Journal number 14 – Service Learning Part 2 “#TeamSAVENOW”

As I am writing my 14^th post, it made realize how really time flies. It’s a cliché but there are no other words that would perfectly describe what I am feeling right now. As my first term is officially coming to an end, anxiety and happiness started to creep in.  Anxiety because I’m still not sure whether I will pass my other subject and happiness because after 3 months of juggling work and study I am now already looking forward to longer hours of sleep and rest.

After much deliberation, we decided to conduct our Service Learning at Muntinlupa National High school through the help of Singles for Christ (SFC) last Saturday, November 28, 2015. Before this was finalized, we had gone through many changes such as member and activity changes. We had member changes because three of our group mates are unavailable on the said date and we don’t have any spare time left. On the other hand, we had activity changes because of uncertainty in the schedule of the activity from our chosen organization, Handog Tungkod Project.

Our agreed meeting time was 6:45am at Cash and Carry mall. I was second to arrive there and thankfully I was not late even though I barely had proper sleep as I kept on waking up every other hour since 1 am for fear of being late. Though there was bad traffic specifically on Osmena Highway and in Alabang, we still made it on time.

Most of the group got their education from private institutions and some even from exclusive schools. Our worst dilemma was we might not connect to the students well enough as we are from a different section of the society. Based on the information given by SFC, we did our best to use examples and analogy that they can relate to considering they are still High school students and some of them are not financially well-off. However, through our surprise we connected with them more than what we expected. When it was my turn to conduct my part in the “Financial Literacy Seminar,” I shared to the students the very bad future (2009 Manulife statistics on Filipino senior citizens) that we might face if we don’t do anything today. This is to stress the importance of developing the habit of saving at an early age and starting from small savings. During this time, I also explained to them the consequences of not saving and planning for the future. Furthermore, I asked them how are their lolo’s and lolo’s are doing? Are they financially dependent or are they like what the statistics say that most relies on relative/s for financial support?  Surprisingly, a couple of them said yes and told their story. Personally speaking, I was taken a bit because I can still remember that when I was their age I was shielded by my parents from any financial woes that are affecting my family. This made me have mixed emotions as I felt happy that the seminar that we are conducting will have more impact to their lives and because they are already aware of what is happening to their family. However, I felt sad as I pitied them for being exposed to those at such a young age where ideally they should be enjoying their teens instead of worrying matters that are supposed to be for adults.

Overall the experience was good for everyone. We went there teach and complete a requirement in our ethics class but at the same we also learned from the students. We ended the seminar by taking the feedback from some students and the Team Lead of SFC for that school. Money is often construed as evil. However as we know that it is not; rather it is how the person earns and how he utilizes it that make it evil most of the time. By combining texts from the Bible and scientific findings (financial statistics) we were able to bring the students closer to God in our own way and at the same time equip them with some financial knowledge that will help them have a secure a financial future. In fact, SFC said that they might conduct this yearly as they realize that what we had just taught the students can’t normally be acquired from school.     

Journal number 13 – A reflection paper on the movie "Enron: The Smartest Guys in the Room"

Its APEC season and the next week after our professor will be on a business trip to India. In lieu of the classes that we will miss, she instructed us to watch the movie “The Smartest Guys in the Room” and write a reflection paper about it. This is about the Enron scandal that happened in the early 2000s that shook business world and the accounting practice globally.

Greed, cost-benefit analysis, and management integrity, these are just among the words that I found surprisingly present in most of the cases that we have tackled during the previous classes and this movie. Enron, before the financial scandal was one of America’s top companies with an estimated market value of approximately $70 billion. The film featured Enron’s executives who were involved in unethical practices that took place in the business. The film also portrays its founder, Kenneth Lay’s, humble beginnings and Jeffrey Skilling’s rise and demise in the business world before and after becoming Enron’s CEO. Based on the movie, Enron’s executives were involved in a couple of unscrupulous activities, they are the following:

