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Pregnant? You’re fired! touches on a sore point for many women – the trade off between having money and having children.

Not only may getting pregnant lose you your job immediately; leaving work to have one or more babies costs – and costs a lot. It’s not just the obvious things like nappies, child care, or even school or university fees. It’s the opportunity cost of not working and the consequences that has for your pension – the income you would have got if you hadn’t taken on a maternal or caring role.

"One in two women over retirement age are not entitled to the full state pension"

An Open University course starting in 2006, called You and Your Money, has a whole chapter devoted to ‘Sharing and caring’ and highlights the costs of having a family in fairly stark terms. Recent research has identified a longer term problem, though. One in two women over retirement age are not entitled to the full state pension – compared with only one in ten men - because they devoted themselves to caring and not to earning money. The poorest pensioners in the UK are women over the age of 80.

And younger women are building up a problem for the future. In 2003, 29% of all single women had no savings at all and nearly two thirds of single parent households (the vast majority women) were in the same position (according to the Department for Work and Pensions).

But it’s not all doom and gloom. Times are changing and more and more women work. Girls do better now at school and at university, and end up with higher skills and so higher pay. Higher income leads to higher savings and greater wealth. In the US, in 2004, women represented over 40% of all individuals with over $500,000 in assets. In the UK it is predicted that women will own 60% of the nation’s wealth by 2025. Part of this change can be explained by the growing rates of women’s employment, of education and of participation in the higher paid professions. But another key factor is women’s greater longevity - living longer than men means they are likely to do better in terms of inheritance.

What will women do with this increasing wealth? Will they save more or less than men? Are they more risk averse than men? Popular opinion says that women have more of a ‘nesting instinct’ and are prepared to take less risks in investing than men. This has potential consequences for retirement. Lower risk assets earn lower returns – on average. After 20 years, say, a retirement fund invested in a building society account will have much less than if it had been invested in company shares. A smaller retirement fund means a smaller pension.

So far, little research has been done in this area except in the US where women do seem to invest in less risky assets than men and single women more so than married women. But recent research on women and money in the UK in the nineteenth and early twentieth centuries has come up with a slightly different picture. There is evidence that if women do have money, they like to speculate with it. Wealthy women from the North and South of England speculated in the shares of the South Sea Company in the 1720s, some of them making tidy sums in the process. Wealthy female clients of Barings Bank in the 1820s and 1830s speculated in Spanish and Chilean bonds. In the early 20th century, women aristocrats – the celebrities of their day - were criticised for setting a bad example to the masses as they gambled with their housekeeping money.

There is also evidence that middle class women knew more about investment than they do today. In the nineteenth century, women only worked if they had to and many ‘genteel women’ lived in salubrious places such as Bath or Leamington Spa and relied on their investment earnings. For these women – and there were a lot of so-called ‘surplus women’ with a very small chance of getting married – the returns they got on investment were crucial. Advice was plentiful – from newspapers, magazines, text books and friends and advisers. But the risks were much greater than today. Companies starting up had only a one in three chance of lasting more than five years. And company prospectuses were not regulated, and more economical with the truth than they are today.

"There are still women penalised for choosing to care for others"

Of course, there were also many women who worked but had no savings and no prospect of a decent pension. In principle, today’s women are better off in many ways. They have the option to work and hope to save for their old age. They have had a better education, have better work prospects, and should have access to good advice. But, as this programme shows, there are still women penalised for choosing to care for others. As in the nineteenth century, there are disturbing discrepancies between women who have very little, both in terms of income and savings, and women who are comfortably off.

Further reading

• The price of parenthood – having children brings many changes
• '"The widow, the clergyman and the reckless": women investors in England, 1830 to 1914’ by J Rutterford and J Maltby, in Feminist Economics, vol 12
• ‘The Gender Asset Gap: What Do We Know and Why Does It Matter?’ by C D Deere and C Doss, in Feminist Economics, Special Issue on Women and Wealth 
• 'Why do Women Invest Differently than Men?' by V L Bajtelsmit. and A Bernasek, in Financial Counseling and Planning no. 7
• ‘Who’s Better at playing the Markets Game?’ by N MacEarlen, in The Observer (20 June 04) 

About the author

Janette Rutterford is Professor of Financial Management at the OU Business School, having previously worked in corporate finance and investment. Jannette's research includes pension funds, equity valuation and investment history, in particular the history of women and wealth.

