Making a Partnership Work

Making a partnership work can be difficult. Key factors include having a shared vision for the company, sharing equally in the work of the company, and having compatible skills among the company owners. All of this requires that the partners be honest and transparent with one another. Most important, the partners must have clear responsibilities within the company. Partners must be accountable to one another for their responsibilities. We saw the breakdown of a partnership in a recent episode of The Profit.

Partnerships can be created from scratch by both partners pooling their moneys to purchase needed equipment and working capital. But often, partnerships are formed by investing a combination of cash and assets. Placing a value on each partners investment requires calculating each partners net worth. Net worth is simply calculated by adding up assets and cash and subtracting liabilities or debts.

Exercises: Create a Google Docs file and make the following calculations.

1. Calculate your own net worth by listing your total assets and total liabilities. At this stage in your life, this should be simple. You have a few assets such as clothes and sporting goods. You may even own a car.

• Simply list your total assets, place a value on each of them and add up the total.
• Next, add up your debts or what you owe. You may not have any debts or you may have a car note. 
• Finally, subtract your debts from your assets to get a total net worth.

2. Now lets fast forward 15 years. You've accumulated some assets as well as liabilities.

Assets:
Home $85,000
Car $15,000
Personal possessions: $10,000
Retirement Account: $10,000
Cash: $5000
Total- $125,000

Liabilities:
Home Mortgage: $60,000
Car Note: $5000
Student Loans: $30,000
Total: $95,000

• Calculate your net worth given the assets and liabilities above.
• Calculate the amount of equity in your home.

3.  Your friend Robert, an experienced web designer, approaches you about starting up a web site design business. He knows that you have many contacts in the business community and you could open many opportunities for a new company. Robert has the computer equipment valued at $10,000. You find an office space that would be perfect for the business at $500 per month or you could use the bonus room above your garage. You figure you'll need about $30,000 of start-up money to renovate the office space and have some working capital. It will take about a year to get this business going to the point where you and Robert could draw a salary.

• Describe how you would structure the partnership and who would be responsible for what.

Here are your calculations of what it will take to run your business for the first year.

Office space rent - $500/ mo. $6000
Computer equipment - $10,000
Working capital and start-up expenses - $30,000
Total - $46,000

• What would each partner contribute in terms of cash and assets?

4. After running the business for a year, you've made some money and bought some additional equipment. You're still working out of the space above your garage. Your balance sheet looks like this:

Assets:
Cash - $15,000
Accounts Receivable - $5000
Equipment - $15,000

Liabilities:
Accounts Payable - $ 2000
Bank Loan  $10,000

• Calculate the net worth of the business. 
• How much capital do you and Robert have individually in the business?

5. With the addition of new clients, you have outgrown your bonus room. With the growth of the business, you also need help managing your current accounts To grow, you need additional capital to grow. You could also use some management expertise. You both know Keisha, an experienced business manager and you think she might make a good partner. How much capital would she have to pay in to become a 33% partner in the business?

• First, you have to look at how know how much capital both you and Robert have in the business, then you can calculate the amount Keisha would have to pay in to become a partner.
• Draw up a list of responsibilities for each of the three partners. 

6. One of the key parts of a partnership is the partnership agreement.

While Keisha, and Robert are trustworthy partners, you fear that one of the partners could withdraw from the partnership and go into competition with the other two.

• Write something into the partnership agreement that will discourage this from happening.Use the following as an example:

1. Leaving partner must offer shares at  book value of the equity to the remaining partners.
2. Leaving partner cannot compete for 2 years after leaving the business.
3. Leaving partner cannot call on customers within a 500 mile radius.
4. If partner breaks the agreement, the leaving partner will owe the remaining partners 2x book value. 

Notice that the above agreement had a time clause, a distance clause, and a remedy if the agreemtn is broken. A non compete agreement. would also outline what knowlege the leaving partner would have of the business that could be used against them.

Prepare for the test!

• List the advantages and disadvantages of partnerships. Make sure you know these for the upcoming test.
• Study the additional terms in Quizlet. http://quizlet.com/_zxbiy
• Download the Quizlet app from the Android or iTunes store so you can study on the go.

So what is an entrepreneur?

Are all independent business owners entrepreneurs? If not, what's the difference? Here's an interesting article that might shed some light on the issue.

So What Is an Entrepreneur, Anyway?

 

Now, read this article about iCracked. Would you classify AJ Forsythe as an entrepreneur, opportunist, or just a business owner? 

http://www.forbes.com/sites/andrewcave/2014/11/30/how-to-compete-with-apple-in-the-iphone-and-ipad-market/

Assignment: After reading both articles write a one page paper describing your definition of an entrepreneur. Is there a difference between an entrepreneur and a small business owner? Would AJ Forsythe qualify as an entrepreneur by your definiton? Using John Abraham's BOSI method of classifying entrepreneurs, how would you classify Forsythe? Builder? Opportunist? Specialist? Innovator? Explain your answer.

