Professor/Student Syllabus and Teaching Guides to Case Study I, II, III and IV -2015-2018

LinkedIn: professor-irv-silverman-89a04212a

Irvin Silverman Visiting Professor of English and Business Communications at Hanoi Pedagogical University:

Professor/Student Teaching Guides to Case Studies I, II, III and IV with Syllabus, Annotated Readings, Examinations,Discussion notes and Debate Guide

Case Study I: United States Banking Crisis of 2008:

Introduction:

10 minutes

Assignment question 1.

20 minutes

Assignment question 2.

20 minutes

Assignment question 3.

30 minutes

Conclusion:

5 minutes

Analysis:

The overall interplay of the actors in the earlier drama of how Wall Street Banker/Broker Bear Sterns was saved in March of 2008 and later on how Lehman Brothers tragic demise might now be viewed should not be seen as a mundane event; when Bear Sterns was saved by Jamie Dimon of Chase Manhattan and Tim Geithner the President of the New York Federal Reserve Bank, it needs to be correctly viewed as an event of high impact.

When these two top bankers would not do the same for Lehman Brothers six months later the result was Lehman Brothers default, a nearly catastrophic event to 25,000 Lehman employees globally and nearly crashing the whole banking system of the United States.

Because in the earlier scramble to cobble together an overnight loan of 3 billionUSD to Bear Sterns orchestrated by Dimon and Geithner the than President of the New York Federal Reserve Branch, we can now see a pattern of doing 'finger-in-the dike' banking that absolutely could not continue.

When we simply label the end of a 150 year old firm like Lehman Brothers as a case of being forced into default for 'credit swap' malfeasance we are missing the whole thrust of the Banking Crisis of 2008.

In the case of Bear Sterns where they literally ran out of enough operating capital to even open their doors in early 2008, here was the triggering event that probably sealed the fate of Lehman Brothers fall and subsequent bankruptcy.

Clearly any number of the top twenty [20] United States banking corporations had also committed at least circumstantial malfeasance though none but Lehman actually defaulted. This conundrum is both baffling and appalling to an American public committed to 'fair-play' in all manner of Government authorized and supervised activities.

In its finality the American public still is groping around in the dark attempting to ‘get its arms around the 2009 Bankruptcy of a bank like Lehman Brothers that was clearly ‘too big to fail.’

The mantra of ‘too big to fail’ was not accorded to Lehman Brothers but was wrapped tightly around A.I.G., Wells Fargo and others like the giant Bank of America, which for sure was equally badly managed.

The much troubled bank Wells Fargo in a 2016 presentation accompanying its earnings laid out the preliminary results of its own investigation into how many people were affected by its employees opening false accounts without customers' knowledge.

The bank, with the help of the auditor Pricewaterhouse Coopers, identified 565,000 possible fraudulent consumer credit card accounts and 1.5 million possible fraudulent checking accounts opened between 2011 and 2015. Since then, the bank said it has identified and tracked 564,000 of the credit card account holders. It said 330,000 of the cards had been closed and 234,000 accounts were still open. About 192,000 of these cards were still open but had never been active, while 42,000 were still opened and activated. It was unclear whether employees or customers activated those accounts.

The bank also said in the presentation it was investigating the impact on consumers' FICO credit scores. In turn, Wells said it would determine if the opening of an unwanted credit card made it more expensive for the customer to receive another financial product because of a lower credit score.

During former CEO John Stumpf's testimonies to Congress, lawmakers said they were concerned about the unwanted credit card accounts because of the impact it may have had on customers' credit scores. Even with all that, the Wells Fargo company beat earnings projections for both revenue and earnings per share for the third quarter of 2016.

Any body who has any lingering doubts or questions as to the criminality to be seen in the statements above should lead any interested party to take note of just how widespread and pervasive criminal activity uncovered at Wells Fargo. Illegally opened new checking and savings accounts and credit cards that were wrongfully opened for thousands of unsuspecting Wells Fargo clients, absolutely ended up lowering FICO scores for thousands of Wells Fargo customers.

Their losses on subsequent home mortgages and other similar type financial products were in the many millions and was duly noted by the Congress members sitting on the Bank Finance Committee.

By the beginning of 2009 with Lehman being the 4th largest United States bank in 2008, with 25,000 employees all but shattered and in full-out Chapter proceedings, all that was left to do to bring the entire United States Banking Bank system down fortunately never happened.

Legal Impact of Bank of America Case of 2009:

"AFTER YOU MAKE A DECISION, SHOOT HOLES IN IT":

In the summer of 2009, one year after a financial crash that nearly brought down Wall Street, a proposed settlement landed on the desk of United States District Court Judge Jed Rakoff.

The parties involved were the U.S. Securities and Exchange Commission and the Bank of America, the latter of which had agreed to pay a $33 million fine for having failed to inform its shareholders of several facts that were critical to a questionable deal it made when it acquired Merrill Lynch. With most settlements, especially those involving a government agency, the judge will glance at them quickly and sign off.

Rakoff, however, chose to apply a rule that he uses for all important cases: He made a list of the three best arguments that could be mustered against his own decision.

“I know that if I don’t have a clear and coherent answer to each of the objections,” he says, “then I have to rethink the entire decision.”In this instance, says Rakoff, the first objection that he wrote down was that Bank of America shareholders were paying the settlement, even though they were the ones who’d allegedly been defrauded. “I tried really hard to come up with an answer to that,” Rakoff says. “And I couldn’t.”

This led Rakoff to veto the settlement, an extremely rare move that made him a hero to some and a villain to others. Eventually, the parties returned with a settlement that placed the financial obligations on former Merrill Lynch shareholders, the beneficiaries of the misconduct. Rakoff approved this one.

“I know that many people who have to regularly make important decisions pride themselves on making them quickly,” the judge says. “It’s almost a macho thing.”As he well knows, however, it’s often better to slow down a bit and play devil’s advocate— against yourself. *

Interest Rate Swings:

The interest rate swings instituted by the continually ‘wrong-headed’ mistakes of the Federal Reserve Bank from 2004 to 2011 first under Alan Greenspan and than under Ben Bernanke coupled with the apparent collusion of the than Secretary of the Treasury, the former C.E.O. of Goldman Sachs and Company, Henry [Hank] Paulson, again was a clearly precipitating factor that almost brought the entire American Banking system to ruin.

