The latest entrant into the merchant-deals game is Bank of America Corp., which is testing a service with employees in North Carolina, South Carolina and Nevada that delivers merchant offers directly to users within their online bank accounts.

The big differences: The deals are pegged to card activity and, instead of printing a coupon or downloading a bar code on a mobile phone that a retailer must scan, the customer opts into a deal by clicking on it within their list of purchase transactions. They redeem offers by swiping their debit or credit card at the merchant offering the deal.

“Really interesting,” said Thomas Hubbard, a professor of management and strategy. “Groupon is a modern Green Stamps, which credit card rewards killed.”

BASF announced last week that it was moving its genetically modified plant-science headquarters from Germany to the United States. The chemical firm said widespread resistance to GM crops in Europe prompted the move, one which mirrors a decision the company made two decades ago when it opened a biotech research lab in Boston.

The company said it will relocate 123 jobs from Limburgerhof, Germany, and other European facilities to Raleigh, North Carolina. BASF was the last company still pursuing regulatory approval for GM crops in Europe, according to a Nature News Blog article. Though it won approval for its Amflora potato, it was the first time in a decade that a new GM plant was allowed to be grown in the European Union.

That BASF has elected to shift research and development in both transgenic plants and biotech to the United States should come as no surprise. There are strong sentiments in Germany against both technologies. “The anti-GM movement is in large part an offspring of the broader anti-biotech movement in the 1980s,” said Klaus Weber, an associate professor of management and organizations who has studied BASF and other German chemical and pharma firms.

While the German anti-biotech movement is still skeptical about the safety and benefits of medical biotechnology, it is more strongly opposed to applications in the agricultural sector, Weber said. Medical—or “red”—biotech had “undeniable medical and health benefits,” he noted, which made it harder to contest. Plus, the industry became highly regulated. Agricultural—or “green”—biotech, on the other hand, hasn’t had the benefit of perceived indispensability. Many early GM crops showed only incremental improvements over non-GM versions, and “industrial agriculture as a whole became suspect in the wake of major scandals, such as mad cow disease,” Weber said.

BASF’s pharmaceutical division stumbled when it moved from Germany to the U.S. in the early 1990s, but Weber doesn’t think the same problems will repeat themselves with the GM crop division. In the short term, the move will be expensive and disruptive, but the current global reach of the company’s R&D efforts, coupled with its partnerships with other firms like Monsanto, will insulate it from long-term problems. “I see this move as less problematic for BASF,” Weber said. “It is more of a problem for German research institutes that worked with them.”

Other firms have been closely watching the BASF case, Weber said, especially Bayer CropScience. While Bayer conducts much of its R&D on GM crops outside of Europe, it retains the division’s headquarters there much like BASF had. “As long as it is hard to get approval for outdoor tests and commercial scale permits in the EU, companies won’t invest a lot there,” he said. “The bigger question is whether BASF, Bayer, and others will keep their crop science units or sell them at some point.”

“My impression is also that BASF was acting not only on its own interest with the potato case, but also was trying to set a regulatory precedence for the industry as a whole. A lot of other companies were closely watching this case and there was certainly industry lobbying going on in support of the larger issue.”

That BASF decided to move its GM crop headquarters to the U.S. is a win for the anti-biotech movement in Europe, Weber said, “not just because of BASF, but because of the signal it sends to the entire industry.”

Further reading:

“The Fall of German Biotech” on Kellogg Insight

Photo from BASF.

Don’t miss the great video that accompanies the article.

“Unfortunately I’m not surprised with these results,” said Neil Ellington, executive vice president of Consumer Education Services, a credit counseling agency in Raleigh, N.C. “The same underlying issues that created the problem in mortgage lending, with minorities paying higher interest rates than their white counterparts having the same loan qualifications, are present in all financial fields.”

Via professor of marketing Galen Bodenhausen.

In a way, pharma and medical device firms already knows how to deal with such regulations. “Variations of this type of regulation have been around for a while,” said Lakshman Krishnamurthi, a professor of marketing, “particularly in the area of Continuing Medical Education where sponsoring drug companies must report their relationship with the medical presenters.”

But this new requirement, he said, “goes further.”

The majority of internists and general practitioners will probably not be affected, Krishnamurthi said, but specialists like oncologists, psychiatrists, and orthopedic surgeons who have closer relationships with pharma and medical device companies will likely notice some changes.

More likely to feel the heat of the new regulations are the companies themselves. “The rep picking up lunch for the office staff to chat up the receptionist or the nurse will not be able to do so, or will have to report it if he/she does so,” he said. “But this is small fry. The bigger question is the effect on consulting and research interactions between doctors and the drug/device industry. Yes, there can be abuses but one would expect the vast majority of these interactions to have positive effects on discovery, drug interactions, and use of drugs.”

