Professor Elam

HR Block Bad Strategy

Monday Dec 27 2010

We last visited HR Block on Dec 8 of this year. We noted HRB had adopted a strategy of lending Tax Anticipation Loans to customers. Now the government has struck down some of that 

business. Desperate, HRB even sued their ultimate lender, HSBC, which does not sound like a particularly good idea to me. Our point is that one should not stray too far from the basic business, preparing tax returns. The money lending business was one of the causes of the problems at GM and Ford, they made more money lending money than making cars. 

Twitter, Practical Apps

Wednesday Dec 22 2010

Fast Company  profiles the latest thinking about Twitter. At first it seemed just a sort of self indulgent look at me and what I am doing site. But it turns out that Twitter is an instant messaging medium that provides instant feedback. 

Frank Lutz does this sort of instant polling  with political focus groups. He tracks their reactions while the politician is speaking. This feedback  is invaluable to the person attempting to perfect the perfect thirty second sound bite. It is also apparently of value to the lost sought after two way tv feedback loop. This after all is what Nielsen and others claim to sell, at high prices, actual listener or viewer feedback. But set up  a site, tell the viewers and bada bing, all the viewers can tweet away with their immediate impressions. Consider 

 

285,800 Tweets about Glee the day Britney Spears appeared on the show

3,085 Tweets per second at eh end of the 2010 NBA championship game

Twitter is now setting up sites so that one can see the specific tweets for specific events, bingo instant feedback.

This could be of value in education as well, though I am not sure administrators and professors are ready for such instant feedback. Assuming the identity of the sender was secret, one could get the instant response of the crowd to anyone speaking at any time. Hmm, what about that lecture on Milton...

Check out the link above, Bill Clinton spent more on polling than any other President before him, now everyone is doing it. 

On the Road to China

 Dec 14 2010

Steven Hsu, a physics professor at the University of Oregon, blogs here

http://infoproc.blogspot.com/

I think you will find his revelations about Chinese life, such as the 'ant colony' most interesting. 

Retro Ladies

Martha Stewart is attempting to re invent her company once again by taking over the Hallmark Channel. So far the results are not promising. This is a pretty good article on socionomics though I doubt the writer realizes it. He notes that Cher is on magazine covers for Burlesque, Oprah is going Cable amid falling ratings, and yes Lady Gaga has slipped into the new Madonna role. 

Like High Hefner at Playboy, MSO has been a much better deal for its owner than for investors. Martha is 69 now, and still trying to make the same formula work. One criticism of MSO was that a company would not likely endure with the name of one mortal on the masthead. After all Betty Crocker's image can change generation to generation, hair style and all, like Blondie in Dagwood, she is perpetually 39. The rest of us have no such luck. 

You tell me, are all enthralled still with Angelina Jollie?  Hmm, the timing may be just right for the marriage of the Prince and his new bride next year, the world needs a new female lead....

 

Real World Budgeting

Thursday Dec 8 2010

Kirk Tuck is an Austin based Photographer. Here is a real world example of budgeting

We study budgeting in ACCT 3314. I really like this example because it is a service company budget. Only 8% of the business in America is manufacturing and that is what the book addresses, how silly is that. Take a look, we will discuss this in our last class Thursday Dec 9.

Chinese High Speed Rail

Thursday Dec 8 2010

While we are arguing about extending tax rates, the Chinese are building infrastructure, check out

photos of these train stations!

As the article says we are fighting pointless wars in Afghan, the Chinese are building infrastructure.

Bad Strategy

Wed Dec 8 2010

 

H & R Block was started by two brothers when they got out of the Army. Their original idea was a firm to assist small business, everything from store window decorating to, oh who knows, filing taxes. After a few months they discovered business wanted one thing more than any other, help with taxes. The first year was in Kansas City, their home town, then on to NYC. As the saying goes if you can make it in NY you can make it anywhere. 

This was the first national tax preparation service. Decades ago Henry Block would appear on tv with his lengthy list of 20 reasons why you should use Block. Back then they advertised low price. Like MCDs, they wised up on that one and moved to expertise, letting prices rise. Indeed I cut my teeth on taxes doing 1040s for Block at the Sears store on 45th and I 35 in Austin. That is how I  initially learned income tax. 

Block however strayed from the original formula. Refund Anticipation Loans became a big part of the business. One of their regional comptrollers explained to me that their average 'ticket' was $180. And the great part, as he said. was that most of those customers did not pay for it, the fee came out of their refund. This struck me as a terrible business plan. What if, the landscape changed and that was not possible?  And sure enough that is what the IRS has done, throttle back on allowing tax preparers to be in the loan business. Worse, Block got into, are you ready, the mortgage business. You can guess how that turned out. 

Stick to  what you know, that is always the winning strategy. 

$100 Million and Counting

Tuesday Dec 7 2010

This video puts the $100 M of 'budget cuts' in perspective. Out of $3.5 Trillion it is of course nothing so why did the President mention it. Because he knows most people are lost amid such large numbers. 

Will the Death Tax Finally be Laid to Rest?

Tues Dec 7 2010

 

This may be the end, of the estate tax that is. This is a particularly onerous tax. The 'idea' was to break up estates of the wealthy, but of course it never accomplished that. The wealthy move that to various trusts. Inflation has meant that many individuals are now worth a million dollars. Believe me assembling the information and paying this tax is onerous. I will be glad to see it gone. What an intrusion. After paying income taxes all one's life to accumulate property, then the govt wants a substantial chunk of the assets. .If those assets are in a family farm, here does the money come from?  Unless one has lots of life insurance, which by the way is also included in the tax, it a deal breaker for the family business which is often tied up in one asset. 

ASWA Scholarship

Monday Dec 6 2010

The ASWA San Antonio offers scholarships for aspiring female students. Log on and take a look, plan on attending some of their meetings. I get lots of questions from students about scholarships, so here is a link.

 

ASWA is the American Society for Women Accountants.