Rotman in the News Sep 20-22
Harper's Canadian Revolution:
An article in the September 29 issue of Maclean's takes a look at how Prime Minister Stephen Harper is changing Canada. But if his (Harper's) record on crime is only moderately conservative, and his record on immigration is surprising, there is one important and surprisingly little-noted way in which Harper has begun to change the shape of Canada profoundly. And it's little noted even though he has done it through some of the highest-profile gestures any government can make: his federal budgets and their centrepiece, a two-part, 29 per cent cut in one of Ottawa's most important revenue sources, the GST. It's not always true, after all, that long-term change and electoral expediency are necessarily ntagonistic. The GST cut is a case in point. Economists, or at least economists who aren't named Stephen Harper, hate it. As a mechanism for encouraging growth and competitiveness, cuts to consumption taxes are widely reckoned to be the least efficient policy tool. Roger Martin is the dean of the University of Toronto's blue-chip Rotman School of Management and chairman of Ontario's Institute for Competitiveness and Prosperity. "Cutting the GST," Martin has said, "was a terrible idea. Terrible in every respect." Well, all but three, from Harper's perspective. First, it won the Conservatives a lot of votes. Second, the opposition parties are terrified at the thought of reversing it, which means it's probably permanent. Third, and most important, it gets a lot of money out of Ottawa -- perhaps $30 billion over the next five years
--------------------
As fall session begins, opposition plans to hammer McGuinty over jobs:
It's the economy stupid, said a Canadian Press article, which appeared in several newspapers on September 22, including The Globe & Mail, London Free Press, Toronto Sun, Sault Star, Sudbury Star, and Brantford Expositor, among others. The catchphrase that helped put Bill Clinton in the White House could easily be adopted by Ontario's political leaders. They all agree the fall session of the legislature, which starts today, will focus on the faltering economy in Canada's former economic engine. Premier Dalton McGuinty made a rare pre-session cabinet shuffle last week to highlight the Liberal government's plan to attract new businesses - and jobs - to Ontario, splitting the Economic Development Ministry in two and creating a new Ministry of International Trade and Investment. "The Ministry of Economic Development and Trade has become so important to us, with such tremendous challenges and great opportunities confronting us, that I think we can do a better job ... by better dividing the workload," he said. "A global economy with tremendous opportunity makes it clear to me Ontario needs a ministry devoted exclusively to building up our international trade and investment." Attracting foreign investment is a good idea, said Roger Martin, dean of the Rotman School of Management at the University of Toronto, who added that cutting business taxes in Ontario would be the best way to achieve that goal. "What we need to do is make sure Ontario is a place where businesses have the strongest possible encouragement to invest, and that has a lot to do with our marginal effective tax rates on investment, which are among the highest in the world," said Mr. Martin. "We have one of the dumbest tax structures on the face of the planet."
--------------------
Fall session of Queen's Park starts today:
The fall session of the legislature at Queen's Park, which starts Monday, will focus on the economy, said a report broadcast on 680 News on September 22. Premier Dalton McGuinty will no doubt be faced with several tough decisions this session, including whether to keep a balanced budget or allow a deficit if the economic slump continues. McGuinty made it clear the economy was a priority last week -- in a pre-session cabinet shuffle that split the economic development ministry in two, to create a ministry of international trade and investment. But Roger Martin, dean of the Rotman School of Management, said it's Ontario's tax rates that need to be addressed. In the coming days, the legislature will also discuss a possible ban on cell phones while driving.
--------------------
Price competition takes on a deadlier edge in inflationary times:
I've written earlier that failing to raise your prices to reflect the increases in your input costs is a de facto price cut. If you are the low-cost competitor, your weaker competitors could be grievously hurt if you hold prices constant or increase prices below the rate of increases in your input costs. If you are the high-cost competitor, your choice is to raise prices or to be ground down by the leader's "price cut." Increasing your prices will signal to the leader that it is okay to raise prices, wrote Rotman Adjunct Professor George Stalk in a column in The Globe & Mail's Report on Business on September 22. But how much should you raise prices? Many executive teams will settle for levels of price increases they hope will recover the increases in input costs, thereby preserving their profit margins. Beware: this rate of increase is not enough. Prices must be raised at rates that exceed the increases in input costs. Why? Additional cash is needed to buy goods for inventory and production that will now be priced higher. Inflated prices mean inflated accounts receivable and payable. Capital goods to sustain and build the business will cost more than in the past. In periods of low or no inflation, depreciation allowances were intended to match the replacement costs needed for equipment. When there is inflation, depreciation allowances based on historical costs undervalue the replacement needs of your business. Adding to the challenge, current profitability is artificially inflated by the relatively lower costs of goods sold out of inventory (hence the increased profitability of most oil companies today).
