Summary Blog: CBC Job Cutters?

http://www.nytimes.com/2009/03/26/business/media/26tele.html?_r=2&ref=business

Summary:
The articles is saying that CBC ( Canadian Broadcasting Company) the publicly owned operator of national television and radio networks, is going to cut about 800 jobs and try to sell assets to fight a growing financial shortfall caused by a advertising downturn, it said on Wednesday. This company which has 9850 employees and receives more than 1 billion dollars a year from the federal government, is expecting this shortfall to hit 171 million dollars. It blamed weak ad market, higher costs, a base salary financing shortfall and aging infrastructure. Its projections assumed the government would authorize 125 million dollar in asset sales. Other than the government funding, CBC usually generates $600 million a year in revenue from commercial activities. About 400 employees are being laid-off from the English-language services, and 335 are being laid-off from the French-language services and 70 are being cut in other areas of the company.

Connections:
The connection is the changed financial statement the company due to the significant decrease in wages expense. Since CBC is cutting jobs and selling assets to try and beat the recession, even though they are supported by the government, they would have more cash in the bank instead of having a lot of long-term assets. Also the manager has to choose which employees to lay off, so each one will be different and the accounting department will have to record everything. From calculating the last paycheck and paying it, but changing the info on employees will be a big task. I think that they should change their strategy in getting business from business ads, by changing the management or perhaps make better deals to bring in more business. But because of this turn-of events, the shareholders of the company are probably not very confident in the company, so selling some assets would then lower the shares costs and would lose interest in the company. Which would in turn weaken the company further, and then as people lose faith in the company it will continue to lose money, resulting in bankruptcy.

Reflections:
As we all know, the news has been filled with stories about companies big or small are cutting jobs and facing downfalls. This is not a different case, but the thing is, CBC is Canada's first broadcasting company. So from historical sentimental value its also has pride as being the first and one of the biggest broadcasting company in Canada. So due to these two facts it is possible that the Canadian government will support CBC and then they wouldn't have to worry about being shutdown or selling the company. Although they may not make a lot of money, but because the government is pratically running the company all they have to do is find some other business and they can keep it running without that much revenue.

Ch. 16 Reduced Resort Rages?

http://www.forbes.com/feeds/ap/2009/03/11/ap6155146.html

Summary:
Vail Resorts, a ski resort, is planning on cutting their employees wages by as much as 10 percent to try and reduce operating costs of their resort. A move like this was predicted to save more than $10 million annually. But not all employees are getting the 10 percent cut, the percentage is decided on a sliding scale, seasonal employees receive a 2.5% cut, and executives get a 10% cut. Even Chief Executive Rob Katz said that he will not take any salary for 12 months and receive a 15% pay reduction. The effects of these for seasonal employees will take place at the end of the winter season, and the other employees will be on April 2. Also year-round employees will receive stock-based bonus values from 1.5%-7.5%.

Connection:
The biggest thing is about the wage reductions of a company in order to cut back operation costs. This goes directly with the current chapter we are doing about payrolls and the complex systems of keeping track and giving wages. With the new changes being put in place for the near future the accounting department for that company is going to be kept busy calculating the new wage amounts for each employee and giving out compensation for the employees that have been laid off. So the numbers for the coming year will be quite a experience for the accounting team. That is all the connection between the chapter and this article.

Reflection
Due to the recent recession nearly every business in the world has been struggling to keep in business, or has at least been affected in a negative way that would put them in an troublesome position. So to cope with this recession many businesses are forced to make some drastic decisions, some completely closed down, and others laid-off a lot of people, but in this case they cut the wages of its employees by a lot. But i still think that is very compassionate considering they still have a job unlike others who lost their jobs and are depending on the government to help them. But if this continues i don't think that these employees will be lucky for very long, and just end up like thousands of others.

Ch.15 Can Canwest pull through?

http://www.cbc.ca/money/story/2009/02/27/canwest-deadline.html

Summary:
On Friday, February 27, Canwest Global Communications Corp. had their debt repayment date pushed back by 12 days, but the company has reduced the media company's credit by two thirds, from $300 million to $112 million. Although Canwest has $92 million drawn under the credit line, it said that they had enough cash on hand and cash flow to continue work normally through the period. But the company and its banker are still negotiating on pushing the deadline further back. During all of this, the company is taking measures to reduce expenses and think of alternate business plans to keep this company alive. Even the spokesperson had said that it was "business as usual" it is clear that the company is struggling through this time, as The DBRS puts pressure on them by saying that if they failed to pay their debt of $100 million the company would be in default. But this debt was only so great because of their earlier acquisition of the former Southam newspaper chain and Alliance Atlantic entertainment. So to pay off their debts Canwest is struggling to sell several of its non-core assets. It has even put 5 of its E! television station for sale.

Connections:
This shows that have a good credit and liquid assets are good for running a company. Which is perfect for our Ch.15 topic when bankers decide whether they should loan a company or individual money by seeing there credit history and trust. So after this incident banks may not lend money to Canwest again for a long time because they couldn't meet its deadline. Also because they had bought the other companies, they should have seen their common-size comparative income statement to see if that company is profiting enough or losing money before purchasing it, or else it may become a burden to own. But by selling their assets to try and pay off their debt is smart choice because if all they needed was this little bit of time to catch back up then losing some assets is a suitable sacrifice.