 Make sure and format your paper in 12 point Times New Roman, double-spaced text. Make sure you use complete sentences in writing your paper.

Rubric:
Formatting 0-3 points
Grammar, usage and puctuation 0-3 points
Quality and completeness of your answer 0-4 points

Quizlet for Chapter 5

You'll need to start getting familiar with important terms used in chapter 5. You can start learning them by using Quizlet. I have created a set to assist you here:

http://quizlet.com/_zxbiy

Entrepreneurial DNA

Today's lesson deals with entrepreneurship. Essentially, what does it take to start your own business? Does it take a certain type of person or can anyone be an entrepreneur in their own style?

So what's it like to actually be an entrepreneur? Are there characteristics common to all of them? Red the section Characteristics of Entrepreneurs on page 112 in your text book. Watch this video and make a list of common characteristics.

Next, check out this video from Joe Abraham. Joe has a different take on what it takes to be an entrepreneur. Be prepared to discuss the BOSI method of categorizing "entrepreneurial DNA." Write down the definition of each of the BOSI categories.

So do all entrepreneurs share common characteristics or are they different as Joe Abraham proposes with his BOSI classification?

Assignment 1: Team up with a classmate. Write a short business plan on the following business opportunity.

You just learned that a local garage has a place available that would be perfect to start a weekend car washing business. Write down your answers to the following questions to create a basic business plan. Be ready to present your plan to the class. Your time is limited so work quickly.

1. Nature of the Business

How many employees should the business have?
What expertise will you need that you don't already have?

2. Goals and Objectives

What are your short and long term sales goals?
What is your anticipated revenue?
How many cars will you wash per month?

3. Marketing Plan

Who is your ideal customer?
What will you charge for various services?
How will you promote your business?
Who are your competitors and how will they respond to your entry into the market?

4. Financial Plan

How much money will you need to start the business?
What are your projected income, expenses and profit?

5. Organizational Plan

Who will work in your business and how will the jobs be organized?
What is your organizational plan?
What physical building or vehicles will you need?

Present your answers to the class.

Think... In the process of developing a business plan, did you discover differences between you and your partner or were you in total agreement?
How were you and your partner alike?
How were you different?



Assignment 2:

This time, write out your own business plan using the scenario above. You may use ideas generated with your partner but this will be your business plan. You may type it out or write it down by hand.

When you are finished. Compare notes with your partner. Answer the following questions at the end of your business plan:

• How are your business plans alike and how are they different?
• If you were to put yourself in one of the BOSI categories, which would it be? 
• If you were to put your partner in one of the categories, which would it be? 
• Do you think you would be better off having a business partner in this venture or work independently? Explain your answer. 

Write your answers on your business plan and turn it in at the end of class.

• Your assignment can be typed or hand written. If you type it, use Times New Roman, 12 point, double-spaced text.
• Make sure you use complete sentences.

Rubric:

Completeness 0-7 points
Grammar, usage and punctuation 0-3 points

Portfolio Review

It's Thanksgiving week. So now is a good time to look back on the choices we made earlier this year and give thanks for our good (or soon to be good) fortune. Earlier this year we selected 5 stocks for our portfolio. I've created spreadsheets for each class showing the stock selections for each student. For these who did not turn in portfolios, I have listed some stocks for you. Here are the spreadsheets for you to reference.

Management Class A1

Management Class A2

Assignment:

Your assignment for this class is to review the performance of each stock in your portfolio. Follow these steps carefully.

1. Create a new folder on your Google Drive called Portfolio Review. Share it with me.

2. Create a new Google Sheets file in your Portfolio Review folder. Name the file Portfolio.

3. On your Google Sheets file, list each stock ticker in your portfolio in column A. If you can't find it in your CNNMoney portfolio, you can find it listed in one of the two files above.

4. Look up the starting price of each stock using the Yahoo Finance page. Look up the price on September 2 and at the close of business day last Friday. To do this, simply click on the 3m below the stock chart and slide your cursor on the chart to September 2 and record the opening price for that date.

5. Record the starting prices in Column B and last Friday's closing prices in Column C of the Google Sheets file you've created.

6. Using a calculator or formula, calculate the increase or decrease percentage of each stock price. To do this, divide the ending stock price by the beginning. Here's an example using ConocoPhillips (COP).

73.54/81.06 =  90.7%

In this case, the stock decreased by 9.3%. Make the calculation for each stock in your portfolio. and put the number in the last column, D.

7. Next, you'll need to analyze your portfolio. Create a Google Docs file in the same folder. Name the file Analysis. Format the file with Times New Roman, 12 point, double spaced text. Analyze your portfolio by answering the following questions:

a. Which of your stock picks was the best performer, based on the spreadsheet?
b. Which was the worst performer?
c. Research your options. If you could sell any one stock and buy any one stock, which would it be? Why do you think your new pick would outperform the old? Keep in mind that past performance is no guarantee of future performance. Also, what stock might have been a poor performer may turn ut to be an outstanding performer in the future.

