little guy goes big

An imaginary business expansion adventure for capitalists to read before bed…

James Connaughton, 04/03/2018

– The Know Nothing Digest staff writer of the month for March 2018.

Abstract

This report summarizes Courier Wizard, LLC’s exploration of the benefits and detriments of expanded services in 2018 to include the global export of regionally supplied goods involved in the development, manufacture and distribution of consumer healthcare, various prescription and personal health care products.  Multimarket segments we hope to serve are groups in Hong Kong, Guangzhou, Beijing, Taiwan and more recently to create a sister firm operating in Myanmar and Vietnam.  Our hope is to utilize the expert export facilitators at firms such as FDCG, to realize Courier Wizard’s market expansion goals.  Feng Da Consultancy Group is a British owned firm based in London, Fuzhou and Shanghai and is dedicated to helping foreign businesses sell to, or source from China and the surrounding regions.  This is in addition to our recent M&A with The United Laboratories International Holdings Limited, also operating in the region.  Our goal is to have multiple options in our supply and distribution network, which also have a proven track record in the emerging markets of Vietnam and Myanmar.

 

Proposal Discussion

Regional expansions have allowed us to enter the Myanmar and Vietnam healthcare markets through the creation of a sister firm to Courier Wizard.  This is to be accomplished through resources and contacts obtained through the strategic alliance with The United Laboratories International Holdings Limited, a proposal initiated and previously entered into by Director Vanhorn, of the United States office of operations in 2017.  A subsequent offer of a merger and acquisition was accepted upon successful initial operations in Guangzhou, Guangdong, China by The United Laboratories International Holdings Limited.   This has in turn lead to the creation of a proposed sister firm to Courier Wizard operating in the ASEAN economic development regions.

 

Courier Wizard’s new Vietnam and Myanmar multinational firm has been proposed to be centrally operated in either Hue City, Vietnam or in Yangon, Myanmar.

Hue City, Vietnam, currently has at its disposal laboratory space made available by the Carlo Urbani Centre.  This medical facility has been created in Vietnam through a grant from the Italian government.  The operations location in Myanmar is as yet to be fully determined, but there is a medical tradeshow occurring in Yangon later this year that representatives from Courier Wizard intend to investigate for suitable locations for our sister firm. Regional stability in the Myanmar region is in serious question after hundreds of thousands of Rohingya-Muslims have been forced to flee Myanmar in the face of religious persecution, creating additional human suffering in an area of the world that is no stranger social upheaval.

 

The concerns surrounding expansion into Myanmar can be obvious considering Nobel Peace Laureate and Myanmar state counsellor Aung San Suu Kyi endorsed the military crackdown that enflamed the humanitarian crisis in the country.  In spite of the political uncertainty, there is also an obvious need for investment in the reliable supply and distribution of viable medical equipment in the region (Vaessen, 2017.)

 

Courier Wizard’s desire to help in the humanitarian crisis in Myanmar aside, we have also looked into aiding in the growing infrastructure in cities across Vietnam.  The expansion into this region lacks immediate threats of violence to regional political stability that could harm our firm’s people and operations.   Vietnam was like Myanmar, once a region of economic uncertainty; yet improvement of managerial skills of government officials and compromising of ideological factors began the development of the agricultural and industrial sectors.

 

The level of extreme poverty has dropped dramatically in Vietnam since reforms put in place in 1986 and now Vietnam has one of the Pacific Rim’s fastest growing economies, and is a one-party Communist state. It intends on being considered a developed nation by the year 2020, just like China considers itself one now.

 

The goal of the Socialist Republic of Vietnam is to double the middle class by the year 2020 as well.  The income distribution is indeed distorted by all accounts, yet according to reports from McKinsey & Company, there is great indication that at least 75% of China’s population will also reach middle class by 2022.  This would mean a middle class the size of the entire population of the United States, in comparison (Euromonitor, 2017.)

