An Ethical Dilemma - Bribery in Developing Countries

By:  Adaobi Okafor
MSBA Class of 2012

In the MS in Business Analysis program at CUA we are taught to see ethics as an integral part of practicing business daily and not just the topic you consider when you have a difficult decision to make. In my Management With Integrity class with Prof.Attila Freska we discussed the Foreign Corrupt Practices Act (FCPA) of 1977 and how it addresses the need for businesses to practice accounting transparency requirements under the Securities Exchange Act of 1934 and refrain from bribery of foreign officials. We discussed how it was unethical for companies to bribe officials in order to facilitate their business interests in foreign countries and if it was mandated then they had an ethical responsibility not to succumb.  [Note: It is illegal for US persons and companies to pay bribes to foreign officials] 

Nigeria

However, I found myself thinking about the ethical issues surrounding bribery from the point of view of the local businesses in developing countries, for instance my home country of Nigeria. The US based businesses and their representatives have the luxury of deciding that they would not bribe officials for business because they have other options to generate income and profits. Local businesses in developing countries cannot be as rigid as their foreign US counterparts in their approach to bribery because if they do not play the game they might as well pack up and go home.

It is so commonplace and expected that you have to give something in order to get things done that if the request is not completely outrageous you do not consider it more than the cost of doing business. I have even heard it being compared to the culture of tipping for service that is provided in the United States and there is some truth to that when compared to the waiter whose expected tips are built in when determining the hourly wage. Most government workers do not make enough money compared to the standard of living in these countries so they have to make up that shortfall somehow. The problem with that analogy is that the amount to ‘tip’ is being dictated and required even before the service is provided.

Greasing the hands of the official at the desk to ensure that documents that you have filled and paid the fees as required are processed on time is the only way to ensure that you get things done on time. The bigger established companies can afford to stand on principle and refuse to pay the fees because they have enough cash flow to wait out the bureaucracy of the system. The smaller mom and pop establishments cannot afford to stick to their guns. Each day they dig in their heels is one day they come closer to closing their doors permanently and their families starving. In that case they consider how ‘reasonable’ the demanded fee is and they build it into the cost of operations and continue their business and I cannot say that I condemn them. 

I am in no way suggesting that bribing of officials should be sanctioned as a legal requirement of doing business but the situation has so many shades of grey that seeing it as black and white is not being realistic or fair to the local businesses in that environment. Until the governments of these developing countries at their core decide to commit to being ethical in their business practices, is it really fair to lay the ethical burden of bribery on the smaller businesses who cannot afford the time and money to fight to the bitter end for what is rightfully due to them.

Adaobi Okafor
MSBA Class of 2012

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Becket Adams Fans the Fires at The Blaze

T. Becket Adams
Business Editor at The Blaze

Hailing from South Bend, Ind., Becket Adams is one of 12 children. He graduated from Christendom College with a BA in history in 2008 before enrolling in the Master of Science in Business Analysis program at Catholic university two years later (after waiting tables and selling guitars). He has interned with The National Journalism Center and had the opportunity to serve as chief research assistant to both the Washington Examiner’s David Freddoso and The Wall Street Journal’s Stephen Moore. Becket joined The Blaze after graduating from CUA with his Masters in Business Analysis.

"My time in the CUA MSBA program was marked by two things: The curriculum and the learning environment.

Whether it was the faculty (experts in various business fields) or the advisory board (a diverse array of knowledgeable businesspeople tasked with the job of mentoring individual candidates), the program provided me with a well-rounded curriculum that was steeped in both the technical and ethical aspects of business.

But equally important was the learning environment.

Several of my colleagues were schooled in the liberal arts (i.e. philosophy, history, etc.) and, as a result, things such as quarterly financial statements and three-month moving regressions were wholly foreign concepts.

However, thanks to the MSBA's dedicated staff, as well as candidates working as a team, mastering the curriculum was all but assured. (Indeed, I was amazed at both the faculty's personalized instruction as well as the teamwork I saw between my colleagues.)