When you are finished, you'll have a shared folder named Portfolio Review. Inside that portfolio, you'll have the following files:

1. Google Sheets file named Portfolio with beginning, ending, and calculated increase or decrease in price.

2. Google Docs file named Analysis with your portfolio analysis. Format your paper in 12 point Times New Roman, double-spaced text.


This assignment is worth 20 points. All of your work is due at the end of the class so you'll need to stay focused in order to get this work completed.

Rubric:

Portfolio spreadsheet - 10 points
Stocks listed - 3 points
Beginning stock prices - 2 points
Ending stock prices - 2 points
Growth percentage calculations 3 points

Stock Analysis Document - 10 points
Question 1 answered - 2 points
Question 2 answered - 2 points
Question 3 answered 2 points
Grammar, usage and punctuation - 4 points
Make sure you use complete, well structured sentences.

Total points available - 20 points

Europe and the debt crisis

You thought you understood Europe as a trading bloc? You were wrong. Here's a quick overview. Make a note of the definitions of the EU, Eurozone, Shengen and EEA.

Now that you understand a little about Europe as a trading block, you're ready to understand the European debt crisis. Here's a quick explanation.

Discussion questions:

1. What is the difference between monetary and fiscal policy?

2. What caused the European debt crisis?

3. Why must Europe either seek to unify politically or get rid of the euro and go back to separate currencies?

World Trade Regulation

International trade is regulated by several organizations. Let's look at a few key organizations.

World Trade Organization - The WTO is an organization created to regulate trade and set trading rules between countries. Organized in 1996, the WTO is a forum where countries can negotiate and enforce trading rules and tariffs. You can learn more at their web site.

International Monetary Fund - The IMF was established to help countries import food and other necessary goods by providing low interest loans. Read more about the IMF here.

The World Bank - The World Bank is an institution established in 1944 under the auspices of the United Nations. It's purpose is to reduce poverty in poor nations. You can learn more about it's organization here.

Assignment: Create a study sheet with definitions of these three organizations. Make sure you know how each organization differs from the others.

What is International Trade?

Which of these facts do you find the most surprising?

 

Comparative Advantage and Product Life Cycle

There are 2 basic reasons we have trade. Comparative Advantage and Product Life Cycle Theory. You can read about both of these theories in your book on page 95. Here, I'll give you a brief overview plus a couple of videos to help you understand the concepts.

Comparative Advantage

Comparative Advantage is a basic concept of international trade. It means simply that countries should produce the good for which they are best suited to produce. Here is a good explanation from Investopedia. 

Product Life Cycle Theory

The product life cycle theory suggests that exports happen when a product hads reached the maturity stage of development within a home market. Once the market has been saturated, the product wil then begin growth overseas. Here's a short video explaining the different stages of a product life cycle.

So which of these theories do you think works best. Could you think of a sample of each?

The truth about inversions.

Recently, CNBCs Rick Santelli interviewed the CEO of Abbot Labs about corporate inversions. His explanation of the issues is fascinating.


http://bizappshhs.blogspot.com/2014/11/making-impact-with-graphics.html

Federal Government vs International Business

This past September, Burger King purchased a Canadian restaurant chain, Tim Horton's, and proceeded to move their corporate headquarters to Canada. Why move? The simple answer is to escape high US taxes on corporate profits. Such merger deals, called inversions, have been a hotly debated issue in Washington. Here's a quick video explaining the issue.

 Some lawmakers say that taxes should be lowered on corporate profits to encourage companies to re-invest and stay in the United States. Others believe that the United States should increase restrictions on the ability of companies to move profits off shore.

You can read more about what inversions are at this Investopedia site.

This article from Bloomberg Business News outlines the Burger King deal and gives a pretty interesting overview of the struggle in Washington to deal with inversions.

Another issue closely related to inversions is the issue of "earnings stripping." This involves declaring dividends in a foreigns nation in order to reduce the taxable income of US corporations.

Think: Most countries tax businesses based on the earnings made within their own boarders whereas the United States taxes corporations based on the earnings from their entire worldwide operations. Should the United States change it's tax policy to emulate that of the rest of the international community?

The US has the highest tax rate of any industrialized nation (35%). Companies currently are holding over two trillion dollars in overseas accounts because they don't want to bring the money back and pay taxes on it. Should the US lower its tax rate to encourage investment here at home?

Are US companies being unpatriotic for wanting to avoid paying taxes or are they just acting in their own (and their shareholders) best interests?

Assignment: Write a one page Google Docs paper titled Tax Inversion. Format your paper in 12 point Times New Roman, double-spaced text. Answer the questions above. Share your paper by the end of class. Your paper will be graded based on the following:

• Grammar usage and punctuation 0-3 points
• Formatting 0-3 points
• Quality and completeness of your answer 0-4 points

Total available points 10

Cub Cadet

In May of 2009, MTD Products closed the Cub Cadet manufacturing facility in Brownsville. The closing of the plant resulted in the loss of 200 full-time jobs and 280 part-time jobs. It was a huge blow to the local economy.