 

Returning to the option of initiating operations in these regions we look at the currently established foreign direct investment medical facility, the Carlo Urbani Centre.  The Carlo Urbani Centre has focused on the testing of extremely dangerous respiratory disease viruses since its inception in March of 2009.   Treatments there have been initiated for causes of severe acute respiratory syndrome. Research has been carried out to combat tuberculosis and avian flu. There is some concern here at our firm, Courier Wizard, that the Italian government’s perceived ties to the Catholic church may invoke feelings of discontent with the Socialist Republic of Vietnam.  It has been demonstrated that to get decent employment in the Italian government it is important to be a good catholic.

 

Italy’s leadership, formerly ll Popolo della Libertà (the People of Fredom) Pdl and now Forza Italia, are both headed or strongly influenced by Silvio Berlusconi who is intertwined with Catholicism (BBC, 2012.) The Catholic church has often been silent on the matter of mafia activity and government corruption. Silvio Berlusconi was convicted himself of having sex with an underage prostitute in 2013.  Members still in power of Berlusconi’s party are open supporters of the Vatican and belong to a Roman Catholic sect known as Communion and Liberation.  These individuals see no difficulty in considering themselves good Catholics and public servants despite the actions of their party leader and this could anger an already overtly hostile Vietnam government, should the Italian government perceive to interfere inappropriately with their foreign direct investment activities in Vietnam (Roe, 2012.)

 

In recent years property has been seized by the socialist republic government however from private Christian citizens and although no laboratory we have set to work with has been targeted, we do have obvious considerations about our newly discussed sister firm set to operate in Vietnam.  Our concerns stem from the medical facility developer which stems from the Italian government.  The Italian government is seeking only of course to use the opportunity of Vietnamese citizens being required to travel outside the country to obtain healthcare and obtain healthcare devices as a reason for foreign direct investment in the infrastructure of Vietnam’s healthcare system.

Should the Socialist Republic of Vietnam decide that the Italian government’s FDI in the healthcare sector is a threat to the country’s tribal culture and identity or the power it allocates to the Party; it is likely that all politically outspoken entrepreneurs can expect to have their investments in the region readily confiscated by government agencies. Historically Christian communities in Vietnam have experienced religious and social freedom.  This being said, politically vocal Catholics have been targeted and arrested by the government as recently as 2017 (Open Door USA, 2018.)

 

The Socialist Republic of Vietnam has taken land away from developers for the country’s financial gain.  Many who flee the country for asylum in neighboring countries have been sent back to Vietnam.  The creation of state-owned entities from foreign firms creates a real moral hazard that can leave the people of that country without outside support from the international community should the country suffer regional disaster.

 

Institutional conditions in both Myanmar and Vietnam seem favorable considering the environment of openness to foreign direct investment from the United States at the moment.  This is seen as a sign of faith in not only the United States but in the global expansion of corporate governance throughout Southeast Asia and the Pacific Rim.  The Association of Southeast Asian Nations (ASEAN) was established in 1967 to facilitate ease of foreign trade in the region (ASEAN, 2017.)  Member states are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. There is a long history of what is now termed as foreign direct investment in the region, with some foreign companies’ investments dating back to the 1800s.  FDI remained high in 2016 in spite of the 20% decline to under USD 97 Million.

 

The European Union is the largest investor group in FDI and MNEs in the ASEAN states, with more than 9,000 firms in operation.  Korean firms have established a significant presence in the region not only through production and manufacturing but through investing and expanding into other service industries such as distribution and construction.  Samsung made an investment into Vietnam’s biggest aviation logistics company due to the fast-growing logistics market in Vietnam.

 

Market seeking FDI investments from firms like German owned Bayer started operations in Vietnam in the mid-1990s.  Unlocking economic development by concentrating economic infrastructure development and public goods production in various areas and expanding from there has been the most successful strategy employed in the ASEAN bloc.  Growing demand and economic growth in the regions have encouraged the development of more zones of growth at strategic locations in strategic countries in the regional economic union.  Growth begats growth.

