Posts in category Business


Business

Counting Down to ASC 606

There will be little New Year’s Eve celebrating but perhaps a lot of morning-after hangovers for U.S. businesses that haven’t begun preparing for ASC 606, the Financial Accounting Standards Board’s new rules about revenue recognition. They are set to go into effect on Jan. 1, 2018. The news is much the same for Europe, though there the rule’s name is “IFRS 15.” The change is hard to do.

Read more 0 Comments
ApprovedBusinessBusiness and finance

After a bite of Apple, Margrethe Vestager targets another tech giant

MARGRETHE VESTAGER’S assault on technology firms she deems to have improperly massaged down their tax bills continued this week with a tilt at Amazon. The internet retailer faces a bill of €250m ($293m) for back taxes over what the European Union’s competition commissioner considers to have been an illegal sweetheart deal with Luxembourg.

The order requiring the Grand Duchy to recover the money follows a well-publicised three-year investigation. It is the latest in a series of tax-avoidance cases brought by the European Commission against multinationals, most of them American. Last year, Ireland was ordered to recover €13bn from Apple—smashing all past records for EU corporate-tax cases.

As with Apple, the commission concluded that Amazon received illegal state aid—in the retailer’s case between 2006 and 2014—through a tax-cutting arrangement that was unavailable to its rivals. This came in the form of a ruling from Luxembourg’s tax authority,…Continue reading

Read more 0 Comments
ApprovedBusinessBusiness and finance

Facebook and the meaning of share ownership

ONE group of Facebook friends that Mark Zuckerberg recently decided were not worth hanging out with were its public shareholders, who expected to cross-examine him (via a lawyer) on September 26th in a Delaware court. At issue would have been Mr Zuckerberg’s plans to refashion the social-media firm’s share-ownership structure more in his favour.

There is not a scintilla of doubt over who controls Facebook. Not only does Mr Zuckerberg, its founder, serve as its CEO and chairman; owning 16% of its shares, he controls 60% of the voting authority through a special class of stock with ten times normal voting rights. A year ago, Mr Zuckerberg decided he would like to sell a large slug of his holdings (worth $74bn) without diluting control. The firm made a plan to distribute non-voting shares enabling him to reduce his economic interest to 3% without affecting control.

That prompted litigation. Shareholder votes can be directly meaningful on many issues, including management pay…Continue reading

Read more 0 Comments
ApprovedBusinessBusiness and finance

Rivigo is helping the Indian truck-driving industry out of a jam

Time to freshen up the model

THERE are 36 gradations in India’s archaic caste system, from the priestly to the supposedly untouchable. And then, somewhere below that, are the long-haul truck-drivers. Plying the subcontinent’s potholed highways for weeks at a time, few can settle into anything like a home life. Their marriage prospects are grim; venereal diseases and sore backs from sleeping in cramped cabs are but two occupational hazards. Despite an oversupplied national job market, the industry has struggled to attract the roughly 1m new drivers it needs each year to keep everything from Amazon packages to car parts moving. Can technology help?

To fend off shortages, most truck owners have done precisely what economists suggest, which is to increase pay. Drivers can now command nearly 40,000 rupees ($610) a month, a decent white-collar wage—and not far from double the level of trucker pay just three years ago. Rivigo, a startup based in Gurgaon, an…Continue reading

Read more 0 Comments
ApprovedBusinessBusiness and finance

A shareholder pact is rocked by Liliane Bettencourt’s death

A face of the firm

DEATH does not end all uncertainties. News that Liliane Bettencourt, a glamorous 94-year-old Parisian heiress, died on September 20th has provoked a flurry of investor speculation over L’Oréal, the world’s biggest cosmetics company. She had held a controlling stake in the firm her father, an inventor of hair dyes, founded in 1909. Its market value has since grown to be a whisker short of €100bn ($117bn).

