23Mar

The ability to provide credit feedback

FILED IN debt | debt consolidation | financial advice | foreclosure | income Comments Off

129The ability to provide feedback within the context of partnership is an important aspect of your Partnering Intelligence. If you can’t provide feedback, resentment begins to fester. As in conflict, a partner’s resentment develops into passive-aggressive behavior that can quickly turn destructive.

The best model I’ve seen for giving feedback has five basic steps:

1. You note a person’s behavior.

2. The behavior creates an impression on you—maybe good, maybe bad, but powerful enough for you to take notice.

3. Time passes. You evaluate what you want to do about the impact of the behavior. If it’s urgent, you may react immediately: “That was a great comment you made.” Or, “Please stop interrupting me.” Depending on the situation, you may want to give the feedback in a private setting. In general, though, I recommend giving it as soon as possible after the behavior.

4. Give your feedback to the other person. Describe the behavior and tell the person the impact it had.

5. Decide what to do with the person’s reaction. Remember, the feedback is yours. It’s your impression that you’re giving to the receiver. It’s up to the receiver to decide what he or she wants to do with the information.

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05Dec

Possible dangers and risk associated with loans

FILED IN financial advice | foreclosure | income | insurance | investments Comments Off

74One example from the automotive sector is the large spread differential between Ford and Renault bonds with similar coupon and maturity. Although the rating agencies assign approximately the same credit risk to both issuers, investors view the risk that is related to owning Ford bonds as significantly higher. Our study clearly outlines that Ford bonds have been much more volatile than Renault bonds between September 2003 and February 2004. When S&P put Ford on credit watch negative on October 21, 2003, spreads widened massively. Even if only very few investors feared a multiple notch downgrade of Ford from the then BBB rating, a 1 notch downgrade to BBB coupled with a negative outlook would have caused concerns about a later downgrade of Ford into high-yield. There were fears
that the high-yield market would not be able to absorb the large volume of outstanding Ford bonds, and from a fundamental perspective that the company’s financing costs would rise, thus limiting the company’s financial flexibility massively. This example highlights that market technicals at least temporarily can be the dominant driver of credit spreads.

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26Oct

The credit lesson for competitors

FILED IN banking | credit | credit advice | crisis | debt | debt consolidation | financial advice | foreclosure | personal finances Comments Off

76Coca-Cola introduced new Coke after taste tests proved it more popular than Pepsi and the original Coke. However, the launch of new Coke contained an untested assumption: that flavour mattered more than image. The information gathered built upon this flawed notion, confirming the decision that classic Coke needed to be replaced. This view was contrary to what customers – past, present and future – actually wanted. Interestingly, this goodwill was so powerful that the cause of the company’s failure was also the source of its salvation, as consumers forgave Coca- Cola and realised that they appreciated classic Coke, or else tried it for the first time.

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23Oct

Don’t react emotionally to your credit

FILED IN investments | loans | loans guide | payday loans | profit | real estate | shares | stocks Comments Off

Technically, the launch went well. However, even before they had tasted it millions of Americans disliked new Coke. Across the country and especially in the South, the birthplace of Coca-Cola, consumers reacted angrily and emotionally to the new formula. Thousands contacted the organisation’s headquarters in Atlanta. Remarkably, many were not Coca-Cola drinkers, simply American consumers disappointed at a major change to an iconic American product.

By mid-July, the pressure had become enormous, and Roberto Goizueta, the chairman, together with other senior executives announced that classic Coke would return. The news was leaked the previous day, and ABC News had interrupted daytime programming to break the story. The next morning headlines were filled with what insiders called “The Second Coming”. On the day of the official announcement, Coca-Cola’s hotline recorded 18,000 calls. For the first time in over two months people were positive, glad that their voices had been heard and that such a change had been aborted.

The company’s executives might have feared the consequences of reintroducing classic Coke, resulting as it did from unhappy customers, bad press and ignominious defeat. But the opposite occurred: it proved massively popular. Against all expectations, classic Coke outsold new Coke, and sales overtook Pepsi early in 1986.

Attempting to explain the renewed popularity of classic Coke, senior executives told the Wall Street Journal: It’s kind of like the fellow who’s been married to the same woman for 35 years and really didn’t pay much attention to her until somebody started to flirt with her.

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