Economic Sanctions– It’s a Paradox: Cost Business Billions of Dollars, People Suffer, Rarely Successful; Misguided, Defies Reality.

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What are economic sanctions? Whom are they deployed against? Do they work? For more than two millennia, countries have been attempting to influence one another’s behavior by imposing economic sanctions, and in most cases they have failed… U.S. and other countries uses sanctions in an effort to dissuade nations from taking undesirable actions, e.g.; supporting terrorism, proliferating weapons of mass destruction, violating human rights, trafficking in drugs, despoiling the environment, failure to adequately protect sea turtles… Economic sanctions are a form of punishment that one or more countries impose on another country (or other entities) with the purpose of changing behavior… According to Kim Elliott, Jeffrey Schott, and Gary Hufbauer; when examining 35 U.S. sanctions programs since 1973, the study estimates they have succeeded 23% of the time…

Hence most often, the reality of economic sanctions is that the only change that occurs is– the sanctioning country’s loss of business, and much suffering in the population of the sanctioned country, e.g.; in the case of Cuba the U.S. unilateral sanctions have failed: Castros remain in power and the Cuban government continues to pursue its particularly-thuggish form of authoritarian communism… and according to the ‘U.S.-Cuba Trade and Economic Council'; approximately 4,500 companies from over 100 countries import to, export from, provide services to, or have investments within Cuba… The Cuban regime trades with almost everyone (e.g.; China, Canada, Europe, Brazil, Russia… for about $20 billion per year), and the suffering endured by the Cuban people. (Consider over 40 years of U.S. sanctions on Cuba, and the billions of dollars lost by U.S. business and the untold human suffering)… Then to argue that the economic sanctions somehow isolates these rogue regimes and change behavior, simply defies reality…

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Although there is little consensus among scholars and policy-makers on the use of the economic sanctions; It’s clear that economic sanctions do have a serious impact on business, i.e.; lost business revenues, and business compliance with sanctions… hence, as companies expand across global borders they must tread carefully in the area of economic sanctions… Failure to comply with sanctions programs can have serious legal, financial implications… In the U.S. alone penalties for individuals may include; criminal fines up to US$5 million and imprisonment up to 30 years and/or civil fines of US$1.1 million for each violation. A company may also be penalized for its employee’s actions with fines up to US$10 million… Sanctions have become defining feature in response to geopolitical rogue issues that are implemented primarily by developed countries, e.g.; U.S., Europe… The assumption is by demonizing, penalizing countries or persons– they change behavior, and become good world citizens… Critics say– sanctions are often poorly conceived and rarely successful in changing behavior… Supporters say– sanctions are an effective and essential foreign policy tool…

In the article Effectiveness and Ethics of Economic Sanctions by Marcus Boomen writes: Economic sanctions are an important feature of the modern economic, political, social landscape, lauded as the humanitarian alternative to war… They are implemented with stated intention of altering a target entity’s behavior so as to conform with international ethical norms. But analysis of the effectiveness and ethics of economic sanctions reveals they are a resounding failure… Hence, a Question: Why are sanctions used so frequently? Answer: Sanctions serve as a symbolic function; they signal to the target and world; what is, and is not, acceptable ethical behavior… but as perceived by the sanctioning nation(s)…

Economic sanctions are a country’s foreign policy tool, which have been used frequently for the last 20 years as a humane alternative to war. But, despite their prevalent use they have conclusively failed in stated purpose. Sanctions almost never succeed in stopping the unethical behavior of a target, particularly when enacted over long periods of time or through unilateral actions. Sanctions are not cost-free from an ethical perspective; comprehensive sanctions can cause great pain and suffering to innocent and weak in sanctioned country’s population… Although, in some cases, sanctions have mitigated the worst impacts on civilians; they still carry costs that are difficult to justify when weighed against their comparatively miserable efficacy. The only way economic sanctions make sense is when they are viewed as symbolic against unacceptable behavior; then arguably there is place for sanctions as means to shape public opinions and international norms…

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In the article Costs and Benefits of Economic Sanctions by Kimberly Ann Elliott writes: Since 1970, unilateral U.S. sanctions have achieved foreign policy goals in only 13% of the cases where they were imposed, and the negative effects that these repeated failures have on U.S. credibility… Research suggests that U.S. economic sanctions are costing U.S. $15 billion to $19 billion annually in potential exports. This translates to 200,000 or more jobs lost in the highly profitable export sector… While ‘benefits’ of sanctions are elusive, ‘costs’ often are not: Sanctions penalize many businesses in exporting trade, which are among the most sophisticated and productive in the economy…

As sanctions have expanded and proliferated, they have also led to increasing tensions between Western allies, as well as, trading partners around the world… Indeed, many business people claim that the effects of even limited unilateral sanctions go well beyond target sectors, and the effects linger long after they are lifted… firms from sanctioning countries come to be regarded as ‘unreliable suppliers’. Hence sanctioned countries may avoid buying from some exporters even when sanctions are not in place, thus giving firms in other countries a competitive advantage in those markets… Also, foreign firms may also design goods and technology out of their final products for fear of one day being caught-up in a sanction episode…

In the article Doing Business With The Enemy by William V. Hearnburg, Jr. writes: Most people are unaware that U. S. aggressively enforces a broad range of economic sanctions against over 10 countries, and more than 3,500 organizations and individuals. These sanctions prohibit individuals and companies from conducting any type of business with the targeted entities and subject violators to heavy civil and criminal penalties. Because of the sheer number of targeted entities, and the fact that connections among individuals, organizations and foreign governments may be shadowy and ill-defined, it’s very easy to do business with the enemy unknowingly and violate the law unwittingly…

Punishment for violations of sanctions can be severe: Civil fines range from $11,000 to $1 million for each violation. Civil fines may be imposed even if violation was committed unknowingly and with innocent intent. The majority of the fines imposed are most likely the result of corporations simply failing to recognize trade transactions involving a target country… Additionally, criminal penalties may be levied for willful violations and include fines from $50,000 to $10 million and imprisonment from 10 to 30 years. While sanctions may be an effective tool for the implementation of U.S. foreign policy, and a weapon in the war on terror, they can also be a trap for uninformed: it’s vitally important that business people, corporations take steps to ensure that they are not unknowingly doing business with the enemy…

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It’s a paradox of policymaking that economic sanctions are so often imposed in the pursuit of foreign policy objectives with so little apparent success… According to Joseph G. Gavin III; to better understand this paradox it’s useful to reexamine common perceptions of economic sanctions… the chief purpose of economic sanctions is to send signals and not, as is commonly perceived to exert economic leverage… A corollary is that pressures to impose economic sanctions are likely to endure despite the paucity of tangible results… Hence it’s important that policymakers recalculate balance of likely short-term gains against the harmful long-term effects of such policies on the competitiveness of U.S. business…

However sanctions will continue to be popular, and business interests are a secondary consideration, because economic issues cannot compete with government policy issues, at least in the short-term… Hence, for the business community to make progress in defended its position; it must refine its arguments beyond the simplistic ‘sanctions will not work’ arguments, and argue for a more convincing ‘cost-benefit’ approach… Business must document, as much as possible, the economic costs that fall on specific– industry sectors, markets, companies… the damage done to U.S. competitiveness, reputation, profitability… It’s time to move debate beyond whether sanctions work in traditional sense, to more realistically balance between; long-and short-term costs of sanctions… in order to achieve better awareness, balance of the collective interests of the nation in avoiding– frivolous, misguided, counter-productive applications of economic sanctions.

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  • According to Suzanne Nossel; isolating bad actors is mainstay of U.S. foreign policy; but it hasn’t worked… and in an increasingly connected global world, it’s less and less likely to make a difference…
  • According to Henry A. Kissinger; mandated sanctions are threatening to place U.S. policy in a straitjacket. Some 73 nations and over half the world’s population are subject to U.S. sanctions; fewer allies are following the U.S. lead…
  • According to Madeleine K. Albright; something must be done about proliferation of sanctions… Sanctions that have– no flexibility, no waiver authority are just blunt instruments; diplomacy requires some finesse…
  • According to Senator Richard Lugar; unilateral economic sanctions rarely succeed in altering the behavior of a country or countries against whom they are aimed; they do not always serve U.S. interests and may, in fact, inflict more harm on U.S. than on the target country…
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Thievery in Workplaces– Trillion Dollar Industry: Honesty in Deep Decline– Business Theft Becoming Epidemic…

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Theft in workplaces is epidemic and it’s devastating to business… According to Annual Retail Theft Survey: U.S. retailers stand to lose an average of 1.3% of sales through shrinkage, which translates to $54 billion per year (shrinkage is the loss of inventory attributed to factors, including; employee theft, shoplifting, administrative error, vendor fraud, damage goods, cashier errors…) Employee theft is the largest area of retail loss accounting for 37% of total shrinkage…  Shrinkage rates varies by retail segment, from a high of 1.8% of sales for small-format specialty retailers, down to 0.9% for large-format specialty, hospitality, leisure retailers… Theft of inventory (37%) and theft of cash (20%) are the largest internal employees-related areas of retail loss. The second biggest factor of store loss is administrative or bookkeeping errors at 23%, and shoplifting came in at fourth place at 13%…

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According to another study; U.S. retailers lose $45 billion annually to retail theft, and shoplifting alone accounts for $10 billion in losses… One-of-every 38 employees was apprehended for theft in 2014… Within just 25 large retailers; over 1.2 million shoplifters and dishonest employees were apprehended in 2014… Another survey estimated that the typical organization loses 5% of revenues each year to fraud, and if applied to the 2013 estimated Gross World Product, this translates to a potential projected global fraud loss of nearly $3.7 trillion… According to U. S. Chamber of Commerce; 75% of employees steal from workplaces and most do it repeatedly… Security experts say that as many as 30% of the average company’s employees steal, and another 60% will steal if given a motive and opportunity… Some estimates indicate that more than $600 billion is stolen annually, or roughly $4,500/employee. According to Security Magazine; employees theft statistics are showing an upward trend… According to Federal Bureau of Investigations (FBI) report; employees theft is the fastest growing crime in U.S

