Noh Review Taxation: Residency

As some accountants are getting ready for the tax season, this post will help clarify some of the Canadian taxation concepts regarding residency.

Residency for Individuals

• The Canadian Income Tax Act imposes taxes based on Residency. This means individual who currently reside in Canada, who may or may not be citizens.
• Individuals who are not residents of Canada but are employed in Canada, carry on business in Canada or dispose of taxable Canadian Property are subject to Canadian taxation.
• Canadian Residents are taxed on their worldwide income, regardless of which country the income was earned in. To avoid double taxation, Canada has negotiated a number of international reciprocal tax agreements.
• Key Principle: The country in which income is earned has priority in taxing that income and the country of which the payer is a resident allows all or some part of the foreign tax paid as a credit against the domestic tax.

1) Full-time resident: taxed on his worldwide income for a full year

• Deemed: Sojourned in Canada for 183 days or more OR Have the characteristics of a non-resident
• Common Law: Continuing State of relationship with Canada

• Maintaining a dwelling
• Immediate family remaining in Canada
• Maintaining personal property and social ties in Canada
• Furniture, clothing, cars, medical insurance, seasonal residence, employment/investment with Canada, retirement savings plans, credit cards and securities accounts, landed immigrant status, passport, license, membership, retention of Canadian mailing address, telephone listing and newspaper subscriptions

2) Part-Year Resident: Taxed on his worldwide income earned during the part of the year he was resident in Canada

• Clean Break: Leaves Canada during a year and severs all ties with Canada (with a spouse and dependants)
• Fresh Start: Comes to Canada during a year after permanently severing all ties with the previous residence

3) Non-Resident: Taxed on his Canadian-source income

• Employed in Canada [Continuous business activity: Carried on business in Canada or Disposal of taxable Canadian Property]
• E.g. A non-resident selling something in Canada through a salesperson = carrying on business in Canada
• Through an independent contractor (Canadian retailer/wholesaler) = not carrying on business in Canada = not taxable in Canada on business income earned in Canada
• “A person who is a non resident for the whole year cannot be a part-time resident. To be a part time resident, there must be a period in which the person was resident, in the sense of a full-time resident, and a period in which the person was non-resident.”

Canada-U.S Tax Convention: Exists to avoid double taxation or tax avoidance. Exempts a CDN resident from U.S taxation on salaries, wages, and other remuneration if:

• Remuneration < $US 10,000
• Present in the U.S. for <183 days

Only Taxed in U.S if he had a permanent establishment in U.S:

• More than 50% of gross active business revenues in U.S
• Or business is for U.S. customers
• Defined as a fixed place of business through which business of a resident of (a country) is wholly or partly carried on.
• Places of management,  a branch, and office, a factory
• Individual who is resident in Canada, would only be taxed in the U.S if the individual has or had a “permanent establishment” regularly available to him or her in the U.S. The tax amount is capped at the income attributable to the permanent establishment in the U.S.

Residency for Corporations: Depends on resident vs. non-resident

Corporate Residence depends on:

• Deemed Resident if incorporated in Canada after April 26, 1965
• Common Law: Central management and control are in Canada; Real business is carried on in Canada; Permanent establishment in Canada
• If incorporated before 1965, still deemed resident if it was resident by the common law principle of control management and control; it carried on business in Canada after 1965

 

 

 

 

Noh Review's Special Edition: The United States of America

The United States of America - Empire?

There is a hot debate going on about whether or not America is an empire. This special edition will cover what I think about this certain topic.

America is currently the world’s most influential country, and it is deemed the global hegemon of today’s world. Aside from its power, political and economic influence, it has a hegemonic hyperpower because of its unilateral military actions worldwide. America has been successful in bringing order to the globe and has been able to order the world in favour of its own state. It has brought western values as an ideal standard to the world, through its experiences in colonialism, war and civilization. As such, America has the upper hand in this world and is fully capable of taking control of the world. But, there has been an immense amount of controversy in whether America is considered an empire, and whether the current world order is actually one of American empire. Many critics have carefully analyzed this topic and have been unable to conclude on a definite position to this argument. In my view, although America’s influence on the world does not perfectly fit into the definition of a formal empire, America’s power and impact on the world makes them an informal empire.