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“The Coca-Cola Company exists to benefit and refresh everyone it touches” (Coca-Cola’s mission statement)

Can Coca-Cola, one of only a handful of truly global brands, really be in trouble? Amidst adverse media coverage and concerns about the sugar content of its core brands, Coca-Cola’s share price has taken a nose dive. The drinks giant has been hit by the explosion of the obesity time bomb! Worse still, industry experts are accusing the company of panic as it struggles to bolster market share with a host of new product launches. Diagnosing Coca-Cola’s malaise reveals rising public expectations about the behaviour and responsibilities of such corporates. The danger is that consumers angered by food companies’ role in the obesity crisis will use their spending power to enforce higher ethical standards.

"Some consumers are becoming edgy"

The nation is suffering from a serious weight problem. With a 400 percent rise in obesity levels in just 25 years and weight problems set to overtake smoking as the main cause of premature death, the scale of the problem is huge. Faced with headlines dominated by scare stories about childhood obesity and ‘pester power’, some consumers are becoming edgy.

The problem for Coca-Cola is that these concerns are hitting sales of its core brands such as Coca-Cola, Sprite and Canada Dry. At a time when junk food and sugar-laden fizzy drinks are taking some of the blame for this weighty crisis, the government is getting tough on the food industry. Schools are switching off branded vending machines, campaigns to promote healthy lifestyles are in full flow and bans on junk food advertising may be just around the corner.

So are Coca-Cola and others in the food and beverages sector really responsible for the failing health of the nation? While health experts agree that inactive lifestyles and poor parenting are partly to blame, they are robustly critical of junk foods and carbonated drinks. The bad news for major brands is that public opinion against snack food manufacturers is growing along with suspicions that these corporates may not have consumers’ best interests at heart. With research showing a strong link between corporate social responsibility and profits, Coca-Cola cannot afford to be complacent.

Corporate social responsibility (CSR) has been described as a company’s obligation to maximise its positive impact and minimise its negative impact on society. Expert Archie Carroll writes about a pyramid of social responsibility, with four basic levels of responsibility:

1. Economic – the responsibility to be profitable


2. Legal – the need to obey the law


3. Ethical – an obligation to do what is right


4. Philanthropic – making a contribution to the wider community

At the heart of the obesity debate are the so-called Ethical responsibilities. These involve companies behaving in ways which are right, just and fair and - just as importantly in the current climate - not causing harm to a company’s stakeholders.

"The trouble is that behaving ethically just isn’t that easy"

Handling ethical issues can be tricky. Companies must quickly tune into changing consumer values and implement policies which reflect society’s desires. The trouble is that behaving ethically just isn’t that easy. Identifying consumer trends is tough enough for brands already striving to be noticed amongst the advertising noise in the marketplace.

There is a fine line between innovative marketing and unethical behaviour. Ethical concerns about the impact of unhealthy product lines are much clearer. Faced with such scrutiny, Coca-Cola has two options: make its existing products healthier or diversify. Beguiled by the promise of new brands, the company has decided to sharpen up its market offerings by extending into diet and health-related beverages.

This move into sports drinks, juices, energy drinks and waters it hopes will be the panacea to the company’s ills. Unfortunately, despite radical surgery to its brand portfolio, Coke’s prognosis remains uncertain. Less than three years after launch, the company has axed its much vaunted but unpopular Vanilla Coke and Vanilla Diet Coke. Now some retailers are refusing to stock the new lime and grapefruit-flavoured variants of the Powerade sports drink, accusing the company of spreading its brand too thinly. These are not the only problems. Few will forget the technical hiccup which caused bottled water brand Dasani to be contaminated, hastening the downfall of the company’s foray into bottled water.