According to Jason Rueger; U.S. businesses lost around $40 billion in 2013 to retail theft, which is more than 1.3% of overall retail sales, making retail theft one of the biggest problems facing business retailers today… there are 4 main reasons, namely:

  • Customers: Shoplifting accounts for around 34% of retail loss in the U. S. Items are taken for personal use or resale, e.g.; health and beauty items, apparel, electronics… are products most vulnerable to this kind of theft…
  • Employees: Employees theft is almost as damaging as shoplifting, accounting for around 32% of retail loss in the U. S. There are various reasons that employees steal, e.g.; some give friends a deal (i.e., sweet hearting), others are dissatisfied with their employers/bosses, some simply steal because they want extra cash…
  • Suppliers/Contractors: Store suppliers/contractors are another source of theft, accounting for around 8% of retail loss. Business with more informal/less-organized contracts are especially susceptible to this kind of theft. Suppliers might overcharge, or charge for services never actually provided…
  • Management: Management and admin errors account for around 26% of retail loss, e.g.; mismanagement of inventory (i.e., orders too much product, orders the wrong products…), pricing items incorrectly…

In the article U.S. Retail Workers are No. 1 in Employee Theft by Anne Fisher writes: Light-fingered employees cost U.S. retail stores (and consumers) more than shoplifters do… According to Ernie Deyle; the four months from October through January are when stores see not just their biggest sales volume of the year, but also the most returns and exchanges, and unfortunately the same four months account for about half of all annual shrinkage… That shrinkage is made-up of missing goods from shoplifting, other causes… costs U.S. retailers about $42 billion a year, according to the latest ‘Global Retail Theft Barometer': Shoppers pay the price for such theft and cost of mysteriously vanishing merchandise comes to $403 annually per U.S. household. Of course, retailers everywhere deal with shrinkage but there is one big difference between U.S. and rest of the world: Globally dishonest employees are about 28% of inventory losses, while shoplifters account for a markedly higher 39%… But not so in U.S., where employees theft is much higher and accounts for 43% of lost revenue… Are U.S. workers bigger thieves?

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Some stores get ripped-off more than others, e.g.; discounters– experience higher rates of employees theft than home improvement stores or supermarkets… Moreover, rather than simply walking-off with merchandize or pocket cash, most workers who steal do so in subtler ways, e.g.; usually it happens during checkout, when an associate manipulates a transaction to benefit themselves or someone else… or, employees might enter refunds, discounts, voided transactions into a cash register… or, they can also cancel transactions, modify prices, or say someone used a coupon when they didn’t… The interesting question, of course, is not so much, ‘how’ but ‘why’ do employees steal… Some reasons, include; hiring wrong employees, or lack of employee supervision, or easy sale of stolen items…  Others see it as cultural differences, e.g.; internationally there is more of an unwritten code that says; it’s not honorable to do something dishonest to an employer, whereas in U.S. there is a different mindset…

The Global Retail Theft Barometer (GRTB) Study: An annual survey that interviews 222 retailers in 24 countries representing $744 billion in sales in order to research the amount of shrinkage, theft in retail business… Report Summary: In 2013–2014, U.S. shrinkage rate decreased by 2 basis points to 1.48% of the region’s sales: Total shrinkage stood at $42 billion. North America recorded the highest shrinkage rate in the world, although it has highest concentration of retail stores, however, this region also spends much less on ‘loss prevention’ than other regions… Other Report findings:

  • Shrinkage Across Store Types: U.S. discounters (2.78%), pharmacies/drugstores (2.16%), and supermarkets/grocery retailers (1.38%) witnessed the highest shrink rates owing to shoplifting, dishonest employee theft, organized retail crime… and together with a low-level of ‘loss prevention’ spend. Almost all types of retail stores in U.S. are affected by dishonest employees theft and shoplifting… The lowest shrink rates are in department stores (1.11%), home improvement and gardening stores (1.10%), and apparel specialist retailers (0.84%)…
  • Shrinkage Sources: In 2013–2014, dishonest employees theft was the major reason for shrinkage in U.S. The proportion of shrinkage attributed to dishonest employees theft increased to 42.9%. Dishonest and fraudulent employees were responsible for $18.01 billion (by value) of shrinkage. Shoplifting is the second-largest source of retail shrinkage in U.S. In 2013–2014, it accounted for 37.4% ($15.70 billion, up from 34% in the previous year… Finally, administrative and non-crime losses, including; accounting mistakes, poor budgeting practices, pricing errors, and process failures specific to inbound and outbound inventory control accounted for 10.8% ($4.53 billion), down from 26%, in 2012…
  • Most-Stolen Items: Shoplifters and dishonest employees primarily targeted items that were easy to conceal and resell in the market, resulting in increased pilferage of accessories. In 2013, shoplifters preferred to steal fashion and mobile accessories over fashion clothing and mobile handsets, respectively. Other frequently pilfered products included; power tools, wines, cosmetic products…

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Is stealing becoming more acceptable in the workplace? Generally, when people think of theft or stealing they are referring to the act of physically taking property from someone else… In reality there are many ways that employees can steal from an organization; the basic definition of theft is the wrongful taking and carrying away of personal goods, property of another… However, the most common way for employees to steal is theft of ‘time’, and this includes; taking extra ‘time’ on breaks and lunches, using work ‘time’ for personal matters, simply wasting ‘time’ while at work, fraudulently changing ‘time’ sheets and expense reports… According to Michelle Boykins; most often you think of workplace theft as someone snatching money from a person’s wallet or purse… It can just as easily be an employee stealing office supplies or committing identity theft. However to chagrin of many employers, the workers guilty of the most grandiose theft frequently turn out to be those deemed to be highly trustworthy… They are employees that are given access to most sensitive systems, information that allow them to commit major fraud…

Employees who are caught stealing or who confess to it– give some interesting reasons, e.g.; in many cases it wasn’t because of a real financial motivation but the company made it to easy to do so… Some employees says they saw management helping themselves to whatever they wanted, so they assumed it was an ‘ok’ for them… There are many ways that workers can steal from employers. Some common ways are, e.g.; taking cash from cash registers, or stealing customer information, or helping themselves to products, or copying digital assets belonging to the company, or cheating when filling in time sheet…

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But does all this thievery represent a basic decline of honesty/morality in society? The almost-daily incidents of– business, government, law enforcement, celebrities, sports figures, church leaders… involved in questionable activities make it easier for ‘borderline’ employees to steal and to rationalize their actions… Also with significant growth of the part-time workforce it’s not uncommon to find that many workers have less loyalty to employers, hence they are more apt to take advantage of opportunities to steal…

But, no plan will eliminate business theft 100%: As the saying goes; ‘where there is a will, there is a way’. Business must send a strong signal to potential thieves that they are serious about security and loss prevention… business must show a deep commitment to prevent loss at every level with policies to prosecute theft where ever it occurs, and at all levels of management… Controlling theft is important to profitability and business cannot afford to ignore it… Hence, review your ‘loss prevention’ procedures, policies, systems… you can save your business a lot of money and grief… Remember; ounce of prevention is much better than a pound of cure: Be prepared!

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Respect! Code of Culture, Universal Currency: You Cannot– Buy It, Sell It, Steal It, Transfer It… It Must Be Earned!

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‘R’ is for RESPECT! There’s an old saying among business leaders: “Take care of your people and they will take care of you.” Business strength lies in its people… For the business to work properly there must be a bond between leaders and those being led. A bond that rests not on authority alone– but on professionalism, good will, and above all ‘mutual respect': The chain of command must respect employees, and the employees must respect the chain of command… An easy way to think about it is; the Golden Rule treating people (e.g.; managers, co-workers, customers…) exactly the way you wish to be treated…

According to Melanie Sklarz; respect seems like simple concept; but it’s not defined the same way by everyone, and it’s certainly not practiced by everyone in the same manner, either… people often describe ‘respect’ in terms of how they feel, rather than how they are treated… So, What is respect? For some, respect is positive feeling of admiration or deference for a person or entity, e.g.; culture, or religion, or race… For others, respect can be a specific feeling for the actual qualities that a person possesses, e.g.; “You have great respect for their judgment”… Respect can be both given and received; and you know when you have it, and you know when you don’t…

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According to Christine Porath and Tony Schwartz; for leaders to get desired commitment and engagement from– managers, employees, customers… they must show: Respect! In fact, no other leader’s behavior has more effect on people then being treated with respect. Leaders must keep in mind that respect is different, for different people; it’s all in the eyes of the beholder, and respect is directly tied to how the leader makes that person feel… It’s important to understand that behavioral norms vary by– culture, generation, gender… as well as, industry and organization… Research shows that people are less likely to buy from a company when an employee or manager is perceived to lack respect, whether it’s directed at them or at other employees. Witnessing just one short negative interaction can lead customers to generalize about other employees, the organization, and even the brand… So, what are leaders supposed to do? First and foremost, they must promote a culture of respect in their organization…

In the article Is Lack of Respect Holding Your Business Back? by Kuljit Kaur writes: Over 50% of employees aren’t regularly shown respect from their managers, according to a survey by Tony Schwartz and Christine Porath with the Harvard Business Review; the survey based on a study of nearly 20,000 employees around the world; found that when managers and leaders treat employees with respect they are more engaged: Yet it found that when 54% did not get ‘respect’ their behavior was less engaged, less focused, less productive, and less likely to contribute to business performance… However, when employees were respected by their managers and leaders they reported better health and well-being, more trust and safety, greater enjoyment and satisfaction with their jobs, greater focus and prioritization, more meaning and significance, more employee loyalty… What is interesting is that the survey found that being treated with respect was more important to employees than having a leader communicate an inspiring vision, or other motivational factors…

Hence, lessons learned from the survey was that– when employees feel respected by their manager, and each other; and when managers feel respected by their employees, and each other ; this ‘mutual respect’ encourages a healthy and harmonious workplace… It encourages an atmosphere of– collaboration, communication, co-operation… Quite simply, things get done– more quickly, more smoothly… Hence, when workplaces have cultures that fosters respect they are –more productive, better customer service, better quality, improved profitability… Also, when employees feel respected by their manager, and vis-versa; there is less toxicity in the workplace… whereas, workplaces with cultures of disrespect become dysfunctional…