Reflection:
Although having ambition is a good thing, in this case a company expanding by purchasing other companies. It is imperative that the company think everything through before acting on it. One of the many questions is, if the company i bought did not make enough profit to cover its worth of buying it, would it be a good choice? Or maybe if the economy were to suddenly go to a change for the worse would i still be able to keep it running? But everything is not always logical, as emotion may have played a factor in the decision making, I think that even it may not have been the best choice. The ability to buy another company is a great way to show how powerful and sufficient a company is. I hope that for the days to come that Canwest can shine after this predicament.

Ch. 14- Taking advantage or being taken advantage of credits cards?

Summary:

The article I read talks about the use of credit cards and the rewards from using credit cards. The use of credit cards are now very common with over 50 million Visa and Mastercards in peoples pockets its no wonder banks are so keen on giving out rewards for using their cards. With each transaction a patron makes with the credit card, the bank takes transaction fees and then their are annual fees for each card a cardholder has. So the banks are now trying to "sell" their credits card by giving rewards like air miles, and lower interest rates so people will choose to use their credit cards and make money off the transaction fees.



Connections:

This article relates to the chapter as it shows the progression of credit cards and the many uses it has accumulated over the years. It shows that the base for choosing which bank account and credit card to use has changed and it also shows what people are prioritizing and what they deem as unimportant. Also as you know that humans are very greedy people, they will try to get the best deal out of anything, and that is no difference in choosing what credit cards to use. With so many different banks and cards out there to choose from, its hard to make a decision so the banks will not only have to provide services but advertise their credit cards and make sure that they are appealing to the public. Also with the weakening economy, encouraging people to spend and travel is a very good idea to help improve the global economies so that we can get out of this recession sooner.



Reflection:

With the rewards and benefits, I think that people may be tempted to use credit cards to pay for everything they may buy. But that might not be the best thing, as the most important and liquid assets is cash, I think people should use and keep cash more as well. We can't just make every transaction on account because that means that money hasn't really been exchanged yet, so if a large amount of money owed on account the banks may not be able to cover everything. So it may go bankrupt if it can not pay off the debts of its customer, if they haven't paid the bank yet. So it can be quite dangerous, using credit cards all the time so i think people should try to use cash as often as they can.

Chapter 12. B.C. retail sales downward spiral.

Summary:
The article reports that retail sales in B.C. is continuing its downward spiral to a record low, with forecasts suggesting 2008 will end with the weakest growth performance in several years. According to a report from central 1 credit union, spending in B.C. has been at an all time low because people are losing confidence due to the financial crisis and a worsening economy. Not only is the retail business being affected but housing market and equity market are also falling. But a lower Canadian dollar will discourage many Canadian shoppers to go out of the country and keep them here. So that would help the economy a little.

Connection:
Since the retail businesses are being affected because of the financial crisis making people lose confidence in spending. The businesses must either lower their prices to meet the demands, or give discounts as to let people get a great bargain. Or there would be no other way of saving a business with today's economy. But because of these discounts and lower prices wages may also be cut, or employees may find their employment terminated. Which would hurt the economy even more, so business owners are faced with a dilemma and there is no hints or clues as to what to do.

Reflection:
The lowering of prices would encourage more people to spend. Also due to the holidays coming closer the economy cannot afford to be in a recession. But giving discounts is actually a very good idea, it will let the consumers save some money and allow the retails to still make a profit. Its is profitable for both sides. Also because of this people spending more might help slow down the fall to recession while our government tries to fix this predicament. Plus sooner or later out Canadian dollar will return to its original glory and that would help the economy and raise prices. But the problem is how much longer do we have to wait to lose this problem. No one knows, but I'm sure no one wants to be in a recession.

U.S. Stock Market Crisis

The recent stock market crash that happened in the U.S. has now quickly become a global crisis. Not only are U.S. investors in a panic but the recession has also spread to Canada and several European countries. Not only that but it seems that stocks in emerging nations like Europe and Canada plunged even more steeply than in the U.S. as investors in other countries saw the credit crisis as a threat, not just to U.S. investors. But one good thing is that Canada won't be in the slump won't be as serious and long as the U.S. and some European nations, that is because the Canadian banking system is solid and this country's economy is not weakened by growing government debts. But the economy has still been hurt by falling export sales to the U.S. and as people start spending less on daily life as job growth stalls and fear spreads through the economy. Also Canada is hit the harder because it is a big resource exporter and plunging income from the petroleum and other commodities that needed a high export price. But we are still much better than the U.S. and Europe because their banking systems are burdened by massive debts, many of which unlikely to be repaid.

Connections:

The crash would have a serious impact on our economy resulting in a recession which would strike fear in the residents, making them spend less, plunging our country into further recession. That would lead to the government losing money from taxes and going into debt. Not only that but it would affect our schools, health care, community centers, and much more. Also because we have a federal election coming up the next party to come into power would have risen to a position of debt and a shortage of money. So that would lead to prices increasing for our essentials and then employers would have to raise salaries to meet the demands of the prices and that would lead to further increase in prices and that would enter a continuous cycle. Where prices increase salaries increase and government goes into debt. But not only that but the trade companies would have a much harder impact because their most prominent trade route is with the U.S., but now that they can't afford to buy our materials we would lose a large source of income.

Reflection:
This article makes me wonder how come the U.S. let this happen so easily, did they not have any back up plans or something that will prevent the country plunging into a recession. The government is a big factor in this predicament they should have budgeted their spendings in their projects and have a financial plan that would ensure the safety of the economy. But our government has ensured that we would not fall to far as apposed to the U.S. but that does not mean we would not be hurt as much. As the U.S. continues to not buy our trade products would would lose revenue and that would be just as bad. But as the crisis continues we may not know what would be the eventual outcome of this disaster may be but we can only hope for the best.