The big question left behind was, why did this happen? First, it might be useful to understand a bit of the history of the Cub Cadet company. You can read a bit about the history of Cub Cadet here. Cub Cadet was eventually bought by Yanmar, a Japanese company. You can read a bit about the company here. Yanmar also has a Wikipedia page which provides some useful background information.

What happened to Cub Cadet and Brownsville is just a small part of a bigger picture. To understand whats happening with the local economy, you need to understand globalization.

Discuss the following questions in class:

1. What changes in American society encouraged International Harvester to get into the lawn tractor business?

2. What was the primary selling point for the Cub Cadet brand?

3. Why do you think Yanmar would be interested in getting into the lawn tractor business in the US? What additional information would you like to know?


Assignment: Write a paper in Google Docs titled "Cub Cadet." Answer the questions above in a paper formatted to 12 point double-spaced, Time New Roman. Put your name and page number in the header of the paper. Your paper will be graded using the following rubric:

Formatting: 1-3 points
Spelling and Grammar: 1-3 points
Completeness of answers: 1 point per question. (4 points total)

Maximum points: 10

NAFTA

Twenty years ago, President Clinton signed the North American Free Trade Agreement (NAFTA) into law. The law reduced tariffs on good imported and exported among Canada, Mexico and the United States. The hope was that by reducing tariffs, new markets would open up for American products to be exported. Looking back, the effects of NAFTA have been mixed. Read the following article on the growth of the automobile industry in Mexico. Also, read this article on the results of NAFTA. For a good overview of the pros and cons of NAFTA, read this article on Investopedia.

Discuss: After reviewing the materials, what do you think of NAFTA? Do you think it was a good idea or bad? What have been some of the good results and what are the bad? How has NAFTA changed the types of jobs that are available to American workers?

Assignment: Type a one page paper formatted with double-spaced, 12 point, Times New Roman. Name your paper NAFTA. Explain why you think NAFTA was a good idea or bad. Will NAFTA result in a net benefit for the United States? Use evidence from the materials you were provided.

Rubric:

Formatting: 0-3 points
Spelling and grammar 0-3 points
Content and quality of your answer 0-4 points

Total 10 points

The Fed

The Federal Reserve, otherwise referred to as "The Fed," is the arm of the government charged with maintaining the health of the economy. In order to operate a business, it is essential to have a basic understanding of how the Federal Reserve functions and how it influences the economy. Here are some resources you can use to learn more about The Fed.

You can find a quick tutorial at Investopedia.

The Federal Reserve Band of St Louis has a video you can watch here:

For a more humorous look at The Fed, check this out...

For a more technical explanation of open market operations, watch this:

Assignment:

After reviewing the materials above, write a paper answering the following questions:

1. What is the goal of monetary policy?

2. What are the three primary "tools' the Federal Reserve uses to control monetary policy?

3. Under what conditions would the Fed raise interest rates? What key indicators would the Fed look at when making this decision?

Title your paper "The Federal Reserve." Format you paper in 12 point Times New Roman, double spaced text. Submit your paper by the end of class. Answer the questions thoroughly using compete sentences. Your paper will be graded on the following scale:

Grammar, usage and punctuation 0-3 points
Formatting 0-3 points
Completeness of your answers 0-4 points

Total points 10

Math and Writing

Take your math and writing seriously. You'll need those skills when you go to college. Read this...

http://memphis.edu/admissions/math_writing.php

What is a Recession?

Think about the following questions: What are some things that can cause recession? What actions can governments take to help economies recover from recessions? What role does fear play in creating a recession? Are you confident or fearful of your future right now?

Here's a quick overview of the business cycle:

Assignment: Is the US economy growing or shrinking? Locate 3 articles on the Internet to find your answer. Analyze each article and write a brief summary. List your three URLs at the end of your paper. Write your paper in Google Docs, title it Economic Growth, and share it on your Google Drive. Use Times New Roman, 12 point, double-spaced format.Your paper is due at the end of class.

Discuss: Review the Fear and Greed index. What happens to stocks when investors are afraid? Last week, the fear index hit a rating of 5 which is "extreme fear." What do you think is driving investor fear despite a season of good earnings reports?

The Consumer Price Index - Investopedia

You can find additional information on the US Government's Bureau of Labor Statistics CPI FAQ here.

http://www.bls.gov/cpi/cpifaq.htm

Inflation

Now, to measure the prices of what the typical American pays for goods and services, we turn to the Consumer Price Index. Here's a brief explanation.

Promoting Economic Growth

Measuring the growth of anything begins with knowing it's size. Here's a quick recap of the concept of Gross Domestic Product (GDP).