Coca-Cola isn’t the only brand with problems. Falling foul of ethical principles is all too easy for food companies vying for consumer visibility. Cadbury thought it had backed a winner with its Get Active scheme, which swapped confectionary pack tokens for school sports equipment. The chocolate giant was swiftly chastised by educationalists for encouraging unhealthy eating practices in the young. Now some retailers are accusing Cadbury of misleading consumers with an ‘over-priced’ 99 calorie chocolate bar. Meanwhile Walker’s free books for schools scheme was criticised by the National Union of Teachers. Even family-favourite Heinz has been attacked for the high-salt content of its products.

Like businesses in all sectors, these companies know that they cannot afford to ignore consumers’ growing ethical demands. Failure to meet expectations for socially responsible behaviour is commercially dangerous, destroying consumer trust and hastening tough new regulations. The Food Standards Agency (FSA) is already naming and shaming the worst offending products for sugar, salt and fat content. With the government ready to reap legislative havoc should the food industry fail to comply, the FSA’s action may only be the start.

So what does the future hold for the world’s biggest drinks brand? Can Coca-Cola shake off its associations with tubby teenagers, bolster its brand and overcome poor performance in Europe? Success will depend on whether the drinks giant can persuade consumers and retailers that it has an answer to declining fortunes in its core markets. Regaining the confidence of consumers with a waist-line crisis will be critical. While no-one disputes the demise of the flavoured carbonated drinks sector, the question is whether Coca-Cola’s investment in healthier drinks and extending brand portfolio will be enough to rebuild its fortunes.

Further reading

• The importance of brands – the value of brands explained by this extract based on Open University Business School course material
• Business briefs: checks and chavs – can brands become victims of their own success?
• Corporate accountability and ethics – what are the forces that control and ensure corporate accountability?
• Marketing: Concepts and Strategies (Fifth Edition) by S Dibb, L Simkin, W Pride and O C Ferrell, published by Houghton Mifflin
• 'The Pyramid of Corporate Social Responsibility: Towards the Moral Management of Organizational Stakeholders' by A Carroll, in Business Horizons (Jul/Aug)
• Business Ethics by C Jones, R ten Bos and M Parker, published by Routledge
• Weight Matters for Children by R Pryke, published by Radcliffe Publishing

About the author

Sally Dibb is Professor in Marketing at the OU Business School. Sally chairs the Academy of Marketing's Special Interest Group in market segmentation.

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The Great Phone Call Con looks at the problems of phone-line fraud and unsolicited telephone marketing. This made me wonder, why has there been an explosion of this sort of fraud, and why do they seem to find it so easy to fool us? The answers to both questions may lie in the nature of human psychology.

Why the massive surge in telephone fraud?

Fraud requires a supply of victims, weak safeguards and motivated crooks. Changes in technology have increased access to potential victims. It’s relatively cheap and easy to set up machines to communicate with people. It’s also possible to obscure the trail back to the fraudster. The widespread use of electronic money exchange (online banking, credit card use, etc) also makes it easier – by making it easy for us to part with our cash. Safeguards are poor; law enforcement has struggled to keep up with these new forms of fraud.

However, I don’t think the availability of new means of fraud, alone, is sufficient to explain why there is so much fraud going on. An important aspect of the recent surge in telephone and internet crime seems to be the seemingly endless supply of fraudsters.

Successful fraud requires both a set of skills and a willingness to deliberately target and deceive others. The most successful fraudsters have a capacity to look us in the eye, to engage our trust and then betray it without a qualm. This capacity is actually quite rare and often associated with personality disorder (or perhaps politicians?!).

Typically, those committing fraud use psychological strategies to distance themselves from any sense of guilt. Criminologists refer to this as ‘neutralisation’. A common form of neutralisation is to view the victim as in some way to blame – “He had it coming; I couldn’t have taken him in if he wasn’t so greedy”. Another is to depersonalise or belittle the victim – for example the recently prosecuted perpetrators of a series of frauds on Ebay, referred to their 3,000 victims as ‘the idiots’. However, for most people, such attitudes are difficult to maintain in the face of personal contact with an intended victim.