 

Currently two types of economic zones are being promoted in Myanmar, Industrial parks and industrial infrastructure development zones known as Special Economic Zones.  The industrial infrastructure development zones (known as SEZs) are being developed in line with national objectives such as generation of employment, promotion of investment and trade industrial development.  There are three currently approved SEZs in Myanmar located at areas of maritime access for ease of distribution.  There is the Dawei SEZ in the Taninthayi region, the Kyauk Phyu SEZ in the Rakhine State and the Thilawa SEZ in the Yangon region.  Courier Wizard’s first choice for entering the Myanmar market was the Yangon region in the Thilawa SEZ.  The Thilawa region offers private investor opportunities and government joint ventures as well.

 

Such special opportunities exist in Myanmar’s SEZs in part because of a Myanmar Special Economic Zone Law passed in 2014 that stipulates various incentives for foreign MNEs and domestic firms approved to operate in the SEZs.  There is an offer of a 5 year tax exemption on income created in the SEZs from sales within Myanmar, 50% investment relief for 5 years and 50% for an additional reinvestment of income earned with in 1 year of it being earned.  Exports in the Free Zone qualify for 7 years of tax exemptions along with the aforementioned 50% investment relief and 50% for additional reinvestment of income earned and then reinvested within 1 year of creation.

 

There are additional income tax exemptions for dividend payouts based on profits accrued locally for which taxes have been paid. There is an import tax exemption on the import of raw materials, machinery and spare parts, construction material and even motor vehicles used for construction purposes.  Myanmar has guaranteed asset protection that recognizes profits and property rights will be protected and the government has guaranteed that assets will not become nationalized.

 

Special Economic Zones are established to typically to specifically attract foreign direct investment.  Most SEZ countries designate areas where goods may be landed, handled, reconfigured or manufactured and re-exported with being subjected to Customs Duties.  This is the case just described in Myanmar.  The development involves public investment in basic infrastructure.  The Socialist Republic of Vietnam also regards such economic zones as tools to achieve regional economic development goals and additionally provide government opportunities for policy experimentation. Vietnam currently has over 325 such registered industrial parks as of year-end 2016.  This economic growth has been spurred on by a growing demand for SEZs and such industrial park facilities by foreign and domestic investors (ASEAN, 2017.)

 

Most economic development zones in Vietnam are located in the vicinity of Ho Chi Minh City or of Hanoi’s Red River Basin. Hue City is a coastal city located comparatively between Ho Chi Minh City in southern Vietnam and Hanoi in the north.  The investment opportunities afforded Courier Wizard by the developing economic zones created by the governments of Vietnam and Myanmar are conducive to industry based competition of the medial supply sectors in both countries (Peng, 2009.) Courier Wizard hopes to successfully expand in the ASEANs through a traditional cost leadership strategy and a focus strategy based on serving the particular needs of these underserved market segments.  Industry boundaries appear clearly identified and institutional conditions are very readily primed for economic development.  Opportunities for domestic employment in both areas due to our sister firm’s investment in the region will be a benefit for both the Vietnam and Myanmar populations.  This foreign direct investment should help to further stabilize the political situation in Myanmar and to further integrate the Socialist Republic of Vietnam into the practices of generally accepted accounting practices.  The global acceptance and protection of these principles leads to the further recognition of property rights, which in turn grants more focus on the universal protection of human rights.