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In the article Showing Respect in the Workplace by Constance Woloschuk writes: No matter which dictionary is used, the word ‘respect,’ both as a noun and a verb, is defined and described with words, such as; ‘esteem’, ‘show high regard for’, ‘honor’… This kind of respect is demonstrated in workplaces by treating everyone with courtesy, dignity, and without prejudice or discrimination… The familiar concept of the Golden Rule that is found in many cultures is always effective: It’s simply; “do unto others as you would have them do unto you”… Hence, whether you management or employee, everyone can help develop a culture of respect by following a few simple guidelines:

  • Management Showing Respect for Employees in the Workplace: Managers are in unique positions with the authority to make sure that the workplace is a place of respect for each employee. A common complaint of staff in many organizations, though, is that management do not respect them, or their work… Some managers simply do not know how to show respect without feeling they are losing some of their authority. These managers might want to remember that it’s their employees who actually do the work, and who can make them look good as managers…
  • Employees Showing Respect for Management in the Workplace: In some workplaces, it’s all too easy for employees as a group to disrespect managers… It just takes one strong personality type to starts complaining about the way they are being treated– abused, disrespected… then other employees join in, and over time, the workplace becomes– toxic, unhealthy, unproductive…
  • Formalizing Respect in the Workplace: Although it can be difficult to dictate ‘respect’ in the workplace; a culture of respect can be developed through formal policies and guidelines of behavior for both managers and employees… one method is to developed clearly documented rules for appropriate and respectful behavior… and any rules must be fully enforced with consequences…

In the article Creating a Climate of Respect by Jonathan Cohen, Richard Cardillo and Terry Pickeral write: For some, the notion of ‘respect’ implies a courteous, decorous, civil, deferential attitude of being taken seriously… Acting respectfully reflects appreciative feelings for another person, group… In business, respect can sound like this statement from an employee: “They actually listen to me in this workplace; management care about what I think and feel, they want me to be part of making this business even better”… In contrast, the absence of respect can sound like this statement from an employee: “They (i.e.; managers, co-workers…) don’t care what I think, all they care about are the results”… Respectful organizations are environments where people feel safe, supported, engaged, challenged… Respect doesn’t happen in isolation; it’s based on well-intentioned engagements…

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In the article Secret to Respect in the Workplace by Darcy Jacobsen writes: Respect has gotten much attention in the work environment lately, as it relates to– equity, fairness, and just getting along with others… In fact, most will agree that a healthy level of respect is probably the most potent ingredient for workplace civility… But respect reaches much further than manners and compliance. It also plays a key role in recognition, engagement, and in creating a strong organizational culture. Think about it: Recognition, at its core, is really just a form of respect; people who are recognized– for doing the right things tend to rise to that recognition, and strive to be worthy of it… People who are not recognized for hard work, performance… tend to feel forgotten, unappreciated, disrespected… According to research; the top five things employees look for when seeking a new job are: stability, compensation, respect, health benefits, work-life balance… According to Brian Kropp; workplaces have changed; it’s not ‘work and keep your head down workplace’ anymore; most people are looking to be recognized, respected for individual contribution…

As workforce demographics shift and global markets emerge, workplace diversity inches closer to becoming a business necessity instead of a banner that companies wave to show their commitment to embracing differences and change… Hence, ‘respect’ for management, co-workers, customers… is important business priority; this means viewing each person as a unique contributor to the organization; it means recognizing each person on your team for their talent, ideas… which can make your organization better…

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Hence, replace the old adage: Treat others as you want to be treated”… with Treat others as they want to be treated”... Learn about the different mannerisms in your workplace– managers, co-workers, customers… and learn and listen on how they wish to treated… If you are not sure how to treat– a person, group, religion, race, culture… then just ask them, in a respectful and polite manner… Respect/Disrespect is an interesting concept because it occurs only in the eye of the beholder– it doesn’t matter what you think or do… if a person feels disrespected it’s their reality; it’s the way they feel that really matters. Everyone (well, almost everyone) deserves to be treated with respect, but the key is to know and understand what ‘respect’ means to them…

 

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Sleeping Nightmares– Liability Disclaimers for Websites, Blogs, and Emails: Protect Against Claims of Negligence…

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Websites, blogs, and even emails… are the world’s window into your business and also the source of unlimited liability… According to Vanessa Emilio; regardless of the type of website content, and especially ecommerce; it’s highly recommended that a ‘liability disclaimer’ is included on the website, blog, and even emails… The primary purpose of a disclaimer is to limit, or attempt to limit, liabilities, e.g.; libel, defamation, copyright infringement, breach of privacy, product issues… Your website is like a ‘contract’ between you and your visitors, where upon you become ‘contractually’ bound by what is published. Another way to look at disclaimers is as a type of ‘informed consent’ for visitors… Hence, placement of a disclaimer prominently on a website suggests to visitors that they agree to the terms of the disclaimer and assumes all risks associated with viewing and using information on the website… However placement of a disclaimer is no guarantee from a claim of liability, but at least there is some basis for defense…

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For sure your legal risks depend on content of the website, blog… you could be sued for negligence, e.g.; if someone claimed to suffer an injury (physical or emotional) because they followed advice you provided… Or, if a visitor suffers from severe depression and in using a process published on your website and they claim that they didn’t feel any better, and in fact, they claim that their depression got worse… According to Midge Murphy; not only are you at risk for being sued for negligence, but also for misleading information that could lead to claim of misrepresentation, potentially fraud… Claims can be made by a disgruntled visitor even if there is no merit to the claim…There is no ‘standard’ form that applies to disclaimers: A disclaimer must be tailored, i.e.;  well-crafted, well-placed to fit the specifics of a website both in terms of substance of material and intended usage…

In the article Website Disclaimers by Vanessa Emilio writes: There is much confusion about what a ‘liability disclaimer’ is and what it does… A disclaimer seems to be the ‘catch-phrase’ used for a number of different things: What is it? Generally, a disclaimer is a notice on a website that attempts to limit liability of business for losses from things, such as; content accuracy, reliance on information, defamation, copyright infringement, virus transmission… Do they work? Disclaimers are a slightly ‘grey’ area of the law, for example; often a website might include a ‘disclaimer’ that states: This information is of a general nature only, and is not professional advice… or, We accept no liability for the accuracy of this information or any reliance you may place on it… or, something similar… But do these type statements really protect a business? The short answer is ‘yes'; more often than not…

Website disclaimers can go a long way to protecting a business from visitors who come to a website and for whatever reason they; misunderstand or misinterpret information on the website, and then try to sue the business… However a disclaimer can have limited effect on claim of liability, if in fact a website is misleading with fraudulent information. On other hand, the very use of a disclaimer is a deterrent for visitors from making claims against the business… also, disclaimers functions as warning to visitors of potential risks associated with the website…

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What do disclaimers need to include? First, you need to ensure the website has an appropriately worded ‘disclaimer’… For example; the disclaimer need not be long but it should instruct visitors to make their own independent inquiries before acting on any information… and it should state that all information is of a general nature, only and must not be taken as specific or complete advice… Hence, best defense against liability is the following:

  • Have a Disclaimer: It’s the first line of defense for any claim against the business and it may help limit liability, even if you may be held liable for statements or information on the website…
  • Ensure the Disclaimer is easily found and obvious: It’s critical to have a website disclaimer easily ‘visible’ on the website…
  • Regularly update the website: It’s important to regularly review the website information and ensure that it’s not outdated, misleading…

In the article Why Your Website or Blog Needs a Privacy Policy and Disclaimer by Michael Rogers writes: Both a comprehensive privacy policy and a liability disclaimer are a must for any business website, blog… they can provide important legal protections and give customers additional information about how you use personal information and the steps you take to keep their personal information safe… A disclaimer generally states that you, and everyone else who posts on your website will be held harmless and cannot be held legally liable for the information posted on the site. A blog owner may use a disclaimer to protect themselves and their guest bloggers, while a business can use a disclaimer to reduce the risk of a frivolous lawsuit… Even if you do not think the website or blog needs a disclaimer, adding it will not cost much and it could provide important legal protection… Consider:

  • Why Privacy Policies are Important: Chief reason is the protection of visitors who visit the website. Web surfers have the right to know exactly how their personal information is being used, and they have come to expect that kind of disclosure from the companies they do business with… If your website or blog does not have a prominently displayed privacy policy, visitors are likely to click away before they even have a chance to explore the site and see what your firm has to offer. The lack of a privacy policy could be costing you money…
  • Disclosure of Intent: Your customers have the right to know what your intentions are and how you plan to carry them out, and that information should be clearly spelled out and prominently displayed on every website and blog you maintain… for example; if you plan to harvest email addresses and share that information with other companies, your privacy policy needs to clearly spell that out… or, if you are building a list of physical addresses for a future marketing campaign, your visitors deserve to know that… or, if you plan to track IP addresses and analyze web traffic, your privacy policy should include that information…
  • Use Privacy Policies to Your Advantage: Your privacy policy gives you a chance to brag about what you are not doing. If you do not share personal information with anyone else, be sure to let visitors know. In today’s privacy-challenged world, a policy like that could win you new friends and drive customers through your virtual doors…
  • Placement of the Disclaimer: Make the disclaimer as visible as possible to the visitors… Some bloggers get pretty creative with their disclaimers, often adding a touch of self-deprecating humor along the way… Others stick strictly to business, making their disclaimers as straightforward as possible. Either approach is fine. The most important thing is adding the disclaimer to the website…

In the article Website Disclaimers; They Do Work by Guy Burgess writes: It’s customary for websites to include a disclaimer such as: This information is of a general nature only, and is not advice… or, This information is provided ‘as is’, and we accept no liability for its accuracy… and, also there is a degree of uncertainty over some basic questions, such as: Can an incorrect disclaimer statement result in a claim of negligence against website owner(s)? or, What circumstances will a disclaimer protect website owner from liability? Here are some important findings; 1.) statements on a website can give rise to negligence claims… 2.) website disclaimers can be effective tools for limiting or excluding liability for website mistakes… Hence, two important recommendation for website owner(s): 1.) Have a disclaimer: Ensure that the website has an appropriately worded, displayed disclaimer… 2.) Pay attention to website condition: Many websites contain incomplete or outdated information, especially when the website is supplemental to a business or organization and the primary information is available offline…

