“The Story Of Bernard L. Madoff, The Man Who Swindled The World” By Deborah And Gerald Strober Sample Assignment

If one is curious in knowing how Bernard Madoff was able to pull off the biggest Ponzi scheme it is a good idea to read the book The Story of Bernard L. Madoff, The Man Who Swindled the World, written by Deborah and Gerald Strober. The Strobers have conducted a detailed study into the matter by interviewing several people who had dealt with Bernard Madoff. They have also gathered important information about the several transactions done by Madoff in swindling his clients.

In fact, the authors have made attempts in piecing together a fraudulent act that has been referred to being a fraud that surpassed all proportions. A bird’s eye view has been given in the book about the kind of tricks that Madoff used, although there are several questions that still remain unanswered.

People still wonder as to how Mardoff could have managed to pull off such a big fraud that extended for a long period. The questions that arise about him after getting to know his ways are many; whether he was a sociopath, mentally disturbed, or whether he was entirely rational though completely amoral. The book is divided into four parts along with nine appendices that are very appealing and significant. The first part of the book relates to the confessions and subsequent arrest, details about the victims and the loss of Jewish wealth, and about the fact that the Jews were not the only community that was made victims.

The second part narrates about Madoff and his family and gives a detailed account of Bernard in terms of where he grew up, his school, and other related information. Part three provides information about the way the shocks were absorbed and how the consequences were dealt with. It is in this part that the reader gets to know the story of the victims in regard to the antisemitic vox populi. Part four delves into the future course of action after the revelation of all facts and the kind of punishment that should have been given to the culprit.

Born in New York in 1938, Bernard Madoff was brought up in Queens. His shrewdness in money matters did not surface while he was in high school. It was in 1960 that he invested $5000 and formed his company, Bernard L. Madoff Investment Securities, LLC, (BMIS). He started making his fortune very discreetly and dared to do things which other brokers would never have thought of doing, for which he began to be called a financial wizard and a pioneer in his field.

Bernard Madoff was a well-known and respected financier, former chairman of Nasdaq, and member of elite clubs. After having established his firm that dealt with financial securities, he performed extraordinarily well and made billions of dollars in assets. Very few financial experts knew him before the 1980s and fewer were aware of when he initiated the Ponzi schemes. When the scandal became public, Madoff was arrested and everybody was shocked to find that the person on whom they had placed their trust with their money, was actually a thief. A number of people lost millions of dollars while others were cheated of their entire wealth on account of handing over their retirement funds to him. There was doubt whether Madoff had actually invested the money at all.

People were perplexed as to how investment advisors could confirm that they had carried out the due diligence about Madoff’s activities. One investment advisor had gone to the extent of declaring that an investigation agency had been hired to make a thorough background check about Madoff and his fund managers. It also came to light that investment advisors had handed over the money of investors without their consent to Madoff and without revealing that he was giving them a commission of 1.5% on such investments. Investigations are done by the SEC also did not unearth any kind of fraud on the part of Mardoff.

Questions were subsequently raised about the authenticity of such investigations and about the competency of the investigators. The authors have raised the question about how much the SEC actually knew about Mardoff. Above all the SEC had ignored the warnings of Harry Markopolos, an eminent financial figure, who consistently warned the agency about the malpractices being adopted by Mardoff.

It is surprising how Madoff was able to carry out his nefarious activities from Palm Beach, Hamptons and Manhattan by clandestinely watching over rich neighbours, joining their elite clubs and by establishing his trust in them. It was not long before he exerted a magnetic pull on such people who literally begged him to invest on their behalf. One person interviewed by the authors hit the target when he described Madoff as an extremely shrewd person who understood human psychology, especially in regard to the human greed for making fast money. When people asked him for his secret about his investments he simply said that it was a proprietary strategy.

Bernard Mardoff was found guilty on 12th March, 2009 and was sent to jail. Although he apologized for his misdeeds it is doubtful whether people will get to know the actual story behind such a massive Ponzi scheme, the likes of which have never been witnessed in history. Having read the book one is bound to consider that he could not have done all this alone. The big question arises as to who all were involved with him in such a hideous crime.