Law of Supply

The video above will help you understand the Law of Supply. But what happens to products that people really need but can't afford such as drugs or healthcare. Should the government impose price controls to limit the prices drug companies can charge?

Read this article from the Cato Institute. What happens to supply when prices are set artificially low?

http://www.cato.org/publications/commentary/problems-price-controls

Read this September 23, 2014 article from the Wall Street Journal:

NEW DELHI—The Indian government Monday reduced the ability of the country's drug-pricing regulator to set prices on some drugs after pharmaceutical companies complained that a surprise round of pricing caps earlier this year was hurting the industry.
The National Pharmaceutical Pricing Authority is allowed to set the prices of what are deemed "essential medicines," which means the drugs that are most used by the general populace. The authority also had the right to set a ceiling price on other medicines in "extraordinary circumstances" if it was in the public's interest.
As of Monday, the pricing authority's ability to expand its control of prices in extraordinary circumstances was withdrawn. It is now only allowed to set prices on the hundreds of medicines that are on the essential list.
In July the pricing agency capped prices for more than 100 diabetes and cardiovascular medicines that weren't considered essential by the government, a move that surprised pharmaceutical companies and investors.
Shares of France's Sanofi SA (SAN.FR -1.79%) 's Indian subsidiary plunged 10% July 14 on news of the price controls. The company was one of the worst-hit by the caps as it is one of the largest sellers of diabetes and heart medicines in India, analysts said. At the time Shailesh Ayyangar, head of the French drug maker's India operations said that the company was "shocked and disappointed" by the price cuts.
On Tuesday, shares of Sanofi India Ltd. (500674.BY -1.00%) were up more than 12%.
The latest order—which was posted on National Pharmaceutical Pricing Authority's website Tuesday—removes the authority's extraordinary price-capping powers, but doesn't reverse the July price caps, said Dilip Shah, head of the Indian Pharmaceutical Alliance, a trade group.
After the July caps industry analysts and executives warned that attempts to control the price of too many drugs in India could hobble the industry and even hurt consumers in the long run as smaller pharmaceutical companies go out of business. Forcing global pharmaceutical companies to sell their popular products at rock-bottom prices might leave little business for India's generic drug companies.

"Several companies have started withdrawing their products that are under price control which means availability is going down," said Mr. Shah.
For example, after the government capped the price of antibiotic Augmentin, many generic companies stopped making it and the inventor of the drug, GlaxoSmithKline (GSK.LN -1.88%) PLC, saw its market share shoot up, said Mr. Shah.
"If GSK's product is available at the same price as generics, why would doctors not prescribe GSK's product?" he said.


Assignment: After reading the articles, answer the following questions. If price controls fail to bring costs down, why do government policy makers continue to use them? What happened in India when price controls were enforced? Re-read the Cato article. How could free-market forces be used to lower drug prices? Write your answers down in a handwritten paper or e-mail and turn it in for your daily grade.

The Law of Demand

The video above is a basic explanation of the law of demand. If you lower the price of something, demand will go up. For a more practical illustration of this. See the video below.

When price goes down, supply generally decreases, so a limited number of products are made available but demand is high. So what happens when demand out-strips supply? A shortage ensues. The greater the shortage, the higher the anxiety.

Private Property

The establishment of law to protect private property is fundamental to a country's growth. Without clear lines of property ownership, businesses cannot invest in capital goods and governments cannot invest in infrastructure. Read the following article on Haiti. Discuss the follow questions:

1. Why is it difficult to establish clear title to real estate in Haiti?

2. How do private property laws influence Haiti's ability to attract businesses?

Why Haiti Must Address Its Policies on Private Land Ownership 

Read this story about a proposed Russian Law.

Assignment: Write an analysis (hand written or e-mail) answering the following questions:

1. What does the law propose to do?

2. What is the motivation behind the proposed law?

3. How would the law affect current and future foreign investment in Russia? 

Nationalization vs Privatization

Nationalization takes place when a government takes over a privately held asset. When countries fall into communist hands, companies have no choice but to leave a country and turn over their assets to government officials.

Privatization often takes place in capitalist countries but not always. Privatization takes place when a government held asset is sold to a private company or individuals.

Sometimes, governments own monopoly companies which exploit natural resources owned by a country such as natural gas, oil or minerals. Governments also create government managed companies to operate utilities or serve a vital national interest.

Read this article concerning Pemex, a government run oil company in Mexico.Pemex has held a monopoly on oil drilling and exploration in Mexico. Recently, the Mexican government has opened up the country to oil exploration and drilling by private firms. Why do you think they are ding this? Do you think privatizing the oil industry would be a good idea?

Some have advocated privatizing healthcare in the United States. Read the following article. What do you believe is the strongest argument for universal healthcare? What is the strongest argument against it? Do you think it would be a good idea or not?

Assignment: After reading both articles above, write a typed or handwritten paper to answer the questions. Turn your paper in at the end of class.

Capital Formation

Read the section on capital formation on page 55 of your textbook.