It started as high drama and escalated even more dramatically because in essence the Federal Reserve Bank told Bear Sterns they would 'not be allowed to fail' but never addressed the question of how to handle other insolvency cases going forward.

In just six months an even more dicey bank solvency problem would arise with Lehman Brothers eventually going into default and being forced to close its doors after a one hundred and fifty year run..

Assignment Question 1 

What deleterious and very serious effect would a bankrupt Bear Sterns have precipitated within the United States already fragile economy if New York Federal Reserve Bank President Tim Geithner had not approved the Three [3]billion Bridge Loan for Bear Sterns?

Secondly with the pressures of the Lehman default and not withstanding the judgment and character of all the players to include Tim Geithner President of the New York Federal Reserve Bank, and the two top Federal Bank heads Alan Greenspan and Ben Bernanke, were these top private banking and Government officials just over matched and clearly overwhelmed by the rapidly unfolding Banking Crisis.

Or could they have operated in a more judicious manner and hatched a secret plan to save Lehman Brothers from default.

Post-Mortem:

After Lehman Brothers 'folded' each day I would ride the New Jersey Transit into Wall Street on trains both early and late, I personally took note of the humbling experience many of these top people were going through and this included yours truly because Lehman Brothers was one of my firm's key clients.

Most still unbowed and now just 'ex-employees' of Lehman Brothers;many with their boxes piled up high with office materials going back and forth into the city from the New Jersey suburbs.

I watched these grown men and woman, many sobbing... some cursing under their breaths...because it was just starting to 'hit' them and me personally that 25,000 of their coworkers at Lehman Brothers were also being furloughed for good and all the support businesses like my digital Graphics firm were also taking the 'hit'. 

So it goes without saying with my firm's largest client being Lehman Brothers also buried us with the default of Lehman Brothers, the venerable banking firm that was just "too big to fail" had some how failed.

Lehman Brothers was now headed for the 'dustbin' of failed financial firms that bore witness to the strength and severity of what had been the Banking Crisis of 2008.

Analysis and Overview of the Federal Reserve Role in the Banking Crisis of 2008:

Fact:The Federal Reserve Bank of the United States acted as little more than a printing press for trillions of dollars that were being poured into the United States banking system.

Assignment Question 1:

Whether this was the correct action will be debated by historians going forward however some will still argue vehemently that it still was the only thing the Federal Reserve Bank could have done to stem the panic that was rapidly engulfing the world banking system.

So did the 'printing press' tactic to keep the banks afloat save the entire United States Banking system and consequently the world banking system from a catastrophic failure. What do you think?

Assignment Question 2: Did the open-ended Bridge Loan that had been cobbled together literally overnight by J.P. Morgan Chase Manhattan Bank for Bear Sterns foretell doom and really stop any chance for Lehman Brothers to have survived in March of 2008?

As it played out less than six months after Bear Sterns was saved, Federal Reserve Executives may have him become 'gun shy' and when Lehman Brothers began to unravel after requesting a ‘bail out’under 'to big to fail' the Federal Reserve did not choose to save the firm.

Assignment Question 3:

If so what were the underlying issues between Richard Fuld of Lehman and Paulson that moved Paulson to block the Lehman Brothers request for restructuring under the newly formed concept of ‘simply too big to fail’?

Assignment Question 4:

Secondly as you read Case Study I ....is there any possible doubt in your mind that it was Henry [Hank]Paulson who was decidedly against saving Lehman Brothers from default.

Assignment Question 5:

In the future and today how will macro and micro views of the American banking system be viewed systemically?

Has the view shifted from one side to the other recently and of the two evaluative tools which is it now the macro or the micro that now holds sway at the highest Governmental levels.

The whole concept of ‘stress testing’ top banks still remains in force; is it a good idea or do the economic sands shift so suddenly and violently in banking that these tests are all but meaningless? 

Analysis:

Any correct strategy builds on the assessment of aspects that are most material and critical to both the banks and the nations involved.

Case Study I has clearly laid out where the blame lays with overall culpability rightfully being laid at the foot of the Federal Reserve Bank of the United States and Henry [Hank] Paulson and his team at Treasury. A fewmild 'brick-bats' for Ben Bernanke but he was not the culprit;bear in mind he had just taken over the Federal Reseve job from Alan Greenspan and much like Obama had been handed this enormous problem... but now Ben Bernanke had to deal with the aftermath..

Although there were many other key playerss in the failure of Lehman Brothers the fourth biggest bank in the United States at 25,000 employees, they were by no means all from the Federal Reserve Bank. 

A young President in Barack Obama as we all now know, had this most difficult situation ‘dropped in his lap’ and really had to rely on the team already assembled to figure out what had to be done with Lehman Brothers.

The new President had been trained as a Constitutional Lawyer and Community Organizer so admittedly he had precious little to offer except motivational talk to assist with this breakdown in the United States banking system.

Later on with the unraveling of the banking system becoming a real possibility Obama and his Federal Reserve Bank officers finally get control of the wild violent interest rate swings that were brought on.... and than even more badly and clumsily orchestrated by the F.O.M.C. unit’s monthly retooling of the rates.

With the nation still reeling from the Lehman Brothers collapse, the United States came precipitously close to upsetting the entire economic equilibrium of the United States and with it all of international Global finance and banking. With the world Banking order at stake and being buffeted by all these negative forces it is possible that Global financial equilibrium could have been systemically torn apart.

If the nation's banking system would have failed it could have caused an unprecedented world wide financial depression unlike any ever seen before or since.

Some argue that it all started because in essence the Federal Reserve Bank said to Bear Sterns 'we will not let you fail' but never addressed the question as to how would they know how to handle other dicey problems like under capitalized mega-banks like Lehman Brothers going forward.

This retelling of the near financial melt-down of the United States Banking system has to be seen both systemically and from the linear perspective because it actually occurred over a half decade 2006 to 2011.