The European definition of an empire is a contemptuous state, whose primary aim is for power and status.  An empire is a system of governance forged by military conquest as part of a policy of colonialism. In an empire, there is an imperial core, and it has the colonies which are the dependencies on the periphery of the empire. The characteristics of an empire include substantial inequality, domination and subjugation. As the empire provides the benefits of military protection and potential citizenship rights to the colonies, the conquered people within the colonies must offer back the political allegiance, taxes, financial tributes, local troops to help out with the protection and defence of the colony as well as natural resources. This ties into the ideas of imperialism and colonialism which is the authority of an empire over foreign countries, where one has control over another country, territory or people. Realistically, America does not fit into this definition of a formal empire because such characteristics or relationships of dependency and exploitation do not exist between America and the other countries. America does have a bit of aspects of a formal empire because they currently operate 700 military bases outside its own borders. But, America does not suck resources from the colonies, and does not really have such formal relationships with countries outside its own borders. An empire is perceived to be a cynical, old-world game played by other people, and it is all about power and status. But, the US was formed on a non-cynical, optimistic moral vision of a political community. America was created in 1776 to be a political society that secures individual rights to life, liberty and the pursuit of happiness. It is definitely different from the European imperialism and colonialism. There is also very strong resistance for this view because American schools teach their citizens that they are not an empire. America justifies this argument by stating that the term “empire” is seen in a negative light and for that sense, people are jealous of America’s wealth and power and want to publicize a pessimistic image to America’s name. 

 

Although America does not have a formal empire as discussed above, they have an informal empire. It is true that America has no formal, legally declared links between core and periphery, nor formal, publicly-declared links of dependency. But, America can still set up the ground-rules of the world system in its favour. America chooses not to formally declare that they are an empire, but America still meets the conditions of being an informal empire. America has the biggest economy and military as well as the most political influence in the world. On top of these, America has the biggest consumer base and brings in tons of population for both foreign investment and immigration. Accordingly, America meets the criteria of being an imperial core. It is also important to revisit America’s history as they may have been an imperial project since its founding in 1620. America claimed land and power from East to West and down to Texas and Florida. As indicated on a historical map of the growth of America, there is a clear sign of relentless expansion of territorial control which extended into Alaska, Hawaii, Germany and Japan as well as into the Middle East.

Moving forward with the argument that America indeed has an informal empire, there are definitely advantages and disadvantages for the world. The world lacks a universal government or entity which protects citizens globally and keeps the globe in order. And, America is the only country on earth capable of bringing some order to the globe and preventing an un-governed, chaotic condition of complete fighting and conflict between various groups, also known as anarchy. Due to America’s capabilities and high economic status, American empire is a source of stability which all nations can benefit from. Benefiting from the values of capitalism and free trade, America can run profitable businesses and a productive free market economy which has generated more money and a higher standard of living. America is a prime and ideal country that stands for great values of human rights, individual freedoms, democracy, free and fair elections, separation of church and state and the grown of science and technology. As these values get spread, America does the world a favour by strengthening these values across the globe. However, many see America’s informal empire as a bad clause. Noam Chomsky is the leading critic of the American empire, referring to it as the “ultimate conspiracy theory.” According to his theory, America was originally formed with respectable ideals, but has now turned into a corrupt society which is run to benefit the rich and powerful elites. The government is focused on its own self-interests, which uses the customary people in securing benefits and only rewarding social peace when necessary to hold onto society. America primarily uses their military to offer entertainment from Los Angeles to keep the powerless people happy and stunned.  This view conforms to the belief that any form of empire is a violation of democracy and forbids people in the ability to choose their own preferred form of governance.  The American empire is one of the worse in history because Americans are ignorant, know minimal information and do not care about the rest of the world. Chomsky relates this to a historical analogy of the Roman Empire, which started out adequately with benefits for its people but became an empire motivated by power and money due to corruption. In fact, America may be moving towards the same pact of the Roman Empire in its time.

