The Bull, Bear & Lion

THE BULL, BEAR & LION VOL. IV, NO. i THE STUDENT NEWSPAPER OF THE COLLEGE OF NEW JERSEY’S SCHOOL OF BUSINESS AUGUST 2017 JAPAN STAGNATES DESPITE “A BENOMICS” ISLAND ECONOMY SEES LITTLE REVITALIZATION IN PRESIDENT SHINZO ABE’S TRIPARTITE PLAN; RECRUITING YOUTH MAY HOLD KEY TO PROGRESS By Paul Mulholland

take place. Japan is by far the oldest de- with other countries, but the failure of Japan is one of the most stagnated veloped country in the world. Its work- the Trans-Pacific Partnership (a - 12 economies on the planet. Japan’s econo- force has declined by 6% over the last member trade pact among Pacific Rim my grew by 1% last year and the IMF ten years and the number of 20-29 year- states) was a disaster. Japan exposed its projects it won’t grow by much more olds has fallen from 18.3 million to 12.8 negotiating position on key issues, and this year. Its GDP has hardly risen since million since 2000. It is not hard to see frustrated politically sensitive industries the 1990s, and its aging population why a declining domestic population such as agriculture and auto parts in a peaked in 2010 at 128 million and is in would hurt growth, but instead of al- final deal that was ultimately abandoned decline. The Prime Minister, Shinzo lowing more immigration into Japan by the U.S. Abe, was elected in 2012 on the promise from other Asian countries with work- Japan and the EU reached a consen- to restore growth and fight deflation in ers to spare, Japan has focused on in- sus on a deal dubbed JEEPA (Japan-EU the economy in his three-part plan creasing its own birth rate, now at 1.46, Economic Partnership Agreement), dubbed “Abenomics”. even creating a new cabinet position for which has been described as an ex- The first “arrow” of Abenomics is fertility. Probably the most effective change of Japanese cars for European fiscal stimulus. Abe’s government has reform Japan could make would be to wine and cheese. But if Japan is to com- Probably the most effective re- spent over $200B since 2012 on infra- allow younger workers to enter its pensate for a decreasing workforce it form Japan could make would structure investment with the aim to workforce from labor surplus countries should focus on what it does well (cars) increase growth. Even though Japan’s in Asia. and leave other industries to other na- be to allow younger workers to unemployment rate is below 3%, a 25- Another potential major reform tions (cheese). enter its workforce from labor year low, the extra spending has not led could be relaxing Japan’s rigid labor Japan has also been struggling with surplus countries in Asia. to higher wages or growth, only to an laws which make it difficult for firms to low inflation and deflation since the increase in Japan’s debt, which now lay off workers, effectively locking out 1990s. Deflation puts additional pressure stands at around 240% of GDP, the young workers from full-time jobs. This on borrowers because the repaid money highest in the developed world. lack of secure employment is ironically is more valuable than the money that The second arrow is monetary policy. denied to younger workers by these was lent to them, and deters investment The Bank of Japan has introduced nega- laws because firms are less likely to hire because assets are expected to be cheap- tive interest rates and has launched a them full-time if they know they cannot er in the future. The resulting decrease quantitative easing program (in which easily fire them. Economic insecurity in consumption and investment leads to assets are bought with printed money to among the young likely contributes to still further deflation and decreases intentionally devalue its currency). The Japan’s deflation and demographic traps growth. Bank of Japan now owns assets valued by preventing the young from investing For Japan to break out of its trap, it over 70% of Japan’s GDP, roughly triple in themselves and starting families. should continue monetary stimulus to proportionate to the US Fed’s quantita- With a declining workforce, Japan “reflate” the Yen, and most importantly tive easing program. can also try to increase labor efficiency, open up its economy — and particularly But if the first two arrows have been which requires lowering Japan’s tariffs its labor market — to competition from ineffective, it is because the third arrow and opening its economy to competi- the outside and to its own young work- of structural reform has yet to seriously tion. Shinzo Abe has pursued trade deals force.