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Websites, blogs, emails… disclaimers do not guarantee that the owner(s) will escape liability… However, each jurisdiction has unique laws and the laws that apply to a specific jurisdiction may not allow courts to give any force to the language contained in a particular disclaimer… Whereas another jurisdiction may provide full enforcement of a disclaimer and not allow a person to recover damages as long as the website provides a valid disclaimer… Also, the mere existence of a disclaimer can discourage users from filing a lawsuit, and they may believe that agreeing to use a website, which requires agreeing to the provisions of a disclaimer prevents them from taking legal action… The disclaimer, however, does not necessarily provide website owner(s) with absolute protection from lawsuits. If the terms of a disclaimer are overly broad, a court may declare it invalid and refuse to enforce its provisions…

According to Aaron D. Hall; honesty is the best policy– business should warn visitors that information on their website might include inaccuracies and out-of-date information and use of such information is at a visitor’s own risk… Also, the law is very unclear as to whether a website owner(s) can be vicariously liable for material on sites to which it’s linked… Hence, the most prudent course is to disclose to your website visitors that you do not necessarily endorse any materials appearing on your linked websites… and visitors who wish to view any of the linked websites is at their own risk… Also, you must  consider the individual laws of each jurisdiction, e.g.; linking to websites containing gambling, pornography, lottery, and other questionable websites… may be unlawful and subject to very serious liabilities…

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Changing Rules of Global Competition: The Segue for Low-Skill, Low-Wage Workers to Poverty…

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Is capitalism failing the low-wage workers? According to Nick Hanauer; fundamental law of capitalism is that– if workers have no money, businesses have no customers… Seeing the economy as Henry Ford did would redirect the country toward a high-growth future that works for all… That’s why the extreme and widening wealth gap presents not just a moral challenge but an economic one, too… In capitalist system, rising inequality creates a death spiral of falling demand that ultimately takes everyone down… Low-wage jobs are fast replacing middle-class ones in the U.S. economy…

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Sixty percent of jobs lost in the last recession were middle-income, while 59% of new positions during past two years of recovery were in low-wage industries that continue to expand, such as; retail, food services, cleaning, health-care support… and by 2020, 48% of jobs will continue to be in those service sectors… It’s a changing world order in the global economy, which is not only due to changes in technology, but is also due to the changing rules enforced by multinational corporations… The global economy today is characterized by ferocious competition between multinational corporations to find the lowest possible production costs; and by millions of low-skill, low- wage workers who are both customers and value producers…

In the article Global Economy by Garrett Brown writes: Multinational corporations represent 51 of the largest 100 ‘economies’ in the world… The 500 largest multinationals control 70% of world trade, one-third of all manufacturing exports, three-fourths of all commodities trade, four-fifths of all technical and management services… Multinationals control two-thirds of capital used for economic development in developing countries… There is a profound shift in the production of goods, especially, consumer goods from a relatively well-regulated, high wage, often unionized workplaces in developed world to basically; unregulated, very low-wage, non-union workplaces in the developing world… All the world’s workplaces are competing with one another to offer multinationals lowest production costs for maximum competitive advantage…

Today 100% of television, 80% of other electronics, 75% of toys, and two-thirds of the $180 billion worth of clothes sold in the U. S. are made outside of the U.S.  But its key to understand that this is the result of deliberate corporate policy– 50% of all U.S.-owned manufacturing is done outside U.S. to exploit low wages in other parts of the world… More than 40% of all ‘imports’ from Mexico, 55% of all ‘imports’ from China are nothing more than internal transfers from one division of a multinational corporation to another division.  The multinational buys raw materials in one country, sends them for processing and assembly in another country, and then ships the product to U.S. for sale… And this worldwide ‘race to the bottom-line’ in wages and working conditions is bleeding over to other sectors of the global economy: Rapidly increasing amounts of business services, including ‘high technology’ jobs, are being ‘outsourced’ and ‘off-shored’ to low-wage, no-regulation countries. Almost anything done electronically is now at risk to being transferred to the lowest paid, least protected workforce…

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In the article Income Inequality Globally is Falling by Tyler Cowen writes: Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a ‘global’ perspective. Yes, the problem is more acute within many nations, yet income inequality for the ‘world as a whole’ has been falling for most of the last 20 years… The economic surges of China, India and other nations is among the most egalitarian developments in history. Although some policies, such as; global trade… will  increase inequality in some nations, but it has an uplifting effect on the world, overall: It’s a better place, globally, with decreasing poverty…

However, contrary to what many economists suggest, there is good evidence that the rise of China and other developing countries through trade is holding down wages of the developed countries middle-class, particularly those with low-skills. Hence, increase global trade suggests the following; 1. Increase growth, profit, influence of multinational corporations; 2. Decrease work opportunities for low-skilled wage workers in developed countries; 3. Increase work opportunities for workers in developing countries; 4. Increase prosperity and reduced poverty for most workers, globally; 5. Increase wealth of top 1% through their investment in multinational corporations’ stock shares…

Low-Wage Workers Poverty in the U. S.; According to U. S. Census Bureau:

  • In 2013, there were 45.3 million people in poverty. This is up from 37.3 million in 2007.  The number of poor people is near the largest number in the 52 years for which poverty statistics have been published…
  • The 2013 poverty rate was 14.5%, down only slightly from the 2010 poverty rate of 15.1% and still up from 12.5% in 1997…
  • The 2013 poverty rate for Blacks was 27.2%, for  Hispanics 23.5%,  for Asians 10.5% and for non-Hispanic whites 9.6%…
  • The poverty rate for children under 18 fell from 21.8% in 2012 to 19.9% in 2013. The number of children in poverty fell from 16.1 million to 14.7 million. Children are 23.5% of the total population and 32.3% of people in poverty…
  • 19.9 million live in extreme poverty. This means a family’s cash income is less than half of the poverty line, or about $10,000 a year for a family of four. They represented 6.3% of all people and 43.8% of those in poverty…

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Myths About Low-Wage Workers:

  • MYTH: Low-wage jobs are the ones in neighborhood McDonald… FACT: Fast food jobs constitute less than 5% of all low-end jobs. Low-wage, low-reward jobs are all around and include: security guards, nurse’s aides and home health-care aides, child-care workers and educational assistants, maids and porters, call-center workers, bank tellers, data-entry keyers, cooks, food preparation workers, waiters and waitresses, cashiers and pharmacy assistants, hair dressers and manicurists, parking-lot attendants, hotel receptionists and clerks, ambulance drivers, poultry, fish and meat processors, sewing-machine operators, laundry and dry-cleaning operators, agricultural workers…
  • MYTH: Low-wage jobs are unskilled... FACT: In the public view, low-wage jobs tend to be lumped together and referred to as ‘hamburger flipper’, insinuating both a lack of real skill and social value. Policy analysts and public officials refer to ‘low–wage, low-skilled’ jobs as if the two terms were inseparable. This mistakenly assumes that if a job pays poorly, it must be because it does not call for many skills. In fact, these jobs require knowledge, patience, care, communication… Most of them require constant interaction with people, such as; patient in health-care setting, child in day-care center, guest in hotel, tenant in commercial office building, customer in department store…
  • MYTH: Most low-wage workers are teenagers, illegal immigrants, high school dropouts... FACT: U.S’s low-wage workers are mostly (nearly two-thirds) white, female, high school educated and have family responsibilities. Teenagers comprise only 7% of the low-wage workforce. Minorities and women are disproportionately found in low-wage jobs and occupy the lower rungs of the ladder in this workforce…
  • MYTH: Low-wage jobs are usually only temporary; since they are a stepping-stone to better paying jobs... FACT: Mobility will not bring significant advancement to most low-wage workers. Even after a 25 year period, half of those in the lowest 20% of wage earners had not moved above that group and of those that moved half had only moved to the next highest wage group, still below the median wage. Low-wage jobs, historically have had few career ladders. Today, they offer even fewer…
  • MYTH: Re-skill will solve the problem FACT: Of course, better education and fluency in new technologies are essential to improve job options of this and the next generation of workers. Yet, these labor intensive industries will continue to demand large numbers of workers regardless of individual mobility and these are the growing sectors of the economy. In the next ten years, the low-end of the job market will account for more than 30% of the workforce. Employers will hire nearly twice as many food-service workers as software engineers, hire as many cashiers as they do computer-support specialists and hire more than twice the number of customer-service representatives as they do computer systems analysts. The re-skill approach will do little to improve the lives of most workers in these low-wage jobs, jobs that will continue to grow as a proportion of our economy. What these workers need is to be adequately rewarded for the skills they already possess…
  • MYTH: Globalization is the problem... FACT: As profound as the impact of global trade has been on the economy, it does not preclude improving the wages and working conditions for lower-wage workers. Only a small portion of low-wage jobs are actually in industries that compete globally. Most lower-wage jobs are and will continue to be in the non-tradable service and retail sectors, e.g.; checking out groceries, waiting on tables, servicing office equipment, caring for children, tending the sick, cleaning-up… However, some industrialized countries have made political and business choices to ensure that workers in similar jobs are far better than U.S. workers… Low-income American have living standards that are 13% below that of low-income Germans, 17% below low-income Belgians and 24% below  average income of the bottom 20% of Swedes. This is despite the fact that the median U.S. standard of living is far above the median German, Belgian, Swede…

Research shows that structural changes to developed economies over past 20 years from; globalization, industry deregulation, computerization… of the workforce has resulted in fewer opportunities for low-skill, low-wage workers… There is a basic concept in trade economics that states– wages in rich countries will tend to go down while increasing in poorer countries through trade…

