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There is simply no rational for the CEO of Toyota to agree to an “inquiry” by special interest driven congress members.  With one exception, there is nor should there ever be a congressional oversight board reviewing how business is conducted including how business problems are being handled. That exception is an obvious violation of the constitution.

The US Congress has already demonstrated massive incompetence in fiscal responsibility so what the hell do they think they are about to accomplish by putting a legitimate business on trial. The US Congress does not even know what they are doing yet alone evaluate what someone else is doing. Members of Congress may know how to drive a car but that does not mean they know how to manage  a car company. Haven’t they learned from the GM fiasco where we the American people have allowed our President and Congress to drive up the deficit by bailing out a company that has sunk so  deep the American taxpayers will not be repaid in full.

Damage control is now the number one priority for Toyota and they don’t need a committee that is from a Congress whose idea of damage control is to hold a politically based public view of questions prepared by people who are not even members of Congress. It solves nothing. Toyota has problems. There is an obvious quality control problem and a cultural problem. The cultural problem is obvious from their lack of aggressive communication and damage control related to defects.  The marketplace will actually sort this out not the US congress.

As for Toyota, it is amazing that in 2010 an international business seems void of sound damage control and public relations practices. There are numerous examples that serve as best practices guides when a company is involved in a negative situation. One I often point to as a great positive example is the way Johnson & Johnson handled the Tylenol recall in 1982. However, even they may have forgotten how well  and fast they recovered from that episode since more recently there is increasing evidence Johnson & Johnson did not react as fast or well to problems with certain products recalled earlier this year.

Solutions:

Companies like Toyota, Johnson & Johnson normally have policies in place that define the quality standards and quality culture of the business. They also have boards that have fiduciary responsibility to ensure executives running the business are doing their job in all areas including quality. An effective management system includes regularly addressing how the quality culture and standards are implemented and not just “dust collectors” on company shelves. Product problems do not universally mean there is a general breakdown in quality control. However, it is clear the quality related management system for Toyota and maybe for Johnson & Johnson either no longer in place or broken.

Sending you energy of health, happiness, prosperity

Steve Pohlit

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About: Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies.  Steve is a business owner and an expert business consultant focused on building profits and net asset value. He is very experienced with Internet marketing and social media marketing.  All articles published by Steve unless specifically restricted may be freely published with this resource information.

Retail sales during the  Thanksgiving and Christmas holiday season are followed by the news media very closely.  This is because consumer spending is a key economic barometer and the annual holiday season accounts for a large  percentage of total annual retail sales. Some estimates are that the fourth quarter retail sales account for more than 30% of total retail sales reported by department stores, specialty stores and mass merchandisers. The percentages can vary widely. For example December sales for jewelry stores account for 23% of the total annual sales.

“This November, (same-store) sales are going to be incredibly important to gauge the state of consumer spending, and thus fourth-quarter earnings and stock trajectory, and it’s also an important statement about the economic recovery,” said Deutsche Bank analyst Bill Dreher.

Comments like this from Bill and others may not be accurate.  I learned how to analyze retail performance from experts responsible for running multi-billion dollar international businesses.  These lessons helped me tremendously in operating my own retail business and in my business consulting work with other retail companies.  Consider the following:

Same Store Sales Can Be Very Misleading

Same store sales are when you compare the sales in one period, for example November, with the sales from that same location the previous year. Seems simple enough but it is not always straight forward. For example, consider one store.  What is your conclusion if the store just opened the first of  November last year or if a major competitor closed a location near you this year?  There are many variables that can affect same store sales and you have to be careful in knowing you have true comparability.

Consider 2009, the same store sales that will be reported this year are being compared to 2008 which is considered one of  the weakest retail sales periods ever. At the company level a moderate increase in same store sales this year may not be a reason to celebrate except that of course it is better than a decline.  Regardless of the results, retailers must go deeper than looking at the aggregate numbers.  They must keep “peeling back  the onion” until the lowest common denominator is evaluated and that is at the item level.

Same Store Sales Are Not A Direct Indicator of Profits

Many retailers promote heavily in the holiday season. This is part of the marketing funnel.  Hot items sold at or below cost  are used as lead generators.  The Internet has educated shoppers on finding the best deals.  This has resulted in  add on sales  dropping which means more of the sales being reported on a monthly basis have lower profit margins.