The overall financial impact is also less clear, Krishnamurthi noted. Companies will have to generate and disclose reams of data to comply with the new laws. “This will not be costless,” he said. “These costs will be passed down. So, there can be unintended consequences of the increased reporting requirements in the form of higher prices.”

“The counter is that the companies will not be spending the monies in the first place to avoid the reporting requirements. There will be some reductions, but if the companies believe all—or most—of the spending is legitimate anyway, they will continue to spend the money.”

A few weeks ago, the New York Times published a piece about the tax benefits companies are deriving from stock options granted to executives just after the market collapsed in 2008. The story was succinctly summarized in these two lines:

Thanks to a quirk in tax law, companies can claim a tax deduction in future years that is much bigger than the value of the stock options when they were granted to executives. This tax break will deprive the federal government of tens of billions of dollars in revenue over the next decade.

Stock options are typically cashed in at higher prices than they were issued. The legal oddity to which they refer gives firms a tax deduction based on the price at which they were cashed in—the higher price—rather than the lower price at which it was issued.

Anup Srivastava, an assistant professor of accounting and information management, says it’s not as straightforward as the article makes it out to be. “Yes, firms will save taxes, but IRS will more than make up for it by collecting taxes from executives,” he said.

It’s well known that people pay at higher tax rates than corporations, sometimes much higher—GE, for example, didn’t pay any taxes last year. Yet the IRS won’t lose out because of most executives who cash in stock options sell their stock right away. This means they typically have to pay the normal income tax rate on the price difference between when the option was granted and when it was cashed in, Srivastava said. Since most executives are already in the highest tax bracked—35 percent—they will end up paying the full rate. And since many firms don’t pay taxes at the statutory rate, the income generated from taxing executives’ gains on options will likely be higher than the tax savings firms can obtain at their marginal rate, he said.

“In fact, the higher the difference between prices at which options are cashed in and prices at which options were granted, the higher the benefit IRS derives,” Srivastava said. “This difference increases as the grant price becomes lower. Thus, the lower the grant prices set during the recessionary periods, the higher the ‘net’ benefit IRS derives.”

Photo by Team Civil Air Patrol.

Here’s a pop quiz. Would you eat some unknown pieces of what looks like meat?

Well, a good answer is, “It depends. What is it?” Some of you would eat it if it were pork, but not beef. Some of you would eat it if it were beef, but not pork. Few of you would eat it if it were a rat or a human. Some of you would eat this only if these were strangely colored pieces of tofu.

“How senses could be so easily fooled,” notes Angela Lee, a professor of marketing.

Paul’s third-place finish perhaps wasn’t the result for which his campaign was hoping—he had surprising support in Iowa polls running up to the caucus—but his margin of loss was small enough that he’s still strongly in the race. I spoke with Mehmet Ekmekci, a political economist, about Paul’s prospects a few days ago and followed up with him on the outcome of the Iowa caucus. Ekmekci is particularly interested in divided electorates like Iowa’s and has developed a model to study them in depth.

“My model studies precisely such situations when the electorate is highly divided,” Ekmekci told me. “The vote difference between Romney and Santorum is just eight, and Paul is trailing with 3 percent. That’s really tight.”

“Now that some more noise is gone—Bachmann is out of the race—the real contenders are becoming more clear,” he continued. Other primaries may hold a surprise or two—say if Huntsman or Perry win or place well—but realistically, the field is down to Romney, Paul, and Santorum, Ekmekci said. Who comes out on top is a matter of endorsement, according to his research. “The nominee will be the one that gets the strongest endorsement from the establishment. So I would expect the candidates to tailor their speeches and platforms slightly to the Republican base.”

While Romney’s win may indicate that Republicans are willing to put aside their doubts about Romney to field an electable nominee, the degree of division in the vote leaves the door open to a nominee who is less palatable to the general public. “The candidate with the least chance of winning the general election may become the nominee, since the voters may divide their votes among the remaining two candidates,” Ekmekci said.

“In my view, Santorum has the least chance of winning a general election, but he has a significant chance of being the nominee. If either Paul or Romney gets to be the nominee, I think they will not be adversely affected in the general election from the tight primary race. Romney has proven to be a flexible politician and can tailor to the median voter, and Paul can attract new voters who are independents and even Democrats.”

There is a healthy tension between profits & growth. To grow faster businesses need resources in today’s financial period to fund growth that may not come for 6 months to a year. The most obvious way to explain this is with sales people.

If you hire 6 sales reps in January at $120,000 / year salary then you’ve taken on an extra $60,000 per month in costs yet these sales people might not close new business for 4-6 months. So your Q1 results will be $180,000 less profitable than if you hadn’t hired them.

I know this seems obvious but I promise you that even smart people forget this when talking about profitability.

Hiring more people isn’t always the right answer. You have to understand whether they’re likely to yield revenue growth in the near term OR whether you have access to cheap enough capital to fund your losses until your investments pay off.

Heard through professor of finance Yael Hochberg.