Whether it's the collaboration between colleagues, the willingness on the part of some to help others through tough projects, or the intensive course structure, the CUA MSBA experience is one that I would recommend to anyone interested in learning more about business and/or furthering their professional career." - Becket Adams, Class of 2011

Stewart McHie
Director, MS in Business Analysis
mchie@cua.edu

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An Analysis of Social Media and its Productive Potential

By Tom Malone

MSBA Class of 2013

There have been a number of articles concerning the internet and it’s effect on countless aspects of human life; from changing commerce, communication, and even how we maintain relationships amongst friends.  The internet has become an integral part of human life on the whole. Like an organic being, it has grown from simple beginnings and processes to a creation of man that has a vastly complex nature and intricate rules, neither of which we can fully explain. Nor can we predict its evolution, as it grows and grows due to the dedicated and sometimes unwitting care and development every user gives it.

Program Director McHie and class

Among the many branches that have grown from a simple mustard seed of binary code has been that of social media. Social media had its roots in the communication medium of email, which grew into instant chat and file sharing, and finally taking a further step into such systems as Facebook, Twitter, Instagram, and so many other programs which connect human beings on so many levels.

As a student of the CUA MSBA program, I found myself re-evaluating the internet, and specifically social media, under the light of an analysis informed by business practice and ethics. If the end of business and business men and women is to help the growth of the economy and help bring society to a higher standard of living and producing, a principle which I have learned and cherished at this program, then how can the internet play a part? This nebulous, ever growing creation of mankind does not share the same rules as commerce or economics. In economics, in order to produce a product that people need or desire, we learn that a considerable amount of time, effort, and resources are needed and expended to create it, and in most cases these ingredients are never renewed.

            

Yet here is where the internet becomes something incredible to us as producers and creators: there is no true consumption of resources when something is put onto the internet. Granted, one could argue that time is required on the part of the individual creating, or that monetary compensation might be required on the part of those who create digital sites and information. In reality, however, the scale of difference negates any such argument. To build a chair, I use wood and tools that cannot be used by anyone else. To write this article, all I require as an author and creator of digital information is an access point and the impetus to write. This in turn leads to another amazing aspect of the nature of the internet and this digital age: there is no impediment to my creativity and production. As a chair builder, I may not be able to access a supply of wood, but as a writer (in this case), nothing stops me from sharing my ideas and helping others who may benefit from them or receive enjoyment from them. 

The social media landscape

Given these two amazing aspects of the internet, how can we, students of business and future helpers of mankind through the medium of commerce, turn social media to man’s true economic well-being? 

 Social media, as of now, seems to serve only one possible tool to the consumer and the producer: information. Through social media sites such as Twitter and Facebook, producers and marketers are able to track the lifestyles and interests of countless people. With that information, they create and market a product that will be of use or enjoyment to the people they aim to serve.

To me, however, these social media sites do not appear to have fulfilled their economic purpose or potential. Information and connectivity are only the first stepping stones these sites have for man and economy. However, two principles of commerce and economics seem to me to be the key for unlocking further potential for social media sites: integration and gain.

 Integration, when done effectively, has always increased the productivity and quality in any tool or product of man. By viewing social media under an analytical lens, we can find an idea, or even another process of the internet, which can be grafted together in synthetic and symbiotic way. Imagine if, on one site, on one screen you were able find information, view friends statuses and messages, and purchase items that directly correlate to you, and not a market segment? Another thought: is it any coincidence that Google owns YouTube, has its own email site, search engine, and is beginning to provide free, quality internet to cities through their Google Fiber program? These close connections within one system are clear examples of the direction towards integration.

 The second aspect, gain, is, quite arguably, one of the axioms (if not the axiom) of economics, and the more difficult of the two previously mentioned concepts to employ in social media. To illustrate the point further, take the case of Facebook. Through Facebook, a user has access to friends, family, and innumerable groups, all of which provide him or her with information at a moment’s notice. Even though information is gained, to follow economics strictly, there is no gain; the user receives no material or financial advantage, and neither do the owners or shareholders of Facebook. They receive hope that their users will respond to tailored ads on their pages, but there is no real income gained, as opposed to, say, Coca-Cola, when they gain another regular customer who purchases their products. Thus, Facebook and other social media sites do not aid the economy in a very real way, even though many view them as services. It is to this end that I believe we, as students or participants in digital business or digital media, must focus our efforts. We must find a way to truly implement gain in social media, and turn social media into a true source of vitality for the economy and society. 

