As someone who has a vintage MBA (from 1981) and has taught MBAs for almost thirty years, I have been spending the last few months wondering about the implications of the market crisis for MBA programs globally. After decades of almost uninterrupted growth in business schools, we are starting to look at not just a mature phase but potentially a phase of decline. Using the same principles that we so blithely recommend that companies facing similar challenges should follow, it is time for action. Knowing how slowly academia moves, I am not hopeful. Here are two of the reasons why I think we should...
Are accountants learning?
While I have many areas of disagreement with accounting, there are three accounting practices that I have taken particular issue with over time.1. Not treating employee options as expenses when granted: There should really be no debate about this. Employee options are compensation, and like all other compensation expenses should be recorded at fair value, when granted. The fair value is the option value and not the exercise value.2. Treating leases (or at least a significant portion of them) as operating expenses: Both FASB and IASB have used the ownership of the asset as the determinant of whether...
Losing, sustaining and building on brand names
In my last two posts, I argued that a brand name can add significant value to a firm and that we can sometimes estimate that value. A news item last week about Domino's started me thinking about the fragility of brand name value and whether, and how long, it can be sustained: Two employees at a Domino's filmed themselves making sandwiches for delivery, adding ingredients (too disgusting to mention) to the meals. Even worse, they put the film up on YouTube.http://www.youtube.com/watch?v=r4ftKIMLCl0In the next few days, this video was watched by millions of people, who thought worse of Domino's...
Valuing brand names
If we accept the proposition that a brand name can have significant value, it seems logical to follow up by trying to estimate that value. The best way to think about how much of the value in a company comes from its brand name is to ask the hypothetical question: What will happen to this firm's value, if it lost its brand name tomorrow?That question is not always easy to answer since the effects of brand name are everywhere in the firm and are not easily separable. They can affect the company's sales, its pricing policies and its financing costs. Getting a clean estimate of brand name value can...
The power of a brand name
I am sorry about the long hiatus from posting but I was at Disneyworld last week with two of my children. As we wandered from one line to another, frantically collecting fast passes along the way, I perused the merchandise that I passed by and pondered the power of a brand name. Every conceivable item that can be fashioned into Mickey Ears has been, from T-shirts to mugs to waffles. And once the Mickey logo is put on a product, the price takes a quantum leap upwards.To me, this captures the power of a brand name. Stripped to basics, it allows you to charge a higher price for exactly the same product....