America holds the biggest power across the globe and has a large contribution to the success of the world as a whole. As America contributes to the core of all international relations and the upbringing of international law, many countries across the world benefit from this single power. Since America does not officially engage in relationships of dependency and exploitation, they are not a formal empire. However, America’s enormous influence on the world coupled with their history of territorial control makes them an informal empire. American empire can benefit the world by bringing stability and order and increasing the standards of living. American empire can also be a dangerous one due to its massive corruption as per Chomsky’s conspiracy theory. Whether or not America will declare an empire in the future, America’s supremacy will reign for many periods to come.

Noh Review on Companies & Industries - September 19, 2012

Harvard Business Review "Morning Advantage: Is Apple Too Focused on Profits?" by Sarah Green

Summary:

• Although Apple always talks about their innovation, Apple only spends 2% of revenue on R&D (Google and Microsoft 14%, Samsung 6%)  
• But, does this tell us anything about the effectiveness of their R&D spending? Apple may simply spend their R&D dollars more wisely than the other companies. Or it could be that their brand and marketing are doing the job.
• The smartphone market consists of 68% of Androids and 17% of iPhones. Apple has luxury products and their product market focus is the upper end of the economic spectrum. Their pricing is relatively high, so the lower end consumers cannot afford to buy their products. This explains why Apple's phones are losing market share.

Noh Review:
In my opinion, the argument raised by Dan Lyons (MIT Technology Review) is flawed.
1) It is not wise to talk about Apple's dedication to R&D while comparing the percentages. It is true that Apple devotes the least percentage of their revenue to R&D. But, it is important to realize that Apple's net revenue (denominator) beats many other companies' revenues by a clear mile. Let's look at some numbers here.

Apple in Fiscal Year 2011:
Revenue: US$ 108.25 billion
R&D Spending (2%): US$ 2.17 billion
Net income: US$ 25.92 billion

Samsung in Fiscal Year 2011:
Revenue: US$ 148.94 billion
R&D Spending (6%): US$ 8.94 billion
Net income: US$ 12.06 billion

Google in Fiscal Year 2011:
Revenue: US$ 37.91 billion
R&D Spending (14%): US$ 5.31 billion
Net income: US$ 9.74 billion

When Dan Lyons said 14% for Google and 2% for Apple, we all thought "Wow, that's a big difference." But, the difference seems more reasonable now that we see the actual numbers: $2.17 billion for Apple and $5.31 billion for Google. It is true that compared to Samsung and Google, Apple's R&D expenditure is quite low. But, they still spent $2.17 billion on R&D last year, which is still one of the highest in the industry.

2) The R&D expenditure amount does not indicate the effectiveness of R&D. Maybe, that $2.17 billion is the most optimal amount that Apple can efficiently handle. Just because the R&D spending is relatively low, it does not necessarily mean that the R&D payoffs are low.

3) Apple knows how to properly operate their company. With a major boost coming from their high pricing strategy and efficient spending, Apple's profit margin was at about 24% in 2011 fiscal year. This is quite comparable to Samsung's 8% profit margin. With Apple's proven efficiency, it is hard to doubt that they are not being efficient with their R&D expenditure.

Actually, everything has been working out fine for Apple. Regardless of what kind of products they release, a large portion of their consumers will always love their products. Just when the iPhone5 was announced, some critics and analysts were disappointed with the new features of the phone. They all said the new iPhone5 is far from being "innovative." But, it still broke the sales record. It was sold out within the first hour of availability, and the projected sales stand at about 58 million units. This tells us something: Apple has successfully established their brand.

Article: http://blogs.hbr.org/morning-advantage/2012/09/morning-advantage-is-apple-too-focused-on-profits.html
Apple - Press Info: http://www.apple.com/pr/library/2012/09/17iPhone-5-Pre-Orders-Top-Two-Million-in-First-24-Hours.html

Noh Review on People – September 17, 2012

Bloomberg Businessweek "The More We Automate, the More People Matter" by Harold Sirkin

Summary:

• It only took 45 minutes for Knight Capital Group to lose $440 million from a computer glitch. Maybe, companies are paying too much attention to electronic technology instead of the professional development of people.
• “Everything always works just like it’s supposed to work, except when it doesn’t.” - There could always be a power outage, a fire, an accident, a computer error, a human error, a storm, a crime, a revolution or a financial meltdown. Risk management is about recognizing all of these possibilities that might disrupt your business. This includes backup plans and protocols as well as testing and training in case something happens. For proper risk management, we need the right people with proper training.
• Companies which invest in recruitment, training, and job satisfaction of their employees outperform other companies by a substantial margin, which indicates that people matter more than technology.