Keys To Successful Retailing In This Economy

First point is the foundation of  a profitable business in any industry is largely the same.  Companies make money when they offer what people want at a profitable price.  In retail, customers often want a shopping experience that goes beyond price. For example, a recent testimonial from a customers experience on Black Friday demonstrated the success of a much smaller retailer with this customer vs. the major competitor. While having a slightly lower price for the laptop offered, the major retailer did not have any “unallocated laptops”   at 5 in the morning even though the item was heavily promoted. On top of that the crowds there were not pleasant to navigate.  The competing smaller chain, had inventory available and a more pleasant shopping experience.  So you know who got the business and a repeat customer.

Off line, location is increasingly important as well as the overall appearance inside and outside.  Large retailers win the game store by store.  When demographics and traffic patterns change, and they always are, the store needs to change as well.

Customer shopping experience is major for building customer loyalty.  This is mostly how customers are treated by staff when shopping.  This is the one area where many retailers fail.  There are great examples of customer service but they are not the norm.  On line, ease of navigation, speed of checkout and access to customer service are key. Many retailers with web sites pay little attention to the customer service that is needed.  People have questions and at times returns or exchanges may be needed. How this is handled is key.

Have you noticed the most ridiculous new message you get when calling larger customer support lines?  It goes something like this: “Due to heavy call volume, your wait may be longer than normal. Many questions can be answered at our web site.”  I don’t know about you but when I hear that message, which I do with increasing frequency, I think …this company has problems.

At The End of The Day, Profit Must Be Made

As a business consultant and coach, I always look to the profit trends and what is the practical near term strategy for strengthening profits.  Every  business must earn a profit to survive and grow.   There is always an opportunity to improve business performance.  It requires defining the performance targets then establishing  a disciplined process for meeting or exceeding those targets.  That process always works when the process is worked.

Sending you energy of health, happiness, prosperity

Steve Pohlit

Business Consulting, Executive Coach
Turnaround/Crisis Management
Temporary CEO, CFO, Controller Services
International Business Resources

Social Media Services
New Digital Media, Inc.

727-587-7871
Email

About: Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies.  Steve is a business owner and an expert business consultant focused on building profits and net asset value. He is very experienced with Internet marketing and social media marketing.  All articles published by Steve unless specifically restricted may be freely published with this resource information.

The reason this headline is so important is because while many companies and entrepreneurs will continue to do well in this country, what is possible to accomplish is being extinguished by our government and what is being achieved has a high probability of being extinguished  by the burden of debt.

For a long time I would look at our politicians and the general trends and conclude that is not an arena that I appreciate and it is somebody else’s life.  Now I look in the mirror.  I and all the voting citizens in this country are responsible.  That is right. As a nation, we voted for people who look to the latest trend of what is popular so they are re-elected. We voted for a president who campaigned on being critical of the debt of the prior administration and then came in and drove that debt into the stratosphere. Obama should be fired now for that fact alone among others. Just for the record, there are a lot of people who should be fired and leave with him. Nothing personal …this is business.

Have we ever voted for a person who stands for the principles of our Declaration of Independence and Constitution? Actually I am not aware of anyone winning on that platform. I am aware of people running on that platform. We didn’t like that idea because that platform holds us as individuals accountable for life, liberty and the pursuit of happiness. It does not say, I am from the government and will solve your problems.  That formula clearly does not work.

This is a business blog with my focus being to offer sound guidance on helping companies and entrepreneurs move their businesses forward in profit at accelerating rates of profitability. Notice I said at accelerating rates of profitability, not accelerating debt like our government is doing.

So Why The Political Platform?

This is not a political platform. It is a business platform on the topic that our policies are going to drain America unless we take action. The action I recommend is based on business principles as I am not a politician at all.  If the US Government were a consulting client this is how I would approach it:

1. Clear definition of purpose: I feel there is a clear definition of purpose for our government and we the people have allowed people in office to ignore it. So let’ s use our foundation principles as the evaluation point and if our elected officials have not demonstrated compliance, we fire them.

2. Who replaces the masses that are fired?  People with experience running large organizations and know what it means to be accountable for compliance with the charter of why you are formed. Who are these people?  There is no shortage, there just is not a system in place to elevate them including a fair compensation system.  Get past the “you have to have been an angel all your life standard and we are only going to pay you $400,000 a year for being President. I would vote for paying the right leadership $100 million dollars a year  and link that to performance standards with base pay of $25 million. Now you have the attention of  some talent.

3. Key Tenant: basic economic and universal laws.

4. Tough stuff: the one way for this to be accomplished is to recognize the difficulty people have with change and then have leadership in place prepared to deal with the constituencies that say these changes are unacceptable.  These opposition groups should be in the minority if the leadership and related communication is in place.

Who Am I To Speak?

