THE BULL, BEAR & LION

VOL. II, NO. vii

THE STUDENT NEWSPAPER OF THE COLLEGE OF NEW JERSEYS SCHOOL OF BUSINESS

WE ASK DEAN KEEP:

WHAT IS MULTI-LEVEL MARKETING?
By Kristen Townend and Kristen A. Borowski
Dean Keep will be featured in the
film Betting on Zero, which will be
shown at the Tribeca Film Festival this
month.
Betting on Zero is a documentary
about Herbalife International, a multilevel marketing company which, according to various investors and ex-

perts, operates as a pyramid scheme.

Bill Ackman, of Pershing Square Capital Management, has been one of the
main proponents of the accusation.
Dean Keep is an expert on the topic of
multi-level marketing and pyramid
schemes, and has been quoted by various prominent news outlets such as the

Dean Keep (right) speaking with students at an event. Photo courtesy of Courtney Wirths

Back Again this Summer:

The Business Institute
By Kristen A. Borowski
For the second year, the School of
Business will host the Business Institute, a five-week, eight credit summer
program designed to give non-business
students a taste of the business curricula.
Last years program had a lot of positive student feedback and the goal this
year is to incorporate these comments
into the structure of the program, expanding it further across TCNJ and the
community.
Martine Bertin-Peterson, an adjunct
professor, is one of those organizing
the Business Institute. We start from
scratch, Prof. Bertin-Peterson said.
These students are enthusiastic to
learn and we introduce new skills to
them; skills they dont necessarily
learn as anthropology or psychology
majors.
Business skills can be applied to any
major, she continued. If a history major wants to own his/her own business,
they might as well start learning now.
An overview of a typical week includes four days of module classes.
Each week has a different topic, starting from the basic, What is business?
to diving deeper into learning personal
and corporate finance and marketing
research. The goal of the Business In-

stitute is to introduce business material

and provide students a good starting
point.
All students attending the Business
Institute are in the same classes together. In addition to these modules,
Fridays are devoted to skill building
workshops as well as group projects.
Skill building consists of topics such
as Excel use, developing effective
presentations, and improving your
rsum.
The Business Institute runs from
June 23 through July 29. It is worth
eight credits for non-business majors.
If interested, please visit:
businessinstitute.tcnj.edu/

Wall Street Journal, The Washington

Post, and CNBC. He sat down with
The Bull, Bear & Lion to discuss his

past research, consulting experiences,

and the history of multi-level marketing regulations in the United States.
Multi-level marketing (MLM) is a
business model based on rewarding
independent distributors for sales they
make and the sales made by the new
distributors they recruit. When taken
too far, however, the business relies
more on ever-expanding recruitment
with the increasing probability of new
recruits losing money.
One clear sign of a pyramid scheme
is if the companys products never
make it out of the distribution channels, and the main purchasers are retailers rather than actual customers.
This indicates that the companys reward mechanism is mainly based on
products purchased by recruits who
have no real customer base outside the
distributor network.
In 1979 one multi-level marketing
company, Amway, argued that it had
taken substantial actions to ensure that
their marketing strategy did not develop into a pyramid scheme. By making
sure that they complete enough sales
outside of distributors in employees
downlines, they have been the only
MLM company to successfully convince the FTC that they are not a pyramid scheme. Many companies claim to
have similar Amway policies but
Herbalifes policies do not appear to be
that similar. The language of their rules
and policies is very different from Amways, and these policies have proven to
be relatively ineffective in curbing evolution into a possible pyramid scheme.
Dean Keep discussed his research
with FTC economist Peter Vander Nat.
They
completed
their
paper,
Marketing Fraud: An Approach for
Differentiating Multilevel Marketing
from Pyramid Schemes, at a time
where not much information existed
about the clear signs of a pyramid
scheme.
We asked Dean Keep about the current state of affairs in terms of regulations and laws addressing firms that
operate as multi-level marketing companies. He explained that the FTC lacks
sufficient rules and enforcement mechanisms to address this issue - at the moment, there are not really any in place.
Dean Keep also commented that the
FTC has become too lenient in their
monitoring of such corporations. In
various years, they have published
fraud surveys that claimed to show a
decrease in victims of pyramid
schemes, when the only real difference
between surveys was a change in language used by the FTC, and their standards for what constitutes a significant
loss on the part of victims. Its a very
troubled industry, and theres a lack of
transparency, Dean Keep said, the
FTC has a lot of work left to do.

The School of Business, Photo credit: Ally Marcino.

