This document summarizes 12 articles contained in the Touro Accounting and Business Journal (TAB Journal) from Spring 2014. It begins with a message from the Dean of the School of Business highlighting the increased number and quality of papers submitted for this issue of the journal. It then announces that the Best Student Paper Award is being given to Joseph Dauber for his paper titled "Counterfeiting: An International Crisis". The remainder of the document provides brief summaries of each of the 12 articles contained in the issue, with topics ranging from counterfeiting and marketing to finance, economics, and management.

1. 2.7521
Inside This Issue
Message from the Dean of School of Business 2
Best Student Paper Award 2
Counterfeiting: An International Crisis, Joseph Dauber 3
Celebrity Endorsements, Josh Friedman 14
The Impact of Culture on Advertising, Adina Linn 19
The Result of Cause-Related Marketing on Consumers’
Attitude & Brand Loyalty, Elisheva Florence 24
Sweet Manipulation, Danielle Reifer 30
Mahna Mahna, Shevi Gartner 33
The History of the United States Monetary System, Rachel Morris 36
Investment Principles, Eric Lehmann 44
Equity Portfolio for the 21st Century, Rafi Mahilnitski 56
Sports Apparel Licensing, Simcha Himmel & Abraham Weiser 64
Revenge of the Machines, Dena Brookler 77
Adherence to Ethical Behaviors, Faygie Rakower 80
The Importance of a Creative Work Environment, Joseph Gomez 85
Is There an Optimal Time to Sell Equity?, Professor Eliezer Goldberg 91
Submission Requirements 99
Lander College of Arts and Sciences, Division of Touro College
TAB JOURNAL
ARTICLES
Spring 2012
Touro Accounting and Business Journal
WELCOME
Journal
Lander College of Arts and Sciences, Division of Touro College
TAB JOURNAL
Spring 2014
Touro Accounting and Business Journal

2. TAB Journal Page 2
Message from the
Dean of School of Business
Dr. Barry Bressler
I am very pleased that we have exceeded our
expectations and have received many more
outstanding papers qualifying for the inclusion of
the TAB journal than ever before. Not only have we
increased the quantity of refereed publishable
papers, but also we have expanded the purview
and range of topics. On behalf of Dr. Michael
Szenberg and myself, I want to commend the
students for their superlative work, the faculty,
(specifically Professor Tendler of LCW and
Professors Teich, Rovt, & Bigel) for their
encouragement of students and to our student
editorial staff consisting of Sol Lerner, Shimon
Krieger, & Lilian Hamadani for decoting their time
to assisting in the editorial process. Above all, we
thank our lead editor, Dr. Julita Haber, who
painstakingly read ever word of every paper and
was the final arbiter. Finally, there are no words to
adequately thank Esther Widroff for coordinating
every single detail of the editing process as well
general and specific overseeing of all aspects of
the journal.
Active participation in a student journal is a
reflection of a dedication to learning, academic
development, and striving for recognition and a
successful career. The manuscripts in this TAB
Journal contain theoretical analysis with real world
application covering major Business disciplines:
marketing, finance, economics, management and
strategy. Students demonstrate that they are able
to conduct inquiry research and extrapolate
principles of Business from the course material
into well-structured analysis of Business and its
ramifications.
Best Student Paper
Counterfeiting: An International Crisis
by Joseph Dauber
This edition of TAB is awarding $100 American
Express Gift Card to the Best Student Paper. The
TAB Editorial Board has evaluated all submissions
according to the content depth, analysis, research,
practical implication, paper organization,
structure, format, style, and grammatical rigor.
Based on the overall ratings, the board decided to
award Joseph Dauber for the manuscript titled
“Counterfeiting: An International Crisis” under the
direction of Professor Teich.
We hope to nominate many more worthwhile
manuscripts in the upcoming editions of TAB. All
Touro College students are encouraged to follow
this student’s footsteps by writing and conducting
research to produce high quality papers for future
submissions by their faculty. Congratulations
again to Joseph!

3. TAB Journal Page 3
Counterfeiting: An International Crisis
Joseph Dauber
The Agreement on Trade-related Aspects of
Intellectual Property Rights defines “counterfeit
trademark goods” as any goods, including
packaging, bearing a trademark without
authorization. This authorization is identical to
the trademark validly registered in respect of such
goods, or which cannot be distinguished in its
essential aspects from such a trademark, and
which thereby infringes upon the rights of the
owner of the trademark in question under the law
of the country of importation. Furthermore,
“pirated copyright goods” are defined as any
goods made without the consent of the right
holder or person duly authorized by the right
holder in the country of production and which are
made directly or indirectly without an infringement
of copyright under the law of the country of
importation (Wiedmann, Hennigs, & Klarmann,
2012).
As the technology and global infrastructure
improve, counterfeiting has become a rampant
problem. By the year 2015, analysts at the
International Chamber of Commerce (ICC)
estimate that the value of counterfeit goods will
reach more than 1.7 trillion dollars. Counterfeiting
is a very profitable business with low barriers to
entry; it requires minimal investment, and
consumer demand for counterfeit goods is high.
Apparel, shoes, and handbags account for an
estimated 29% of all counterfeit items (“Magnitude
of Counterfeiting”, 2009). Whether it is the latest
Gucci purse or Lacoste shirt, counterfeiters try to
capitalize on brand recognition.
This paper explores the topic of counterfeits in the
apparel, shoe, and handbag industries, focusing
on consumer decision process of purchasing
counterfeits and strategies companies can
implement to fight counterfeiting. In order to fully
understand the severity of the issue at hand, one
must fully understand the business of the
counterfeiting industry. As such, this paper
provides extensive background information on
this subject matter, current statistics, reasons why
consumers purchase counterfeit goods, why
consumers should not purchase counterfeit
goods, as well as other topics. When there is a
core understanding of the counterfeit business, it
will be easier to understand the need for retailers
to strategize against this pervasive issue.
This is an issue that has spread like wildfire with
the advent of technology and globalization. It is
important to educate people on this matter
because it is something that should be at the
forefront of company policy. Studies have
estimated, for example, that between 1994 and
2004, the worldwide market for counterfeit and
pirated goods increased by 1,100%. Astonishingly,
figures from 2004 also suggested that counterfeit
goods accounted for seven percent of global
trade. This number will continue to rise if nothing
is done to quell the problem (“Business Action to
Stop Counterfeiting”).
The apparel, shoe, and handbag industries are
interesting to study with regard to counterfeit
goods because of the unique aspects these
specific markets offer. First, knockoff brand
named clothing, shoes, and handbags give the
consumer the same self-expressive and symbolic
look as an authentic product. A study by Nia and
Zaichkowsky (2000) showed that all respondents
found luxury products fun and worth the amount
of money spent, whether they were original or
counterfeit. Despite feeling that luxury products
were_more_worthwhile, participants_were_unable_
Joseph is a student at Lander College for Men and is majoring marketing.

4. TAB Journal Page 4
to_distinguish_between the real and the
counterfeit product. Someone who purchases a
product strictly for its practical use, such as
medicine, however, may be able to tell the
difference more readily between authentic and
counterfeit goods. Furthermore, the counterfeit
apparel market is interesting to examine because
studies suggest that up to 73% of apparel-related
purchases are non-deceptive purchases, meaning
the consumer is knowingly purchasing a
counterfeit (Bian & Moutinho, 2011). Therefore, if
marketers can implement defensive strategies to
make counterfeits less desirable and offensive
strategies to keep current consumers brand loyal,
serious steps could be taken to mitigate the sale
of counterfeit goods.
Background
Counterfeiting is not a new phenomenon.
Economists claim that it is the second-oldest
“profession” in the world. There is evidence dating
back as early as 800-400 B.C.E. proving there was
counterfeit Greek pottery sold in the Roman black
markets. In France, there is also evidence from 27
B.C.E. of counterfeit wine stoppers being sold on
the black market. More recently, the British
counterfeited American currency during the
American Revolution. In the 21st century, various
products have been plagued by counterfeiters,
including cigarettes, candy, medicines,
automobiles, and clothing (Yi-Chieh, 2009).
Advancements in technology and global
communication, as well as globalization, have
made the development of counterfeit goods easier
and more efficient. Technology allows
counterfeiters to quickly imitate and manufacture
high quality knockoffs, even replicating a
product’s labeling and packaging. The Internet has
also allowed for more efficient communication
between suppliers and consumers. With more
widely available Internet access and the evolution
of more intricate trade networks, counterfeit
suppliers from overseas are quickly and
professionally able to connect to buyers and drop-
shippers. The Internet allows for illegal suppliers
to look professional and legitimate, as well as to
remain anonymous. Counterfeit apparel suppliers
can be found in a mere instant by doing a Google
search for “wholesale Lacoste polos” or “wholesale
Ralph Lauren dress shirts”. Thousands of
knockoffs can also be found on Chinese business
to business websites, such as www.alibaba.com.
Counterfeiters also give customers the ability to
purchase their goods on the local streets instead
of having to go into a store, although that option
is also available. As a case in point, walking
around 34th Street and Broadway in Midtown New
York, pedestrians will be bombarded by peddlers
seeking to lure in the customers with their
counterfeit products. Globally, counterfeit
products are also relatively easy to come by. One
can visit the famous Silk Street in Beijing, or the
Arab Shuk in the Old City of Jerusalem, or
Indonesia’s Harco Glodok, for example, and
effortlessly purchase all sorts of counterfeit
apparel.
There are three main methods of counterfeit
production used when producing apparel, each
having unique characteristics. The most common
technique used when producing designer label
knockoffs is the procurement of authentic items
by the counterfeiter, who then produces his own
version in his illegal factory or warehouse. Another
manner in which counterfeit apparel is produced is
by subversive employees of legitimate suppliers
who produce ‘over-runs’ or unauthorized goods
during nonoperational hours. Companies such as
Lacoste and Ralph Lauren will have contractual
agreements with overseas manufacturers they
trust to produce apparel exclusively for their
company. Dishonest plant managers will take
huge kickbacks, usually in the

5. TAB Journal Page 5
form of cash or drugs, and agree to run ‘night
shifts’, to produce “over-runs”. These are unique
counterfeits because the same company on the
same production line produces them, but due to a
breach in contractual agreement, law deems them
as counterfeits. The most uncommon
counterfeiting technique is whereby counterfeiters
produce plain clothing, without trying to replicate
an authentic version, and just add the designer’s
logos, tags, and labels. These are usually very easy
to recognize, as they are usually of inferior
quality.
When analyzing a country’s production of
counterfeit goods, precise data is often difficult to
obtain due to the covert nature of the business.
Extrapolation from a sample of websites, peddlers,
and stores is not an accurate measure of the
magnitude of the counterfeit industry. First, there
are thousands of web pages, peddlers, and stores,
and they are too numerous and varied to quantify.
Second, quantity available for purchase is usually
not publicly available information. In fact, it may
be in the sellers’ interest to underestimate
quantities available, both in order to drive up the
selling price and in order to protect themselves
from the scrutiny of policing authorities.
Furthermore, because counterfeiters are always
trying to work one step ahead of the authorities,
they will be selling the same merchandise through
many different mediums. Finally, in order to get
the best estimates on the number of counterfeit
goods, one must delve into the yearly customs
reports produced by each nation’s border police
and account for the number of confiscated
packages in their analysis. There are a lot of
confounding variables in making such calculations
and estimations. Official estimates of the number
of counterfeit goods produced vary significantly,
and it seems that the only thing various officials
really agree on is the escalating nature of the
counterfeit goods market. The 2012 European
Union (E.U.) Customs Enforcement of Intellectual
Property Rights Report claims 90,473 cases of
counterfeits were seized at the borders, with a
total estimated value of €896,891,786 (the
equivalent of approximately $1.2 billion dollars).
In 2012, U.S. officials claimed that the United
States Department of Homeland Security seized
counterfeit goods valued at over $1.25 billion, a
number comparable to that of the E.U. Sixty
percent of counterfeit goods seized by customs
agents in the E.U. and U.S. originated from China,
Thailand, Hong Kong or Malaysia.
U.S. customs agents have seized millions of
counterfeit apparel items. All types and all styles
of apparel have been counterfeited. Statistics from
last year show last that $25.3 million dollars of
shoes were seized. Most of the shoes confiscated
were Nike knock-offs. However, counterfeiters
also managed to counterfeit other highly popular
and exclusive national brands like Uggs, Christian
Louboutin, Air Jordan, and Jimmy Choo. $14.8
million dollars of counterfeits seized were
designer clothing. The retail value of those goods
was over $126.3 million. Seized goods included all
categories of clothing, with a preponderance of
national brands such as Guess, Ralph Lauren,
Lacoste, Burberry, Armani, and Hugo Boss.
Additionally, $8.4 million dollars of seized goods
were watches, with a retail value of over $112
million dollars. Watch brands included Rolex, Tag,
Breitling, as well as many others.
Damage from Counterfeiting
The fact that 73% of Americans purchase
counterfeit apparel with the knowledge that it is
counterfeit indicates that Americans feel that
purchasing counterfeit apparel is acceptable.
Interestingly, it is not only illegal to sell
counterfeit goods, but it is also illegal to purchase
counterfeit goods (Bian and Moutinho, 2011).
Governments have made buying and selling

6. TAB Journal Page 6
counterfeit apparel illegal in order to protect
legitimate retailers and patents and to protect the
unsuspecting consumer, as well. Furthermore,
counterfeiting can damage the economy and the
public welfare in general. Counterfeit rings have
been linked to all sorts of illegal activity including
terrorism, organized crime, and drug trafficking.
Counterfeiters also do not pay taxes on their
goods. They usually do not pay their employees
fair wages and often provide extremely harsh
working conditions.
Counterfeits may destroy brand value and firm
reputation, and can detract from the incentive to
innovate. Counterfeit sales reduce the ability of
companies to develop new products. Companies
may not be willing to invest as much in new styles
and ideas if potential profits are minimized
because counterfeiters are taking a portion of
them.
Counterfeiters can also affect the consumer more
personally. Purchasing knockoffs from
counterfeiters’ web sites may put the consumers
at risk for identity theft; when dealing with
unscrupulous people, who knows where they draw
the line? Counterfeiters may be more than happy
to use customers’ credit card information at their
disposal to commit other fraud. Furthermore,
counterfeit apparel may be made with dangerous
materials that are hazardous to one’s health. A
recent study published by the American Consumer
Institute (“Intellectual Property”, 2013), surveyed
1,000 U.S. adult citizens to assess consumer
opinions on the effects of counterfeit goods. One
of the findings of the study was that 89% of
respondents saw the sale of counterfeit and
pirated goods as negatively affecting American
jobs and 90% believed that the sale of counterfeit
goods is bad for the U.S. economy. Additionally,
91% of participants supported strong enforcement
of laws to protect against the sale of counterfeit
goods. The results demonstrate that consumers
really know the detrimental effects of purchasing
knockoffs. Nonetheless, a large number of
consumers, as mentioned above, continue to
purchase counterfeits goods. When there is an
understanding of why consumers continue to
purchase these goods despite their seeming ill-
will against them, it may help give marketers ideas
about how to fight counterfeiting (The American
Consumer, 2013).
Literature Review 1
Counterfeits and branded products (CBP): effects
of counterfeit ownership. Explored the impacts of
counterfeit branded products (BP) on branded
goods, and explored the determinants of CBP
purchase intentions of both CBP owners and non-
owners. Bian and Moutinho (2011) ran a study to
try to answer three simple questions. They wanted
to know if consumers favored BP over CBP, if the
ownership of CBP would alter their perceptions of
CBP or BP, and if current CBP ownership interacts
with perceptions of CBP in determining CBP
purchase intention. This article investigates non-
deceptive purchase, where a buyer knowingly
purchases the counterfeits. Bian and Moutinho
explained the uniqueness of luxury apparel
counterfeits, whereby the product attributes tend
to serve less of a utilitarian function and more of a
symbolic or “self-expression” function, and thus a
counterfeit good may accomplish the same task as
the authentic good. The authors pointed out that
consumers realize that an authentic product is
usually of better quality, and comes with excellent
service, which allows the manufacturer to demand
a higher price in the market. To help understand
consumer behavior, they attempted to limit the
purchase of counterfeit goods to consumers who
shared certain demographic characteristics. The
article concluded based on previous research from
Bloch (Bloch, Bush, & Campbell, 1993), that age
and household income were not significant criteria

7. TAB Journal Page 7
for consumers who chose to purchase counterfeits
instead of authentic items. Nia and Zaichowsky
(2000) found that respondents believed the value,
satisfaction, and status of the original brand
names were not diminished by counterfeit goods.
Bian and Moutinho (2011) choose the U.K. because
it is a major recipient of counterfeit goods in the
market. They interviewed one in every ten
consumers 18 years or older who walked into a
pre-approved supermarket. Research was done
over a period of 14 days, including both weekdays
and weekends. Just in case consumers had not
previously purchased counterfeit goods, the
authors showed them an authentic Rolex as well
as a counterfeit Rolex and asked them to fill out a
survey, taking into consideration the watches in
front of them.
Results from the 430 consumers that were
surveyed revealed people found significant
differences on all traits except for brand
personality. In other words, people did not care
whether the Rolex was authentic or not! The
results indicated consumers were aware of the
superiorities of BP over counterfeits in many
aspects of the product itself, as well as the brand.
Results further showed consumers who had
purchased counterfeits did not have a less
favorable impression of the counterfeit brand
name product, especially the brand image. It is
important to note that the results showed
counterfeit product owners had more favorable
impressions of counterfeits in all categories across
the board than non-owners. Specifically, the
results revealed that compared with non-owners,
counterfeit owners were more likely to consider
that CBP provide good choice of size, good style,
good value, can bring image benefit, and are fun.
Results indicated that counterfeit owners’ and
non-owners’ perceptions of authentic
merchandise do not differ significantly. In
conclusion, from a perception perspective,
counterfeits might not devalue the brand equity of
authentic products.
Analysis
Insight into how consumers think about
counterfeits can help marketers understand
consumer buying behavior, and perhaps this
information can be used to help deter
counterfeiting. Marketers should note from this
study that consumers perceived a higher level of
social risk in relation to CBP over BP. Another
noteworthy result is that, in addition to social and
financial risks related to the purchase of CBP and
BP, consumers also perceived a security concern
when purchasing a counterfeit. In terms of a
purchase intention, the critical dependent
construct of consumer behavior, the findings
clearly indicate that consumer purchase intention
of CBP can be predicted through the effects of the
perceived competence personality, perceived
satisfaction benefit, perceived social risk, and
perceived functional attribute. Therefore,
marketers must create a strategy incorporating
these facts to convince consumers to purchase
authentic items.
The research findings of this study, although not
conclusive, represent a step toward resolving the
ongoing debate as to whether the presence of CBP
damages BP brand equity. The majority of genuine
luxury brand owners believe that brand equity will
be adversely affected by the CBP, because it will
decrease the value of the BP, the satisfaction
derived from it, and the status of the genuine
luxury brands. This article suggests CBP users
evaluate BP as positively as CBP non-users;
however, CBP users evaluate CBP more positively
than CBP non-users. Although there is room for
conflicting interpretations, this study seems to
indicate that there may not be an immediate loss
of sales of BP. This research suggests that
marketers should consider how the brand

8. TAB Journal Page 8
meaning they construct through promotional
activities influences CBP consumption. The
research findings indicate that consumers’ CBP
purchase intention is predominantly determined
by perceived CBP brand personality. Thus, the
prevalence of advertisements linking luxury
brands to an aspirational personality may actually
encourage purchase behavior of CBP. To inhibit
the demand for CBP, marketers need to adopt
image-based advertisements that not only
communicate a positive brand meaning of BP but,
equally importantly, project negative brand
personalities of CBP.
Limitations
A limitation of this article is that results are not
applicable to other luxury apparel. After all, this
research only investigated one brand of one
product category in the context of non-deceptive
counterfeiting. It is possible the counterfeit Rolex
they showed participants was an unusually good
replica, which may have given them more
favorable outlook toward counterfeit goods. Other
counterfeit products, such as polo shirts or jeans
may not look as legitimate, which may cause
consumers to have less favorable outlook toward
them. In addition, consumers perceive brands
differently, even within the same product
category; therefore, results might not have been
the same if another watch brand, such as Tag or
Breitiling, had been tested.
Further Research
Future research could involve analyzing the extent
to which price plays a role in the consumers’
decision to purchase counterfeit items. The article
dismissed the likelihood that a price is the main
contributing factor in a consumers’ decision and
cited numerous other factors, such as novelty
seeking, risk taking, self-image, and product
importance. Price is likely the biggest factor
influencing the purchasing of CBP. Future research
could address different grades of CBP and more
visible and heavily counterfeited products
consisting of clothing, handbags or sunglasses.
The present study could be expanded by including
brands from different product categories.
Literature Review 2
Sahin and Atilgan (2011) explain why consumers
prefer to purchase counterfeits. The price-quality
perception of consumers toward counterfeit
products, social effect and brand loyalty for
luxury-branded products, thoughts about ethical
issues for purchasing counterfeit branded
products, and purchase intentions for the
counterfeit versions of luxury brands, are all
variables investigated in this study. There are four
hypotheses developed. Hypothesis one states
there is a positive relationship between
consumers’ perception of counterfeit brands as
having high quality-price ratio and their purchase
intentions toward counterfeits of luxury brands.
The second hypothesis states there is a positive
relationship between consumers’ inclination to use
luxury brands as a social affecting tool and their
purchase intentions toward counterfeits of luxury
brands. Hypothesis three states there is a positive
relationship between brand loyalties of consumers
towards luxury brands and their purchase
intentions toward counterfeits of luxury brands.
Lastly, hypothesis four states there is a positive
relationship between the perception of consumers
about purchasing counterfeit products as ethical
and their purchase intentions toward counterfeits
of luxury brands.
Sahin and Atilgan’s survey consisted of 26
questions. The first two questions determined
approximately how many counterfeit branded
products the respondents purchased during the
previous year, and categorized their previous
purchases. Twenty questions focused on
measuring quality-price perceptions, social

9. TAB Journal Page 9
impacts, brand loyalty, ethics, and purchase
intentions for counterfeits of luxury-branded
products (see case study for exact questions).
There were four questions to determine the
respondents’ demographics, such as age,
educational background, income, and gender. Out
of the 404 subjects surveyed, 47.3% were female
and 52.7% were male. 66.6 % of respondents
surveyed were between the ages of 21 and 40.
Results showed a strong positive correlation
between consumers who see the action of
purchasing counterfeit products as ethical, and
their purchase intentions towards counterfeit
products. Respondents, who found purchasing
counterfeits to be ethical, were more likely to have
positive purchasing intentions. Lower price of the
counterfeit item justified the act of choosing it
over the authentic article, thereby eliminating any
ethical dilemma for the consumer and positively
affecting the purchase intention of consumers
towards these products (r=0.536, p<0.001). Also,
the study showed there was a weak positive
relationship between social effect of using luxury
branded products and purchase intention towards
counterfeits of luxury brands (r=0.160, p=0.001).
Also, consumers in the age group of 21 through
30 (mean=2.7826, SD=1.1082) and consumers in
the age group of 41 through 50 (mean=3.4256,
SD=1.3863) showed significant differences in
regard to brand loyalty (p=0.004). The study
showed brand loyalty for older consumers in the
age group of 41 to 50 are higher than the brand
loyalty of consumers at the age of 20 or younger.
The age and ethical factors can be very crucial
when creating a defensive strategy marketing
campaign to convince consumers not to purchase
counterfeits.
What emerges from this study is that when
consumers view counterfeit luxury branded
apparel as having a high quality to price ratio, and
they find it ethically acceptable to purchase such
products; their intentions of purchasing such
products are positively affected. Respondents
show the tendency to purchase these products
since they think that the quality of these
counterfeits is just as reliable, and the properties
are similar to those of the genuine products. Also,
consumers think that if quality-price inference of
counterfeits is high, they do not perceive the
action of purchasing such products as unethical.
Consumers with high education levels believe that
brand is not necessarily a good indicator of quality
and consumers with lower education levels do not
generally share this perception. This suggests
that those with higher education are more likely to
think counterfeits are unethical.
Analysis
This study pointed out that 47.8% of respondents
purchase five or more luxury branded counterfeit
items a year, and 24.8% purchase between six and
ten counterfeits of luxury branded products.
Maybe past experience with counterfeit luxury
brands should be taken into consideration.
Perhaps the reason respondents found it ethical to
purchase counterfeits and viewed the quality of
the counterfeits as on par with the authentic
product is because of the role of their past
experiences with counterfeits. The study states
only 27% of respondents have never purchased a
counterfeit. Therefore, it must be factored into the
results that these respondents were accustomed
to purchasing counterfeits, something that is not
taken into consideration in other case studies.
Limitations
In this research, the factors affecting the intention
of the consumers to purchase counterfeits of
luxury brands are limited to consumers living in
the central districts of Mersin, Turkey. Turkey is
monitored by the United States of America Trade
Representative due to the high number of
counterfeit activity that occurs there. Perhaps the

10. TAB Journal Page 10
study was conducted there because of the
availability of subjects familiar with counterfeit
merchandise. However, in a more ethical or
better-educated society results would vary.
Compare and Contrast
This journal article was informative, because Sahin
and Atilgan (2011) asked respondents with what
frequency they previously purchased non-
deceptive counterfeit goods. This study also
stated there were certain demographic factors that
help us determine counterfeit purchases. This
needs to be taken into consideration when
devising a strategic marketing plan against
counterfeiters. Lastly, this study was unique
because respondents were surveyed on the streets
close to where counterfeited products were
frequency being sold, and not just upon entrance
to a shopping center (e.g., setting of the first
study). Since surroundings affect people’s actions
and perceptions, respondents in Turkey may have
felt more justified when purchasing counterfeits
because they are so common.
Literature Review 3
A study by Zhang, Hong, and Zhang (2012)
investigated the impact of counterfeits on the
price, market share, and profitability of authentic
products. In this complex study, Zhang et al.
studied consumer decision processes and
attitudes toward purchasing both an authentic
luxury piece of apparel as well as a non-deceptive
piece of counterfeit apparel. The study also
examined a counterfeit’s effects on authentic
products. Zhang et al. did not focus their research
specifically on apparel; instead, they equated all
counterfeit goods within the study. The article
failed to mention the specific brand name of the
apparel used in surveying respondents; it just
mentioned the apparel was from a well-known
designer handbag company. There are different
tiers within designer handbag companies, and I
think that it would have been helpful to provide
that level of information. Zhang et al.
implemented the standard vertical differentiation
model, and unlike the two previous case studies,
they gave respondents their choice of purchasing
an authentic product, a counterfeit, or nothing at
all. They studied subjects’ behavior and came up
with many conclusions. Results showed that
counterfeit goods lower the price and profit
margin of each authentic product, in line with
one’s expectations. To help support this, the
authors collected data from Chinese markets to
find the equilibrium price of luxury handbags.
Furthermore, results indicated the impact of
counterfeits on the profit of brand name products
increases as the quality difference between the
authentic products and their counterfeits narrows.
Ironically, the study also showed counterfeits drive
more consumers to make purchases, and hence
the counterfeits may actually have a promotional
effect on and enhance the popularity of authentic
products. Zhang et al. (2012) also examined a
market with two competing brand name products
and a counterfeit. Results from that study
indicated a counterfeit of one brand name product
can even draw some consumers away from and
damage the profitability of a different brand name
product. Clearly, as Zhang et al. illustrated, there
is a complex benefit/damage relationship between
counterfeit and authentic products.
The study also suggested a strategy for luxury
brands to implement in order to protect
themselves from counterfeiting. It found that a
brand name company had more incentive to invest
in raising the quality level of its own product (an
offensive strategy) rather than reducing the image
and reputation of a counterfeit (direct fighting
strategy). Zhang et al. (2012) asserted it is more
productive for a company to proactively invest in
improving its own product’s quality, rather than
reducing that of the counterfeit’s perceived

11. TAB Journal Page 11
quality. They concluded that a company should
have taken on the counterfeit directly only if they
strongly believed that it was much more effective
to do so.
Analysis
One interesting result of this study is that the
authors showed that non-deceptive counterfeits
may enhance the popularity of the authentic
products and have a positive promotional effect
on the authentic product. Zhang et al. (2012)
suggested that only offensive strategies be
implemented and that it is a waste of company
resources and expenses to implement defensive
strategies to fight counterfeiters head on. I agree
with the researchers in regard to other counterfeit
products, but they incorrectly included the apparel
industry in their suggestion. I would argue that
the apparel industry is different from other
industries because of several unique aspects. First,
studies revealed that up to 73% of counterfeit
apparel is purchased by consumers who know that
the product is a knockoff, as mentioned earlier,
which is a number higher than that of other
industries. Furthermore, counterfeit apparel offers
consumers similar value of a luxury brand at a
much more attractive price. Therefore, apparel
companies must implement defensive strategies
to lessen the risk of having counterfeits damage
the business. This can only be done by directly
attacking counterfeits. Companies can ‘attack’ by
educating the customers as to why they should
not to purchase counterfeit apparel. Marketers
must produce marketing campaigns
demonstrating counterfeits are socially
unacceptable and of lower quality. The target
market should be limited to educated 21- 41 year
old men and women. Companies must also let
counterfeiters know they will be prosecuted to the
fullest extent of the law. Despite being
discouraged by exorbitant legal costs, companies
should understand fully prosecuting unscrupulous
individuals will discourage others from attempting
to counterfeit their products, and counterfeiters
will choose to go after other brands who take a
less aggressive approach.
Specific Organization
I chose Lacoste as the specific organization to
focus on. Lacoste has always been one of my
favorite luxury brand clothing lines. My
grandparents have generously been giving me
Lacoste polo shirts on my birthday every year
since I was four years old. I continue to sport the
polo on vacations and in more casual settings.
History
It was in 1927 that René Lacoste had made for
himself a batch of shirts which were more
comfortable to wear ‘in the heat of the American
courts’. These shirts were made of a mesh
material, which completely absorbed perspiration,
and caused a sensation in the courts. In 1933,
Andre Gillier, the owner of one of the biggest and
oldest hosiery factories in Troyes specializing in
mesh materials, entered the scene. The two men
joined forces to set up a company to manufacture
the crocodile logo-embroidered pique knit shirts.
They created ‘La Chemise Lacoste’ and the brand
name was registered in June 1933. Lacoste
continued to work on his inventions and designs
until shortly before he died in 1996 at the age of
92. He left a global empire that was presided over
by his son, Bernard Lacoste, who was the
president of the company from 1963 until his
death in 2006 (“History of Lacoste”, 2013).
Today, the Lacoste collection consists of more
than just polo shirts. Lacoste’s product line
includes sweaters, pants, dress shirts, eyewear,
footwear, and watches. A consumer can walk into
any high end retailer such as Macy’s or Nordstrom
and purchase Lacoste apparel. Lacoste also has its
own retail boutiques. Lacoste invests a great deal

12. TAB Journal Page 12
in brand building and in quality control. Currently,
Lacoste has many celebrities modeling its
clothing, including Ginnifer Goodwin, Paco
Delgado, Anne Hathaway, and Russel Crowe.
Lacoste claims to sell two Lacoste items per
second worldwide. In 2011, the Lacoste brand
achieved a wholesale turnover of 1.6 billion Euros.
The company has a worldwide presence in 115
countries including the U.S., France, Italy, Greater
China, and Japan. Lacoste currently sponsors
numerous world sporting events, including the
Australian Open, Dubai Tennis Championships,
Madrid Open, ATP World Tour Finals, French Open,
and more (“Lacoste Press Kit”, 2012).
Lacoste’s high brand recognition and exclusivity
make it a common target for counterfeiters.
Counterfeiters are easily able to stich a Lacoste
tag into the collar and an alligator onto the left
chest of a polo shirt. Lacoste polos retail for about
$72.00. Counterfeiters sell them wholesale for
about $8.00 each and retail on sites like eBay for
$20.00-$32.00. I would argue that one of the
most common counterfeit pieces of apparel
currently sold on eBay is the fake Lacoste polo.
Conclusion
When one carefully examines a counterfeit Lacoste
polo shirt, one may notice many slight variances
that distinguish it from an authentic one. The fine
details of a genuine Lacoste crocodile and the
material from which the buttons are made are
usually never found in counterfeit products. To
avoid purchasing a knockoff, one should purchase
merchandise through official retailers only. If one
purchases a ‘Lacoste’ from a street vendor or on
eBay, it is probably a counterfeit.
Lacoste invests millions of dollars annually to
combat counterfeiting. The company has full time
employees dedicated to defending its products
and trademark around the world. It works with
police and customs officials in a number of
countries to foil counterfeiters.
References
Bian, X.,& Moutinho, L., (2011). Counterfeits and branded products - Effects of counterfeit ownership. The
Journal of Product and Brand Management, 20(5), 379-393.
Bloch, P., Bush, R., & Campbell, L. (1993). Consumer ‘accomplices’ in product counterfeiting. Journal of
Consumer Marketing, 10(4), 27-36.
Business action to stop counterfeiting and piracy (BASCAP). (n.d.). International Chamber of Commerce.
Retrieved from http://iccwbo.org/advocacy-codes-and-rules/bascap/
History of Lacoste. (2013). Retrieved from http://www.devanlay.fr/public/hr/History.aspx
Intellectual property on the facts and consumer opinions on counterfeit and pirated goods. (2013). American
Consumer Institute. Retrieved from http://www.theamericanconsumer.org.
Lacoste press kit. (2012). Retrieved from
http://www.lacoste.com/library/contents/press/pdf/LACOSTE_presskit_en.pdf
Magnitude of counterfeiting and piracy of tangible products: An update. (2009, November). Organisation for
Economic Co-operation and Development. Retrieved from http://www.oecd.org/industry/ind/44088872.pdf

13. TAB Journal Page 13
Nia, A., & Zaichkowsky, J. L. (2000). Do counterfeits devalue the ownership of luxury brands? Journal of
Product & Brand Management, 9(7), 485–497.
Sahin, A., & Atilgan, K. O. (2011). Analyzing factors that drive consumers to purchase counterfeits of luxury
branded products. The Journal of American Academy of Business, 17(1), 283-292.
Wiedmann, K. Hennigs, N.; Klarmann, C. (2012). Luxury consumption in the trade-off between genuine and
counterfeit goods: What are the consumers' underlying motives and value-based drivers? Journal of Brand
Management, Special Issue: Luxury and Counterfeiting,19(7), 549.
Yi-Chieh, J. L. (2009). Knockoff: A cultural biography of transnational counterfeit goods. Retrieved 24 Nov.
2013 from http://udini.proquest.com/view/knockoff-a-cultural-biography-of-pqid:1851554141
Zhang, J., Hong, L. J., & Zhang, R. Q. (2012). Fighting strategies in a market with counterfeits. Annals of
Operations Research, 192(1), 49-66.
Additional Bibliography
Annual report on intellectual property enforcement. (2011). U.S. Intellectual Property Enforcement
Coordinator. Retrieved from
http://www.whitehouse.gov/sites/default/files/omb/IPEC/ipec_annual_report_mar2012.pdf
Counterfeiting: problems and solutions in report of the Committee on Economic Affairs and Development.
(2004, February). Council of Europe (CoE). Retrieved from
http://assembly.coe.int/documents/WorkingDocs/doc04/EDOC10069
Economic impact of counterfeiting in Europe, global anti-counterfeiting group. (2000). Center for Economic
and Business Research (CEBR). Retrieved from http://www.cebr.com
Global counterfeiting background document. (2003). APCO. Retrieved from:
http://counterfeiting.unicri.it/docs/Global%20counterfeiting%20background.pdf
Grossman, G., & Shapiro, C. (1988). Foreign counterfeiting of status goods. Journal of Economics, 103(1),
79-100.
Lowe P. (1999). The scope of the counterfeiting problem. International Criminal Police Review, Number 476-
477, 92-97.
Report on EU customs enforcement of intellectual property rights: Results at the EU border. (2012). European
Commission. Retrieved from
http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_controls/counterfeit_piracy
/statistics/2013_ipr_statistics_en.pdf
Wilcox, K., Kim, H.M. and Sen, S. (2009). Why do consumers buy counterfeit luxury brands? Journal of
Marketing Research, 46(2), 247-259.