I am an American and I have my share of successes and failures. As a human, I have made good choices and some I would do differently. Do I have all the answers? No  but I do know this…I support  the founding principles of life liberty and the pursuit of happiness and our government does not. I am tired of that and I am speaking out .. and you?

Sending you energy of health, happiness, prosperity

Steve Pohlit

Business Consulting, Executive Coach
Turnaround/Crisis Management
Temporary CEO, CFO, Controller Services
International Business Resources

Social Media Services
New Digital Media, Inc.

727-587-7871
Email

About: Steve Pohlit is a CPA,MBA and has been the CFO of several major domestic and international companies.  Steve is a business owner and an expert business consultant focused on building profits and net asset value. He is very experienced with Internet marketing and social media marketing.  All articles published by Steve unless specifically restricted may be freely published with this resource information.

More

There is going to be more from me on this and I hope a lot of others as well. For now here is the article that resulted in my conclusion I have had enough.

New York Times: U.S. Racing Toward Debt ‘Shock’

Monday, November 23, 2009 1:51 PM Article Font Size

A page one, top-of-the-fold New York Times report Monday warns that U.S. debt is rising so fast that the federal government is careening toward a “payment shock” in the not-too-distant future. The Times lead headline read: “Federal Government Faces Balloon in Debt Payments: At $700 Billion a Year, Cost Will Top Budgets for 2 Wars, Education, Energy.” The Times headline appears eerie just as the Senate moves to push forward on a radical healthcare reform — with CBO estimates for a final bill costing nearly $1 trillion dollars over the next year. The national debt now stands at over $12 trillion and the White House estimates that the cost of servicing the debt will rise to more than $700 billion a year in 2019, up from $202 billion this year. The Times suggests that $700 billion annual payment cost may be conservative. The additional $500 billion a year in interest payments would surpass the combined budgets this year for education, energy, homeland security, plus the wars in Iraq and Afghanistan, the Times observes. Treasury officials face not only huge new debts incurred in response to the economic meltdown but a balloon of short-term borrowings coming due in the months ahead, and interest rates that are certain to return to normal levels when the Federal Reserve concludes that the fiscal emergency has passed. “Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages,” The Times reported on Monday. Interestingly, the alarming Times analysis comes as the nation is in the midst of a debate over healthcare reform proposals that could add many billions of dollars to the overall debt. Record deficits have arrived just as payments for Medicare and Social Security benefits are set to explode, with the oldest Baby Boomers approaching age 65. This will result in what experts have long warned will be a “fiscal nightmare” for the government, the Times article notes. “What a good country or a good squirrel should be doing is stashing away nuts for the winter,” William H. Gross, managing director of the Pimco, a bond management firm, told The Times. “The United States is not only not saving nuts, it’s eating the ones left over from the last winter.” As for the balloon of short-term borrowings coming due, that debt now accounts for 36 percent of overall debt, compared to the historic average of less than 25 percent, and more than $1.6 trillion is due by March 31. Another problem: The Federal Reserve’s purchases of Treasury bonds and mortgage-backed securities to prop up the economy pushed down long-term interest rates by about half of a percentage point, but the Fed is set to reverse those policies — that alone could add $40 billion to the government’s annual debt service expense. The Treasury Borrowing Advisory Committee, a group of market experts that advises the Treasury on debt management, declared this month: “Inflation, higher interest rate and rollover risk should be the primary concerns. Clever debt management strategy can’t completely substitute for prudent fiscal policy.” And The Times warns: “There is little doubt that the United States’ long-term budget crisis is becoming too big to postpone.”

If you have followed this blog you know I am a fan of Bill Bartmann. He is a rags to billionaire riches  story and most of his wealth came during an economic climate similar but actually less serious than what we are facing today.  I follow Bill because he deals in reality and looks for the opportunity in what other see as a disaster.

This email I received from highlights some startling fact about our economy.  Personally I some direct experience with our financial institution industry and if anything Bill may be understating the pending failures.  As for the opportunity Bill suggests, that is up to you. I am not an affiliate, I am not paid to publish this on my blog, I make no money from sharing this with you.  I feel Bill is on the mark and come to your own conclusions.

I have been on several of Bill’s calls and I have studied his book Bailout Riches which I highly recommend if you have an interest in the details of how this works.  If you are intrigued you now have the information on the next steps.