Even when the Federal Reserve Bank and The Treasury Department agreed that the recession was over in 2011 the United States was to a large degree culpable for the after shocks that continued to relentlessly shake the banking systems of Greece and Spain.

? Learning Objective 1:

Here we can really see how banks actually work with their key banking clients.

? Learning Objective 2: 

Some would argue that the nations biggest banks and the Federal Reserve have always worked together in an almost collusive atmosphere to control the interest rates so that bankers always seem to walk away from the casino table as winners and the publics role as loser is perpetuated.

? Learning Objective 3:

Here we see how ‘thin is the line’ between success and failure in successfully setting domestic and international interest rates.

? Position in Course:

Department Chair usually chooses at what levels the materials can be taught at both Graduate and Undergraduate levels.

? Graduate Level: 

? Two Semesters:American Banking System Semester One 

? The Federal Reserve System Semester Two

? Writing Requirement: First Semester:Mini-thesis of twenty pages minimum on the American Banking System

? Second Semester: Mini thesis of twenty pages on the Federal Reserve Bank System of the United States its history and current status.

? Both Papers should be thoroughly annotated and replete with bibliographical and annotated notes for making a students case.

Conclusion:

Jamie Dimon even today in 2017 is still the head of the J.P. Morgan Chase Manhattan Bank and in 2008 he had the awesome responsibility of supplying his best efforts in the retention of key bank clients like Bear Sterns who for all intents and purposes were bankrupt.

Bear Sterns was a huge client of J.P. Morgan Chase Manhattan Bank and as we have seen in Case Study I, Dimon faced an almost insurmountable challenge in steering the Federal Reserve Bank’s President in New York ,Tim Geithner, to make the only decision that could make Bear Sterns whole again and save one of Chase’s biggest Broker/Dealer clients.

Dimon’strategy was to relentlessly pressure and politic Tim Geithner into backing Bear Sterns request to allow J.P. Morgan Chase Manhattan to loan Bear Sterns $3 billionUSD for necessary daily capitalization so that Bear Sterns needed to open and conduct banking business on the next banking day.

The other option was that if he did not convince Geithner to stand behind Chase as the lender of first choice and 'last resort', any number of cataclysmic events would have been triggered which had not been seen since the unprecedented ‘run’ on the banks that followed the Stock Market Crash of 1929. 

Dimon bluntly tells Geithner what he has to do and with so little time to waffle, Geithner relents and approves the open-ended Bridge Loan which keeps Dimon’s client business with Bear Sterns alive and turns off the panic that would have for sure ensued if Bear Sterns had totally defaulted and gone bankrupt.

This allowed just a little more time to figure out what they could do if this occurred again;however the real possibility of this happening but to a much bigger bank like a Wells Fargo or an Investment banking house like the venerable 150 year old Lehman Brothers, was always out there on the horizon.

This was very unsettling to these button-down financial types who had really only heard about the great Crash of 1929 from their history books and their grand fathers.

More to the point they had chosen to make their it life long endeavor to study and write about the economic effects of the Great Depression of 1929 while studying at the top business schools in America.

Never did they 'dream' that they would be facing the exact same scenario as the government faced when the banks started failing as the aftermath of the Stock Market Crash of 1929.

Less than six months later the ‘dooms day’ scenario unfolded because they were all now faced with this exact same scenario but this time it was not Bear Sterns the Banker/Broker but Lehman Brothers and its bad debt which brought this 25,000 person bank to its knees.

Jamie Dimon and Tim Geithner and the new Chairman of the Federal Reserve Bank Ben Bernanke almost saved the venerable Lehman Brothers but lost out to Henry Paulson. This default of Lehman Brothers is still a tragic story because the strong hand of the former C.E.O. of Goldman Sachs and company Hank Paulson was writ large all over Lehman’s Bankruptcy proceedings beginning in January of 2009.

As hard as they tried Obama, Bernanke, Geithner and others could not defeat Paulson and his team at the Treasury Department, because the now Secretary of the Treasury and his hand-picked team were clearly united at squelching any outside chances that Lehman had to survive. 

There was a very long history of acrimony between Paulson and Fuld with much of the discord between Fuld and Paulson stemming from bloody battles in the Capital Markets for competitive deals over a twenty year period while at competing Wall Street banks.

The Secretary of the Treasury Paulson had brought over with him from Goldman Sachs and Company a 'rock-solid' group of executives. These ex-Goldman Sachs employees had long since been convinced that Lehman Brothers was just a bunch of ‘Mississippi River Boat Gamblers’ who now needed to pay the ultimate price for failed high stakes gambling. They justified taking Lehman Brothers down because of their stunning failures in the credit swaps markets which would eventually force them into default and Bankruptcy in 2009.

The Federal Reserve Bank went on to make numerous critical interest rate errors and brought the Global banking world to the precipice of a “melt-down” with enormous implications that in the United States alone ran up to some 60 to 70 TrillionUSD in market capital losses.

The nation and the world both ended up watching and would largely just have to accept at face value what the Federal Reserve Bank had wrought in allowing Lehman Brothers to default. Yet on the other hand we all did see how the Federal Reserve saved A.I.G. the world's biggest insurer and Wells Fargo and eventually seven the Bank of America.

In point of fact a Grand Jury even as recently as the last Quarter of 2016 brought Ace Greenberg the titular head of A.I.G. in to court after Greenberg had run out of stalling tactics. The Grand Jury hearing found that Greenberg and his firm A.I.G. were to be held blameless and all charges against Greenberg/A.I.G. were declared as mere ‘hear say’ and any criminal involvement during the Bank crisis of 2008 against A.I.G. was summarily dismissed.

Case Study II:

 "The Anatomy of a Turn-around" in a New York City Advertising firm:

Introduction: The 'Turn-around' Firm was a smaller 'boutique' firm located on Madison Avenue in New York City.......

10 minutes

Assignment question 1.

20minutes

Assignment question 2.

20 minutes

Assignment question 3.