--------------------
National Black MBA Association Makes Global Expanision:
The National Black MBA Association, Inc. (NBMBAA) has expanded its organization with the addition of its first international interim chapter in Toronto, said an article in The Hilltop Times, a newspaper at Howard University, on September 22. "We are very pleased with the momentum that the Toronto chapter has built to date across Canada," Damon Knights, President of the Toronto chapter, said in a press release. "We are excited that the National Black MBA Association will have the honor to open the market." Officially launched on August 21, the new Toronto chapter opened trading at the Toronto Stock Exchange at the TSX Broadcast Centre to celebrate the event. Supporting the new chapter are Canada's most notable corporations and business schools. Members of the chapter's advisory board include Kevin Warren, CEO of Xerox Canada, John Peoples, President and General Manager of SC Johnson Canada and Ranji Persad, President of NCR Canada. Schools lending support are the Schulich School of Business, the Rotman School of Management, the Richard Ivey School of Business and the Ted Rogers School of Management. According to Knights, the purpose of the Canadian chapter is to increase the economic and intellectual wealth of black Canadians. "Studies by Catalyst and the Conference Board of Canada indicate that there is still a need to increase diversity in Corporate Canada," Knights said. "It's great to see our vision resonating with the corporate and academic communities." Excited for the future, the professional membership organization already has set high goals for its newest chapter. "We are targeting to host the NBMBAA annual conference in the near future, which would bring over 12,000 professionals, recruiters and students to the greater Toronto area, making it North America's largest development, recruiting and networking event for black professionals," Ivan Francis, Toronto chapter's Vice President of Strategy and Marketing, said. "We are also in the process of rolling out our Leaders of Tomorrow program, which will focus on providing mentoring to at risk youth."
--------------------
Why Business People Need to Think More Like Designers Think:
There was an advertisement for the an upcoming event in the Rotman School Design Thinking Experts Speaker Series in The New York Times on September 22. The event takes place on October 2 in New York York City with Tyler Brule, Editor in Chief and Chairman, Monocle magazine,as the moderator. The presenters will be: Prof. John Maeda, President, Rhode Island School of Design; former Associate Director of Research, MIT Media Lab; Author, “The Laws of Simplicity” and Prof. Roger Martin, Dean, Rotman School of Management, University of Toronto; Author, “The Opposable Mind: How Successful People Win Through Integrative Thinking”; Corporate Director, Research in Motion and Thomson Reuters.
--------------------
MBA students get lesson in school of hard knocks:
University of Toronto business professor John Hull knew by Monday morning that he would not be sticking to his lesson plan. With global markets in a meltdown, and legendary Wall Street firms gone or teetering on the brink, he realized his morning finance lecture needed some last-minute revisions, said an article in The Globe & Mail on September 22. "I had some extra examples," deadpans Prof. Hull, who literally wrote the book on derivatives - the complex financial instruments at the centre of this week's market mayhem. For the first 45 minutes, his second-year MBA class on options and derivatives dissected the weekend's events and Prof. Hull gave them an impromptu primer on the exotic investments behind the front-page news. It was an ideal way, says the popular professor, to help students understand some basic principles early in the term. "In my case, it was the perfect class." This week's drama in the world's financial markets has caused plenty of commotion at business schools across the country. In lecture halls and classrooms, professors were putting aside their textbooks, drawing their inspiration instead from the daily financial pages. For students, the upheaval is hitting close to home, and has happened just as students in their final year are polishing their résumés for the traditional fall recruitment drive. At U of T's Rotman School of Management, firms had already begun to make their annual rounds before the severity of the situation became apparent. Merrill Lynch, one of the casualties on Wall Street this week, actually paid a visit earlier in the month, although it had few jobs to offer. "Right now, we are wondering what firm will be next? When will this end?" said Evelyn Li, a second-year finance and marketing major. Ms. Li figures her chances of getting a job will improve later in the year, so for now, she is trying to stay optimistic. "You have to be patient," she said. Amin Nathoo, a finance major who is also set to graduate this spring, laughs about his bad timing. When he applied two years ago, the economy was on a tear, he notes. By the time he began classes last fall, the first signs of trouble had emerged and by this summer, the real problems started. Still, he says he is one of the lucky ones and got an offer from a Canadian bank on Monday, even as the bad news was rolling in. Most of his friends are still in the hunt. "They are getting pretty nervous," he said. Back in the classroom, Prof. Hull says he will be using the lessons that are still unfolding in the markets for some time to come. The collapse of Lehman Brothers and the takeover of Merrill Lynch, he says, offers a sobering example of what happens when leaders do not pay attention to the very people they have hired to alert them to trouble. "I'll talk about that next term when I teach risk management," he said.