• Lay found out that two his traders were involved with questionable trades that are putting the company in great risks. Instead of disciplining them and enforcing the company’s code of ethics, Lay encouraged them more as at that moment based on a cost-benefit analysis the company will in a better position than if the trader were fired as at that time that is the only part of the business in total that was making money. Another executive, Mike Muckelroy, found about this and showed his findings to Lay but the latter ignored this and when this was made known to the public he argued that he did not know of this even though there was evidence proving otherwise.
• Skilling got Arthur Andersen’s (America’s oldest accounting firm at that time and one of the original big five accounting firms) approval of using Market-to-Market accounting method. This let Enron cooked their books by valuing their contracts or assets by their potential value which is on the presumption that the company’s stocks will continue to increase in value. This is of course very uncertain especially in the commodities/oil market where prices are very volatile and uncertain. This enabled Enron to make their financial statements look good when in fact their business ventures are not doing so well like the ones they made in India. From a business standpoint, they knew that this would tantamount to misleading their investors that is why they secured the accounting firm’s approval to make it legal and appear that this is in the best interest of the company and the shareholders.
• Enron’s executives took advantage of the power deregulation law in the state of California. As stated by the company’s former Public relations spokesperson, there were several times that the company would not meet its targeted earnings. Miraculously, they will be able to do so in the 11^th hour. Little did he know that the company was manipulating the production of electricity to artificially increase its price to ultimately help Enron meet its financial targets. As a result there were massive blackouts even though there was enough capacity. What’s ironic in this instance is Enron used its resources to find legal loop holes in the free market and used it to unjustly benefit the company. The free market economy concept has actually good intentions behind it, however, because of Enron has done it made it look like that its not the case.
• Lastly, when the masterminds of all the above knew that Enron will eventually collapse, they headed for the nearest exits selling their shareholdings while making the public believe that the company is still doing well. In fact, in the movie, before Skilling resigned, he even encouraged his employees to buy the company’s stock for their retirement. This resulted to many employees losing their pensions and retirement funds when the company became bankrupt.

What’s worse in the case is that Enron has good employees like Cliff Baxter and Sherron Watkins; after finding the above, they escalated the issues to higher management and in this case to Skilling and Lay but the two ignored them. Enron’s collapse would have been prevented had top management listened to them as Watkins told Lay that companies that do come out and admit their wrongdoings were able to move forward whilst if they were found out by external companies they would most likely be dealing with serious repercussions that the company may not be able to overcome.

Truly, Lay’s story was one to be admired about by everyone as he started-out as a small boy delivering newspapers to founding and becoming chairman of one of America’s most valued company - Enron. Initially, I can’t understand how was Lay able to come to convince himself that what his executives were doing was right at the time. Personally speaking, I think that as successful businessman greed got the best of him later in his days as Enron’s Chairman that he was willing to take greater risk for unsustainable and short-term gains than sustainable long-term gains. Furthermore, he was enjoying political power by the backing of the Bush family making him think that he can bend the law according to his will. 

One of the realizations that I have made in watching the film is that we’re not much different for the US even though they are a developed nation while we are not. The only difference is that at least in their country the culprits are trailed and convicted unlike in our country where most of the time no one is convicted especially if they have the political and financial power to do so. Although the Enron scandal tainted America’s reputation in the business world it is also good in a way that the culprits were caught and made answerable to the public. They are in fact currently in prison and serving their jail terms. It also allowed the accounting practice and the business community to place safeguards in check to protect the public and shareholders from people taking advantage of loop holes in the free market to unjustly benefit themselves. Unfortunately, this is not the case in our country wherein there are hardly culprits punished even with widespread traditional and social media coverage. Last year we have the pork barrel scam and until now no one is still convicted and the present administration is still trying have the same by renaming it to Disbursement Acceleration Program. Personally, I think that they are trying to make this legal by making it into a law. On the other hand, very recently, we have the Tanim Bala scam at our airports, however, even with vast resources that the government has on its disposal it was not able to stop the scam completely and determine who the real culprits are. My point here is until someone is convicted, we will never learn as a nation as we have to know what has gone wrong for us to know what is right. Unfortunately, unlike the US, we have a very slow and weak judicial process that makes the powerful able to shield themselves from prosecution and punishment. In our case, one of the senators who allegedly used his PDAF funds to enrich himself is now out on bail and sitting on one of the highest post in our government.         

Journal number 12 – The Ozone Threat: Managing with Uncertainty

For this week’s class we were assigned to present our case study regarding the case that involved Dupont which discovered Chlorofluorocarbons (CFCs) in the early 1900s and was its largest producer globally until 1987 when the company decided to phase out its CFCs division. During that time, the chemical became a necessity in every household as a refrigerant for air conditioners and as aerosols. On the other hand, in the manufacturing industry CFCs are used as solvents. At the time of the case, the CFC market is an $8 billion market which DuPont enjoys having the biggest market share globally.