U.S. & World headlines

Chinas economic growth slows to 6.7% in q 1 IMF Says global financial stability
risks have risen since October 2015 impeachment for brazilian president Dilma
rousseff great Britain: queen Elizabeth ii celebrates her 90th birthday Super
Tuesday: Trump wins MD., Del., PA., Conn., & R.I.; Clinton wins MD., PA., Del., & Conn. Carl
icahn sells his entire stake in apple Amazon reports q 1 sales of $29.1 billion
alphabet inc. (a.k.a. google) and fiat chrysler discussing possible technology
partnership Bernie sanders to cut campaign staff by several hundred

OF NOTE: Bloomberg Businessweek 2016 Ranks

TCNJ School of Business #1 in NJ, #35 in Nation, Undergraduate Business School Programs
Follow us on Twitter: @Bull_Bear_Lion

MAY 2, 2016

Trading Snacks
& Trading
Currencies:
A Lesson in
Forex
By Carolyn Previti

Photo Source: Pixabay

Remember trading snacks at lunch

in elementary school? A SnackPack
for a bag of barbeque chips, a cookie
for a bag of gummy worms. The art of
the deal, in elementary school and in
boardrooms across America, boils
down to getting someone to give up
something you want in exchange for
something you have. The same applies
to global currency markets.
One dollar is worth what someone
else is willing to give up to obtain it.
Globally, the dollars value is derived
from the strength of U.S. markets relative to those of the international
community. This means the dollar is
worth the number of Euros, yen, or
pounds sterling one could obtain in
exchange for one U.S. dollar. Foreign
exchange is the term that encompasses
these kinds of deals. It quantitatively
matches the value of one currency
against that of another.
Exchange rates measure exactly how
many units of foreign currency one
dollar is worth. If you travel to France
while the USD/EUR exchange rate is
$1.50 youll be shelling out $1.50 for
each Euro you spend. This means a
10 ham and cheese sandwich in that
cute little Parisian caf costs you $15.
You would be better off heading to
Paris when the exchange rate is $1.08
per Euro, as it is now. That same 10
ham and cheese sandwich would cost
you $10.80. $10.80 vs $15 for the same
sandwich? That is the power of foreign exchange.
U.S. companies with business segments in multiple nations with different currencies have to be mindful of
foreign exchange rates just like students planning their semester abroad.
When American companies sell products in Europe, their prices are U.S.
dollar amounts converted to Euros.
For example, a $20 blender costs
14.71 in terms of a $1.36 dollar/Euro
exchange rate. Compare that to the
same blender made by a European
company selling for 20. The blender
sold by a U.S. company in Europe is
relatively cheap compared to the European one. When American-made
products are relatively cheaper than
European ones, sales of American
products in Europe increase. In contrast, sales of U.S. companies decrease
in Europe in times of a weakening
Euro/strengthening dollar. The same
$20 blender would be 25 in a marketplace where $0.80 is equivalent to
1, making U.S. products relatively
more expensive. European consumers
would therefore buy more relatively
cheaper, European-made products in
times of a strong dollar.
Trading $1.08 for one Euro or a
cupcake for a pudding cup: it all
comes down to what you are willing
to relinquish and what the other party
is willing to give.
www.bbltcnj.weebly.com

MAY 2, 2016

PAGE 2 | THE BULL, BEAR & LION

Book Review:

BIG DATA VII: The Algorithm

The Etiquette Advantage in Business By Peggy Post & Peter Post

By David W. Letcher, Ph.D.

Professor Emeritus

Review by Alyssa J Freitas

For those of you who may not know,
Emily Post is the queen of etiquette
whose influence has been at work since
the late 1800s. The Post family has
continued to create essential etiquette
resources including courses, podcasts,
and, most helpfully, guidebooks for all
areas of life. Of great benefit for professionals is The Etiquette Advantage in

Business: Personal Skills for Professional Success.

As the title indicates, personal skills

are the key to attaining professional
success. After all, who wants to work
with someone whom you do not like?
While some may think of etiquette as
an antiquated art with little relevance
in todays world, this indicates a lack of
understanding of what etiquette truly
is: acting with others at the forefront of
your mind and engaging in behaviors
that put them at ease. When conducting business you are working for the
benefit of your customers, shareholders, coworkers, etc. so it only makes
sense that you should be conscious of
your personal skills and how they impact those around you.
This book goes through six parts including the basic keys to success, practical workplace behavior, navigating

business events and other special circumstances, communicating effectively, doing business abroad, and applying
for jobs. While all of these sections
offer insight and practical etiquette
tips, the most valuable for college students is surely focused on job applications. Not only is tried and true advice
included, such as what to expect in an
interview and how to properly follow
up with a thank you note, but there are
also tips on how to network effectively,
create an impactful rsum, and how to
respond to both offers and rejections.
This should be required reading for
all school of business students
(especially seniors!), but as it is not,
you will be ahead of the curve by reading this book. It is equally valuable for
seasoned professionals to brush up on
their skills and the information it contains is not to be overlooked. Although
you may think you have a good understanding of professional etiquette, it
never hurts to revisit what you know:
you may learn something new. Pairing
your TCNJ education with a thorough
understanding of business etiquette
will undoubtedly set you on the road to
success.

