On March 3, stories in the Business Section dealt with the difficulty that firms in such diverse industries as wine-making, farm machinery and economic forecasting were having in adapting to declining market opportunities.
By coincidence, the same issue featured columnist Earl Cheit's observation that the luster of the MBA degree is bound to diminish in the next few years. Thus, the question is raised as to what strategies management schools should pursue to meet the probable decline in the market for their students. Cheit did not address that question, crucial though it is.
Historically, the MBA graduate offered three advantages to an employer. First, a candidate with an MBA demonstrated a greater interest in management--or appeared to--than other job applicants. Second, the MBA graduate could state that he or she had succeeded in passing through a rigorous, competitive academic environment and therefore was likely to succeed in a similar business climate. Third, the MBA graduate could claim to have acquired useful academic knowledge.
The first advantage is now passe; as Cheit documents MBAs are no longer rarities in the labor market. The second advantage has also faded; management schools succumbed to the same grade inflation and slippage of standards that afflicted the rest of higher education in the 1970s.
So what is left is essentially a matter of content. Here, too, the 1970s took their toll. Faculties lost confidence in the utility of what they had been teaching and tried to substitute "complex interpersonal decision making" and the like for traditional subject matter. Unfortunately, the typical management school is ill-equipped to compete with the numerous private seminar consultants whose efforts fill urban hotel meeting rooms on a typical day.
The lesson is clear: Those MBA programs that follow the budding "back to basics" trend now developing at all levels of education will prosper in the 1980s and 1990s. Those who do not will suffer the fates of the wine-makers, farm machinery manufacturers and economic consulting firms who misread their markets.
DANIEL J. B. MITCHELL
Professor, UCLA Graduate School of Management
I am impressed with the two pieces about MBAs ("An MBA Degree Has Meant a Rosy Future but Bloom May Soon Fade," Viewpoint, and "MBA Students Enjoy This Pressure," Sidelights).
As Chrysler Chairman Lee A. Iacocca has well demonstrated, after all, business is people, and that means humanizing the Masters of Business Administration in the workaday world.
Help Save Teachers' Eyesight
As a high school history teacher, I must disagree with your column "Matrix System Has Advantages" (Computer File, Jan. 28), in which you stated, "Why spend money to make a state-of-the-art computer emulate an old-fashioned typewriter . . ."
In the case of personal or home computers, which are being heavily advertised for student use ("Why every kid should have an Apple after school," claims the Apple ad), I know I speak for many teachers who are unhappy with student work handed in that is done on dot matrix. Even with the strike-over feature, there is an unattractive, mechanical look about the fonts. Moreover, the dots are often light blue in color, and this puts a burden on a teacher who has to read a lengthy research paper or even short essays, book reviews, chapter summaries, or other class assignments.
Insofar as student use is concerned, I would therefore urge parents to spend the money for a letter-quality printer. It would make English, history, biology, journalism and many other teachers happy, if not preserve their eyesight.
Benjamin Franklin High School
There's a Difference in Zeros
Regarding "Zero-Coupon Bonds and Your IRA," (Money Talk, Feb. 21), the author implies that investing in municipal zeros and U.S. Treasury zeros requires the same kind of "homework." Investing in tax-exempt municipal zeros is actually so filled with potholes as to make the road to investing virtually impassable. A beginner's list of potential problems follows:
- While U.S. Treasury zeros are noncallable for 20 years, municipal zeros usually have optional redemption provisions, which makes them callable at almost any time if interest rates decline. Buyers of zeros offered by single-family mortgage bond issuers should take a cardiac stress test before reading the fine print in the offering prospectus.
- There are tricky tax traps in tax-exempt zeros. For instance, the cost basis of a zero for calculating capital gains or losses on subsequent sales is based on the "Compound Accreted Value" tables listed in the offering prospectus. That cost basis changes daily. If you sell your original issue zero, the new owner must adjust his cost basis daily using a very complicated formula. In addition, if you buy an out-of-state municipal zero, you will owe state income taxes, each year, on the imputed interest earned even though you received no cash interest payments.
