Final Blog Post

Economics 490 has been very beneficial with learning more in depth about Organizations. Although I believe I did have a good amount of knowledge before beginning the course, the course was very helpful with explaining specific examples, models, and the algebra behind the models. The live class was different than many economic courses that I have taken in the past. A lot of my political science course have the same type of structure that this course did and I believe that this method of teaching is more enjoyable for students. The interaction was constant and entertaining during class. It also made me feel as if skipping a class would be detrimental for my grade in the course since that is how we learned most of our concepts and where I was really able to finally understand the Excel homework.

            Blogging was something new from me and I am pretty indifferent with my opinions towards it. I do think it was a great idea to have discussions about the blog posts in class and how the professor called out specific student’s blog posts because that showed that what I was writing will actually be read. I did feel that I did learn a lot about blogging and about how an economic concept could be perceived as something completely different from different students. I made sure to write my blog posts first and then read my peers to test my knowledge beforehand on the concept that we were to talk about. For my blog posts my process was pretty standard. If I didn’t understand a concept I would go back to our class website and read more about it or Google the concept and just write for anywhere from 20-40 minutes. The Excel homework required some research before hand so that I could understand the concepts or else I would never be able to complete the assignments. The Excel homework usually took a lot longer than the blog posts and every Excel homework varied in the amount of time it took me to complete it.

            What I think could be an improvement in the course is for every Excel homework assigned if as a class we had a discussion about the concept and basic equations before the homework was due and not after. I think this would tie everything together more and I know we did it a couple of times but to make it a requirement before every assignment would be beneficial and cut a lot of time that the Excel homework took to complete. 

Reputation and Branding

Last summer I interned at JP Morgan Chase (JPMC). JPMC is an American multinational banking and financial services holding company and the largest bank in the United States by assets. Brand and reputation are two huge concerns that I saw first hand at the bank in order to keep their clients and to bring in the type of clients that they want.

JPMC brands itself as a very conservative and universal bank. Because JP Morgan and Chase merged together, they are not a financial institution that serves various lines of business including investment banking, asset management, private banking, treasury & securities, commercial banking, & retail banking. This universal and global brand is very important for their reputation.

JPMC has a reputation of being very conservative and serving clients who have the same ethics and morals that JPMC has. Because of this reputation, they have to be somewhat picky with their clients so that their reputation does not change. Since JPMC is such a strong bank, regulations are crucial to maintaining their reputation. Any mistake that one employee of the bank makes can ruin the JPMC reputation they have taken years to build. The London Whale is a good example of how a mistake by one trader who worked for JPMC can cause so much damage to JPMC, which is why now more than ever their reputation is very important in managing.

Their brand and reputation is the most significant in order to keep a client’s loyalty. JPMC wants to make sure their client’s trust JPMC and that they do not lose any clients because of bad reputation. I think JPMC is very aware of their reputation and always working on different branding to modify any reputational problems they run into. 

Reputation

Reputation is a vital factor for success. Whether it’s your academic, professional, or social reputation, I believe each are very important. Although it isn’t always great to care about what others think about you, the reality of it is that you have to in order to have a positive reputation. Since I was a sophomore here at the University of Illinois I have been heavily involved in a professional business fraternity. My reputation for this organization has been one of my biggest priorities ever since I was accepted an invitation to join the organization. My reputation developed from my involvement within the organization. I have always had big roles in different committees and made sure to surpass every goal I had for that committee and to portray myself as a professional at all times. My reputation also developed based off of the internship and full time job offers I was receiving. Since members of the organization always found out about the job offers I have received from the Business Career Fair that made my credibility and reputation higher and stronger. It has been a struggle to always try to maintain this reputation because the members of this organization are my peers so staying professional and timely all the time can be stressful. Since I see a lot of the members around campus that is something I also must always think about.

To keep my reputation intact, since I am a senior and have little responsibilities now within the business fraternity, I try my hardest to be a mentor. I offer mock interviews, resume critiques, and just meeting with the younger members of the organization to see if I can help them in any aspect of their professional business careers. Since I am a senior there are a lot of times where I wish I didn’t always have to stress about maintaining this reputation and with I could just “cash it in” but when I think of any of the immediate gains I could receive, none of them are as meaningful as having a positive reputation within this organization. The alumni relations we have are HUGE for our organization and I have been able to see first hand how the alumni’s of my business fraternity have helped various members of the organization with networking, internships, full time job offers, etc. so having a strong reputation will benefit to the success of my career. For example, if there was a job opening at a Financial Institution where an Alumni of my business fraternity is working, I want them to be able to think of me as a good candidate for that job which could possibly lead to an interview. Reputations go a long way in life and I would never want an immediate gain to get in the way of that. 