Watch the following 2 videos to get an understanding of capital investment. First, learn what a Production Possibilities Frontier is.

Next, how can companies grow through capital investment?

Read this article by Peter Thiel, co-founder of Paypal.

Discuss: Why does he think that businesses have not invested in capital goods? Why do companies buy back stock? What is the downside of this practice?

Read the following article concerning stock buy backs. 

Assignment: After reading the above article, write a paper answering the following questions:
1. What are the benefits of a stock buyback?
2. Does a buyback indicate that a company is healthy or is it an indication that a company has run out of ideas? Explain your answer.

Your paper may be hand written or typed. Either way, submit your paper by the end of class.

Chapter 3 games

Use these games to review concepts from chapter 3.

Utility

Utility is the ability of a good or service to satisfy a want. Watch this episode of Shark Tank. Can you identify the utility of the products that are being proposed?

Assignment:

Take handwritten notes on the utility of each product proposed. Some of these are pretty straightforward but one is a but tricky. Turn your notes in at the end of class for your participation grade today.

25 Trends

USA Today outlined 25 trends that would shape the United States. Some of these trends we have discussed and others we have not. Read over this list and note which ones we have discussed and which ones we have not. Note which trends you think will be the most important over the next decade. How will businesses need to respond in terms of managing their employees and meeting their customers' needs?

http://usatoday30.usatoday.com/news/top25-trends.htm

Assignment: Select your top three. For each topic, write down how businesses will need to change in dealing with employees and customers in the coming years. Be ready to discuss these in class.

Closng the gender pay gap

Discuss: Why do you believe the gender pay gap persists? Is it because women choose to leave the work force or is it due to discrimination ofr some combination of the two? What could or should be done to correct this problem?

The shrinking middle class

Last December, the President called income inequality the "defining challenge of our time."

Read the following articles:

http://www.huffingtonpost.com/2013/12/04/obama-income-inequality_n_4384843.html

http://www.nytimes.com/2014/02/03/business/the-middle-class-is-steadily-eroding-just-ask-the-business-world.html 

http://www.forbes.com/sites/joelkotkin/2014/01/30/blue-collar-hot-spots-the-cities-creating-the-most-high-paying-working-class-jobs/

...and this video from Richard Wilkinson.

Assignment:

Discuss: What is income inequality? What causes it? Why would the President elevate it to a "defining issue"? Should we really be that concerned with inequality? What happens to countries with extreme income inequality? Is there anything we can do to lessen inequality in our nation?

Write:  After thinking about the causes of income inequality, write a paper explaining why income inequality might be a problem.  Provide at least 3 ways income inequality could be lessened through public policy. You may use any of the three resources provided. Place it on your Google Drive and share it with me at the end of class. You paper will be graded on grammar, spelling and content.

Quotable

"It is not that I'm so smart. But I stay with the questions much longer."

-Albert Einstein

Understanding the Labor Force

Read the section on the Labor Force in your text book beginning on page 31 and ending on page 35. Note the difference in the terms "labor force" and "labor participation rate."

Read the following article:

http://www.bloomberg.com/news/2014-05-02/workforce-participation-at-36-year-low-even-as-more-jobs-beckon.html

Assignment: Write a paper answering the following questions:

1. How does the labor participation rate affect the unemployment rate? Does the unemployment rate really reflect the number of people out of work? How?

2. Why do you believe the size of the workforce is decreasing? Cite evidence from the article or your textbook for your answer.

3. Why do you believe people are delaying entering the workforce? Read the following article:

http://www.usatoday.com/story/news/nation/2013/10/31/more-than-a-college-degree/3324303/

Do you believe that education plays a role in people delaying entering the workforce? Why or why not?

4. Think of yourself as a unique set of skills, what skills will you have when you enter the work force? What skills have you already attained? What level of education (College degree, technical certification, etc.) will you need to land the job you want?

5. How could high schools change their curriculum to better prepare students for the workforce? How could students be encouraged to work harder in school?

Title your paper Labor Force. After writing your paper, share it with me on your Google Drive. Your paper is due at the end of class. See me if you have questions.

A poplulation on the move.

Your textbook points out the the US population is quite mobile. In fact, Americans are more than twice as likely to move as people from Canada or Europe.

Read "Moving Population" in your textbook (p.31). Note, what percentage of Americans move every year?
 
Specifically, the population is generally moving from the Rust Belt and Frost Belt to the Sun Belt. Companies often move their operations south for a number of reasons including the following:

• Lower labor costs
• Lower cost of living
• More advantageous labor laws

Gross migration, the percentage of people moving in any given year peaked around 3% in 1991 has fallen to about 1.5% today. Note the difference between Gross and Net migration in the chart below.

Think: Given what you know about other changes in society (ie immigration, aging baby boomers, technological, cultural changes, etc.), what do you think could explain the decline in the number of people who move from state to state?