U.S. & world headlines: Index to writers August 2017 Featured in this edition:

♦ 8/25: Hurricane Harvey hits Houston ♦ Paul Mulholland, ‘18 ……. A1 ♦ 8/26: Mayweather defeats McGregor with 10th-Round Political Science major; Economics, Philosophy, History minors TKO ♦ Insights: economic policy, world governance, state legislation ♦ 8/28: Former Expedia head Dara Khosrowshahi Hailed as new Uber CEO ♦ ♦ 8/25: Spotify paves way for IPO with Time Warner Kaelyn DiGiamarino, ‘18 ……. B1, B2 label deal ♦ Marketing major, International Business minor ♦ 8/24: Yellen, Draghi, world economic leaders meet in Insights: consumer behavior, branding, management literature Jackson Hole, Wyoming ♦ ♦ 8/17: Van drives through Barcelona crowd in deadly Joshua Allman, ‘18 …….. B1 terror strike ♦ Music with Cello specialization, Finance major ♦ 8/19: North Korea reveals advances in Insights: economic markets, sports management, financial transactions Intercontinental Ballistic Missile weaponry ♦ ♦ 8/4: German Chancellor Merkel campaigns for reelec- Sean Lange, ‘19 ……. . A2, B2 tion against Social Democrat Schulz ♦ ♦ 8/16: President Trump disbands Manufacturing Linguistics, Interdisciplinary Business major Insights: stock news, M&A, executive backgrounds Council and Strategy & Policy Forum ♦

Welcome back, TCNJ! Sharpen your knowledge on Japanese demographics, keep up with world headlines, & be- come acquainted with the interests of our student staff — just on this first page alone! En- joy the expanded content in the August 2017 edition of The Bull, Bear & Lion: our first four-page issue. Thanks for picking us up!

Contact us: [email protected] Bloomberg Businessweek 2016 Ranks TCNJ School of Business #1 in NJ, #35 in Nation, Undergraduate Business School Programs www.bbltcnj.weebly.com PAGE A2 | THE BULL, BEAR & LION | VOL. IV, NO. i AUGUST 2017

CORPORATE & FINANCE

LEARN YOUR M&A ABCs GOOGLE PARENT ALPHABET IS A JUGGERNAUT FOR TAKING OVER TECH VERNTURES

By Sean Lange

A coinciding trend? The same firms have been net search, but also the leading magnet for ac- Among the most powerful trends in Ameri- extraordinarily named. Silicon Valley startups quiring these Silicon Valley ventures. Therefore, can enterprise in this millennium has been the have made a fashion of using the most niche let- when company executives felt the need to create starting-up of small technology firms. Following ters of the Roman alphabet when titling a parent company to separate Google from its their inceptions, these companies have themselves. Technology IPOs in 2017 have in- many startup siblings, it was only appropriate Accomplished some extraordinary feats: pro- cluded Alteryx, Impinj, Okta, Qualtrics, Viptela, that they named the holding firm Alphabet. gramming artificial intellects, 3D-printing pros- Yext, and Zuora. Here, learn your ABCs of Alphabet’s existing thetic limbs, and engineering driverless vehicles. Google is a brand universally linked to inter- and up-and-coming holdings.

Android: developer of the most prevalent operating software in the world; provides the mobile interface on over 2 billion phones Meka Robotics: pioneer of bipedal robots that mimic and tablets human sprinting

Bump Technologies: creator of the Bump! app that allowed users to exchange data by tapping their smartphones together; captured the Nest: Alphabet’s “smart home” subsidiary that earliest whims of mobile information sharing designs internet-connected, self-programmable appliances, before being acquired — and having its iPhone- including thermostats, smoke detectors, and security cameras clanging premise sensibly retired — during the 2013 remodeling of Google Photos Oyster: the digital publishing company that perfected e-book streaming for all devices built with Android software Calico: Alphabet’s $1.6 billion biology subsidiary devoted to human longevity research PostRank: founder of the analytics services used by Google to accumulate web click, page view, and network traffic data from blogs and Deepmind: the machine learning venture famous for its social media sites algorithmic mastery of the board game Go Quickoffice: builder of the productivity applications that were the Eyefluence: a lab that classifies foveal shifts, the precursors to Google Drive, Docs, Sheets, and Slides specific optic movements that enable Google Glass headset wearers to navigate web pages with their eyes ReCAPTCHA: maker of the infamous internet security system, which asks users to type sequences of distorted letters and numbers; sold its 100- FameBit: a digital marketing intermediary million-Captcha-per-day business to Google in 2014 that strikes contracts between independent content creators and online companies, acquired in Songza: service that provides music recommendations 2016 to drive YouTube ad sales based on the user’s favorite genres and artists, the time of day, and the season of the year Google: Alphabet’s flagship subsidiary that includes the eponymous search engine, Cloud database, Maps Titan Aerospace: developer of unmanned aviation vehicles; contrib- navigation, and “G-Suite” of office uted to drone technology experiments in Alphabet’s X lab processing tools Urban Engines: a transportation analytics start-up that designed the Halli Labs: Alphabet’s most recent acquisition; the four- software used in Google Maps’ route visualization feature month-old, India-based startup’s unprecedented advances in natural language processing led to its purchase in July Verily: Alphabet’s life science technology subsidiary; its 2017 projects include a health-tracking wristband, glucose- monitoring contact lenses, and surgical robots Impermium: an anti-spam software developer that has contributed to Google’s web protection projects since 2014 Waymo: the division responsible for Alphabet’s popular innovations in driverless cars Jigsaw: Alphabet’s think-tank subsidiary, convened to brainstorm policies on online censorship, extremist representation, cyber attacks, and tech ethics X: Alphabet’s research and development facility that houses its Kaggle: a platform where “moonshot” projects, including an internet-beaming hot air balloon, a 536,000 registered statisticians and drone-based package delivery service, and the Google Glass virtual reality researchers can eyewear compete to create the best predictive models for inquiries in computer science, med-