Closing thoughts

While safety considerations for firm employees is a serious issue for expansion into Myanmar due to the military-sponsored religious-persecution humanitarian crisis in that country; expansion of the availability of modern medical care devices could help to foster a much-needed sense of business-as-usual normality.  Citizens can have opportunities for employment in a growing economy and differences of religion can become less of a focus when humans have a job.  The furthering of the successes of the people of the country of Vietnam can never make up for the imported horrors of the war that tore that region apart half a century ago.  The advancement of civil law and the personal securities it brings included with the safety that economic progress breeds among a people are the strategy behind the expansion of our firm into the ASEANs and the creation of our merger and acquisitions activities.  By improving the health of one country and its respiratory care capabilities, we improve the respiratory health of the world.  While war and corruption still threaten our earth, the ability to breathe easier will foster the will to breathe easier.

 

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Strength through Labor

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Some suggest that foreign markets are graveyards for entrepreneurial firms to overextend themselves. Others argue that foreign markets represent the future of SMEs. If you were the owner of a small, reasonably profitable firm, would you consider expanding overseas, why or why not?

Given our domestic entrepreneur-friendly bankruptcy laws in the United States I am currently considering (and for a long time have been interested in) entering foreign markets.

Growth and innovation are personal goals as well as successful attributes to expansion into the global marketplace. As a Courier in the domestic market I have become interested in exploring opportunities to apply my trade to a global scale, but have not identified any opportunities as of yet.

My passion is art and music, so producing work to export to a global audience is always appealing, but I am just now creating content that is marketable. Earning an appropriate amount of capital to continue to produce content is an obstacle to pursue this course of business.

As an SME, I am currently exploring my options to work for a larger, established firm that is active in the global marketplace. Substitute services for my courier service are numerous as are substitute products for my writing and painting, so gaining knowledge of the business world has been my main priority over the past couple of years.

I have found overextending my firm in the domestic market an outcome that is just as likely as foreign market overextension. The latter will at least offer new and interesting people and venues.

https://www.google.com/amp/s/nypost.com/2016/05/17/why-us-companies-have-started-fleeing-china/amp/

Globalization Pendulum Swings over Pyeongchang



by: James Connaughton, Know Nothing Digest staff writer

Procter & Gamble, a firm founded by a British American and an Irish American in 1837, produces and distributes hygienic and personal care and products as well as popular cleaning agents.  Tide laundry detergent is one of the best-known cleaning agents on the market and of Procter & Gamble’s products.  Always menstrual hygiene products, Bounty paper towels, Crest toothpaste, and Dawn dish soap are just a sample of the household names that are currently offered by P&G on the global market.  Procter & Gamble’s product names do vary in different countries, as Tide is known as Ace in Puerto Rico, Alo in Turkey and Vizir in Poland.

 

The International Association of Outsourcing Professionals (IAOP) has awarded Procter & Gamble the “Global Excellence in Outsourcing Award” for best practices in outsourcing.  P&G products net sales have exceeded 50 Billion USD in the past 5 years, with on-the-ground-services spread over 80 countries.  Procter & Gamble’s products are sold in at least 180 of the 195 countries on the planet.

 

As if offering their products all over the planet were not enough, Procter & Gamble has even gone to outer-space in an effort to improve the particle dispersion of their products.  P&G has utilized the International Space Station (ISS) as a science laboratory for an investigation into advanced colloid experimentation with Microscopy technology.  Researchers study how to use colloidal particles as stabilizers in P&G products to improve shelf-life stability.  The colloidal particles are used to keep large and active particles from settling to the bottom in a self-descriptive process known as sedimenting (NASA.)

 

Colloids are used in gels that make-up everyday products like medicine, shampoos, liquid detergent and other various cleaners. When such products sit on the shelf for an extended period of time the gels start to coarsen and separate.  This texture alteration occurs when smaller particles that are suspended in liquid join together to become larger particles.  The Procter & Gamble research and development department hope to learn from the microgravity space experiments and improve 4.8 billion people’s favorite cleaning products here on earth.