The Strobers have done a commendable job under the prevailing circumstances. There does appear to be an element of haste in their work and some repetitions have been observed in the book. There are a number of quotations which have been appropriately and meaningfully placed in focussing on the actual events. I believe this is the right approach in making the required narrations which have been made with lot of clarity and authenticity.

The sequence of events as narrated by the authors is very exciting in exposing Madoff’s criminal intent. It is highly praiseworthy that the authors have handled the issue of Madoff’s Jewish origin very delicately in exposing that he had swindled a number of Jewish charitable organizations and associations. The authors have used an exemplary tone in notifying that it was organizations from his community that suffered the maximum.

Works Cited

Strober Gerald, Strober Deborah, Catastrophe: The Story of Bernard L. Madoff, the Man Who Swindled the World, 2009, Phoenix Books.

Porter’s Generic Strategies Analysis

Choosing what position to take in the market in which a business function is an extremely important part of a company’s strategy. Michael Porter identified three basic strategies which cover the range of positions that a business can take to compete in the market.

These three strategies are

Cost Leadership

According to this strategy, a business competes by applying cost-cutting measures to all levels of its value chains. A low-cost producer will be hitting the highest profits in a market that is selling standardized goods at relatively standardized rates. In such a situation low cost of production is not reflected in lower prices, but the company then has a bigger margin of profit which it can reinvest back into the business. In other situations however a low-cost producer’s edge in the market might be that the producer is offering the good at the cheapest rates.

Differentiation

This strategy implies that a business is offering a unique addition to the product that is being sold in the market and in such a way that it adds value to the product from the customer’s perspective. This value addition can be in any form, providing better services, adding a new feature to the product, or maybe even giving more variety to the customer. If the value addition is perceived as valuable by the customer then the producer will be able to transfer the costs to the customer or maybe even get a higher margin of profit.

Focus Strategy

The focus strategy involves identifying various market segments and then choosing a narrow segment and modifying the product to suit that particular segment. This strategy might work for smaller businesses that are struggling to compete with larger businesses in terms of efficiency or even variety. Identifying a narrow segment means that businesses can understand that segment thoroughly and be able to serve it better than a larger more broad-based competitor.

Each strategy carries with it its own culture and therefore t might be hard and risky to implement more than one strategy in the same business, however, narrowing one’s focus to just one strategy might also end up hurting the business.

The model below serves to summarize the model:

porter's generic strategies

If we look at where Du stands when considering Porter’s strategies we realize that the actual implementation of the model is slightly more complex. Looking at it from one perspective we can see that Du is focusing on differentiating its product from those in the market. It seeks to tailor its products according to the needs of the various customers and to value add o the product to make it more appealing to the customer. However, on the other Du has been increasing shareholder value through profit maximization by keeping costs low. It has even partnered with Nokia to keep its costs as low as possible. This implies a cost focus. This would imply two diverging strategies which are not recommended by Porter. However, in the case of Du, we can see that it has certain advantages which permit it to follow both paths. Du has a significant edge because it receives a significant government subsidy. In addition to this government regulations have created tough entry barriers for competition in the market giving Du a significant edge.

Ansoff Matrix

Ansoff Matrix was introduced by Igor Ansoff to categorize a business’s growth strategy by taking a combination of options involving existing and new products and markets.

ansoff matrix

Market Penetration- This is the least risky option for growth since the business is sticking to the products and the markets that it knows. The business is seeking to increase its market share. This strategy cannot be applied indefinitely and eventually continued growth will require other strategies.

Market Development- This means that the business is selling the same product but looking at new market segments to which to sell. This strategy will work best if the core competency of the business is products and not customer segments.

Product Development- Product Development is when a company sticks to the same market but explores new products. Unlike the Market, the Development strategy will work if the business’s core competency is its customer’s and not its product.

Diversification-This is the riskiest of all strategies since a business is making new products to sell to new customers. It’s a completely unfamiliar area

If we look at Du then basically we can place them in two of these categories. The first one is to increase penetration in the market. As referred to earlier in the paper, Du plans to increase its penetration in the UAE market from the present 2.498 million active customers to 4 million subscribers in the next three years. This indicates a clear strategy of market penetration, which simply involves increasing market share (which Du intends to increase from 25.5% to 50 % in the coming years). However, in addition to this Du intends to pursue a strategy of product development. Du realizes that because of the variety of the products in the market and the fact that customers are becoming increasingly demanding, means that new products need to be evolved. This implies a strategy of product development, which means selling new products to the same market segment.