14. TAB Journal Page 14
Celebrity Endorsements
Josh Friedman
Creating, communicating, delivering, and
exchanging goods or services that have value to
consumers is called marketing. Advertising is a
form of marketing communication in which it
persuades a certain market to take actions from
that advertisement. Celebrity endorsement is a
form of advertising campaign, which involves a
popular figure, using their name to promote a
product or service. The credibility of the
endorsements source, as well as the relevance of
the subject of the endorsement itself, affects the
consumer attitude towards celebrity
advertisements. The importance of doing research
in the field of celebrity endorsement is vital to its
projected success in the consumer market. The
goal for using a celebrity for advertisement is to
associate the targeted consumer market with the
product or service being promoted.
Background Statement
The concept of celebrity advertisement originally
dates back to the early 18th century. In a market
where advertising plays a vital role in the
consumer market, companies need to take all the
possible steps to persuade the consumers to make
a purchase through an effective advertisement
campaign. As marketers devise their advertising
plan and begin to make decisions, marketers need
to know whether or not to use celebrity endorsers.
Celebrity advertisement can be a very effective
way that companies communicate with the
consumer market, however it is also extremely
expensive. In addition, while celebrities can have a
positive impact on the targeted consumer market,
they can easily have a negative effect. Therefore,
when a company is faced with the task of selecting
a celebrity, they need to focus on the relevance
and credibility of that celebrity, as well as all the
factors that this celebrity may have on the market.
Celebrities are found to be effective when they
promote products or services that they are more
likely to use.
Literature Review
Advertisement has a subliminal and influential
effect on our everyday lives. Each day, consumers
are exposed to over 1,500 messages promoted
from companies and brands. These messages can
address the consumer market in a variety of ways.
Consumers are exposed via television, billboards,
radio, mobile phones, convenient stores, and open
environments (Grede, 2002). In today’s society,
most of the popular brands select a well-known
person, either from the film industry or from the
sports world, to endorse for their brands In a
group of students surveyed, 77% felt that celebrity
endorsement helps them to recognize the brand
quickly, and 53% felt that celebrities have the
ability to influence and change the consumer’s
perception and attitude (Vaghela, 2012).
Celebrities who are perceived to be highly credible
can alter consumer attitude and create behavioral
change. Credibility is dependent on three
elements. The first element is expertise, which is
the knowledge and skills the endorser has in a
specified area. The second element,
trustworthiness, is dependent on the reliability of
a product or service. The last element, likability, is
how attractive the source can be to the
consumers.
Creating an image that the consumers can easily
associate the celebrity with a product is a key
factor in achieving success. If there is no
correlation between the celebrity and the brand,
then the consumer is only remembering the
Josh is a student at Lander College studying business.

15. TAB Journal Page 15
celebrity and not the product or service. When this
transpires it defeats the purpose of using the
celebrity to create an image. Another risk for a
company is to have a multiple endorsement
strategy. Credibility is lost and consumer
confusion occurs when the celebrities are
endorsing multiple brands or products. In
addition, a celebrity endorsing a company does
not necessarily guarantee success. Companies
need to ensure that the celebrity they choose has
a positive image, is attractive, and has a high
credibility, because the behavior of celebrities
reflects back onto the company. Therefore,
companies attempt to ensure that the endorsers
do not have any behavioral or legal issues that
could cause the company a loss (Amos, Holmes, &
Strutton, 2008).
In today’s society, the most prevalent endorsers
are athletes, coaches, and other sports personnel
(Bush, 2004). In the last decade, companies have
paid roughly $17.2 billion to athletes, coaches and
teams to endorse their products or service. An
athlete’s current performance is the key for
companies or brands to determine what impact
celebrities have in advertising and on endorsed
brands. A study was conducted to examine the
influence athletic performance has on the
elements of source credibility and the impact of
consumers’ attitude toward the advertisements
and their purchase intentions (Koo, Ruihley, &
Dittmore, 2012). In the realm of sports,
performance and skills determine expertise. The
on-field performance of an athlete will alter the
consumers’ perception of the celebrity’s expertise,
which ultimately will lower the athlete’s source of
credibility. The better their performance, the more
publicity they will attract. The adverse relationship
is true; if the athlete performs at a low level, he
will reduce his publicity and source credibility; not
only the athletes’ credibility decreases, the
consumers’ attitude towards the associated brand
takes a direct fall (Till & Shimp, 1998).
Research by Till and Shimp (1998) suggests that a
match up between a non-famous or unknown
athlete and the brand is adequate enough to
provide positive responses. Further research
states that an unknown model, claimed to be an
athlete, might have a similar or greater effect than
an actual athlete when promoting sports related
products. Studies show that athletes who endorse
products will have a greater influence on the
consumer market if they are endorsing for sports
brands rather than for brands not associated with
sports.
Application and Analysis
Although source credibility has a critical effect on
celebrity advertisement, there are still other
factors that need to be discussed. A marketing
campaign that elects to go with celebrities as their
endorser must realize that they potentially can be
major competitors. When selecting a celebrity not
only does the company need to find someone one
with a high credibility, it needs to be aware of up-
and-coming celebrities and the competition. In
sports, major competitors select their endorser
and hope the endorser can influence the consumer
market. What distinguishes athletes from one
another is their performance level, which in result
changes the attitude and perception of the
consumers. Major competitors can look for
athletes who win and not ones with the highest
publicity.
Specific Organizations
Nike is one of the world’s largest suppliers of
athletic shoes and apparel. Bill Bowerman and Phil
Knight established the company in 1964. Bill and
Phil had a vision to revolutionize the footwear
industry. Bill Bowerman was a track and field head
coach at the University of Oregon. Bill Knight was

16. TAB Journal Page 16
a middle-distance runner from Portland, who
attended the University of Oregon. Bill, who is a
well-respected coach nation-wide, coached Phil
during his tenure in Oregon. Upon finishing
university, Phil composed a paper that proposed
an innovative design of a quality shoe that could
compete with German brands that would be
manufactured in Japan. With no response to his
paper, he contacted the manufactures of Tiger
shoes to make him a distributor in the United
States (Nike). Bill Bowerman then offered to
become Phil’s partner in result creating Blue
Ribbon Sports. Knight began to sell the shoes out
his trunk. Meanwhile, as Phil was selling shoes, Bill
was ripping apart the shoes trying to design a
faster, lighter, more efficient shoe. They had the
runners of the Oregon track and field team tests
the new and efficient shoe. While both Bill and Phil
had full time jobs, they needed to hire a manger
to run Blue Ribbon Sports. Jeff Johnson a
teammate of Phil’s, who was creative and artistic,
was hired. Without missing a beat, Johnson
immediately created product brochures, print ads
and marketing materials (Nike). Jeff opened up the
first Blue Ribbon Sports retailer store. After
parting ways with the manufacturers of Tiger, they
decided to design and manufacturer their own
brand of sports shoes. The brands name was
called Nike. In essence they created the design
“Swoosh” which emerged as Nike’s logo. Nike
ultimately became the nation’s leaders in the shoe
industry. What kept Nike above all its competitors
was their ability to attract young and talented
athletes to endorse for them. One of the earliest
endorsers for Nike was Michael Jordan with his
NBA rookie shoe.
Nike is well known for signing the hottest athletes
in the realm of sports (Nike). In 2001, Nike signed
rookie Quarterback Michael Vick of The Atlanta
Falcons for $2 million. Michael had a few great
seasons in Atlanta building up his credibility. In
the summer of 2007, Michael found himself
surrounded by off-the-field issues. Michael
admitted to his involvement in dogfighting. He
was convicted and imprisoned for 21 months.
Immediately after being convicted, Nike
suspended their contract with Michael and
ultimately stopped selling any merchandise related
to Vick (Duncan, 2007). Before his legal issues,
Michael was one of the best athletes on the field.
He had a great influence and impact on the
consumer market. Although he was a great
endorser, legal troubles caught up him and
eventually effected Nike. Despite his legal troubles
that kept him sidelined for two years, Michael
came back and had a pro bowl level season. Later
that year, Nike resigned him to another large
contract. Since returning to the NFL, Michael has
regain trust and likability across the nation. From
this specific incident, we really learn how off-the-
field issues can affect a brand or company in a
detrimental way. In addition, we see how his high
credibility played a role in influencing and
persuading the consumer market in his first
contract with Nike.
Synthesis
Electing to use celebrity endorsers may benefit a
company in various ways. Using a celebrity may
serve as an advantage to a company against their
competitors. Celebrities have the ability to
persuade and influence the consumers’ mind and
purchase intentions. Elite endorsers are more
likely to influence the consumers’ attitude and
mind as opposed to using ordinary athletes.
Choosing a celebrity who wins on a constant basis
also gives a company an advantage. When the
athlete wins, his/her victory gives over insurance
to the consumers that this athlete knows how to
win with high expertise. Companies tend to push
to use celebrities as endorsers because the
consumer market tends to emulate and admire

17. TAB Journal Page 17
their characteristics, traits and their everyday
lifestyle.
Suggestions for Future Research
Vast areas of celebrity endorsements have gone
unstudied. There are a few suggestions that I can
make that should be looked into in the field of
celebrity endorsements. A question could be
asked: what is the extent to which negative
performance has an effect on a player’s credibility
and effect on the brand or company. Studies that
were discussed only discerned the off-field issues
that have a negative impact on the consumers’
attitude and purchase intentions rather than bad
play.
A possible detriment for companies using athlete
endorsement is the lack interest in sports.
Consumers may begin to realize how these
athletes do not really care about their fans. As
fans, we need to realize that these athletes are
making millions of dollars from us watching them.
Not to disregard their credibility or their talent,
these athletes play for the money and we support
them. Publicity is what is keeping the consumer
market engaged with these celebrities. These
studies discussed sources of credibility and how
they positively and negatively affected the
endorser, brand or company. Further research may
want to look at other characteristics of athletes.
The experiments conducted were based on a
selected group of college students. In the future,
when studies are performed there should be a
broader selection of respondents.
Despite the cost, companies right now are
spending a substantial amount of money on
endorsers. In the near future companies will begin
to realize that it is not necessary to sign
celebrities to massive contracts. Companies will
search and eventually find a way not to spend
millions of dollars on celebrity endorsers and still
be very effective. Marketers need to help in finding
the most effective ways to influence consumers’
mind and purchase intentions. Money is not
always the answer. Marketers need to be creative
and design a marketing scheme that will be
efficient and effective.
References
Amos, C., Holmes, G., & Strutton, D. (2008). Exploring the relationship between celebrity endorser effects
and advertising effectiveness. International Journal of Advertising, 27(2), 209–234.
Bush, A. M. (2004). Sports celebrity influence on the behavioral intentions of generation. Journal of
Advertising Research, 44(1), 108-118.
Duncan, A. (2007). Companies distance themselves from Michael Vick. Retrieved from
http://advertising.about.com/od/celebrityendorsements/a/vickendorsement.htm
Grede, R. (2002, March 29). Rising above the advertising clutter. Small Business Times, Retrieved July 7,
2008 from htt://www.thegredecompany.com/docs/Rising%20Above%20Advertising%20Clutter.pdf
Koo, G. Y., Ruihley, B. J., & Dittmore, S. W. (2012). Impact of perceived on-field performance on sport
celebrity source credibility. Sport Marketing Quarterly, 21(3), 147-158.
Nike (n.d.). History & heritage. Retrieved June 6, 2014 from http://nikeinc.com/pages/history-heritage
Till, B., & Shimp, T. (1998). Endorsers in advertising: The case of negative celebrity information. Journal of
Advertising, 27(1), 67-82.

18. TAB Journal Page 18
Vaghela, P. S. (2012). A study on consumer attitude perception about celebrity endorsement. International
Journal of Marketing and Technology, 2(12), 150-163.
Additional Bibliography
Atkin, C. & Block, M. (1983). Effectiveness of celebrity endorsers. Journal of Advertising Research, 23(1), 57-
61.
Friedman, H., & Friedman, L. (1979). Endorser effectiveness by product type. Journal of Advertising
Research,19(5), 63-71.
Hovland, C. I., Janis, I. L., & Kelley, H. H. (1953). Communication and persuasion; psychological studies of
opinion change. New Haven, CT: Yale University Press.
Kahle, L. R., & Homer, P. M. (1985). Physical attractiveness of the celebrity endorser: A social adaptation
perspective. Journal of Consumer Research,11(4), 954-961.
Kambitsis, C., Harahousou, Y., Theodorakis, N., & Chatzibeis, G. (2002). Sports advertising in print media:
the case of 2000 Olympic Games. Corporate Communications: An International Journal, 7(3), 155-161.
Koernig, S. K., & Boyd, T. C. (2009). To catch a tiger or let him go: The match-up effect and athlete
endorsers for sport and non-sport brands. Marketing Quarterly, 18 (1), 25-37.
Louie, T., Kulik, R., & Jacobson, R. (2001, February). . When bad things happen to the endorsers of good
products. Marketing Letters, 12(1), 13.
Ohanian, R. (1990). Construction and validation of a scale to measure celebrity endorsers' perceived
expertise, trustworthiness, and attractiveness. Journal of Advertising, 19(3), 39-52.

19. TAB Journal Page 19
The Impact of Culture on Advertising
Adina Linn
As a result of the recent economic recession,
many multinational corporations face the question
of whether or not to globally standardize their
advertisements. In addition to cost savings, there
is also a possible disadvantage of standardization.
Multinational corporations deal with a large
marketing mix, composed of different countries
that contain different cultures. Each culture has
their own set of values, ideals, and religious
beliefs (Walle 1997). Culture greatly influences the
success of company’s advertising efforts. If
advertisers wish to attract customers from a
specific region, it is important to take into account
the individual cultures of that region and alter the
advertising techniques to accommodate each one
(Gregory & Munch, 1997).
This paper analyzes the unique role that culture
plays in advertising, and how the relationship
between the two is imperative to attracting
customers, worldwide, and cross-culture. This
subject is intersting because there is an ongoing
debate about whether it is necessary to alter
advertising messages to appeal to different
cultures.
Background Statement
The controversy regarding standardization of
advertising is not a new one; it dates back to the
Roman Empire. The Catholic Church participated
in a bitter debate which showed the controversies
and lack of clarity on this issue. They debated the
view of modern globalizers versus those who felt
that products or advertising messages need to be
adjusted to cater to the needs and beliefs of
diverse markets (Walle, 1997). Later, in the early
1980s, the world was going through a period
known as “globalization”, diffusion of the world’s
cultures. Based on that, people thought that only
one message was sufficient to target different
markets around the world. In current times, it is
still an ongoing debate that multinational
corporations face when creating their advertising
campaigns. Extensive research is needed to
determine if different cultures and other factors
have an effect on consumer behavior and if
companies can rely on “westernization” to
standardize advertisements (Walle).
Literature Review
The reason many multinational advertising
companies do not usually accommodate different
cultures is because they try to appeal to a variety
of consumers using the same standardized
message, thus reducing their costs. However,
many argue that cultural differences must be
taken into consideration when advertising
products around the world. If a company’s
advertisements show similar values and beliefs
that are consistent with those of society, the
consumers’ reactions will be more positive, and
their desires to purchase will increase (Gregory &
Munch, 1997). Problems occur with standardizing
advertisements. When companies attempt to
translate their message into numerous languages,
there is often improper translation. Additionally,
ads display certain images that can be offensive to
some cultures (Gregory & Munch). When people
feel that their values and norms are being
“attacked” or challenged, it diminishes their
willingness to buy that product. Besides values
and beliefs, roles are a big part in collectivist
Adina Linn is a student at Lander College studying Business.

20. TAB Journal Page 20
cultures, such as Mexico. In Mexican culture, the
role of the family has a big influence on the
individual, and interactions between family
members can change one’s attitudes and
opinions. Therefore, advertisements that present
norms consistent with family values will be more
persuasive and positively affect consumer
reactions in Mexico.
Another dominant orientation in the Mexican
culture is the concept of “Machismo” masculinity,
where the husband is a more dominant spouse
than the wife. The man in Mexican culture is a
symbol of authority, toughness, and a strong
sense of respect. The concept of “Marianismo" or
femininity symbolizes submissiveness,
tenderness, and the responsibility of caring for the
family (Gregory & Munch, 1997). Advertisements
whose content is consistent with collectivist values
such as family and familial roles will attract buyers
from that culture. Conversely, these same ads will
not have the same impact on individualistic
cultures that place emphasis and priority on
individual values.
Even when a company can succeed in
homogenizing a certain product across many
cultural markets, the interpretation of its
advertising message may have an entirely different
meaning to members of different cultures. For
instance, the familiar icon of the Marlboro Man is
an ambiguous figure, which has proven to have
different meanings to different people (Walle,
1997). To a North American, this man is a
reference to ‘the American Cowboy’ and life on the
frontier. He represents strength, independence,
and superiority. To an East German woman, the
same image of the Marlboro Man can mean
something totally different. In one advertisement,
a female store clerk in East Germany noted the
fact that the man lived without fences and
contrasted it to her own life behind the iron
curtain, (Walle).
While working for the Medical Care Development
in West Africa, a third world country, David Sokal
engaged in conversation with a young African man
about an advertisement for Marlboro cigars. The
young man commented on the impressiveness of
the Marlboro Man. He was in awe of the tanned
cowboy rounding up fat, robust cattle. To him, a
rural African, this meant wealth and prosperity
(Walle). Marlboro, a multinational corporation,
chose to market its tobacco across different
cultures, using the same advertisement, depicting
the Marlboro Man. While this one product,
tobacco, is sold throughout different countries, its
symbolic message is interpreted differently based
on the customer’s culture and background.
Walle (1997) claims that this interpretation was
not intended. Rather, the creators of this icon
were seeking to conjure up the image of the
cowboy, representing the American vision. Without
even realizing, they succeeded in reaching the
hearts of people in different cultures, as they
created their own interpretations based on what
was meaningful to them. Although many argue
that messages targeting mixed cultural markets
prove to be ineffective, this unintended ambiguity
of the Marlboro Man proved to have greatly
benefitted the company (Walle). Culture has an
effect on advertising because of its impact on the
interpretation of messages.
In their article about controversial advertising, Li
and Shooshtari (2007) brought to light an
important case where major multinational
corporations did not take into account Chinese
culture when advertising their products. It spurred
an offensive reaction from the Chinese people.
One case discussed Toyota’s 2003 ad campaign.
When analyzing the history of Toyota’s
advertisements in China, one sees that, in general,
their advertisements generated positive feedback
and were well-accepted. They showed that as
international businesses, they understood and

21. TAB Journal Page 21
respected Chinese core values (Li & Shooshtari).
For example, Toyota incorporated a well-known
Chinese proverb “che dao shan qian bi yo lu” in
one of their advertisements “Where there is a road,
there's a Toyota”. However, in 2003, when they
advertised Toyota’s 2004 SUV model, the overall
negative reaction was surprising, and these
commercials were banned. The content of these
commercials included Toyota Land Cruiser with a
headline that can be translated into “ba dao [The
rule by force], you cannot but respect” (p.7). The
brand name “Prado” is on the SUV’s front bumper.
The Chinese characters chosen to represent this
brand were pronounced as “ba dao.” Although it
sounds similar to “Prado” its literal translation is
“taking the road in one’s own hand”. This phrase
can have multiple meanings, depending on the
context, including “the mighty rule”, “rule by
force”, “tyranny” or “overbearing”. The ad was
interpreted as “You can't help but be ruled by
Prado's power,” “The Prado's power will take you
over,” or “You have to admire and respect Prado's
supreme quality” (Li & Shooshtari, p. 10). This
unintended error in translation resulted in a
message that was offensive to many Chinese
consumers. Immediately after the ad’s release,
consumer calls came flooding into the Toyota
office in Beijing, China, protesting their negative
feelings towards the ad. It was described this as a
‘cultural pitfall’.
The image that Toyota hoped to portray to its
potential consumers consisted of “This car lives up
to its name—no matter who you are or where you
are, there's no escaping Toyota's powerful bao
dao" (Prado). The makers of the car wanted it to
appeal to and attract the upper-class nobility,
displaying “high social status and character of a
road warrior.” The literal meaning is neutral and
acceptable to Chinese readers, however in context
the ad seems to be controversial and disrespectful
to the socially-stratified Chinese culture. Toyota’s
interests were solely creativity and innovation, but
became a threat to Chinese identity, especially
when considering past tension between the two
countries. Although Toyota gained their respect
from the Chinese through past advertisements,
that were consistent with Chinese values, this faux
pas, due to the inaccuracy and inability to
translate their message into Chinese, greatly
offended their culture.
Another multinational company that offended the
Chinese culture through their advertising efforts
was Nike, in its 2004 ad campaign. They released
the same million-dollar, 90-second TV
commercial, “Chamber of Fear,” in China, Hong
Kong, Singapore and the United States. Nike used
one message to target these culturally diverse
markets. China’s response to it was disastrous (Li
& Shooshtari, 2007). Filmed and produced in the
U.S., the clip featured basketball star LeBron
James, sporting a pair of Nike sneakers, fighting
and defeating an elderly Chinese martial arts
master, as well as dragons and goddesses. A few
different scenes unfolded, where LeBron was
shown battling and overcoming different
obstacles. A lot of Chinese concepts were
incorporated, including Chinese stone lions and
kung fu warriors (Li & Shooshtari). The forces that
LeBron was overpowering, in order to shoot into
the basket, were fear, hype, temptation, hatred,
complacency, and self-doubt. While this concept
was acceptable and non-threatening to Chinese
culture, the imagery that accompanied the text
was insensitive and offensive to them.
Analysis
When a multinational corporation considers
standardizing its message across cultures, there
are critical factors to consider. Since the
advertising industry is highly competitive, in order
to attract consumers to their product versus their
competitors, advertisers should appeal to the

22. TAB Journal Page 22
culture of the consumer. A major one is whether
the cultures in their marketing mix are collectivist,
individualist, or a mixture of both. These cultures
contain very different values and priorities. A
collectivist culture places emphasis on the
“group,” while an individualistic culture is focused
on the individual person (Gregory & Munch, 1997).
This seemingly small detail makes a big difference
when creating an advertising message intended to
appeal to multiple cultures. Although having
respect for all cultures shows social responsibility
and often generates more sales, there are also
legal implications. When advertising in China,
Nike, and Toyota did not comply with cultural
standards and as a result, their ads were banned
(Li & Shooshtari, 2007). Article XX of the WTO,
GATT’s Provisions, allows for regulations
necessary to protect public morals in China.
Chinese regulatory institutions banned Nike’s
2004 commercial, claiming that it “violates
regulations that mandate that all advertisements
in China should uphold national dignity and
interest, and respect the motherland’s culture” (p.
12).
Specific Organization
In 1969, Don Fisher, a wealthy Californian real
estate developer, was frustrated with his inability
to find a pair of jeans that fit right. Together with
his wife Doris, Don decided to open his own retail
store, to ‘bridge the gap’ between the boomers
and the current ‘silent generation.’ This is how
Gap began. The first store was opened in San
Francisco, California. In 1987, Gap’s first
international store opened in London. This was the
beginning of their fusion into a multinational
corporation. By 1992, Gap was recognized as the
second largest apparel brand in the world (Joslin
et al., 2009). Gap’s annual report in 2009 stated
one of Gap’s challenges as an international
company, is “maintaining favorable brand
recognition and effectively marketing products to
consumers in several diverse market segments”
(Joslin et al., p. 17).
Synthesis
Since its inception, Gap has shown their ability to
accommodate and reach their culturally diverse
markets. Recently, they found themselves in a
situation where they were subject to public
protests against their advertisement. In 2013, Gap
released a holiday advertising campaign titled
“Make Love”. One of their advertisements featured
a popular Sikh actor and jewelry designer, Waris
Ahluwalia. Shortly after the release of this ad,
vandalism appeared on one of the billboards
displayed in a subway station. Racist comments,
such as, “please stop driving taxis” were scribbled
all over, and the picture of Ahluwalia was defaced.
The words “make love” were changed to “make
bombs.” When evidence of this graffiti appeared
online, Journalist Arsalan Iftikhar tweeted, to
inform the world about this through social media
(Kuruvilla, 2013). Gap instantly tweeted back,
asking for the location of this ad so they can fix
the situation. In an interview, Gap (2013) told the
Daily News, “Gap is a brand that celebrates
inclusion and diversity. Our customers and
employees are of many different ethnicities, faiths,
and lifestyles and we support them all”. Gap was
praised for its immediate response to these racist
comments, and for supporting and backing their
campaign.
Shortly after the prejudiced remarks were exposed
to the world via the Internet, Gap immediately
placed Ahluwalia front and center of their home
page. They showed respect for the Sikh culture
and religion and stuck to their beliefs in
advertising. Using Ahluwalia as a model was a
brave move on Gap’s part and the company was
willing to sacrifice potential public attack to show
their diversity and acceptance of different cultures

23. TAB Journal Page 23
(Kuruvilla, 2013). Gap’s promotion of cultural
acceptance increased their sales, as one customer
tweeted to Gap, “I just holiday shopped w/you
because of yr anti-racist support of #Sikh model
Waris Ahluwalia!” (Kuruvilla). If Gap continues to
implement models from different cultures which
have different religions and beliefs, their
advertisements can potentially increase revenue.
Although some prejudiced individuals may
continue to show opposition to this, hopefully,
many people will embrace their cultural
acceptance, and respect it.
Suggestions for Future Research
The corporate world is changing rapidly. As great
technological breakthroughs and new innovations
come out all the time, competition within each
industry continually increases. As a result,
businesses need to improve their advertising
efforts to gain more consumers. One way to
attract more consumers across the world is by
appealing to specific cultures and beliefs.
Although in the past international businesses have
succeeded in doing so, further research is needed
to keep up with the fast-changing industrial and
advertising world. Advertisements can include
models from minorities, and have their slogans in
multiple languages. A small step like this shows
consumers that their culture and way of life means
something to the company. Another important
detail to remember is that America itself is a large
melting pot of many different religions and
cultures. Businesses have to realize that although
other ethnicities become “westernized,” and may
start dressing like an “American,” their core values
and beliefs are still present.
Multinational corporations put a tremendous
emphasis on the creativity and originality of their
advertisements. However, it is equally, if not more
important, to invest more time, effort, and money
in extensive research of their culturally diverse
target markets. The members of the advertising
agencies should be educated and aware about
what each culture values the most. Additionally,
there should be more accurate translation and
interpretation into other languages. When a
phrase cannot be translated properly, it should be
eliminated, rather than causing a potential racial
blunder. By implementing these tactics and
conducting further research, companies can
maximize the success of their advertising efforts.
References
Gregory, G. D., & Munch J. M. (1997). Cultural values in international advertising: An examination of familial norms and
roles in Mexico. Psychology and Marketing, 14(2), 99-120.
Joslin, R., Lueck, P., Martino, C., Rhoads, M., Wachter, B., Chapman R., & Christian, G. (2009). Gap, Inc.: Has the retailer
lost its style? In R. D. Ireland, R. E. Hoskisson, and M. A. Hitt (Eds.), Understanding Business Strategy: Concepts and
Cases. Retrieved from http://www.cengage.com/management/webtutor/ireland3e/cases/gap
Kuruvilla, C. (2013, November 27). Gap praised for quick response to racist graffiti against Sikh model, as more evidence
of vandalism pops up. New York Daily News. Retrieved from: http://www.nydailynews.com/new-york/gap-ads-
featuring-sikh-model-waris-ahl
Li, F., & Shooshtari, N. H. (2007). Multinational corporations' controversial ad campaigns in China - Lessons from Nike
and Toyota. Advertising and Society Review, 8(1), 1-18.
Walle, A. H. (1997). Global behaviour, unique responses: Consumption within cultural frameworks. Management
Decisions, 35(10), 700-708.

24. TAB Journal Page 24
The Result of Cause-Related Marketing on Consumers'
Attitude and Brand Loyalty
Elisheva Florence
Cause-related marketing (CRM) is a powerful
marketing tool which brings success to many
companies. CRM is the process of implementing
marketing techniques characterized by an offer
from a company or firm to contribute a specified
amount of resources to a designated charitable
cause when customers engage in revenue-
providing exchanges that satisfy organizational
and individual objectives (Van, Odekerken-
Schröder & Pauwels, 2006).
This paper will discuss how CRM has developed
throughout the past decade. It will also explore
the different categories of cause-related
marketing and demonstrate how it can lead to
positive consumer attitude and an increase in
brand loyalty. Furthermore, this paper will
differentiate between strategic CRM and tactical
CRM and explore the relationship between
customer passion for a particular cause and
customer purchasing. This marketing tool is
beneficial to three distinct groups, as it feeds the
needs of a corporation, supplies the needs of a
non-profit organization, and satisfies for the
emotional and altruistic desires of an individual
consumer. CRM can improve corporate image,
increase customer purchasing, and create a strong
relationship between a company and its
customers.
Background Statement
Since the late 1900s, many companies have felt
pressure to increase their corporate social
responsibility (CSR) to prove their corporate care
for society. Van den Brink, Odekerken-Schroder,
and Pauwels (2006), define CSR as the extent to
which businesses assume the economic, legal,
ethical, and discretionary responsibilities imposed
on them by their various stakeholders. Lantos
(2001) states that in the past 50 years businesses
were assessed not only by their honesty and
economic performance but also by their
contributions to the public.
CRM is an effective tool to attract consumer
spending while also maintaining the company’s
CSR. For example, in 1984, credit card company
American Express guaranteed to donate a penny
to the Statue of Liberty restoration project for each
card member’s transaction. It increased
cardholder transactions by a booming 28%. CRM
then immediately caught the attention of
companies who wanted to boost their profit and
improve their company image (Rozensher, 2013).
CRM quickly came to be known as the most
popular method of marketing by the early 1990s.
During this time, many companies were using
CRM programs and spending an exuberant
amount of money on their campaigns. Likewise, at
the end of the 1990s many companies foresaw
continued growth in their promotions of CRM.
Since then, CRM has become a topic of scientific
research, not only one of corporate interest. These
studies suggest a positive relationship between
CRM and consumer loyalty, as the consumers may
feel a sense of morality and benevolence when
contributing to a certain cause, therefore creating
a positive consumer attitude towards the
company.
Elisheva Florence is a student at Lander College majoring in accounting.

