Business news in the papers.....

A couple of unusual business stories caught my eye in the newspapers in the last couple of weeks which make for interesting reading.

Mafia take advantage of global economic crisis.

With many businesses in Italy unable to get access to cash at the moment and the value of their businesses falling, the mafia have emerged as one organisation who could benefit from the recession. The mafia, for example Sicily's Cosa Nostra, are able to get stakes in legitimate businesses at bargain prices and use them to launder "hot" money (illegal money). The combined annual turnover of Italy's mafia was calculated at €3billion two years ago, bigger than ANY legitimate Italian corporation. They have access to a vast pool of ready cash which can be tempting to businesses in trouble.

What media do teenagers think is worthwhile?

A 15 year old Morgan Stanley intern was asked to write a report on what teenagers liked and disliked and it has caused a lot of interest amongst media executives and investors. The bank wanted to know about the benefit of taking over social networking and mesaging sites but the intern said that although teenagers were using more and more media, they weren't prepared to pay for it. He also said that teenagers don't read newspapers other than cheaper tabloids, and prefer to listen to advert-free music on websites. Most teenagers wouldn't pay for music and find pop ups and banner ads annoying. He did identify the cinema, concerts and video game consoles which can be connected to the internet as the popular things amongst young people.

The report was described as "one of the clearest and most thought-provoking insights we have seen" and has generated five or six times as many responses from people as usual.

McDonalds move HQ to Switzerland

McDonald's have announced their decision to join Yahoo!, Google, Procter and Gamble and Colgate-Palmolive by moving their European headquarters to Switzerland to take advantage of their advantageous tax laws. The move will bring together all of McDonald's regional centres - London, Paris, Munich and Vienna. McDonald's have denied that it has anything to do with new UK tax rules which have recently taken effect.

CHECK OUT THE MANAGING THE BAND VIDEOS!

Click on the S2 Administration link to see the videos that my class made at the end of the Managing the Band project. Their remit was to interview each other about the various different things they did during the project. Obviously for security and safety purposes, they couldn't film themselves and publish it on the blog - click on the link to see how we got round it!

Coffee Republic goes into administration

Despite news today that the worst of the recession may be over, it was too late for coffee chain Coffee Republic, started in 1995,  who went into administration today. It has 187 outlets, 20 of which are directly owned (and therefore affected by administration) whereas the rest are franchises or concessions in cinemas or hotels. Job losses amongst it's 153 directly employed staff are likely. 

Administration is a rescue mechanism for UK companies in severe trouble and, with supervision, attempts to enable a business to try and trade its way out of difficulty. A business which is in administration cannot be wound up without permission of a court. 

The UK has the most branded coffee bars in Europe and the three biggest are Starbucks, Costa and Caffe Nero. 

Diageo says goodbye to Kilmarnock

The drinks giant Diageo has announced that it plans to cut 900 jobs in Scotland, 700 of which will go as a result of shutting the packaging plant in Kilmarnock. 

The decision to close the plant in Kilmarnock raises the question of what level of commitment a business should have to the community in which it is based. Diageo's decision has been taken because they feel that moving some of the jobs to alternative sites in Scotland and reducing their workforce makes the business more sustainable in a global environment. Sales were down 7% in the first three months of this year as a result of the economic downturn, particularly in Russia. However, the impact of the closure on Kilmarnock, a town which has already been badly hit in the recession, will be huge. The Johnnie Walker brand has been part of Kilmarnock since 1820, since John Walker established a shop and produced a blend which became the world's most popular whisky. 

Although the Scottish Government has become involved in an effort to save jobs in the local area, it is difficult to see how they can change the course of action Diageo are planning to take.