Tom Malone

MSBA Class of 2013

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Never Be Late Again

I'm reprinting this blog from MSBA Alum Dan Shnaider who published it on the OPUSfidelis blog site.  Maybe there is hope for DC commuters yet.  With the opening of the new HOT lanes on the Virginia beltway, traffic is indeed on the brain.  I love that there is a formula for "Phantom Traffic Jams", (see the link "water" below.)  And maybe, just maybe, IBM has found the solution. 

Never Be Late Again: IBM Sparks Hopes for A Traffic-Free Future

IBM recently announced some groundbreaking new technology designed to not just cut deadlock, but ultimately eliminate it.

We’ve known for years that traffic does not behave randomly and actually behaves closer to water than anything else. Because of that, scientists have been able to predict where and when traffic is likely to be delayed with basic algebra for decades now.

Been there, done that!

The problem is not so much the math as it is scale. Every time an accident happens or a person puts the breaks on early, the river of traffic responds differently. Add in variables that can shut down multiple roads such as an accident or an emergency vehicle rushing to a hospital, and traffic becomes impossible to predict.
Until now, of course. 

Thanks to a close partnership with the city government of Lyons, France, IBM has built a system capable of predicting the most likely effects of an accident or other traffic event on the entire city's traffic grid. The system then makes recommendations to city officials monitoring the grid on how to manage the situation -- whether to close roads, open others, change the programing on traffic lights, or dispatch a detour team. Every solution generated is tailored to every problem automatically and, best of all, the system "learns" over time, becoming faster and generating answers that are even more efficient.

The beauty of this system is also that it can be duplicated. If it works in Lyons, there is no reason why transportation grid managers throughout France, Europe, and the world can't incorporate it into their system as well. Over time, this could wind up shaving a significant amount of time off of your commute, although we'll still need to wait several years for the system to complete its debut in Lyons.

How do you feel about a computer dictating the flow of traffic? Do you think using technology to control traffic would make commutes faster and easier, or would the device wind up with bugs with could lead to even larger traffic snarls?

Note:  Dan Shnaider, MSBA Class of 2012, is a NGO specialist at OPUSfidelis Media Company and we appreciate his contribution to our blog.

Stewart McHie 
Director, MS in Business Analysis
mchie@cua.edu

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When Did Common Sense Go Out of Style

NCAA Hammers Caltech!

Not one picture of athletics
on Caltech's homepage

Ho-Hum.  Another major university is caught cheating to gain an edge in the lucrative field of winning athletic contests.  A tired theme and one that repeats itself year after numbing year.  It's a vicious cycle of breaking the rules to attract blue-chip talent so you can win more games so you can attract more blue chip talent so you can be a perennial contender and, let's not forget, attract more donations from proud alumni and sell more hats and sweatshirts.  (disclosure:  I refreshed my University of Kentucky gear after they won the NCAA basketball championship last year)

And so it goes, until you are successful enough to attract the blue-chippers without cheating, Alabama, Kentucky (I hope), Duke, etc.

So forget academic integrity, that's only meant for the classroom; this is big business and it's only cheating if you get caught anyway, right?  The more revenue we earn, the more science labs we can build (or we can use the money to buy new and increasingly uglier football uniforms every week like the University of Maryland).

USC won't be in the Rose Bowl
this year!

So let's focus on those two athletic powerhouses in Los Angeles; USC and (no, not UCLA) Caltech.  USC is on probation about 25% of the time (you can't attract recruits with just sunshine and beaches?) 15 miles away lies Caltech, admittedly one of the finest institutions of higher education in the country; school-education, get the connection?  