The Reality of the Principal-Agent Model

While interning a bank this past summer, I noticed a situation that acted more as a triangle, where the agent deals with two different principals. The agent in my example would be a banker of both the client and the bank. What the client wanted the banker to do for them was not always in favor of what the bank allowed or what would benefit the firm. Especially when dealing with pricing and the amount of money they are able to lend a client, it was hard for the banker and client to see eye to eye at times because there are certain things the banker was not allowed to tell the client. Specifically I saw the reactions that a client had when they received the right amount of money they were satisfactory with lending, but the pricing was not in their favor. This created an awkward tension, especially for the banker, since the banker was not the person calculating what that loan should be priced at. The bank has specific calculations and regulations that are set for these types of things and because of that the agent failed to satisfy the client while satisfying the bank. The banker was obviously not going to risk losing his job, which is why the relationship he built with that client is so important. He had to trust that their relationship was strong enough that this type of tension would not push the client away from the bank. Usually when this sort of tension arises, the banker will try to do something else for the client to make up for a price that the client was not happy with. For example maybe the banker would decrease the price on a different line of credit that the client has, create a better amortization schedule, etc.

After working there for 3 months I realized there were many types of ways to master this tension. Each banker had their own personal ways and even within that, clients was treated different. Because being a banker is so focused on relationship management, the ways to resolve the tension are not cookie cutter solutions. 

The Struggle with Group Projects...

Group projects to me are never 100% good or 100% bad. It usually is luck of the draw depending on the group members I am assignment to have. This semester, I specifically, have an example of a positive experience with a group project that I am still working in. For a political science course that I am in, we have a large project that we have been working on for the course of the semester. Our group is made up of 3 people total and we have had no problems to date. It worked out that all three of us got along very well and since our project was stretched out for so long, we have been able to work on every section of the project together. Every other week we meet up at the UGL for an hour or two at a convenient time (usually on Sundays) and work on our project together. Since all three of us are there, there is not a “slacker” in our group and everyone is happy. I believe that the reason we have been so successful in our group is because of our similarities in personalities and talent. We all have the same major, have take similar classes, and have similar interests in our project. Our group members were chosen based off of who preferred each topic so I think that was also a big factor in why we were doing so well, because we were all genuinely interested in our topic.

On the other hand, there have been many instances in my college career where my group project was the least desirable experience. During an online class I took last summer we were assigned a group project where we had to work on a debate together. This project seemed almost impossible since it was over the summer, online, and we were never able to physically meet with our group. Even getting ahold of my group members via email was extremely difficult. The way that we divided work was I sent an email with the parts of the debate and everyone just chose one section. We all worked on it separated and had no clue if our members were putting in the work and effort they should have been putting in before the debate. There was on group member who never responded to our emails and while we just assumed he got them, we emailed our professor to check if he dropped the course and when he said he is still enrolled we assumed that he would do the work for the debate. As the debate was approaching none of my group members still received any sort of response from the group member we hadn’t made contact with all summer so myself and another group member took it on ourselves to do his work. The day of the debate, that group member that wasn’t responding all summer never entered the debate so we were very glad we did his work for him. Although in the end our grade for the debate was great, it was a very stressful situation. Ten minutes before the debate started was the first time we were able to share with our group members the research that we did. We fully trusted one another to do the work and that was a very stressful situation. This was the worst example of a group project because of the lack of communication that we were able to have with our group members as well as lack of consistent effort portrayed from each group member.

Team Production Versus Individual Production

This article was a very intriguing article because it made me think of scenarios that I have experienced, but have not analyzed previously. I have personally experienced this phenomenon of procedural fairness when it comes to working with in a group environment. The concept of team vs. individual production as we discussed in class can be applied in the same experiment. 

A great example of this is when working in group projects compared to an individual project. While working in a group, every member has their own part or contribution which their effort is focused on that factors into the final grade that the entire group receives. Usually the work load assigned to each group member is equal. This can cause many problems if not everyone does their share of work and can negatively impact the whole group. Every member is responsible to do their part, but they also have the other group members to use as resources if they are having trouble. This isn't always necessarily fair, depending on who is in the group project, but it is how a group project works. You can get lucky and have a group of intelligent students who complete their work on time or you can have members who are not willing to put in the time and effort for the group project to be done correctly. The group members each get the same grade and the distribution of work is not separated dependent on who does what work. The only a way for the grade to change for a group project is if a professor has the group members grade each other and then the group members final group project group could have that be factored in. This method, however, is typically not used in a college school setting.

Individual work in a school setting directly corresponds to the effort and intelligence that an individual puts into an assignment, while studying for a test, or any other individual assignment. This is irrelevant of other people and your grade is dependent on you. The procedural setting of working in a group project or doing an individual assignment corresponds with the distribution of wealth, which for a school setting would be grades. 