References

Ansoff Matrix QuickMBA.

Generic Strategies – Michael Porter (1980) Marketing Teacher. Web.

Porter’s Generic Strategies Mindtools.

Porter’s Generic Strategies QuickMBA.

The Ansoff Matrix ‘Mindtools’.

Footnotes

  1. Web.
  2. Web.

Wal-Mart’s Efforts In Global Expansion

Introduction

Wal-Mart, the largest retailer in the world, was founded in 1962 by an American Sam Walton in Arkansas State in the US. It did not start international expansion until 1991 when it opened Sam’s club in Mexico City. Since then it has expanded its international business to 13 countries in Latin America, Europe, Asia and Canada. In Latin America and Asia, it started from scratch while Europe and Canada entered the market through acquisitions. This paper summarizes Wal-Mart’s efforts in global expansion in regard to efforts made at globalization, challenges encountered in the process of globalization, and mistakes and successes made in the efforts (Deresky, 2008).

Efforts in globalization

Wal-Mart’s global expansion started in 1991 after the death of its founder, Sam Walton. His successors realized that if they waited any longer to expand to other countries, they would lose the window of opportunity to other retailers and create a gap that would be hard to close. It, therefore, needed to move fast. They elected a president for international business, Bob Martin, who moved with speed to a neighboring country, Mexico, and later to Brazil and Argentina. After operating in the three countries for three years, the company had learned enough and entered the Canadian market by acquiring a Canadian retailer Woolco, with 122 stores. In Canada it faced stiff competition from established and large stores such as Eaton’s and Zellers, but, eventually emerged as the largest store by the end of 2005 with 272 stores and 6 Sam’s clubs. From here, Wal-Mart moved to Europe targeting the UK and Germany markets where it operated with various degrees of success but, eventually exited the German market in 2006 terming it as a difficult market (Ball, Geringer, MuCullock, McNett & Minor, 2008).

Wal-Mart entered the Asian market in 1996 when it opened in the Chinese market. It experienced problems immediately and adjusted to become the biggest foreign retailer by 2006 with 46 supercenters, 3 Sam’s clubs, and 2 neighborhood markets. This was followed in 1998 by the South Korean market, which had just been liberalized to allow for foreign retailers. The company bought Makro stores and opening up new stores in the capital city of Seoul and Taejon. Problems soon cropped up of poor choice in location and tastes and as was the custom with the company, they quickly learned and adapted to local tastes. This saw them grow and expand to Japan in 2002, where they started by acquiring a 6.1 % share of Seiyu, a large supermarket chain. The company is looking at the prospects in India and Russia, countries that will present a different set of challenges but as is the motto with Wal-Mart, they will learn from these experiences (Ball et al., 2008 & Deresky, 2008).

Wal-Mart Challenges in globalization

It has encountered technical constraints in Logistics and transportation in different countries. High levels of efficiency were hampered by lack of modernized suppliers in China. Technological conveniences such as bar coding were not standardized and retailers had to recode themselves or distribute labels to the suppliers. These are added costs to the process and an obstacle to efficiency characteristic of Wal-Mart. In Germany, the company faced the same inadequate technological constraints as they tried to introduce to suppliers their advanced information systems and inventory management (Ball et al., 2008).

Integration of the Wal-Mart culture in the USA to its international business was challenging. It had to take along the cheers, Sam Walton quotations and pictures, the focus on the customers, EDLP to international subsidiaries (Deresky, 2008). The practice of selecting goods from stores and having clerks bag them with no bargaining did not auger well with the German shoppers who are used to haggling their purchases. Also, bans on romantic involvement between supervisors and employees of Wal-Mart were challenged by their associates in Germany leading to lawsuits (Ball et al., 2008).

Another challenge for Wal-Mart in its globalization Endeavour was bureaucracy and red-tapism in some of the countries it has subsidiaries. In China, graft by government officials and long delays in the approval process proved cumbersome. They had to appease the government officials by sponsoring visits to Wal-Marts headquarters in the US, supporting local charities among other things (Ball et al., 2008).