Noh Review: People say that later in the future, there will be more automation. And, they say that due to the automation, many people will lose jobs. Basically, we are talking about a world where technology replaces humans. But, what people are forgetting is that the more machines we have and the more we automate, the more people matter. More automation means more dependence on machines and equipment. But what if the machines fail? Machines cannot protect themselves. Automation alone cannot manage all sorts of risk of failure or risk of loss. We need people to protect the organization along with the machines. And in order to do that, recruitment, training and job satisfaction are required.
Morale of the story: When you know that your company will start to automate, start investing money on the people, not just on the technology.

Article: http://www.businessweek.com/articles/2012-09-05/the-more-we-automate-the-more-people-matter

Noh Review on Companies & Industries – September 10, 2012

Bloomberg Buisnessweek "Netflix Would Like Very Much to Change the Channel" by Nick Summers

Summary:

• Netflix has lost more than 80% of the value since their peak in 2011. 
• Amazon is Netflix's main competitor, and they are taking subscribers away from Netflix.
• Netflix has no hardware sales or advertising revenue, so their best bet is making steady subscription revenues. (current domestic streaming subscriber rolls at 24 million)
• Netflix's library of movies and TV shows is getting gradually replicated by their competitors, such as Amazon, Redbox Instant, Hulu and iTunes. If all of them offer the same content, the only realistic way to stay competitive is by having competitive prices. But, Netflix's subscription costs about $96 per year while Amazon's costs $79.
• As Cable Network AMC made a breakthrough with a single hit with Mad Men, Netflix is trying to change and become the HBO of the Internet with 5 original series by early 2013. At least until then, Netflix's stocks do not seem to have a bright future.

Noh Review: I bet when Netflix first came out, Blockbuster was scared. Netflix offered online video service while Blockbuster tried to compete with their video rental service. Basically, new technology declared a war against old technology. In the end, new technology won the battle. I wouldn't be exaggerating when I say Netflix bankrupted and demolished Blockbuster. Needless to say, Blockbuster ended up going on sale for the embarrassing starting price of $290 million, and they were bought by Dish Network at auction for $233 million. Analysts say that Blockbuster's fall resulted from poor strategic planning and mismanagement aside from the fierce competition. I say that they failed to keep up with the changing times and trends. Consumers are getting lazy. They do not want to physically get up and go to a store to rent a DVD when they can simply watch it on their computer. Only a portion of them do. Netflix was destined to win this battle because their strategy matched better with the social trend.

But now, Netflix needs to look around and realize that they have other competitors in the video rental/streaming market. Amazon is threatening their position. Something needs to be done with Netflix's price. If it cannot get any cheaper, they need to figure out another creative way to boost their subscriptions. In 2011, Netflix made total revenues of $3.2 billion, but they only ended up with a net profit of $226 million, which amounts to about 7% of that. Based on other factors considered, they need to cut down on some of their unnecessary expenditures. Most importantly, Netflix should learn from Blockbuster's mistakes and focus on not falling behind the times. In that sense, it is good to see their plan to reinvent themselves as the HBO of the Internet by 2013. Regardless of what they say, Netflix is constantly moving.

Article: http://www.businessweek.com/articles/2012-09-04/netflix-would-like-very-much-to-change-the-channel

Noh Review's Special Edition: Concepts of Auditing

Noh Review's Special Edition: Concepts of Auditing

As requested by some of the subscribers, here is a special edition of Noh Review on Auditing. The following content will summarize the basic concepts of Auditing. For some readers, this may be a great refresher. And for others, this may be a good opportunity to have a taste of some Audit concepts.

What is the difference between Audit and Review?

• Audit is the evaluation and accumulation of audit evidence to see if the audited entity complied with the established criteria. Review is similar in this sense, except that it is less extensive than audit. Review is also less costly than audit because audit provides the most assurance, and review does not go as deep as audit.

