanding of customer’s motivation, their challenges presently and in the future, which capabilities that are missing, and how you bridge that gap for them.
Ability to make good decisions and sound judgments based on thorough understanding of financial implications, strategic initiatives, and tactical deployments.
The understanding that symbiotic relationships exist between society, business, and mankind. Science, economics, and ecology are melding together, which is a convergence of this knowledge into one.
Taking the collaborative approach to problem solving that includes all of the relevant stakeholders and assessing the consequences of actions up front.
Bold enough to take risks on new possibilities and approaches.
Integrity above all else with fairness for everyone and the courage of conviction for what you believes. Standing up for your values, beliefs, and principles.
Your behavior creates a model for the entire organization, its culture and values.
Focus on the soft skills, the people aspect of leadership. Embrace conflict and confrontation, demanding an open and truthful forum.
Commitment is facilitated by the ability to speak openly and actively be listen to as well as clearly understood.
Build and foster teams through empowerment and coaching
5. Importance and awareness of Human Capital
Synergy of people to work together cohesively and effectively.
Capturing, applying, and exploiting the intellectual property.
Knowledge management systems to capture the valuable and possible irreplaceable knowledge when people leave or retire.
Competitive advantages will be people related and driven.
Population growth of educated and skilled people will not keep up with the present and future global job growth.
The new dimension of wealth for the future will be through people and their motivations.
Interview Questions for Assignment Part
1) What do you feel is one of the most important skills as COO?
Importance of Communication Skills
a) Establish information technology (IT) systems that facilitate information and knowledge sharing among employees, customers, and suppliers.
b) Sparking creativity and innovation through open dialogue.
c) Focusing on the needs and wants of others and not the self through empathetic listening.
d) Ability to effectively listen, conveying ideas and opinions clearly and concisely.
e) Facilitate open dialogue to eliminate self-protection, secrecy, denial, and establish accountability.
f) Communicating expectations and setting clear performance goals.
g) Communicate to external stakeholders about important milestones, strategic directions, and specific challenges.
h) Understanding enough to ask the right questions.
i) Open communication allows creative and innovative ideas, thoughts, and concepts to grow and multiple. This will lead to high quality and strong profits, which are sustainable elements of a business.
j) Allows groups of people to work together synergistically with a synchronization that drives creativity and innovation to higher levels not achievable through individuals.
Ability to execute
a) Ability to lead through change and navigate the ambiguity of chaos and uncertainty of the environment.
b) Alignment of people with goals and objectives that are based on the vision and mission.
c) Attacking the inefficiencies in productivity, homogeneity (consistency), and process and system flows.
d) Setting priorities between new product development, diversification of products and product lines, while increasing productivity simultaneously.
e) Capturing the spirit of objectives and empowering others to achieve goals and objectives through your ability to build confidence and energize them.
f) Results orientated with a focus on achieving goal and not the possibility of failure. Effort and trying is not the same as achieving executable results.
g) Establishing leader's intent and clarifying through steps, creating a path of goals that lead to the achievement of objectives.
Ability of learning how to learn
a) Research and acknowledge emerging trends and changes in customer preferences.
b) Utilizing SWOT, Porter Five Forces, and value chain analysis to remain competitive in the rapidly changing market environment.
c) Understanding and application of financial and accounting techniques. What all the costs are and how to follow the money.
d) Understanding the cash flow characteristics of the market and your business.
e) Using technology as a tool and a means to increase the flexibility and responsiveness to the needs of customers and employees.
f) Strategic thinking, the endless pursuit of understanding the relevant markets, development of competitive strategies, and creating possibility scenarios for future market changes.
g) Reflecting on the implications and consequences of actions and decisions in order to learn from these experiences and develop wisdom.
2) Some say that cash is king. At TBS we feel that the customer is king. How do you feel about this business philosophy?
a) Showing respect for others and appreciation for different views.
b) Customer orientation, the understanding of customer's motivation, their challenges presently and in the future, which capabilities that are missing, and how you bridge that gap for them. Communication strategies must view the customer base with a 4-lens perspective.
c) Ability to make good decisions and sound judgments based on thorough understanding of financial implications, strategic initiatives, and tactical deployments.
d) The understanding that symbiotic relationships exist between society, business, and mankind. Science, economics, and ecology are melding together, which is a convergence of this knowledge into one.
e) Taking the collaborative approach to problem solving that includes all of the relevant stakeholders and assessing the consequences of actions up front.
f) Strong cash flow is vital to ensure momentum and superior service to customers.
3) The role of COO is a huge responsibility, tell us why you have what it takes to run the operations of Tactical Business Solutions and why you feel this attribute is so important.
a) Bold enough to take risks on new possibilities and approaches.
b) Understand all of the accounting issues and consequences of federal, state, and local regulatory rules and laws.
c) Financial consequences of building, purchasing or leasing space for the business.
d) Financial considerations for manufacturing: renting equipment and temporary workers, purchasing equipment and permanent workers, or outsourcing to contract manufacturers?
e) Assessment of capital requirements for start up and growth.
f) Hiring the right people and ensuring that the right people are in the right position.
g) Continually assess the risks of new technology obsolescing your products.
4) There may be times in your job when you are tempted by vendors or others to do something that may not be ethical. Share with us how you would deal with a situation like this.
a) Integrity above all else with fairness for everyone and the courage of conviction for what you believes. Standing up for your values, beliefs, and principles.
b) Your behavior creates a model for the entire organization, its culture and values.
5) Connecting with TBS associates is paramount. Tell us how you will be successful.
a) Focus on the soft skills, the people aspect of leadership. Embrace conflict and confrontation, demanding an open and truthful forum.
b) Commitment is facilitated by the ability to speak openly and actively be listening to as well as clearly understood.
c) Build and foster teams through empowerment and coaching
d) Importance and awareness of Human Capital
e) Foster and build extraordinary teams by empowerment and coaching.
f) Establish strong and competent training programs for all employees, to establish consistency in the product.
g) Establish evaluation programs for these training programs.
h) Establish freedom and independence as part of the culture. This will facilitate innovation and give employees a voice in the company’s success. This protects knowledge and experience from leaving the company, due to loyal employees.
6) Delivering quality IT consulting services is a very challenging business, especially given the soft market and threatening competition. Knowing your leadership styles what message will you push to associates so that TBS becomes a better consultancy?
a) Synergy of people to work together cohesively and effectively.
b) Capturing, applying, and exploiting the intellectual property.
c) Knowledge management systems to capture the valuable and possible irreplaceable knowledge when people leave or retire.
d) Competitive advantages will be people related and driven.
e) Leadership style: Informal, flat or horizontal structure, and independent in nature.
f) Use a combination of both and become the pace setter, culture creator, a player as well as a coach.
g) Ability to keep the company balanced where gaps and threats exist internally and externally.
h) Keep the company sharply focused by staying true to marketing goals, targeted markets and customers, and the budget versus costs.
i)
j) Population growth of educated and skilled people will not keep up with the present and future global job growth.
k) The new dimension of wealth for the future will be through people and their motivations.
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