DuPont as a company also played a great role in America’s success story. In fact, in both World Wars, DuPont was the largest supplier of gunpowder for the US military. They were even the ones that produced the plutonium used in the atomic bomb. Aside from this, other products that made DuPont one on America’s top companies over the past two centuries are their development of nylon and Kevlar. Currently, they hold about 25,000 patents globally and have one of the world’s best R&D capabilities.

Crux of the case:

In the time periods between 1970s and the 1990s, there were several scientists who came up with studies regarding the Ozone layer. Some of them found that CFCs especially the ones being used as aerosol are the main culprits behind the widening of the Ozone Hole while other scientist came up with the opposite result. In other words, there were was already a consensus that something bad is happening to the ozone and some scientific minds claim that CFCs contribute to the ozone depletion, however, there was no concrete scientific basis during those times.

What made the case sensational is that scientists found out that a mere five percent decrease in the ozone levels might lead to 8,000 new cases of skin cancers. Also, CFCs lives are between 20 – 100 years which makes their potential adverse effect to the nature irrevocable if proven later on which actually happened in 1987. As there was no complete agreement in the scientific arena about the potential adverse effects of CFCs to the ozone layer, DuPont argued that they should be allowed to continue production of CFCs until such time a concrete study is done to prove its adverse effects. This is even though the safety of all inhabitants of Earth will be put at risk and in uncertainty.

To complicate matters further, some groups claim that even before the Montreal Protocol and the recorded widening of the Ozone Hole in the Artarctic, DuPont has already developed technology for safer alternatives (Hydro fluorocarbons or HCFCs) but chose not to shift production in order to increase demand and ultimately increase its price.   Also when a local ban in the US was put in place, DuPont instead of completely abiding shifted its focus on developing countries which has no ban in place. Thus it really squeezed what it can from CFCs before it phased it out of the market despite its potential adverse effects to the environment.

Conclusion:

As I have stated in our presentation, it was not easy approaching this case as no entity or person was really held responsible over the adverse effects done to the ozone. We tried exploring DuPont’s point of view in aftermath of the case, however, we discounted it eventually as it was hard to think that DuPont will become a better citizen of Earth. This was based on our research that after this case the company was also involved in another case involving disposal of toxic wastes in deep in the earth that led to the poisoning of water supply for 131,000 people in Delaware in the US. Before all of this, the company was also involved in the production of Tetraethyl lead (TEL) that caused the decrease in IQ of two generations of Americans. Just as the previous cases mentioned, DuPont made every single way possible to keep production of this products even to the extent of establishing dummy organizations to deceive the public.

In the end, we conclude that the problem with DuPont is the integrity of management. They were ready to make decisions as long as they can justify its legal even though it’s not ethical and sustainable for the environment. Based on our research, the company still remains one of America’s biggest and influential companies at the same time being among the dirtiest ones as well. This made us approach the case as how should the company make a decision that is ethical and sustainable for all stakeholders during the period that there was scientific uncertainty about the adverse effects of CFCs to the ozone layer.

We recommended that DuPont should have completely shifted to the production of alternatives immediately while still investing in R&D for superior alternatives as it was later on proven the HCFCs are also considered as an Ozone Depleting Substance (ODS) later on but is more environmentally friendlier than CFCs. DuPont may argue that it will have significant impact to their profits, however, based on our research this will only be temporary especially in the short-term because at that time they were the only ones that have this technology and is in position to dictate and lead the market. By doing so, they will be able to protect their profit margin and most importantly keep people’s safety and the safety of the future generation which will also be the source of the company’s future profit. 

Journal Number 11 – “Human Rights”

According to the United Nations Office of the High Commissioner for Human Rights (OHCHR), “Human rights are rights to all human beings, whatever our nationality, place of residence, sex, national or ethnic color, religion, language, or any other status. We are all equally entitled to our human rights without discrimination. These rights are all interrelated, interdependent and indivisible.”