25. TAB Journal Page 25
Literature Review
There are two categories within cause-related
marketing; strategic CRM and tactical CRM.
Strategic CRM is more effective than tactical CRM,
according to Ellen et al. (2000), as strategic CRM
involves high senior management, a substantial
amount of resources, and most importantly, a
long–term commitment to whichever organization
the company is endorsing. Tactical CRM, however,
is limited involvement of employees and short-
term commitments to whichever cause the
corporation is donating; this allows a company to
make a reduce donation and risk, but may result
in a lesser reward. Consumers admire a company’s
long-term commitment to the cause, because the
extended provision for the organization is seen as
an altruistic intention, as in strategic CRM. Short
term commitment to a cause as used in tactical
CRM may portray a message to the consumer that
the company focuses largely on self-interest and
purely wants to boost sales with publicity. While
most companies usually use one strategy, there
are cases in which companies use both strategic
and tactical CRM (Van den Brink et al., 2006).
In researching CRM, 240 subjects from a European
university took an unbiased survey in which the
subjects were provided fictional examples of CRM
being implemented. The result showed that
strategic long-term CRM does have a greater
effect on customer brand loyalty (Van den Brink et
al., 2006).
Often, curious consumers will question the
motives behind a company’s CRM campaign. A
company’s intentions are classified as either
intrinsically motivated or extrinsically motivated.
Intrinsic motivation stem from the company’s self-
actualizing feeling of helping society, whereas
extrinsic motivations are expressed as self-
interest desires focused on a response from the
environment. Customers purchase a larger volume
of goods and services from a company whose
motives are intrinsic. Some, however, disagree and
argue that there is a lack of information to prove
the correspondence between corporate social
responsibility and consumer purchasing (Van den
Brink et. al, 2006).
Another aspect of CRM is the connection created
between the company and the cause. Thus, any
customer who has a particular association to a
cause to which the company is donating, the
consumer will be more likely purchase from that
company. This occurs when a company has cause
specificity.
A successful example of cause specificity was
shown in a survey given to a spectrum of people
who varied from highly religious to less religious
backgrounds. The study found that highly
religious people are more favorable to a company
whose cause is religious, whereas, less religious
subjects look more favorably upon a company who
supports a more secular cause. From here, one
can derive that “cause affinity” has a strong effect
on consumer attitude (Sheikh & Beise-Zee, 2011).
However, many believe that cause specificity is a
poor marketing strategy, as it may cause people
who feel unfavorably towards that specific cause
to refrain from buying from the company.
Application and Analysis
An issue of competing forces can surface with
CSR. A publicly-owned company often receives
pressure from investors and shareholders in the
company regarding most decisions, which may
induce conflict in the situation of restricted profit;
the company’s interest to increase CSR may
conflict with the investors’ interest of maximizing
profits (Lantos, 2001). Such a problem does not
arise in the case of a privately-owned company, as
the proprietors may do as they seem fit and do
not need to answer to a board of directors.

26. TAB Journal Page 26
CRM, however, also has the potential to damage
society. Consumers may invest too much into a
company as a result of being too committed to its
associated cause, which may be a detriment to the
consumers’ personal finances. This could also be
dangerous to an organization that is not
associated with a particular company, as they may
lose publicity and resources, and therefore
supporters (Rozensher, 2013). CRM may also hurt
the company itself, as the prices of the goods
produced by the company will rise to cover
donative costs, which eventually will lead to less
consumer spending and a backlash to the
economy (Rozensher, 2013).
Another inference discovered by researchers is
intensified customer demands to be involved in
CRM decisions. Many customers who purchase
products in connection to CRM campaigns have
commented that they would like to know the
impact of their purchase. Consumers have stated
that they wish the companies would elaborate on
the effect of the cause-related product, which is
not something that all companies would prefer to
do (Rozensher, 2013).
Specific Organization
ConAgra, the nation’s second to largest food
company, began in 1919 when Alva Kinney
combined four grain mill companies together in
Nebraska (“Congra Food, Inc. History”, 2013). It
was first called Nebraska Consolidated Mills
Company, and was then renamed ConAgra, Inc. 70
years later. ConAgra is an international company
that produces many agricultural supplies like
fertilizer, pesticides, and feeds.
During World War II, sales soared because of the
high demand for grain and milling. ConAgra
constantly competed with rival milling companies
General Mills and Pillsbury, so to get ahead
ConAgra expanded and opened a flour mill and
animal feed mill in Alabama. When that was not
enough, further research was put into processed
foods like using flour for cake mix, which became
known as Duncan Hines. Since ConAgra had only
about ten percent of the prepared cake market, it
was not worth their continuous efforts to gain a
foothold, and they soon sold Duncan Hines to
Proctor and Gamble. ConAgra used the money
from this deal to invest even more with basic
commodities, like grains and feeds. At this point
they moved beyond the U.S. borders and opened
up grain processing plants in Puerto Rico through
its second child company, Caribe Company.
In the 1950s and 1960s people began to recover
from World War II and were able to afford more
expensive foods. Therefore, people had less of a
need for flour consumption; this caused the
number of sales in ConAgra to decrease, since
their main resource was flour and feed. To fight
off the loss, ConAgra’s competitors, General Mills
and Pillsbury were quick to introduce new types of
foods that were not purely flour. Instead of
experimenting, ConAgra took the easier way out
and turned back to focus mainly on animal feed as
well as another commodity: chicken. They
partnered with a Spanish producer of animal feed
and breeder of pigs, chickens, and trout, known as
BioterBiona. In 1971, ConAgra became the official
name of Nebraska Consolidated Mills. In 1973,
ConAgra was listed on the New York Stock
Exchange. Unfortunately, losses were realized the
following year and the company had to suspend
dividends. In 1975, ConAgra almost filed
bankruptcy due to heavy losses in commodity
speculations.
In 1975, the former CEO of Pillsbury, Charles
Harper, was hired as the President of ConAgra to
reshape the company. He had strict goals that
were to broaden the ConAgra sales base. Harper
sold unnecessary operations to ease debt. He
purchased Banquet Foods, Corp. which resulted in
a chicken production increase of one-third. Harper

27. TAB Journal Page 27
also bought Peavey Company to augment wheat
milling. In 1978, ConAgra bought a distributor of
herbicides and pesticides, known as United Agri
Products. The acquisition was supported by
Harper’s hypothesis that if there were higher grain
prices it would cause a larger demand for these
chemicals. Harper also knew not to rely on
commodities, which only prosper at certain times
in the economy. Thus, he bought into
miscellaneous areas such as pet accessories,
Mexican chain restaurants, and fabric chains.
ConAgra began acquiring prepared food
manufacturers in order to meet their financial
goals. Return on equity was 20%, annual earnings
were over 14%, and long term debt was less than
35% of capitalization. Due to financial stability,
ConAgra decided to obtain more businesses. They
bought some seafood processing plants in 1981;
companies acquired included Singleton Seafood,
Sea-Alaska Products, Trident Seafoods, and
O’Donnell-Usen Fisheries. In 1982, ConAgra took
first place in the chicken industry by creating
Country Poultry. Soon afterwards, the creation of
ConAgra Turkey Company and the acquisition of
Longmont Foods took place. No longer was
ConAgra just focused on plain chickens, but they
were also concentrating on more exciting
variations like marinated chicken breast, hot dogs,
and processed chicken for fast food restaurants.
ConAgra then moved to the red meat market. They
acquired Armour Food Company, a processer of
hot dogs, sausage, bacon, ham, and lunch meats.
Along with meats, Armour also had a line of
frozen dinner classics. ConAgra was not hasty in
making this purchase; they waited until Armour
closed some plants and went down in book value
before making the purchase. They made their way
further by buying out Morton, Patio and Chun King
Brands. In 1987, ConAgra became the third largest
beef packer in American after buying E.A Miller
and Monfort of Colorado. However, soon after,
there was a steady decline in beef product sales
when consumers began to become more heath
aware. As a result, ConAgra moved into a healthier
beef product industry and bought 50% of Swift
Independent Packing Company.
At this point in time, if a consumer would go into
a grocery store looking for ConAgra foods, most
of it could be found in the frozen food section. To
further diversify, Harper purchased Beatrice Co,
which distributed dry goods. ConAgra Company
expanded and acquired different projects in Japan,
Thailand, France, Canada, Chile, and Australia. In
America, ConAgra catered to a different market by
buying National Foods, a kosher food business. In
the 1990s, ConAgra introduced Healthy Choice, a
low fat, low sodium line of frozen dinner foods.
Advertising Age named this as the most
flourishing new food brand in the two decades. In
1992, Harper resigned and Phil Fletcher took over.
Fletcher cut operating expenses by establishing
cost-control measures and creating better
communication between the companies many
branches. He spread out globally in China,
Australia, Denmark and Mexico. In 1994, the
company’s 75th anniversary, sales were over 23
billion dollars, with earnings of $437 million. To
celebrate, ConAgra donated $200,000 to a
museum in Nebraska for the creation of a model
of the original Glade Mill (one of the original four
flour mills). ConAgra, once a small flour milling
company, rose up to be a great international food
corporation with over $20 billion in sales.
Synthesis
ConAgra used many marketing techniques to
develop is CRM. As stated earlier, CRM can be
beneficial to both the corporation and the non-
profit organization. According to Cone and Phares,
a CRM program will not be beneficial if it is not
backed by the executives. ConAgra had the
backing of Bruce Rhode in creating their project

28. TAB Journal Page 28
called, “Feeding Children Better”. The program had
a focus to end childhood hunger in America (PR
News, 2003). ConAgra had the intrinsic and
altruistic characteristics and motives in creating
the connection between the company and the
cause.
When ConAgra Foods Foundation heard about the
concept of “heat vs. eat”, a decision poverty
stricken families have to make between paying
electric bills and grocery bills, they spread
awareness about the childhood hunger in the
United States (PR News, 2003).
ConAgra then created “Feeding Children Better
Program” to combat childhood hunger. ConAgra
combined this program with America’s Second
Harvest, one of the country’s largest hunger-relief
organizations. ConAgra would give financial
funding to food banks, which would then give out
food to Kids’ Cafes, where children received a free
hot meal (PR News, 2003).
ConAgra’s altruistic actions made them winner of
the Platinum PR for CRM. The enormous amount
of money spent on the Feeding Children Better
program was worth for ConAgra as they made
society aware of the outbreak of hunger and
attracted attention to their own company (PR
News, 2003).
Suggestions for Future Research
There are a number of changes that can occur in
business or environment that may shape the role
of CRM in the future. One assumed change is an
increasing pressure on companies to be
associated with a cause. One can predict that in
the future CRM will no longer be a suggestion but
rather an obligation. The Lantos’ (2001) article
includes a statement:
There are increasing pressures and rising
expectations for such altruistic CSR
because there has been a decline in the
social institutions that have traditionally
tied communities together, namely,
families, religious organizations and
neighborhoods, along with higher mobility,
and so it many people believe that it is
business' obligation to help fill the void (p.
605).
Another aspect is the change in cause interest or
attraction amongst the company’s target market.
The organizations which the target market is
supporting now may shift as a result of
environmental changes. The cause-affinity of
consumers is crucial in CRM, as that will attract
the customers to buy from the corporation
associated with the cause (Sheikh & Beise-Zee,
2011). Therefore, it is important that a company
stay up-to-date on the causes which are
significant and stay relevant for their target
market. The company can then associate itself
with a cause that is popular amongst the target
market to ensure brand loyalty and positive
consumer attitude.
A vital change to expect in the future is an end to
corporate philanthropy. Companies will refrain
from donating to a cause out of mere kindness;
instead they will give to a cause as a marketing
benefit. Corporations will expect to derive more
benefit and have more control over the money that
they donate, as opposed practicing the traditional
corporate philanthropy of donating to nonprofits
with no strings attached and for unrestricted use
(Rozensher, 2013).

29. TAB Journal Page 29
References
ConAgra Food, Inc. history. (2013). Retrieved December 22, 2013, from
http://www.fundinguniverse.com/company-histories/conagra-inc-history
Lantos, G. P. (2001). The boundaries of strategic corporate social responsibility. Journal of Consumer
Marketing, 18(7), 595-630.
PR News. (2003, October 13). Platinum PR award winner: Cause-related marketing. Retrieved from
http://www.prnewsonline.com/subscription/2003/10/13/platinum-pr-award-winner-cause-related-
marketing/
Rozensher, S. (2013). The growth of cause marketing: Past, current, and future trends. Journal of Business
and Economics Research, 11(4), 181.
Sheikh, S. R. & Beise-Zee, R. (2011). Corporate social responsibility or cause-related marketing? the role of
cause specificity of CSR. The Journal of Consumer Marketing, 28(1), 27-39.
Van den Brink, D., Odekerken-Schroder, G., & Pauwels, P. (2006). The effect of strategic and tactical cause-
related marketing on consumers' brand loyalty. Journal of Consumer Marketing, 23(1), 15-25.

30. TAB Journal Page 30
Sweet Manipulation
Danielle Reifer
Have you ever wondered why the fast food
industry is doing so well? How the bags of chips,
soda, and ice cream are constantly being sold in
vast quantities? Fast food restaurants are
everywhere, marketing their cheap and available
products to everyone. These fast food restaurants’
products can be very unhealthy; filled with fat,
sugar, and salt. Unfortunately, families can only
afford a one-dollar hamburger or a bag of potato
chips over fresh fruits and vegetables. Therefore,
many people have very unhealthy diets.
However, there is another reason fast food
restaurants and the junk food industry are doing
so well. The secret lies in the products themselves.
Research shows that fat, sugar and salt may be as
addictive as drugs and can cause similar effects in
the brain.
When in a state of depression, a giant tub of
sugary ice cream, a big bag of salty potato chips,
and a large cheese pizza usually help people deal
with their intense emotions. This is because fat,
sugar, and salt cause the body to release
dopamine. Dopamine is a chemical in the brain
that is associated with pleasure and reward. When
released, dopamine causes people to feel good.
This process also occurs in the brain while taking
drugs, smoking cigarettes, and drinking alcohol
(Hockenbury & Hockenbury, 2010).
Since dopamine gives a pleasurable feeling, the
brain believes it is being rewarded. The feeling is
very pleasurable, yet very addicting, causing the
body to crave the same sensation again. Overtime,
a human body will stop releasing as much
dopamine as it used to, and more food is needed
to achieve the same result. “Over time, the brain’s
circuitry might become rewired to produce less
dopamine in response to high-calorie, flavor-
enhanced foods” (Consumers Union of the United
States, 2013, p.1). They also add, “As a result -
and possibly in combination with genetics and
environmental factors - some people will eat
more, attempting to stimulate dopamine
production to feel good” (p.1). Frequent
overeating starts an addiction.
There have been many studies done on food
addiction. One of these studies involves seeing the
differences between the brains of obese girls and
thinner girls. “A team led by investigators at the
Oregon Research Institute in Eugene noticed that
MRI scans of the regions of the brain related to
reward and the senses lighted up more in obese
girls anticipating a chocolate milkshake than when
they were actually drinking it, compared with brain
MRIs of leaner girls” (Consumers Union of United
States, 2013, p.1). This study showed that people
who find food more exciting are likely to overeat.
Eric Stice of the Oregon Research Institute added,
“And the more you eat high-fat or high-sugar
foods, the less your brain regions are activated by
actual intake of these foods” (p.1).
In an interview with Monica Eng (Eng, 2013), when
asked what surprised him the most, Michael Moss,
the author of Salt Sugar Fat, answered, “On a
personal level it was how many food-company
executives I met [who] are health conscious and
do not eat their own products, especially when
they get injured” (p.1). Moss describes a scientist
at Kraft, who had stopped having liquid calories
due to an injury. Moss also added, “He has also
stopped eating salty chips, because he was among
the many of us who cannot stop at one tiny
serving” (p.1).
Danielle is a student at Lander College for Women and is studying business.

31. TAB Journal Page 31
In another interview with Alexandra Sifferlin
(Sifferlin, 2014), Moss added that the scientist
from Kraft also avoided Kool-Aid, which the
company produces. Moss stated that, “The
optimum amount of sugar in a product became
known as the ‘bliss point'" (p.1). He then
explained that food scientists spent a lot of time
to find the perfect amount of sugar to help sell the
products faster and in larger quantities. When
eating fatty foods, you have the same pleasurable
feeling as when eating sugar, but fat has double
the calories. He claimed, “The companies
discovered they could add as much fat as they
wanted to their products, and unless people
looked closely at the nutrition facts, they are
going to totally love it more than they would
without the fat” (p.1). Moss also wrote that he
spent time with the former top scientist at Frito
Lay, who had been trying to get Frito Lay to cut
back on the salt in their products. Moss was
served healthy food while there and observed that
there were no processed products in the
scientist’s house.
When asked if he thinks the executives felt guilty
about the obesity problems they have helped
create, Moss answered that the scientists may feel
guilty but do not hold themselves accountable for
the products. Many of the products were invented
when there was lower dependency on the
products. He also added that Kraft had tried to get
the whole industry to help fight obesity and cut
back on these ingredients, but the rest of the
industry refused to join Kraft’s efforts. Kraft began
to show how much of each ingredient is in one
serving and in the whole package. He said that for
a company, who tries to make their products
addictive to achieve the highest amount of profit,
they had asked their scientists to cut back on
these addictive ingredients in the products. He
added that, “Ultimately, they ran into the problem
that the whole industry faces, which is the huge
pressure from Wall Street and the investment
community to increase profits” (Sifferlin, 2014,
p.1).
Obesity is a big problem all over the world.
Research shows that junk food may be just as
addictive as drugs and can cause similar results to
the body. However, not everyone agrees: “But not
everyone is swallowing the theory. Food addiction
has not been formally recognized by the American
Psychiatric Association. And there is a lack of
objective evidence that the condition contributed
greatly to the U.S. obesity epidemic” (Consumer
Union of Unites States, 2013, p.1). Addiction or
not, many people have a problem of overeating,
and it can lead to severe health problems. Some
companies in the food industry may be using this
addiction to help sell more products. Others, like
Kraft, may be trying to change their products to
try to turn this addiction around. Next time, you
see a donut and feel like you need it, you should
decide if it is worth it, because once you start,
there is no stopping.
References
Consumers Union of United States. (2013, November 27). ‘Feel-good’ food may be addictive, though direct
evidence has not been found. Washington Post. Retrieved from
http://www.washingtonpost.com/national/health-science/feel-good-food-may-be-addictive-though-
direct-evidence-has-not-been-found/2013/01/21/28d9833e-1edf-11e2-9cd5-b55c38388962_story.html
Eng, M. (2013, March 15). Michael Moss on 'Salt Sugar Fat': Author says consumers can use their power
against an industry that keeps them addicted to unhealthy food. Chicago Tribune. Retrieved from

32. TAB Journal Page 32
http://articles.chicagotribune.com/2013-03-15/features/ct-prj-0317-salt-sugar-fat-michael-moss-
20130315_1_general-foods-food-industry-unhealthy-food/2
Hockenbury, D. H., & Hockenbury, S. E. (2010). Focus on neuroscience, the addicted brain: Diminishing
rewards. In A Discovering Psychology, 5th ed. (p.34). New York, NY: Worth Publishing.
Sifferlin, A. (2014, February 27). Salt sugar fat: Q&A with author Michael Moss ‘How did Lunchables get
created?’ Moss pulls back the curtain on the processed food industry and why it's so obsessed with sugar,
salt and fat. Time.com. Retrieved from http://healthland.time.com/2013/02/26/salt-sugar-fat-qa-with-
author-michael-moss/

33. TAB Journal Page 33
Mahna Mahna
Shevi Gartner
Mahna Mahna is a fashion company that
specializes in renting an array of high-end
clothes, shoes, and accessories to fashion industry
professionals. Established in April 1991, the
founder Sumiko Enya opened the first showroom
in Tokyo, Japan, which became one of the top
rental houses in the U.S. by providing a wardrobe
to top stylists in television, film, video, and print
production, as well as celebrities. A hundred
percent of all celebrities in Japan have used Mahna
Mahna’s services. It has been noted that the
entertainment industry in Japan would fall apart
without them (“NY Style Competition”). They have
since expanded to many more showrooms in
Japan, Korea, and most recently, SoHo, New York.
Sumiko Enya, an established stylist in Japan before
starting Mahna Mahna, always wished there was a
rental house that was outfitted to handle all types
of jobs that carried everything from clothes,
shoes, to accessories. She understood what people
were lacking, and her extensive understanding of
the industry helped make Mahna Mahna the
number one rental house in Asia.
Mahna Mahna’s philosophy is “fashion was born as
part of human culture and art. It has been shaped
by our surroundings and continues to evolve with
us. With a profound appreciation of history and
culture, our company hopes to foster happiness
through fashion. Our goal is to constantly evolve
as specialists in cultivating and finding the best in
fashion.” (“Mahna Mahna Philosophy”, 2014, p.1).
While a lot of rental houses specialize in certain
styles such as avant-garde, or period pieces,
Mahna Mahna understands that clients have vaious
needs from vintage to contemporary, and pride
themselves on having a diverse array for clients to
choose from. Stylists know they can come in to
Mahna Mahna for a complete “head-to-toe” look.
They carry major designer collections such as
Alexander McQueen, Jean Paul Gaultier, Emilio
Pucci, Maison Martin Margiela, and Valentino, as
well as hard to find brands like Comme des
Garcons, DressCamp, and Atsuko Kudo. They also
carry a vintage collection including Chanel, Yves
Saint Laurent, and Oscar de la Renta. Recently,
Mahna Mahna has been a part of many music
videos and performances, and is now beginning to
work with major network television series.
Kaori Cipriano and Haruka Hiroishi both went
through an intense interview process a year and
half ago in Japan, where they met for the first
time. Sumiko Enya wanted to hire them together
because she felt they would be a perfect match to
run the New York location, and if one of them had
said no, she would have gone with a different
pairing. Cipriano left her job at Fashionhaus in
New York City (NYC), where she had been working
for some time doing international sales. Haruka
was involved in freelance work for Japanese
production companies at the time. They both
accepted the offer made by Enya and were sent to
Japan for two months of training.
Because Kaori and Haruka were launching Mahna
Mahna for the first time in the United States, they
did not have a client base yet. They started from
scratch, doing research on stylists and sending
out press packages. They also hired a public
relations (PR) company to help, but they did not
receive the results they had hoped for. They
realized the PR company was not a good
Shevi is a student at Lander College for Women and is majoring in marketing.

34. TAB Journal Page 34
investment for them, because Mahna Mahna is not
a retail store. Therefore, Cipriano and Haruka felt
that a high exposure to the general public was not
the right direction for their brand. Cipriano
suggested that perhaps advertising in high end
magazines would be more appropriate, which
proved to be beneficial for their company. In
addition, she prefers to think of more organic
ways to develop and grow the company, like
having more personal relationships with clients.
This practice works for them, because after only
nine months of being open, Mahna Mahna is
seeing results. Marketing is very important to a
business, but money has to be invested in the
right strategy. Kaori suggests that in order to do a
high risk, high return project, capital needs to be
available for use. Currently the company has
something that is working for them, but like in any
business, there are always ways to improve. Social
media can be a good example to help Mahna
Mahna grow and improve.
In order to be successful they have to constantly
remind people about what they do, have lots of
events and parties, and invite people in the
industry. Although they started out slow in May,
they are now getting calls from other people. From
here, it can be deduced that much of their
marketing comes from word-of-mouth. Mahna
Mahna is a diverse company that includes many
divisions such as rental, wholesale, styling,
consulting, and working on production for
Japanese companies.
The Mahna NY Style Competition took place on
social media and ran for a month around NYC
Spring Fashion Week 2014. The competition
invited fashion industry professionals to compete
for the chance to win $10,000 in credit towards
rentals from Mahna Mahna. The company team
headed by Kaori Cipriano looked for “well styled
images…that truly spoke to the originality and
creativity of the individual” (“NY Style
Competition”, 2014, p.1). They are quoted as
having said, “We were looking to showcase the
work of these emerging talents so that we can
continue to grow with them and invite them into
the Mahna Mahna family” (p.1). The judges picked
ten of the top photos, and Facebook fans voted for
their favorites. On February 11, Mahna Mahna
hosted a cocktail party in their Soho showroom
and announced the winner, fashion photographer
Drew Johnson. Sumiko Enya, who flew in from
Japan to attend the event, decided last minute to
award a prize of $5,000 in rentals to the first
runner up, which was a pleasant surprise for
Donald Hicks, a professional stylist. This contest
turned out to be a great way to introduce many
new stylists to Mahna Mahna, and helped their
Facebook page gain 300 new followers in just one
month.
One of their biggest competitors is a rental
showroom by the name of Albright, which is also
located in lower Manhattan. Cipriano is not
worried about them though, because she believes
in her brand. They have heard that people are not
always happy with quality of the merchandise at
Albright, but before Mahna Mahna opened up,
people did not have much choice. Mahna Mahna is
dedicated to giving the best customer service and
quality of merchandise. They and are friendly and
helpful and treat all their clients equally, and feel
they have a leg up in customer service
satisfaction.
One challenge they faced with the new American
launch was trying to make their headquarters
realize that there is a big difference between
running a business in Japan and in America.
Cipriano says that she has had experience with
many Japanese companies that tried and failed to
be successful in America. This was ultimately
because they were trying to use the same business
model in both places, which according to Cipriano
is a big “no-no.” The difference, she says, is

35. TAB Journal Page 35
flexibility. In Japan, there are no discounts, no
negotiations, and no such thing as late. However,
they fully trust their customers—maybe too
much—and allow customers to take the
merchandise and pay within 90 days.
In the U.S., a business like this has more room for
negotiations, but upfront payment is a must. In
Japan, business is a very formal affair and there is
no room for personal relationships with
customers. Cipriano says that this model frowned
upon there. People in business do not talk to each
other about their personal lives, they do not ask
about their clients’ kids, or anything that is not
related to the business. In Japanese businesses
she says, it is “please”, “thank you”, and “sorry.”
This difference can definitely be seen and felt in
the Mahna Mahna NYC showroom. The team feels
like a family, always joking around with each
other, and talking about what is going on in their
lives.
Cipriano says New York has definitely changed her
views of business, as well as her personality. New
York makes a business person tougher, which is a
must; otherwise a business cannot survive. In
NYC, apologies are not always needed. A good
balance is needed. Politeness can be present,
without being seen as weak. They hope is to help
reinvent the way U.S. productions think and use
wardrobe. Mahna Mahna is altering the business
plan to help suit the new U.S. market, and offering
specialized production packages to stylists.
Mahna Mahna gets its merchandise from a variety
of channels including other showrooms and
buyers, who travel all over the world to find items.
They are constantly scouting new collections to
feature in the showrooms. Currently, Mahna
Mahna carries over 100,000 items in ten
showrooms around the world. The company is
hoping to expand to Los Angeles, California, as
well as other parts of Asia.
References
Mahna Mahna philosophy. (2014). Retrieved from http://www.mahnany.com
NY style competition winner announced at Fashion Week event. (2014, February 20). Nolcha Fashion Week.
Retrieved from http://nolchafashionweek.com/2014/02/20/ny-style-competition-winner-announced-at-
fashion-week-event-co-hosted-by-mahna-mahna-and-nolcha-fashion-week-new-york-presented-by-
rusk

36. TAB Journal Page 36
The History of the United States Monetary System
Rachel Morris
Ever since the beginning of time, humanity has
participated in some form of a monetary system
no matter how basic. The first monetary system
that humanity took part in was the simplest form,
self-sufficiency. Under this policy, if someone
needed something, such as food and clothing,
they had to make it themselves. This policy is not
very efficient, because people have different
abilities and strengths.
The next system to emerge was the barter system.
Through this system, people traded goods and
services for other goods and services. We can see
from European history that they utilized this
system to its fullest. Every child in kindergarten
learned about the explorers in 1492, who traveled
across the ocean all the way from Spain and
chanced upon America. The reasons for their
travel, as many historians theorize, were “God,
Gold, and Glory.” These forces, or derivatives of
these forces, serve as motivations for almost every
world event that has taken place in history.
Through the many historical documents and travel
journals (that these explorers kept on their
travels), the exploration’s efforts in converting the
“barbarians” to Christianity brought deaths of
many Indians. Additionally, as seen from the
explorers’ actions, the glory of claiming new land,
and putting the country’s flag on the soil, was at
the forefront of many explorers’ missions. Many
explorers would travel to a land, claim it for their
country, and then leave without ever trying to
inhabit it. For example, when Portugal claimed
parts of South America after the Treaty of
Tordesillas, they set up trade routes and moved
on to the next place. Virtually all historians agree
that gold, or some form of trading commodities,
was the chief factor and motivation for the
explorers to travel and discover new lands.
Motivation for the generation of exploration began
as a result of the Ottoman Turks taking over many
ports. Many people wanted to do business without
having the large middle man markups that the
Ottoman Turks placed on goods. Therefore,
countries decided to go on a quest in search of
the riches of the east: gold, silk, spices, jewels,
and silver, to name a few. The countries started
sending people to travel to the edges of Europe to
establish their own ports. The taxes and tariffs
filled the government’s treasuries. These countries
may not have had the complex economic theories
that were later developed, but they understood
that to build up gold and silver (bullion), they
needed to export more than they import.
One of the pioneers of the exploration was
Portugal, who sent Bartholomew Dias to the Cape
of Good Hope and Vasco Da Gama around the tip
of Africa and on to India. Through their efforts,
Portugal procured a monopoly on the spice trade.
All of the exploration brought about a
phenomenon called “The Colombian Exchange.”
The bartering system, the monetary standard at
the time, spread different goods and products
across national borders. Spain introduced sheep,
cows, wheat, olives, and many other products,
while America introduced Spain to potatoes,
tomatoes, corn, sugarcane, chocolate, tobacco,
and slaves among other things.
Although the barter system worked very well for
the Europeans in the 1400s, it still presented
many problems. One problem presented was that
Rachel is a student at Lander College for Women and is studying business.

37. TAB Journal Page 37
sometimes a person needed something, but the
person who had that thing did not necessarily
need what they were offering. Additionally, this
system proved clumsy. The value of one person’s
goods and services was not necessarily equivalent
to the other goods and services being bartered
for. For example, a person who breeds elephants
realizes he needs a ballpoint pen. How will he
trade the goods he has for the goods that he
needs?
Despite the negatives of the barter system, the
economic effects of the explorations were robust.
The influx of food and wealth started a
commercial revolution. Additionally, the bartering
system is not as susceptible to the impacts of
inflation. If we decide that a pig has the same
value as a goat, and inflation occurs, the pig and
the goat are still worth the same amount and can
be traded. On the other hand, bartering is not
totally inflation proof. In the exploration era, with
so many goods and commodities being pumped
into the continent, the economy acted the same
way as it would in any money based society. Slight
inflation began to set in as Europe introduced a
ton of spices that had previously been a luxury
item and made them easily available to
consumers. Those commodities began to decrease
in value and this caused a strengthening of the
middle class.1
As a result of the slight inflation, people decided
that they wanted to get involved in the trade and
get some of the money from traveling to other
countries. They wanted to benefit from the
mercantilist system that the government enjoyed.
Many people got together and created joint stock
companies. These companies were business
organizations, where private investors financed
the voyage themselves, and the returns from these
1 It is interesting to see a parallel today with the deflation of
the dollar and a waning middle class.
voyages were theirs to keep. Because of this, new
banking arrangements were established and
Europe’s financial scene continued to progress,
from the barter system to more sophisticated
systems.
The new and more sophisticated system that
emerged was the concept of money. Money is
simply something that everyone accepts as
payment. The earliest money was a rare food or
clothing item and some cultures used uniform
sized bricks of salt as money.2 The system worked
pretty well, but there was still one problem: those
commodities began to wear down. The clothing
would wear out and rip and the salt would slowly
come apart and fall away.
The people needed money to be a medium of
exchange that can store purchasing power,
meaning you can put it in the bank for years and it
won’t go bad. Additionally, money has a standard
of value. A standard of value means that people
can pay money according to the value of the item
they wish to purchase. The people living in
America resolved the problem by creating a new
monetary form called metallic money. Metallic
money is made out of metal and also has intrinsic
value. The people made the value of each coin
directly linked to the value of the metal in that
coin. A gold coin was worth the gold in that coin
and if someone wanted gold, they could melt the
coin down and use it.
Every country with money has a monetary
standard. A monetary standard states the basic
unit of value. Before the founding of the U.S. as a
country, the 13 colonies had different dollars and
would not accept each other's money. This was
not conducive to an economy and business
between the states. In 1776, the U.S. declared its
independence, but it took until 1792 (16 years) for
2 Salt in those days was a rare and expensive commodity.

38. TAB Journal Page 38
Congress to come up with a monetary standard. In
1792, Congress finally passed the First Monetary
Act. The country decided on the “dollar” as the
basic unit of money. The country also had to
define the value of that dollar. This New Monetary
Act provided for a bimetallic standard, a system
where the money was based on not only gold, but
other metals including silver and copper. The
dollar was defined as 24 and 3/4 grains (a
measure) of pure gold and 371 and 1/4 grains of
pure silver. This ratio of gold to silver was 1:15. A
provision was created for gold coins to be minted
in denominations of $2.50, $5, and $10 and silver
coins to be minted in denominations of $1.00,
$0.50, $0.25, $0.10, $0.50. Copper coins were
minted in $0.10 and $0.05. These coins were all
full bodied coins meaning that the value of the
metal in the coin was worth the dollar amount it
represented. In this monetary system, everyone
was allowed to own gold, there was free trade, and
everyone could use this commodity. This money
that America had created was on the bimetallic
coin standard. The bimetallic coin standard meant
that the basic monetary unit was defined in terms
of a coin containing a certain amount of gold at a
certain level of fineness.3 This money was full
bodied money, meaning that each coin contained
its full monetary value in that metal.4
Even with the new dollar accepted by all the
states, the colonies continued to use the Spanish
dollars that they were used to. Spain was a world
trader and they would come to the U.S. to trade
and bring their currency. The U.S. accepted it, and
the Spanish dollar was considered legal tender by
law. The impact of the Spanish dollar was felt for
3 Gold is a very soft metal so it cannot be made into a coin that
is 100% gold. Instead, there is an added mixture of alloys and
other metals in it.
4 Today the penny contains more copper than “one penny’s
worth” of copper.
many years after. The Spanish dollar has eight bits
to the dollar and the American dollar had a little
less silver. People began to covet the Spanish
dollar, but as the Spanish coins began to be used
more and more often, the silver got rubbed down
and began to weigh less than their American
counterparts. It got to the point that when a
person paid with a coin, they would have to weigh
it to see how much silver was in it and how much
it was worth. It was not a very practical monetary
system. [As one can imagine, this system would
probably make long lines in stores].
The United States bimetallic standard came along
with additional problems. There were different
ratios of value between the different metals in the
government and the market. The U.S. government
decided that the ratio of gold to silver was 1:15,
but then the market ratio of gold to silver changed
to a 1:15.5 ratio. One ounce of gold should be
worth 15 ounces of silver according to the
government and when someone had an ounce of
gold they could bring it to the government and
trade it in for 15 ounces of silver. The market rate
for one ounce of gold then became worth 15.5
pieces of silver; everyone began to take their gold
to the market to trade it in for the 15.5 pieces of
silver. Then they would go to the market and
trade 15 ounces of silver for one ounce of gold
and still have a half ounce of silver left over.
Finally, they would take their ounce of gold back
to the market. As a result of this repetition,
Gresham’s Law5 would take effect and the metal,
artificially undervalued by the government, would
drive out the artificially overvalued metal. No one
was bringing gold to the government to be
minted, and gold coins began to disappear6. The
5 Also known as the Copernicus Law and commonly stated as
“bad money drives good money out of circulation.”
6 They were all being melted down for silver.