Wal-Mart faced stiff competition from other big retailers on its entry to the European and Canadian markets. These were strong and well entrenched in the markets such that it was difficult for Wal-Mart to utilize its internal growth as a competitive advantage. In the UK the Tesco group was a major rival and in Canada, Eaton’s, Zellers and Bays (Upbin, 2004).

Mistakes made in globalization efforts

In china, it entered in 1994 and immediately encountered problems due to poor selection of merchandise and location. They for example stocked paper towels which the majority of Chinese did not know what they were or thought were some luxury items. Another brand was with matching kitchen items such as curtains, a towel which they learned people made them at home instead and the extension ladders stocked in American stores. In South Korea poor choice of merchandise and location that is outside the city center. In Mexico, they had stocked tennis balls that they did not realize can’t bounce well in high attitudes and huge lawn mowers stocked in US markets that locals just looked with curiosity (Ball et al., 2008).

In Germany, it forced its system of acquisition which involves fast acquisitions of existing stores but failed. It acquired two large companies in two cities in a year which brought challenges in management due to inadequate infrastructure in Europe. It had to bring American Expatriates to most management positions which were lacking in German language skills. The supplier also resisted the information systems and management inventories that the company used (Deresky, 2008).

Also, in Germany failure to sign an industry-wide collective bargaining agreement with the labor union created problems for it in the country. Another mistake the company made in this country was to implement its policy on bans on romantic involvement between supervisors and employees of Wal-Mart. The bans were challenged by their associates in Germany leading to lawsuits that are a distraction and an added cost. The company eventually dropped them (Deresky, 2008).

In Mexico designing and construction of extensive parking lot which they realized only tired the shoppers as they crossed to get to the buses. The widely used means of transport was buses rather than personal cars as they had thought (Upbin, 2004).

Things Wal-Mart has right in international expansion

Its tendency to learn from mistakes made. This is helped by the popular 7.30 am Friday meetings where postmortems of both failed and successful operations are done by operations staff from 36 regions every week. The staff flies to the company’s headquarters in Bentonville, Ark every week for hours-long meetings where experience and ideas are shared (Upbin, 2004).

Decentralization of decision-making is another successful idea Wal-Mart has implemented in its expansion mission. Country presidents of Wal-Mart were given the authority to make and implement decisions so as to avoid delay by the chief financial officer John Menzer. To this effect, they handle their own merchandising, sourcing and real estate (Deresky, 2008).

High ethical standards are maintained everywhere Wal-Mart opens its doors by treating all their customers well regardless of the country they are in the same (Deresky, 2008).

Wal-Mart adapts to local tastes, culture and products to suit local customers. In Mexico, their stores stock cheese, meat, and produce that fits the local diet. Promotions also target the local consumer (Deresky, 2008). The same is adopted in its Chinese market where it markets mass products from Chinese manufacturers and farmers. It has brought products from little-known parts of the country such as hams, oats and mushrooms from remote and rural provinces (Ball et al., 2008).

Emphasizing customer service and broader merchandise mix in competitive countries such as Brazil. Here, Wal-Mart had stiff competitors in French retailer Carrefour and other Brazilian retailers who outdid Wal-Mart in Prices because of strong relationships with local suppliers (Ball et al., 2008).

Conclusion

Wal-Mart has expanded globally to become the largest company in the world. It has extended its subsidiaries to 13 countries in the world in Latin America, Asia, Europe, and Canada with various degrees of success. In its efforts, it has encountered many challenges and conquered some to be a world leader in a retail business. In this journey, it has done things that have resulted in success and made mistakes that have cost the company but, which it always learns from. The company has plans to expand further and is looking into future prospects for expansion to other countries such as India and Russia.

Works cited

Ball, D. A.,Geringer, M. K., MuCullock, W. H., McNett, J. M. & Minor, M. S. International Business. McGraw-Hill Irwin, 2008.

Deresky, H. International management: managing across borders and cultures. Prentice Hall, 2008.

Upbin, B. Wall-to-Wall Wal-Mart. Forbes 2000, 2004.

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