The above is what we discussed during the last session. I personally believe that our country has improved a lot with regards to this issue but we still got a big room for improvement. For example in big cities like Makati and Manila you will not probably notice human rights abuses that much but when you go the far flung areas like in Mindanao, you will see be shock to see and be in disgust with the situation there.

At the moment, as a student and a citizen what I can do to help with regards to the issue is very limited. However, I am very willing to do whatever I can. Based on studies and history, we as a nation has a history of being discriminative to people even to those that are our own. This is especially the case for those that are in ethnic tribes, the less fortunate, and the uneducated. We tend to judge people base on where they came from, what the color of their skin is and what’s their status in the society. As I’ve stated above, I believe we have improved a lot but we still can and should improve with regards to this issue. What we can do as a private individual is utilize what we have studied in school and was taught to us in church. Though we have the natural tendency to discriminate, we can always stop for a moment to think and rationalize things base on our knowledge before we act or speak. If we do this we can make our environment better in our own little ways and if everyone does this then perhaps we can have a bigger impact to our nation and maybe to the world also.

Journal Number 10 – “CSR”

What is Corporate Social responsibility? According to the video presented in class, it is “good business for good society for today and tomorrow. “ Personally speaking, I completely agree with this definition as it is very simple and it is what I have come to realize after all of the previous class sessions. This is especially the case when we have discussed how SAS was able to sustain double digit growth despite competition and significant events that affected the global markets. They have achieved this feat by investing significantly in their employee’s welfare. They have provided benefits which were unheard of and  other companies would not normally provide like free day care for employee’s children and restaurant quality meals to name a few. This lead to employee job satisfaction that further lead to dollar amounts for the company as employees are more motivated and inspired to work.

What struck me the most during this session is it enlightened me more about what really CSR means. Previously, I view it as something done only by big corporations that has enough means to have such programs in place and because they are required by law. However, after this session I now know that yes companies use this as a tool for marketing but it is not just that as at the same time it encourages others to do the same. In essence, it is a win-win solution for the company as it is being rewarded for doing good to the society.

In addition to the above, I also realize that indeed it pays to appreciate how the company makes money than how they spend it. Here in our country, there are many tycoons who do admirable philanthropic acts through their foundation. People look up to them and praise them as normally people associate CSR with charity. However, if you look a little deeper you will find that they may be committing unethical practices in generating money from their businesses which funds the admirable programs of their respective foundations. I praise them for their charity but I do not agree that they will justify the means because of the end result. I believe that they can still achieve the same results without resorting to what they are currently doing as being a responsible member of the society is proven around the world to pay back dividends in the future. 

Journal number 9 - Ford-Firestone Debate

Background of the case:

The Ford-Firestone Case is about a huge business debacle between Ford Motor Company (Ford) and Firestone Tire & Rubber Company (Firestone) that caused hundreds of lives and billions in damages for both companies. This controversy also tore the long-time relationship of the two giants in the automotive industry, which began in 1896 when Henry Ford—the founder of Ford-- asked Harvey Firestone—the founder of Firestone-- to create tires for his experimental vehicles. It was also known for the high number accidents involving Ford Explorers fitted with Firestone tires.

In 1990, Ford launched the Ford Explorer, a Sports Utility Vehicle (SUV) that boomed the sale of SUVs in the United States market. Ford sold 3.6 million units of Explorer, which quickly became the number one selling SUV in the US, booking Ford profits.

In 1998, Sam Boyden of State Farm Insurance received a call from a claims adjuster about a case of Firestone tread separation. Upon his investigation on the inquiry, he discovered several cases of claims pertaining to cases of Firestone tread separation. After seeing the Firestone tire cases filed, he sent an email to the National Highway Traffic Safety Administration (NHTSA)—an agency under the Federal Department of Transportation—to notify the unit.

In May 2000, after recording 90 complaints, including four deaths, NHTSA formally started an investigation. The investigation covered the AT, ATX, and Wilderness tires, totaling 47 million, all made by Firestone from 1990 to 2000. During the succeeding months, the number of complaints as well as the number fatalities was rising. In August 2000, Bridgestone-Firestone, announced a recall of its 15” tires, which included those installed in Ford Explorers (model 1991-2000).

