Articles of Interest

Capturing the World’s Emerging Middle Class
by David Court and Laxman Narsimhan
July 2010
https://www.mckinseyquarterly.com/Capturing_the_worlds_emerging_middle_class_2639

The rapidly growing ranks of middle-class consumers span a dozen emerging nations, not just the fast-growing BRIC countries,1 and include almost two billion people, spending a total of $6.9 trillion annually. Our research suggests that this figure will rise to $20 trillion during the next decade—about twice the current consumption in the United States.

These new spenders offer an opportunity for early winners to gain lasting advantages, just as companies in Europe and the United States did at similar points in their development. In 17 product categories in the United States, for example, we found that the market leader in 1925 remained the number-one or number-two player for the rest of the century. These companies include Kraft Foods (Nabisco), which led in biscuits; Del Monte Foods, in canned fruit; and Wrigley, in chewing gum.

How Individuals and Not-for-Profit Organizations Can Protect Themselves Against Ponzi Schemes

Thinking Outside the Box
by Guest Columinst
Seymour Jones
Clinical Professor of Forensic Accounting & Fraud at NYU Stern School of Business & former Senior Partner of Coopers & Lybrand
New York, NY

With the recurrence of a number of recent Ponzi schemes it is well to be reminded of the defenses available to both individual investors and certain institutions of a charitable or club nature that have been adversely impacted by the schemes. Investors should be alerted to certain flags that smack of Ponzi schemes and therefore they should be avoided:

· Investment opportunities that promise a fixed rate of return that far exceeds the more rational normal rate are indeed too good to be true.

· Investments that promise a return of your dollar at your request, other than regulated financial institutions such as banks, are suspect.

· Investments that do not clearly define the detailed nature of the related investments together with periodic financial statements certified by recognizable certified public accountant have been employed by Ponzi schemers in the past.

· Secrecy involved in the investment strategy utilized by the investment manager should alert investors to the distinct possibility of the existence of a Ponzi scheme.

· Institutions that are involved in charitable activities and private clubs should be forewarned that to the event that the Ponzi schemer has used such institutions to advertize his investment opportunities by attracting investors through his charitable and therefore “honorable” intentions may fall into the following traps.

When the Ponzi scheme ultimately fails and files for bankruptcy, as is often the case, the trustee in bankruptcy may go after the contributions to the charitable institutions and/or private clubs made by the Ponzi schemer on the basis that these are considered fraudulent conveyances because they were used to promote the fraud. In such cases the foregoing organizations may be hard pressed to come up with the required funds since two or more years worth of such contributions, depending on the state location, may be requested by the trustee in bankruptcy. It is therefore required that organizations become familiar with and monitor the actions of major contributors.

What You Should Know About Choosing and Setting Up Accounting Software

Thinking Outside the Box
by Guest Columnist
Laurence Scot
Co-Managing Partner
Skody Scot & Co, CPAs
New York, NY
Author of Simplified Guide to Not-For-Profit Accounting, Formation and Reporting

Most business people today understand that accounting software is important and necessary to properly track, and report on an organization's financial activities. But what software to use and how to configure it is a mystery to most people, even to many accountants. This mystery is compounded by common misconception such as - all programs are created equal (with the exception of cost) and what's good for one type of business is good for another type; Or, anyone who's computer literate can install/setup a properly configured accounting program; and, accounting systems and chart of accounts are easily modifiable and changeable in the future.

It's safe to say (and an undeniable fact) that an organization's accounting program is the bedrock or "foundation" from which all financial activity and reporting flows. If it is flawed, financial information will not be easily available and management will lack the tools to make informed and timely decisions. In the author's opinion, based on 30 years experience, a significant number of organizations under-spend on accounting software, software design and software training. Many times the cause is simply a lack of money, but in numerous other cases the cause is lack of knowledge or expertise in understanding what is involved, or lack of time to properly evaluate or design/configure the software and char of accounts. To borrow an old phrase, an ounce of prevention is worth a pound of cure. This aptly applies to purchasing and configuring accounting software. To avoid or significantly reduce future problems, the following suggestions should be followed.

• Evaluate your current and future reporting needs through discussions with all major accounting software users (e.g. president, controller department heads).
• Evaluate at least two different accounting programs either through vendor demonstrations or by reviewing evaluations copies. It is imperative that a technically competent individual be involved in the evaluation process.
• After purchasing the software, spend time with all key users to develop an appropriate chart of account structure.
• Have a technically competent individual install and configure the software and train others in its use.

Management might balk at spending time and money in performing these tasks, but not doing so will invariably lead to future problems such as the inability to generate important detailed reports. Lack of timely or convoluted financial information will invariably lead to a reduction in organizational efficiency and effectiveness and the nagging regret that more time and energy was not spent in the beginning to avoid the ensuring problems.

Please send posts or tweets to us if you have any comments or questions for Laurence Scot.

Articles of Interest

Unlocking The Elusive Potential of Social Networks
by Michael Zeisser
June 2010
https://www.mckinseyquarterly.com/Unlocking_the_elusive_potential_of_social_networks_2623



There is much hype about social networks and their potential impact on marketing, so many companies are diligently establishing presences on Facebook, Twitter, and other platforms. Yet the true value of social networks remains unclear, and while common wisdom suggests that they should be tremendous enablers and amplifiers of word of mouth, few consumer companies have unlocked this potential. At Liberty Interactive, which comprises many specialty e-commerce companies, we wrestle daily with the question of how to realize the promise of social networks.
We do have pages on Facebook and active feeds on Twitter, but we never thought those steps alone would make a big difference to the performance of our companies. More recently, we have adopted a new mind-set: we think of word of mouth generated on social networks as a distinct form of media. This idea is more than a semantic detail. When you think of word of mouth as media, it becomes a form of content, and businesses can apply tried-and-true content-management practices and metrics to it. In addition, word of mouth generated by social networks is a form of marketing that must be earned—unlike traditional advertising, which can be purchased. We therefore concluded that we could succeed only by being genuinely useful to the individuals who initiate or sustain virtual world-of-mouth conversations.


So what does it mean to be useful in a world of virtual conversations enabled by social networks? Obviously, there are no generic solutions, and each company will need to invent and discover what makes sense for its unique situation. We have, however, learned a few lessons that can be encapsulated in two primary insights. First, a powerful way for a brand to be useful in the virtual world is to confer social importance on its users. Second, “virtual items” are critical to stimulating social interactions that may in turn generate word of mouth.