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So does that mean that multinational corporations exploit workers in poor countries at the expense of workers in rich countries? According to Drusilla Brown, Alan Deardorff, and Robert Stern; it’s a resounding ‘no'; there is no careful and systematic evidence demonstrating that multinationals adversely affect their workers, or provide incentives to worsen working conditions, or pay lower wages than in alternative employment, or repress worker rights, in fact they argue, the opposite is true…

Multinationals’ use of developing nations for production is substantial and growing, yet most trade economists, including; Paul Krugman, William Cline, Robert Lawrence– maintain that global trade takes place largely on the basis of ‘comparative advantage’… Comparative advantage theory says; some groups will benefit at expense of others, and for developed countries the demand for high-skill labor and high-tech equipment will increase while demand for less-skill labor will fall. This will raise wages of the high-skill and the profits of multinationals, while lowering wages of less-skill workers… The result: greater inequality…

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Art of Managing Business Decline– Coping with the Silent Creep of Doom: Grasping for Silver Bullet

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Managing decline is when a business, organization… has gone irreparably wrong and disintegrating into irrelevance… but being managed, in an organized way, to salvage resources and minimize all possible negative consequences… According to Wikipedia; managed decline refers to the management of decline (or ‘sunset’) of an entity, at the end of its life-cycle, with the goal of minimizing costs or other forms of loss or harm. According to Maurilio Amorim; right now somewhere in the world there are people managing the inevitable death of a business, organization, product line, entire industry… While some are smart enough to know that the end is inevitable; they are either powerless to change it, or don’t have the will-power it takes to make the shift to something new– knowing the end is near but holding-on because it’s their job…

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According to Bob Angart; the nature of decline and the strategic alternatives for coping with changing conditions are complex; some businesses age gracefully and maintain extremely high profitability, while others decline steadily experiencing rapid market deterioration… Once a business has entered the stages of decline, it’s very hard to change and reverse the process… it takes leadership with vision and motivation to put a business on a new life-cycle and return it to the early days of ‘start up’, when risks are ‘risky’ and unknowns are ‘truly dangerous’ to the business– and it’s at this point that the business begins to ‘evolve’ again, re-imagine itself, and finds new life and new meaning…

In the article Stages of Decline in Business by admin writes: Most business don’t know they have The Decline Disease until it’s too late and when remedies are too painful! According to Jim Collins; some of the best companies that crash and burn go through ‘stages of decline’ with early warning signs, such as:

  • HUBRIS BORN OF SUCCESS: We’re so great, we can do anything! Great enterprises can become insulated by success; accumulated momentum can carry an enterprise forward for a while, even if its leaders make poor decisions or lose discipline… But it’s when the rhetoric of success succumbs to hubris and attribute success to your own superior qualities (e.g.; We deserve success because we’re so good/so smart/ so innovative/so amazing)… Then, you might find yourself surprised, unprepared when you discover your vulnerabilities too late, then decline surely follows…
  • UNDISCIPLINED PURSUIT OF MORE: More scale, more growth, more acclaim, more of whatever… that those in power see as ‘success’… when companies stray from the disciplined creativity that led to greatness in first place, and making undisciplined leaps into areas where they are not great ,or growing faster than they can achieve with excellence– or both… When an organization grows beyond its ability to fill its key seats with the right people, it has set itself up for a fall. Although complacency and resistance to change remain dangers to any successful enterprise, overreaching better captures how the mighty fall…
  • DENIAL OF RISK AND PERIL: When internal warning signs begin to mount, and yet external results remain strong enough to ‘explain away’ disturbing data, or suggest that difficulties are ‘temporary’ or ‘cyclic’ or ‘not bad’, and ‘nothing is fundamentally wrong’… It’s when leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data. Those in power start to blame external factors for setbacks rather than accept responsibility. The vigorous, fact-based dialogue that characterizes high-performance teams dwindles or disappears altogether. When those in power begin to imperil the enterprise by taking outsize risks and acting in a way that denies the consequences of those risks, they are headed straight for decline…
  • GRASPING FOR SALVATION: When the cumulative peril and/or risks gone bad assert themselves, throwing the enterprise into a sharp decline… The critical question is: How does its leadership respond? By lurching for a quick salvation or by getting back to the disciplines that brought about greatness in the first place? When you find yourself in trouble, when you find yourself on the cusp of falling, your survival instinct and your fear can prompt lurching– reactive behavior absolutely contrary to survival. The very moment when you need to take calm, deliberate action, you run the risk of doing the exact opposite and bringing about the very outcomes you most fear. By grasping about in fearful, frantic reaction… companies accelerate their own demise…
  • CAPITULATION TO IRRELEVANCE OR DEATH: The point of the struggle is not just to survive, but to build an enterprise that makes such a distinctive impact on the world it touches (and does so with such superior performance) that it would leave a gaping hole– a hole that could not be easily filled by any other institution– if it ceased to exist. To accomplish this requires leaders who retain faith that they can find a way to prevail in pursuit of a cause larger than mere survival (larger than themselves) while also maintaining the stoic-will needed to take whatever actions must be taken, however excruciating, for the sake of that cause…

In the article End-Game Strategies for Declining Industries Kathryn Rudie Harrigan Michael E. Porter write: In choosing a strategy when in decline, managers need to match the remaining opportunities in the industry with their companies’ positions. The strengths and weaknesses that helped and hindered a company during the industry’s development are not necessarily those that will count during the end-game, where success will depend on the requirements to serve the pockets of demand that persist, and the competition for this demand… To determine the correct strategy a company should assess its strategic needs vis-à-vis the business and modify its end-game strategy accordingly– companies must choose an end-game strategy for themselves, rather than let one be chosen for them… Clearly the best course is to manage the decline so that the business can improve its end-game position…

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In the article Business Turnaround Strategy by Gary Rushin writes: In a situation where the business is in crisis and you are trying to identify and manage the decline– the nagging questions are: Is the business really faltering out of control, heading towards doom? What strategy do I employ to turnaround the business? How do I identify the real problems the business is facing? What actual resources do I have to employ to reverse the decline? Determining what constitutes a managed turnaround and restructuring in a declining business is not easy. Too often business management is focused on symptoms of the business decline rather than determining the causes of the business decline… Some of the common symptoms of business decline can be noticed by– rapid turnover of senior management and employees, factoring customer invoices, declining customer services, increased disputes with leading suppliers, stretching of supplier payables, build-up of inventory, low employee morale pervasive through the company… Both internal and external issues can cause serious business deterioration, for example:

Internal causes; high costs, lack of an effective marketing, lack of innovation, weak financial policies, organizational confusion… External causes; changes in market demand, competition, disruptive technology… Widely known and most often the causes of business decline can be attributed to: (a) flawed or outdated strategy, (b) good strategy, but poorly implemented, (c) poor strategy, and poorly implemented… Not all distressed businesses can be rescued… whereas for others, remedies may involve just applying basic  traditional management techniques mainly by following best practices…

Understanding the signs of crisis and decline in organizations can help management understand the environmental context of a situation, in the critical early stages of setting expectations and roles… before it’s ‘too late’. According to Joe Lamantia; business crisis can present great opportunities with significant benefits, as well as, mitigating many dire consequences, when well-managed… however, in other situations business decline is better managed for quick closure rather than delay of the inevitable– wasting much time and resources– there are too may holes to patch. To avoid difficult crisis business must engage in regular health checks– examining, re-examining all the critical elements that can impact health and well-being of the business, both internal and external…

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Business that regularly check and assess their business process, competitive intelligence, market innovations…  are in a position to spot potential problems early on and take steps to avoid crisis… Several common issues that cause business decline are: Entanglement; companies that tackle basically different business activities with the same strategy… Out-of-focus;  companies that fails to focus on value creation… Un-adapted; companies that do not adapt to changing market conditions… Over-stretched; companies that grow faster than its structurally capable of handling… Those in charge of a business must take a good hard look at themselves to determine how their decisions and attitudes contributed to the decline… They must ask: Why are we in business? What do we hope to achieve with the business? Once the answers are known; the business must take appropriate action to re-imagine itself, quickly, and move forward…

 

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Stock Options– Striking Fools Gold: Most Don’t Understand Basic Reality of Stock Options; Harbor Unrealistic Expectations.

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The 90-10 Stock Options Reality; 10% of stock options are a source of personal wealth for some, while 90% are disappointment for most; stock options is a topic of contentious debate… Many employees, management join a startup (or established business) and work incredibly hard at sub-market salary in the hopes of ‘striking gold’… However, sobering reality is that unless you are one of the very few first employees, you’re probably not going to get more than a nice hiring bonus, even if the company does well for itself… However, it’s become common practice in many companies to offer the benefits of stock options to not only top-paid executives, but also to rank-and-file employees. But; What are stock options? Why are companies offering them? Do they accomplish their purpose?

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A stock option is the right given to employees, management by employers to purchase (‘exercise’) a certain number of shares of a company’s stock at a pre-set price (‘exercise or strike price’) over a certain period of time (‘exercise period’)… Most stock options are granted on publicly traded stock but it’s possible for privately held companies to design similar plans using their own pricing methods… Usually the strike price is equal to the stock’s market value at the time the option is exercised (or granted), but not always; it can be lower, higher depending on the type of option… In the case of private company, the strike price is often based on the price of shares at the company’s most recent funding round… and employees, management gain a benefit (i.e., profit), if they can sell their stock for more than they paid at the strike price… According to National Center for Employee Ownership; most people covered by broad-based stock options may receive amounts equal to 12%-to-20% of their salaries, from the ‘spread’ between– what they pay for their options and what they sell them for…

The typical explanation for the use of stock options is that these compensation vehicles enable companies to– attract, retain, motivate… employees, management, as incentives for superior personal performance which will translate into increase shareholder value… While the explanations seem reasonable on the surface, the whole concept hinges on the basic assumption that employees, management understand how stock options work… Yet according to David F. Larcker and Richard A. Lambert; many employees, management tend not to understand the basic economics of stock options; in fact, many employees, management harbor unrealistic expectations on how much stock options will increase their personal wealth…

According to survey of workers, management who own stock options; 39% said they knew ‘little’ or ‘nothing’ about their options, another 35% said they knew only ‘something’… As a strong indication of serious knowledge limitations, 11% of the respondents had allowed options to expire, essentially rendering them worthless. Finally, 52% said they knew ‘little’ or ‘nothing’ about the ‘tax’ implications of exercising options… According to the ‘Options Clearing Corporation'; around 17% of all options contracts got exercised and about 35% expired worthless, and almost half (48%) of the rest got bought or sold to close in the open market… Now it’s difficult to believe that stock options will have their desired effect on employees, management behavior, if these people don’t understand the basic economics of stock options and how they work…

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Proponents argue that stock options help overcome the ‘agency’ issue, which is inherent in the separation of ownership and control of the firm… they argue that stock options align employees, management, shareholders interests, and motivate them to focus on maximizing share value… Critics argue that the use of stock options cause employees, management to engage in inappropriate risk-taking, unethical behavior, manipulation of company performance… which defeat the very purpose of stock options. However, the relevant question is: Do stock options really work? Do they motivate people to think like owners?