39. TAB Journal Page 39
government needed coins for the economy to
function, and the government became desperate.
These problems brought about the printing of
paper money. The earliest form of paper money
represented something tangible. If a person would
go to the government, they would be able to trade
that piece of paper for actual metallic coins. This
kind of paper money was also on the gold coin
standard. At any time a person was able to take
their paper money to the government and trade it
in for a gold coin. This was called representative
full bodied money. The paper money itself did not
contain value but it was fully backed and tradable
for its value. The country would only print a dollar
bill if it had a dollars’ worth of gold to back it up.
Additionally, in this monetary system, everyone
was allowed to own gold; there was free trade;
everyone could use this commodity; and the value
of gold fluctuated based on supply and demand.
In practice, this money was accepted by most and
allowed the economy to continue. It served as a
medium for people to exchange between each
other without the worry of the silver wearing down
and losing its value.
In 1834, Congress changed the ratio of gold to
silver from 1:15 to 1:16. This created a new
problem; the market ratio had only risen to
1:15.6. Now, if anyone had gold they could trade
it in for more by going to the government than
they could get form the market. Thus, people
brought all their gold to the government to be
minted but did not bring their silver to the
government to trade in for gold. This policy
caused silver coins to begin to disappear.
In 1853, Congress began printing fractional silver
coins, coins which had some intrinsic value, so
people would be willing to accept them. This
worked for many people, but not for everyone.
Seven years later, the Civil War broke out and the
government found itself with only half the country
on its side. The country needed more money to
fight the war, so Congress put the U.S. on the
inconvertible paper standard. The government
began to print money regardless of how much
gold and silver the treasury owned. At one time,
the government immediately issued $430 million
in greenbacks.
People were not that enamored with paper money
anymore because without metals to back it, the
paper was no longer redeemable for its full face
value in metals. The money was no longer able to
be traded in to the government for gold or silver,
but it was still backed by some sort of metal, but
only very loosely. When the government decided it
needed money, they would simply print more out.
The monetary supply ceased to have anything to
do with the amount of the amount of goods and
services the country produced or the precious
metals it had.7
During the Civil War (1860-1865), the monetary
supply doubled. The people knew the paper
money was not fully backed, and wholesale prices
doubled with it. Metal coins all but disappeared
because people realized that they could pay with
worthless paper instead of using coins with some
intrinsic value. In 1879, Congress redeemed the
greenbacks with metal, returning to the intrinsic
value based currency.
After the Civil War, until 1900, big arguments
broke out concerning what type of monetary
standard the country should be on. One group
thought the country should adopt the gold
7 This standard is often associated with inflationary countries
and banana republics, where the commodity standard means
that the basic unit of value was based on the value of a fixed
bundle of commodities and could be traded for it. For example,
one potato, three bananas, and two apples would be
exchangeable through the government, for one dollar. The
government would have to be a big fruit store, and people
would be able to answer “yes” when asked the question “Do
you think money grows on trees?!”

40. TAB Journal Page 40
standard while other groups believed the silver
standard was best.8 Many laws were passed
between the period of the Civil war and 1900,
regarding this disagreement. The first act was the
Sherman Act (1890) which called for Congress to
buy 4 million ounces of silver every month in
order to back the dollars they were printing.
Finally in 1900, the argument was settled when
Congress passed the Gold Standard Act, putting
this country on a gold standard only. Then in
1914, World War I came about. Although the U.S.
joined the war effort in 1917 and dropped the
gold standard to raise money to fight the war, it
managed to resume the gold standard in 1919.
Ten years later, a turning point in our nation’s
history occurred: the Great Depression and stock
market crash of 1929. This crash not only hit
America, but also impacted the whole world.9 In
1933, President Franklin Delano Roosevelt (FDR)
took over the presidency from Hoover and the U.S.
abandoned the gold standard for good. He did this
because gold was so expensive that prices were
declining. When the prices became too low, people
had no incentives to go into business and would
simply abandon selling their goods. In May 1933,
FDR convinced Congress to pass a law giving him
the right to fix the gold and silver value of a dollar
to up to 50% of its value.
From the mid-1930s to the mid-1970s, America
moved over to the gold bullion standard and in
January 1934, FDR convinced Congress to officially
pass the Gold Reserve Act-modified gold bullion
8 Farmers and people who constantly had to borrow and pay
back liked this one.
9 Europe was extremely affected by the stock market crash. The
great depression was one reason Hitler was able to rise to
power. There was the tremendous inflation in Germany and the
people were experiencing extreme poverty. The country was in
a rut. Hitler showed them hope by giving them a scapegoat to
blame their problems on, and a new task to refocus their
energy.
standard-where the price of gold was set at
$35/oz. For every ounce of gold the treasury had,
they were allowed to mint or print $35 of
currency. Gold was not minted in coins, or
circulated. The government set the price of gold
and controlled it so that they could mint or print
the money they felt the economy needed without
worrying about the price of gold fluctuating or
there not being enough gold to back up the
dollars. This made public free trade of gold illegal,
but the money was still totally backed by gold. In
America during his time, gold was only being used
for jewelry and to settle foreign debt. Gold had
virtually the same legal status as cocaine.
Therefore, gold was not traded frequently and the
price that the government set was not necessarily
the market price.10
The government began to buy a lot of silver.
Additionally, they allowed people to own silver
privately. Because people were also able to bring
money to the Treasury and exchange it for silver
or vice versa, any dollar from before 1961, instead
of saying Federal Reserve Note on it, said "Silver
Certificate". In 1961, Congress directed the
government to stop printing $5 and $10 silver
certificates. Any bill over $5 became a Federal
Reserve Note. In 1963, this rule was extended to
the $1 and $2 bills. The price of gold stayed fixed
until the mid-1970s ($35/oz).
Recently, gold is free market again. It recently hit
its high at almost $2,000/oz, but U.S. paper
money still does not have full backing, and cannot
be traded in to the U.S. government for metal. The
U.S. government does not even have that amount
in its treasury. So, if the dollar is not backed with
intrinsic value, it must get its value from
somewhere else, because we are able to take that
10 The market price for other countries could have been higher
or lower depending on supply and demand while the U.S. price
was controlled and fixed.

41. TAB Journal Page 41
piece of paper money and trade it in for groceries,
electronics, a place to live or a new car. The
reason the U.S. dollar has purchasing power and
value today is because we put our faith in it. We
give the dollar its value by believing that it has
value. Our money evolved from paper money
issued by the government, to money created by
individuals.
Our faith goes even farther than that. We also give
value to another kind of paper called a check. This
piece of paper never had any intrinsic value, but
when we write on it and believe the banks will
honor it, we give it value and purchasing power.
Two-hundred and fifty years ago, the 13 colonies
had not completely worked out the banking
system and the check deposit system. When a
check from Boston was deposited in New York, it
would only be worth 90% of its value because it
was hard for the banks to collect the money from
the Boston banks that were so far away. Today, we
no longer have that problem because an effective
financial system has been set up to give effective
means of transferring money, no matter how large
or small the amount. America not only has an
effective and efficient financial banking system,
but additionally the creation of electronic
exchange and plastic money has pervaded the
country. Today a person may never feel or see any
of their money because it can be deposited
directly into their account and from their account
to others. People can use credit cards and a simple
swipe can transfer funds.
We continue to place our trust in the government
and continue to lend value to the dollar no matter
how far away we move from the gold standard. As
the government needs additional funds to back
their projects and to finance their programs, they
resort to printing fiat money—money with no
backing at all. The government issues promissory
notes in the form of bonds. When the government
sells these bonds, people buy them not based on
any intrinsic value but based on faith in the
government’s ability to pay. As time passes,
America continues to borrow a lot of money to
fund many projects and cover many expenses.
Today, the United States is in debt over 16 trillion
dollars and still borrowing more. The question
that arises is who the United States is borrowing
from and where is their money invested. About
32% of the U.S. debt is owned by the federal
government and is required to stay in trust funds
earmarked to pay social security and other
retirement programs. 32% is a significant amount
but the other 68% is owned by individual
investors, companies, and other governments
(e.g., state and local) including foreign countries.
This may come as a surprise that other countries
can be creditors of the U.S., but according to the
U.S. Department of Treasury, these foreign
countries governments own more than 45% of the
debt.
In recent years, it seems that China has risen to
become a major power in both the world’s political
sphere and economic influence. China is featured
in the news and seen as a country that is growing
economically, producing and exporting, and also
as a strong political power. The United States is
not only as one of the biggest consumers of
Chinese goods, but the United States also
maintains China as one of the nation’s largest
creditors.
Bud Conrad, a macroeconomics researcher,
analyzed interest rates in order to uncover how
the flow of capital from one country to another
affect the interest rates and the economic position
of a country. Conrad found that the deficit of
imports over exports that the nation experiences
today, would have been impossible if the country
was on the gold convertible dollar system (the
system the United States used for most of its
history). The reason, he stated, is that if imports

42. TAB Journal Page 42
rise much higher than exports, one country would
pay the other country gold in order to make up
the difference. As the country had less and less
gold, and the currency was less backed by the
gold, the imports would become too expensive
and the country would have been forced to stop
the imports; thus effectively stopping the trade
deficit. Unlike today, where the country operates
with a fiat dollar currency, there are no limits to
the trade deficit.
America’s yearly current account trade deficit is at
about $660 billion dollars a year and if the country
even attempted to use gold to pay off the trade
deficit, the gold supply would be consumed in less
than two months11. The same study also calculates
the amount of gold needed to fully back all $775
billion of Federal Reserve notes outstanding today
and concludes that the U.S. is in no position to
return to the gold standard any time in the near
future. China continues to help the U.S. dig deeper
into the deficit by loaning the U.S. money to pay
China for their goods and exports.
As the spending of the U.S. grows, the U.S. needs
more money and borrows to cover these costs.
China, as one of the United States’ largest
suppliers of goods, exports more than 500% more
goods to the U.S. than the U.S. exports to China.
Many of the products the U.S. buys are bought on
credit and China continues to buy the U.S.
Treasury bonds and bills.
According to the Federal Reserve, China owns
more U.S. debt than the United States citizens do.
As the third largest holder of U.S. debt, after the
Federal Reserve ($2 trillion) and the social security
trust funds ($3 trillion), China bought over 8%, or
$1.2 trillion of treasury bonds and treasury bills
11 That is assuming that the amount of gold the U.S. has
recorded on its books is correct. It is possible that is incorrect,
because there has not been an audit of their books in decades!
during the “debt crisis of 2011”. China’s purchase
of such a significant amount of U.S. debt has led
many citizens to ask why China thinks that U.S.
debt is a valuable or safe investment.
Generally, the U.S. debt is a safe and stable
investment and has even grown as a result of the
strengthening of the dollar. But in the past few
years, the United States has gone through many
turbulent times, for example, they bailed out
finance firms and large banks who were
threatened by the sub-prime mortgage crises,
where mortgage loans were supplied to many
families who were unable to pay back the loans
and defaulted on the mortgage. This was another
reason that the U.S. decided that more money was
necessary and they issued more treasury bonds,
providing liquidity to financial systems.
The Chinese have a great influence over the U.S.
economy, because they can decide whether or not
n to continue to lend money to the U.S. Interest
rates would increase and it would be harder for
businesses to obtain loans. In addition, if China
turned around and sold off the debt they have
purchased, it would effectively take money out of
the U.S. economy. Many believe that this would be
a calamity for the United States. Removing the
funding and spending power of the U.S. could
affect the country by devaluing the dollar, halting
credit, making credit less accessible, increasing
prices and bankruptcies. All of these factors
together could cause the job market to plummet
and send the U.S. into a depression.
Although in the past five years, China has slowly
lessened their purchasing of U.S. bonds, interest
rates have not skyrocketed and the dollar has not
dropped. Many other economists believe that it
would be impossible for China to pull the funding
out of U.S. as many people fear. Economists show
that if China removed their support of the U.S.
they would harm themselves as the U.S. would be

43. TAB Journal Page 43
in no position to pay back the debt owed to China.
If China forces U.S. to run low on capital, they are
threatening their own country’s stability.
Therefore, China will not take a chance and will
stay far away from harming the U.S. dollar.
It is quite clear that the value of the dollar is very
connected to the faith that people have in its
value. Throughout the history of the U.S. dollar,
the currency has been backed by different means.
At first, it was fully backed by gold and other
metals and at some points it was mainly backed by
silver, but once the country left the gold standard,
the value of the dollar was placed in the hands of
the people. If at any point in time, the nation
decides that the currency is worthless and they
dump it in the street, the dollar bills will truly have
no value. The American currency is simply the
value we place on it and nothing more and
nothing less.
But there is one exception to this rule. The value
of the dollar is what we believe it is, but it is also
what we make out of it. If we treat the dollar as if
it has value, then it will have value. China has the
ability to say that the dollar is worthless, and they
may even believe that, but it would not be in
China’s best interest to take such action or make
such a statement. The U.S. citizens also hold some
power. They may believe that the value of the
dollar is worthless without the gold standard.
However, no matter how many intelligent people
tell us that the U.S. dollar is not worth very much,
our country has the power to ignore it and
continue spending as if the dollar has true value.
References
Barter news. (2011). Retrieved from http://www.barternews.com
Brief history of money in the USA. (2009, August 15). American Monetary Institute. Retrieved from
http://www.monetary.org/a-brief-history-of-money-in-the-usa
CMI gold & silver (2011). Retrieved from http://www.cmi-gold-silver.com/history
Debt crisis of 2011. (2011). Retrieved from http://www.usgovinfo.about.com
Federal Reserve Bank of San Francisco. (2011). Retrieved from http://www.frbsf.org/currency
Federal Reserve Bank of St. Louis (2011). Retrieved from http://www.stlouisfed.org
Gold eagle. (2011). Retrieved from http://www.gold-eagle.com
History of the U.S. currency. (2011). Retrieved from http://www.newmoney.gov/currency/history.htm
Money matters 101. (2011). Retrieved from http://www.moneymatters101.com/money/importantevents.asp
Murse, T. (2011). How much U.S. debt does China really own? Retrieved from
http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm
Recent developments. (2011). Board of Governors of the Federal Reserve. Retrieved from
http://www.federalreserve.gov
Ron’s currency stocks & bonds. (2011). Retrieved from http://www.ronscurrency.com
U.S. China treasuries. (2011). Retrieved from http://www.reuters.com/article/2011/06/30/us-usa-china-
treasuries

44. TAB Journal Page 44
Investment Principles
Eric B. Lehmann
Everyone wants to make money. Everyone wants to
beat the market, but not everyone gets what they
want. Historically, equity investments have
outperformed any other asset class in the long-
run. As such, many blindly invest in the stock
market and hope for their millions. They think
investing is a matter of luck, equivalent to
gambling. In their case, they are right. They are
gambling if they invest without doing research. I
am not a gambling man; therefore, I composed my
portfolio based on macroeconomics, fundamental
analysis, and diversification to limit unsystematic
risk. No, you do not always get what you want, but
as the Rolling Stones say, “you can still try”
Strategy and Methodology
We live in a volatile economy; one day the market
may soar while the next day it may plummet.
Therefore, with my bottom-up philosophy I took
numerous precautions to stabilize my investment
in this tumultuous economy.
First, I invested mostly in large cap stocks since
they are known to be the most stable and
established companies. Second, I invested only in
dividend paying stocks because they offer the
most stability even in a down market. Dividend
stocks offer a steady stream of income even in a
downturn, offering downside protection without
compromising its capital appreciation potential.
Third, I sought to develop a portfolio that had a
low risk, but since low risk means low return, I
compromised to create a portfolio with the beta of
1—the same systematic risk as the market. This
will be addressed in further detail in the Risk.
Adjusted Returns section
Above all, diversification is the best defense in any
economy. I chose five stocks which are spread out
in different industries and sectors in the attempt
to limit risk overlap. They are MGE Energy Inc., a
mid-sized utility company; Philip Morris
International Inc., a global tobacco company;
Broadcom Corp., producer of semiconductors and
high-tech chips; Eaton Corp., a diversified
industrial company; and Enterprise Products
Partners, a gas-pipeline company. My investments
are shown in the table below.
MGE Energy Inc.
My first security selection is MGE Energy. MGE
Energy Inc. (MGEE) is a utility holding company
based in Madison, Wisconsin. Its chief holding is
Madison Gas and Electric Co. (MGE), which
supplies electric services to over 139,000
customers and supplies natural gas to
approximately 144,000 customers in Wisconsin.
MGE Energy services a strong local economy, in
fact, Madison’s economy was ranked seventh out
of 366 metropolitan areas in a study conducted by
Holdings Price on
9/4/2012
Portfolio
Weight
Number
of
Shares
Value ($)
MGE Energy
Inc.
49.65 20% 4028 200,000
Philip Morris
International
Inc.
89.44 20% 2236 200,000
Broadcom
Corp.
35.34 20% 5659 200,000
Eaton Corp. 44.75 20% 4469 200,000
Enterprise
Products
Partners
53.88 20% 3711 200,000
Total 100% 1,000,000
Eric is a student at Lander College for Men and is majoring in finance.

45. TAB Journal Page 45
POLICOM Corp. Such a strong economy bodes well
for MGE Energy, since a growing economy requires
additional utility services.
Given our current volatile economy, I believe MGE
Energy is a wise investment because during
economic hardship people continue to use
utilities, and MGE Energy in particular, has a safe
Beta of 0.4. Additionally, it has increased
dividends for the past 37 consecutive years, a
testimony to stable returns for investors.
Fundamental Analysis
I utilized fundamental analysis to pick MGEE.
Below is the table of ratios I analyzed. “Dividends
USD” show the profit the investor realizes while
holding the security.
A vital aspect that should be analyzed in a utility
company is its net profit margin, because
investors care about the after tax profitability of a
company as it may translate into returns for
investors. Since 2009, MGE Energy’s net profit
margin has increased from 9.55% to 11.15%, an
increase of 1.60%. This high net profit margin
compared to the industries rate of 8.5% illustrates
MGE Energy is a profitable company that is
displaying sustained economic growth. What does
the investor gain if he must pay more per share?
So, the next logical ratio to analyze is the price to
earnings ratio.
The price to earnings (PE) ratio is indicative of the
value of the stock, or the dollar-on-dollar worth
of the stock to the investor. From 2009 to 2011
MGE Energy’s PE ratio rose from 16.17 to 17.89.
Such increases can result in capital gains for the
investor. Although the MGE Energy’s PE ratio is
higher than the utility industry PE ratio of 13.9
which may indicate it is more expensive. I believe
MGE Energy’s PE ratio is justified, if not
undervalued, given its track record of sustained
growth and dividend increases. As a matter of
fact, according the Standard & Poor's (S&P) report,
had an investor invested $10,000 ten years ago it
would now be worth approximately $19,393!
The dividend payout ratio is another key ratio to
use in the analysis of utility companies. Utility
companies generally have a high dividend payout
ratio. A high dividend payout ratio may mean
more dividends for investors, but it may also mean
the company has less financial flexibility to
reinvest12 and develop non-regulated business,
and vice versa. In the period from 2009 to 2011,
MGE Energy decreased its dividend payout ratio
from 66.1% to 57.4%. This decrease shows MGE
Energy is retaining cash to further develop and
grow its company. Indeed, MGE recently finished a
$14 million upgrade at the Walnut Substation and
a $2.5 million expansion at the Femrite
Substation, increasing MGE’s capacity and growth.
Also, although the dividend payout ratio is
decreasing do not be deceived, as noted above,
MGE Energy has consistently increased dividends
for the past 37 years and is currently paying an
annual rate of $1.5804 per share.
12
Although some may argue that a company will only have
as high of a dividend yield as they can afford, I am of the
opinion that this is not necessarily so. A company may be
forced to pay high dividends if its income statement is not
impressive enough to attract investors. In fact, the S&P report
is of the opinion that utility companies like to lower their
payout ratio to less than 70%, but not all are able to do so.
MGE Energy 2009 2010 2011
Net Profit
Margin %
9.55 10.84 11.15
Price to
Earnings
16.17 16.28 17.89
Payout Ratio % 66.1 59.5 57.4
Return on Equity
%
10.41 11.24 11.32
Debt to Assets 0.61 0.6 0.62
Dividends USD 1.46 1.49 1.52

46. TAB Journal Page 46
Furthermore, the dividend payout ratio decrease is
a result of a share price increase from $35.74 to
$47.23 during this three year period; so the
decrease in the dividend yield just means the
investor gained capital gains instead.
The next aspect that has to be analyzed is the
company’s management. If the management is
poor, the company may suffer. MGE Energy’s
return on equity (ROE) ratio has increased from
10.41% to 11.32% in the past three years, beating
the industry average of 11.1%. This increase in the
ROE ratio shows positive management and bodes
well for investors.
MGE-Energy’s debt to assets (D/A) ratio has been
consistently good, fluctuating between 0.60 and
0.62 in the past three years. This moderate ratio
reflects MGE Energy’s financial stability and its
proper use of leverage to spur growth.
Risk Factors
MGEE bears the same risks as the rest of the
utilities industry, but the utilities industry is
affected by weather. Very cool winters means an
increase in the demand for gas for heating, and
very warm summers means an increase in demand
for electricity to power cooling units. Whatever
type of weather, extreme conditions are beneficial
for the utilities industry. Moderate temperature,
however, is adverse for the industry because
people tend to use less gas for heating and less
electricity for cooling. This decreases the revenues
of utility companies and MGEE too will suffer in
temperate weather. On the other hand, wild
weather can damage MGEE’s plants which will
increase expenses and decrease revenue.
Some of MGEE’s largest expenses are oil, coal, and
natural gas. MGEE must purchase these
commodities in order to service their consumers.
If commodities become more expensive, MGEE’s
expenses will increase. If MGEE chooses to charge
customers more to cover their costs, customers
may be forced to use fewer utilities, thereby
decreasing MGEE’s revenues and gross profit.
Additionally, this increase in utility cost may mean
fewer customers will be able to pay their bills,
thereby increasing MGEE’s bad debt expense.
Furthermore, if prices are high, MGEE may have
trouble signing customers on to long-term
contracts.13
Along with the higher costs that come with a
commodity price increase are many other
associated risks. For example, utility companies
pay for gas when they inject gas into their storing
facilities during the summer, but only receive
revenues when they sell the gas during the winter.
An increase in gas price means MGEE will have to
pay more money up front without being
compensated until the winter. Suffice it to say, oil,
coal, and natural gas prices are a primary risk to
the utilities industry.
MGEE, like most utility companies, is known for its
high dividends. At the time of this investment
Congress was reforming the tax code for the 2013
year. It was expected that Congress would
increase the dividend tax rate, making it less
attractive for investors to invest in high dividend
paying stocks. MGEE would suffer as a result of
this dividend tax code change, since investors may
be less inclined to invest in dividend stocks.
Unfortunately, this risk has been realized to an
extent.
Stock Performance
During my holding period, MGEE increased from
$49.65 to $51.77 and paid a $0.40 dividend, a
total increase of 5.07%. MGEE performed as I had
expected: utility stocks generally promise stable
returns, no matter what the market is like. Below
13
http://www.valueline.com/Tools/Educational_Articles/Sto
cks/The_Effect_of_Natural_Gas_Prices_on_Utilities.aspx

47. TAB Journal Page 47
is a graph depicting how MGEE performed during
my holding period.
Philip Morris International, Inc.
Philip Morris International (PM) manufactures and
markets tobacco products in the European Union,
Eastern Europe, Middle East, Africa, Asia, Latin
America, and Canada—everywhere but the U.S.A. It
sells a range of brands including: Marlboro, Merit,
Parliament, Virginia Slims, L&M, Chesterfield, Bond
Street, Lark, Muratti, Next, Red & White, and many
local cigarette brands. PM is the largest publicly
traded company in the tobacco industry.
Fundamental Analysis
I evaluated PM as a good investment with the
fundamental ratios that are presented in the table
below.
PM incurs high interest expenses since it heavily
uses debt-financing, and also pays high taxes due
to governmental regulations on the tobacco
industry. Both of these reduce PM’s net income.
Therefore, it may be useful to ignore taxes and
interest just to see how well PM is operating. PM’s
operating margin has steadily increased during
the 2009-2011 period: it increased from 40.1% to
42.9%, beating the industry average of 38%. On an
operating basis, PM seems to be becoming
increasingly profitable
Even though operating margin is a good indication
of profitability, it is still worthwhile to check the
bottom line earnings per share (EPS). From 2009-
2011 PM’s EPS increased from 3.24 to 4.85,
greatly surpassing the industry average of 2.5.
This means PM is steadily generating earnings,
which usually translate into capital gains for
investors.
PM is the industry leader in market capitalization,
increasing its market cap from 94.24 to 139.48
billion dollars, while the industry average is only
65.05 billion dollars. Although different investors
may interpret this in different ways, I contend that
large cap stocks are usually the most mature and
stable investments. The greater the market cap,
the greater the safety, which is especially
comforting in the current volatile economy.
Leverage is important for a company to maximize
its return on equity. From 2009-2011, PM’s D/E
ratio has increased from 2.39 to 64.75, and in
turn, its ROE ratio has also dramatically increased.
PM’s increase in debt may increase return, but it is
also alarming as it increases default risk. PM must
be closely monitored in the future to monitor its
interest expense; if it becomes too risky, it may
lose its merits as a conservative investment.
Risk Factors
As an international tobacco company, PM is
subject to substantial taxes. Increases in cigarette
taxes have been proposed in numerous countries.
Increases in excise tax, sales tax, and import
Philip Morris 2009 2010 2011 Industry
Avg.
Operating
Margin %
40.1 41.2 42.9 38.0
Earnings Per
Share
3.24 3.92 4.85 2.50
Market
Capitalization
94.24 B 108.46 B 139.48 B 65.05 B
Debt to Equity 2.39 3.81 64.75 -

48. TAB Journal Page 48
duties can adversely affect PM’s sales volume and
profitability in a disproportionate measure to its
competitors because some tax rates are based on
sales price, and PM tends to focus on premium-
priced manufactured cigarettes. In other words,
PM will suffer a higher tax rate than its
competitors because PM sells more expensive
merchandise.
Governmental regulations aimed at decreasing the
use of tobacco products may decrease PM’s share
price. The World Health Organization’s Framework
Convention on Tobacco Control (FCTC) attempts
to regulate the tobacco industry on a global level,
interfering with PM’s global business. It has
enacted and proposed the following: restrictions
on advertising, restrictions on tobacco product
ingredients, restrictions on packaging designs,
restrictions on cigarette vending machines,
restrictions on smoking in public areas and even
in some private areas; requiring the display of
larger health warnings, and the elimination of duty
free allowances for travelers. The FCTC also
attempts to make smoking less appealing to adult
smokers. Combined with diminishing social
acceptance of tobacco usage, this may reduce the
industry’s sales volume and be detrimental for PM.
Furthermore, as the tobacco industry becomes
more regulated, the black market for tobacco may
grow. Counterfeiting, contraband, and cross-
border purchases can further decrease PM’s net
sales.
For numerous reasons farmers may be influenced
to grow less tobacco leaves. This would lower the
supply of tobacco, which, in turn, would increase
PM’s cost of goods sold and decrease PM’s gross
profits. Additionally, climate changes may ruin the
tobacco and decrease the quality of PM’s
products, which would reduce the demand for
PM’s products and decrease PM’s net sales.
Stock Performance
PM decreased from $89.44 to $86.09, probably
due to governmental restrictions in Russia, but
was propped up by a dividend of $1.74. This
illustrates the power of dividends. Overall, PM
decreased 1.80%. Even though PM underperformed
during this holding period, I believe it will be
profitable in the long-run. To the right is a graph
of PM’s performance.
Broadcom Corp.
Broadcom Corp. (BRCM) provides semiconductors
solutions for wired and wireless communications
which deliver data, voice, video, and multimedia
connection to all environments. BRCM’s has a
dizzying technological portfolio including system
on a chip (SoC), which is the platform for
Samsung’s Galaxy Y Series smartphones, and
embedded software solutions. Offering solutions
for the office and home wireless networks, such as
Wi-Fi, Bluetooth, modems, GPS devices, and cable
set-top boxes is just a drop in the bucket of what
BRCM offers.
Fundamental Analysis
The ratios which I used to analyze Broadcom Corp.
are presented in the table on the following page:

49. TAB Journal Page 49
Broadcom Corp. 2009 2010 2011
Price to
Earnings
243.9 21.9 17.8
Inventory
Turnover
6.07 6.84 7.12
Debt to Equity 0.22 0.12 0.18
Dividend Yield
%
0.00 0.73 1.23
Broadcom Corp. has a relatively high price to
earnings ratio even for the growth-oriented
semiconductor industry. In 2009 BRCM’s P/E was a
whopping 243.9 due to poor earnings, but since
then it has steadily increased its earnings and
brought its P/E ratio down to 17.8 as of 2011.
Although BRCM had a bad year in 2009, it has
done extraordinarily well since, and as BRCM
continues to grow its earnings and thereby lower
its P/E ratio, it is becoming more of a value stock
than a growth stock. At the P/E of 17.8, I think
BRCM may be undervalued and will snap up to its
appropriate price.
BRCM’s inventory turnover ratio supports this
analysis. From 2009 through 2011, BRCM’s
inventory turnover ratio increased from 6.07 to
6.84, and then to 7.12. This is a healthy turnover
ratio and indicates that BRCM is efficiently selling
its products, which is important in the technology
industry where products can quickly become
obsolete.
BRCM’s D/E ratio has decreased from 0.22 to 0.18
from 2009-2011. At the time of the investment, I
thought this low D/E ratio was good because it
meant a low default risk. However, since then I
have learned that such a low D/E as 0.18 may
mean BRCM is not sufficiently utilizing leverage to
increase its profitability.
BRCM started issuing dividends in 2010 at a
dividend yield of 0.73% and has increased to
1.23% in 2011. This new dividend strategy may
indicate that BRCM has “surplus” cash to payout in
dividends to attract investors. It should be
interesting to observe how this strategy plays out,
but in the meanwhile it increases income for
investors.
Risk Factors
BRCM may be viewed as a growth stock. Its P/E
ratio (at the time of the writing of this project) is
26.21. Even for the growth oriented technology
sector this is considered a high P/E; the
semiconductor industry’s P/E ratio is only 19.5. An
obvious risk is even if BRCM grows, it may not
grow as much as anticipated and it may fail to
justify its high P/E ratio. This may occur for
numerous reasons.
BRCM generates much of its revenue from sales to
a relatively small customer base. For example, for
2011, 2010, and 2009, 42.6%, 38.6% and 34.6%
(respectively) of BRCM’s total revenue came from
its five largest customers. If for some unforeseen
reason BRCM would lose any of these customers, it
would mean a dramatic decline in BRCM’s
revenues.
Additionally, BRCM has received the majority of
their licensing revenue from Verizon Wireless and
Qualcomm. From January 2008 through
December 2011 alone, BRCM generated $753
million from licensing agreements with these two
companies. Recently, BRCM’s licensing agreement
with Verizon Wireless ended, and the Qualcomm
agreement will terminate in 2013. There is no
guarantee that BRCM will be able to replace these
two primary customers. If they fail to do so,
BRCM’s revenues will take an extreme dive.
BRCM competes in the highly volatile
semiconductor industry. As such, BRCM’s stock
can experience extreme highs and lows even in a
short timeframe. From the beginning of 2009 to

50. TAB Journal Page 50
the end of 2011, BRCM’s stock fluctuated from as
high as $47.39 to as low as $15.31 per share.
These vicissitudes were caused by factors beyond
BRCM’s control; if the investors buy and sell at the
wrong times, they may face extreme losses.
The semiconductor industry is also exceedingly
competitive. BRCM must compete with older and
better known companies that have greater name
recognition, lower expenses, and more resources.
BRCM must also compete with emerging
companies which seek to undercut BRCM. In order
to remain competitive, the compnay must be able
to gauge demand, respond quickly to these
changes in demand, develop new technologies,
adapt quickly to technological developments,
introduce new products to the market, and deal
with global economic risks. The industry is fast
paced and demanding; any failure to swiftly
address these concerns could reduce BRCM’s
value.
BRCM relies on third parties to manufacture,
assemble, and test its products. This presents the
risk that BRCM may be unable to control the
quality and timely shipping of their products.
Moreover, if the third parties decide to charge
BRCM higher rates, BRCM may be forced to find
new manufacturers or pay the higher charges.
Stock Performance
BRCM underperformed, dropping from $35.34 to
$34.02, but paid a $0.10 dividend, totaling in a
loss of 3.45%. I cannot pinpoint the cause for this
decline, but perhaps it was due to Qualcomm’s
recent ascent, drawing investors away from BRCM.
Even so, I still retain my position that BRCM
investors will soon see an upward movement. The
graph below is a visual of BRCM’s performance
over my holding period.
Eaton Corp.
Eaton Corp. (ETN) is a diversified manufacturer of
industrial products such as electrical systems,
power management components, truck and
automotive transmissions, and hydraulics. ETN
also services industrial, mobile, and aerospace
equipment. In addition, ETN offers energy
solutions by helping expand traditional and
renewable energy sources.
Fundamental Analysis
I utilized the financial ratios presented in the table
below.
Eaton Corp. 2009 2010 2011
Net Profit Margin % 3.23 6.77 8.41
Price to Earnings 28 18.6 11.1
Days Sales
Outstanding
64.47 55.06 53.25
Return on Assets % 2.33 5.54 7.69