--------------------
Mortgages on aisle five:
With news earlier this week that Wal-Mart Canada had applied for a banking licence, Canadians will soon have more banking choices than ever before. And, of course, with the U. S. financial crisis wiping out storied financial institutions in the blink of an eye, banking with a food company or big-box retailer is suddenly not so weird, said an article in the National Post on September 20. "More banking options are a good thing," says Kevin Groh, Wal-Mart Canada spokesman. "Whether it's financial services or brands of cereal, Canadian consumers are saying they want more services under one roof." The retailer has not revealed its planned services, but Mr. Groh hints that a credit card is likely to be one of the first offerings. Wal-Mart will be joining two established retailers offering banking services -- PC Financial and Canadian Tire Financial Services, along with retailers such as Sears, Sobeys and the Hudson's Bay Company that offer credit cards. Rotman School of Management banking expert Laurence Booth says he expects Wal-Mart to also rebrand a bank's service. He doesn't believe the Big Five banks will be threatened by Wal-Mart joining the industry. "People are too lazy to move and banks benefit from that," he says. "I bank with Royal Bank. I'm absolutely sure that if I did the research I could find a better service, but is it worth the effort?" he asks.
--------------------
Party websites as dull as dishwater:
If you think the Canadian election is about as interesting as pickling beets with your grandmother Mabel, perhaps you haven't visited any of the political parties' campaign websites, said an article in The Toronto Star on September 20. Pundits say our political parties are light years behind their American counterparts when it comes to using the Web to energize the election process and galvanize support among disenfranchised browsers. David Dunne, a political advertising expert with the Rotman School of Management, suspects the Conservatives' website might not be attracting disenfranchised voters or the active youth who might take advantage of such online features. "This sort of thing is working in the States with Obama. But you've got to consider the message," he says. "The Obama message is very much targeted at people who would not normally vote. That's not the case with the Conservative message. "If the Greens did something like this, the result could be different."
--------------------
Financial Markets:
Prof. Joseph D'Cruz was a guest on CBC Newsworld Business Weekly on September 20. He discussed the past week's events in the world's financial and economic markets.
--------------------
California city officials head to L.B.:
Mayor Bob Foster and nearly 2,000 elected and appointed officials from across the state are expected to attend the annual League of California Cities conference Wednesday through Saturday at the Long Beach Convention Center, said an article in The Press Telegram (Long Beach, CA) on September 20. "The league does two main things - education and advocacy," said Eva R. Spiegel, spokeswoman for the statewide organization. "We do lots of education and training for the people who run our cities." Meeting in a series of workshops, the politicians and administrators will discuss housing and infrastructure, climate change, public safety, economic development, budgeting, redevelopment, and leadership. At the three-day convention, featured presenters include Neal Petersen, a motivational speaker; Richard Florida of the University of Toronto; and Doris Kearns Goodwin, a presidential historian.
--------------------
National contest honours principals:
Who is an outstanding school principal? Nominations for the 5th Annual Canada's Outstanding Principals contest are now being accepted. Anyone from across the country may nominate an outstanding principal in a publicly-funded school in their community. Nominators can be parents, colleagues, community members, local business people or social service agency partners, said an article in The Burlington Post on September 20. "Strong leadership is what makes Canada's education system one of the finest in the world," said Veronica Lacey, president and CEO of The Learning Partnership (TLP). "Principals set the tone for a school and their communities and children across the country are benefiting from the work of these remarkable men and women." Canada's Outstanding Principals program was developed in the fall of 2004. Last year, 33 exceptional leaders from across the country were selected as Canada's outstanding principals. The winning principals are invited to the Canada's Outstanding Principals Awards Dinner Celebration. They also get to attend a four-day executive leadership training program at the University of Toronto's Rotman School of Management and will be recognized in the National Academy of Principals through an online forum.