If I had to choose a preferred type of work, a group versus individual assignment, I would have a different answer dependent on each class. There are certain classes where a group is extremely helpful and others where it is not. While I have preferences for each, I believe that the group members are the biggest asset in determining grades.

Illinibucks

Illinibucks seem like an interesting concept to implement for the campus. While at first I did think that Illinibucks could be very positive for such a large campus and make figuring out who gets priority easier, (whether it’s senior students, athletes, etc.) it could also cause anger among students due to the change in the process. This sort of change puts money on top of the list, meaning that if a student had the money, they would have priority over anyone else, which does not seem fair. Things that would be a candidate for this are things such as registering for classes, purchasing books, sporting events tickets, and many more.

My first priority when it comes to anything having to do with this university is getting my preferred class schedule. That is why the first thing I would use my Illinibucks for is getting priority to be one of the first students to register for my courses. The next thing I would use my Illinibucks for is for books. Other than those two things, I can’t imagine really using them for anything other than books and registering for classes because I usually don’t attend a lot of sporting events.

I believe that a number of prices would arise if Illinibucks were actually implemented. Setting a price would be very difficult and could cause a potential loss in money for the university. If the price is too low then too many students will have priority, therefore too many people would have priority which defeats the purpose. If the price is too high for the Illinibucks then the same thing could happen. Not enough students would buy it which means that everyone has the same priority and that Illinibucks are benefiting anyone. It also gives a dollar amount to get first priority, which should be the case in my opinion. Being a senior, having a high GPA or large amount of credit hours should be more important for giving someone a priority rather than the amount of money they have. 

Managing Future Income Risk

Managing future income risk, I believe, all starts from the day you are born. Every decision made in life, affects where you will be in the future. Some of the biggest factors are what your major is, activities and organizations you are apart of, and your location.

The University of Illinois has a great career services, which has what seems like an unlimited amount of resources for students to search career opportunities. With all these resources, what makes a student qualified for a job? Certain requirements include GPA, major, location preference, courses taken, and many others. If you do not have one of the qualifications that a job requires, applying for the position could not be a possibility for you anymore. So ultimately, your decision to not take a class or to pick a certain major could be the reason why you are or are not qualified for a certain job.

At U of I certain majors are more heavily recruited; for example, an accounting major. U of I has one of the most prestigious accounting programs in the world and because of that, all of the best accounting firms do whatever they can to recruit and hire as much U of I graduates as possible. The Big Four (PwC, Deloitte, KMPG, & Ernst and Young) have dedicated so much time at the College of Business and donated so much money to make sure that the College of Business does a good job marketing their companies so that every accounting graduate wants to work for one of the Big Four.

I have a friend who graduated from U of I in May 2013 with a Masters Degree in Accounting. When he described his recruitment process for how he obtained his current job at PwC, (with a very nice salary) he explained it as “very easy.” He interned for PwC for two summers in a row and said that he expected nothing less but than to receive a full time job offer from them. He explained that the reason it was so easy is because being an Accounting major at U of I, having a GPA over 3.5, and being personable are the 3 things that any accounting firm is looking for and will hire almost without a doubt.

It was interesting to hear about how “simple” his process was in comparison to the struggle that other U of I graduates with different majors face to land a full time job. He made it sound too easy and almost unfair. From my perspective, he was working for that job offer for three years. He chose a difficult major, was able to maintain a great GPA, and sacrificed his summers to intern at an accounting firm instead of the typical life guard job that most students have over summers. He sacrificed a lot to make sure getting a full time job was easy. He managed his income risk by doing all the work beforehand to guarantee the results and the income that he wanted. 

Opportunism

Opportunism – “the taking of opportunities as and when they arise,

regardless of planning or principle.”

In college, opportunistic opportunities arise regularly. For a college student, it is quite simple to take advantage of opportunistic opportunities in regards to taking advantage of a parent’s financials. While I believe that if you are going to take advantage of something in an unethical manner, it shouldn’t be with your parents money, however not every student would agree.

I have a friend who did this exact thing. For our apartment we each had to put down a quite large security deposit. The security deposit was an equivalent to our first month’s rent, and with Champaign’s rates, I’m sure everyone can imagine the high number that it is. We all received our security deposit about a week ago with checks made out to our names. Even though I know that each of us had our parents finance our apartments, one friend of mine thought it would be okay to cash that check and keep it for ourselves. I, on the other hand, wouldn’t be able to do that to my parents. I know that my parents most likely forgot about the security deposit that they were expecting to get back, but I knew that stealing their money wouldn’t be the ethical thing to do. After all they have done for me, there was no way I would have felt comfortable not returning them their money.

This situation made me think of how there are so many opportunistic opportunities that stand on a fine line of who would take advantage of them and who wouldn’t. Most of these opportunities have low risks of getting caught, but if you do, there are big consequences. The consequences usually, I believe, are reputational related.