UPCOMING EVENTS:

5/4, 5 pm, Business Building 122: Dr. Naples is holding an Information Session for
Winter Session: TCNJ in Ghana, January 2017
Come hear about the ECO 270/WGS 270/INB 250 Women, Gender & Economic Development (satisfies gender, global, and economics elective), SPE
324/SPED 626 Theory and Practice in the Education of Students with Complex Disabilities and the full cultural program in Ghana. Leave winter behind, its 80 F on average in Ghana in January!
Also on 5/4: Celebration of Student Achievement
5/20, 8:30 am, Commencement.

Special Note:
To the Class of 2016, best of luck to you in your future endeavors!

A Snapshot of School of Business

Community Service
By Kristen A. Borowski
As we learn in class, corporate social
Net Impact held their Social Innovaresponsibility is an important part of tion Challenge on April 24. This chalthe triple bottom line as well as good lenge gave students the opportunity to
business practice in general. The stu- think about real issues facing businessdents of the School of Business make es in terms of social responsibility.
use of these principles and apply them These real world examples challenge
to their lives as undergraduate stu- students to think about strategies to
dents. Just like many companies, the improve the social responsibility of a
Business Student Organizations are corporation. By engaging in this event,
involved in many service projects on students learn how to become better
campus and in the community. Here leaders when they enter their careers.
are highlights of a few of the many Net Impact will also host a Bloomberg
student organizations involved in such event as community service.
service:
Beta Gamma Sigma, the Business
The Entrepreneurship Club has Honor Society, has completed a serworked with Piccolo Pronto to raise vice project feeding the homeless at
money for the needy and hungry. The the Trenton Soup Kitchen. Students
club has also contributed by helping travelled to the Soup Kitchen and
put local businesses onto Google Maps. served members of the surrounding
The club held an event in Princeton Trenton area. Members cite this as a
on April 21 to assist the SBDC. These rewarding experience and a great opworkshops demonstrate how to add a portunity to give back and help others.
business to Google Maps and how to
optimize the business profile.

HBR TIP & INSPIRATIONAL QUOTE:

PREPARE FOR TOUGH BUSINESS SITUATIONS AS YOUD PRACTICE A SPORT
Prepare for realistic contexts; nothing ever goes 100% as planned.
Practice your presentation or pitch and realistic questions that may
arise from your audience. Sensitize yourself to actual challenges that
you may face.

"You are wise when you listen, especially to people with experience."
Lori Greiner

THE BULL, BEAR & LION

The Student Newspaper of The College of New Jerseys School of Business
May 2, 2016 ~ Volume II, Number vii

ADVISORS:

STAFF:
Editor-in-Chief

Contributors

Kristen Borowski, 17

JoAnna DiCicco, 17
Sarah Wallin, 17
Kristen Townend, 19
D.J. Kleinbard, 16
Paul Mulholland, 17
Carolyn Previti, 18

Assistant Editor
Alyssa J Freitas, 17

Ms. Patty Karlowitsch,

Communications Specialist,
TCNJ School of Business
Dr. Jean Brechman, Assistant
Professor, Marketing

Thank you to Dr. Letcher for the

Big Data Series

Follow us on Twitter: @Bull_Bear_Lion

CONTACT:
Join our team! Write, take
photographs, or help manage
The Bull, Bear & Lion!

Write to Kristen Borowski:

bo r ow s k 1 @tcnj. e d u

The New York Times reporter, Mr.

Quentin Hardy, quoted Mr. Scott Dietzen, CEO of Pure Storage, as saying
No one can look at all their data anymore; they need algorithms just to
decide what to look at. (1)
The very next day The New York
Times reporter Mr. Mike Isaac, wrote
that The photo-sharing service
(Instagram) plans to begin testing an
algorithm-based personalized feed for
users (2)
The arrival of big data, business analytics, and data mining has given rise
to a large collection of algorithms that
are so necessary and helpful to us as
we explore and analyze the stupendous
amount of data at our disposal.
What is an algorithm? Dictionaries
tell us that an algorithm is a method of
computing.
(Remember how we
learned how to compute the lowest
common denominator in algebra?)
Think of an algorithm as a recipe, or
a finite collection of well-defined
steps. It has a beginning and an end; it
accepts input data, computes and produces an output. And, algorithms are
not only used in the sciences; they are
also heavily used in business as well.
Let us take a look at a simple algorithm
showing a simple arithmetic calculation:
Begin Multiply algorithm
A = 10
B=5
Z=A*B
Print A, B, Z
End Multiply algorithm
You will note that it has a definite
beginning, a series of well-defined
steps and a definite end.
Data mining routinely uses algorithms to perform a wide variety of
analyses of big data files. A virtually
unlimited number of algorithms are in
use today and that number is growing
almost daily.