Caltech is a Division III school like our own Catholic University  That means they offer no athletic scholarships. You have to be a student-scholar to attend Caltech and Catholic University.  But unlike Catholic University, who has it's share of successful campaigns in the Old Dominion Athletics Conference; Caltech, a charter member of the Southern California Intercollegiate Athletics Conference, is experiencing a bit of a slump.

     -  Baseball  team has lost 237 straight games
     -  Basketball team went 310 winless conference games up until two years ago
     -  Women's volleyball lost all 168 of its conference games
     -  Men's water polo is winless for the past seven years
 

Clearly they are bad cheaters if this is the best they can do after violating the NCAA rules. 

How many cars, jobs, houses did Caltech provide it's athletes to draw the ire of the NCAA?  Like their winning percentage, zero.  Their violation is allowing so-called "part time students" to participate in NCAA contests. Caltech encourages its students to "shop" for classes at the beginning of a semester.  They do this by attending a couple classes before registering for that class.  So technically a student is part time (registered for less than 12 hours) before finalizing their schedule (what, a week? two weeks?) and thus, ineligible to compete under NCAA rules.  This occurred a total of 30 times over 4 years across 12 sports.  A Caltech, or even UK student, can tell you that's an average of .625 students/sport/year. Clearly an outrageous attempt to gain a competitive advantage!

Consider some of the classes, Caltech offers and you might want to take a test drive before buying; "Signal Transduction and Biomechanics in Eukaryotic Cell Morphogenesis", "Markov Chains, Discrete Stochastic Processes and Applications".  Quick, turn away and spell any of those words out loud!     

There is a silver lining to this ridiculous example of overreach by the NCAA.  One, while men's water polo is probably doomed to another 7 year drought (pun intended), Caltech will most certainly produce, over those seven years, a plethora of young, inquisitive scientists that will help make the world a better place to live. And isn't this the purpose of higher education, to educate and train young people to serve society and mankind? 

Now in fairness to the NCAA enforcers, who probably have a satellite office in LA on the USC campus nearby anyway, I have to note that Caltech turned themselves in when discovering this egregious breach of ethics.  (watch out Harvard, you also allow class shopping)  But wouldn't the reasonable, I dare say common sense response be to chuckle and write them an exception and better define the rule to accommodate those institutions that are really trying to do it right?  Can you spell Morphogenesis?  If not, stand down Mark Emmert and the NCAA. 

 

Stewart McHie
Director, MS in Business Analysis
mchie@cua.edu

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Would the U.S. be Considered a Good Company?

By Caroline Gangware
MSBA Class of 2013

In light of the fiscal cliff debate on the Hill, I 
thought it would be appropriate to speak about our looming debt crisis. This week, Business Roundtable launched an ad campaign, trying to get the President and Congress to focus in on the issue and come to an agreement. As part of this informational campaign, they interviewed CEO’s from various companies who said this: they won't invest in the U.S. if the cliff isn't addressed. However, there are the other, less concerned CFO’s who wrote into the CFO journal section in the Wall Street Journal, and say, “Politicians have created this event to pressure one another into a deal. It is theater. The most likely outcome is a combination of tax increases, spending cuts and kicking the can down the road…It is going to be imperfect, but it is going to be OK”.

My question to you…Is it going to be OK? Kicking the can down the road doesn’t seem like an OK idea and allowing this debt to accumulate actually seems like quite a bad idea.

Recently, in our MSBA Accounting and Financial Management class, we conducted an exercise as potential investors for an unknown company in order to get us to think like a shareholder. The first year, the revenue was $2.1 (millions or billions, not important) the expenses were $3.5, leaving net income to be -$1.4. 

The Management Committee?

Professor Bill Kirst asked what we thought of the company and of course there were some severe concerns. Then, year two and three go up on the board, revenue was about the same ($2.1 & $2.3) and so were expenses ($3.4 & $3.5). We were asked again what we thought about the company and while all of us were skeptical, it was also clear this company was unable or unwilling to make any significant financial changes for the betterment of their future. 

We were asked to give them one more chance, another year to see how it goes before deciding. As you might suspect, little changed. Revenue increased slightly to $2.4 and expenses stayed at $3.5. One of our classmates said “I want out”, which led us all to laugh because of the obvious reasons for his sentiment. 