51. TAB Journal Page 51
ETN has a very steady Net Profit Margin (NPM)
which is important for an industrial company.
From 2009 through 2011, ETN’s NPM more than
tripled going from 3.23 to 8.41! ETN has been
becoming steadily more profitable which may
translate into capital gains for investors.
ETN’s P/E ratio has been decreasing in
commensurate to its increase in net profit margin,
going from 28 in 2009 to 11.1 in 2011, even
becoming lower than the industry average of 13.9.
This means ETN is becoming a cheaper investment
and investors get more earnings for every dollar
they pay. I believe this low P/E is not a sign of
weakness, but rather an undervaluation by the
market, and I predict that its price will bounce up
to its efficient level.
One concern though, is ETN’s high days sales
outstanding. In 2009 it was at 64.47, but has
since become a more controlled 53.25. The ratio
should be monitored closely to check if ETN’s
accounts receivables continues to become more
liquid; if not, then it may be unfavorable.
ETN’s ROA increased during 2009-2011 from
2.33% to 7.69%. This increase in ROA shows that
ETN’s operating performance is being well
managed and ETN is efficiently using its assets.
Risk Factors
ETN bears the risk of weakening global markets.
As of 2011, 55% of ETN’s revenues were generated
by business outside of the U.S. A weak global
economy may mean less demand for ETN’s
products and services. Moreover, even if the
global markets remain stable ETN still bears
currency exchange risk.
A further risk related to global markets is ETN’s
exposure to emerging markets like Brazil and
China. Operations in these new, foreign markets
increase ETN’s geopolitical and operational risk.
ETN requires commodities, such as iron and
copper, to manufacture its products. Rising
commodity prices means increased costs for ETN.
To offset rises in commodity cost, ETN must
hedge these commodities. However, the
commodity market is extremely volatile, so it may
be tricky to hedge properly; any inability to do so
will increase ETN’s costs and decrease its gross
profit
Stock Performance
ETN was my portfolio’s number one performer,
increasing from $44.75 to $55.02 and paying a
$0.38 dividend; ETN increased by an astronomical
23.8%. This is probably attributed to an overall
increase of the entire industrial industry. ETN’s
price change over my holding period is illustrated
on the table that follows below.
Enterprise Products Partners L.P.
Enterprise Products Partners L. P. (EPD) operates in
the natural gas industry. Primarily, EPD processes,
fractionates, stores, and transports natural gas
and natural gas liquids (NGL). EPD operates
pipelines which transport gas from producers in

52. TAB Journal Page 52
the U.S.A., the Gulf of Mexico, and Canada, to
domestic consumers and markets. EPD has over
14 billion cubic feet of natural gas storage and
50,600 miles of offshore and onshore pipelines.
Fundamental Analysis
I used fundamental analysis in picking EPD. The
ratios I used are presented in the table below.14
EPD 2009 2010 2011
Price to Earnings 18.1 36.2 19.5
Gross Margin % 7.6 6.8 6.8
Revenue Mil 25,511 33,739 44,313
Return on Equity % 13.22 3.07 17.43
Debt/Assets 0.93 0.64 0.65
Enterprise Product Partners earnings have
increased from 2009-2011, which is reflected in
its P/E ratio. Its P/E has grown from 18.1 to 19.5;
even so, it is much below the industry average of
28. This low P/E ratio makes it a value stock, and
value stocks have been proven to be the most
stable and profitable investments in the long run.
As EPD’s revenues and P/E ratio steadily grow,
investors can realize capital gains.
One concern is: even though EPD’s revenues have
grown during 2009-2011 from $25,511 million to
$44,313 million, its gross margin has not done
the same. EPD’s gross margin decreased from
7.16% to 6.80%, indicating EPD is suffering from
increased COGS. EPD’s gross margin must be
closely observed for any further decline.
EPD’s ROE should be comforting for investors; it
increased from 13.22% to 17.43% during 2009-
2011. This positive development in the ROE was
caused by EPD’s increase in net income. So,
although EPD’s gross margin has declined, its
14
EPD has been doing consistently well aside from a bad
year in 2010. For the purposes of brevity, I will ignore 2010
in my discussion.
increase in net income and ROE should be
promising enough.
EPD’s D/A ratio is also noteworthy. In 2009, EPD’s
D/A was 0.93; meaning only .07 of EPD’s
financing came from equity. However, since then
EPD’s D/A has decreased to a less alarming 0.65.
This shows EPD’s management has been very
aggressive with leverage in the past, and was
successful in bringing it back down to a
maintainable proportion. EPD remains to be a
solvent firm.
Risk Factors
EPD is a master limited partnership and therefore
does not have to pay taxes. At the time of my
initial investment, there was a fear that the tax-
free status would be eliminated and EPD would be
forced to pay taxes in the event of a “fiscal cliff.”
This would negatively affect EPD’s cash flow; cash
available for dividends would decrease, and
subsequently, share prices may drop. However,
Congress has imposed no such taxes, and
according to Wells Fargo, it is unlikely that it will
happen
As an operator in the natural gas industry, EPD is
subject to the high volatility of that industry,
namely, the extreme fluctuations of gas prices.
High gas prices may mean less consumer demand,
and low gas prices may mean gas producers will
not have enough incentive to explore and develop
more gas, which would also decrease EPD’s
business activity. Either extreme may adversely
affect EPD.
EPD is sensitive to declines in economic activity. A
decline in economic activity may reduce demand
for energy commodities such as crude oil and
natural gas. This reduction in demand would mean
there would be less need for EPD’s transportation
services which would decrease EPD’s revenue. A

53. TAB Journal Page 53
decrease in revenue may spur a decline in EPD’s
share price.
A greater-than-expected rise in interest rates may
adversely affect EPD. EPD employs high leverage
as a means of raising capital, and thus incurs
relatively high interest expenses. For the year
2011 alone, EPD’s interest expense was
$744,100,000. Additionally, EPD had
approximately $1.1 billion in long term debt
subject to variable interest rates. An increased
interest rate would increase EPD’s interest
expense, limit cash flow, and may mean a
decrease in dividends paid. Additionally, in the
DDM a rise in interest rates will decrease share
price. Although this may be a systematic risk, it is
of great concern when analyzing EPD.
Stock Performance
EPD decreased from $53.88 to $52.71, but paid a
$0.65 dividend. In total, EPD lost 0.97%.
Nevertheless, I would still hold this stock because
I think it will do well in the coming years. As can
be seen in the graph, EPD may already be on the
rise. EPD’s performance is depicted below.
Portfolio Performance Analysis
Since I did not know which of my five selections
would perform the best, I opted to weight my
portfolio equally and invest 20% in each security.
Overall my portfolio generated profits and
increased by 4.53%. Due to my diversification, my
portfolio was profitable. Had I invested in only one
sector, my portfolio would have been much riskier:
it may have risen like ETN, or it may have declined
like BRCM. Even though it is the percent that
matters, it is still pleasing to see the dollar profit.
On my initial investment of $1,000,000 I would
have made $45,291.69—not a bad profit for just
four months.
Below is a table showing my portfolio weightings
and returns.
zzz
Portfolio Holdings Price Per
Share on
9/4/12
Price Per Share
on 11/13/12
Dividend
Received Per
Share
Holding
Period Profit
Security HPR Portfolio
Weight
Portfolio HPR
MGE Energy Inc. 49.65 51.77 0.40 2.52 5.07% 20% 1.01%
Philip Morris International, Inc. 89.44 86.09 1.74 -1.61 -1.80% 20% -0.36%
Broadcom Corp 35.34 34.02 0.10 -1.22 -3.45% 20% -0.69%
Eaton Corp. 44.75 55.02 0.38 10.65 23.80% 20% 4.76%
Enterprise Products Partners L.P. 53.88 52.71 0.65 -0.52 -0.97% 20% -0.19%
Total - - - - - 100% 4.53%
SPDR S&P 500 141.04 145.55 1.801 6.31 4.47% - -

54. TAB Journal Page 54
It is important to use a benchmark to determine
how one’s portfolio performed in comparison to
the market. The trouble is finding an accurate
benchmark; meaning, a benchmark which
encompasses most, if not all, of the portfolio’s
individual securities. Otherwise, it is an unfair
comparison since the two operate in different
markets; it would be tantamount to comparing a
U.S.A. market to a Korean market. However, no
index that I know of encompasses all of my
security selections. Therefore, although it may not
accurately reflect the market in which my portfolio
operated, I used the SPDR S&P 500 to benchmark
my portfolio. I chose the SPDR over the S&P 500
index because it allowed me to easily incorporate
dividends into the total return, and since the SPDR
mimics the index, it should be a fair replacement.
During my holding period the SPDR increased
from $141.04 to $145.55, and along with a $1.80
dividend, the SPDR gained $6.31, or 4.47%. This
can be seen in the table above. It seems that my
portfolio outperformed the market by 0.06%
(4.53% - 4.47%) but this figure will have to be
risk-adjusted in the next section.
On the next page is a graph comparing my
portfolio to the SPDR.
It is perfectly clear from the graph that my
portfolio followed the trend of the market. Almost
every rise and fall of the SPDR was replicated by
my portfolio. This is explained by systematic risk.
Since my portfolio and the market are affected by
the same undiversifiable risks, such as interest
rate risk and fear of “fiscal cliffs”, they behaved in
a similar fashion.
Risk Adjusted Returns
It would be unfair to say one stock performed
better than another without accounting for the
different risks involved. As noted before, without
risk adjustment, my portfolio outperformed the
market by 0.06%. But, let us now compare returns
according to the Treynor Index which will account
for risk.
First, the beta, or systematic risk, of my portfolio
is 1.004. The beta of each security is shown in the
table below.
Security Beta
MGE Energy Inc. 0.43
Philip Morris International, Inc. 0.90
Broadcom Corp 1.23
Eaton Corp. 1.80
Enterprise Products Partners L.P. 0.66
Average 1.004
On the date of my purchase, September 4, 2012,
the U.S. 10-Year Treasury Notes yielded 1.57%.1
Since this is an annualized figure, my portfolio’s
and the market’s return must be annualized, too.
My holding period was 127 days; so my portfolio’s
4.53% turns into an annualized 13.02%, while the
market’s 4.47% turns into 12.86%.
The Treynor Index is calculated as follows: (RP –
RF) / β, where RP is the portfolio return, RF is the
risk-free return, and β is the systematic risk of the
portfolio. My portfolio Treynor Index is therefore
[(13.02% - 1.57%) / 1.004] = 0.1140, while the
1
Obtained from Marketwatch.com

55. TAB Journal Page 55
market’s Treynor Index is [(12.86% - 1.57%) /
1.00] = 0.1129. This is shown in the table below.
Risk Adjustment Return Beta Treynor Index
Portfolio 13.02% 1.004 0.1140
Market 12.86% 1.000 0.1129
Even with risk adjustment my portfolio still beat
the market by 0.0011 in the Treynor Index,
although by a smaller margin since my portfolio’s
beta is 0.004 greater.
Additionally, according to Jensen’s Differential
Rate of Return Measure, my alpha was
0.002017646. This shows that with my
management, I was able to produce a portfolio
risk premium that was slightly greater than the
market risk premium after accounting for risk.
Conclusion
This project was invigorating and stimulating.
Throughout the process of this investment
simulation I learned a lot about the market. I
learned what to look for and where to find it.
Overall, I feel more confident to pursue a career in
equity research.
During this project I also learned a lot about
myself: which securities I am drawn to, and about
my conservative investing personality, which I am
now more aware of in other areas of my life, too. It
amuses me that my last stock pick (Eaton Corp.)
which I was the least fond of due to its high risk,
also generated the highest returns.
Additionally, I was shocked that with all of my
research and diversification, my portfolio only
narrowly beat the market. Nevertheless, I still
agree only with the weak-form of the efficient
market hypothesis, and I trust that with a longer
investment holding period I can justify my
skepticism towards the semi-strong and strong
form of the EMH. Let us hope I do not have reason
to convert. No, not everyone gets what they want,
not everyone makes money, and not everyone
beats the market, but I am glad I tried and did.

56. TAB Journal Page 56
Equity Portfolio for the 21st Century
Rafi Mahilnitski
2013 was a great year for the stock market. The
Dow Jones Industrial Average added over 20% and
the NASDAQ rose over 30%. At this time, should
investments be held or is it time to sell? Two
authoritative investors have different opinions on
this point. Carl Icahn warns that stock market
could face a “big drop” while Warren Buffet thinks
that stocks are in “zone of reasonableness”. In my
view, it is never too late to invest in a company if
you think that it has potential, good business
model, and good leadership. In such cases the
price of the company may eventually go up, but in
the short-term the macroeconomic situation may
significantly slow this process down.
In order to build and diversify my fictitious
portfolio, I decided to invest in five companies in
different industries. The diversification may
compensate for the underperformance of a
particular industry. I also tried to pick a company
with a “healthy” balance sheet and a history of
growth in its stock price. In addition, I tried to find
stocks that pay dividends so I would be able to
have some income while holding the stocks. I
picked companies with very large capitalizations,
because these companies are safer. The selected
companies included: General Electric (GE),
Microsoft (MSFT), Nike (NKE), Home Depot (HD)
and Starbucks (SBUX).
Security Selections
I chose five different well-known companies from
different industries that have large market
capitalizations, and are the leaders in their
industries. I picked companies I know and like
after analyzing their balance sheets. I looked
mostly for their potential to grow. I believe that
people invest in the stock market for profit and
not primarily for a dividend income. Still,
companies should pay some sort of dividend in
order to keep people from selling their stock. I
invested equal amounts in each company.
Nike
Nike is the largest seller of athletic footwear,
apparel, equipment, and accessories in the world,
It sells more than 1 million pairs of shoes every
day. Brands such as Hurley, Converse, and Air
Jordan are well-known Nike brands. Nike
diversifies its products beyond developing and
selling shoes. It sells equipment for the majority
of the sports industry which includes; basketball,
soccer, football, fitness, running, golf, tennis, and
many others sports. The company also has its own
clothing line; it sells socks and coats, and much
more, while focusing mostly on athletic-style
clothing. Since the beginning of 2012, Nike
replaced Reebok as the NFL's licensed-apparel
maker in a five-year deal. It provides uniforms for
the U.S. national basketball team and for over a
dozen of national soccer teams, athletes, and
clubs. Nike has the endorsements with LeBron
James, Roger Federer, Rafael Nadal, Tiger Woods,
and Rory Mcllroy among many others.
One of the biggest Nike’s agendas is innovation.
Nike tries to integrate technology. It released its
Fuel Band which allows athletes to count both the
number of steps one makes every day and the
calories one consumes. Nike’s new Flyknit
technology uses an ultra-light thread to create a
single-layer upper that eliminates overlays,
reduces weight, and minimizes waste. Nike also
sells an iPod Sensor, a little device which is located
inside the sneaker and interacts with the iPod.
Rahy is a student at Langer College for Men and is majoring in accounting.

57. TAB Journal Page 57
This company was started by Bill Bowerman, an
American track and field coach, in 1964. Now,
Nike employs over 40,000 people around the
world. Nike owns 753 retail stores, 303 of them
are located in the United States. North America
still gives Nike the opportunity to grow; Earnings
before interest and taxes for the North American
segment of Nike grew 25% in fiscal year 2013.
According to “The World’s Most Powerful Brands”
list, by Forbes, Nike takes 26th place, and is the
most powerful apparel brand. It nearest
competitor, Adidas, is only number 53. According
to “Global 2000” list by Forbes, Nike’s sales are
ranked #369 in the world, and its profits are #242
in the world.
In the era of technology, more people prefer to
shop online from home; and Nike online store
combined more than 70 brands into one single
destination for people to order almost every Nike
product. Nike’s DTC (direct to consumer) business
grew an impressive 31% last year. Nike Inc. is
planning to expand its business all over the world,
and especially in Brazil, Russia, India, China, and
South Africa (BRICS)`. In the next 10 years, one
billion consumers are going to enter the middle
class, and the vast majority of them will be in the
BRICS countries.
Financial Ratio Analysis
Nike has recorded very strong financial
performance in the period from 2009 – 2013; Nike
stock rose 95% compared to the S&P 500 Index’
30%. In fiscal year 2013, revenues from
continuing operations grew by 8%, and diluted
earnings per share grew 11%.
Operating profit margin is important for every
type of business; it shows how well the
management does its job to sell the product.
Nike’s operating profit margin is significantly
higher than the average for this industry. It is
twice as big as Adidas’. In the last ten years, this
growth has been in the 10 - 13% range.
Nike’s current ratio is 3.47. Nike’s closest
competitor, Adidas, has a current ratio of only
1.57. This company is quite liquid. Inventory
turns over 4.3 yearly. This ratio is very important
for the retail industry, since it sells products to the
customer. Although this ratio is slightly lower
than last year, it is still a “healthy” number, in my
opinion.
Earnings per share grew 11%, demonstrating a
substantial growth. In the last five years, its
compound annual growth rate was 8%, which
shows that the company’s profitability increases
annually.
Risk Factors: Competition and Exchange
Rates
Nike is a highly competitive company and
dominates the athletic footwear market. Nike’s
success depends on marketing and must adapt to
a rapidly changing media environment. Changes in
the U.S. dollar’s exchange rate could possibly
harm Nike’s financial stability; the weakening of
the dollar might cause an increase in the price of
manufacturing overseas.
The majority of Nike’s factories are located in
China, Thailand, South Korea and Vietnam; only
Nike 2013 2012
Earnings Per Share (EPS) $2.69 $2.42
Current Ratio 3.47 3.05
Inventory Turnover 4.3 4.5
Operating Profit Margin 12.86% 12.6%

58. TAB Journal Page 58
8%1 of its factories are located in the United
States.
Microsoft
In the era of technology, I could not avoid placing
at least one technology stock in my portfolio.
Microsoft is a software giant. Approximately 75%
of all personal computers, laptops, and cellphones
have an operating system developed and licensed
by Microsoft. Its key products are: Microsoft
Windows Operating System, Xbox, Microsoft
Office, Windows Server, Bing, Skype, and recently,
Surface.
The Microsoft Business Division currently brings
31% of the company’s total revenues. Microsoft
key product in this division is Microsoft Office,
which is virtually ubiquitous. Microsoft Office has
no real competition in this sphere. Although
Apple and Google provide free software, they still
cannot compete with Office.
The second biggest contributor to the revenue is
the Windows division, which contributes 25% of
total revenue. The only competitor Microsoft has
in this industry is Apple. However, Apple does not
allow computer manufacturers use their OS on
their computers. It only installs the OS on Apple
computers. Their market share is seven times
smaller than Microsoft’s.
Financial Ratio Analysis
The payout ratio indicates the percentage of the
company’s net income, which is paid to the
shareholders as a dividend. Microsoft has a
slightly volatile dividend payout ratio with a
standard deviation of 6.5 percentage points. Even
though that this ratio seems to be volatile, it is
still very good compared to the industry. The
technology industry happens to have mostly
growth stocks, rather than dividend generating
1
According to Nike Manufacturing Map Nikeinc.com
stocks. Google and Facebook do not pay dividends
at all, and Cisco and Apple just started to pay
dividends.
Microsoft’s net profit margin grew from 23% in
2012 to 28% in 2013. This is higher than Apple
and Google (Microsoft’s closest competitors).
Apple's margin is only 21.67% and Google's
21.40%. The company should continue to grow
because it will have more retained earnings to
reinvest. Furthermore, stockholders may also
receive higher cash dividends. Microsoft has
managed to reduce its operating expenses from
last year.
Current ratio is important for Microsoft, since it
has a lot of expenses that it needs to pay them on
monthly basis, such as salary. Microsoft employs
approximately 99,000 employees. 37,000
employees work in research and development,
26,000 in sales and marketing, and another 9,000
in general and administration. Since these jobs
require huge labor expenses, any shortfalls may
likely cause the stock price to drop and damage
company’s reputation.
In order to pay dividends to the stockholders, a
company must have cash. That is why it is very
important to have a current ratio above one.
Microsoft places in the middle of its industry
average.
Microsoft returned 30% on its equity as measured
by net income versus equity. This is slightly above
the industry average. In the last five years
Microsoft spent $36.3 billion in share repurchases.
The return on equity has been above 20% for the
last eight years.
MSFT 2013 2012
Payout Ratio 34.5% 38.1%
Net Profit Margin 28.08% 23.03%
Current Ratio 2.71 2.60
ROE 30.09 27.51

59. TAB Journal Page 59
The Home Depot
Home Depot is the world's largest home
improvement retailer; it sells building materials,
home improvement and garden products. As of
the fiscal year 2012, Home Depot had 2,256
stores throughout United States and more in
Canada and Mexico.
Products
A regular Home Depot store stocks about 40,000
products during the year. Home Depot also offers
600,000 products through its website. As an
industry leader, Home Depot provides consumers
a selection of environmentally preferred products
that help to save consumers money.
The Home Depot stores serve three customer
groups. "Do it Yourself Customers” - home owners
who buy products and complete their own projects
and installations. "Do It for Me Customers” - home
owners who buy materials themselves and hire
third parties to complete the project or
installation. And “Professional Customers”- these
customers are primarily professional general
contractors, repairmen, and small business
owners. Home Depot provides professional
customer service for every group of its clients.
Financial Ratio Analysis
Inventory turnover is very important. Customers
want to see fresh product. Home Depot's
inventory turnover has grown; clearly,
management understands its consumers. Sales
per square foot ratio of $319 has grown slowly
but steadily. This measures management’s
efficiency, in facilities usage. The reason for such
impressive performance in this area could be due
Home Depot’s large investment in inventory
management software.
The current ratio of 1.34 is lower than last year
and uncomfortably close to one. In the last five
years current ratio of the company slightly
increased; it is understandable that Home Depot
has a relatively low current ratio, since the retail
chain has to pay rent, salaries, utilities, and $5
billion in accounts payable. Home Depot's current
ratio, nonetheless, is still a bit higher than its
closest competitor, Lowe’s Companies, whose
ratio is 1.27.
The net profit margin for 2013 was 6.1% and has
increased from year to year at a rate of 18%.
Earnings per share have increased by
approximately 50 cents every year. The company
more than doubled its earnings per share in the
last four years. Lowe's earnings per share are
almost half of Home Depot’s.
HD 2013 2012
Inventory Turnover 4.65 4.40
Sales per Square Foot 319 299
Current Ratio 1.34 1.55
Net Profit Margin 6.1% 5.5%
EPS $3 $2.47
Starbucks
Starbucks Corporation is a coffee retailer
operating in 61 countries. Starbucks purchases
and roasts coffee that it sells, along with tea,
juice, and other beverages. By the end of 2014,
Starbucks anticipates having 20,000 stores on six
continents. Starbucks is also planning to open
3,000 new stores in the U.S. in the next five years.
It has 200,000 employees.
Starbucks tries to enhance its customer
experience, by creating a loyalty card program,
and by keeping it customers informed using social
media. Starbucks currently has 35 million
Facebook fans, 5.5 million Twitter followers, and 7
million users using Starbucks’ mobile app.
Starbucks goes beyond just being a coffee shop,

60. TAB Journal Page 60
by bringing Verismo System, a coffee machine for
home that lets customers make coffee at home
using Starbucks K-Cups. In 2012, Starbucks sold
more than 500 million of K-Cups.
The company tries to expand its stores by adding
La Boulange bakery products, and Evolution Fresh
high quality premium juices, which shows its
commitment to health and wellness. Starbucks is
also bringing Teavana tea brand to the stores, and
will be opening tea bars in the stores. “Coffee
Giant” scores #76 on the World's Most Valuable
Brands list compiled by Forbes in 2012. The only
restaurant company that is ahead of Starbucks is
is McDonald's.
Financial Ratio Analysis
Starbucks’ operating margin is 15%, and has
increased from year to year. The reason for the
better margin could be the high prices of
company, or reduced expenses. Earnings per
share grew 17 cents since last year to $1.79. In
the last five years, earnings per share quadrupled.
During the last five years, the company had a very
stable assets turnover ratio of 1.7. The dollar
amount of assets is growing also, because the
sales growth is about 10% a year, therefore assets
growth rate is very similar. It is interesting that
Dunkin Brands, the closest competitor of
Starbucks, has a total asset turnover rate, which is
merely one-eighth of Starbucks’.
Starbucks enjoys annual revenue growth of 13.7%.
The company not only opens more stores but sells
more products as well. On the Starbucks’ chart, we
may see that the company’s growth reached
record high levels. We may also see that the
company had a revenue decrease in 2009 due to
the global economic downturn.
External Circumstances
In the September of 2013, the Chinese
government and media openly criticized Starbucks
for its price policy in the region. The reporters
accused Starbucks of charging $4.40 for its
middle-sized latte, while the price for the same
drink in the U.S. is only $3.20. This accusation
harmed Starbucks’ popularity in China, and, as
result, could cause a decrease in revenue from the
region.
Starbucks’ CEO, Howard Shultz, said that the
company would not cut health insurance benefit or
reduce working hours for employees,in order to
avoid health insurance to it workers due to
“Obamacare”. The coffee chain has a unique
policy, where even part-time workers are eligible
for insurance. In 2010, benefits cost the company
$300 million, more than it paid for coffee. High
health insurance for employees might result in
lower net income.
General Electric
General Electric (GE) is one of the biggest
companies in the world. It specializes in eight
industrial businesses, including advanced
manufacturing services, industrial Internet, and
leading natural gas technology. Advanced
manufacturing includes 3D printing and high
performance computing. The industrial Internet
helps to run a service business through smart
machines. The CEO of the company, Jeffrey R.
Immelt, positions GE as the biggest infrastructure
company in the world.
GE works in 160 countries with 305,000
employees worldwide; 131,000 of them in the U.S.
This is just a little glimpse of what GE does, the
company is all over the world, and produces from
SBUX 2012 2011
Operating Margin 15% 14.5%
EPS $1,79 $1,62
Total Asset Turnover 1.71 1.70
Revenue Growth 13.67% 9.27%

61. TAB Journal Page 61
microwaves, dryers, and dishwashers to marine
engines, diesel marine power, and mining
equipment. The list of the company's products
and services is so big that it will take more than a
page of my report to list all the products. They
could be viewed on the company website. The
company is so big that it does not compete with
any one organization as a whole business, rather it
competes with many different companies in every
segment.
Access to shale gas is opening new possibilities
for energy use, and GE is involved in almost every
aspect of this “Shale Revolution”. Natural gas
could be a game changer for the U.S. and maybe
globally, and GE is the leader in this industry. The
company is going forward, and uses the next
generation materials. GE's newest jet engines use
new material to reduce weight, improve fuel
consumption and lower maintenance. General
Electric has major investments in software &
analytics. The company has a Software and
Analytical Center of Excellence in California, where
employees work on the power of the industrial
Internet. They try to improve performance of
assets by at least one percent; improving asset
performance by one percent can add $20 billion of
profit annually.
One of the companies, which has a very big
influence on GE's success, is Boeing (BA); because
GE builds engines for Boeing. With a new model of
Boeing 777x, Boeing received $95 billion in
orders. Right now GE’s aviation segment accounts
only for 20% percent of revenue, but it will grow.
The $95 billion deal is just the beginning for
Boeing, with three airlines (Emirates, Qatar, and
Etihad). When Boeing will start selling 777x to
U.S., Asian, and European airlines, the orders of
GE's engines will keep growing. Forbes ranked GE
#7 on the Most Valuable Brands chart, and #4 on
the Global 2000 chart.
Financial Ratio Analysis
GE’s net profit margin was 9.26% for 2012; in the
last three years, the net income profit margin
experienced 10.7% growth. Return on assets ratio
of 1.95% grew very steady, excluding the year of
2008, when the world’s economy suffered a crisis.
GE has hundreds of plants with very expensive
equipment. Other big, technology companies have
return on assetss of about 20%, but do not have as
much hard assets like buildings and plants as GE.
GE has extremely high dividend payout ratio of
50%. The stock’s dividend yield is 2.80% annually.
The debt to assets ratio is 0.82, indicating very
high indebtedness. Our chart shows that the
company is going in the direction of being more
solvent, by reducing the debt to total assets ratio
by one percent every year.
GE 2012 2011
Net Profit Margin 9.26% 8.91%
ROA 1.95% 1.79%
Dividend Payout Ratio 50.35% 49.19%
Debt/TA .82 .84
Some Risks
General Electric is so diversified that it represents
mostly systematic risk. If the economy is not very
good, the company might be harmed, as we saw
during the recent 2007-2008 financial crisis; GE’s
company stock declined by more than 60% percent
(from $30 to about $10). The company has half of
one trillion dollars in debt, with annual revenues
of $140 billion. In contrast, Siemens, German
company in similar industries, has revenue of $94
billion with only $24 billion in debt.
Relative Stock Performance
In this section, stock performance of the five
companies is compared. Nike grew 17%, ranking
the best in this portfolio. There are two factors
which caused the company to grow; one of them is

62. TAB Journal Page 62
the overall market performance, market was doing
very well this fall, since the economy was
improving. The second reason is that the company
itself is doing well financially, it has very
aggressive marketing strategy. Nike keeps
developing new products, like Smartwatch, and it
is growing its presence in developed markets each
quarter. In the end of last December, Nike
announced it earnings for the quarter; it showed a
significant financial gain compared to the 4th
quarter in 2012.
Microsoft stock’s price grew 15% until the last year
and for 13 years the company’s price barely
increased. The last time Microsoft’s price was
above $38 was 14 years ago. Microsoft increased
its market share on Smartphone by other 200%
this year.
The Home Depot gained 9.5%, not as much as
Microsoft, Nike, or GE and less than the S&P 500
index. Therefore, in my opinion, Home Depot was
not a very successful selection for my portfolio. I
ignored the growing competition from Lowe’s, as
some experts assert. The reason Home Depot’s
price did not grow much it is because the
company’s earnings per share were $3.72, which
is slightly lower than the estimate of $3.74.
Improvement of housing market data is good
news for Home Depot; it will bring in a lot of
customers.
Starbucks performed worse than any other stock
in my portfolio, it only gained 5.87%. One of the
reasons for such poor performance is the criticism
of the prices in the coffee shops by Chinese
government. A $2.76 billion fine to Kraft also held
the shares from growing. I think this company will
continue to bring in higher revenue and income as
it grows to more countries. It is also introducing
new grocery and fresh juice sections that will be in
the stores in the next few years.
GE gained almost 17% over the last three and half
months, at the time this paper is being written.
Boeing, for whom GE makes jet engines, received
huge number of orders from airlines. In my
opinion, this company reflects the macroeconomic
situation of the U.S.; therefore if the country is
doing well, then the company’s price should
follow.
Throughout the course semester (Fall 2013), this
portfolio appreciated by 12.8%, which is 2.4%
higher than the S&P 500 gain of 10.4%. I picked
the S&P 500, for my benchmark, as opposed to
Dow Jones Industrial Average or Nasdaq
Composite, because I think 500 companies can
better reflect the entire market. The market was
almost as volatile as my portfolio, since all of
them had different risk factors all my stocks were
weighted at 20% of the portfolio each.
Relative Stock Performance Symbol
Last price as of
12/27/13
$
Initial Price as
of 9/9/13
Market Value
as of 9/9/2013
$
Weights Gain in
%
Gain in
$
General Electric GE 27.83 23.87 1,000,009 20% 16.59 165,900
Microsoft Corporation MSFT 37.29 32.39 1,000,008 20% 15.13 151,282
Starbucks Corporation SBUX 78.57 74.22 999,972 20% 5.86 58,607
Nike Inc. NKE 78.16 66.82 1,000,028 20% 16.97 169,714
The Home Depot HD 81.64 74.6 1,000,013 20% 9.44 94,371
12.80 $639,876
Relative Stock Performance

63. TAB Journal Page 63
Risk-Adjusted Return
I utilized the Treynor Index to adjust for risk. My
portfolio’s beta is slightly higher than one, which
makes it more risky than the market. Therefore
my portfolio should produce a higher return. I
used Treasury-bills as the risk free instrument.
The rate for T-bills as of December 2013 was
0.05%2 We may see that my portfolio Treynor
Index is 11.68%, while the market Treynor index
will be 10.35% (11.40 - .05). The Treynor index of
my portfolio beat the market by approximately
1.30%, which is slight but and noticeable.
Conclusion
This portfolio was my first serious financial market
experience. I picked companies that I hear in the
news and researched them. Before embarking on
this project, I felt that it is extremely easy to earn
a high return on stocks, but after this project I am
not so naïve anymore. I saw how systematic and
unsystematic risks operate, and now understand
better the roles of systematic factors like tax
rates, healthcare reform or foreign exchange rate
scan benefit or harm the company.
When I was first introduced to the efficient market
hypothesis, I thought that this theory does not
work at all. But now looking at my risk-adjusted
return, I can relate to the “weak form” of this
theory. Although I still hope that semi-strong
2
Retrieved from FederalReserve.com
form does not work, I am not so sure looking at
my returns.
I also think that diversification is a very safe
approach for somebody who does not want to lose
any money. But for somebody who wants to strike
it rich it is probably not the best strategy. The
greatest investor of all time, Warren Buffet, seems
to agree with me that when investors do not
understand what they are doing they pursue wide
diversification. My portfolio outperformed the
market on a risk-adjusted basis, but I still need to
learn a great deal in order to become the next
Warren Buffet or Peter Lynch.
Finally, I must thank, my professor, Dr. Kenneth
Bigel for his encouragement and invaluable
assistance.
Stock Symbol Return
3 month
Treasury Bill
S&P 500
Return
Beta
Treynor
S&P 500
Treynor
Index
Alpha
GE 16.59% 0.05% 10.40% 1.81 10.35% 9.14% -2.19%
MSFT 15.13% 0.05% 10.40% 0.96 10.35% 15.71% 5.14%
SBUX 5.86% 0.05% 10.40% 1.09 10.35% 5.33% -5.47%
NKE 16.97% 0.05% 10.40% 0.95 10.35% 17.81% 7.09%
HD 9.44% 0.05% 10.40% 0.90 10.35% 10.43% 0.08%
TOTAL 12,80% 1.14 10.35% 11.68% 0.95%

64. TAB Journal Page 64
Sports Apparel Licensing
Simcha Himmel & Abraham Weiser
Although the earliest known use of “brand
licensing” comes from the Middle Ages – when the
Popes granted regional “tax collectors” licenses to
associate themselves with the Vatican in exchange
for royalties – modern merchandising began in the
1870s (“The History of Licensing”, 2013). Brand
licensing and merchandising is a business
arrangement where a licensor (property right
holder) permits a licensee (manufacturing
companies) to manufacture products carrying the
licensor’s logo or trademark, in exchange for fees
called royalties (Kwon, Kim, & Mondello, 2008).
Licensing is a subcategory of co-branding (i.e.,
when two, generally known, brands combine to
create a new product bearing both brand names)
where a licensee wants to attach a well-known
brand name or logo to its product (Leuthesser,
Kohli, & Suri, 2003). The retail sale of licensed
merchandise in the U.S. and Canada in 2005 was
$71.21 billion, of which sport licensed
merchandise comprised 19% (Kwon et al., 2008).
The objective of this paper is to survey the
modern history of brand licensing, delineate its
benefits and potential detriments, and discuss
brand licensing as it applies to Under Armour Inc.,
a sports licensing and sportswear manufacturer
(NYSE:UA). This paper will examine the above
issues from the licensee’s perspective, and not
from that of a licensor. This area of marketing is a
particular interest to the authors (both of whom
are Marketing Majors and avid sports fans),
because of the limitless applications and win-win
propositions co-branding and brand licensing
seem to offer.
Brand Licensing Modern History
The use of brand licensing in merchandising
started in the 1870s with Adolphus Busch (original
partner in beer brewer, Anheuser Busch) allowing
the manufacturer to produce and sell a wine key
bearing the BUSCH name (“The History of
Licensing”, 2013, “History”, 2013). Peter Rabbit is
believed to the oldest licensed character – licensed
around the turn of the 20th century. In the late
1920s through the 1930s, there was the creation
of well-known and well-licensed characters, such
as, Winnie The Poo, Mickey Mouse, the Loony
Tunes (i.e., Bugs Bunny, Daffy Duck, Porky Pig,
Elmer Fudd, Sylvester, Tweety, Marvin the Martian,
Taz, Wile E. Coyote, & Road Runner), and
Hopalong Cassidy (“The History of Licensing”).
The 1930s were significant in their contribution to
major brands of today. In 1932, there was the
creation of DC Comics first limelight superhero,
Superman. Kay Kamen also joined the Walt Disney
Company, and became “The Father of Modern
Licensing”. Starting with Mickey Mouse, Kamen
was responsible for Disney’s highly successful
licensing approach. Macy’s in New York sold a
record high of 11,000 timepieces [watches] with
the Mickey Mouse image in one day (“The History
of Licensing”, 2013, p. 5). And besides the
“classic” Disney characters we all know and love,
there was also a well-known Marvel Superhero
(“The History of Licensing”, 2013; Walt Disney Co;
Krantz, Snider, Della Cava, & Alexander, 2012).
Marvel, which has been licensed out to movie and
television producers and to action figure makers,
was co-branded with LEGO and includes
characters such as, Spider-Man, Iron Man, the X-
Men, Wolverine (the most famous X-man), the
Hulk, the Fantastic Four, Captain America, Silver
Surfer, Thor, etc. Marvel began as Timely
Publications in 1939. Marvel’s competition
Simcha and Abraham are student at Lander College and are majoring in
marketing.