Public Accountants' Ethical Dilemma

• Deciding whether or not to overlook a material overstatement of revenues to maintain a good client relationship

What are some of the threats?

• Self-interest Threat: E.g. The client could not pay their fees for the last 2 years, so the Public Accountant created a loan agreement covering the fees, with the client paying 10% interest on the fees.
• Advocacy Threat: E.g. The Public Accountant has been hired to manage the accounting department for 3 weeks while the corporate controller is on vacation.
• Familiarity Threat: E.g. The Public Accountant has been working with the client for 10 years, first as a manger, now as a partner.
• Intimidation Threat: E.g. Management threatens to change auditors if you do not let them overstate accounts receivable by $100,000.

What are the types of Audit evidence?
1) Inspection: E.g. Audit Procedure: Count inventory items and record the amount in the audit working papers. Examine a piece of equipment to make sure a recent purchase of equipment was actually received and is in operation.
2) Confirmation: E.g. Audit Procedure: Obtain a written statement from the client's bank stating the client's year-end balance on deposit.
3) Recalculation: E.g. Audit Procedure: Re-foot entries in the sales journal to determine whether they were correctly totalled by the client
4) Observation: E.g. Audit Procedure: Watch client employees count inventory to determine whether company procedures are being followed.
5) Inquiry of the Client: E.g. Audit Procedure: Obtain information about the client's internal controls by asking questions of client personnel
6) Re-performance: E.g. Audit Procedure: Trace totals from the cash disbursements journal to the general ledger
7) Analytical Procedure: E.g. Audit Procedure: Review the total of repairs and maintenance for each month to determine whether any month's total was unusually large. Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year.

What is the difference between Subjective Evidence and Objective Evidence?

Sujective Evidence: E.g. Inquiries of the credit manager about the collectability of non-current A/R

Objective Evidence: E.g. The physical count of securities and cash

General Transaction-Related Audit Objectives:

1) Occurrence: Recorded transactions occurred.
2) Completeness: Existing transactions are recorded.
3) Accuracy: Recorded transactions are stated at the correct amounts.
4) Classification: Transactions included in the client's records are properly classified.
5) Posting and Summarization: Recorded transactions are updated to the master files and are correctly summarized.
6) Timing: Transactions are recorded on the correct dates.

General Balance-Related Audit Objectives:
1) Existence: Amounts included exist at the Balance Sheet date.
2) Rights and Obligation: Assets and liabilities belong to the entity.
3) Completeness: Existing amounts are included.
4) Accuracy: Amounts included are correct.
5) Valuation: Assets are included at the amounts estimated to be realized.
6) Classification: Amounts are properly classified.
7) Detail tie-in: Transaction details sum to the master file amounts, and subsidiary records agree with the balance in the General Ledger
8) Cut-off: Transactions near the Balance Sheet date are recorded in the proper period.

General Presentation and Disclosure-Related Audit Objectives:
1) Occurrence: Disclosed information has occurred.
2) Rights and Obligations: Assets belong to the entity and obligations are owed on behalf of the entity.
3) Completeness: Relevant disclosures should be included.
4) Accuracy: Information should be mechanically accurate.
5) Valuation: Information should be disclosed fairly.
6) Classification: Information is appropriately described in the correct accounts.
7) Understandability: Amount balances and related disclosure requirements are clearly presented in the financial statements.

Real Life Example #1: How to Audit Accounts Receivables
Your goal as the auditor is to detect audit risks, such as 1) receivables do not exist 2) recorded receivable balances are inaccurate 3) it may not be possible to collect A/R 4) the derivation of the allowances for doubtful accounts may not properly reflect bad debt experience 5) sales transactions were not processed in the correct periods 6) revenue was incorrectly recognized.