By contrast, telephone or internet fraud guarantees a psychological distance between fraudster and victim. The technology already provides a significant amount of depersonalisation: a ready-made neutralisation strategy. Thus, people who would find the emotional costs of face-to-face fraud too high are much more able and willing to engage in remote fraud.

Why are we so easy to fool?

When we fall victim to fraud, or the more legal but related forms of advertising and marketing manipulation, we often assist in our own deception. Effective fraudsters don’t try to fill out all the gaps in a story. Like professional magicians, they know that manipulating us to reach a conclusion for ourselves is more powerful than making a direct statement. We’ll fill in the gaps in story for ourselves given the right motivation; and they know that greed and fear are both powerful motivators that they can easily manipulate.

If we believe someone can enrich us, or we think they can prevent something we dread, we want to believe them and will often explain away any holes in their story for ourselves.

Once we have become victims of deception, another factor comes into play. Fraud is often under-reported. For most of us, self-esteem is important; and we, often quite unconsciously, look for ways to protect it. For this reason, we tend to pay more attention to information that builds our own self-esteem than information that threatens it. So, many of us are quite reluctant to accept that we are victims and are even more reluctant to tell others.

Intelligence and education are not a protection here. Indeed, there is some evidence that highly educated people are easier to fool, because they don’t expect to be fooled.

There are important parallels between the traits that make many of us easily deceived by fraud and those that make traders in financial markets easily deceived by market movements. In my own research on the behaviour of traders in investment banks, I found these well educated, intelligent and highly trained professionals to be often prone to illusions about the extent to which they were in control and able to make unbiased financial judgements.

Fear, greed and the need to maintain self-esteem may make many of us more easily trapped by a telephone scam, but they also account for some major mishaps in financial markets.

Protecting yourself from fraud

So if the world is full of fraud and human psychology disposes us to be dupes, how can we protect ourselves? There is no foolproof solution, but some simple rules may help: 

• If it seems too good to be true, it probably is.
• If a person, or organisation, starts to play on your fears it may be that person or organisation that you should fear.
• If you are fooled, it does not mean you are an idiot. You are in good company. Do take the time to report the scam.

Further reading

•  The psychology of decision making – the same thinking processes that help you cope with everyday life prejudice your judgements in other areas
• The Psychology of Fraud by Grace Duffield and Peter Grabosky, pubilshed by the Australian Institute of Criminology
• Introduction: Traders, markets and social science by M P Fenton-O'Creevy, N Nicholson, E Soane and P William, published by Oxford University Press
• Trio jailed for £300,000 fraud on eBay 'idiots' by Audrey Gillan and Bobbie Johnson in The Guardian (29 October 05)
• 'The Psychology of Deception' by R Hyman in Annual Review of Psychology
• The American Confidence Man by R Hyman and Charles C Thomas

About the author

Mark Fenton-O'Creevy is Professor of Organisational Behaviour and Director of Programmes and Curriculum at the OU Business School. His research includes investigations into the performance of traders in financial markets, and the reasons for resistance to change in middle management.

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The launch of Microsoft’s new Xbox 360^TM challenges some of our assumptions about firms and their capacity to innovate new products. Can a company previously focused on software become an apparent leader in hardware products?

Experts writing on innovation suggest that it tends to be ‘path-dependent’. Firms innovate in areas they know something about, where they have a track record and cumulative capabilities. There are comparatively rare examples of firms moving into very new areas – Nokia from paper and forestry into mobile phones for example – but such transitions take a lot of time and require the growth of radically new capabilities.

Developing and distributing software is a very different process to hardware innovation and production. Software producers write computer code, which once written is easy and very cheap to replicate. In the software world, post-development production costs are virtually zero.

Not so with hardware. Hardware manufacturers have to think about materials, design for manufacture and production engineering. They must consider tricky things like how will the heat generated inside the box be dissipated. Or in the case of games consoles, will the product still function when subjected to the rough and tumble of the family home - children and pets can take their toll!