icine, and virtual reality

Lift Labs: the biomedical engineering firm that made YouTube: the worldwide web’s leading video streaming headlines in 2014 for its self-stabilizing spoon, which and posting network allows patients suffering from neurodegenerative tremors to eat independently

Zagat: the cultivated restaurant ratings guide launched by couple Tim and Nina Zagat in 1979 and acquired by Google for $125 million in 2013

THE BB&L W ORLD MARKETS

M IGHTIER: T HE N EEDLE OR T HE D RILL?

BEYOND THE SWEAT, PART I: CONTINUING THREAD: Under Armour Faces Oil Price, Foreign Fast Fashion Confronts Oil Price Volatility Exchange, Ethics Challenges By Kaelyn DiGiamarino

By Joshua Allman

mineral extraction change. Conflict Zara CEO Amancio zones also have supply chain reliability Ortega introduced the con-

issues as infrastructure and employ- cept of “fast fashion” to the ment are not primary concerns for their apparel industry. His stores replenish their stock with governments, leading to risky supply chain practices. new clothes and styles eve- Under Armour was founded by ry two weeks, and receive Oil is related to conflict minerals in Kevin Plank in 1995. Plank’s motiva- orders within 48 hours. that its supply and demand impact its tion to create a sports apparel company Typically, a dress modeled price. Therefore, entire systems of pro- was born out of his desire to solve a on the runway will take duction can fluctuate, creating variabil- single issue: sweat-soaked shirts. Today, several months to arrive in ity and risk. Oil directly impacts the UA is one of the most innovative appar- a department store. A dress towards sustainability, but freight costs of shipping and receiving el and footwear companies in the sports with a similar design can be it also offers the company goods, the operation of plants and apparel industry and possibly the cloth- found on the Zara store protection against oil price equipment, and the production of goods ing industry as well; and innovation is racks within just a few volatility. Zara works to and services. The fluctuations in the what sets the UA brand apart. Under weeks. improve transportation Plank’s leadership, UA has continued to price of oil due to political regime methods in the most effi- The price of oil has a innovate what athletes wear, how they changes, war, and terrorism, and UA’s cient manner. To optimize huge impact on the cost of look, and most importantly how they dependency on oil affect how UA can packaging throughout the shipping and transportation feel. However, a transition from mois- manufacture, transport, and forecast supply chain, the company services. A rise in oil prices ture-free shirts to today’s advanced the price of its goods. homogenized and standard- has the potential to be det- wearable technology has not been Over the past two years, oil has seen ized its packaging materials. rimental to a global compa- without its challenges. a dramatic fall in its price because of This also allows for greater ny that relies on offshoring. several interrelated factors. This change shipment sizes, making UA’s products are petroleum-based Zara, however, keeps its began with Saudi Arabia refusing to transportation more effi- and require the usage of conflict miner- supply chain predominant- limit supply, Russia increasing its cient because more goods als. Beyond that, UA’s products, includ- ly close to home. It is naive productivity, and Iran’s gearing up for can be moved at one time. ing its advanced wearable technology, to say that Zara would be its sanctions being lifted. Additionally, More sustainable packaging require the conversion of raw materials unaffected by a spike in oil given the advent of fracking, the Unit- is also used and encour- and minerals into specialized interme- price, but its short supply ed States is now a marginal producer of aged, with the goal of elim- diate and final products, which inher- oil. The United States' production of oil chain could help minimize ently leads to complex operational ob- inating waste that goes to is highly elastic to changes in price. the damage. stacles, environmental backlash, and landfill. Thus, there is an oversupply of oil, and At least half of even human rights issues. a huge drop in the per-barrel price. the company’s However, Saudi Arabia recently agreed The Dodd-Frank Wall Street Reform production cen- to limit supply if Iran and Russia also Section 1502 (“conflict materials”) pro- ters are in Spain. agree to hold back – thus, the volatility vides insight into where companies The Inditex is reflective of political maneuvers. The source and transport materials, offering (parent company production of UA’s goods and its pa- a lens into their supply chain risks. of Zara) Annual tented sweat-free shirts are stained Conflict minerals are comprised of four Report identifies with a dependency on oil, and there- main raw materials, coined “3TG”: tin, this as an effort tungsten, tantalum, and gold; all of fore, a dependency on the political ma- which are vital to the production of neuvers of unstable regimes. numerous manufactured goods, includ- To be continued in Part II ing UA apparel. These minerals are pri- “The fluctuations in the “Zara, however, keeps its marily derived from the mines of war- price of oil due to politi- supply chain predomi- torn or “corrupt” countries, like the cal regime changes, war, nantly close to home. It and terrorism, and UA’s is naive to say that Zara Democratic Republic of Congo and dependency on oil affect would be unaffected by a Rwanda. This fact is an obvious chal- how UA can manufac- spike in oil price, but its lenge to supply stability and pricing as ture, transport, and fore- short supply chain could regimes change and policies regarding cast the price of its help minimize the goods.” damage.”

