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FINA 210 Lecture Notes - Henri Lefebvre, Cognitive Model, Trans-Cultural Diffusion

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Concordia University
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Finance
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FINA 210
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Absolute distance is a physical measure that we may count in km for example. Relative distance is measured in terms of time, effort or cost. Cognitive distance: the distance that people perceive to exist in a given situation. It can seem longer or more pleasant to go from a to b than from a to c (how far it seems) Friction of distance: reflection of the time and cost of overcoming distance. Distance-decay function: describes the rate at which a particular activity or phenomenon diminishes with increasing distance. For geographers, the most important thing to note is that the effects of distance almost always mean that the influence (or importance) of a center diminishes as we get further away from it. And usually that influence will diminish rapidly at first, and then more slowly the further we get away from the center of influence.

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Related Questions

Short Story
Too many managements – and the number seems to grow every year – are looking for any means to report, and indeed feature, “adjusted earnings” that are higher than their company’s GAAP earnings. There are many ways for practitioners to perform this legerdemain. Two of their favorites are the omission of “restructuring costs” and “stock-based compensation” as expenses.

Charlie and I want managements, in their commentary, to describe unusual items – good or bad – that affect the GAAP numbers. After all, the reason we look at these numbers of the past is to make estimates of the future. But a management that regularly attempts to wave away very real costs by highlighting “adjusted per-share earnings” makes us nervous. That’s because bad behavior is contagious: CEOs who overtly look for ways to report high numbers tend to foster a culture in which subordinates strive to be “helpful” as well. Goals like that can lead, for example, to insurers underestimating their loss reserves, a practice that has destroyed many industry participants.

Charlie and I cringe when we hear analysts talk admiringly about managements who always “make the numbers.” In truth, business is too unpredictable for the numbers always to be met. Inevitably, surprises occur. When they do, a CEO whose focus is centered on Wall Street will be tempted to make up the numbers.

Let’s get back to the two favorites of “don’t-count-this” managers, starting with “restructuring.” Berkshire, I would say, has been restructuring from the first day we took over in 1965. Owning only a northern textile business then gave us no other choice. And today a fair amount of restructuring occurs every year at Berkshire. That’s because there are always things that need to change in our hundreds of businesses. Last year, as I mentioned earlier, we spent significant sums getting Duracell in shape for the decades ahead.

We have never, however, singled out restructuring charges and told you to ignore them in estimating our normal earning power. If there were to be some truly major expenses in a single year, I would, of course, mention it in my commentary. Indeed, when there is a total rebasing of a business, such as occurred when Kraft and Heinz merged, it is imperative that for several years the huge one-time costs of rationalizing the combined operations be explained clearly to owners. That’s precisely what the CEO of Kraft Heinz has done, in a manner approved by the company’s directors (who include me). But, to tell owners year after year, “Don’t count this,” when management is simply making business adjustments that are necessary, is misleading. And too many analysts and journalists fall for this baloney.

To say “stock-based compensation” is not an expense is even more cavalier. CEOs who go down that road are, in effect, saying to shareholders, “If you pay me a bundle in options or restricted stock, don’t worry about its effect on earnings. I’ll ‘adjust’ it away.”

To explore this maneuver further, join me for a moment in a visit to a make-believe accounting laboratory whose sole mission is to juice Berkshire’s reported earnings. Imaginative technicians await us, eager to show their stuff

Question:

Discuss Buffett’s specific views on “adjusted earnings”

Employees at D-Bart’s San Jose facility have reason to be concerned. Division Manager Karen Howell received word from headquarters that the San Jose plant would be closed, with operations merged into the San Francisco facility. Most of the San Jose staff would be transferred to San Francisco, since the change was more an effort to save facility costs than to eliminate workers. Even so, approximately 20 percent of the San Jose staff would be let go. Howell was to work with supervisors to decide who would go and who would stay. Since there was no particular area that is to be reduced, Howell thought the most straightforward and equitable method to determine staff cuts was to eliminate 20 percent from each department, with termination decisions based on performance appraisal scores. She has reviewed appraisal records and generated a list of employees she believed should get notice. Howell has not yet shared her list with managers, and no general announcement has been made to employees. Managers have been informed of anticipated cuts and were asked to come up with suggestions on which employees to cut. Howell planned to meet with each department manager to finalize their decisions before they took any action. Howell met with Production Supervisor Dave Bradshaw this morning. They needed to cut five people from his department. Howell and Bradshaw both agreed that reductions would be difficult, but she was surprised when Bradshaw said, “I know this is going to be hard for some people, but it’ll be a good thing, too. I’ve got a couple of people I have wanted to get rid of for a very long time.” “Who’s that?” asked Karen. “Ben Renfro and Jackie Callahan,” Dave said without hesitation. “Why?” asked Karen, “They both have outstanding performance appraisals.” “Well, it doesn’t matter what the paperwork says,” he answered, “they’re both terrible. Renfro’s always wasting time chatting with other employees. He keeps everybody from working, and he never meets production goals. Callahan can’t get to work on time. I bet she’s late three days out of five.” “How do you know she’s late three days out of five?” Karen asked. “Have you kept a log or documented her absence?” “No, but I work with these people. I know what they’re doing. We’re pushed to meet production numbers,” Dave said in his defense. “We don’t have time for that paperwork stuff, and besides, people know they have to be at work on time. If they can’t even do that, we should just get rid of them!” Howell found much the same response from all the managers. It appeared that no one had been taking the appraisal process seriously. Feedback to employees had been haphazard at best, and discipline, if it had occurred at all, had been arbitrary and not properly documented. Managers simply checked off boxes on the appraisal forms so they could get back to the “real” work of production. Howell shook her head. Obviously, the existing performance appraisals could not provide reliable documentation on which to base reduction decisions. She would have to come up with a different plan for appraisals and reducing staff. SHRM is recognized as the source for this case study. Students will complete the assigned case study as a way to increase learning through application of course material in complex, real world situations. To complete the case study the student will:

