Looking for Better Ways to Rank B-Schools

Finally, MBA programs outside the U.S. are being included in BUSINESS WEEK's annual rankings (''The best B-schools,'' Cover Story, Oct. 2). This progress was long overdue. From the perspective of foreigners, ignoring non-U.S. programs shows arrogance, ethnocentrism, and insularity, i.e. Americans are too inward-looking to appreciate anything foreign.

It is stating the obvious to say that business has become highly international over the past decades. The best foreign MBA programs long ago closed the gap, providing a global perspective on business management. The day will soon come when any ranking limited to the U.S. will be dismissed as too narrow. Given today's global environment, a domestic ranking is almost irrelevant.

Gautam Parikh
San Jose, Calif.

I was pleased to see that this year's B-school survey continued to evolve from the last. As a recent graduate of a smaller, more entrepreneurial program (Babson College), I have had to explain the rankings to friends at other schools: Our starting salary and number of job offers are lower, since we tend to ''create'' jobs, not just ''take'' them, and we have less big-name corporate representation, since we have smaller classes.

Now I find there is another piece of the rankings (''intellectual capital'') and that the bias is now in academic research. My program (and many others) put an emphasis on teaching, rather than on research. Many of these professors would rather enliven a class discussion than slog away on peer-reviewed journals. Not that these are unimportant--indeed academic research is important--but your rankings need to consider how faculty are connected with industry and explore what entrepreneurship ''really'' means in a business school environment.

Sometimes I feel as if I am reading a political poll with my school labeled the Ralph Nader: smart, intelligent, but just ''not a viable candidate'' and therefore not included in debates.

Ian White
Brooklyn, N.Y.

Which company contributes most to the economy: 1) one with sales of $10 million per employee, or 2) one with sales of $1 million per employee? If the first company has one employee, while the second one has 10,000 employees, then the first company's contribution is only $10 million compared with the second one's $10 billion.

Although I'm happy to see that you have included ''intellectual capital'' as a factor in ranking B-schools, you have done it based on contribution per faculty employee rather than contribution per school. It is invalid to measure a school's intellectual contribution based on publications per faculty, just as it would be invalid to measure a firm's economic contribution based on sales per employee.

Darold Barnum
Professor of Management
College of Business Administration
University of Illinois
Chicago

While rankings are necessarily subjective, and I know you're in for lots of criticism for perceived swings and inconsistencies, it should be pointed out that in the seven times you have done these rankings since 1988, four schools (Wharton, Northwestern, Harvard, and Michigan) have been ranked in the top 10 every single time. That's pretty consistent for almost half of the top 10. Keep up the good work.

David Treece
Miami

This Shampoo Is All Set to Lather Up Again

Without any advertising support from Gillette Co. since 1996, White Rain is currently the No. 5 volume player in the U.S. hair-care category and is used in more than 26 million households worldwide (''Most of Gillette's bleeding is self-inflicted,'' News: Analysis & Commentary, Oct. 2). White Rain product sales exceeded $110 million last year--not too bad for a ''perennial dog.''

We looked at this neglected product and saw its unrealized potential. We have an aggressive growth plan supported by a strong marketing campaign. Our three-person senior management team has more than 60 years of experience total and has demonstrated the ability to drive sustained sales and market growth at companies such as Duracell, Procter & Gamble, and Revlon.

We're planning to reintroduce our entire hair-care line with new packaging, new formulations, and new products, which will augment the shampoos, conditioners, and hair sprays that have been a favorite for 50 years. The White Rain Co. hasn't bought a dog, but we're about to show you some new tricks.

Gary Raymond
President
White Rain Co.
Danbury, Conn.

Why China Needs Labor Unions

Anyone who has researched U.S. industrial labor practices in the late 19th and early 20th centuries will find nothing new in your story (''A life of fines and beating,'' Social Issues, Oct. 2). The glaring equivalent is the 1911 fire at New York's Triangle Shirtwaist Co. China and other developing countries are at a stage the U.S. was at 100 years ago. Until these countries allow the free working of unions and rid themselves of corruption, little will change. It is ludicrous to blame Wal-Mart Stores Inc. and Kathie Lee Gifford for the failings of the Chinese government.

Richard Brawer
Ocean, N.J.

A 22,000 Dow Is Way Too Low--or Way Too High

The Dow Jones industrial average at 22,000 by 2011, and no end in sight for the bull market (''How does a 22,000 Dow sound to you?'' Finance, Oct. 2)? Given a conservative (ex-dividend) expected return of 10% per annum, Dow 22,000 in 2011 implies a fair value of around 7,700 in 2000. That's more than 25% below today's market level (and almost 35% below the market peak earlier this year). Either the market has to drop 25% to reflect this fair value--which sounds like a bear market--or we should all be happy to earn a measly 6% per annum over the next decade.