 
Procter & Gamble began its global expansion in the 1990s and soon after, set up a Shared Services organization to reduce redundant personnel and build strategic alliance management.  During the first stage of Procter & Gamble’s best-in-class service management organization development, there were three service centers set-up in Manila, Newcastle and Costa Rica.  Procter & Gamble then explored the value derived from outsourcing relationships with IBM for employee services, Hewlett Packard for IT infrastructure and Jones Lang LaSalle for facilities management.

 

Through developing outsourcing relationships and practicing related industry diversification, Procter & Gamble developed a Global Business Services (GBS) organization.  The GBS organization services are provided through a set of alliance partnerships and range from people management, travel services, meeting services, facilities, financial services, supply network solutions, and as discussed in the space about Space above: product innovation.

 

The Procter & Gamble Global Business Services organization creates value for the firm and improves the consumer experience by improving efficiency within the firm and the firm’s interactions with outsourced firms. Successfully managing the end-to-end relationships reduces risks associated with third party service organizations.

 

In 2016 Procter & Gamble’s volume shrunk by 1% by mid-year, while competitors Unilever and Kimberly-Clark were up 2.2% and 4% respectively.  Innovation was seen as lacking that year in comparison to competitor Johnson & Johnson, who got ¼ of its 2016 sales from products that Johnson & Johnson introduced over the past five years.  The shrinkage in Procter & Gamble’s sales is problematic despite the success of Pamper’s diapers innovation, Gillette (which was actually sold off), and Tide pods.  Innovation at P&G is indeed in trouble considering the firm sold off one of its 2016 innovation lines (Gillette) and its other market share winning line is now considered a teenage delicacy (Tide pods.)

 

A further fiscal death rattle could be heard from the Procter & Gamble R&D department as Johnson & Johnson pushed 9 Billion USD in research and development as Procter & Gamble continued with preceding years’ 2 Billion USD research and development budget (Kalogeropoulos.)

 

Although P&G was still on track to lose market share to rivals in 2017, it was felt that Procter & Gamble was in better shape after passing Kimberly-Clark in sales and almost equaling Unilever’s.  A 10 Billion USD cost-cutting program pushed P&G’s gross profit margin up nearly a full percentage point making Procter & Gamble one of the most profitable in its peer firm group.  Procter & Gamble continues to succeed in large part because of the firm’s 5 Billion USD advertising budget.

 

One strategy that Procter & Gamble has utilized in 2018 was to reach out to Bottom-of-the Pyramid consumers in their Olympic advertisements aired during the Pyeongchang Winter Olympics in South Korea.  North Korean human rights violations have become as contentious as globalization itself, but in a surprising show of regional unity North and South Korea came together to compete in the Pyeongchang Olympic games.  Procter & Gamble took the opportunity to reach out to the global audience and make a statement about corporate social responsibility in the style of management consultant Peter Drucker.  Drucker emphasized the need to turn social problems into economic opportunities.  Procter & Gamble shows the way to liberate the citizens of North Korea is not with the threat of nuclear confrontation, but by giving the people a chance to build productive capacity and build human competence.  P&G’s Millenial strategy is to show that managing social responsibility is the next step our leaders need to take in addition to just managing the message of being a good corporate citizen or leader of nation (Igel.)

As entrepreneurs, our strategies must follow the swing of the globalization pendulum.  As policy-makers we must seek to improve and enforce existing laws and encourage nations to become better global citizens.  All of us in the business community must strive to better the lives of our global human community.  I would like to think the underlying idea behind globalization is that we are all a global family.  We have the opportunity to empower our family members to better their local communities using the strategies we and others have learned.  Procter & Gamble should succeed in increasing market share in the emerging economies moving forward with this message.

