http://www.vancouversun.com/news/Vancouver+needs+plan+recession/1404421/story.html
Summary
Vancouver City Council sees the recession as a serious matter and has decided to take matters into their own hands by setting their priorities in place. They have decided that their main concerns were “establishing a mental health advocate, enhancing child care support, and creating a green grants fund”. It was suggested that residents of Vancouver could face a potential property tax increase of more than 11% but city staff have already did some calculations and decreased the increase to 6.3%. City Manager Penny Ballem is already aware of the fact that as taxpayers lose their jobs, they’re hopelessly watching the value of their property decrease, so that’s why Ballem has imposed a hiring freeze at city hall. There is a need for stopping hiring because two-thirds of the city’s operating budget is used towards payroll. Despite the hiring freeze, there are exemptions for any unfilled positions that are sufficient in operating the city of Vancouver. Right now they have in mind a basic recovery plan that will keep taxes low, improve the efficiency of city services and encourage the kind of investment that will create jobs. Such plan includes: cutting spending, introducing zero-based budgeting, using benchmarks, keeping taxes low, and encouraging investments.
Connection
Learning about payroll in Chapter 16, we can relate this article directly and indirectly to the income of the city workers as well as the taxpayers. All over the city, the nation, and even internationally, workers are experiencing lay-offs from their jobs due to the recession. Citizens retrieving their pay checks will notice that their net pay (the amount they are paid) is not equal to their gross pay (the amount they earned before any deductions were made). After determining your gross pay, the employer has to make a whole bunch of deductions which include Registered Pension Plan, Union Due, Income Tax, Employment Insurance, Health Insurance, etc. The deduction for Employment Insurance is for when someone gets laid off from work or they are unable to work due to various reasons that could include health issues. But to tie in with our article, we will take into consideration that the workers have been laid off, which is very common because of the recession. While the worker is at home searching for a job, they are entitled to receive Employment Insurance because they have contributed to it while they were employed. Now that they are unemployed they can have the benefit of a slight income during their transition from the last job to the next.
Reflection
It is very wise of our country to have the workers pay Employment Insurance. This is extremely beneficial to workers that are out of job and out of income to support themselves and their family. So by having the government take a portion of their gross pay each pay period, although it may sound dumb at the time, is actually for their own good. Since while they were employed they contributed to the Employment Insurance fund, now that they are unemployed they will be offered payments out of this fund to assist them as they seek for a job.
Monday, March 23, 2009
Wednesday, March 4, 2009
Chapter 15: Cell phone industry seen facing more trouble
http://www.canada.com/business/fp/Cellphone+industry+seen+facing+more+trouble/1616132/story.html
Summary:
Researcher Gartner claims that demands on cellphone will not recover until late 2010. The Reuters data show that the industry will suffer the worst quarter ever during April-June. During the first quarter of 2009, the industry fell 8.6 per cent. Gartner said, "We do not expect demand to get better before second half of 2010." According to research firm CCS Insight, in the first quarter, handset companies sold 14.3 per cent fewer phones than a year ago. Gartner which tracks the changes in inventory and the actual sales to consumers said that retailers sold about 25 million phones from inventories during the first quarter. It is expected that inventory reduction will continue during the second quarter but at a slow rate of about 10 million phones. Despite the decreasing inventory, there aren’t clear signs of improvement on consumer demand. The trend in Europe is that consumers are opting for cheaper monthly plans or even prepaid phones rather than yearly contracts.
Connection:
Inventory is piling up in the cell phone industry as this article clearly lets us know. This can be related to inventory turnover. Inventory turnover is the number of times a business has been able to sell and replace its inventory in a year. We learned in Chapter 15 that having a high inventory turnover is a good thing. It is a result of the company being able to sell much of the products that they have in stock. The formula for inventory turnover is cost of goods sold divided by the average merchandise inventory. Although in this article we aren’t given numbers, we can assume that the cost of goods sold is the same as the previous years. As for the average merchandise inventory, it is safe to estimate that the numbers are a lot higher compared to previous years, since the article says that companies sold 14.3 % less this year. Take a look at the equation for inventory turnover, the numerator (cost of goods sold) is the same and the denominator (average merchandise inventory) has increased. In this scenario, this would result in a small number for inventory turnover. But we learned that it is bad for the company to have a small inventory turnover.
Reflection:
I understand why the mobile industry is suffering and inventory levels are increasing as time goes by. We can blame it mostly on the economic recession. Citizens tend to hold onto the money they make and are less likely to go shopping. This results in inventory. When inventory piles each fiscal period or even each quarter, it has a negative effect on the company. Having last year’s model in stock and in large quantities just keeps on costing the company. It takes money from the company both by occupying space, which takes away room for newer models, as well as increasing the company’s expenses by not selling. When dealing with inventory turnover, it is ideal for the company to have a high turnover because that would mean that the company is producing just enough and not too much products to keep in stock. Although the cell phone companies wish to achieve this, they are currently not in this situation.
Summary:
Researcher Gartner claims that demands on cellphone will not recover until late 2010. The Reuters data show that the industry will suffer the worst quarter ever during April-June. During the first quarter of 2009, the industry fell 8.6 per cent. Gartner said, "We do not expect demand to get better before second half of 2010." According to research firm CCS Insight, in the first quarter, handset companies sold 14.3 per cent fewer phones than a year ago. Gartner which tracks the changes in inventory and the actual sales to consumers said that retailers sold about 25 million phones from inventories during the first quarter. It is expected that inventory reduction will continue during the second quarter but at a slow rate of about 10 million phones. Despite the decreasing inventory, there aren’t clear signs of improvement on consumer demand. The trend in Europe is that consumers are opting for cheaper monthly plans or even prepaid phones rather than yearly contracts.
Connection:
Inventory is piling up in the cell phone industry as this article clearly lets us know. This can be related to inventory turnover. Inventory turnover is the number of times a business has been able to sell and replace its inventory in a year. We learned in Chapter 15 that having a high inventory turnover is a good thing. It is a result of the company being able to sell much of the products that they have in stock. The formula for inventory turnover is cost of goods sold divided by the average merchandise inventory. Although in this article we aren’t given numbers, we can assume that the cost of goods sold is the same as the previous years. As for the average merchandise inventory, it is safe to estimate that the numbers are a lot higher compared to previous years, since the article says that companies sold 14.3 % less this year. Take a look at the equation for inventory turnover, the numerator (cost of goods sold) is the same and the denominator (average merchandise inventory) has increased. In this scenario, this would result in a small number for inventory turnover. But we learned that it is bad for the company to have a small inventory turnover.
Reflection:
I understand why the mobile industry is suffering and inventory levels are increasing as time goes by. We can blame it mostly on the economic recession. Citizens tend to hold onto the money they make and are less likely to go shopping. This results in inventory. When inventory piles each fiscal period or even each quarter, it has a negative effect on the company. Having last year’s model in stock and in large quantities just keeps on costing the company. It takes money from the company both by occupying space, which takes away room for newer models, as well as increasing the company’s expenses by not selling. When dealing with inventory turnover, it is ideal for the company to have a high turnover because that would mean that the company is producing just enough and not too much products to keep in stock. Although the cell phone companies wish to achieve this, they are currently not in this situation.
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