Her death brings few immediate consequences. An Alzheimer’s sufferer, she had been declared legally unfit to manage her concerns. That followed a scandal, made public in 2010 after her butler secretly recorded politicians, lawyers and friends as they bilked her for millions of euros. The case still haunts Nicolas Sarkozy, an ex-president. He seethed in October that opponents had stymied his return to politics by repeating allegations he profited from the “sordid Bettencourt affair” (he was cleared of charges over it in…Continue reading

Read more 0 Comments
ApprovedBusinessBusiness and finance

McDonald’s wages a food fight in India

Bakshi gives McDonald’s the shakes

IN MOST ways the McDonald’s outlet in Jangpura, a gentrifying neighbourhood in south Delhi, looks like one anywhere else, with bright displays, plastic seating and a familiar menu. But this week a disconcerting sign warns that “unpredictable” conditions have affected tomato supplies; none are available. Not bad though for a store that McDonald’s has been trying to close since September 6th. Over a third of its 400 or so outlets in India were supposed to shut their doors then—yet nearly all are still slinging McSpicy Paneers to customers.

War rages between McDonald’s India and Vikram Bakshi of Connaught Place Restaurants Limited (CPRL), who first brought the American chain to India in 1996 as a local partner in a 50-50 joint venture, starting in Delhi (along with another franchisee, Hardcastle Restaurants, which went into the southern and western states). Over the next two decades, Mr Bakshi expanded in the north…Continue reading

Read more 0 Comments
ApprovedBusinessBusiness and finance

American entrepreneurship is flourishing, if you know where to look

It’s hard to keep them down for long

AT FIRST glance, it seems that America’s economy is losing its mojo. Many economists, most notably Robert Gordon of Northwestern University, have lamented that productivity growth seems to be anaemic when compared with earlier golden eras (see Free exchange). A gloomy chorus of business leaders has echoed what media outlets have by now turned into a mantra, that American entrepreneurship is in steady decline. Surely America’s overall competitiveness, then, is plummeting?

The answer from one influential think-tank, the World Economic Forum (WEF), is no. In its latest update to its long-running annual ranking of global economic competitiveness, published on September 27th, America rose from third place to second, ranking below only Switzerland.

This is partly…Continue reading

Read more 0 Comments
ApprovedBusinessBusiness and finance

Yandex, Russia’s biggest technology company, celebrates 20 years

ARKADY VOLOZH, the bearded co-founder of Yandex, Russia’s largest search engine, bristles at his company being branded the “Google of Russia”. Far from emulating the American firm, Yandex launched in 1997, a full year before Google, he points out. More crucially, the moniker poorly describes what Yandex offers today, which is a group of products and services that includes taxis, shopping, payments, music and education. “Really we’re the Silicon Valley of Russia,” says Mikhail Parakhin, Yandex’s chief technology officer.

That may only be a slight overstatement. Yandex’s Russian presence is immense; it accounts for just over half of the search market and 61% of online advertising, and its sites attract over 60m visitors each month. Like American tech giants, it is also expanding its offline logistical capabilities, signing recent deals with Uber, a ride-hailing firm, and with Sberbank, Russia’s largest bank, to build out its transportation and e-commerce…Continue reading

Read more 0 Comments
ApprovedBusinessBusiness and finance

Who’s afraid of disruption?

LAST week Schumpeter met two tech tycoons who control businesses in total worth $600bn. In both cases the mayhem around them was what you would expect if Beyoncé hit town, minus the musical talent and looks. Hotel floors were locked down by the official secret service; the corridors were crammed with lines of petitioners and in one case a Wall Street boss gatecrashed the room in order to hug his idol.

The message from both titans—you ain’t seen nothing yet—was imperious. Over the next decade, they say, conventional industries will face an onslaught from tech competitors wielding vast financial resources, new technologies and massive reserves of data. It is a view that has swept through traditional firms’ boardrooms, too, where enthusing about virtual reality and singing the praises of Jeff Bezos, Amazon’s boss, is almost obligatory. The notion of disruption, with its promise to destroy the status quo and then renew it, is the most fashionable idea in global business since the…Continue reading

Read more 0 Comments
Business

Innovation Requires Market Enablement

In this age of tech industry consolidation, one has to wonder what will happen with the pace of innovation as a few large companies begin to dominate. In personal computers, the WinTel marriage continues to control the technology, while Dell, HP and Lenovo control the devices. Similarly, in smartphones, Apple and Samsung, which both design their own chips and devices, dominate the market, especially in North America.

Read more 0 Comments