20 minutes

Conclusion

5 minutes

Analysis: 

At the Turn-around' firm known as CommercialARTS Incorporated it was the advent of Desk Top Publishing technology that Led to a dramatic 'up-tick' in the fortunes of this than failing Boutique Madison Avenue Advertising Agency:

This technology allowed cutting edge Advertising Agencies to produce ‘books on line’ instead of only to bound book formats.This was the innovation that would allow a small creative, digitally driven firm to place books on line for business applications like Offering Memoranda to resell Skyscrapers by Wall Street Realty Investment bankers.

These digitized books that today are never printed and bound tell the unique story of many of the fabled Skyscrapers built in the twentieth century.

These would include the famed Empire State, the Art-Deco' period Chrysler Building, and the 'Big Stan' Standard Oil Building and John Hancock in Chicago. The Skyscraper building of the late twentieth century saw hundreds of these gigantic Skyscrapers being built, bought and later resold as Trophy assets that now rest in the realty portfolios of the world's top Pension and Sovereign Nation Funds.

These 100 to 200 page bound books that heretofore absolutely had to be printed or the Donald Trump's of the real estate world would not even consider buying a Skyscraper building were now being placed online by CommercialARTS Incorporated. 

Others who quickly followed along after the CommercialARTS Incorporated pioneering digitizing efforts also started producing Offering Memoranda books in Millenium year 2000 to sell Trophy assets like the AT&T Seven building World Headquarters.

The ‘Turn-Around’story:

CommercialARTS Incorporated, New York City, 1994-2009:

In creating the first online book publishing by digitizing Financial Offering Memoranda books that were needed and required to sell Skyscrapers and long before the Nook became popular the CommercialARTS Incorporated firm started a revolution in how financial niche ‘sell-books’ would be disseminated globally in a little-known niche Financial Marketplace for the 'resale' of Skyscraper realty assets.

Trophy assets would no longer see a book format unless a Real Estate mogul like now United States President Donald Trump absolutely said he would not consider buying the asset without a bound cover book.

Skyscraper Resale Market in 2017: 

Today a Financial Analyst representing any potential buyer of a $100,000,000 to $200,000,000 Skyscraper like the Sultan of Brunei or the Chinese Soverign Nation Investment Fund or any other potential buyer now sees financial analysts all over the globe issued secret codes to view the asset interactively and totally online.

An analyst goes online and interactively reads the Offering Memoranda of the now ‘for sale’ Skyscraper and if the Executive still requires hard copy they simply print out the entire 150 to 200 page Financial Offering Memorandum book.

This is precisely just how Real Estate Investment Bankers began to use digital book publishing to help their largest Realty clients divest themselves of Trophy Properties between $100,000,000usd and $200,000,000USD....all without printing the ubiquitous Offering Memoranda book.

When a client like now President Donald Trump says to his most Senior Vice President Donald Trump Jr..... lets ‘shop’ the Trump Tower in New York City he has two choices; he either chooses an outside Realtor like CB Richard Ellis or Cushman and Wakefield who specialize in Investment quality Trophy asset resales. Or as likely as not Trump Executives will attempt to sell the Trump Tower Trophy asset 'in-house' thereby avoiding paying tens of millions of dollars in realty Investment Sales commissions.

Up until 2000 no one had really thought of placing the books online thereby saving massive amounts of printing and binding costs.They would shop it Globally up until 2000 by actually printing for example 500 Bound books in full color of the Financial Offering Memorandum.

Today by hypothetically creating a digitized version of the 64 story Trump Tower, at the least would take 150 to 200 pages and all would be supplied digitally to an analyst for example from the Sultan of Brunei.

Here he or she might view the entire Financial Offering Memoranda on the now thirty five year old Trump Tower interactively online without aid of a bound hard cover book.

So as an example if the Trump Tower would now be posted online Globally to alert the potential buyers around the globe that this Trophy asset,which was first erected in 1984.Trump’s Trophy realty asset might be selling for an elevated and inflated $250,000,000USD that concievably could net $150,000,000 USD profit for the Trump Organization.

You might wonder how again does the Financial analyst for the Sultan of Brunei know which file will contain the Trump Tower book; he has been given a secret code and ‘voila’ the 100 to 200 page book is on his laptop, desktop, IPad or IPhone.

Management Team :CommercialARTS, New York City:

• CommercialArts Incorporated under the leadership of President Neil Krasner, Executive Vice President Larry Steinfeld and Senior Vice President Irvin Silverman New Business Development, developed the software and Marketing skill sets to digitally capture Skyscraper Memorandum books information.

Contents of a typical Skyscraper Memorandum Book:

• Lease Expirations: [color-coded stacking charts to indicate year of expiration]
• Floor Diagrams:
• Engineering reports: show floor weight plate maximums,
• Electrical requirements:
• Aerial Photography:
• Lobby Photography:

With the advent of digital printing only a very few books ever needed to be printed because the whole book could now be seen online in color and could be flashed in a matter of seconds to Financial analysts at their offices around the world.

So where are the clients who could and would potentially buy and bid for these Skyscraper Realty assets? 

They were than and now to be found Globally at the Foreign Soverign Investment funds in Russia, Turkey, Brunei, Qatar, China, United Arab Emirates and in publicly held entities like the State of Texas Teachers Pension and Annuity Fund, California’s ‘Calpers’, New York, New Jersey and State of Texas Teachers Pension and Annuity Retirement Funds and the huge Midwest Teamsters Pension and Annuity fund.

The ‘Turn-Around’ at CommercialARTS Continues:

This Turn-around took place in this small advertising boutique in New York Cities crowded advertising agency space.Soon Investment Sales firms would see their competitors books online and wonder out loud at who had created these digital representations of the books?

These $100,000,000usd to $200,000,000USD Skyscraper assets had always needed Investment Offering Memoranda[books] to be dropped on prospective buyer desks.

The Turn-around occurred when CommercialARTS started digitizing as many as 75 books a month:That is to say 75 Investment properties would now be Online and the industry changed just like that 'overnight' in how the sale of Investment quality assets in major Global cities would be presented.

The mere fact that a one hundred page bound book could be seen by any number of International buying prospects online a full two weeks before it ever would go to print if it went to print at all.. was simply amazing in the year 2000.