Contact us: [email protected] www.bbltcnj.weebly.com PAGE B2 | THE BULL, BEAR & LION | VOL. IV, NO. i AUGUST 2017 THE BB&L REVIEW

Movie Fans: Get Published for BOOK Your Passion Outliers by Malcolm Gladwell Want to review films for The BB&L? Reach out to [email protected]

Review by Kaelyn DiGiamarino S TOCK PROFILE:

Alphabet (NASDAQ: GOOGL) What if the pieces of advice we have been from other cultures, and likewise a reason that given to succeed are leading us to fail? Conven- you have never heard of the man with the tional wisdom says intelligence and ambition highest IQ. By Sean Lange will get us where we want to go; Malcolm It is not uncommon for business students to Gladwell says otherwise. In his third book, feel overwhelming pressure to succeed; there is Outliers, Gladwell proposes that instead of enormous focus on grit and determination, on looking at successful people’s characteristics as hard work and hard sells. Every choice seems From its internet influence explanations for their accomplishments, we to be excessively weighty, and the fear of miss- via Google and its one-of-a-kind ought to look at their surroundings. Perhaps it ing an opportunity early in one’s career is im- approach to leveraging Silicon is not what successful people are “like” that is mense. Business majors read case study after Valley start-ups, the holding important, but rather where they came from. case study on inventors, innovators, and dis- company Alphabet should be since Google’s 1998 inception Known for his bestsellers The Tipping Point ruptors. One wonders how these individuals viewed as a tech superpower. Its coming this past July, Alphabet’s and Blink, Gladwell continues to strike his found a way to stand out from the rest of hu- businesses at once encompass aggressiveness is the standard for readers with surprise. He questions the intui- manity. Did they pave a path with grit and channels for immediate profit, prolific M&A within the tech tive and his pieces pick apart the subconscious ambition, or did they simply stumble upon a products staked to growing in- industry. Despite wielding a biases every person holds. Gladwell’s curiosity road laid out for them? dustry demands, and projects $650 billion dollar market capi- is unrivaled and he continually confronts his There is no doubt that Gladwell’s myriad of based on visionary trends. talization, Alphabet targets readers with truths that have always been pre- case studies and data creates compelling argu- Therefore, Alphabet offers a startups that reflect undervalued sent, but never noticed. ments. He pushes his readers to confront the constant timeline of value, and is technologies rather than prized Outliers is a book that is both comforting hidden advantages of generation, family, cul- advised to be held as a long-term innovations, taking over unpol- and disconcerting. The idea that one’s likeli- ture, and class, and will undeniably make you position under the condition ished assets and experimenting hood of success is chosen for one by the cards question where you fall on the spectrum of that its price continues to ad- with them…many of these “Odd life deals makes room for a little bit of opti- human potential. Whether you subscribe to vance... Bets” are managed under the mism, but also a great deal of doubt. In the luck or to grit, Gladwell’s peculiar perspective ...Google’s earnings per share premise that they may never end, how much is hard work really worth if is provocative and memorable. are expected grow 10.92% to produce a consumable product. this is true? “It is not the brightest who succeed. Nor is $30.89 in 2017, and then 31.59% While this deliberate swing-and- Gladwell taps into the power of narrative to success simply the sum of the decisions and to $40.65 in 2018. Yet, concur- miss strategy would seem to entice the reader into a success story, with an efforts we make on our own behalf. It is, ra- rent price estimates are project- make the company susceptible to inspiring overview of an individual’s greatness. ther, a gift. Outliers are those who have been ed to only increase from $970 by wasted spending and the stock Only once he has captured your imagination given opportunities – and who have had the FYE 2017 to a high estimate of susceptible to lower EPS figures, and lured you to the ending you expect does he strength and presence of mind to seize them.” $1,050 by the conclusion of this tactic may serve to insulate swiftly dismantle every detail. Gladwell ex- to make yet more fortunes from the misery and 2018. This renders a P/E ratio in Alphabet from certain risks. If plores how commonly we confuse maturity misfortunes it has inflicted on others. the 18x - 22x range, a phenome- the economy or tech sector faces with ability and how accumulative advantage, nal figure for a company with as a downturn, Alphabet already unusual opportunities, and practical intelli- “It is a tale. Told by an outstanding a growth horizon as has a buffer of operational costs gence play stronger roles than we typically Alphabet... written off and committed to think. Gladwell proposes provocative theories idiot, full of sound and ...In complement to its core extenuating failures... such as that only those born in January will fury. Signifying nothing.” search business, its Google divi- ...Alphabet is both an en- make the Canadian national hockey team, or sion has two prominent vehicles trenched corporation and a tech that South Korean pilots are more likely to for continuing dominance. growth company. The company crash their planes than pilots from other coun- - Malcolm Gladwell, YouTube revenues, at over $10 is ubiquitous online (Google tries. He suggests that there is a reason Asians Outliers billion in 2016, represent 18% of search and YouTube), in the are more successful in mathematics than those Google’s total business. With an information dimension (Google audience of over one billion Cloud), in the industrial world viewers, and with new customi- (drones, drugs, computer hard- zation controls implemented ware), in the material world that allow partners to choose (Google Glass, smart speakers), exactly where in or where and in consumers’ hands Advertisements: alongside videos their ads will (Android phones), for the imme- appear, YouTube commissions diate, intermediate, and long- Interested in space? Contact [email protected] are expected to jump 40% each term. When the business envi- year in both 2017 and 2018… ronment for one venture be- According to Statista, Google’s comes unfavorable, there are Tips & quotes Android operating platform is still others that the company Edited by Sean Lange used in 76.2% of cellphones holds that can thrive. Per RBC worldwide. Android software analyst Mark Mahaney, has a 90.46% share of the mobile “Alphabet is one of the strong- ADAPTED FROM THE HBR MANAGEMENT TIP OF software market in countries est, most consistent fundamental THE DAY: classified as emerging markets... stories in Tech. Period.” ...With its 200th acquisition Stating the Obvious