65. TAB Journal Page 65
included DC Comics (whose Batman character was
also born in 1939) and Superman, who made his
first appearance in the Macy’s Day Parade in 1940.
By 1942, during the World War II, the Superman
comic sold over 1.5 million copies. It was a
standard military issue offered to the U.S. Marines
stationed in Midway (“The History of Licensing”,
2013).
The 1940s introduced Archie Andrews, Thomas
the Tank Engine, and NASCAR (National
Association for Stock Car Auto Racing). Highly
popular below the Mason-Dixon Line, NASCAR
grew to 75 million fans. As a result, today, it
purchases over $3 billion in licensed products
annually, particularly focusing on licensed apparel
(“The History of Licensing”, 2013).
The 1950s saw an explosion of brand licensing
including Peanuts and Met Life’s licensed Snoopy
dog; James Bond, the first licensed celebrity
property; Elvis Presley, who set the benchmark for
celebrity licensing programs; Kermit the Frog; the
Flintstones; Scooby-Doo; the Smurfs; Paddington
Bear; and Barbie. Also in this decade, sports
merchandising began with Pete Rozelle and the
Los Angeles Rams. Rozelle, went on to have a stint
as a commissioner of the NFL (National Football
League), and licensed L.A. Rams products to raise
additional needed cash (“The History of Licensing”,
2013).
In the 1960s (1963 precisely) NFL Properties, the
first licensing division in professional sports, was
formed, triggering the formation of Major League
Baseball (MLB) Properties in 1966 and NBA
(National Basketball Association) Properties in
1967. NFL Properties, which controls licensing
rights for all NFL teams and the Super Bowl,
currently accrues over $3 billion in licensing deals
per year. Other trend setting brands from the
1960s include the Beatles, G.I. Joe, and Sesame
Street (i.e., Oscar the Grouch, Big Bird, Ernie and
Bert [and the iconic yellow rubber duck who makes
bath time so much fun], and Elmo]) (“The History
of Licensing”, 2013).
The biggest brand of the 1970s (in the authors’
opinions) was the Disney owned and produced
Star Wars Movies (written and directed by George
Lucas) in addition to Star Trek, Hello Kitty,
Garfield, and Strawberry Shortcake (“The History of
Licensing”, 2013).
The 1980s brought about the licensing of major
corporations: Coca-Cola, Harley Davidson, Pepsi,
Coors, and John Deere, and the characters Barney,
the Mars M&M’s characters, Teenage Mutant Ninja
Turtles (published by Mirage studios and bought
by Nickelodeon) and the movie E.T. The movie
introduced the concept of product placement
within movies and T.V. shows by including E.T.’s
favorite candy, Hershey’s Reese’s Pieces. The
grass roots of the Martha Stewart brand were also
planted in the 1980s, but the decade’s biggest
contribution to the licensing was the formal
recognition of the brand and character licensing
industry. The first “licensing show” was organized
by Expocon in 1981, and the first industry related
association, The Licensing Association, whose
members comprised of property owners and
licensors, was formed in 1982. The Licensing
Merchandiser’s Association was created in 1984
by manufacturers and licensees in response to
their counterparts’ association. Both organizations
merged to form the Licensing Industry
Merchandiser’s Association (LIMA). The licensing
of collegiate sports apparel began in the 1980s
with a licensing agreement between the University
of Pittsburgh and Champion (“The History of
Licensing”, 2013).
The 1990s continued many licensing trends, with
more licensed television characters for kids (i.e.,
the Teletubbies, Dora the Explorer, and Bob the
Builder), Nickelodeon’s Spongebob Squarepants,

66. TAB Journal Page 66
the Mighty Morphin Power Rangers, and another
crew of teenage Ninja and Samurai. The decade
also included: publicizing children’s books, such
as Goosebumps and the overly rated Harry Potter;
T.V. shows; trading cards; and the second most
successful video game-based franchise of all time,
Pokémon (“The History of Licensing”, 2013).
While licensing in the 21st century did not bring
about as many novel brands, it focused more on
brand extension (“The History of Licensing”,
2013). Five movies based on Marvel’s Hulk were
released, as were four Spider Man movies, three
Iron Man ones, Captain America, “The First
Avenger,” The Avengers, two Thor’s, six X-Men,
two Ghost Rider’s, two Fantastic Four, plus a
whole slew of licensed T.V. series based on Marvel
characters (“The History of Licensing”; Marvel
Movies). Lucasfilm released “Star Wars: Episode III
Revenge of the Sith” based on the sixth and last
episode of George Lucas’s “original six” (not to be
confused with the NHL’s Original Six).
In 2008, the Batman movie, “The Dark Knight” was
released by Warner Bros (“The History of
Licensing”, 2013). The 21st century also had
record deals and endorsements with sports
celebrities. Many of whom earn more from
licensing and endorsements, than they do from
their contracts. They included soccer star David
Beckham, golfers Tiger Woods and Phil Mickelson,
a basketball star LeBron James, a baseball star
Alex Rodriguez, Ichiro Suzuki, the first Japanese
player in the MLB, and a tennis champion Rodger
Federer (“The History of Licensing”; Roberts,
2013).
Here are the top ten sellers of licensed products
(by nominal quantity) as reported by License
Magazine in 2009: Disney Consumer Products,
ICONIX, Warner Bros., Consumer Products, Marvel
Entertainment, Nickelodeon & Viacom, MLB,
Philips-Van Heusen, Sanrio, Collegiate Licensing
Company, and Cherokee Group (“The History of
Licensing”, 2013).
Advantages and Disadvantages of
Licensing and Co-branding
In general, like all business enterprises, there is a
certain level of risk and reward to being a licensee.
Licensing is beneficial to a licensee if it a) saves
costs; b) improves the licensee’s brand image; c)
differentiates the new product; d) facilitates
opening business channels for the licensee; e)
increases sales; and f) confers a competitive
advantage. Many of these conditions are
interrelated and they are discussed next.
The first condition addresses cost savings.
Licensing can save costs, because the licensee
gains consumer awareness. It benefits from the
well-known brand, character, logo, or a design, by
tapping into the brand’s loyal followers (Licensing
Industry Merchandiser's Association; McKee,
2009). This is free publicity and advertising to
increase sales. Another reason licensing may lower
costs is by allowing the licensee to eliminate the
need for an in-house art staff (Licensing Industry
Merchandiser's Association, p. 2). This is obviously
a benefit, because it gives the licensee the option
to increase profitability and gain a competitive
advantage by lowering prices. Furthermore, if the
licensee lowers its prices to gain a competitive
advantage, its market share and sales may
increase.
The second condition is whether the licensing will
improve the licensee’s brand image. If co-
branding and licensing enhance the brand’s
authenticity and credibility, then consumers will
be more willing to recommend the brand and
accept brand extensions (Del Rio, Vazquez, &
Iglesias, 2001); which can result in more sales and
a more receptive network of large distributors to
work with (Licensing Industry Merchandiser's

67. TAB Journal Page 67
Association). Studies conducted by Saqib and
Manchanda (2008) revealed that consumers’ brand
perception improved for licensed products as a
result of licensing. Leuthesser et al. (2003) note
that high-quality brands can increase quality
perceptions to partner brands. “Consumers may
perceive products licensed by a well-known brand
to have a similar quality to the brand’s own
extension” (Saqib & Manchanda, 2008, p.77).
Based on the example of Nike and the Michael
Jordan brand “Co-branding […] enables one brand
to benefit from the ‘halo of affection’ that belongs
to another” (McKee, 2009). By association,
consumers’ positive perception of one brand will
influence similarly their perception of the partner-
brand.
Next, licensing can be beneficial if it differentiates
the new product. Differentiating one’s product
through licensing can bring three benefits. It
offers an exposure to distributors and purchasing
officers who would otherwise tend to ignore an
undistinctive brand. It gives the licensee a
competitive edge in selling to consumers due to
the product’s uniqueness (Licensing). In addition,
it allows the licensee to charge higher prices for
its products because of consumers’ expectation to
pay top prices for licensed goods. Higher prices
can increase the licensee’s margins and again
establish a competitive advantage (Licensing; Wu
& Chalip, 2013; Del Rio, Vazquez, & Iglesias,
2001).
On the flip side, licensing can contribute to added
costs, financial risk, weakened brand image,
reduced equity, and major difficulties from
uncooperative partners. We showed before how
licensing can cut costs, but as a licensee, one
must measure these cost savings against the
additional costs of licensing. These items include
royalties and advances (Licensing Industry
Merchandiser's Association), specialized
consultant and advisor fees (Seltzer & Polakoff,
2011), potential litigation, and opportunity costs
(Beckett, 2007). Advances, licensing fees and
royalties that must be paid upfront, entail financial
risk, because there is no guarantee that the
licensee’s product will sell (Licensing Industry
Merchandiser's Association). And even if the
product does sell, one must ask whether these
sales are additional sales or the new licensed
product is cannibalizing the already existing
products. If there is cannibalization, then the
licensee is not making money; and it may be
incurring losses because of royalties. A second
risk is the opportunity cost of utilizing limited
space and inventory dollars for the unproven
licensed product (Beckett). Retaining in-house
licensing advisors or hiring outside consultants
also constitutes additional cost (Seltzer &
Polakoff). Lastly, if the licensee is in an industry
with exclusivity contracts, obtaining a license can
be really competitive and expensive (Kwon et al.,
2008).
Licensees must also consider the risk that
licensing or co-branding may weaken their brand
rather than strengthen it for several reasons. Co-
branding can have a dilutive effect of spreading
the credit for a positive consumer experience
across two brands (McKee, 2009). By co-branding,
each brand is giving up some of its prestige.
However, at the same time, if consumers have a
bad experience with a product, it can reflect badly
on brand A even if it is brand B’s fault (McKee,
2009). This is especially difficult when brand “A” is
a licensee (Leuthesser, Kohli, & Suri, 2003).
Further, licensed product depends on the other
brand’s equity and it can make one’s brand appear
weak and inferior (McKee, 2009).
Licensing and co-branding put a brand’s image
and reputation at risk. Each brand relies on each
other to reflect well and not besmirch the other’s
name. A vivid example of this can be seen by
examining the co-branding alliance Kmart had

68. TAB Journal Page 68
with the Martha Stewart Brand. When Kmart
declared bankruptcy, Kmart hurt the Martha
Stewart image, and conversely, when Martha
Stewart was accused of insider trading, she
tarnished Kmart’s image (Clinton, 2002; Hein,
2002).
Other factors to consider in licensing involve
contract limitations and uncooperative
relationships between licensees and licensors.
First, there are restrictions placed on licensees “in
areas such as submitting products for all
necessary approvals, creating a product to
agreed-upon standards, and marketing a product”
(Licensing Industry Merchandiser's Association,
p.1), which may limit growth and market reach
(Leuthesser et al., 2003). Second, the licensee
becomes dependent on the licensor for continued
goodwill. The licensor can make the licensee’s life
miserable by refusing to renegotiate the license,
ignoring shifting licensee’s needs or opting to go
to an exclusivity contract with a competitor when
the license expires. Licensees may also be forced
out of business (Kwon et al., 2008). If a licensee
and licensor cannot get along, conducting
business can get “messy”. It is worth to assess
whether the two parties will collaborate well.
Overall, while offering an upside, licensing has
also a few downsides that need to be taken into
consideration.
Sports Apparel Licensing
While the above passages pertained to brand
licensing in general, co-branding involving team
licensed apparel has a unique brand structure that
cannot be replicated in other industries (Kwon, et
al., 2008). Sports licensing is a whole different
“ball game” with a different set of rules. In order to
define the scope of the team licensed apparel
industry, let us digest a few key recent statistics:
1) “In 2010 approximately $200 billion […] worth
of licensed merchandise was sold worldwide”
(Sillcox, 2012, p.1); 2) sports related merchandise
accounted for 12.5% or $25 billion of the global
market (Sillcox); 3) top two sport players each
tallied approximately $5 billion in merchandising;
and 4) 68% of MLB merchandise sales and 60-70%
of the National Collegiate Athletic Association’s
(NCAA) came from apparel and headwear (Lollar &
Brett, 2013). Thus, we can project the team
licensed apparel industry to be within the range of
$16.75-$17.75 billion per annum.
The team licensed apparel industry is unique in
co-branding. The alliances are not expected to
offer better quality or more functional products,
but to solely increase perceived value of the
products for the consumers. As a result, sport
teams and manufacturers work less closely with
consumers than in other industries (Kwon et al.,
2008). The manufacturer makes use of the team
logo as a powerful means of introducing its
products to the team’s followers and fans (McKee,
2009) whereas the sport team gets its royalty. The
potential to hurt each other’s brands (as discussed
earlier) is mitigated. In fact, organizations
frequently use the association with sports to
distinguish their brands (Kaynak et al., 2008). This
is the first advantage sports apparel licensing
holds over other forms of licensing.
In addition, playing sports is “something
evergreen [that will stay popular],” which Meyer
Janet, president of Design Plus (an Atlanta-based
licensing boutique that specializes in branding)
says, it is “the route to go” (Spader, 2007). A
strong argument for extending one’s brand is to
include sports licensed products, as long as there
is a perceived connection between the base
product and the sport (Leuthesser et al., 2003).
Retailers generate 40% of their annual sales
revenue during the holiday season of gift buying
(Saqib & Manchanda, 2008). When it comes to
buying gifts, there is a major difference between
apparel and team-licensed apparel. The first is a

69. TAB Journal Page 69
merely clothing and questionable: “will-he-like-it”
gift, while the second is a convenient and
automatic “touchdown”, as long as one knows the
other person’s favorite team. The primary concern
of the retailer to increase sales is how popular the
sport or team is during the holiday season.
A major drawback in sports licensing is the power
of sport leagues. Since it is considered a privilege
to be a licensee in this industry, leagues have a
“stronghold” on licensees (Lollar & Brett, 2013).
Licensees are somewhat beholden to the leagues,
which can force them out at their will.
Sales are also somewhat dependent on the
performance of the sport team, whichever one is
licensing. Even though strikes or lockouts occur in
any given league once every five to ten years, such
work stoppages can also drastically reduce sales
(Lollar & Brett, 2013).
Fortunately, there are two main reasons to expect
steady sales. Sport merchandise consumers can be
split into two major groups. The first group is
genuine and thoroughbred sports fanatics. The
second group includes casual sports fans and fair
weather fans. The fanatics repeatedly buy
merchandise with their team’s logo out of a strong
brand loyalty and support of the team (Kaynak et
al., 2008). The casual fans buy sports merchandise
for what is known as the social identification
function.
Social Identification Function
The social identification function is related to the
desire to be accepted by members of a certain
group (Del Rio et al., 2001). According to Wu and
Chalip (2013) people have preferences for
particular brands, especially when it comes to
apparel. People may perceive themselves as
similar to others, who use the same brands. They
may wish to identify themselves with the
stereotypical user of that brand.
There are various theories as to why people use
brands for a social identification. The self-
congruity theory maintains that people want to be
perceived as being part of “the group” while the
symbolic self-completion theory claims that
people want to substantiate the own identification
(i.e., definition of themselves) though the
association with other brand users (Wu & Chalip,
2013). Regardless of the reason, sport fans will
continue to buy team licensed apparel, either to
convince themselves or others that they are real
fans.
Kwon and colleagues (2008) conducted a study to
show that college students were more prone to
wearing their team’s gear when they wanted to be
associated with the school or team after a win, but
not when their team lost (Kwon et al., 2008).
Another study (Del Rio et al., 2001) demonstrated
that people who initially associated themselves
with a sport team brand for purely social reasons
later developed brand loyalty similar to “real” fans.
They were also likely to accept price premiums
charged by the brand (Del Rio et al.).
In summary, the team licensed apparel industry
offers a highly loyal consumer base, has the
potential to improve one’s brand equity, and
carries relatively less risk than other areas of
licensing.
Sportswear & Fitness Apparel
Industry
During the 1970s, athletic sportswear evolved
from a product line aimed at small and unique
markets into a mainstream fashion product
(“Sportswear Industry Data”, 2004). During these
crucial years, the once clear difference between
formal and informal wear and function and style
clothing diminished. In the 1980s, the
acceptability of casual dress on more occasions
paved the way for sportswear to move into the

70. TAB Journal Page 70
mainstream clothing market. The trend was
accompanied by an increase in sport participation
(“Sportswear Industry Data”). The public shifted
towards a healthier lifestyle with an emphasis on
being fit and physically in shape. Since then, the
public’s increasingly active lifestyle, requiring
more versatile, comfortable, fashionable, and high
performance clothing, has created a strong
demand for sports and fitness clothing, which
offers both functional performance and style
appeal (Sorkin & Feder, 2005). This market has
grown so much to the point where the
international athletic apparel market is worth
approximately $145 billion. Of the $145 billion
(Sage, 2008), the U.S. accounts for 41% of total
sales (Sorkin & Feder), which makes it the largest
market of the sports apparel merchandize.
The sports apparel market is predominately
controlled by three companies: Nike, Adidas, and
Reebok. Nike owns close to a third of the
international sports apparel market whereas
Adidas and Reebok, combined, control 20% (Sorkin
& Feder, 2005). These companies have achieved
their dominance via partnering up with high
profile athletes and sports organizations, which
helped endorse their brands (“The UA Story”).
Nike, which has cornered a third of the sports
apparel market worldwide, is an American
multinational company which designs and sells
sportswear around the globe. It is one of the
world’s largest suppliers of athletic shoes and
apparel (Sage, 2008). Nike is also a major
manufacturer of sports equipment. The brand
itself is valued at around $10.7 billion, making it
the most valuable brand among sports businesses
(Schwartz, 2010). Nike promotes its products by
sponsorship agreements with celebrity athletes,
professional teams, and college athletic teams. It
was the first company to have all of its shoes
produced in Asia and the first company to market
and advertise athletic shoes. Practically all sports
apparel businesses try to emulate Nike’s
successful business model.
Adidas and Reebok are two main companies which
hold a significant share of the sports apparel
market worldwide. Adidas purchased the Reebok
sportswear company in 2005 to better compete
with Nike. These two companies design and
manufacture sports clothing and accessories. In
this highly competitive market, they have taken
the same route as Nike and partnered with high
profile athletes and sports organizations. They are
highly respected name brands and own 20%
market share of the sports industry (Sorkin &
Feder, 2005).
Under Armor
Competing with the above mentioned companies,
Under Armour is also a designer of high
performance apparel, supplying athletes with
moisture-wicking apparel worldwide (“The UA
Story”). Their products are worn by athletes at all
levels, from youth to professionals, on playing
fields around the globe (“Under Armour Named
Exclusive Official”, 2008). They are continuously
innovating and improving their products to stay
ahead of competition. Out of the appreciation for
its customers and community, Under Armour runs
several community programs to help people in
need. They support breast cancer awareness by
producing garments in pink, the signature breast
cancer awareness color, and run a wounded
warrior program, which assists soldiers who have
been wounded in combat. This initiative is funded
through the sale of specific Wounded Warrior
products (Under Armour). These are only a few
examples of how Under Armour runs its
successful business by giving back to the society.
Under Armour’s History
In 1996, Kevin plank founded Under Armour to
resolve a problem that had troubled him for some

71. TAB Journal Page 71
time. Kevin Plank was frustrated that he needed to
change his cotton T-shirt several times a game.
He wondered why there were no T-shirts made
out of the same material as his compression
shorts (Thomaselli, 2001). He took the material
that the shorts were made from and asked a tailor
to make him a shirt out of the same material. After
a few adjustments to the shirts, he formed the
company Under Armour from his grandmother’s
basement in Washington D.C. (”UA Story”).
Under Armour started off only offering high
performance shirts called Under Armour HeatGear
T-shirts, which wiped away sweat from the body
and kept the athlete dry and cool in extremely hot
conditions. Plank went around selling his shirts
from the trunk of his car until he finally made a
team sale generating $17,000 in sales. In 1997,
Under Armour introduced a new T-shirt with the
famous ColdGear material, which keeps athletes
warm, dry, and light in cold conditions. Later that
year, Under Armour introduced the AllSeasonGear
line, which was comfortable gear for weather in
between the two extremes. In 1998, the company
moved to a new headquarters and warehouse in
Baltimore, leaving Plank’s grandmother’s
basement (“The UA Story”).
In 1999, Under Armour used product placement in
a movie called “Any Given Sunday”, which helped
boost brand recognition and sales. Over the next
couple of years, the brand formed relationships
with key retail partners and professional sports
leagues including MLB, the National Hockey
League, and the Baltimore Marathon. Due to its
continued growth, the company took a gamble
and launched its first TV campaign (“The UA
Story”).
In 2003, Under Armour introduced a women’s line,
UA Women. In 2004, the brand expanded its
product offering for children, and outdoor athletes
(non-team spots participants). In 2005, the
company introduced a golf line and signed its first
all-school deal with Plank’s alma mater, the
University of Maryland. Less than ten years after
its launch, Under Armour ended the year with
$281 million in revenue (“The UA Story”).
During 2006, Under Armour decided to supply
athletes with equipment that would dress the
athletes from head to toe. They introduced a new
campaign called, Click-Clack, where it entered the
brand into the footwear business and introduced
its first line of football cleats. It immediately
captured 23% of the market share within the first
year of its introduction. Due to the success, Under
Armour expanded its line to include cleats for
other sports such as baseball, softball, and
lacrosse (“The UA Story”).
Under Armour made its official entry into the
athletic footwear market in 2008 by offering its
first line of performance trainers. During this time,
Under Armour made key additions to its roster of
world-class athletes who promoted their brand.
They added future NFL Hall-of-Famer Ray Lewis,
gold medal skier Lindsey Vonn, MMA World
Champion Georges St-Pierre, and Brandon
Jennings, the first U.S. basketball player to go
straight from high school to a European
professional league. It was just the beginning. By
the end of 2010, the company added the most
accomplished Olympian of all-time and Baltimore
native Michael Phelps, two-time Super Bowl MVP
Tom Brady, and a young tennis phenomenon
named Sloane Stephens (Under Armour).
In 2011, Under Armour established a presence
outside of the U.S. and gained enormous traction
with athletes around the globe, mainly those in
Japan, Europe, Canada, and Latin America. It
opened its first store in China and became the
official partner of Tottenham Hotspur of the
Barclays Premier League. This partnership is the
largest individual team deal to date. Under Armour

72. TAB Journal Page 72
continues to grow its brand globally and is
transforming the athletic and sports apparel
industry with each and every innovation they
introduce (Under Armour).
Product Offering
Under Armour currently offers apparel for every
weather condition. For warm weather the company
offers HeatGear, Recharge Suit, UA Coreshorts,
Charged Cotton T, and Coldblack infused T-
shirts. All of these products keep cool and dry
during hot, rainy conditions. In addition, the
Coreshorts and Recharge Suit help the body
perform and rejuvenate more efficiently by relying
on technology infused fabric, which compresses
the muscles and help them stay refreshed. For
colder weather, Under Armour has ColdGear Mock,
Team USA Olympic Bobsled Speed Suit, and
Charged Cotton Storm T. All of these apparel
products are water resistant, heat trapping, and
quick dry to help athletes perform under cold and
harsh weather conditions (“The UA Story”).
For various weather conditions Under Armour
provides trainers with cleats and the Armour Bra, a
revolutionary bra that lets female athletes
customize their sports bra to fit them comfortably
and securely. They offer the UA Spine Venom
Running Shoe with a lightweight cushioning that is
flexible yet supportive. The company’s technology
has been applied to many different products,
including Hoodies, T-shirts, under garments,
hunting camouflage gear, and lounge wear.
Interestingly, they offer Alter Ego gear, which is
regular Under Armour gear with super hero icons
for primarily targeting children and young adults
(“The UA Story”).
Positioning
Under Armour started off and is still a
performance apparel company (Thomaselli, 2001),
which wants to provide superior products to what
is currently available in the market. The company
wants their brand to be known for its superior
technology. They accomplish this goal by
supplying college team players with their gear.
They estimate that when the athletes eventually
become professional sport players, they continue
using the Under Armour apparel. This has been a
smart marketing decision by the company. After a
game, athletes are often interviewed by media
wearing their T-shirts (Thomaselli). Wearing T-
shirts with the Under Armour logo demonstrates
to the public that the athletes and their idols use
Under Armour, which is a very effective testimony
of products’ superiority.
Proposition
Currently, Under Armour does not sell any
products with sports team logos (Under Armour),
We believe it is hindering the compnay from
selling higher quantities of products and giving
competitors, such as Nike and Adidas-Reebok a
competitive advantage. Many of the top athletic
apparel brands sell clothing with team logos.
Newbery describes that this is an area of clothing
in which customers’ purchasing choices are
frequently determined by the sports figures they
admire, the teams they follow or the brands they
aspire to wear (Newberry, 2008). We believe that
Under Armour should sell their apparel with team
logos and professional athletes names printed on
the gear.
Strategy & Justification
The idea of licensing logos is not foreign to Under
Armour as they already license super hero logos
for their Alter Ego line of clothing. The company
already has staff knowledgeable of the licensing
business, and an infrastructure suited for
developing and marketing such items. They
should have no trouble transitioning to licensing
and printing sports-related logos. With this typ e
of licensing, they will be able to expand their

73. TAB Journal Page 73
product offering and reach consumers who intent
to buy their favorite sports team logos on their
apparel. The ESPN Chilton Sports poll stated that
more than half of the U.S. population over 12
years of age (51%) bought an apparel item with a
college or a profession team logo (Danielle, 2012).
Additionally, Fowler reported that purchasers who
did not participate in sports or fitness activities
accounted for one quarter of the dollars spent on
sports apparel of which, team licensed apparel is
the most popular (Fowler). Under Armour currently
does not offer anything in this market; they are
missing out on a large sector of the fitness
apparel market.
Under Armour should start off slowly by licensing
small royalty logos and accumulate bigger ones as
they perfect the process. Under Armor should
start licensing college sports teams where the
university level process is easier and the royalties
are lower (Thomaselli, 2001). Allowing the
company staff to begin the sports licensing
business would enable them to target the 16% of
customers within the sports licensing market, who
purchase an item with a college logo (Danielle,
2012). Plus, with a college licensing deal, Under
Armour might build brand loyalty and customer
equity among young college students.
Under Armour should begin licensing and printing
team logos for the University of Maryland sports
teams, whom they already have a strong
relationship with. Under Armour has recently
landed a five-year $17.5 million agreement that
gives Under Armour the right to provide uniforms,
apparel, and footwear to each of the Terps' 27
varsity sports (“Under Armour Exclusive Official”,
2008). In 2011, the University of Maryland had
37,631 students and 240,000 living alumni
(University of Maryland, 2011; Schoenberger,
2011). A large student base and Alumni network
would offer access to a population for test
marketing and a growing customer base.
Once Under Armour successfully licenses college
and university sports team logos, they should
move on to licensing professional sports
organizations logos. Doing so would give Under
Armour the opportunity to sell to the 29.6% of
customers who purchase items with professional
logos (Danielle, 2012). Over time, Under Armour
could build up a portfolio of professional team
licenses and offer their consumers the ability to
choose gear with their team logos.
Conclusion
While there are costs associated with brand
licensing, licensing can also negatively affect the
licensee’s brand image or hurt the co-branding
alliance by a strained relationship with the
licensor. Licensing can also have a huge payoff.
The numerous costs savings may likely offset the
costs. The cost of royalties can be covered by the
increased prices. Although licensing can hurt the
brand image, more often than not, it can actually
make it stronger, especially for sport team
licensed goods and apparel. Licensing will likely
differentiate the new product, facilitate new
distribution channels, increase sales, and serve as
the source for competitive advantage.
The team licensed apparel industry has a few
unique benefits. Sports licensed apparel is
continuously popular, makes great gifts, and has a
consistent consumer base, even though it may
fluctuate depending on the sport team’s
performance and image. A strong brand loyalty
satisfies the need of its fans for social
identification with the team and their logo on
apparel reinforces that identity.
Under Armour could become a particularly
successful sports apparel licensee because they
already have experience with brand licensing. The
added association with sports teams would
enhance their already strong reputation as a
manufacturer of active sportswear, which is an

74. TAB Journal Page 74
important factor for a good co-branding fit. The
company could benefit from the marketing and
added interest from the teams’ fans. Under
Armour could increase sales by targeting a new
group of consumers: the 25% of consumers who
buy team licensed sports apparel but do not
participate in sport. A study by Jaedeock and
Ferreira (2001) showed that with regard to team
licensed products consumers are more likely to
buy from a company which supports social causes,
such as, breast cancer awareness and the
Wounded Warrior Project. The only conceivable
risk for Under Armour could stem from
cannibalization. However, consumers have an
interest and pay more for something that contains
their favorite team’s logo. Thus, charging prices
with the industry standard premium on licensed
goods will most likely offset the cost of royalties.
In summary, to Under Armour and readers, who
are considering entering the sports licensing
industry, we say “play ball!”
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77. TAB Journal Page 77
Revenge of the Machines
Dena Brookler
It used to be that the hard work of man was a sign
of advancement. However, as technology
advances, the hard work of man is being replaced
by the software of machines. CEO’s would look
for humans to fill a job. Now, companies are
looking to save money, to be more efficient, and
to save time anywhere they can. Computers can
help them with all their problems. They are faster,
more accurate, and cheaper. The jobs that are
most at risk are the middle class jobs.
Accountants, pharmacists, meter readers,
secretaries, and lawyers are just a few of the many
jobs that are at risk. Technology is taking over
the business world at a faster rate than new jobs
are being created.
At Pacific Gas and Electric (PG&E) reader meters
were needed to check the amount of electricity
their customers used. The workers would drive
from house to house to determine the amount of
electricity used. Now, they use digital meters to
do the work humans used to. They can give a
more accurate electricity bill and even send out an
alert if the power goes out. PG&E went from
having 50 full time meter readers six years ago to
only six today. This is just one small job, of the
many, that are being taken over.
Drivers, pilots, and soldiers will less needed.
Google and Toyota came out with “smart cars” that
can drive by themselves. The Pentagon has robots
that find roadside explosives in Afghanistan and
can start a war by sending a drone from the sky.
Once the Google and Toyota “smart cars” become
widespread, the need for drivers and taxis will be
diminished. Having these cars can also be
beneficial because they can detect traffic and
means to avoid it. This can lessen the amount of
traffic in heavily populated areas.
Besides for cars, secretaries are no longer needed
in a business. More than 1.1 million secretaries
were replaced by computers, phones, and tablets
between the years 2000-2010. Bosses no longer
needed a secretary. They could just plug in their
meetings into their smart phone, computer, or
tablet and they would be reminded about it or
would see if there was a conflict. Secretaries
became an unnecessary necessity. According to
Labor Department statistics, at the same time,
telephone operators went down 64%, word
processors and typists by 63%, travel agents by
46%, and bookkeepers by 26%. Jobs are being
thrown away. Where are these people supposed to
work? How will they now support their family?
Machines are more efficient and faster than
humans. They can study person’s habits,
recognize a voice and store unlimited amount of
space (on the Internet for free), but never get
stressed out or tired. IBM created a
supercomputer, Watson, which can take an
awkwardly worded question, figure out what you
want to say, and give an answer. They tested this
program against champions from “Jeopardy!”, a TV
series, and Watson beat them. If a computer can
do something like that, then they can certainly
take over many jobs humans are doing today.
Humans are becoming more reliable on machines
and are therefore becoming more trusting of
them. People are happier to fix a problem on their
own instead of having to be on the phone for
hours with a representative. Verizon now has an
In-Home Agent system that a person can install
on their computer. This system can determine why
the Internet is down or why the TV cable box is
not working. It can fix the problem in minutes. It
saves people the hassle of trying to get a repair
Dena is a student at Lander College for Women and is majoring in marketing.