Organizations and Transaction Costs

The summer of 2012 I interned at BMO Harris Bank as a Strategic Initiatives and Integration Intern. While it was a busy summer to say the least, this was primarily due to the fact that this was the summer that BMO Harris Bank was acquiring M&I Bank. This acquisition took a lot of work, money, and time for BMO. The reason for the acquisition is for expansion in locations that BMO Harris Bank did not have a strong presence in. M&I Bank was a diversified financial services corporation headquartered in Milwaukee, Wisconsin, USA, with $63.5 billion in assets. This large acquisition nearly doubled BMO Harris Bank’s footprint and has been creating great opportunities in their financial services.

Structure was one of the most difficult issues BMO Harris Bank was having with the acquisition. Because M&I Bank already had their own structure, having to tell them the new structure and all of the changes going to be made was a difficult task. The systems all had to be merged, employees of M&I Bank had to not only learn these new systems, but a lot of people were being moved around the bank, losing their jobs, or getting new roles at the Bank. Merging the two banks was difficult because in order for the acquisition to be successful, they had to make the merge seem as flawless as possible to the public.

Being a large sized Middle Market Bank, the organization structure is bureaucratic and had to stay that way with the acquisition. Everyone had specific job functions with individual responsibilities. There is a clear hierarchal structure within the bank, which had to be merged with M&I Bank.

Their brand and new marketing techniques was a critical part in the acquisition that I helped a lot with. It was important for the public to have the honest facts about the acquisition and changes that are being made to ensure and keep the strong relationships they have with their clients. The budget for marketing for the summer of 2012 was more than double what it normally was and that was due to their new logo that followed after the acquisition.

I was hired as an intern for BMO Harris Bank (along with 32 other interns in the Line of Business I worked in) because it was more economic for them to hire interns. Hiring a third-party of full time employee to do the work I did would be unnecessary costs for them and as interns, it is almost like an investment for BMO Harris Bank since a lot of interns receive full time offers. The benefits of hiring me were high enough to cover the company's transaction costs. Had they outsourced, the transaction costs of that service would have been much higher than the benefits.

Laura D'Andrea Tyson

Laura D’Andrea Tyson is an American economist born on June 28, 1947 in New Jersey. She is married to writer Erik S. Tarloff and has one son, Elliot S. Tarloff. 

Laura graduated with a B.A. in Economics from Smith College in 1969 and earned her Ph.D. in Economics from the Massachusetts Institute of Technology in 1974. She joined the faculty of the economics department a Princeton University in 1974 and remained in the position until 1977 when she became a professor of economics at the University of California, Berkeley. She was appointed a professor of business administration in 1990. She served in the Clinton Administration as Chairman of the President's Council of Economic Advisers from 1993 to 1995. She was a spokesperson in favour of GATT, arguing with Sir James Goldsmith on Charlie Rose that American jobs will be increased by the trade agreement. Tyson was Director of the National Economic Council from 1995 to 1996. Tyson has been a member of the Council on Foreign Relations since 1987, a board director of Morgan Stanley since 1997, a board director of AT&T Inc. since 1999, a board director of Eastman Kodak and is a member of the Committee on Capital Markets Regulation. From 1998 to 2001, she was Dean of the Haas Business School. From 2002 to 2006, Tyson was the first female Dean of London Business School. In December, 2009 it was announced that Tyson will join CB Richard Ellis Board of Directors on March 4, 2010. Tyson also sits on the FINANCE Strategic Advisory Board.

Laura Tyson has published a number of books and articles on industrial competitiveness, trade, and also on the economies of Central Europe and their transitions to market systems. Some of her books include Who’s Bashing Whom, The Global Gender Gap Report 2008, Economic Adjustment in Eastern Europe, and many more.

In addition to her professorship at UC Berkeley, Tyson is also a member of the Board of Trustees at UC Berkeley's Blum Center for Developing Economies. The Center is focused on finding solutions to address the crisis of extreme poverty and disease in the developing world. Her current research and interests is focused on changes in the global economy, doing business in emerging market economies, and US trade policy. 

I did not know about Laura before I was assigned this alias, however, I was able to learn that her work is very important. Over her lifetime she has had many prestigious positions throughout her career to prove her importance and intelligence. Her knowledge about Economics is a very large range and therefore she has written many books, written many columns, and lectured many individuals over her career to share her knowledge. Her expertise will relate to the material we will be discussing in the course on a broader level, an international level. A lot of what Laura studied had to do with international economics and the organization for that is much different than on a smaller level. The behavior of international leaders can differentiate because they have different incentives and motivations. It will be interesting to see the differences in structure of the two and the difference in the level of difficulty.