According to Katherine J. Klein, Edward J. Carberry, Mathis Schulte; it’s a ‘qualified yes': Stock options ‘work’ if employees expect their options will bring them financial gain… however, if employees, management accept sub-market wages and employers do not deliver financial reward via stock options payoff, then use of stock options can backfire; diminishing employees, management commitment, work hours, retention… According to Warren Buffett; though options if properly structured, can be an appropriate and even ideal way to compensate, motivate people; however, there are some CEOs who are incredibly over-paid via stock options and producing very poor business results…

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In the article Myths About Stock Options by Corey Rosen writes: Stock options and other forms of equity granted to employees, management are an institutionalized part of compensation at many companies. Hence, it’s important to separate myths from reality about how these plans work:

  • Myth– Most People Getting Equity Work for High-Technology Companies: One of the most prevalent and misleading misperceptions was (and still is) that most employees, management getting stock options or other forms of equity, work for high-technology companies and most of which are small, pre-IPO ventures… Not true; in fact, about 15% to 20% of all public companies give stock options or other forms of equity and many of these are outside the technology sector…
  • Myth– Most People Give Up Pay to Get Options: Economists say– there is no free lunch, so if someone gets stock options or other forms of equity they must be giving up pay or benefits. To be sure, some employees, management have done just that. There are lots of people who were lured to start-up companies at lower salaries in return for substantial stock option packages, but these people are the exceptions… According to Joseph Blasi and Douglas Kruse; most employees, management that are getting stock options are paid about 7% more in wages than comparable people in comparable companies that do not give stock options. The fact is that it’s very difficult to lure all but a handful of risk-takers to jobs whose base pay and benefits are not comparable to what could be earned elsewhere. Stock options or other forms of equity are ‘gravy’ to help companies distinguish themselves. In the technology sector, most companies give stock options because its become part of the ‘ante’ to the game…
  • Myth– Stock Options Make You Rich: Equity is probably not going to make more than a handful of people rich, but for most holders, it provides a worthwhile additional financial benefit… And for most equity granting companies, it provides a way to link employees, management, corporate fortunes for the long-term. Equity is not the ready path to riches, as it may seem to some… nor magic elixir for corporate recruitment, retention, motivation as it may seem to others, but stock options have many advantages to both sides, as an important incentive…

In the article Stock Options Are For Suckers Who Accept Below Market Pay by Financial Samurai writes: There is a saying in the poker-playing community; if you don’t know who the sucker is at the table, it’s you… Don’t be a sucker; before you accept stock options as part of your compensation, at least understand the basics economics about stock options, e.g.; your number of shares, exercise price, shares outstanding, vesting schedule, status of your unvested options if the company is acquired… Most important, you must thoroughly understand the workings of the company you are working for (or intend to work for), e.g.; their basic business model, growth strategy, how they make money or plan to make money…

Another important factor is the company’s management team; who are they, why are they there, what are their plans and timeline… what are their motivations– are they there to build a great company, or a quick flip… These type issues will tell you a lot about the real value of your stock options… It’s unfortunate, but some companies aggressively promote the thinking that stock options are the path to riches when, in fact, they can be worthless, for example; 9 times out of 10 stock options are great for the executive team, but crappy for everyone else…

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But the reality with most companies is that– they either fail or just muddle along… with very little possibility for stock liquidity any time soon, if ever… So, if you are expecting to get rich off of stock options, then think again… If you happen to own stock options or in a position to get them, then that’s great and you may benefit, but don’t get distracted, run your life as if they don’t exit and hope for a lottery event… Company stock options can be a source of great wealth, but they can also be a source of great confusion, unrealistic expectations…

According to Veronica Dagher; all too often many people don’t know about how their stock options work and that can lead to big problems… options come with specific rules attached– and ignoring them can have serious consequences, e.g.; you can end-up facing substantial tax hits, or even losing the right to exercise the stock options entirely… So if you join any company (i.e., start-up or established company); do so because you are passionate about the– company, opportunity, coworkers… and not because of the– pot of fools gold– stock options…

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Botched, Dumb, Stupid– Call It By Any Name; But, Bad Decisions, Bad Deals, Bad Negotiations… Are All Bad for Business…

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Botched, dumb, stupid– wreckage of deals gone bad litters the business landscape… Bad business decisions have been made throughout the course of human history. The question is; What can you learn from them? And if possible; How can you avoid them? In order to understand the effects of bad decisions, it’s important to first establish what you mean by bad decisions, or better yet the difference between– ‘mistake’ vs. ‘bad decision’ vs. ‘wrong decision’… For example; hiring the wrong person is a ‘mistake’… Not doing a background check is a ‘bad decision’… The mistake was something you did without intention, while the bad decision was made intentionally, often without regard for the consequence… It’s easy to dismiss bad decisions by reclassifying them as mistakes: It takes the edge off, and softens the blow. But it’s much worse than that; reclassifying a bad decision as a mistake removes your sense of responsibility, making it no longer your fault. And, it’s a lot easier to live with bad decisions, if they are not your fault…

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Consequently, you are more likely to make the same bad decision– over and over again, if you simply consider it a mistake; such behavior is, by definition, insane… We all make mistakes and we all make bad decisions– they are part of human experience… But, let’s not confuse one with the other… While even the best leaders aren’t perfect decision-makers, it’s still true that a ‘wrong decision’ is different from a ‘bad decision'; A wrong decision is a best guess when you may not have all the facts, e.g.; Option #1 vs. Option #2. A decision is bad when the facts are staring you in the face; e.g.; launching a new product when engineering warns you of near certain failure… Getting business decisions right is tough…

A company must continuously make choices and do it fast– faster than competitors– and more important, to ensure that decisions get translated into action… When a company makes a really bad decision, it’s likely that more than one organizational element isn’t working right… every company makes millions of decisions every year, from big strategic decisions, such as; launching a new product line, to daily decisions about marketing, procurement, customer service… and some of these decisions can go terribly wrong… One thing you can learn from all these cautionary tales is that it’s easy for organizations to foul-up the decision processes. When the decision stars fall-out of alignment, a company can run into serious trouble quickly. So it’s worth reflecting on decisions– the good, the bad, the ugly… and, executives can learn much from the pitfalls of the past…

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In the article The Worst Business Decisions Ever Made by Lily Herman writes: What is your answer if someone asked you to name the worst business decision ever made? Not the worst decision you’ve ever made, but worst decision in the history of business decisions… It’s a great question to think about but more important to learn from bad decisions of lore, in order to prevent them from happening to you… According to ‘The Atlantic'; they asked 17 prominent business people for their opinions and as expected they differed greatly… For example, here are a few takeaways:

  • Consumer Matters: In 1983, Coca-Cola launched ‘New Coke’, as a new weapon in its market-share battle with Pepsi. But consumers boycotted and just three months later, Coke brought back their iconic ‘Coca-Cola Classic’… By 1986, Coke was back on top, and some alleged it was all a marketing scheme! What can we learn from Coca-Cola’s gigantic business mess with the creation of New Coke? No matter how much money you pour into a new enterprise, if your consumer hates it, change it quickly… Luckily, Coca-Cola came to its senses very fast, took the new product off the market, and was back on its feet within three years…
  • Creativity is Vital: After Apple forced out Steve Jobs, the company’s creativity ground to a halt. When he returned, Jobs transformed Apple into the biggest company on Earth, proving how a founder’s grand vision is typically underestimated but impossible to replicate… Although he was considered a tough boss, Jobs was also a visionary who completely shifted the way people thought about electronics… What Apple had forgotten was, a company’s ability to innovate (especially in the tech industry) is everything, and a company isn’t just the product it makes; it’s about the people who work there. Make sure you’re hiring the best people you can find who can create the best product possible— and not forgetting their value when things get a little rough…
  • Do Your Research: In 2008, Bank of America purchased Countrywide Financial, an aggressive and abusive sub-prime-mortgage lender, for $4 billion, but the real costs came after the mortgage bubble burst. Between fines, penalties, legal settlements, the deal cost Bank of America an additional $40 billion… the example of the Bank of America debacle illustrates the importance of doing your research before taking the leap in business, whether that be accepting a new job offer, taking a risk at work, or leaving your job or career altogether. Additionally, don’t ignore the signs of a problem— if a business or company seems like trouble, those issues won’t magically disappear once you begin to work there…
  • Bad Decisions in History: Cautionary tales in history has been full of bad decisions: The ancient Trojans brought the famous wooden horse inside their city walls, not realizing it was full of Greek soldiers who would open the gates from the inside… Napoleon decided to invade Russia and returned with just a tiny fraction of his once grand army… The Titanic was outfitted with only enough lifeboats for a third of the total passengers and crew it could carry… What goes wrong with decisions like these? Sometimes it’s just individual arrogance or foolishness or just plain dumb.. that produces a bad decision…

In the article Why You Make Bad Decisions by Dan writes: Bad news for you: Research suggests your brain is hardwired to make poor decisions… Let me explain: You tend to think of rational decision-making and problem solving as a process where you evaluate multiple options, and eventually decide on the best one… But in fact, research shows that 69% of the time you only look at one option, and that is the one staring you in the face… you then decide– ‘whether or not’– to say yes… Research call this exaggerated narrow focus, or ‘whether or not’ decision-making. Studies show, in most business decisions, you fail to consider more than one option– 70% of the time, i.e.; you look at a proposal, or an offer, or an idea… and you decide ‘whether or not’ to say yes…  your brain is blinded 70% of the time to the multiple options available, and you are stuck evaluating them one by one… This reality leads to sub-optimal outcomes, which drives haggling and win-lose behaviors…

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In addition, you become overly attached– emotional and inflexible– about ideas that you like.  And it leads to a false sense of certainty about how good your decisions really are… Unfortunately, deep thought seems to be falling by the wayside in many companies, e.g.; companies that claim strategic interest in innovation and forward thinking, actually tend to discourage deep probing of complex subjects that matter to success… According to Julie Hunt; more business executives have tendencies to actually discourage creative thinking in employees, while repeating the corporate mantras, e.g.; ‘think outside the box’, ‘push the envelope’, ‘provide thought leadership’… instead, some executives look for external answers in hackneyed recycled material from the latest ‘business management gurus’… These executives seem to prefer the glib over the substantive…

In fact ‘shallow thinking’ is used to validate the core strategy of many enterprises… Shallow thinking impacts the quality and depth of information and analysis available to executives upon which they base decisions… and most important, its ‘shallow thinking’ that masks executive management’s unwillingness to listen to others… By thinking superficially about issues that are actually difficult and complex, company executives can over-simplify goals and pursue answers for the wrong questions… Bad business decisions have been made throughout the course of human history… The question is; What can you learn from them?