There is nothing like twenty extra bidders to inflate the final sale price of a building and now owners of these assets were becoming 'giddy' with the increased numbers of bidders and the higher sale prices their buildings were drawing at closing. Interactively manipulating a one hundred to 200 page book online and 'reading it like a book' was than considered at the least highly extraordinary. 

Books online would be replete with Interactive graphing, high definition cartography and floor by floor 'color-coded' lease expiration dates. Analysts could draw upon their analysis of the asset for R.O.I. and R.O.A. and allow for representation to be made to the analysts owners and or management Committee almost instantly.

Learning Objectives:

? How did CommercialARTS revolutionize the way Investment Sales Offering Memoranda books were distributed Globally and save the company from failing?

Conclusion:

Case Study III.

The Global Advertising Industry:

Global and Regional Advertising firms have two main levels of organizational modeling leading directly to two different levels of creativity; highly elevated and dramatically lower.?

The highest level of creativity historically comes from the 'boutique' horizontally arranged smaller firms identified as the Organic model. Here Marketing Directors, Art Directors, Copy Writers, Proofers, Graphics Specialists all work closely together.

?Organizational Design and Office Placement Accelerate Information Flow for "Boutique" Advertising Firms:

This cohesiveness was always purposely designed to place key employees whenever possible in adjacent offices that are all on one or maybe two floors.

Example A: Important creative questions from Art Department head receives instant answer as the Art Director queries President in the Lunch room.

Unlike the smaller Organically organized firms, the larger advertising firms run information almost entirely vertically like the Industrial model with information being disseminated 'top-down’ as is also typically seen in the Military Model.

Example B. Large Global Advertising Firm:

Important creative questions from the Art Director receives a vague and or an unclear answer at a meeting and gets shelved until ‘upstairs' can become involved and project or projects are forced into a 'forced -stall' and the project comes to a halt.

Overview:

The Advertising Industry of the 1960’s to the very late 1970's

The best prototypical model for students who want to better understand the time period depicted is clearly to be found in Mad Men, the Award winning show about the Advertising world of the 1960’s and the 1970’s.

The whole topic of Business strategies as far as purchases and acquisitions by larger Advertising agencies of the smaller 'Boutiques'and the "roll-up"and exit strategies of the Global firms as they existed in this entire twenty year period... is my attempt to focus clarity on the period.

In the world of Mad Men since PhotoShop and Apple hardware programs did not exist;,everything had to be depicted on what was called the 'story-boards’ by hand.

Marketing to new and existing clients in those days was much more mundane and and in some ways very primitive compared to todays communications networks that span the globe in spectacular new ways to bring new ideas into Global business Executive Board Rooms.

In order for the required Marketing Departments to make presentations of the agencies talents and creativity they had to first create cumbersome art work boards that had to be hand carried to new clients, existing clients and trade shows.

Than as now smaller agencies still turned out the best creative work….But why was this so?

The answer is really very straight-forward; being horizontally organized smaller agencies moved even the most intensely creative ad programs and campaign information more rapidly to completion than their big brothers at the major Regional and Global Advertising firms.

 Because the smaller agencies were not tied to the stiff ‘top-down’ Military Model used in heavy industry, the open flow of information moving horizontally was unerringly accurate and kept projects 'on budget and on time'.

Those two things mentioned in the above 'on budget and on time', big firms always touted as their 'holy grail' but rarely ever did but they still tended to lay claim to on time and at budget completion schedules.

The real truth is that their size here had always legislated against their professed claims of projects always being produced 'on-time' and 'on or under' budget.In general they hardly ever came in on time and on promised budget.

Conclusion:

Department Chair Guidance here:

? Position in Course: Undegraduate Business 101/102

? Written Requirement: 10 page ‘Precis’ Well known general industry ‘Turn –arounds’ utilizing new technology as catalyst to fuel the ‘Turn’ 

? Paper on Turn-arounds with annotations , references and bibliographical

? Position in Course:Department Chair Guidance

Graduate Level: 

? Written Requirement :Well known general industry ‘Turn –arounds’ utilizing new technology as a catalyst to fuel ‘Turns’

? Length of paper 25 pages. with annotations , references and bibliographical

Analysis and Overview:

 The New hardware and software technologies drove changes in Advertising firms:

New Technology comes to the Advertising Agencies in the Late 1970’s: 

First the mini computer with 32 k in the late 1970’s and than much later came the ubiquitous Desk top and Lap tops going forward.

When desktop publishing began in the late 1970's was spun out of new technology developed at PARC Laboratories in Palo Alto, Xerox's underappreciated cutting edge attempts to move technology along more rapidly was largely intended to change the way professional graphic designers worked by transitioning from mechanical draftsmen layouts to digital files.

Currently, people identify desktop publishing as work done at home or office on desktop computers. That work is then printed on a small home or office printers, or it is sent to a commercial printing company for output. 

How Desktop Publishing Changed an Entire Industry:

Because the early DTP software (beginning with Aldus PageMaker) was easy to learn and ran on inexpensive desktop computers, people who had never produced a page layout could for the first time generate their own digital files for brochures, business cards, forms, memos and other documents that had previously required a skilled graphic designer running high-end software on expensive equipment.

Desktop publishing software soon spread to the workplace and businesses began to expect employees to use Microsoft Word, Publisher, Pagemaker or other user-friendly software to generate many of the documents that had previously gone to advertising agencies, commercial print shops, and graphic designers.

When the web became ubiquitous, employees were also expected to build and maintain websites. Meanwhile, in professional commercial printing companies and ad agencies, skilled graphic designers were also transitioning to digital production, using high-end retail software like QuarkXPress or proprietary software on expensive equipment. Of course there was and still is a need for those skilled designers for high-end brochures, complicated color printing, and large press runs.  

DESKTOP PUBLISHING IN THE WORKPLACE:

The ability to work with page layout or word processing software in the workplace is a skill that many employers find attractive.

The HR employee who can set up and generate forms to onboard new employees, and the manager who can design and print out an employee handbook and the sales manager who can format and print sales reports or direct mail pieces all bring a strength to their roles that someone without desktop publishing skills can't vaguely hope to accomplish.