1) Trade receivables report to G/L: Trace the grand total of A/R Aging Report to the A/R total amount in the G/L. If these totals do not match, there could be a journal entry in the G/L which should not be there.
2) Calculate the receivables report total: Add up the invoices on the A/R aging report to verify that the total traced to G/L is correct.
3) Investigate reconciling items: If you have A/R-related journal entries in the G/L, review the justification for the larger amounts.
4) Test invoices listed in receivables report: Select some invoices from the A/R Aging Report and compare them to supporting documentation to see if they were billed in the correct amounts, to the correct customers, and on the correct dates.
5) Match invoices to shipping log: Match invoice dates to the shipment dates for those items in the shipping log, to see if sales are being recorded in the correct accounitng period.
6) Confirm A/R: Select some larger account balances and contact your customers directly and ask them to confirm the amounts of unpaid A/R as of the end of the reporting period.
7) Review cash receipts: Verify that customers have paid the invoices.
8) Assess the allowance for doubtful accounts: Review the process with a consistency comparison with the method you used last year, and a determination of whether the method is appropriate for the business environment.
9) Assess bad debt write-offs: Compare the proportion of bad debt expense to sales for this year in comparison to prior years, to see if the current expense appears reasonable.
10) Review credit memos: See if credit memos were properly authorized, whether they were issued in the correct period, and whether the circumstances of their issuance may indicate other problems.
11) Assess bill and hold sales: Examine your supporting documentation to determine whether a sale has actually taken place.
12) Review receiving log: See if the receiving log records an inordinately large amount of customer returns after the audit period, which would suggest that the company may have shipped more goods near the end of the audit period than customers had authorized.
13) Related party receivables: Review them for collectability.
14) Trend Analysis: Review a comparison of A/R and sales over time to see if there are any unusual trends.

Real Life Example #2: How to Audit Inventory
1) Cut-off Analysis: Examine the procedures for halting any further receiving into the warehouse or shipments from it at the time of the physical inventory count so that extraneous inventory items are excluded.
2) Observe the Physical Inventory Count: Familiarize with the procedures used to count the inventory.
3) Reconcile the Inventory Count to the G/L: Trace the valuation compiled from the physical inventory count to the company's G/L to verify that the counted balance was carried forward into the company's accounting records.
4) Test High-value Items: Ensure that high-value items are valued correctly and trace them to G/L.
5) Test Error-prone Items: If you notice an error trend in prior years for specific inventory items, test these items again.
6) Test Item Costs: Find out where purchased costs in the accounting records come from, so you can compare the amounts in recent supplier invoices to the costs listed in the inventory valuation.
7) Test for LoCM (Lower of Cost or Market): Compare a selection of market prices to their recorded costs
8) Finished Goods Cost Analysis: Review the bill of materials for a selection of finished goods items, and test them to see if they show an accurate compilation of the components in the finished goods items and correct costs.
9) Direct Labour Analysis: Trace the labour charged during production on time cards to the cost of the inventory. Investigate to see if labour costs listed in the valuation are supported by payroll records.
10) Overhead Analysis: Verify that the company is consistently using the same G/L accounts as the source for overhead costs, check for abnormal costs, and test the validity and consistency of the method used to apply overhead costs to inventory.
12) Work-in-Process Testing: Test how the company determines a % of completion for WIP items.
13) Inventory Ownership: Review purchase records to ensure that the inventory in the warehouse is actually owned by the company.
14) Inventory Layers: If the company is using a FIFO or LIFO inventory valuation system, test the inventory layers recorded to verify that they are valid.

Noh Review on Sustaining Excellence – September 9, 2012

1. Harvard Business Review “For Those Who Want to Lead, Read” by John Coleman

Overview: This article emphasizes the importance of reading and how reading can develop you to become a better leader. It mainly focuses on the benefits of reading in the context of leadership.

Key Lessons:

• Benefits of reading: insight, innovation, empathy and personal effectiveness
• Reading can improve your intelligence by developing your vocabulary and knowledge as well as abstract reasoning skills, which eventually leads to innovation and insight.
• Reading can increase verbal intelligence and help a leader become a more adept and articulate communicator.
• Reading novels can improve empathy and understanding of social cues, strengthening teamwork and collaborative skills.
• An active literary life can help you stay relaxed and keep a great work-life balance. 

Noh Review: Some people do not like reading because it isn’t exactly an exciting activity. This is especially the case if we are talking about a thick book. What is the main purpose of reading and what is it that people get from reading a book? The answer is obvious and simple. We mainly read a book in order to go through what is written in the book. To enjoy the aforementioned benefits of reading, you don’t necessarily have to read a physical book. Some people prefer reading soft copy over hard copy because staring at the computer screen helps them stay committed and focused. It can even be audio files, mp3 files or video clips which contain the same content of a book. It can really be anything. As long as you are regularly and constantly engaged in the process of obtaining new knowledge, you are on the right track to your personal development.