There are consequences to any decision; often they can be unpredictable, unexpected… and in hindsight– it’s easy to say you would have made a different decision– but you made the decision with the information available to you, at the time… and if the decision actually achieved the desired outcome, even with unforeseen consequences, then it was a good decision– and others will judge your decision in hindsight… In reality, you make the best possible decision with the best possible information available, at that time… and try to eliminate any biases or preconceived notions about the issue… then, you must accept and live with the outcome and the unforeseen consequences…

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According to Erika Andersen; almost without exception bad decisions result from one of three things; when a decision-maker: 1.) did not bother to get all relevant facts… 2.) made invalid assumptions based on ego, wishful thinking, fear… 3.) did not trust the input of their own advisors… Of course, it’s easy to see the folly in decisions in retrospect; hindsight is 20/20; no one can make ‘right’ decision all the time; but if executives approach decisions with– little more curiosity, little more open-mind, little less certain of their ‘rightness’… then their business might be in a much better place…

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Biometrics for Secure Business, Personal Identity Authentication: Fingerprints, Eyes, Voice, Facial… Defeatable but Defensible.

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Biometrics is defined as both the science and technology of measuring and analyzing biological data such as; fingerprints, eye retinas and irises, voice patterns, facial patterns, hand measurements, DNA… Biometrics is beginning to play a major role in different industries, e.g.; medicine, science, robotics, engineering, manufacturing, and all areas of vertical enterprise businesses… and smartphones, in particular, help enable these services… According to experts, biometrics is the only identification technology that can verify with near absolute certainty the identity of an individual… biometric identifiers are the only distinctive, measurable characteristics that describe each individual person… Though once the stuff of science fiction, identifying an individual through biological characteristics is gradually becoming a business reality…

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Unlike the use of other forms of authentication, such as; passwords or tokens… biometric recognition provides a strong link between the person and a claimed identity… However, according to opponents; there are two important reasons why biometrics won’t work, and why the old-fashioned password is still a better option: 1. person’s biometrics can’t be kept secret, 2. person’s biometrics can’t be revoked… According to Deloitte & Touche; spoofing a person’s biometrics, particularly fingerprints, is a legitimate threat… However, given all the current alternative methodologies, e.g., passwords, tokens… biometrics may be the best technology for the authentication of a person’s identity…

Global Biometrics Market Analyses: Historically, biometrics has been used in government applications, however, in recent years there has been a growing demand for its usage in commercial applications, such as; banking, points of sale, insurance… and the technology, e.g.; Iris and face recognition algorithms… are undergoing substantial advancements and gaining prominence, although fingerprint technologies remain the most popular…

  • According to Global Industry Analysts, Inc. Research: The global biometrics market is estimated to reach US$16.47 billion by 2017… and primarily driven by increasing threat of terrorist attacks, and the need for effective identification technologies… Growth in biometrics markets is driven by increasing opportunities from emerging niche market segments, such as, consumer-based wireless applications including; smartphones, laptops… which are expected to significantly bolster sales in the silicon fingerprint sensors market… U.S. is the largest market for biometrics, and Asia-Pacific represents one of the fastest growing markets with a CAGR of about 23.8%… the ‘iris/retinal’ scan market is the fastest growing segment, by technology, with a CAGR of about 25.9%…
  • According to ABI Research: Revenues for the biometrics market will hit US$13.8 billion in 2015… While majority of revenues are currently drawn from governmental contracts, increased consumer acceptance of biometric modalities will see the consumer and enterprise segments overtake government spending by 2018… Consumers are gradually gaining acceptance for utilizing fingerprint to identify themselves… and the ‘accuracy-cost-acceptance-intrusive ratio’ of fingerprint technology makes it more acceptable than other biometrics… Also, research shows that companies, such as; Apple and Samsung are leading in the mobile integration of biometric modalities, while companies, such as; 3M Cogent, MorphoTrak, NEC… are leading the biometrics field overall…
  • According to Mobey Forum Research: Biometrics authentication technology is a top priority for banks; in survey of 235 bank respondents worldwide, 22% of these banks are already offering biometrics to their customers, while 65% are planning to offer services in near future… also, more than half plan to launch fingerprint biometrics for their customers, while an additional 21% are focusing on voice recognition… According to Aite Group; interviews with 26 fraud executives in 19 North American financial institutions, assets greater than US$50 billion, found that mobile and biometric technology are dominating thinking on issues of authentication and identification… Six of these banks are enabling biometrics for mobile banking ‘login’ by the end of 2015, and more than half are reducing the use of ‘knowledge-based’ authentication technology over the next two years…
  • According to Acuity Market Intelligence Research: Smart mobile devices will include 100% embedded biometric sensors as a standard feature by 2020… According to Maxine Most; biometrics are a natural fit for the smart mobile devices… Drilling down into the data, they predict that by 2020 there will be 4.8 billion biometric enabled smart mobile devices generating $6.2 billion in biometric sensor revenue, and 5.4 billion biometric app downloads generating $21.7 billion in annual revenues from direct purchase and software development fees… and 807 billion biometric secured payment and non-payment transactions generating $6.7 billion in authentication fees…
  • According to Transparency Market Research: The healthcare ‘biometrics’ market is expected to grow at a CAGR of 25.9% to reach an estimated value of US$ 5.8 billion in 2019… In the global healthcare biometrics market; fingerprint recognition is the most prominent technology… it will make up more than 50% of biometrics in the healthcare industry through 2019… Geographically, North America is the largest market for healthcare biometrics technologies and it along with Europe will capture more than 75% of market share… While, Asia-Pacific will provide the largest and most diverse business opportunities for biometrics security solutions in healthcare, due to their budding domestic and export markets for national produced biometric devices…

In the article Biometrics: Business of Identity by Rituparna Chatterjee writes: The FBI is one of many government agencies shaping the future of biometrics… According to Olga Raskin; only governments can afford the kind of ‘mega’ investment needed for pervasive biometric projects, e.g.; in Afghanistan U.S. marines are building a biometric database of opium farmers– to create identity cards for security purposes– by using handheld iris-scanners… While, larger devices perform retina scans at Dubai airport, for brief transit visas… By next year, every South African passport will be biometric… In the U.S., the FBI processes 160,000 to 200,000 fingerprint scans every day, and they are using DNA in the form of genetic fingerprints in criminal investigations… A biometric database of about 70 million fingerprints enable the FBI to gauge, within 10 minutes or less, whether a person has a criminal record or not… However, the largest biometric project in the world is India‘s huge, Unique Identification Authority of India (UIDAI) program; India has issued over 2 million Aadhaar cards that are based on biometrics– fingerprints and iris scans…

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In the article Biometric Technology Leads The Way by Jason Compton writes: Biometric technology provides innovative ways to control access, authenticate identity, streamline transactions… Widespread consumer adoption of biometric payment schemes and growing inclusion of reliable fingerprint scanners, in high-end smartphones, are fueling much of the acceptance… As biometrics technology continues to evolve, here are a few facts to know:

  • Biometrics is still a balancing act: Biometric algorithms always involves trade-off between false positives (incorrectly granting access to an unauthorized user) and false negatives (incorrectly denying access to a legitimate user). Finding the right balance for each application is a combination of art and science. Biometric devices and algorithms continue to shrink the gap and, by extension, the tradeoffs…
  • Mobile plays a central role: Emboldened by the success of fingerprint scanners on high-end smartphones and tablets, vendors are racing to push more authentication and transaction tasks to mobile devices. As both consumers and enterprise users become accustomed to tap-and-scan authentication, expect heavy focus to fall on the role of mobile devices to ease the path to biometric adoption…
  • Password-free dream is still alive: One advantages of biometric technology is that it emphasizes ‘who you are’ over ‘what you know’… That makes a biometric credential more difficult to steal or to intercept than a password or physical token. Multi-factor authentication schemes require both an ‘own’ and a ‘known’ component, such as;  fingerprint and password. This multi-factor approach provides enhanced security at the cost of user convenience. Sophisticated criminal organizations are attacking password databases very aggressively, making a multi-factor approach increasingly appealing…
  • Voice print is gaining traction: Fingerprint scanners are all the rage, but the human voice provides a rich bed of unique characteristics, making it near-perfect for biometric identification. Financial institutions are accelerating their acceptance of voice authentication, which can cut down on the need for lengthy and inconvenient in-person meetings by verifying a client’s identity remotely. Once authorized by voice-print, customers can complete complex or high-value transactions by phone or online…
  • Watch the government: Government agencies are not always at the forefront of IT trends, but on biometrics, they have been given both the budget and the mandate to be extremely aggressive. The FBI’s ‘Next Generation Identification’ (NGI) system went live in 2014, creating a central clearinghouse for innovations in– fingerprint, face, iris scanning… Industry can learn from the successful protocols and should keep an eye on public sector results…
  • Wearables join the biometric toolkit: Gartner Research projects over 68 million smart wearable devices will ship in 2015. As adoption of wearable technology grows, so does the potential to use wearables as biometric markers… ‘Zero-Effort Bilateral Recurring Authentication’ (ZEBRA) uses a biometric bracelet to uniquely identify a user, based on their proximity to a computer terminal. When the user moves away from the computer, they are automatically logged-off from the session… Wearables provide an intriguing alternative to fingerprint scanners, smartphones…