Now any workplace that has desktop computers has the potential for handling some of its own design and print work. Including skills in this area or indicating a comfort level with computers on a resume may make that resume stand out from the competition.Examples of typical items that businesses set up internally and either print or send out to a commercial printer include:

• Brochures, flyers, and posters
• Booklets
• Newsletters
• Business cards and letterhead
• Forms
• Financial documents
• HR documents
• Invoices, inventory sheets, memos, and labels

Office workers may also use software to design slideshows and handouts or publish a blog or website. It is a rare office that doesn't produce some of the products in-house that used to go to professional designers or commercial printers.

DESKTOP PUBLISHING IN A HOME ENVIRONMENT:

Desktop publishing in the home is usually limited to small-run print projects for the family. Any family with a desktop computer, software and a printer can produce many projects. Examples include:

• Greeting cards
• Iron-on transfers
• Candy wrappers
• Postcards
• Digital scrapbooks
• Decorative labels
• Family calendars
• OTHER PLACES DESKTOP PUBLISHING THRIVES:
• In addition to business and home use, desktop publishing also exists in:
• Churches
• Schools
• Copy Centers
• Clubs and organizations
• Sports teams

With the advent of the Apple Graphics interface software plus the new portable and semi-portable communication devices it all became much simpler to create an advertising campaign for a new or existing client. 

Conclusion:

? How do smaller advertisng agencies differ from larger National and International firms? 

? How do the larger firms play catch-up to the smaller advertising agencies from a creative stand point?

? Why do the larger agencies have so many problems keeping their creativity at higher levels?

Case Study III

Global Advertising Firms: 

Advertising Agency Organizational Development 1960 to Today

Organizationally Advertising firms are somewhat unique:

Advertising Agency: Acquisitions and Divestiture after Acquisitions:

Globally powerful Advertising firms have all but given up on becoming more creative and have found that acquiring smaller, more creative firms is a better way to gain bottom line growth.

Even a short look back to the past and we see that the ongoing theme of Mad Mentv is that big agencies want to buy the little agencies because they recognize that creativity is just inherently higher. They have in most cases resolved that paying in higher sale valuations for that creativity in dollars when they acquire the smaller firms is the sanest way to grow at the bottom line and in their world of Advertising.

Introduction:

5 minutes

Assignment question 1

20 minutes

Assignment question 2

 20 minutes

Assignment question 3:

20 minutes

Conclusion

5 minutes

Analysis and Overview:

In the interest of brevity and to best explain the overall Organizational platform in the field of International Advertising one needs to understand where and why creative types thrive. 

My focus is not to dissect each large agency and its absorption of a small creatve advertising agencies but to moreover point out the organizational models that are at work in the advertising industry that may well not be that unique to all of the vertical markets. It took seven seasons to have Sterling-Cooper and Roger Sterling become part of the big agency in the Mad Mentv series.

I am hoping to illustrate to both Professors and teachers how to to dissect that world and in doing so open a view into the make believe and or real world illustrated to us every day by Global advertising.

Although there are some parallels in other industries like the software development industry however the global uniqueness of how in general the advertising firms that comprise this vertical also manage to describe our world for us and better shape our understanding of certain aspects of our daily life; that is what is so very unique about advertising firms.

The overall interplay of both the smaller boutique agencies and the largest agencies who systematically poach creative ‘stars’ from the best and the brightest in the smaller agencies is exemplified in the superb rendering of Mad Mentv from AMCtv.

In many cases the bigger entity ends up buying whole the best smaller agency for one simple reason, the little agencies creative juices are sweeter. At the larger agencies ‘hope springs eternal’ that is of course the hope that the smaller agencies creative bursts can be channeled positively in to the larger agencies modus operandi.

Many dozens of mergers have failed between big and small agencies because the larger Advertising agencies are led to believe that by buying the agency where all the great ad copy emanates from will solve all their creative problems. 

It starts with the way small agencies are organically created and moves on from there. The larger agencies always seem to forget that to have creative types laboring in a ‘top down’ information loops destroys the very chemistry that allows so much creativity to come forth from smaller firms. Creative types are usually bunched together on a couple of floors in a typical Madison Avenue, or Fifth Avenue and or Santa Monica Boulevard firm.

Daily modus operandi in a small Advertising Agency:

Their daily modus operandi is to gain creative answers to sometimes baffling questions and in the final analysis hopefully bring projects in on time and below or at budget.To do this they really need to get timely answers to tough creative questions by doing something as simple as walking across the room or going up or down one floor. 

Industrial firms employ the Military-Industrial ‘top-down’ Vertical approach to communications and it works well because even at the bottom of the rung, ‘piece-work’ employees are not hired because they are active creative thinkers.

This leaves students and Professors both with an absolute need to see where one Organizational Model will work and why the other one will not work and specifically why or why not?

Trying to understand Mechanistic ‘top-down’or simply what is sometimes called a Vertical communications loop versus an Organic firms structure:

Horizontally constructed organizations are by their very nature is specifically set-up to allow creative types to cluster around the ‘water coolers’ of thousands of creative smaller firms in the Advertising industry. 

I know this first hand from observing how things really are accomplished in a smaller Advertising firm versus the larger firm. Again nothing is 'set in stone' here but if a creative Vice President has a burning question about ad copy and or the Art Work for a new Advertising campaign his creative DNA cries out to him or her and says:

So in this way projects meet Client driven deadlines and this is how its done in the best smaller creative advertising shops on Madison Avenue.They just get the answers….and deliver projects on time and at or under budget.

Ojective 1:

In referring back to the original Case Study...What are the newest neural or Bayesian tools available to advertising agencies to better understand their client consumer base?

Objective 2:

How do the Bayesian programs project how consumers will purchase long before the consumer even realizes his or her choices. 

Objective 3:

Can and will agencies better serve both their clients and the actual consumer by knowing more about the consumer than ever before?

Position in Course:

? Position in Course: Undegraduate Business 101/102

? Paper on Organizational Development in other Vertical Industries. Not necessarily Advertising with annotations , references and bibliographical

? Position in Course:Graduate Level: 

? Written Requirement :Lengthy paper at least 25 pages. On Organizational Development in any Industry with any type of Organizational schema.