The numbers clearly put this company into the danger zone and showed our class there was no good plan to improve its numbers. As a result of its current business plan, net income loss accumulated to a total of -$5.1. It was revealed to our class that this was the balance statement for the U.S. government over that past four years. (now the millions or billions or TRILLIONS does become significant!)

While I acknowledge government is in place for entirely different reasons than any business organization and so should be held at different standards, it is imperative that the public and our leaders understand just how detrimental our current situation is. If an investor were to ever look at a company’s records and state “I want out”, that would send a strong red flag in the direction of that company to shape up.

So now poses the ultimate question, as a young adult, ready to invest in my future and inherently in my country, why would I think any differently? 


Caroline Gangware
MSBA Candidate
Class of 2013

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Interbrand Names 100 Best Global Brands

One of the highlights of my year is to attend the launch party in New York City for 
Interbrand's 100 Best Global Brands at the New York Stock Exchange.  The annual event is the culmination of months of analysis and vetting on the part of the analysts and brand experts at Interbrand, a division of DDB and holding company Omnicom. 

The New York Stock Exchange is decked out for the
launch of the 100 Best Global Brands

This is the 13th year Interbrand has published this study and it tells us a lot about the power of Brands, both in the marketplace and, as importantly, in the financial community.  As we learn in our MSBA marketing class, Brands are a valuable commodity with real value.

Writes Interbrand Global Chief Executive Jez Franpton;

"Those who manage the Top 100 Best Global Brands understand the role they play in peoples' lives and respond accordingly — building on successes and making up for mistakes. They are constantly nurturing their brands to keep pace in a rapidly changing world; they know that every market is different, every interaction counts, and every individual matters. Quite an achievement in such turbulent times. These strong, highly innovative brands have earned the respect and loyalty of many individuals who, collectively, contribute to their power and prosperity. They have also earned our respect and admiration, as well as a place in our report."

The methodology used by Interbrand "takes into account all the many ways in which a brand touches and benefits its organization -- from attracting and retaining talent to delivering on customer expectations. The final value can then be used to guide brand management, so businesses can make better, more informed decisions. There are three key aspects that contribute to the assessment:

• The financial performance of the branded products or services.
• The role of brand in the purchase decision process.
• The strength of the brand."

The 2011 list of Best Global Brands is headed by perennial winner Coca Cola with a total Brand Valuation of $77.8B.  It is interesting to note that after seeing this familiar Brand top the list, the rest of the top five Brands are all technology companies.  In rank order from 2 to 5 are Apple ($76.6B), IBM ($75.5B), Google ($69.7B) and Microsoft ($57.9B).  Pretty much tells you where the world is headed, doesn't it?  If you have any interest in Brands whatsoever, this is a must read report. 

The Stock Exchange by Day

The Stock Exchange in party mode

 But back to the launch event itself which attracts CMO's from around the world, it is an amazing spectacle.  I had no idea the NYSE could be transformed from the financial epicenter of the world at 4 PM to party central at 7 PM.

From left to right:
Mark OBrien, President of North
America DDB Worldwide,
MSBA Director Stewart McHie,
and DDB President and CEO
Chuck Brymer

And a sincere note of thanks to fellow University of Kentucky alum and DDB Worldwide President and CEO Chuck Brymer for allowing me to crash this prestigious event year after year.  I've known Chuck for many years, both as the former Chairman and CEO of Interbrand and in his current role as President and CEO of DDB, who handled the ExxonMobil Fuels Marketing Company global advertising account in my former life as Global Brand Manager for the company. 

Also shown at right is Mark OBrien, President of North America DDB Worldwide and former CFO of DDB Worldwide.  Mark has never let me live down our first global contract negotiation at the Mohonk conference center in upstate New York!

With  Jessica at the
bell stand at the NYSE.

And of course a shout out to my daughter Jessica McHie who is a Senior Associate in the Global Communications group at Interbrand and who sneaks my name onto the invite list every year.






Stewart McHie
Director, MS in Business Analysis program
mchie@cua.edu

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