With money markets yielding close to that amount, if most investors think the way I do--which is, it is better to earn 6% risk-free in a money market and sleep at night--we should soon see an exodus from the stock market, which should again lead us into bear territory. Obviously, both predictions can't be true at the same time. Either we should experience a bear market sometime soon, or the Dow should be considerably higher than 22,000 in 2011.

K.R. Subramanyam
Associate Professor
Marshall School of Business
University of Southern California
Los Angeles

One More Way SUVs Could Dent Ford's Image

''Did Ford mislead Congress?"''(News: Analysis & Commentary, Oct 2) reported on the legal issues faced by Ford's management as a result of the recent safety scares relating to its SUVs equipped with Firestone tires. In fact, this is just one aspect of how this vehicle category risks undermining Ford's brand image and credibility. Since becoming Ford Motor Co.'s chairman in December, 1998, William Clay Ford Jr. has declared several times his commitment to pushing the company towards environmental excellence. SUVs, though, are regularly criticized for poor fuel efficiency vs. other passenger vehicles. Moreover, inappropriate off-road use could also lead to the destruction of natural habitat.

For Ford, the dilemma is that while SUVs are responsible for 57.5% of the group's worldwide total profits, these vehicles constitute a threat to Ford's stated aim of being the ''world's most environmentally friendly auto maker.''

Businesses are responding to the increasing pressure placed on them by the public. They realize that business success can no longer be measured by the narrow parameters of the auditor's report. Business should not be seen as an institution separate from society but as an integral part of it, both being mutually dependent on one another. However Ford manages its current difficulties, businesses can be sure that this type of dilemma is not going to go away.

Andrew Wilson
Director
Centre for Business & Society
Ashridge Business School
Berkhamsted, England

Has Piracy Given Microsoft a Helping Hand?

Microsoft Corp.'s omnipresence has led it to near 100% penetration in the market (''Can Microsoft stamp out piracy?'' Technology & You, Oct. 2). Thus if one wants to survive and communicate without any friction in the business world, use Microsoft Office rather than, say, Lotus.

Given the price of Microsoft Office, the software package would not have got such extensive usage without casual piracy in the U.S. as well as commercial piracy around the world. Piracy has led to more extensive penetration of markets, giving Microsoft the market dominance it can now leverage to generate revenue.

The extensive use of Microsoft Office in China and other Asian countries would not have been possible without inexpensive pirated copies. Now these same addicted users could be converted into full-price-paying buyers because of the rising incomes and the willingness of local governments toward stricter enforcement.

Counterfeiters have been the biggest conduit for the spread of technology, especially in Asia, and could be credited for partially creating the $12 billion-dollar-a-year market the industry now wants to tap.

Vinit Desai
Clifton, N.J.

Louis Rukeyser, Pioneer of TV Business News

''Ringmasters of the financial circus'' (Books, Sept. 25) does your readers a disservice by relying upon Howard Kurtz's book to provide an accurate accounting of the genesis of business news on television. Specifically, Wall $treet Week With Louis Rukeyser began its 30-years-and-still-counting run on Nov. 20, 1970--not in 1979, as erroneously stated. By any standard, nine years of additional airtime should be hard to overlook--and in this case even more so, as it makes all the difference between founding the category of business news and simply extending it.

And while Irving R. Levine was one of the first to follow in Louis Rukeyser's footsteps, the facts simply do not account for Kurtz's assertion that before Levine reported on wage and price controls and oil embargoes in the early 1970s, TV executives did not believe the general public was interested in business news. In 1968, Louis Rukeyser became TV's first national economic correspondent and commentator for ABC. This meant that, three years before Levine's appointment at NBC, he was contributing regularly to ABC's nightly news and had hosted four prime-time specials devoted to economic and financial topics.

John Davis
Senior Executive Producer
Wall $treet Week with
Louis Rukeyser
Owings Mills, Md.

Accountants and Accountability

The conclusion reached in ''Where Levitt's plan falls short'' (Cover Story, Sept. 25) is wrong. If the New Economy demands that accountants play an increasing role in putting a price on intangible assets--''intellectual fire-power, innovative processes, and ground-breaking patents''--then auditor independence becomes more crucial, not less. Deciding how to value such ''assets'' is a subjective process at best. The more subjective the process, the more prone the numbers are to being fudged. And if the valuation proves faulty, distinguishing between bad judgment by the auditor and biased judgment will be all but impossible.

Even if a reasonable price tag can be put on such intangibles, if the numbers are to have any credibility, the auditor must be free from any taint of bias. But a conflict exists when auditors evaluate work performed by another branch of the auditing firm or when the firm is simultaneously competing for a lucrative consulting contract. That conflict would make the auditor's assessment unreliable.