Crux of the case:

The case suggested that both Ford and Firestone were aware of the tread separation incident earlier than when initial complaints were filed against the 2 companies. Even though similar incidents were reported outside USA such as Saudi and Venezuela, Ford held back in rectifying the situation. This is because the company is too much focused on dollar revenue and loss. They took a chance on the possibility of not having similar accidents, therefore avoiding a huge recall cost. Also, as the profit margins on Ford SUVs are significantly higher than other models, they opted to forcefully meet their target release date by implementing workarounds to mitigate safety risks. It shows how the management culture is leaning towards market share dominance and meeting deadlines to ultimately gain more profit.

Furthermore, before shutting down the Firestone’s Decatur plant and laying-off a number of employees due to the aggregate costs of tire replacements and product liability lawsuits to Firestone, union workers at the plant were in a 10 month-old-strike in 1994. The plant was operating with replacement workers and managers. The change in work shift schedule from 8 to 12 hours resulted in a labor strike. Performance and quality of work from the laborers were greatly affected due to extended shift hours and outdated manufacturing equipment. This has led to the reason why most of the incidents received were from tires manufactured in Decatur plant.

Argument:

Firestone may argue that the rollovers are the results of  design flaws on the Explorer as there are evidence that Ford rushed its design. In addition to that, Ford tested the Firestone tires on a mule rather than an actual Explorer as there is none available during the time of testing.

On the other hand, Ford may argue that the main reason for the accidents involving the Explorer are due to the defective and poor quality tires that Firestone produced. This is because when they used other tires such as Michelin there were significantly less occurrences of accidents or there are hardly any.  

Impact of the case:

This does not only lead to the end of a century long partnership between great American companies that are greatly admired by others but it also opened the world's eye to other early warnings that may lead to a catastrophic event. In this case, there were already signs such as those reported accidents in the Middle East but they were ignored as they were not given that much of an importance in America as it happened in a different country.

Conclusion:

In my opinion, Firestone and Ford should have just collaborated with each other to combine their resources and address the needs of their customers whether it be financial for those that were already injured or a recall and replacement for those that were fortunately not yet involved in an accident. By doing this, they could have at least preserved their reputation to the public that may have saved  the customer confidence that they have lost in the following years.

In conjunction to the above, it is clearly seen that both of them have faults. Firestone produced defective and poor quality tires while Ford should have done further testing on the Firestone tires especially when complaints are pilling up. They know something was wrong but because of their long relationship with the other they decided to take their words as it is. 

Most importantly, Ford can not argue the fact that when other tires were used instead of Firestone, there were hardly an accidents. This is because they should have taken full responsibility as people will buy a car because of the brand of the car (in this case Ford) and not because of the brand of the tires.  

Journal number 8 – Service Learning Part 1

For our Service Learning our group decided on helping Handog Tungkod Project. Our objective here is to give canes to senior citizens.

Before we decided on the above, we were considering teaching kids financial planning (how to save money). Personally, if given the chance, I will pursue this as it is a personal advocacy of mine. I often think what would have happened if I knew how to save and invest when I was still in school. It’s not that I don’t save; actually I am very disciplined with money. Unfortunately, back then the only way that I knew is to keep my savings in the bank. The problem with this is you save money for the longest time that you can but in a time of need it devaluates because of inflation and most of the time I zeroed it out as it does not grow. The reason we did not pursue this is because we couldn’t get an organization to conduct this seminar.  We thought of schools but since our schedule only allows us to have the event on a weekend, as we are all working full-time this was discounted. Finally, we decided to look for an orphanage but we couldn’t get any confirmation from the orphanages that we reached out to.

Our third option was to conduct a sports event in a community or an organization for children. What we hope to achieve here is to bring them outdoors away from their gadgets like PC, mobile phones, tablets to name a few. We were thinking of naming the event as “No CoC day” or “No Dota day” as children nowadays tend to play more electronic games which is proven to be very unhealthy compared to traditional outdoor games. One of our group mates has already a sponsor institution in the works, however, as with the previous; we were again to have confirmation from the organizations that we reached out to.

Overall the experience was very interesting and enlightening in the sense that we were going different directions at one point but thankfully we have a more concrete direction at the moment. It also made realize that starting my mba is really worth it as I am learning a lot from my group mates. I may not be in their industry but just sharing to them my thoughts and hearing theirs is already a way of learning. Most importantly, while learning, we will also be able to help or give back to the community in the very near future that otherwise will be impossible on my own.