--------------------
Feeling cold? Blame it on a frosty reception:
They call it the cold shoulder - and with good reason, for being snubbed can make you feel chilly, said an article in The Daily Mail (UK) on September 22. In an experiment volunteers recalled an experience that was socially inclusive, while others remembered a time when they felt left out. Afterwards the volunteers were asked to estimate the room temperature and those who recalled being excluded put it 3C cooler than it was. Chen-bo Zhong, of Toronto University, told the journal Psychological Science: 'We never expected the metaphors we use in everyday conversation to have links to physical reality, but clearly, they do.'
--------------------
'Cold and lonely' has a scientific basis:
Social isolation is often described as "cold and lonely" -- but does it actually feel cold? New research this week says the answer is yes. Just thinking about rejection can make a person perceive a room as chillier, according to a report in the journal Psychological Science. The study, conducted by researchers at the University of Toronto, also found that people who felt isolated preferred warm drinks over cold ones -- presumably to make themselves feel better, said an article in the Los Angeles Times on September 20. The research shows there is a psychological basis behind metaphors linking cold temperatures to feelings of loneliness, despair or sadness, said psychologist and lead author Chen-Bo Zhong. "Our mind is not independent of our body," he said. "Perceptions we think of as purely cognitive also involve physical perceptions." The initial experiment involved 65 subjects, divided into two groups. Half were instructed to think about a time when they felt socially isolated, while remaining participants were told to recall a time when they felt accepted. When asked to estimate the temperature of the room, people assigned to ruminate about rejection on average said 71 degrees -- about 5 degrees cooler than the second group. In a second experiment, researchers rigged a virtual ball-tossing game so that some of the 52 players would receive the ball only twice. Afterward, subjects were asked to rate their desire for hot coffee, hot soup or an icy Coke. Subjects who had been all but shut out of the virtual game showed a greater preference for hot liquids than those who were not. The article also appeared in several other newspapers including The Houston Chronicle, Minneapolis Star Tribune, Kansas City Star, Seattle Times, and The Sun-Sentinel (FL).
--------------------
Frozen Out:
Cold shoulders, frosty looks and cool receptions really do make you feel chillier, according to Toronto University scientists, said an article in The Times (London, UK) on September 20. They report in Psychological Science that people who were asked to recall a socially isolating experience and then asked to guess the temperature of the room they were in made much lower estimates than people who were first asked to remember a time they were warmly welcomed into a group. Those who were made to feel ostracised were also much more likely to choose hot drinks or meals at a buffet after being told the test was over. Chen-Bo Zhong, the lead researcher, says that this shows the power of our fear of social exclusion - it literally gives us the chills.
--------------------
Social Exclusion May Literally Leave People Frozen Out:
People who are socially isolated may literally feel left out in the cold, suggest Canadian researchers who examined whether social exclusion may generate physical feelings of coldness, said an article posted to several news websites on September 19, including WashingtonPost.com, AJC.com, and AZCentral.com. The University of Toronto psychologists divided volunteers into two groups. One group recalled a personal experience in which they'd been socially excluded, while the other group recalled an experience in which they'd been accepted into a group. Participants in both groups were asked to estimate the temperature in the room, on the pretense that maintenance staff wanted that information. Their estimates ranged from 54 degrees F to 104 degrees F. Those told to think about a socially isolating experience gave lower estimates of the room temperature. "We found that the experience of social exclusion literally feels cold. This may be why people use temperature-related metaphors to describe social inclusion and exclusion," study co-author Chen-Bo Zhong said in an Association for Psychological Science news release. In another test, the volunteers played a computer-simulated ball tossing game designed to toss the ball to certain players many times, while leaving others out of the game. After playing the game, the participants were asked to rate the desirability of certain foods and beverages -- hot soup, hot coffee, crackers, an apple, and a cold soft drink. The "unpopular" participants who'd been left out of the computer ball game were much more likely to want either hot soup or hot coffee -- a desire presumably caused by a physical feeling of coldness. "It's striking that people preferred hot coffee and soup more when socially excluded. Our research suggests that warm chicken soup may be a literal coping mechanism for social isolation," study co-author Geoffrey Leonardelli said in the news release.
--------------------
Historical Look at the Markets:
Joseph Martin, director of Canadian Business History at the Rotman School, spoke to CBC Radio One on September 18. He gave a historical perspective on the current turmoil of the stock markets.
--------------------
Rotman in the News is posted to this community daily. It can also be delivered to you directly via e-mail by sending a request to Ken McGuffin at mcguffin@rotman.utoronto.ca. Please also contact Ken if you wish to unsubscribe. Please note that links to news websites may not last for more than 24 hours and may require a paid or free subscription to access articles.