78. TAB Journal Page 78
man to the house at an inconvenient time and
have to change plans accordingly. This program
has been downloaded over two million times. It
saves time and money, so who would not want to
download it?
The jobs that used to be done exclusively by
humans may soon be done exclusively by robots.
The University of California in San Francisco (UCSF)
recently launched a new automated, robotics-
controlled pharmacy in two UCSF hospitals. The
doctor puts the order for the medication into the
computer and sends it to the pharmacy. Then, the
robot receives the information and gets the
medication, packages it, and dispenses individual
doses of the pills. So far, this new technology has
arranged 350,000 doses of medication without an
error. Attorneys and paralegals may also be at risk
to lose their jobs. Computers can analyze and
organize documents faster than a human for a
cheaper price. Someone can type in a keyword and
the software can scan through documents and get
the papers needed within seconds; a task that
would have taken humans hours to complete.
Out of all the jobs that can be replaced, the most
surprising is babysitters. In 2008, Aeon Co.
introduced a four foot tall yellow and white robot
that can watch and entertain children while adults
shop. They can track children with a radio-
frequency identification chip. How many mothers
would trust a robot with their child? Maybe not
now, but in the years to come it will be normal and
they may be more trustworthy than a nanny that
can only be questioned so much.
The following is a chart from the Business Insider
on the probability of robots taking over jobs in the
next 20 years:
As good as human ingenuity, advancement, and
knowledge are, it is still being outpaced by
technology. For all of man’s efforts to keep up
with technological advancements, technology is
consistently a step ahead. As man creates
technology, he ultimately decreases the need for
human employment. The sad result is that one
person’s inventions to advance technology leads
to the decline in employment of another.
References
Aquino, J. (2012). Nine jobs that humans may lose to robots. Business Insider. Retrieved from
http://www.nbcnews.com/id/42183592/ns/business-careers/t/nine-jobs-humans-may-lose-robots
Dunn, K. (2014, January 24). The HR capitalist: Probability HR jobs will be lost to robots in the next 20 years?
The HR Capitalist. Retrieved from http://www.hrcapitalist.com/2014/01/probability-hr-jobs-will-be-lost-
to-robots-in-the-next-20-years.html

79. TAB Journal Page 79
Rotman, D. (2013, June 12). Implants, printed to order. MIT Technology Review. Retrieved from
http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs/
The Associated Press. (2013, January 24). Can Smart Machines Take Your Job? Middle Class Jobs Increasingly
Being Replaced by Technology." NY Daily News. Retrieved from
http://www.nydailynews.com/news/national/smart-machines-job-article-1.1246522
Worstall, T. (2013, September 18). Phew, the robots are only going to take 45 percent of all the jobs. Forbes.
Retrieved from http://www.forbes.com/sites/timworstall/2013/09/18/phew-the-robots-are-only-going-
to-take-45-percent-of-all-the-jobs/

80. TAB Journal Page 80
Adherence to Ethical Behaviors
Faygie Rakower
This paper examines the existence of a moral
mandate and general prudency for a business
entity to recognize, regard, and comply with
ethical standards. There are a myriad of scholarly
articles with endless discourse and ceaseless
debates on the discipline of business ethics, First,
they conjecture on what constitutes ethical
behavior. Second, what is incumbent upon a
business entity and to whom they owe an ethical
duty to further their interests. Third, what steps
can be taken to encourage and foster greater
adherence to ethical behavior. Fourth, what extent
ethical measures should be implemented in the
business world. Most of these questions
presuppose the existence of something far more
fundamental; that there is value to the adherence
of ethical behavior. The examination of such an
area is imperative for having meaningful
discussions regarding the aforementioned
questions and is the reason I chose to engage in
such analysis.
Background Statement
Ethics refer to the moral principles or values that
generally govern the conduct of an individual or a
group. As distinguished from law or legality, there
are not necessarily any sanctions or punishments
directed at a violator or offender of ethical
standards or rules. Laws are in place to advance
the interests of society. They may or may not have
roots in morality, right or wrong, a sense of
fairness or justice, a utilitarian construct, or any
other conceivable reason for their institution.
Ultimately, what gives them legitimacy and reason
to be reckoned with, is the power vested in its
founders and their ability to enforce them.
Whether or not I see the utility in refraining from
driving while holding a cell phone, it will do me
little good when I am pulled over in the state of
New York for driving while holding a handheld
device. Even if I believe that holding a handheld
device while driving is a morally good deed (i.e., it
advances some greater ideal), I will have broken
the law regardless.
Morality descriptively refers to the identification of
a given act or set of actions as good or bad, right
or wrong, proper or improper, based upon some
other established value system, religion, or code.
Making the determination that something is moral
or immoral necessarily presupposes two things.
One, it is adhering to a particular system or code.
Two, this system or code has authority or reason
to be followed. Since neither of these two givens
are universally accepted nor are they factual in
nature, what is moral for one person is immoral
for the next.
For many, there is no such thing as morality, aside
from a mere system of identification. While 'good'
or 'bad' may be used to identify activity in
accordance with society's general conceptions of
acceptable or inacceptable conduct, it has no
deeper meaning or significance. Still, the code or
belief systems, upon which those determinations
are made, are significant to those who believe in
them; and so are the ensuing rulings regarding
morality.
However, morality in and of itself does not make
suggestions regarding how to act. It simply deems
certain activities as more or less moral. Therefore,
one who engages in immoral conduct may or may
not be considered an immoral person. It depends
on whatever it means to each person in a society
and the credence they place in that determination.
Morality itself, and those determining whether
Faygie is a student at Lander College and is studying business.

81. TAB Journal Page 81
something is moral or immoral, does not
necessarily make suggestions regarding how to
act per se. If one engages in immoral conduct he
will simply suffer consequences which accompany
it, should there be any. The underlying code or
philosophy aiding in that determination may or
may not opine on that. Many actions are highly
subjective and individualistic, and certainly not all
are in the purview of those making public
determinations.
Ethics are traditionally based upon a system of
morals or accepted values of society. Unlike
morality, they tend to deal exclusively with the
ramifications of conduct as it pertains between
man and his fellow man. For the adherents of
Judaism or Islam it is considered immoral to eat
pork. It is not unethical to eat pork in other
settings, but it may be unethical to eat pork
immediately in front of someone who is allergic to
it.
It is almost always considered unethical to
comingle clients' funds. It may or may not be
immoral depending upon which source one is
deriving morality from, though one would imagine
that the overwhelming majority of such sources
would condemn such activity in a vacuum.
However, if one comingled funds in order to save
the lives of a billion people, one would imagine
that the overwhelming majority would celebrate
such activity, and consequently those making
determinations regarding morality would say that
the person acted morally. Did said person act
ethically?
The simple approach would be that the person
acted unethically in order to achieve a moral
result. Another approach would say that since
ethics are rooted in morality, the person did not
act unethically and that the determination of
ethical behavior would be globally accepted.
Cavanagh (2010) maintains that ethics have been
ignored by scholars for centuries. This is probably
because the determination of ‘what ethical
behavior is’ usually falls into one of three
categories: completely obvious, utterly arbitrary,
and unenforceable or hopeless. However, as he
acknowledges, it has become an area of much
greater focus, discussion, and attention over the
last number of years. With greater sophistication,
an increase in the number of statistical studies
(Wurthmann, 2013) and empirical data, the pursuit
of understanding ethics has become increasingly
important.
Literature Review
There are three basic approaches to developing a
personal set of ethics (Lamb, Hair, & McDaniel,
2013). One is to examine the consequences of a
particular act. Factors to consider include: who is
helped or hurt, the duration of the impact, and the
magnitude of the overall good advanced. The
second approach focuses on the importance of a
set of rules. As mentioned before, these rules are
developed and derived from "customs laws,
professional standards, and common sense"
(Lamb et al., p. 37). One such example is the
famous axiom, "always treat others as you would
like to be treated yourself." Of course, both of
these approaches are highly subjective and
arbitrary. People could take upon themselves, for
whatever reason, to employ such an approach. It
starts getting hazy when others are making
recommendations based upon such approaches.
The final and most progressive one of the three
emphasizes development of moral character
within individuals. Pre-conventional morality
focuses on the immediate consequences of an
action, its consequences such as reward or
punishment. Most have moved beyond this
childlike approach. Conventional morality focuses
on the expectations of society. The approval and

82. TAB Journal Page 82
reaction of society at large is paramount. Post-
conventional morality attempts to represent the
morality of a mature adult. Ideally, at this level one
is less concerned about the judgments of society
and more concerned with doing the right thing in
the long run (Cavanagh, 2010). However, much
like the aforementioned approaches, the
determination of what is the right thing in the
long run, is necessarily subjective especially if it is
employed by individuals or business entities which
are being asked to use their own intuition and
fundamental sense of fairness.
Regardless of the specific approach or outlook one
employs in making ethical decisions, there are
many factors to consider. The potential magnitude
of consequences affects the likelihood that
marketing professionals will recognize a problem
as unethical. Specifically, the greater the degree of
social consensus that a certain behavior is
unethical the greater the likelihood that marketing
professionals will recognize the problem as
unethical. The greater the probability of a harmful
outcome the greater the likelihood that marketers
will recognize the problem as unethical. The
greater the period of time between a decision and
the onset of negative consequences the less the
likelihood that marketers will recognize the
problem as unethical. The greater the number of
people affected by potential negative
consequences, the less the likelihood that
marketers will recognize the problem as unethical.
The "stockholder" view of the firm advances the
notion that a firm is acting most socially
responsible when it legally maximizes its profits.
It believes that an "invisible hand" will direct
economic activity in a manner that will maximize
social welfare (Friedman, 1970). As Freidman
phrased:
There is one and only one social
responsibility of business—to use its
resources and engage in activities
designed to increase its profits so long as
it stays the rules of the game, which is to
say, engages in open and free competition,
without deception or fraud… Few trends
could so the very foundations of our
society as the acceptance by corporate
officials of social responsibility other than
to make as much money for their
stockholders as possible. This is a
fundamentally subversive doctrine (p. 133).
Ultimately, he argues, anything done that distracts
from their chief obligation of maximizing profits is
irresponsible.
Advocates of the "stakeholder" view, on the other
hand, argue that firms do in fact have
responsibilities that extend beyond lawfully
making profits for the owners (Wurthmann, 2013).
Firms are social entities that have complex and
mutually effecting relationships with a diverse
group of other social entities such as
governments, communities, employees,
customers, and creditors. The impact that they
have extends to all those entities, as well as future
generations. Therefore, firms have responsibilities
based upon the effect that they have on these
entities. However, merely demonstrating the
impact that their decisions have does not by itself
create a moral mandate. That mandate is
explained in two forms.
The first attempt at explication is that firms do not
merely represent and thereby have an obligation
to advance the best interests of its stockholders.
They have an obligation to ensure the welfare of
their stakeholders as well (Donaldson & Preston,
1995). The second explanation synthesized by
Wurthmann (2013) states that through a concerted
effort to follow ethical principles, and acting
socially responsible to all stakeholders, firms will
inevitably enhance their performance through

83. TAB Journal Page 83
various outcomes, such as engendering loyal
customers, motivated employees, innovative
products and processes, supportive communities,
and overall improved reputation.
Application
Based upon the totality of the research conducted,
and based upon the endless supply of research yet
to be tapped into ethics whose gamut is virtually
endless, clearly there is no consensus regarding
the rationale or purpose, let alone mandate, for a
business entity to follow any suggested ethical or
socially responsible course of action. There are
simply too many questions that are either not
accounted for or are accounted for in a vacuum.
What is the mandate for one to act in moral
manner? What is a moral manner? Are ethics based
upon morals? Are morals which ethics are
allegedly derived from a particular code? Is it
based upon a form of social responsibility? Do
those making ethical suggestions indeed know for
certainty what the long term and short term
effects of their suggestions are? If they did, would
that grant them moral authority? The questions do
not cease and the answers are simply not there.
Projecting a theory or offering possible
perspectives are helpful guidelines, but at the end
of the day, unless those making ethical
suggestions are charged with the power to enforce
their suggestions, their subjects have no reason to
follow the guidelines, unless they themselves
identify with the underlying values.
Specific Organization
Virtually any business entity can be selected to
demonstrate the point presented above. Take
PepsiCo, for example. While nothing can ever be
taken for granted, let us posit that the primary
goal of any company is to maximize its profits.
How other secondary goals or considerations
interplay with the primary goal is the question. If
those charged with running PepsiCo feel
compelled to act in a manner that is ethical, then
they will do so. If they believe in the mandate or
prudency of following a course of action, then
they will do so. If they feel that acting ethical will
on a practical level increase profits through some
of the above mentioned systems, then by all
means they will proceed in that direction. Should
they feel that they can achieve similar results by
simply appearing to be ethical, then again, that
will be their path to success. Should they fear or
be inspired by either some profound karmic sense,
a more traditional sense of right and wrong, a
classic Judaea/Christian type model as a code of
conduct, or by merely appearing ethical, then they
will and should follow those guidelines.
Credence should be applied to ethical suggestions
to the extent that they are identified with.
However, to feel compelled to follow a course of
action or a suggestion which has a self-created
importance is ludicrous and detrimental to a
business entity inasmuch as it detracts from its
focus, resources, and most importantly its long-
term profits.
For example, PepsiCo's recent decision to invest
over Rs 1,200 crore to build a new beverage
manufacturing facility in Andhra Pradesh (PepsiCo
India, 2013). This comes as part of the recently
announced plans by PepsiCo and its partners to
invest Rs 33,000 crore in India by 2020. Such a
move necessarily implicates numerous ethical
questions, considerations, and duties to the
stockholders, shareholders, international labor
rules, exploitation and many others. After
examining and weighing all of the ethical
considerations involved in making such a move,
PepsiCo must ultimately do what is internally
perceived as the correct course of action.
PepsiCo is best off by examining suggestions and
reasons. If the reasons are agreeable and logical

84. TAB Journal Page 84
and in furtherance of PepsiCo's best interests then
it certainly should heed them. Simply put, if not,
not.
Future Research
Future research on this particular issue is unlikely
to yield significant data, or shed more light upon
the issue at hand. Matters that have underlying
bases in morality were never universally agreed
upon and barring some divinely inspired revelation
to all of mankind, it likely will never be. Should
data yield results indicating that taking particular
courses of action or ethics education would yield a
particular desired result or avoid undesired
results, then the lawmakers will decide in the best
interest of the society to enact laws in order to
foster these courses of action. Only then, business
ethics research will bring on a new meaning to the
society.
References
Cavanagh, G. (2010). Ethics in business requires moral maturity. Business Ethics Quarterly, 20(4), 717.
Donaldson, T., & Preston, L.E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and
implications. Academy of Management Review, 20(1), 43-65.
Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. The New
York Times Magazine, 122-126.
Lamb, C. W., Hair, J. F., & McDaniel, C. (2013). Mktg 7. Mason, OH: Cengage Learning.
PepsiCo India to invest over 1,200 cr on new beverage plant in Andhra Pradesh (2013, December 21).
Journalism of Courage Archive. Retrieved from http://www.indianexpress.com/news/pepsico-india-to-
invest-over-1200-cr-on-new-beverage-plant-in-andhra-pradesh/1210261/
Wurthmann, K. (2013). A social cognitive perspective on the relationships between ethics education, moral
attentiveness, and PRESOR. Journal of Business Ethics, 114(1), 131-153.

85. TAB Journal Page 85
The Importance of a Creative Work Environment
Joseph Gomez
In the 21st century, it is evident a successful
business and innovation must go hand in hand
due to the “technology cycle.” The technology
cycle occurs when a newer, better technology
replaces an older technology in the market.
Businesses are required to keep up with this cycle
in order to remain in the market. Adapting to
change is not only necessary but inevitable.
At the base of an innovative product are innovative
ideas, and as a manager, employees must be
placed in a position to create. This paper covers
the “creative work environment” method employed
to manage sources of innovation. The construction
of a creative work environment, an environment in
which workers perceive that creative ideas are
welcomed and valued (Williams, 2012), has proven
to be an effective method used by successful
companies, such as: Google, Microsoft, and
Facebook.
A creative work environment is composed of six
key components: challenging work, three types of
encouragement, work freedom, and the removal of
impediments. Challenging work demands
employee focus and effort, giving the impression
of importance. When work is at a perfect level of
difficulty, employees reach a psychological status
called “flow”, which promotes creativity due to the
complete absorption in the task according to
researcher and psychologist, Mihaly
Csikszentmihalyi. However, when work is too
difficult it causes employee anxiety and hinders
the opportunity for creativity, requiring a perfect
balance. Three types of encouragement:
organizational, supervisory, and work group
encouragement, are imperative in the construction
of a creative work environment. Organizational
encouragement means that management
encourages employees to take risks and come up
with new ideas. Top management recognizes
creativity and proposes incentives for employees.
Supervisory encouragement occurs within a
development team. Supervisors encourage open
interaction with subordinates and support new
ideas and work. Lastly, work group
encouragement occurs within a team composed of
members with a diversity of experience,
education, and background. Despite the
differences, the group has a mutual openness to
ideas. Freedom, gives employees control over their
work, which according to many studies, has shown
fruition in creative ideas. Ultimately, companies
have removed impediments, such as sticking to
the status-quo and the involvement of
management, allowing for “outside the box” ideas.
A creative work environment is a key method for
producing innovative ideas, which has proven to
be a major link to a company’s success.
Background Statement
The nature of the 21st century workplace has
undergone a drastic change from the workplace of
past: “The Industrial Revolution was built on
machinery, skills, and labor; however, the
information and knowledge-based revolution of
the 21st century is being built on investment in
intellect and creativity” (Pillay, Boulton-Lewis, &
Wilss, 2004, p.18). The industrial revolution’s
focus on machine and individual skill meant
workers held a specific position according to skill
and managers expected workers only to perform
their skill-based task. It is unknown what exactly
sparked the change in management, but presently,
companies have become less heirarchical in
structure and decision authority, thus allowing
creative opportunities for employees. Companies
Joseph is a student at Lander College for Men and is majoring in accounting.

86. TAB Journal Page 86
today are dealing with competitive pressures and
technological breakthroughs, making them:
“leaner and more agile; more focused on
identifying value from the customer perspective;
more tuned to dynamic competitive requirements
and strategy… continually reorganizing to
maintain or gain competitive advantage”
(Heerwagen, 2010, p.1).
The modern market stresses product innovation
like never before. Companies are no longer trying
to come up with the next big idea; they are trying
to come up with the next big idea after the next
big idea. This race for innovation is leading
managers to maximize all workers’ creativity
potential, by creating an invironment favorable to
creativity. Unlike the work environment of the 20th
century, workers today are “expected to be more
functionally and cognitively fluid and able to work
across many kinds of tasks and situations”
(Heerwagen, p. 1). Managers of modern
businesses do not bind employees to a specific
job title, in fact, a wide scope of knowledge of the
company is expected. Overall knowledge of the
company and its goals provides the freedom for
employee creativity, which has become a standard
in today’s businesses.
Literature Review
The first scholarly source discusses whether the
self-managed work team approach can be
considered a creative management tool and
evaluates its benefits and challenges. Managers
constructing a creative work environment often
do so through work-teams. Work-teams were
considered the productivity breakthrough of the
90s by Fortune magazine. This idea of work
collaborations began surging through companies
in the 1990s, “not because corporations [were]
becoming kinder and gentler towards employees,
but because they want[ed] to survive in a
golabally-competitive environment” (Elmuti,
1997). At the time, 50% of all Fortune 500
companies followed the idea of increased
collaboration. It was estimated that by 2000 90%
of all North American organizations would have at
least some type of self-managed work-teams
(Elmuti, 1997). The assembly of work-teams
provides employees with an opportunity beyond
job involvment, but job empowerement. According
to Elmuti, empowerement is a higher level of
involvement, which allows employees to make own
decisions. Allowing employees to make decisions
for the organization improves individual
motivation and organizational productivity,
because when employees are involved and become
more interested in their jobs.
Elmuti uses Saturn Corporation, a former
subsidiary of GM, as an ideal example. Saturn has
a multitude of work-groups. Each work group
makes its own job assignments, plans its own
work, performs equipment maintenance, keeps
records, obtains suppliers, and makes selection
decisions of new members into the work unit.
Leadership roles are also rotated among the team
members (Elmuti). By providing their employees
with such organizational encouragment, Saturn is
offering an opportunity for creativity.
The managers at Eastman Kodak Company, a film
manufacturer, created an enviroment open to
creativity. Work-teams were supported by
management, and positive reinforcement was
used to encourage quality work, team problem
solving, and decision making (Elmuti, 1997).
Innovation and quality improvements were
continuosly produced at Kodak, because
management rewarded quality new ideas and
fostered open communication throughout the
company.
Regardless of all the benefits of self managed
work-teams, there still lay many limitations.
Without the overseeing of a manager, self

87. TAB Journal Page 87
managed work-teams may fail because of lack of
time investment and effort as a unit. Additionally,
not all employees are fit to make decisions and
judgements. Some employees may rather not have
any authority at all. A combination or either of
these scenarios can lead to bad decisions or poor
time management on the part of employees.
In today’s global market, a self-managed work-
team is a great way to supply a company with the
innovative ideas that are necessary to remain
competitive. However, in order to avoid failure,
management must take adequate steps before the
program is introduced and utilize an adequate
management strategy to support the initiative
(Elmuti, 1997).
The second article analyzes the measures needed
in order to compete in today’s dynamic and
“hyper-competitive” business environment. Within
today’s market, it is no longer enough for a
company to be efficient and responsive (Leavy,
2003). Companies are being forced to become
more creative in everything that they do. Through
the understanding of the importance of creativity
in organizational settings, firms can do a lot to tap
into the creative potential of their workforce. They
can engage the hearts and minds of their current
employees (Leavy).
The volatility of today’s business environment has
removed the ability to merely be efficient as a
company. In the modern age, it is all about
adaptability. Many of today’s CEOs are promoting
creativity and “outof the box” thinking from all
departments, not only from the usual marketing
and product development departments.
In the case of research and development at Honda,
recognition and reward systems tend to be
designed around talent and contribution rather
than title or status (Leavy, 2003). Honda
management encouraged risk-taking and
experimentation during their ‘let’s gamble’
mission, displaying organizational
encouragement. Additionally, Honda challenges
their employees with emotionally engaging work,
as part of their ‘success against the odds’
campaign.
The article interestingly notes two types of
companies when it comes to creativity. Some
companies were built around the creative priority
from its inception, for example Nissan Design
International. On the other hand, companies such
as: Oticon, Nokia, and General Electric are
established companies, which changed from
management-driven to idea-driven organizations.
Most companies are able to uncover their
employees’ creative potential, through
encouraging and rewarding creativity.
The final article discusses which companies are
most committed to creativity and where the
creativity stems from. Additionally, the article
outlines the benefits involved with a creative work
environment. According to Coates and Jarratt
(1994), companies reliant on high-technology or
other leading-edge developments have the
strongest commitment to creativity. Previous
articles mentioned the importance of creative
ideas from employees; however, this article
initially suggests the flow of creativity in a typical
U.S. corporation to be initiated at the top (Coates
& Jarratt, 1994).
Creativity from the senior executive encourages
creative developments throughout the
organization, although, in the businesses of
tomorrow creative flow will be different. Future
businesses’ features will include, “flexibility, broad
participation, and openness, so that the flow of
information and concepts will be in many
directions, and negative sanctions and inhibitors
of new ideas are reduced” (Coates & Jarratt, 1994,
p. 15). Creative ideas will freely be able to reach
any level of the corporate hierarchy, and cross

88. TAB Journal Page 88
functional areas. An atmosphere nurturing to
creativity can be constructed from five essential
characteristics: freedom, encouragement,
resources and time, recognition, and challenge.
Providing freedom in what to do and how to do it
creates a sense of control for employees and
enthusiasm and support from management gives
the impression of successful ideas. Employees, in
addition, must be given access to appropriate
facilities, information, funding, and enough time
to solve problems in new ways (Coates & Jarratt,
1994). Managerial recognition provides
constructive feedback in addition to rewards.
Lastly, a challenge stemming from the problem
itself, outside competition or time, keeps
employees fully engaged.
Application and Analysis
Today’s consumers’ expectations for constant
innovation have led to companies stressing
creativity. Buyers in today’s market are always
looking to buy the newest innovative product.
From a managerial standpoint, all employees are
being utilized as creative minds. In a sense, it is a
number game: place all employees in an
environment conducive to creativity, and a few are
bound to have creative ideas. Many companies are
taking this creative work environment approach,
so the distinction lays in the methods used to
construct a creative work environment. The
assemblies of self-managed teams are
successfully being used by companies. At a
General Mills cereal plant in Lodi, California, teams
schedule, operate and maintain machinery so
effectively that the factory runs with no managers
present during the night shift.
In my opinion, self-managed work teams are able
to come up with a greater amount of useful ideas,
in a shorter time span, than a single product-
innovation. The multitude of employees with a
common goal presents many opportunities: “At a
weekly meeting, a team of Federal Express clerks
spotted and eventually solved a billing problem
that was costing the company $2.1 million a year,
and 3M turned around one division by creating
cross-functional teams that tripled the number of
new products” (Elmuti, 1997, p. 235).
Specific Organization
In 1925, Leica introduced its compact cameras,
which were revolutionary compared to the heavy
plate cameras of the day. According to Timberlake
(2012), in 1932, about 90,000 Leicas were in use;
by 1961, a million. Leica, a highly priced camera,
was popular among photojournalists. Recently,
CNBC wrote an article covering a Leica
commercial. The ad is a video of a Leica worker
polishing the new Leica T System for nearly 45
minutes. During the commercial, Leica asked “Is
this the most boring ad ever made? Not if you
appreciate obsessive craftsmanship”. Leica’s
business model is apparent from the
advertisement. Leica’s conservative business
model, stress on detail and quality, along with its
astounding prices are used to grab the attention
of a specific market. Leica’s conservative outlook
is the reason they did not introduce their first
digital compact until 1998, in an attempt to join
the digital camera race with Canon and Nikon.
However, it was too late and they had lost
customers to Canon and Nikon. Sales bounced
back, nevertheless, when they introduced digital
versions of their 1950s-era M camera.
During 2012, their digital models were
responsible for more than 90% of sales. However,
according to the Camera and Imaging Products
Association, the number of cameras manufactured
per year has dropped from 121 million in 2010 to
61 million in 2013. Leica felt a need to push a new
marketing strategy given the recent decline in
camera sales (Moodley, 2014). To begin with,
Leica only owned a small percentage of the

89. TAB Journal Page 89
camera market: “We know that of the total
photographic market, maybe only 10% would even
consider buying a Leica. Out of the top 10%, only a
small fraction actually will end up buying a Leica”
(Babej, 2012, p.1). With the general decrease in
camera sales, Leica may need to consider new
creative ideas, because as cameras on
smartphones continue advancing, the need for a
separate camera is fading.
Synthesis of the Topic
Leica has been content with being part of a niche
market, however the overall decrease in camera
sales has Leica in need for innovation. As a
German-based company, Leica’s management is
similar to the German ideology. Leica focuses on
craftsmanship, detail, and quality. The overall
design of the cameras has not changed much from
the early 20th century.
I am proposing Leica implement a more open work
environment, allowing the opportunity for creative
thought. In an era fueled by innovation and
change, companies with stagnant ideas will not
succeed. Leica is in need of new, innovative ideas,
which will catapult them from their niche market
to a larger market. The presence of work-groups
and creative freedom can begin the circulation of
innovative ideas between the employees. Removal
of managerial impediments will allow employees
to stray from Leica’s status-quo of “old-school”
cameras.
Suggestions for Future Research
There are three components of a creative work
environment that can potentially yield creativity, or
falter and be counterproductive. The three
components are: providing employees with
challenging work, removal of organizational
impediments, and conditions of freedom.
Assigning challenging tasks to employees has the
benefits of promoting creativity through a
psychological experience called “flow.” The
demand for attention and focus totally immerses
the employee in the task, causing the work to
merely “flow.” However, in this method lays the
possibility to assign too little or too much work:
“Workers become bored when they can do more
than is required of them and anxious when their
skills aren’t sufficient to accomplish a task”
(Williams, 2012, p.135). The search for this
balance is only temporary. Once the work
capabilities of employees are determined,
managers will know the perfect balance of work to
achieve work “flow” and creativity.
The component of freedom in the workplace
means having autonomy over one’s day-to-day
work and a sense of ownership and control over
one’s ideas (Williams, 2012). Studies have shown
that creative ideas thrive under conditions of
freedom. Although, this creative work
environment component might not always be
effective. Not all employees are fit to have control
over their work and time. Employees incapable of
managing their work and time will end up wasting
work hours or make bad decisions in their work.
Although a reasonable concern, employees with
such work freedom are often part of a larger
group, thus reducing the opportunity for mistakes.
For example, at Dunkin’ Donuts, members of the
Culinary Innovation Team are given the freedom to
explore new areas, whether it is testing 28
varieties of shortening or spending three months
researching new potato products. If these projects
were given to individuals, the opportunity for time
loss would be much higher.
The final component that might be susceptible to
being abused is the removal of impediments. The
method stems from the idea that, internal conflict
and power struggles, rigid management
structures, and a conservative bias toward the
status-quo can all discourage creativity (Williams,
2012). The removal of structure, conversely, can

90. TAB Journal Page 90
also allow for employee mistakes. Without
structure, an employee incapable of good
judgment most likely will make a poor decision. In
order to avoid this problem, companies simply
minimize impediment interference instead of
totally removing it. Pixar Studios minimizes
creative interference by making every film project
“filmmaker led”. When they produce films, they
know that company management, rules, and
procedures will not interfere.
References
Babej, M. E. (2012, November 26). How Leica camera is generating momentum for a passion brand. Forbes.
Retrieved from http://www.forbes.com/sites/marcbabej/2012/11/26/how-leica-camera-is-generating-
momentum-for-a-passion-brand/2/
Coates, J. F., & Jarratt, J. (1994, Spring). Workplace Creativity. Employment Relations Today, 11-21.
Elmuti, D. (1997). Self-managed work teams approach: creative management tool or fad? Management
Decision,35(3), 233-239.
Heerwagen, J. (2010, January 15). The changing nature of organizations, work, and workplace. Whole
Building Design Guide. Retrieved from http://www.wbdg.org/resources/chngorgwork.php
Leavy, B. (2003). A More Creative Organisation and a Better Breeding Ground for Leaders. Irish Marketing
Review, 16(2), 51-56.
Moodley, K. (2014, May 1). Can you watch the most boring ad ever made? CNBC. Retrieved from
http://www.nbcnews.com/business/consumer/can-you-watch-most-boring-ad-ever-made-n94666
Pillay, H., Boulton-Lewis, G., & Wilss, L. (2004). Changing workplace environments: Implications for higher
education. Educational Research Journal, 19(1),17-42.
Timberlake, C. (2012, June 14). Why Leica is opening so many stores. Businessweek. Retrieved from
http://www.businessweek.com/articles/2012-06-14/why-leica-is-opening-so-many-stores
Williams, C. (2012). MGMT 4. Mason,OH: Cengage Learning.