Read this article. What does the author think could be the cause of the decrease in mobility?

Note the two reasons that the authors give for the decrease in mobility. Do you think these reasons are valid?

This article offers another reason. What is it?

Discuss: Would you travel to another state to live? Why or why not? Why might someone move to West Tennessee? Why might a business relocate to West Tennessee?

The Changing US Job Market

The US job market is changing. Learn about the latest changes here:

http://money.cnn.com/video/news/economy/2014/08/29/5-surprising-labor-market-facts-labor-day.cnnmoney/

And here...

http://youtu.be/vUCotgXCJws?list=PLsmO3ylbLc5I41xgF2OqSPbRnib253DAP

The Challenge of the Baby Bust

Read pages 29-31 of your textbook.  Your textbook states that "people are a firm's most important resource."

Think: Why do you think managers would rank this aspect of business higher than finance, marketing, technology, or product innovation?

How is the population of the United States changing? Read about the Baby Bust here.

Analyze: Why would a falling birth rate in the United States be a problem? How is the demographic makeup of the nation changing?

Assignment: Read the article carefully and write a one page paper answering the following questions:

1. What are some of the causes of the Baby Bust? How is the population of the United States continuing to grow despite the decrease in family size?

2. What are the effects of a low fertility rate and immigration on the business community? What will be the changes in demand for goods and services in the future? How will business need to change and adapt to the changing population?

3. How will the changing population affect public policy in the coming years? What (if anything) d you believe government do to fix this problem?

Provide evidence from the article for your answers! Title your paper Baby Bust and place it in a folder titled Human Resources. This paper is due at the end of class and is worth 10 points.

Presentation

Thinking on your feet and doing presentations are a part of life in business. Now that you have your stock portfolio built, it's time to do some explaining.

 In today's class you'll need to justify each of your picks before the class in a short presentation. Use your previous work to explain what a good stock portfolio is and how you used these principles to build your portfolio. Demonstrate your analytical skills by telling the class why you believe your picks will grow in value. Be prepared for questions from the audience! Your conference shouldn't take more than 10 minutes.

Good luck!

Sector Analysis

Building a stock portfolio involves more than just picking a bunch of random stocks of companies that you might like. It involves analyzing industries or "sectors." These are simply companies which are involved in the same type of business. The major sectors include the following 9 sectors:

1. Technology (XLK)

2. Industrials (XLI)

3. Consumer Discretionary (XLY)

4. Materials (XLB)

5. Energy (XLE)

6. Consumer Staples (XLP)

7. Health Care (XLV)

8. Utilities (XLU)

9. Financial (XLF)

Now you need to do a little research on each sector. You'll want to make sure that you don't own an more than one stock in each sector. So you'll want to own the most profitable sectors and the best company in the best sector.

Read about the Five Competitive Forces that affect each industry.

Research the following six sectors using the following resources:

Oil and Gas
Retail
Healthcare/ Biotech
Technology / Internet 
Industrials
Entertainment


Assignment:

Write an analysis of each industry using the five competitive forces model.

Work with one other classmate to research and write this paper. You must write 2-3 sentences summarizing all five points of the sector. Submit an industry analysis by creating an analysis paper in your Portfolio Project folder. Name your file by the Industry Title, and the last names of you and your classmate. Turn in by the end of class.

Business news this week...

http://fortune.com/retail/dollar-housing-five-things/

CNBC's Mad Money

DECA

If you are interested in DECA, we'll be having an organizational meeting on Monday in Ms. Davis' room.

Creating a stock portfolio

Now that you understand a little about stocks, it's not time to put together a portfolio. Research five stocks that you'd like to invest in using Yahoo Finance or any other resource you like. Open an account on the Money.CNN web site. Select 5 stocks and "invest" a total of $1000 in your portfolio. Allocate no more than $200 per stock. 

Now, how do I pick stocks? Here's a quick primer from the Money.CNN web site. Note the growth rate of the stock as well as the PE ratio. This will tell you whether a stock is overpriced or  bargain.

Read these links on building a portfolio.

Jim Cramer
Money.CNN.com


Assignment:

Create and share a folder on your Google Drive called Stock Portfolio Project. Create a Google Doc called Five Elements. List the elements of a good stock portfolio. Write 2-3 sentences explaining each element in your own words. Submit it by the end of class for credit.

Test Link

Here is the link to your test answer sheet. You'll be provided a question sheet when you arrive. There are 4 versions of the test and each version has different questions. Please put your test letter (A, B, C, or D) in the appropriate space on the form. Good luck!

https://docs.google.com/forms/d/1z7XMQJs_vSRBzvfR5_XtB8lqqIqQ2I0axAUpXl6tTQI/viewform?usp=send_form

Failure

Today, we're going to talk about something that everyone has experienced which is almost always unpleasant to think about, failure. Think back to something you attempted to do and failed. It may have been a sporting event, a test, a skill such as playing an instrument or or a sport. If you have ever attempted anything challenging, you will have failed at some point.