So: Should you use biometrics security? It depends: Do your benefits outweigh the costs? According to Jason Bruderlin; when used correctly, biometric security devices are more secure than traditional methods, for example, if digitized medical records are stolen from a doctor’s office, that doctor potentially faces steep fines under federal law. The benefit to him is the cost of fines he avoids if his data is properly secured… Additionally, biometric identifiers cannot be written down or lost and in all but the most extreme cases, they cannot be stolen. Replacing passwords with fingerprinting increases efficiency, at the consumer level, and doesn’t require the consumer to remember passwords…

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However, biometric security does have drawbacks, e.g.; installation can be complicated and costly and return on investment (ROI) is usually difficult to quantify… So biometrics technology is not perfect– it can be defeated… But, as more sensitive information is stored digitally, the cost of not sufficiently securing that information increases and currently biometrics is probably best solution for keeping it relatively secure… However, there is much to be done with the technology of biometrics and as it evolves and improves so will its– accuracy, reliability, form factors… and that will increase its applications as an important security solution for business and personal identification and authentication.

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Pop-Up Retail and Future of Retail– Fueling a New Customer Experience: Bridging Online, Offline Gaps…

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Pop-Up retail is a short-time duration retail store, which ‘pop-up’ one day and is gone the next… It’s a temporary shop, stall, or brand experience used to sell goods and services for a limited period of time… Pop-up retailing, also known as– flash, ephemeral, hit-n-run, guerrilla retailing… was coined because these stores seem to ‘pop-up’ out of nowhere and gone within a few days… Pop-ups are perfect deployments for making ‘flash’ appearances to engage customers face-to-face for online retailers… and when done properly customers can be intrigued to follow the retailer online…

So, regardless of where you fall on the spectrum when it comes to selling, e.g.; exclusively online, or in-store, or somewhere in the middle with a mix of sales channels… pop-up is the perfect opportunity to try something different to sell products and publicize your brand… The concept of pop-up stores was first inspired by small-scale retailers that sprung up to cater to seasonal demand for holidays, such as; Halloween, Christmas, Easter, July 4th… These outlets are an exciting change to the typical homogenous, big-brand, impersonal online and retail mall shopping experiences that are so common…

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According to research; the pop-up retail industry is about $50 billion in sales, and the following categories are the biggest players in the pop-up market; farmers markets– $8 billion, flea markets– $30 billion, food trucks– $1 billion, yard sales– $1 billion, and pop-up stores– $10 billion… Also in a survey, when respondents were asked to name top reasons to shop or visit a pop-up store they cited; ‘seasonal products’– 61%, ranked next was ‘finding new or unique services/products’– 39%, then ‘shop locally’– 36%, ‘great prices’– 34%, ‘convenience’– 33%, and ‘fun experience’– 30%… an online directory features over 7,000 ‘pop-ups’ in 2014 alone and expecting that number to explode in 2015…

Trends in Pop-up Retail: Retailers and other enterprises are beginning to view a ‘pop-up’ strategy as a legitimate and innovative way for connecting to customers and extending their brands. The latest iterations of pop-up reveals– more elaborate displays, high-end signage, sophisticated POS, mobile commerce capabilities, and interactive experiences that enable useful conversations with customers… Pop-ups are driving innovation in the retail space with various implementations that serve as unique platforms for both– the well established brands and daring new start-ups… There are several key opportunities that pop-up affords retailers:

  • Target a niche audience…
  • Test new products, markets, concepts…
  • Generate buzz, create memorable, visual experience…
  • Economic alternative to full-scale retail set-up…
  • Sell-off old inventory…
  • Market merchandise around a finite period of time, season, holiday…
  • Create a learning center for customers…

In the article Retailing in a Pop-Up World by Doug Stephens writes: The concept of pop-up retail has been around for more than a decade… ‘Vacant’, a company in Los Angeles is credited with pioneering the concept of pop-up shops in North America, after seeing similar concepts in Tokyo… They observed that Japanese consumers would sometimes line-up for hours to buy limited edition goods. Once stock was sold out, the store would simply close and move-on… This led ‘Vacant’ to innovate the current model for pop-up, whereby stores would open for a defined period and then simply close, only to pop-up later in a different location… Pop-up shops, while intriguing, are regarded largely as novelty but that mindset is changing… The traditional retail industry is dominated by the precept that stores are permanent establishments with long-term property leases, good locations, trusted consumer traffic levels… But, the economic recession and changing consumer buying behavior is changing this well established reality… and bringing new opportunities for pop-up retail… pop thMMBQI11G

Traditionally, landlords and property owners would only consider long-term property leases but they are now entertaining the unthinkable; short-term agreements for their space, paving the way for host of temporary retail installations; from Los Angeles to the mean streets of New York, the economic meltdown spurred a brilliant series of unique and daring pop-up concepts… Today, pop-up is a legitimate channel strategy, and everyone from Walmart to Hermes has turned to this temporary format to reach consumers where their full-line stores couldn’t… Technology is also fueling more creative approaches to pop-up… Reality applications are transforming inanimate spaces into engaging consumer buying portals– they are enabling trips through the looking-glass…

In the article What is a Pop-Up Shop? by Erik Eliason writes: Whether you hear temporary retail, flash retailing, pop-up store, or pop-up shop, it’s all one and the same. Pop-up shops are taking over the retail world, and rethinking traditional brick-and-mortar and big-box stores, but what exactly is a shop that pops-up? Sighted as early as the 1990s in large urban cities, such as; Tokyo, London, Los Angeles, New York City… Pop-up shops and pop-up retail are temporary retail spaces that sell merchandise of any kind… That’s right, just about every consumer product is sold via a pop-up shop… from art, to fashion, to tech gadgets, to food… pop-ups are exciting because they create short-term stores that are just about as creative as they are engaging…

What are the demographics of a pop-up shop? Consider: Duration; Typically 1 day to 3 months… Location; High foot traffic areas, such as; city centers, malls, busy streets… Price; Much lower than a traditional store; typically paid upfront… Use; Sell products, usually during holidays or special events, launch new products, move inventory, test ideas or locations, increase ‘brand’ awareness…

What are the benefits of a pop-up shop? Consider: Connect with customers; The pop-up retail format enables a personal connection with customers by building a face-to-face relationships… Sell more; About 95% of all purchases are still completed offline (vs. online), and pop-ups provides an opportunity to take advantage of the retail channel… Build awareness; The pop-up generate much excitement for both the consumers and the media, they build brand awareness with ‘online retailers’ going offline via the pop-up… Cheaper; Launching a pop-up shop is 80% cheaper than a traditional retail store… Test new markets; Much easier to enter new markets, launch new products, publicize brands.

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In the article Why Pop-Up Shops May Be The Future Of Retail by Ivan Widjaya writes: The future is looking rosy for pop-up shops, and here’s why:

  • Cheap Competitive: There is no denying that pop-up shops have the financial edge in the competitive retail market place, as the overheads can be incredibly low. Empty shops are not good for the community or landlords, thus many landlords are being encouraged to rent shop space for short periods of time, and at competitive rates…
  • Create Experience: If you think that pop-up shops are just about flinging open the doors and waiting for the masses to arrive, think again. The concept has slightly more class than that… Pop-up shops are an experience, as well as, a great selling vehicle to shift surplus stock, warehouse clearance… Telling consumers that you are only going to be in town for ‘X’ number of days, weeks… is one way of getting much attention…
  • Mobile: The beauty of the pop-up store is the fact that it can also be nomadic… So, e.g.; if you have always wanted to try your brand in a big city, fancy mall, outlying areas… then a pop-up strategy provides that opportunity… The mobility of the pop-up shop is something that many established businesses find very attractive…
  • Versatile: The mobility of the pop-up shop is one facet of a business model that is essentially versatile beyond the wildest dreams of retailers only a few years ago… However, this versatility moves beyond that of being able to move from town to city and back again. The nature of the pop-up is such that you can customize it for specific locations or consumer types spend… and many brands have created a whole sub-brand, tagged on to their main image using the pop-up experience…
  • Creative: And herein lies the secret of success of the pop-up– the creative nature of a business model with which you can be as different, unique, and creative as you want… How consumers shop is changing and business needs to morph, and the pop-up experience is a valuable tool for engaging consumers, and experimenting with new markets…

Pop-Up, Pop-Out, Pop-On… How far and how fast can the pop-up concept be pushed? New York is seeing its fair share of innovative pop-ups, with Forever 21 (6-month lease testing out 5th Avenue), The Limited (3,400 sq. ft. store in Soho), and Procter & Gamble (4,000 sq. ft ‘free’ store to build brand loyalty for its products on 57th Street) all launching pop-ups in Manhattan. Other notable pop-ups include; Disney’s Tron–Legacy store in Culver City, CA created to take advantage of the movie’s opening, and American Red Cross stores in Phoenix and Las Vegas, where gift buyers could make donations for disaster relief… pop 41Vj8x-qmSL__SY344_BO1,204,203,200_

Pop-up stores give brands the opportunity to test a new marketing program with a specific, confined retail space and launch period… Due to its temporary nature, retailers are less risk averse and are encouraged to inject more creativity into creating a refreshing and innovative brand experience for consumers… The pop-up’s unpredictable– ‘here-today-and-gone-tomorrow’– concept helps to create a sense of excitement and urgency for consumers to visit the store… Pop-ups will never replace permanent stores or online retailers, but they are an important complement to retailer’s business strategy, and/or promoting ‘brand’ awareness…

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