91. TAB Journal Page 91
Is There An Optimal Time to Sell Equity?
Eliezer Goldberg MA, MBA
If forced to sell the equity portion of an
investment portfolio during a calendar year, is
there an optimal day or time of day to sell? This
may sound like a hypothetical question, but for
millions of Americans turning 70½ years old it is
an important one. Section 401(a)(9) of the Internal
Revenue Code (Code) establishes rules for
Individual Retirement Accounts (IRAs) during the
life of an employee. In particular, Section
401(a)(9)(A)(ii) mandates a beginning date for IRA
distribution that would continue over the life of
the employee, while Section 401(a)(9)(C) defines
the age that triggers the beginning date of
distribution as 70½.1
As the Code does not require asset sales to be
spread out during the year, one sale per year of
the required proportion could fulfill the minimum
distribution requirement. No one accurately
forecasts equity prices for any given day and all
one can hope to sell as close to peak share price
as possible. What advice can a financial advisor
offer to retirees desperate to get the best price
possible for their equity? My analysis suggests
that it could be the last day of the year.
Background
The Securities Exchange Act of 1934 (1934 Act)2
clearly states that prices of securities are
susceptible to manipulation, control, excessive
speculation, which hinder the proper appraisal of
the value of securities and thus prevent a fair
calculation. Publicly traded companies offer
investors with some financial indication about
1
Federal Register. (1987, July 27). Vol. 52, Code 28070.
2 (1934, June 6). Title I, § 2, 48 Stat. 881.
their business. The Securities Act of 19333
requires companies to make financial information
available to potential shareholders. Financial
statements can be viewed at the Securities and
Exchange Commission’s (SEC) website.4 However,
a question arises. Is there enough information in
the public domain for one to make an educated
decision on the right price for one’s equity
investment?
In general, the board of directors or the executive
officers of a publicly traded company do not tack a
specific price to the shares or an enterprise value
to the company. In context in which a public
company must value itself, it relies on the publicly
traded price of its shares. Under the 1934 Act, a
company must file an annual report, which is
referred to as Form 10-K. The form, rules,
content, and requirements of the annual report
are detailed in the Qualifications and Reports of
Accountants (1972) in the Code of Federal
Regulations (CFR) Chapter II Title 17: Commodity
and Securities Exchanges.5 The front page of the
company’s filing provides the share price for the
day closest to the 10-K filing date. Even though
the share price is not controlled by the company
executives or the board of directors, the price has
a direct impact on calculating outstanding shares,
when it causes out-of-the-money options to
become dilutive of common stock, thereby
3
(1933, May 27). Title I, Section 1, 48 Stat. 74., 39.
4 See www.sec.gov.
5 Federal Register, 37(210.01-1, 210.1-02 Application of
Regulations S-X, Definitions of terms used in Regulation S-X,
(17 CFR part 210)), 14594.
Eliezer Goldberg is a High Yield/Distressed analyst working at a hedge fund, is
currently an adjunct professor in the Business Department of Touro College
and is an alumnus of Touro College.

92. TAB Journal Page 92
affecting the company’s earnings per share,
market capitalization, and enterprise value.
There is an instance where a company will
telegraph to the public its disagreement with the
investing community over valuation by
announcing a stock buyback. By buying back its
own stock, the company demonstrates that having
analyzed a slew of available investment
possibilities, the repurchase of stock is equal to or
better than other possibilities. Even in that
situation, the company does not necessarily pick
an exact price at which it will buy back stock.
Sometimes a company will offer senior
management performance bonuses, in cash or
options, for improving profitability metrics. For a
publicly traded company, this is an indirect
method used to raise its stock price, assuming
investors will reward improvements in the
company’s business by boosting its stock price.
This incentive works well when employees think
the stock price can increase. When employees
conclude the market will not reward them for their
extra work, either because of general malaise in
the market, multiple-contraction, or because
investors are pricing the stock on future superior
expectations, cash bonus is more effective than
option or stock.
There are three valuation situations where a
company may make public statement of the exact
price that should be assigned to its shares. First, a
company’s management expresses a valuation
opinion when it offers to buy a certain portion or
all of the stock outstanding. Second, when a
company, that has filed a Chapter 11 bankruptcy
and wishes to emerge from bankruptcy, files a
plan of reorganization under which it offers new
shares to its creditors. The company and its
financial advisors prepare a disclosure statement,
and one of the exhibits displays the value of the
new emerging company, its stock, debt, and
enterprise value. Third, when a bankrupt company
decides to pursue liquidation instead of
reorganization and it gives creditors its opinion of
the company’s liquidation value. Even in this case,
the value presented may not be a conclusive
number but rather a recovery range depending
how the liquidation process runs its course.
In their book6, Security Analysis: the Classic 1934,
Graham and Dodd (1996) wrote:
Hence the prices of common stocks are not
carefully thought out computations, but
the resultants of a welter of human
reactions. The stock market is a voting
machine rather than a weighing machine. It
responds to factual data not directly, but
only as they affect the decisions of buyers
and sellers....Confronted by the mixture of
changing factors and fluctuating human
fancies, the securities analyst is clearly
incapable of passing judgment on common
stock prices generally (Chapter 39).
Graham and Dodd recognized over half a century
ago that is was very difficult to accurately value a
stock. For example, a classic method of valuing a
stock is to examine its price earnings (P/E) ratio.
This method looks at the earnings per share yield
(earnings per share divided by the stock price),
which is a comparable methodology to measuring
a stock that pays a dividend or a bond with paying
interest.
One can compare stocks, bonds or any
investments that promise to reward investors by
dividing the present price by anticipated payouts
to arrive at an investment yield. The nomenclature
for earnings divided by price yield is to flip the
numerator and denominator so that the return on
investment is a whole number instead of a
6 Graham, B., & Dodd, D. (1996). Security Analysis: The Classic
1934. New York: McGraw-Hill Professional Publishing.

93. TAB Journal Page 93
fraction. P/E ratios are quoted only as whole
numbers. If a stock’s earnings per share ratio is
$1 then the P/E ratio does not distinguish between
a price of $9.50 and $10.49. At either price, the
ratio is 10, even though there is a discrepancy of
99 cents, or close to 10%, in price. A 5% positive
or negative movement is significant and yet does
not impact the P/E ratio.
People who are compensated based on their
investment acumen could find the 10% difference
in stock price (from the low end of the range to
the high end) very significant. It is especially
important when that movement allows them to
beat an index by which their performance is being
measured. Does the Standard and Poor’s 500
Index (S&P 500) act any differently on the last
trading day of the year? I assume no one knows
which day of the year will be the best-performing
one for the multitude of indices against which
investment performance is measured, but what if
one patiently held on to equity investments until
the last day of the year and sold them at the
market close?
Analysis
I have researched the S&P 500 high, low, average,
and close prices since 1958 and compared the
close to the index’s low and average prices. I ran
two tests. One test was to compare the year-end
trading close to the S&P 500 average price as
calculated by Bloomberg. The second test was to
compare the year-end trading close to the lowest
price the S&P 500 fell to during the year. As deep
down into the abyss as the index may fall,
historically, would it made sense to hold on and
sell on the last trading day of the year?
Conclusion
In 38 out of 54 years, or 70% of the time, the S&P
500 closed the year above its average price for the
year by a margin of 1% or more. In only 12
instances, or 22% of the time, it closed more than
1% below its average for the year. In the other four
instances, the index closed within 1% of its
average for the year.
In none of the 54 years did the S&P 500 close the
year at its lowest point. In all instances, it closed
at least 2% higher than the nadir, and 50% of the
time it closed at least 14% above its low point.
Indeed, 9% of the time it closed over 32% above
the low point.
If historical data have credence and the S&P 500 is
a good metric for the stock market in general,
then one can conclude statistically that any
required selling may be more profitable on the last
day trading day of the year rather than on a
random day. A random day during the year might
reflect the yearly average price as well as the
yearly low.
Further research is needed to uncover the reason
for this highly correlated statistical occurrence.
There are a number of potential explanations for
the phenomenon. It may be that money managers
are engaged in window-dressing.
Alternatively, the lowest closing price of the year
is an anomaly, a statistical outlier created by
forced equity sales due to margin calls. The
phenomenon may be driven by the realities of the
workplace. Throughout the western world,
government and private sector employees take off
the last week of the calendar year, which may
cause a significant decrease in news that could
affect companies and their stock prices. Another
employment-related possibility stems from the
increase during the holiday season of seasonal
and temporary jobs in retail, which may increase
income and thereby reduce the pressure to sell
stock. In a similar vein, workers may receive
holiday or year-end bonuses, similarly reducing
selling pressure.

94. TAB Journal Page 94
High Low Average Close
Close greater
or less then
the low
% change
01/03/11 12/30/11 361 1363.61 1099.23 1267.64 1257.6 158.37$ 12.49%
01/04/10 12/31/10 361 1,259.78$ 1,022.58$ 1,139.97$ 1,257.64$ 235.06$ 20.62%
01/02/09 12/31/09 363 1,127.78$ 676.53$ 948.05$ 1,115.10$ 438.57$ 46.26%
01/02/08 12/31/08 364 1,447.16$ 752.44$ 1,220.04$ 903.25$ 150.81$ 12.36%
01/03/07 12/31/07 362 1,565.15$ 1,374.12$ 1,477.19$ 1,468.36$ 94.24$ 6.38%
01/03/06 12/29/06 360 1,427.09$ 1,223.69$ 1,310.46$ 1,418.30$ 194.61$ 14.85%
01/03/05 12/30/05 361 1,272.74$ 1,137.50$ 1,207.23$ 1,248.29$ 110.79$ 9.18%
01/02/04 12/31/04 364 1,213.55$ 1,063.23$ 1,130.65$ 1,211.92$ 148.69$ 13.15%
01/02/03 12/31/03 363 1,111.92$ 800.73$ 965.23$ 1,111.92$ 311.19$ 32.24%
01/02/02 12/31/02 363 1,172.51$ 776.76$ 993.94$ 879.82$ 103.06$ 10.37%
01/02/01 12/31/01 363 1,373.73$ 965.80$ 1,194.18$ 1,148.08$ 182.28$ 15.26%
01/03/00 12/29/00 361 1,527.46$ 1,264.74$ 1,427.22$ 1,320.28$ 55.54$ 3.89%
01/04/99 12/31/99 361 1,469.25$ 1,212.19$ 1,327.33$ 1,469.25$ 257.06$ 19.37%
01/02/98 12/31/98 363 1,241.81$ 927.69$ 1,085.50$ 1,229.23$ 301.54$ 27.78%
01/02/97 12/31/97 363 983.79$ 737.01$ 873.43$ 970.43$ 233.42$ 26.72%
01/02/96 12/31/96 364 757.03$ 598.48$ 670.49$ 740.74$ 142.26$ 21.22%
01/03/95 12/29/95 360 621.69$ 459.11$ 541.72$ 615.93$ 156.82$ 28.95%
01/03/94 12/30/94 361 482.00$ 438.92$ 460.42$ 459.27$ 20.35$ 4.42%
01/04/93 12/31/93 361 470.94$ 429.05$ 451.61$ 466.45$ 37.40$ 8.28%
01/02/92 12/31/92 364 441.28$ 394.50$ 415.75$ 435.71$ 41.21$ 9.91%
01/02/91 12/31/91 363 417.09$ 311.49$ 376.19$ 417.09$ 105.60$ 28.07%
01/02/90 12/31/90 363 368.95$ 295.46$ 334.63$ 330.22$ 34.76$ 10.39%
01/03/89 12/29/89 360 359.80$ 275.31$ 323.05$ 353.40$ 78.09$ 24.17%
01/04/88 12/30/88 361 283.66$ 242.63$ 265.88$ 277.72$ 35.09$ 13.20%
01/02/87 12/31/87 363 336.77$ 223.92$ 287.00$ 247.08$ 23.16$ 8.07%
01/02/86 12/31/86 363 254.00$ 203.49$ 236.39$ 242.17$ 38.68$ 16.36%
01/02/85 12/31/85 363 212.02$ 163.68$ 186.81$ 211.28$ 47.60$ 25.48%
01/03/84 12/31/84 363 170.41$ 147.82$ 160.46$ 167.24$ 19.42$ 12.10%
01/03/83 12/30/83 361 172.65$ 138.34$ 160.47$ 164.93$ 26.59$ 16.57%
01/04/82 12/31/82 361 143.02$ 102.42$ 119.62$ 140.33$ 37.91$ 31.69%
01/02/81 12/31/81 363 138.12$ 112.77$ 128.04$ 122.55$ 9.78$ 7.64%
01/02/80 12/31/80 364 140.52$ 98.22$ 118.71$ 135.76$ 37.54$ 31.62%
01/02/79 12/31/79 363 111.27$ 96.13$ 102.99$ 107.94$ 11.81$ 11.47%
01/01/78 12/31/78 364 106.99$ 86.90$ 96.12$ 96.11$ 9.21$ 9.58%
01/03/77 12/30/77 361 107.00$ 90.71$ 98.18$ 95.10$ 4.39$ 4.47%
01/02/76 12/31/76 364 107.83$ 90.90$ 102.04$ 107.46$ 16.56$ 16.23%
01/02/75 12/31/75 363 95.61$ 70.04$ 86.18$ 90.19$ 20.15$ 23.38%
01/02/74 12/31/74 363 99.80$ 62.28$ 82.85$ 68.56$ 6.28$ 7.58%
01/02/73 12/31/73 363 120.24$ 92.16$ 107.44$ 97.55$ 5.39$ 5.02%
01/03/72 12/29/72 361 119.12$ 101.67$ 109.09$ 118.05$ 16.38$ 15.02%
01/04/71 12/31/71 361 104.77$ 90.16$ 98.31$ 101.95$ 11.79$ 11.99%
01/02/70 12/31/70 363 93.46$ 69.29$ 83.18$ 92.00$ 22.71$ 27.30%
01/02/69 12/31/69 363 106.16$ 89.20$ 97.77$ 92.06$ 2.86$ 2.93%
01/02/68 12/31/68 364 108.37$ 87.72$ 98.37$ 103.86$ 16.14$ 16.41%
01/03/67 12/29/67 360 97.59$ 80.38$ 91.96$ 96.47$ 16.09$ 17.50%
01/03/66 12/30/66 361 94.06$ 73.20$ 85.18$ 80.33$ 7.13$ 8.37%
01/04/65 12/31/65 361 92.63$ 81.60$ 88.15$ 92.43$ 10.83$ 12.29%
01/02/64 12/31/64 364 86.28$ 75.43$ 81.37$ 84.75$ 9.32$ 11.45%
01/02/63 12/31/63 363 75.02$ 62.69$ 69.86$ 75.02$ 12.33$ 17.65%
01/02/62 12/31/62 363 71.13$ 52.35$ 62.32$ 63.10$ 10.75$ 17.25%
01/03/61 12/29/61 360 72.64$ 57.57$ 66.27$ 71.55$ 13.98$ 21.10%
01/04/60 12/30/60 361 60.39$ 52.30$ 55.85$ 58.11$ 5.81$ 10.40%
01/02/59 12/31/59 363 60.71$ 53.58$ 57.41$ 59.89$ 6.31$ 10.99%
01/02/58 12/31/58 363 55.21$ 40.33$ 46.20$ 55.21$ 14.88$ 32.21%
COMPARING THE CLOSING PRICE TO THE LOWEST PRICE

95. TAB Journal Page 95
>1% >2% >3% >4% >5% >7% >8% >9% >10% >11% >13% >14% >15% >16% >17% >18% >20% >21% >22% >24% >25% >26% >27% >28% >31%
01/03/11 12/30/11 361 12.5% 12.5% 12.5% 12.5% 12.5% 12.5% 12.5% 12.5% 12.5% 12.5%
01/04/10 12/31/10 361 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6% 20.6%
01/02/09 12/31/09 363 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3% 46.3%
01/02/08 12/31/08 364 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4%
01/03/07 12/31/07 362 6.4% 6.4% 6.4% 6.4% 6.4% 6.4%
01/03/06 12/29/06 360 14.9% 14.9% 14.9% 14.9% 14.9% 14.9% 14.9% 14.9% 14.9% 14.9% 14.9% 14.9%
01/03/05 12/30/05 361 9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2% 9.2%
01/02/04 12/31/04 364 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2%
01/02/03 12/31/03 363 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2%
01/02/02 12/31/02 363 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4%
01/02/01 12/31/01 363 15.3% 15.3% 15.3% 15.3% 15.3% 15.3% 15.3% 15.3% 15.3% 15.3% 15.3% 15.3% 15.3%
01/03/00 12/29/00 361 3.9% 3.9% 3.9%
01/04/99 12/31/99 361 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4% 19.4%
01/02/98 12/31/98 363 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8% 27.8%
01/02/97 12/31/97 363 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7%
01/02/96 12/31/96 364 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2%
01/03/95 12/29/95 360 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9% 28.9%
01/03/94 12/30/94 361 4.4% 4.4% 4.4% 4.4%
01/04/93 12/31/93 361 8.3% 8.3% 8.3% 8.3% 8.3% 8.3% 8.3%
01/02/92 12/31/92 364 9.9% 9.9% 9.9% 9.9% 9.9% 9.9% 9.9% 9.9%
01/02/91 12/31/91 363 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1% 28.1%
01/02/90 12/31/90 363 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4%
01/03/89 12/29/89 360 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2% 24.2%
01/04/88 12/30/88 361 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2%
01/02/87 12/31/87 363 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1%
01/02/86 12/31/86 363 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4%
01/02/85 12/31/85 363 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5%
01/03/84 12/31/84 363 12.1% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1% 12.1%
01/03/83 12/30/83 361 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6%
01/04/82 12/31/82 361 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7% 31.7%
01/02/81 12/31/81 363 7.6% 7.6% 7.6% 7.6% 7.6% 7.6%
01/02/80 12/31/80 364 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6% 31.6%
01/02/79 12/31/79 363 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5%
01/01/78 12/31/78 364 9.6% 9.6% 9.6% 9.6% 9.6% 9.6% 9.6% 9.6%
01/03/77 12/30/77 361 4.5% 4.5% 4.5% 4.5%
01/02/76 12/31/76 364 16.2% 16.2% 16.2% 16.2% 16.2% 16.2% 16.2% 16.2% 16.2% 16.2% 16.2% 16.2% 16.2% 16.2%
01/02/75 12/31/75 363 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4% 23.4%
01/02/74 12/31/74 363 7.6% 7.6% 7.6% 7.6% 7.6% 7.6%
01/02/73 12/31/73 363 5.0% 5.0% 5.0% 5.0% 5.0%
01/03/72 12/29/72 361 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
01/04/71 12/31/71 361 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0% 12.0%
01/02/70 12/31/70 363 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3% 27.3%
01/02/69 12/31/69 363 2.9% 2.9%
01/02/68 12/31/68 364 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4% 16.4%
01/03/67 12/29/67 360 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5% 17.5%
01/03/66 12/30/66 361 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4%
01/04/65 12/31/65 361 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3%
01/02/64 12/31/64 364 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5%
01/02/63 12/31/63 363 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6%
01/02/62 12/31/62 363 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2% 17.2%
01/03/61 12/29/61 360 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1% 21.1%
01/04/60 12/30/60 361 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4% 10.4%
01/02/59 12/31/59 363 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0%
01/02/58 12/31/58 363 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2% 32.2%
54 54 53 52 50 49 46 43 40 36 29 27 26 24 20 17 16 15 13 12 11 10 9 7 5
100% 100% 98% 96% 93% 91% 85% 80% 74% 67% 54% 50% 48% 44% 37% 31% 30% 28% 24% 22% 20% 19% 17% 13% 9%
COMPARING THE CLOSING PRICE TO THE LOWEST PRICE

96. TAB Journal Page 96
Days in
the
period
High Low Average Close
Close
greater or
less than
average
% change
1 01/03/11 12/30/11 361 1363.61 1099.23 1267.64 1257.6 (10.04)$ -0.79%
2 01/04/10 12/31/10 361 1,259.78$ 1,022.58$ 1,139.97$ 1,257.64$ 117.67$ 10.32%
3 01/02/09 12/31/09 363 1,127.78$ 676.53$ 948.05$ 1,115.10$ 167.05$ 17.62%
4 01/02/08 12/31/08 364 1,447.16$ 752.44$ 1,220.04$ 903.25$ (316.79)$ -25.97%
5 01/03/07 12/31/07 362 1,565.15$ 1,374.12$ 1,477.19$ 1,468.36$ (8.83)$ -0.60%
6 01/03/06 12/29/06 360 1,427.09$ 1,223.69$ 1,310.46$ 1,418.30$ 107.84$ 8.23%
7 01/03/05 12/30/05 361 1,272.74$ 1,137.50$ 1,207.23$ 1,248.29$ 41.06$ 3.40%
8 01/02/04 12/31/04 364 1,213.55$ 1,063.23$ 1,130.65$ 1,211.92$ 81.27$ 7.19%
9 01/02/03 12/31/03 363 1,111.92$ 800.73$ 965.23$ 1,111.92$ 146.69$ 15.20%
10 01/02/02 12/31/02 363 1,172.51$ 776.76$ 993.94$ 879.82$ (114.12)$ -11.48%
11 01/02/01 12/31/01 363 1,373.73$ 965.80$ 1,194.18$ 1,148.08$ (46.10)$ -3.86%
12 01/03/00 12/29/00 361 1,527.46$ 1,264.74$ 1,427.22$ 1,320.28$ (106.94)$ -7.49%
13 01/04/99 12/31/99 361 1,469.25$ 1,212.19$ 1,327.33$ 1,469.25$ 141.92$ 10.69%
14 01/02/98 12/31/98 363 1,241.81$ 927.69$ 1,085.50$ 1,229.23$ 143.73$ 13.24%
15 01/02/97 12/31/97 363 983.79$ 737.01$ 873.43$ 970.43$ 97.00$ 11.11%
16 01/02/96 12/31/96 364 757.03$ 598.48$ 670.49$ 740.74$ 70.25$ 10.48%
17 01/03/95 12/29/95 360 621.69$ 459.11$ 541.72$ 615.93$ 74.21$ 13.70%
18 01/03/94 12/30/94 361 482.00$ 438.92$ 460.42$ 459.27$ (1.15)$ -0.25%
19 01/04/93 12/31/93 361 470.94$ 429.05$ 451.61$ 466.45$ 14.84$ 3.29%
20 01/02/92 12/31/92 364 441.28$ 394.50$ 415.75$ 435.71$ 19.96$ 4.80%
21 01/02/91 12/31/91 363 417.09$ 311.49$ 376.19$ 417.09$ 40.90$ 10.87%
22 01/02/90 12/31/90 363 368.95$ 295.46$ 334.63$ 330.22$ (4.41)$ -1.32%
23 01/03/89 12/29/89 360 359.80$ 275.31$ 323.05$ 353.40$ 30.35$ 9.39%
24 01/04/88 12/30/88 361 283.66$ 242.63$ 265.88$ 277.72$ 11.84$ 4.45%
25 01/02/87 12/31/87 363 336.77$ 223.92$ 287.00$ 247.08$ (39.92)$ -13.91%
26 01/02/86 12/31/86 363 254.00$ 203.49$ 236.39$ 242.17$ 5.78$ 2.45%
27 01/02/85 12/31/85 363 212.02$ 163.68$ 186.81$ 211.28$ 24.47$ 13.10%
28 01/03/84 12/31/84 363 170.41$ 147.82$ 160.46$ 167.24$ 6.78$ 4.23%
29 01/03/83 12/30/83 361 172.65$ 138.34$ 160.47$ 164.93$ 4.46$ 2.78%
30 01/04/82 12/31/82 361 143.02$ 102.42$ 119.62$ 140.33$ 20.71$ 17.31%
31 01/02/81 12/31/81 363 138.12$ 112.77$ 128.04$ 122.55$ (5.49)$ -4.29%
32 01/02/80 12/31/80 364 140.52$ 98.22$ 118.71$ 135.76$ 17.05$ 14.36%
33 01/02/79 12/31/79 363 111.27$ 96.13$ 102.99$ 107.94$ 4.95$ 4.81%
34 01/01/78 12/31/78 364 106.99$ 86.90$ 96.12$ 96.11$ (0.01)$ -0.01%
35 01/03/77 12/30/77 361 107.00$ 90.71$ 98.18$ 95.10$ (3.08)$ -3.14%
36 01/02/76 12/31/76 364 107.83$ 90.90$ 102.04$ 107.46$ 5.42$ 5.31%
37 01/02/75 12/31/75 363 95.61$ 70.04$ 86.18$ 90.19$ 4.01$ 4.65%
38 01/02/74 12/31/74 363 99.80$ 62.28$ 82.85$ 68.56$ (14.29)$ -17.25%
39 01/02/73 12/31/73 363 120.24$ 92.16$ 107.44$ 97.55$ (9.89)$ -9.21%
40 01/03/72 12/29/72 361 119.12$ 101.67$ 109.09$ 118.05$ 8.96$ 8.21%
41 01/04/71 12/31/71 361 104.77$ 90.16$ 98.31$ 101.95$ 3.64$ 3.70%
42 01/02/70 12/31/70 363 93.46$ 69.29$ 83.18$ 92.00$ 8.82$ 10.60%
43 01/02/69 12/31/69 363 106.16$ 89.20$ 97.77$ 92.06$ (5.71)$ -5.84%
44 01/02/68 12/31/68 364 108.37$ 87.72$ 98.37$ 103.86$ 5.49$ 5.58%
45 01/03/67 12/29/67 360 97.59$ 80.38$ 91.96$ 96.47$ 4.51$ 4.90%
46 01/03/66 12/30/66 361 94.06$ 73.20$ 85.18$ 80.33$ (4.85)$ -5.69%
47 01/04/65 12/31/65 361 92.63$ 81.60$ 88.15$ 92.43$ 4.28$ 4.86%
48 01/02/64 12/31/64 364 86.28$ 75.43$ 81.37$ 84.75$ 3.38$ 4.15%
49 01/02/63 12/31/63 363 75.02$ 62.69$ 69.86$ 75.02$ 5.16$ 7.39%
50 01/02/62 12/31/62 363 71.13$ 52.35$ 62.32$ 63.10$ 0.78$ 1.25%
51 01/03/61 12/29/61 360 72.64$ 57.57$ 66.27$ 71.55$ 5.28$ 7.97%
52 01/04/60 12/30/60 361 60.39$ 52.30$ 55.85$ 58.11$ 2.26$ 4.05%
53 01/02/59 12/31/59 363 60.71$ 53.58$ 57.41$ 59.89$ 2.48$ 4.32%
54 01/02/58 12/31/58 363 55.21$ 40.33$ 46.20$ 55.21$ 9.01$ 19.50%
COMPARING THE CLOSING PRICE TO THE AVERAGE PRICE

97. TAB Journal Page 97
COMPARING THE CLOSING PRICE TO THE AVERAGE PRICE
Days in
the
period
>1% >2% >3% >4% >5% >7% >8% >9% >10% >11% >13% >14% >15% >17%
1% less
then
the avg.
01/03/11 12/30/11 361
01/04/10 12/31/10 361 10.3% 10.3% 10.3% 10.3% 10.3% 10.3% 10.3% 10.3% 10.3%
01/02/09 12/31/09 363 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6%
01/02/08 12/31/08 364 -26.0%
01/03/07 12/31/07 362
01/03/06 12/29/06 360 8.2% 8.2% 8.2% 8.2% 8.2% 8.2% 8.2%
01/03/05 12/30/05 361 3.4% 3.4% 3.4%
01/02/04 12/31/04 364 7.2% 7.2% 7.2% 7.2% 7.2% 7.2%
01/02/03 12/31/03 363 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% 15.2%
01/02/02 12/31/02 363 -11.5%
01/02/01 12/31/01 363 -3.9%
01/03/00 12/29/00 361 -7.5%
01/04/99 12/31/99 361 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7% 10.7%
01/02/98 12/31/98 363 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2% 13.2%
01/02/97 12/31/97 363 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1% 11.1%
01/02/96 12/31/96 364 10.5% 10.5% 10.5% 10.5% 10.5% 10.5% 10.5% 10.5% 10.5%
01/03/95 12/29/95 360 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7%
01/03/94 12/30/94 361
01/04/93 12/31/93 361 3.3% 3.3% 3.3%
01/02/92 12/31/92 364 4.8% 4.8% 4.8% 4.8%
01/02/91 12/31/91 363 10.9% 10.9% 10.9% 10.9% 10.9% 10.9% 10.9% 10.9% 10.9%
01/02/90 12/31/90 363 -1.3%
01/03/89 12/29/89 360 9.4% 9.4% 9.4% 9.4% 9.4% 9.4% 9.4% 9.4%
01/04/88 12/30/88 361 4.5% 4.5% 4.5% 4.5%
01/02/87 12/31/87 363 -13.9%
01/02/86 12/31/86 363 2.4% 2.4%
01/02/85 12/31/85 363 13.1% 13.1% 13.1% 13.1% 13.1% 13.1% 13.1% 13.1% 13.1% 13.1% 13.1%
01/03/84 12/31/84 363 4.2% 4.2% 4.2% 4.2%
01/03/83 12/30/83 361 2.8% 2.8%
01/04/82 12/31/82 361 17.3% 17.3% 17.3% 17.3% 17.3% 17.3% 17.3% 17.3% 17.3% 17.3% 17.3% 17.3% 17.3% 17.3%
01/02/81 12/31/81 363 -4.3%
01/02/80 12/31/80 364 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4% 14.4%
01/02/79 12/31/79 363 4.8% 4.8% 4.8% 4.8%
01/01/78 12/31/78 364
01/03/77 12/30/77 361 -3.1%
01/02/76 12/31/76 364 5.3% 5.3% 5.3% 5.3% 5.3%
01/02/75 12/31/75 363 4.7% 4.7% 4.7% 4.7%
01/02/74 12/31/74 363 -17.2%
01/02/73 12/31/73 363 -9.2%
01/03/72 12/29/72 361 8.2% 8.2% 8.2% 8.2% 8.2% 8.2% 8.2%
01/04/71 12/31/71 361 3.7% 3.7% 3.7%
01/02/70 12/31/70 363 10.6% 10.6% 10.6% 10.6% 10.6% 10.6% 10.6% 10.6% 10.6%
01/02/69 12/31/69 363 -5.8%
01/02/68 12/31/68 364 5.6% 5.6% 5.6% 5.6% 5.6%
01/03/67 12/29/67 360 4.9% 4.9% 4.9% 4.9%
01/03/66 12/30/66 361 -5.7%
01/04/65 12/31/65 361 4.9% 4.9% 4.9% 4.9%
01/02/64 12/31/64 364 4.2% 4.2% 4.2% 4.2%
01/02/63 12/31/63 363 7.4% 7.4% 7.4% 7.4% 7.4% 7.4%
01/02/62 12/31/62 363 1.3%
01/03/61 12/29/61 360 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
01/04/60 12/30/60 361 4.0% 4.0% 4.0% 4.0%
01/02/59 12/31/59 363 4.3% 4.3% 4.3% 4.3%
01/02/58 12/31/58 363 19.5% 19.5% 19.5% 19.5% 19.5% 19.5% 19.5% 19.5% 19.5% 19.5% 19.5% 19.5% 19.5% 19.5%
38 37 35 32 22 20 17 15 14 9 8 5 4 3 12
70% 69% 65% 59% 41% 37% 31% 28% 26% 17% 15% 9% 7% 6% 22%
TAB Journal Page 97

98. TAB Journal Page 98
Submission Form to TAB Journal
Please use the form below when submitting students’ papers for publication in the TAB Journal.
Email the form and the papers to Barry.Bressler@touro.edu. Watch out for approaching deadlines
set by Dean Bressler in the future.
Student’s Name
Submitting Professor’s Name
Type of Paper
a) Short <=3 pages b) Long > 3 pages
c) Quantitative Analysis d) Qualitative Analysis
Area of Focus
Marketing, Management, Finance, Accounting etc.
Date
Evaluation Criteria Rate on a scale from 1-5
(1 – very weak; 2 – weak; 3 – neither strong or weak;
4 – strong; 5 – very strong)
1. Content Depth: The extent of research effort,
analysis, and depth of knowledge that is covered in
the paper.
1……...2……....3…….....4……...5
2. Practical Implication: The level of applicability to
business life that can be of interest to students.
1……...2……....3…….....4……...5
3. Organization & Structure: Structure of the paper is
clear and easy to follow. Content and purpose of
the writing are clear. Paragraph transitions are
logical and maintain the flow of thought throughout
the paper. Conclusion is logical and flows from the
body of the paper.
1……...2……....3…….....4……...5
4.. Format and Citations: Paper follows designated
guidelines. The document has the appropriate
length as described for the assignment. Format
enhances readability of the paper.
1……...2……....3…….....4……...5
5. Style and Grammar: Rules of grammar, usage, and
punctuation are followed; spelling is correct.
Language is clear and precise. The document is
professional in appearance.
1……...2……....3…….....4……...5
6. Comments: Qualitative assessment of the paper’s
strengths, weaknesses, and ideas for improvement.

99. Lander College of Arts
and Sciences
Division of
Touro College
1602 Ave J
Brooklyn, NY 11230
Phone: 718-252-7800
Fax: 718-253-9455
E-Mail:
Barry.Bressler@touro.edu
We’re on the Web!
Visit us at:
www.touro.edu
Another Reason to Excel
Touro Accounting and Business Journal
The mission of the TAB Journal is to recognize faculty
and highly dedicated students who exceed scholarly
expectations and demonstrate rigorous research,
analysis, and writing capabilities in their papers.
The vision of the TAB journal is to become a highly
regarded publication of top student and faculty
research studies in the field of business administration
for the Touro College and University System worldwide.
Student Editorial Board:
Lilian Hamadani*
Shimon Kreiger*
Sol Lerner, Lead Student Editor
*TAB Society Presidents 2013-2014
Editorial Board:
Dr. Barry Bressler
Dr. Julita Haber, Editor in Chief
Journal Coordinator & Editorial Manager:
Esther Widroff
MANUSCRIPT SUBMISSION PROCESS
Faculty
We encourage Touro College business faculty to submit their top student papers from all
business administration courses for publication in the TAB Journal. Submitted manuscripts
need to be formatted according to the APA style and demonstrate high scholarly standard and
exceed analytical and research expectations. Top papers are selected for publishing by the
editorial board based on rating of content depth, analysis, research, practical implication, paper
organization, structure, format, style, and grammatical rigor. The submission form and
requirements are available from Barry.Bressler@touro.edu. Submission for the next issue is
ongoing. The decision for publication of manuscripts will be announced by the TAB editorial
board.
Students
All current Touro College students taking business administration courses are encouraged to
enhance their efforts on research and writing class term papers so that professors can nominate
their papers for publication in the TAB Journal. Selected authors will be able to acknowledge
their publishing accomplishments on resumes that will surely enhance their academic and
professional advancement. For the next issue, the best student paper will also receive an award
of $100 American Express gift certificate.
Award of $100 Gift Certificate to the Best Student Paper!