? with annotations , references and bibliographical

Assignment Question 1:

Since the overview here does not state in unequivocal terms that there is only one best way to maintain creativity in advertising is there room here to choose a mix between Organic Horizontal and Mechanistic “top-down” ?

In your readings do you see how and where a modified Organizational rendering which mixes the two Organizational types together could be made feasible?

Assignment Question 2

With the focus of Advertising firms as our chosen format we can do an analysis by comparing the relative features and benefits of Organic versus Vertical as in the Industrial Model.

Using a simple Template may magnify what you were already assumeassumE makes one format superior or preferable to another format.

Mechanistic ‘Top-down':Big to Medium Advertising Agencies

Features

 Benefits

Organic Horizontal: Smaller Agencies

Features 

Benefits

Assignment Question 3

As related to students in our Case Study III , the AMC series Mad Mentv shows a top executive at McCann Erickson introduced in Season 1 as showing great interest in poaching[recruiting] Don Draper away from Sterling Cooper.

Does this seem consistent with the overall views you have been given to believe are correct in this Case Study on the Advertising world of the 1960’s ?

Conclusion:

The teacher who leads Marketing/Advertising classes employing our Case Studies really needs to spend time with not only the basic scenario of Case Study II but moreover needs to bring together some other examples from other Vertical markets and industries in to the classroom discussions.

Case Study III realistically gives many real world examples to show why one Organizational methodology succeeds and another fails.

Case Study IV

Korean and Japanese Automotive Organizational Models in Supply Chain Logistics:

Introduction

15 minutes

 

Assignment question 1

20 minutes

Assignment question 2

20 minutes

Assignment question 3

20 minutes

Conclusion:

5 minutes

? Learning Objective 1:

Here we can really see how Auto manufacturers really work

? Learning Objective 2:

 Here we see how the Global auto industry is constantly shifting on its axis. 

? Learning Objective 3: 

Here we can readily see how thin is the line between success and failure in successfully setting production quotas driven by ‘Just-in-time Inventory Control Systems’

? Position in Course:

? Graduate Level: Semester One and Semester Two

? Writing Requirement: Semester One :Mini-thesis of twenty pages minimum on the Global Auto industry today 

? Writing Requirement Semester Two

? Mini-thesis: W. Edwards Demings The father of ‘Just-in-time’ Inventory Supply Train and Control. 

We are interested in seeing how this brilliant man W. Edwards Demings was so badly downgraded by American Auto industry executives and how he spent the rest of his life proving them to be totally inaccurate about his theories and production philosophies. 

Introduction:

Again in the interest of brevity and to best explain the overall playing field that we currently find in the Asian Autos sectors an overview of the economies of Asia at the end of World War II is crucially important.

Here one needs to understand how to direct students to the seminal issues and systemic problems that American Auto makers were experiencing at the end of World War II.

How to best explain to students how a defeated Japan; an island nation which had no industrial structure after barely surviving the war, could in thirty five years rule the world auto markets. This will take some time for your students to get their arms around; what actually happened from 1945 to 1985 in the automobile industry and in doing so we need to trace what was going on in the world as it existed than and how dramatically the production and distribution of autos was being effected by global economic conditions.

The Automotive Global Marketplace Post World War II:

Why and just how the Asian Auto makers took and were able to sustain the high ground from the Americans and the Europeans is to be found in the largely untold story of a discredited statistical Engineer W. Edwards Demings ....an American Professor who Detroit completely discounted.

 In time the Japanese saw his greatness and he is still revered and looked upon as the 'Godfather' of the Japanese auto industry who gave rise to Toyota, Honda, Nissan, Mitsubishi. This statistical genius so badly discounted by the powers to-be in Detroit soon was becoming better known for helping Japan to be renamed as Japan Incorporated.

It was Demings that strategized that we really do not want to tie up our cash in inventory like the Americans but that we should call for inventory only as needed.

Just in-time Inventory Control systems was the systemically superior approach to building better cars at lower prices, that ran longer and returned higher profits to the auto makers; The Japanese followed Demings philosophies, and the Japanese auto makers believed in Demings and fashioned his teachings into an almost reverentially godlike shinto fashion.

How did the Asian auto makers discover the genius of W. Edwards Deming?

Some argue that the Japanese were so far down after World War II that they just got lucky and hitched their star to a ‘dark horse’ who just happened to be a genius at getting down to the bottom of things quickly and efficiently.

By riding that ‘dark horse’ which was Demings, they were rewarded with huge ‘pay-offs’ in the highly competitive Global auto markets but that’s not where the story ends, that is where the story really begins.

Your students need to see what Detroit could not see because they were blinded by the way General Motors said it was supposed to ‘be’ and could not even imagine following the theories of a largely unknown Statistician like W.Edwards Demings.

That the Japanese would be playing on the same ball field with Detroit‘s gas-guzzling, big finned cars in less than thirty years was Demings dream and he turned over to the Japanese the secret to his dream of ‘Just-in-Time Inventory and Control’ systems. Not only were the Japanese able to play on the same field as the Americans but by the mid-1980’s they owned that particular "Field of Dreams”.

The focus of industrial firms and particularly with auto makers over the last 30 years has been on performing for excellence in fixing things on the assembly line even if that meant stopping the whole line a largely unthinkable thing to do pre-Demings.

The Japanese learned that lesson from Demings who was particularly watchful about sloppiness in manufacturing that inevitably could end up causing hugely expensive recalls of hundreds of thousands of cars for defects.

Costly as 'stopping-the-line' may be, it is always more costly to let that maladjusted robot that is wreaking real havoc and than having to clean up the messy results seen when hundreds of thousands of cars have to be recalled to fix and repair Air bags, Braking systems that leak and Accelerator Pedals that 'stick.'

Assignment Question 1

In less than 100 words compare and contrast the way American Auto makers viewed the manufacture, production and shipping of cars to the way Demings thought the above should be carried out in Post World War II America?

Assignment Question 2

What other Asian nation based on your reading of Case Study IV has made the greatest effort to catch up to and even surpass Japan Incorporated?