Turns out a lot of management tools focus on some pretty basic stuff, like how to run meetings, have conversations, and set goals. While they may not always feel glamorous, when really implemented, simple management practices can have a huge payoff. August 24, 2017

"The truth of the matter is that you always know the right thing to do. The hard part is doing it." — General H. Norman Schwarzkopf

Blinded by the Light: “You only have to do a very few things right in your life so long as you don’t do too many things wrong.” – Warren Buffett

“Everything, in retrospect, is obvious. But if everything were obvious, authors of THE BULL, BEAR & LION histories of financial folly would be rich . . .” THE STUDENT NEWSPAPER OF THE COLLEGE OF NEW JERSEY’S SCHOOL OF BUSINESS Volume IV, Number i ― Michael Lewis August 2017

CONTACT: STAFF: “A day without sunshine is like, you know, night.” Editor-in-Chief Joshua Allman, ’18 Sidney Soshkin ‘19 [email protected] Sean Lange, ’19 Kaelyn DiGiamarino, ’18 Tiffany Chen, ’20 ― Steve Martin Assistant Editor Carolyn Previti, ’18 Vivian Louie, ’20 Note: The opinions ex- Rodrigo Almeida, ’19 Soniya Reddy, ’20 pressed in The Bull, Bear & Paul Mulholland ’18 Lion are those of the writers Copy Editor James Cottrell, ’19 and do not imply endorse- ment by the newspaper. Kristen Townend ‘18 ADVISORS: FACULTY ADVISORY PANEL:

Karl Peterson, Adjunct Professor, Management MANAGEMENT ECONOMICS Jean Brechman, Ph.D. Assistant Professor, Marketing Brenda E. Ghitulescu, Ph.D. Roger Moore, Ph.D. FINANCE INNOVATION & ETHICS Susan Hume, Ph.D. Kevin H. Michels, J.D. MARKETING Jean Brechman, Ph.D.

Thank you to our Advisors and Faculty Advisory Panel for topic ideas, fact-checking, and guidance.

Contact us: [email protected] Bloomberg Businessweek 2016 Ranks TCNJ School of Business #1 in NJ, #35 in Nation, Undergraduate Business School Programs www.bbltcnj.weebly.com