I will focus on one algorithm, kmeans, which plays a large role in the
marketing field today. Its objective is
to cluster or segment a somewhat heterogeneous population into a number
(k) of more-homogeneous subgroups,
or clusters. For example, a firm may
want to find out which of its products
sell together (affinity groups) or which
customers have similar behaviors
(market segments) as different market
segments may respond differently to
different promotional schemes.
The k-means procedure is an iterative, complex mathematical procedure.
First, the user inputs the number of
clusters, k. Determining k is usually
based upon experience and knowledge
of the analyst. For this reason, the
procedure is often run several times,
with different values of k, and their
results are compared to each other.
After k has been established, the algorithm goes through a repeating, or
iterative process. Each iteration performs two steps: an assignment step
where each record, such as a customer,
is assigned to its closest cluster center. The second is the update step in
which the center, or centroid, of each
cluster is recalculated. The algorithm
stops when no new assignments are
made. Euclidean geometric considerations, used to update cluster membership, continue in an iterative fashion
until no new assignments are made.
Algorithms are complex mathematical procedures indeed! The worlds of
science, business, health and medicine,
etc. cannot get along without them.
References cited
(1) Hardy, Q. (2016, March 15). As the
data deluge grows, companies are rethinking storage.
The New York
Times. p. B3.
(2) Isaac, M. (2016, March 16). Instagram tests algorithm to personalize
user feeds, proceeding with caution.
The New York Times. p. B3.

Opinion: Corporate Inversions

Why America Should Adopt a Territorial Based Tax System
By Paul Mulholland

You are not revealing a closely

guarded secret when you observe that
for-profit corporations want to maximize their profits. When American corporations change their legal domicile,
they are doing so to escape the high tax
and hornets nest of regulations in the
United States. A corporate inversion
is when an American corporation buys
out a smaller foreign firm and reincorporates in the foreign country. Right
now, the foreign firm must be valued
at least 20% of the worth of the American firm to stop businesses from buying tiny foreign companies in order to
leave the U.S. There is speculation that
that rate will increase to 50%. The
Obama Administration is trying to
fence in corporations rather than addressing their reasons for leaving.
The U.S. has a federal corporate tax
rate of 35%, the highest in the developed world, which is coupled with
state corporate taxes which range from
0% to 12%. The deductions in Americas corporate tax code bring the average effective tax to 27%, an average
which heavily favors larger corporations with the shrewdest lawyers instead of those pursuing productive activity. Worst of all, the U.S. tax system
is non-territorial, so an American firm
has to pay tax on its foreign profits as
well when they are repatriated, a requirement that few other countries
have. Corporations have been lining up
to leave the U.S.; Burger King recently
merged with Tim Hortons, a Canadian
company, and is now incorporated
there.
Thus far, the approach to this prob-

lem has been to arbitrarily prevent

corporations from leaving the United
States. Pfizer, an American pharmaceuticals company, recently tried to merge
with Allergan, an Irish company. Ireland has a territorial system, and has a
corporate tax rate of 12.5%. The Treasury changed its merger rules earlier
this month, and many say it was precisely to end this deal between the two
pharma-giants.
Arbitrary and frequent changes to
the regulatory code increase the cost of
compliance, and decrease trust in the
government. In other words, the U.S.
government is aggravating its problem.
The U.S. has a highly educated workforce and an enormous market. These
are our corporations to lose, and we
seem determined to lose them.
The U.S. should switch to a territorial based tax system. Corporations
would be more likely to invest their
foreign profits in the U.S. (U.S. corporations currently hold over $2 Trillion
overseas). Reducing the corporate tax
rate could also encourage more investment and remove the primary motivation for inversion. High taxes discourage investment, and deductions and
loopholes distort it. Larger corporations have more political influence and
can lobby for these deductions which
benefit them. Benefits for larger, incumbent firms, hurt competition in the
market to the detriment of consumers.
Corporate tax deductions should be
abolished to the greatest extent possible, which may require the abolishing
of the corporate tax altogether.

Notice to our readers: This is the last print issue of The Bull, Bear & Lion for the semester.
We shall continue covering events throughout the summer on our website and blog:
www.bbltcnj.weebly.com.
We had a great year and cannot wait to resume print in the fall. As always, thank you for
reading The Bull, Bear & Lion. Enjoy the summer break and see you again in August!

www.bbltcnj.weebly.com