Think: How did the experience of failing influence you. How did you respond? Did you give up or did you try again? Did failure cause you to change how you worked on the problem or did failure teach you to just work harder in the same manner?

Listen to this presentation by Shark Tank star Barbara Corcoran.

Discuss: How did Corcoran handle failure? What is the connection between innovation and failure? How did her company create intrapreneurs?

Currently, one out of four businesses fail within the first three years.The top causes are listed on page 19. These include:

1. Economic Causes: Industry weakness, low profits, and low sales
2. Finance Causes: Heavy expenses,and business debts
3. Disaster and Fraud: Hurricanes, flood and employee theft
4. Neglect: Business conflicts, family problems, and poor work habits
5. Strategy Causes: Over-expansion and difficulty collecting debts
6. Experience Causes: Inadequate planning and inexperience.

Think: Which of these can be controlled by business owners and which cannot? How can entrepreneurs use this information to prepare for the future?

Assignment:

Write: Create an e-mail (manersj@k12tn.net) titled "Failure" and list causes of failure, numbered one through six. Write a sentence or two below each item in the list summing up what you believe business owners could do to prepare for these potential problems. Write in complete sentences with correct grammar. The exercise is worth 10 points. You'll be graded on completeness, insight and grammar.

This e-mail must arrive at my in-box before the end of class!

Google Drive

This is a quick video showing the features of the new Google Drive. You can get tips on how to use drive on multiple platforms.

GDP and Illegal Activities

Recently, two European countries moved to recognize illegal activities as a part of their GDP. Should governments recognize underground economic activity? What are the arguments both for and against?

Gross National Happiness?

Does Bhutan have a point? Is there more to a country's wealth than GDP?


Assignment:
Imagine that you are a business leader in your community. Think of what you could do to promote individual well-being besides providing job opportunities. What are some ways businesses could contribute to happiness in your community? Write down your thoughts in a business letter and send it as an attachment to your instructor.

Also, consider mailing a letter to your local chamber of commerce.

Innovation

In 2005 Steve Jobs gave one of the most memorable commencement speeches in recent memory at Standford University. Listen for what he has to say about innovation and what it takes to be an innovator.

Discussion Questions:

What innovations did Jobs incorporate into the Macintosh as a result of his experiences at college?

How do you think innovation happens?

What aspect of Jobs personality do you think led to his success? What is the only way to do "great work"? How does "connecting the dots" work?

Compare effectiveness to efficiency.

Companies are successful for two reasons, either they are effective (they do the right things) or they are efficient (they are run efficiently) or both. Compare the stock performance of McDonalds (MCD) to Chipotle (CMG). Both companies are very efficient. Which company do you believe is more effective? Why?


Read this about Chipotle's appeal to customers.

Commercial, Industrial, and Servce Businesses

You deal with businesses every day. Business provides most of the products and services that our economy needs in order to function. Here is a list of some stock tickers of companies you might be familiar with. Some, you might not find as familiar.

MCD, DIS, WAG, APA, CBS, BA, XOM, F, GM, CVS, WM, WMT, AEO, NKE, TGT, LOW, BBY, KSS, SBUX, DRI, AAP, AZO, ORLY, T, KO, HD, TWTR, HD, FB, APPL, MSFT, GOOG, AMZN

You'll draw one of these at random and look up the following using Yahoo Finance.

Company Name
Stock Price
Dividend and Yeild %
52 Week Range
Market Cap
P/E Ratio
Earnings Date
Is the business classified as industrial, commercial or service?

Also, locate and read 3 articles on the company and it's current challenges and opportunities. List the three URLs. Do you think this stock would be a good investment?

Keep in mind that 3 things have to happen for a stock to significantly rise:

1. It has to make money.
2. It has to beat the earnings estimate.
3. Future projections have to be readjusted higher.

Put all of this in an e-mail and send it to me by midnight tomorrow night.

Work day!

We had a lot of students changing schedules last week. As a consequence, many of you missed assignments. To give you an opportunity to get your assignments turned in, I'm going to give you some extra time to work. We'll have a shortened class on Monday. When you come in, pick up a textbook and read section 1.1. Here are some terms that you'll need to understand for the test. (I did mention that you'd be tested didn't I?). Create a study sheet by looking up the definitions in the glossary of the textbook.

Balance Sheet - Know the elements of a balance sheet and how it's set up
Income Statement - Know the elements of an income statement and how it's set up

Know where to find each of these on an Income Statement or Balance Sheet:
Assets
Liabilities
Equity
Revenue (Sales)
Expenses

Industrial Business
Commercial Business
Industry
Business

*Profit - Revenue-Expenses
*Book Value - Total Assets - Total Liabilities = Book Value
*Earnings Per Share - Yearly Earnings - Dividends / Total Shares of Stock
*Market Capitalization - Value of each share of stock x total number of shares


(*- Know how to calculate these items)