- Zeros are subject to much wider swings in market value than current coupon bonds, for a given change in interest rates. A good rule of thumb is that zeros will fluctuate 2 to 2 1/2 times as much.
- Credit risk problems of the issuer are magnified in zeros since the investor will not receive his interest or principal until maturity, or until the bonds are called. Investors should ask themselves the question: "can my issue survive earthquakes, water shortages and Jarvis Amendments over the life of the bond?"
The effect of all the above problems is to dramatically limit your upside profit if interest rates decline while leaving you hung out to dry if interest rates go up.
After reading several zero coupon prospectuses my conclusion is that most municipal zeros have very limited profit potential.
ROBERT C. HETRICK
No Need to Buy a Telescope
I feel that the article "Halley's Comet a Hit with Retailers" (Feb. 6) was unfair to the public consumer market. One telescope dealer even admits to "cashing in on Comet Halley." This is unfair exploitation of the comet and the general public's naivete toward astronomy and telescopes. One woman states that she intended to spend $1,200 on a telescope, but in a showroom of expensive equipment she was persuaded to spend $2,400 on telescope paraphernalia. What she should have spent was $120 on a quality pair of binoculars.
It may seem ironic, but binoculars will give you the best views of Comet Halley in all its glory. You see, Comet Halley (and its long tail) is a wide field object. A telescope is a narrow field instrument. The comet will simply not fit in the field of view of a telescope. So views of the comet through a telescope will be disappointing and discouraging and certainly unspectacular for the beginner. It will also be disheartening to realize that your inexpensive binoculars are giving you the best view. When you have spent $2,400 on a telescope, this is not good news.
I think it is the duty of amateur and professional astronomers to point out the how and whys of Comet Halley to the public before the public makes the mistake of buying an expensive telescope for the purpose of viewing the comet.
I think that telescope dealers should avoid the urge to "cash in on Comet Halley." They should inform people that the best instrument to view the comet is a good pair of binoculars. Maybe then that customer, who was pleased with the honest way he was treated, will not be disappointed with an expensive telescope that he really didn't need. There is a good chance that the satisfied customer will return to buy a telescope for the sheer enjoyment of astronomy, after Comet Halley has left the skies.
Astronomy Instructor, Moorpark College and
V.P. Ventura County Astronomical Society
An 'Organized Hypocrisy'
In his column "Union Says Farm Board Aids Growers," (Labor, Jan. 30) Harry Bernstein wrote: "(General counsel of the state's Agricultural Labor Relations Board David) Stirling and (Gov. George) Deukmejian have said repeatedly that the farm labor board and its general counsels in the past were biased against growers and that they wanted the agency to be neutral."
California Women for Agriculture is a pro-grower organization that publishes a monthly newsletter entitled "CWA Compass." The following quotations are from the April, 1984, issue of that newsletter:
"Governor Deukmejian welcomed approximately 150 CWA members and guests to Sacramento on March 7 at our state board meeting. Said Governor Deukmejian, 'You now have a friend in the governor's office!' . . ."
"Dave Stirling, newly confirmed general counsel to the Ag Labor Relations Board, joined CWA during lunch at the Sacramento board meeting. . . . Stirling told members of his commitment to sway the Ag Labor Relations Board from a pro-UFW to a ro-grower direction. . . . "
An article in the Imperial Valley Press on April 27, 1984, describing the annual membership dinner of the Imperial County California Women for Agriculture contained this statement: "A large sign with (ALRB general counsel David) Stirling's name in lights stood behind the swimming pool."
Based on the above, and recalling that California growers contributed more than $1 million to Deukmejian's campaign for governor, I now invite the reader to consider the possibility that Deukmejian's interest in "neutrality" with regard to the grievances of farm workers is as realistic as the belief that the moon is made of green cheese.
Deukmejian's attitude against farm workers is a confirmation of what Benjamin Disraeli said in a speech on March 15, 1838: "A Conservative government is an organized hypocrisy."
Letters to the Business Editor should be as brief as possible and are subject to condensation.