Assignment Question 3

In your personal opinion do you think that any nation can ever catch up to and surpass the Japanese for inventory efficiency, cost per car created and finally car for car can they ever hope to produce cars at less cost with more profit per car than the Japanese?

Assignment Question 4

The auto markets are a moving target in more ways than one;the consumer wants comfort, safety and gas efficiency but how will he or she respond to the whole concept of the thousands of self –driving automobiles and trucks taking to their roadways?

Conclusion:

The conclusion that Americans are back in the game in the production of quality, long lasting, gas efficient and energy efficient motor machines is undeniable.

W. Edwards Demings would see an apocalyptic force taking hold if he was to be resurrected and see his favored Island nation Japan doing what Mitsubishi and Toyota have been alleged to have been perpetrating on the global auto markets. He knew that any nation can go astray and move away from the the things that made them great because he saw that happening in his own country the United States.

1.Citations and Bibliographical References:

1.Toyota Builds Gas Pedals that 'stick': www.usatoday.com/story/news/nation-now/2016/10/27/woman-listens-inner-voice-saves-husband/92860338/

1a. https://www.dhirubhai.net/pulse/global-automotive-case-improved-produc

2.Nissan to buy 34% of Mitsubishi:

Mitsubishi Motors stock crashes as fuel-cheating scandal widens: Mitsubishi Motors' stock price has halved and billions of dollars have been wiped off its market valuation since it admitted to falsifying efficiency data

More breaking news from:

? TOKYO (AFP) - Shares in Japan's Mitsubishi Motors crashed again Tuesday after a report said it had been using an improper fuel-efficiency testing method for decades, widening a data-cheating scandal that has plunged the company intocrisis.The maker of the Outlander sport utility vehicle and Lancer cars had been supplying false results on more models than previously reported, the leading Nikkei business daily said.In response, the Tokyo-listed shares dived 9.58 percent to close at 434 yen.The firm's stock price has halved and billions of dollars have been wiped off its market valuation since it admitted Wednesday to falsifying efficiency data for hundreds of thousands of vehicles sold in Japan.

? Authorities raided the company's office last week after its admission and the firm has warned that the number of vehicles involved could rise as it could be widened to include those sold overseas.A spokesman declined to the comment on the latest report and it will hold a news briefing later Tuesday.

? The scandal comes a decade after the automaker was pulled back from the brink of bankruptcy after it was found to have covered up a series of vehicle defects.The Nikkei report said Mitsubishi's inaccurate testing could stretch back to the 1990s -- rather than just 2002 as the company has said -- and affect more models.

? On Saturday, the Nikkei said Mitsubishi plans to compensate customers in a bid to limit the fallout.Japan's transport ministry has ordered the company to reveal the results of an internal investigation on Wednesday.The embarrassing revelations have raised questions about the Japanese carmaker's future, and pointed to a broader problem in the global car industry as regulators probe other automakers' pollution and fuel-efficiency standards.

China the New Leader in Global Automotives:

3.Car companies and dealerships are rapidly expanding into China's interior, not contracting. If the estimate of Chinese auto sales hitting 30 million vehicles by 2020 is reached, China's automotive market will outpace Europe and North America combined. The general view is that most think that's definitely going to happen

4.Deming's approach is summed up here in his now famous 14 Points:

Point 1: Create constancy of purpose toward improvement of the product and service so as to become competitive, stay in business and provide jobs.

Point 2: Adopt the new philosophy. We are in a new economic age. We no longer need live with commonly accepted levels of delay, mistake, defective material and defective workmanship.

Point 3: Cease dependence on mass inspection; require, instead, statistical evidence that quality is built in.

Point 4: Improve the quality of incoming materials. End the practice of awarding business on the basis of a price alone. Instead, depend on meaningful measures of quality, along with price.

Point 5: Find the problems; constantly improve the system of production and service. There should be continual reduction of waste and continual improvement of quality in every activity so as to yield a continual rise in productivity and a decrease in costs.

Point 6: Institute modern methods of training and education for all. Modern methods of on-the-job training use control charts to determine whether a worker has been properly trained and is able to perform the job correctly. Statistical methods must be used to discover when training is complete.

Point 7: Institute modern methods of supervision. The emphasis of production supervisors must be to help people to do a better job. Improvement of quality will automatically improve productivity. Management must prepare to take immediate action on response from supervisors concerning problems such as inherited defects, lack of maintenance of machines, poor tools or fuzzy operational definitions.

Point 8: Fear is a barrier to improvement so drive out fear by encouraging effective two-way communication and other mechanisms that will enable everybody to be part of change, and to belong to it.

Fear can often be found at all levels in an organization: fear of change, fear of the fact that it may be necessary to learn a better way of working and fear that their positions might be usurped frequently affect middle and higher management, whilst on the shop-floor, workers can also fear the effects of change on their jobs.

Point 9: Break down barriers between departments and staff areas. People in different areas such as research, design, sales, administration and production must work in teams to tackle problems that may be encountered with products or service.

Point 10: Eliminate the use of slogans, posters and exhortations for the workforce, demanding zero defects and new levels of productivity without providing methods. Such exhortations only create adversarial relationships.

Point 11: Eliminate work standards that prescribe numerical quotas for the workforce and numerical goals for people in management. Substitute aids and helpful leadership.

Point 12: Remove the barriers that rob hourly workers, and people in management, of their right to pride of workmanship. This implies, abolition of the annual merit rating (appraisal of performance) and of management by objectives.

Point 13: Institute a vigorous program of education, and encourage self-improvement for everyone. What an organization needs is not just good people; it needs people that are improving with education.

Point 14: Top management's permanent commitment to ever-improving quality and productivity must be clearly defined and a management structure created that will continuously take action to follow the preceding 13 points

5. Bob Lutz, former General Motors vice chairman, told CNBC's "Power Lunch" why he believes American consumers continue to trade up to bigger, newer vehicles.

"The consumer is not being squeezed, and in fact with gas prices in the U.S. dropping to below two dollars a gallon or even lower fairly soon, there is absolutely no incentive for the consumer to buy anything smaller” .

Lutz went on to say that its just not low gas prices but lower house costs for home heatingfuels and just about anything made out of petroleum like car plastics is on the pricing down slope.