• Word to the Wise

    Shape Your Future in Business With an Eye on the Past: Introducing the Word to the Wise Guide to Economic History

    By Tilahun Ayanou, Faculty Member at Kaplan University

    Today’s dynamic global economy is one driven by foresight. But taking a look back to the past can provide valuable insight and perspective. 

    As practitioners and students of financial services professions, you can use history as a tool for recognizing the potential for future success or failure. Whether you’re an accountant, a financial planner, an investment broker, a real estate advisor, or a risk manager, the Word to the Wise Guide in Economic History will put historical business events in context that you can apply to your profession.

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    Open-air Trading Leads to American Stock Exchange

    In 1836, the New York Stock Exchange prohibits its members from trading in the streets outside. But open-air trading persists under the nickname of "the Curb," which ultimately became the American Stock Exchange.

    Word to the Wise: The financial world is always on the lookout for alternative investment avenues that yield great rewards. As the Chinese proverb says, “When the winds of change blow, some people build walls and others build windmills.” Smart business people build windmills in the changing business world, and they don’t give up on the vision of change due to setbacks. Finance students at Kaplan University have the opportunity to study the importance of innovations and persistence to face new challenges in the globalized world.


    Music Industry Sues Swappers

    The Recording Industry Association of America filed law suits against 251 individuals across the country, accusing them of illegal sharing of copyrighted music online. The group alleged millions of dollars in losses due to the online sharing of music files.

    Word to the Wise: As technology intrudes into everyday activities, companies need to revamp the way they do everyday things. “As in any technological revolution, there will be winners and losers. On balance, everyone will come out ahead, although there will be particular companies that will not be able to cope with a new environment.” (Ralph Merkle) Business students at Kaplan University discover the importance of adaptability to new technological innovation and its challenges for running successful businesses.


    Minimum Wage Rises to $1.40

    On this day in 1966 the U.S. Senate adopted legislation to raise the country's minimum wage to $1.40/hour.

    Word to the Wise: The minimum wage debate has been a hot topic for decades and also catching today's headlines. Arguments in favor of setting minimum wage cite keeping up with cost of living increases to meet livable wage. Arguments against it cite its hindering jobs creation based on competitive labor supply and labor demand. “When we talk about the minimum wage, we have to ask ourselves what it is that we owe both our workers and employers. I think clearly we owe them fairness…” (Dalton McGuinty). Some debates don’t go away, and open dialogue is essential to navigate in today’s business world.


    AT&T Breakup: The Sequel

    On this day in 1995, AT&T announced that it would voluntarily break itself up into three different companies. The company's divide and conquer attitude was the brunt of many jokes in the business world. But when company announced an 11% gain in their stock AT&T was the one laughing.

    Word to the Wise: Break ups aren't easy but sometimes they are necessary and beneficial in the long run. For very large companies, breakups may help to achieve economies of scale by dividing the company into effectively and efficiently manageable companies. “Success is the result of perfection, hard work, learning from failure, loyalty, and persistence.” (Colin Powell)


    Tylenol Tragedy Grips a Nation and Changes an Industry

    This day marked the first in a week-long string of deaths resulting from cyanide-laced Johnson & Johnson's Tylenol Extra Strength capsules. Many predicted the brand would never recover. But by immediately recalling all 31 million of the product off shelves, issuing replacement medicines, and relaunching with tamper-proof packaging, Tylenol put the consumer first and strengthened its reputation as a trusted name in the pharmaceutical industry.

    Word to the Wise: Enduring lessons can be learned from a tragedy. In this case, Tylenol was able to build lasting trust with customers by taking rightful actions. “It is fine to celebrate success but it is more important to heed the lessons of failure.” (Bill Gates) Businesses must not lose sight of the fact that, behind profits, there are people who can be loyal customers over the long term.


    McDonald's Founder Ray Kroc Is Born

    It's a classic American success story. While working as a milkshake machine salesman, Ray Kroc watched workers churn out the now-classic menu of burgers, fries and shakes. Kroc smelled profits and sat down with the owners—the McDonald brothers—to work out a deal to franchise their restaurant.

    Word to the Wise: Sometimes the best opportunities are staring us right in the face. Having good instincts and insights can lead to success. Smart business people see and grab business opportunities before others are able to see them. "Small opportunities are often the beginning of great enterprises." (Demosthenes). At Kaplan University, business students have the opportunity to trust and build on their instincts in the classroom so they’re ready to translate their skills to the workplace.


    OPEC States Declare Oil Embargo on Western Countries

    In an effort to move ahead a political agenda, several Arab oil producers made a critical move to reduce oil exports to Western countries. This embargo would persist for a year and usher in one of the worst recessions in U.S. history.

    Word to the Wise: There is a need to draw contingency plans that deal with the effects of unforeseen external factors on businesses. In the globalized world, the impact of a political decision on different economies is very significant due to the interdependence of the economic structures of countries. One country's or regional actions can have widespread ripple effects on economic performances in difference countries.


    Treaty of 1818 Sets Boundary Between U.S. and Canada

    To restrain both nations from seeking unfair advantages through accelerated development of the areas, U.S. and Britain agreed to establish the 49th Parallel as the boundary between the U.S. and Canada. The treaty also secured fishing and trade rights for mutual use of the territories, and marked the last major permanent loss of territory for the U.S., as it ceded the northernmost tip of the Louisiana Territory.

    Word to the Wise: Resources are limited and the use of resources calls for sustainable development that takes the long run effects into account. Establishing boundaries for peaceful coexistence can apply to the business world as well for mutual and long run benefits. “People are beginning to realize that we need to live in accordance with the law of ecology, the law of finite resources, and if we don't, we're going to go extinct.” (Paul Watson)


    Toyota Motor Sales Opens its First U.S. HQ in Hollywood, California

    Toyota's compact cars were slow to catch on in the U.S., taking until the mid-1960s to gain a respectable chunk of the American "big auto" market. But by 1972, Toyota sold its millionth car, and three years later became the best-selling import brand in the country.

    Word to the Wise: Seek and grab business opportunities that may defy the usual trends. Don’t lose hope on lack of demand for a new product. Rather, focus on improving the quality of the product that is offered in the market. When you have a good product, you can create an effective demand that gives you a competitive edge in the business world. “Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.” (William Pollard)

  • Word to the Wise: Timeline

    We invite you to explore the timeline consisting of dates previously featured in our Guide to Economic History.

  • Tilahun Ayanou is a faculty member at Kaplan University. The commentary expressed in this article is solely those of the author and do not represent the view of Kaplan University.

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