CH 12.3: Gas Stations Say 'no' to Credit Card Fees

Summary

During a deep economic recession in the U.S., the majority of of businesses are going through hard times. Therefore, some businesses turn to cash discounts for some releif. That is exactly the case for Roger Randolph, a gas station manager in West Virginia. What resulted in his decision to offer cash discounts up to 10 cent per gallon are the ridiculous high credit card fees also called interchange fees, which gets as high as 10 cents a gallon. Gas stations in South Carolina, Georgia, Maryland, New Jersey and Arizona are some other gas stations that are following this trend as well. With the interchange fees, most small gas stations are barely making money. Randolph says that he has to pay approximately $500 of credit card fees per month. "It's brutal," is how Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores, describes it. Last year, convenience stores paid a total of approximately $7.6 billion in interchange fees.


Connection

The connection of this article is to chapter 12.3's cash discounts. Many businesses may offer cash discounts. By offering cash dicounts, the business will stimulate more cash flow and avoid the interchage fees. Customers will also appreciate the cash discounts.


Reflection

In my opinion, offering cash discounts to have more cash in hand as well as increasing cash flows, which is especially beneficial for small businesses. Many large businesses offer cash discounts as well. Regarding the cash discounts of the gas stations, I am not sure if it will benefit much. Mainly because I do not think many drivers that go fill up for gas will be carrying enough cash on hand to pay for the gas. Especially with the high gas prices, I think most people will continue to pay with credit card for their vehicle's gas fill ups. And for the gas station that ban credit cards, they might risk losing customers.

Source

http://autos.yahoo.com/articles/autos_content_landing_pages/587/credit-card-fees-some-gas-stations-say

New Car Sales Down in August

Summary

The sales of new vehicles fell 0.3 per cent to 126,401 after rising 5.2 per cent in the month of July. This was blamed on the decline of passenger-car sale. Compared to the August of 2008, sales were lower 6.6 per cent this August. Six provinces reported a decline. The biggest drop was a 5.7 per cent drop in Saskatchewan while the largest increase was in New Brunswick with a 3.8 per cent gain. The sales of oversea vehicles increased 11.0 per cent and the sales of truck, vans and buses increased a 0.4 per cent gain. On the contrary, North American vehicle sales decreased a whopping 9.3 per cent, passenger car sales with -1.0 and new motor sales with -0.3.

Connection

The connection of this article to chapter 11 is the decrease in sales. A decrease in sales is not good for any business, especially for a vehicle company. I would imagine that the freight-in cost of the vehicles is quite hefty. That and the building up of inventory is the last thing a car dealership needs. If the sales of vehicles continue fall, they will lose a lot of money.

Reflection

I think that the car companies really need to start developing innovative vehicles that consumers want to buy. Vehicles need to be more fuel efficient. This is particularly crucial for North-American car which had a massive drop in sales of 9.3 per cent from July to August. They also have to make the vehicles more affordable for the average citizen. Some more environmentally friendly vehicles would also be nice for the planet and would appeal to consumers as well. The motor companies need to get more sales to be more profitable. Some adjustments of their vehicles would help attact more of today's frugal buyers.


sources - http://www.google.com/hostednews/canadianpress/article/ALeqM5g4UBhdGos4Nr9or1_gUYP5x9SjKw



http://www.vancouversun.com/business/Vehicle+sales+turn+lower+August/2099982/story.html

Nortel-Ericsson deal signed off

Summary

In this news article, it talks about the sale of Nortel Networks Corp. assets being signed off by Canada's industry minister Tony Clement. The key wireless company's assets has been sold to Telefon AB LM Ericsson. Research In Motion Ltd. claims that they were blocked from bidding and says that the technologies of the Canadian company Nortel, should stay Canadian. Clement dismisses the allegations saying, "There are no grounds to believe this transaction could be injurious to Canada's national security." Clement says that his staff did not discover any evidence that the courts blocked the RIM to prevent them from bidding for the assets and that the sale is also beneficial to Canada.


Connection

As long as this sale doesn't contradict any GAAP, like the ones in the accounting text book, I don't see a clear problem with this deal.


Reflection

I don't think there is anything wrong with this deal as long as what Mr. Clement said about it posing no threat to national security and that it is indeed beneficial to Canada.



Source:
http://www.theglobeandmail.com/globe-investor/ottawa-signs-off-on-nortel-ericsson-deal/article1290360/