• Identify and define the central dilemma presented in the case

• Select and gather pertinent areas of consideration, and identify critical data and stakeholders (if you need to make assumptions about any of the facts in the case, be sure to specify these assumptions in your analysis)

• Gather additional information and research as necessary

• Identify and investigate all appropriate possibilities to resolve the central issues, and present at least three different options

• Select and present the best solution and include support for the decision that recognizes positions of all the stakeholders

• Describe how to implement the best solution and include strategies to address the known challenges. Also include the likely implications of the selected solution.

I need a diferent point of view and someones opinion on this article.

Reforming the U.S. system of collective bargaining Collective bargaining procedures and relationships between labor and management must reflect less conflict, more cooperation as the Nation's economy struggles to meet international competition and domestic needs D. QUINN MILLS Rules as a productivity drain Rules alone cannot ensure that an organization will perform well. They may keep it from dissolving into self-defeating open warfare, but often do not permit it to achieve its potential. An organization which depends upon adherence to a myriad of rules will always be vulnerable to competition from other organizations which operate in a more consensual and cooperative fashion, even when the latter have fewer resources. And, although an organization of rules may sometimes pull it-self together to respond to an emergency, this need not necessarily occur. It follows, then, that primary dependence on establishing and enforcing rules is a very poor way to run an economic enterprise. The existence of a multitude of rules, many of which attempt to "stretch the work" to maintain jobs in ways reminiscent of depression-era tactics, constrains productivity and raises costs. For example, maintenance classifications may prohibit an employee from doing incidental work outside the strict limits of his or her trade; multiple job classifications may exist even where a person in a single combined classification could do the work effectively, without undue effort and stress; and, job classifications may be perpetuated although technological change has rendered the incumbents' work trivial. Other restrictions may limit the amount of work a person may be assigned, such as permitting a mechanic to open only two flanges. The location of materials and inventory may be restricted by contract or past practice to retain jobs in now-inefficient areas of the plant. In some cases, rules may prohibit employees being assigned work during breaks, and simultaneously prohibit supervisors from doing the employees' work, so that emergencies occurring at coffee breaks or lunchtime cannot be legally handled under the agreement. Over time, rules tend to become increasingly costly and constraining as technology, materials, products, and other aspects of production change. Even rules which made great sense at first become out-of-date under changing conditions. But the rules are difficult to change, and particular employees may be further benefited the more outdated the rules become. Sometimes a company can pay a high price and "buy the rules out," or a union can persuade some workers to give up favored positions for the good of the membership as a group. But often, change cannot be accomplished without a bitter struggle between management and labor. Furthermore, the rule making process promotes a set of attitudes which are inimical to successful enterprise. The existence of the rulebook encourages both management and labor to assert their rights under the contract, rather than to attempt to work out problems. It gives rise to "shop-floor lawyers," rather than problem solvers. It fosters conflict and controversy. It undermines trust. To a large degree, it seems that unions have become captives of their origins. Born in adversity and conflict, they continued to act as opponents of management even when their strength had become much greater. In some instances, unions have created thickets of rules in which to immobilize management, just as spiders build webs to ensnare prey. But when the thickets of rules have crippled productivity, the unions have discovered themselves to be caught alongside management in the trap. Plants have declined in competitiveness, and jobs have been lost. The unions have discovered too late that a snare is no less a snare because they have set it themselves. A prescription for change In a recent survey conducted by the Harris organization, a majority of the general public professed the belief that unions contribute less than they once did to the growth and efficiency of business. Not surprisingly, only 15 percent of union leaders agreed with this judgment.' The need for unions to assist companies in the light of increased foreign competition is apparent to the public. To the inhabitants of the Snow Belt, it is similarly evident that unions should cooperate with local business to stem the outflow of industry and jobs to the South and West. Public perceptions of a productivity problem are supported by Bureau of Labor Statistics estimates, which show particularly sluggish growth in output per labor hour after 1973.3 Collective bargaining practiced primarily as rule making has become self-defeating for both unions and management. It interferes with management's efficient operation of the enterprise, and ensnares employees with legitimate grievances in a web of red tape. It also contributes to the vehemence of employer attempts to resist union organization drives. Study after study of U.S. managers has shown that managers fear the imposition of restrictive work practices far more than the higher wages and benefits which unionization may bring. Companies' efforts to make competitive operations out of older plants often fail because changes in current work rules take the form of additional complex rules which do not provide the flexibility needed to turn a facility around. What management really needs is fewer rules altogether, and willing cooperation from the work force. The union, for its side, needs a management sensitive to the needs of people. Both are very difficult to obtain in the U.S. labor relations environment.