The idea that better disclosure of consulting ties and fees can overcome this obstacle is absurd. When tech stocks rose to dizzying heights, they did so despite repeated warnings from the likes of Alan Greenspan and other credible sources that the prices had no rational basis. Does anyone expect that the same investors who drove tech stocks ever higher in the face of such warnings will evaluate an auditor's bias before acting on his or her optimistic assessment of the value of a company's New Economy assets?

While the authors may be right that new accounting standards are needed for the New Economy, the Securities & Exchange Commission's proposed ban on auditors' providing consulting services to audit clients is an essential component of any such new standards, not an obstacle to progress.

Former Senator Howard M. Metzenbaum
Barbara Roper
Consumer Federation of America
Washington

While attempts to enhance auditor independence and investor perceptions thereof are relevant and warranted, the focus of the SEC appears skewed. If the SEC is truly concerned about auditor independence, why not focus its efforts on the audit activity rather than wandering far afield in nonaudit activities?

Instead of fixating on a laundry list of prohibited management advisory services, the SEC should simply require stronger ongoing communications between the auditor and the audit committee, as well as require auditors of public companies to be adequately compensated, thereby ending the practice of $1,000 audit fees for certain audit engagements in hopes of gaining future management advisory service revenues--a practice that seriously imperils auditor independence.

Adequate audit fees would not eliminate inefficient audits but would help curb any tendency of auditors to ''eat time'' or to cut corners in conducting the audit, thus improving audit quality, potentially reducing apparent or real audit failures. Realistic compensation may motivate talented people to stay in the practice rather than transfer to more lucrative consulting practices or seek employment with the firms' clients. A realistic fee requirement would have negligible impact on the audit fees of most public companies where auditor compensation is already reasonable.

Tom Keaveney
Susan H. Ivancevich
Joanne Rockness
Accountancy & Business Law Dept.
University of North Carolina
Wilmington, N.C.

Make Fluency in Three Languages the Standard

''Speaking the customer's language--literally'' (Finance, Sept. 25) unwittingly adds another dimension to the failure of U.S. public schools. To be competitive and employable, American schoolchildren should be fluent in three languages. While English has become the business standard, doing business in a global environment requires more skills, including language. My 13-year-old son's school required Japanese in lower school and my 8-year-old daughter's school taught Spanish in second grade. As president of a small consulting company, I am hastily studying Spanish to communicate as an equal with our Mexico-based clients.

Merrie Spaeth
Dallas

The '90s and the '20s: Some Dangerous Parallels

Congratulations on ''Too much corporate power?'' (Cover Story, Sept. 11) as well as ''New Economy, new social contract'' (Editorial, Sept. 11). Particularly impressive were your Business Week/Harris Poll results.

Your report should remind enlightened capitalists of the unhappy abuses of the 1920s. During that decade, the unemployment rate steadily rose, the annual income of workers declined, as did that of small farm families (then a significant part of the economy), while at the same time, a small proportion of the population enjoyed unprecedented prosperity (sound like the 1990s?). When the incomes of the bulk of families fell so low that it was insufficient to maintain demand for manufactured goods, you know what happened in 1929 and succeeding years.

Historical parallels are always suspect, and they should be viewed critically. However, current data on the growing economic differential between rich and poor are reminiscent of past mistakes. Coupled with the attitude structure that you report, your editorial offers truths that we can ill afford to ignore.

Leonard S. Stein
Evanston, Ill.

A Honeymoon among the Maple Leaves

In 1968, I was a young bride, and my husband's job on one of Her Majesty's Royal Navy Survey Ships meant that we were married in England and with insufficient time for a honeymoon (''A manor among the maple leaves,'' BusinessWeek Lifestyle, Sept. 4, in some editions). My parents, secretly disappointed that I had married outside my native Canada, keenly awaited our first visit as a married couple.

The honeymoon was all but forgotten in the fluster of what my husband referred to as ''Exhibit A''--introductions and celebrations. But my astute grandfather in Montreal, aged 92 at the time, had secretly arranged and paid for a romantic sojourn for the two of us at Hovey Manor. How delightful to read that Le Manoir is still treating guests to a break in the slow lane in the identical Quebecois style.

Suzanne Swan
Antalya, Turkey

''The best B-schools'' (Cover Story, Oct. 2, 2000)

Because BUSINESS WEEK received an incorrect tuition figure from the University of Florida's Warrington College of Business, the school was misranked in our calculations of how quickly students earn back the cost of attending B-school (''The best B-schools,'' Cover Story, Oct. 2). The correct tuition figure is $12,000 a year, making the school the 10th slowest, with a return on investment of 5.3 years.