Article: http://blogs.hbr.org/cs/2012/08/for_those_who_want_to_lead_rea.html

2. Harvard Business Review “Ten Reasons Winners Keep Winning, Aside from Skill” by Rosabeth Moss Kanter

Overview: This article discusses how winners sustain their success. It explains 10 important advantages that winners take away from their victory to win again.

Key Lessons: 

In the context of sports, life, in-the-office, etc., winners keep winning because of the following advantages resulting from a victory:

1) Winning puts the winner to a good mood. Because we are humans with feelings, emotions affect our performance. 

2) Winners stay longer together while losers go home early. Spending more time together leads to more solidarity, information sharing and mentoring.

3) Winners accept negative feedback in order to improve while losers tend to avoid feedback. For example, when you receive a horrible mark on your exam, you feel too ashamed to open the exam. Instead of going over every question and figuring things out, you just want to forget about it and be done with it for now. On the other hand, when you receive a 96% on your exam, you feel happy and confident enough to ask your professor where you lost the 4% so that you can learn and improve for the future.

4) Winners have fewer distractions while losers have their own pressure to win and make up for their previous loss

5) Once a winner wins, he has the time and optimism to maintain high aspirations and act generously toward others. This creates a positive culture of mutual respect. 

6) Behind a victory, there’s a solid support system. The support system stays there for the winner’s second and third win. 

7) Winning produces favourable story about the past and future while losing produces more criticism.

8) Winning grants you access to valuable networks and relationships.

9) Winners have more control over their own destiny because they have self-determination.

10) Winners can enjoy their stability and long-term strategies whereas losers often confront new coaches, strategies and systems for the purpose of trying to win next time.

• As long as a winner does not get over-confident, arrogant or complacent, his comebacks are more likely to happen due to the advantages that he has.  

Noh Review: A victory never guarantees anther victory. The competition might get tougher or the winner may lose his motivation to pursue the next victory.  If you have won something in life and you want to keep winning it in the future, I want you to know that regardless of all the odds, you are still at an advantage over others who have yet to win.

Article: http://blogs.hbr.org/kanter/2012/08/ten-reasons-winners-keep-winni.html

Noh Review on Companies & Industries – September 4, 2012

Bloomberg Businessweek “At Abercrombie & Fitch, Sex No Longer Sells” by Sapna Maheshwari

Overview: This article is about Abercrombie & Fitch and where it is currently positioned. A&F is going through hard times, and the author believes that it will only continue to get worse for them.

Key Lessons:

• A&F once attracted many teenagers with their sexy models, but their marketing is losing its edge. They have lost 1/3 of the market value in the past year with falling sales in Europe and the U.S.  Abercrombie shuttered 71 U.S. stores, and will close another 180 through 2015.
• A&F failed to change with the times. It’s great that they have sexy models to represent their store. But, what are they trying to accomplish here? Does the sexyness of their models mean anything to the customers? A&F no longer has the next big thing which attracts customers because their “coolness” is disappearing. On top of that, customers are less inclined to wear A&F’s expensive clothings, so they began moving on.
• Abercrombie's brand is supposed to appear rebellious, indie and different. But, the current product mix does not communicate or facilitate the brand.
• The good thing going for A&F is that they are about to expand into China and the Middle East. However, there is no saying that the brand's fading cool will not catch up with the local shoppers in Dubai and Shanghai.

Noh Review: A&F must change their current strategy because there no longer exists a core idea in it. The A&F brand is fading because their “coolness” or “sexyness” no longer strikes the consumers’ interest or desire to purchase. A&F are losing their popularity, but they are not losing their high prices. At this rate, their sales and market value will continue to suffer. They should actively conduct product research and product market survey to find out what the current trend considers rebellious, indie and different. The least that they can do at this point is to change their current pipeline of products and have the proper product mix in order to minimize the damage.

Article: http://www.businessweek.com/articles/2012-08-30/at-abercrombie-and-fitch-sex-no-longer-sells#r=com-s