Steve Pohlit

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On Friday, FDIC shut down two more banks - which will have billions in losses. The bank failure total for the year is now 95 and includes three of the largest and most troubled — Guaranty Bank in Austin, Colonial Bank in Birmingham and Corus in Chicago. We project the number will top 1,000 over the next year and a half.   The majority of the banks that will fail are Community Banks and Regional Banks where the impact will devastate entire communities.  The FDIC is running  out of money and will soon have to tap taxpayers – only the second time in the 75 year history of the FDIC that it had to do so. Personal bankruptcies will hit a record 1.4 million this year. Business bankruptcies are 250% over their previous high – and rising. Unemployment is at 9.7 – heading for 10%   (Department of Labor says real unemployment rate is 16%). Credit Card charge-offs are at 10.5% and Moody’s predicts they will go to 12%. Mortgage foreclosures and “walk-aways” continue at record pace. Any discussion of the Recession ending and the recovery beginning are based on wishful thinking, while ignoring the brutal facts. The Commercial Real Estate market is about to implode the same way “sub-prime residential real estate” did two years ago. The economic impact of this implosion will compound every category mentioned above which will result in increased bank failures, increase personal and business bankruptcies, higher unemployment, higher credit card and mortgage default. Sounds terrible, doesn’t it? Well, it is terrible – but it is also some of the best news you could ask to hear! Why?  Because the last time I saw this environment, I made $5 billion just picking up the pieces of all those credit defaults and failed banks and by helping good banks dispose of their bad loans. Now, a $5 billion net worth may sound unbelievable.  I assure you it was real and I was not the only person who made a lot of money helping all those consumers put their lives back together and helping the government and the banks solve those problems.  That is how big the opportunity was 20 years ago. Guess what?  We are back in that same situation again today!  Banks are failing left and right.  Bad loans are everywhere you look.  The US Treasury and the FDIC are looking for people like you and me to help solve this problem.  Just this past week the FDIC closed on the very first tranaction under the Legacy Loan Program.  The Legacy Loan Program allows a generous leverage that magnifies the return for the Investor. This first transaction under the Legacy Loan Program was a pool of residential real estate loans.  Now, I have no interest in real estate and neither should you.  But, first comes the real estate and then comes everything else and that is where the great opportunities are. Those of us who participate and take advantage of this program could potentially make millions of dollars. T he Legacy Loan Program not only makes a tremendous amount of loans available for purchase at a steep discount to true value, they it provides a government funding source. The Legacy Loan Program is not the end of the good news and the great opportunities.  The market is rapidly filling with charged off loans available for purchase at very steep discount from banks that have not failed — banks like Chase, US Bank, Bank of America, Citibank, Wells Fargo and all the other names you have known for years. Here is your chance to get a piece of the “Bailout!” Here is your chance to take advantage of what will be a “once in a lifetime opportunity.” Finally, a Bailout Plan that is aimed at all of us on “Main Street” instead of those fat cats on “Wall Street.” It gets even better than that.  I am offering my students a chance to become a full-fledged business partner with me in this industry.    Join me and Larry Genkin, Creator of the Thought Leadership Marketing Methodology, as I explain how we (you and me) can take advantage of this wonderful opportunity. This one-hour teleseminar is scheduled for 7:00 pm – Central (8:00 pm Eastern, 6:00 pm Mountain, 5:00 pm Pacific) on Wednesday, September 23, 2009. Click Here to register for this teleseminar. Please Click Here to convert the call to your local time zone.

See you then, Bill Bartmann

The Headline Reads: Retailers Report Weak Sales For August (Click For The Story) Then highlight is:

“Industrywide, same-store sales fell for a 12th straight month — highlighting the woes retailers have been under as consumer spending continues to decline.”

Then there is discussion as to what will happen this holiday season as well as the impact of the clunker program. This is followed by reports of what key public companies in the retail industry reported. Remember there is a lot that is not reported. Also remember, economic recovery is driven by consumer spending and there is little evidence that is strengthening.

The point made that I commented on was that going forward the monthly same store comparisons will look better because you are comparing against increasingly weak numbers from last year as retailers tanked in the fall of 2008. Here is what I wrote:

The comparison may show less dramatic declines and even a greater number of positive percentages when current year sales are compared against months last year when retailers began to experience sharp declines. Those may be feel good metrics. However, the key is what are the volumes and margins that are planned in connection with an acceptable profit plan and how are actual revenue and profits doing against that?

Typically that information is a bit more difficult to extract. The well run retailers have a profit plan by location that is based on category proformas. The key is to be profitable at each location and in each category within that location. I still see very little advancement in the use of direct response marketing and social media marketing. Tools and technology that have been readily available and proven to work for quite some time.

There is a lot of the “same ol same ol” and that is not going to work in an economic climate likely to be very soft for quite awhile.

Steve Pohlit
http://newdigitalmediainc.com
http://stevepohlit.com