And with the economics of manufacture drawing production to China and the Far East, they have to learn how to manufacture and distribute complex technology on a global scale.

These issues are likely to be compounded when the company in question is not well known for its innovative capabilities in its core business: software. Microsoft has been a follower rather than leader in the main software innovations in the personal computer arena. The graphic user interface (that enables PCs to be accessed using a mouse) and the web browser are the most obvious examples where it has lagged well behind other firms.

How can such a company successfully leap to the forefront of games console technology, as is claimed for the Xbox 360^TM?

"Microsoft owes its phenomenal dominance ... to a ‘once in a century’ business error by IBM"

But then, Microsoft’s own success story is hardly typical. Microsoft owes its phenomenal dominance of the PC software business to the market share created by IBM. IBM established the industry standard for PCs and allowed Microsoft to own the rights to the vital operating system software. This gift has been described as a ‘once in a century’ business error by IBM.

How fitting that the new Xbox should be labelled ‘360’ since that was the name of the IBM range of mainframe computers that underpinned IBM share prices in their 20th century heyday.

IBM used to be referred to as ‘the environment’ because of its market dominance. Today Microsoft is arguably in a similar role in the PC software arena. But in the world of the games console their current Xbox is some way behind Sony’s PlayStation2 in terms of market share. Not being the dominant player is another new experience for Microsoft.

And in an intriguing twist of fate, in this new area of business for Microsoft it is now dependent on a clutch of software developers for the games that run on its Xboxes. This is a classic case of the hardware producer being dependent on having essential ‘complementary assets’ provided by external organizations over which it has no direct control.

The first Xbox established a bridgehead in the games market, albeit a way behind PlayStation2 in terms of market share. The Xbox 360^TM is intended to leap to the next generation of powerful games machines with new levels of processing power and support for multimedia, high definition graphics and other features.

Presumably few people buy a games console unless there are games programs to run on it. Here the Xbox 360^TM is presenting games developers with big technical challenges in exploiting its potential. A key question is whether the games producers have the resources and skills to do this fast enough. The extent to which they are prepared to invest in Xbox 360^TM developments is dependent on perceptions of the potential market. And the even more powerful PlayStation3 is looming on the 2006 horizon, attracting developer attention.

There are some indications that Microsoft have wider ambitions for the Xbox 360^TM. Though Microsoft’s marketing emphasises games, the 360 could be seen as an entertainment hub for the home. It may broaden its potential market by having the capability to run the same software as a PC, as well as functioning as a media centre for audio and video.

Microsoft also emphasises Xbox Live® – the internet link that enables gamers to interact with each other and also download upgrades. As well as providing new revenue streams this potentially adds a new dimension to the console’s repertoire, downloading music and video files. Who knows, these could even become as significant as games as a market driver.

"Microsoft’s move out of its software comfort zone ... is a bold step"

Previously only Apple has succeeded in matching innovation in both Personal Computing hardware and software, and innovating new classes of products such as the iPod. Microsoft’s move out of its software comfort zone into hardware design and manufacture, and beyond the PC business into games consoles, is a bold step.

The company does not have a distinguished record for managing innovation. But in the Xbox 360^TM they may for the first time be the primary mover in a new class of products. Whether they can replicate Nokia in building world-class capability in a new area remains to be seen.

Further reading

• Managing innovation – how do companies get the creative juices flowing?
• Network effects – the interplay between products and markets is complex
• 'Managing Knowledge and Innovation Across Boundaries' by Paul Quintas, in Managing Knowledge: The Essential Reader, 2nd Edition edited by S Little and T Ray, published by Sage
• The Nokia Revolution: The Story of an Extraordinary Company That Transformed an Industry by D Steinbock, published by AMACOM
• Managing Innovation: Integrating Technological, Market and Organizational Change (3rd edition) by J Tidd, J Bessant and K Pavitt, published by John Wiley & Sons Inc

About the author

Paul Quintas is Professor of Knowledge Management at the OU Business School. He has been researching, teaching and advising in the area of the management of knowledge and innovation for over 20 years.