 

 

 

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The Dark Side of the boom 


By James Connaughton, – Know Nothing Digest Staff Writer

When we talk about the dark side of globalization in academia we often point to the Seattle protests at the beginning of this century as the touchstone for the anti-globalization movement. The protests were held during a World Trade Organization conference as had happened before and has continued globally since. One dark side of globalization is the violence and disrupted business environment that accompanies the protest of globalization.  
Another dark side to globalization are the Foxconn employee suicides that horrify iPhone fans across the world. Hope destroying work conditions drive employees to end their lives at a rate that mirrors US military suicides during the same time period, an alarming statistic considering the size of the Foxconn workforce is proportional to the US military.
Darker still are the lowering of domestic wages and lost jobs to the lower paid workers in China, who are working in suicidal conditions. The products produced are more cheaply made, but in many cases turn out to be unsafe and at times poisonous. Some studies link exposure to heavy metals found in imported Chinese toys leading to violent crime in childrens’ later lives. Outsourcing has also lead to coal pollution in China creating a respiratory health crises in many areas.
But globalization has pulled millions out of abject poverty in China and in emerging markets around the globe. Desperately needed infrastructure is developed alongside industry in many impoverished nations rich with employable individuals. The adaption of marketing strategies by global firms has extended product distribution channels through untraditional regional partners, namely under-employed women, and allowed them to bring home livable wages for the first time in their lives. Firms have utilized globalization practices to market to bottom-of-the-pyramid consumers and not only reach this “new market segment”, but improve sanitation and quality of life in these regions on a large scale.
The benefits of globalization are not only seen through the lense of firm and consumer segment development in emerging markets, but even in the popular culture references to its opposition. Protest movements create awareness of and begin dialogue about the dangers of this new/old business strategy, globalization. 

Throughout history humans have seen it grow and decline before, and if the pendulum theory holds true we will see globalization fluctuate again. Globalization protest efforts have lead to employment growth in the legal defense industry as well as destruction repair firm growth. If, through globalization you build it, they will come, and they will shop and they will knock it down for us all to rebuild again.  

Do i stay…or do i go?

Expats and Expat kids, “Do they still have seniority or friends when they get back home?” or “Who gets the promotion upon our return?” -by Manga Meinform, staff writer

 

As a father of multiple children, my concern for their wellbeing would be a deciding factor in my decision to work abroad.  The length of the assignment would determine if I would attempt to relocate them with me out of country, as well as the political and economic environment of the foreign country in question.


Historically, I assumed foreign assignment would be an advantage when promotional considerations occur within the firm.  However, I have learned that unforeseen situations can change the domestic business environment and render expatriates at least temporarily inappropriate for certain advancements that they may have been qualified for, if they had stayed in country.

Fear of being passed over for promotion or obtaining senior position after returning from foreign assignment should optimally be addressed before and after embarking on the assignment.  As mentioned, there are situations where being out of the home country for an extended period of time creates disadvantages for newly repatriated employees to advance in position at the firm.  The employer and expatriate must practice negotiation skills and strive to work together to understand and communicate concerns on both sides for the common good of the firm and the individual.

Finally, I have come across the fear-of-interference-with-stability mentioned more than once in the discussion of employee foreign assignment concerns.  In business, as in life, the fear of the unknown stops many things from happening before they ever begin.  The spirit of the entrepreneur is to face the unknown and to work through fear and difficulties as they arise.

The entrepreneur faces these fears not because they have all of the answers to the countless questions, but because of faith in ability.  A successful expatriate must have faith in their ability to adapt to the new environment, faith in their family’s ability to adapt, and also faith in the strength of their company.

No retreat, only a treat.


Business and science fiction

Business and science fictionBy Hans Yambler – staff writer


In the modern age the terrible crime of not mixing business and fiction is constantly committed by proletariats and elites alike. 
Insurance salesman and jewelry merchants are all hedging their bets against the rising cost of fuel. Up-and-down, up-and-down the seesaw of the have not’s is reducing its minimum speed.  
Willy Wonka and Johnny Cash are being used to sell us access to dreams that never were are very own. It seems like self service is on the rise but honesty and transparency is being filtered.  
We now have the games of peace reuniting the broken kingdom and we hope that the glue holds, maybe we should put some more rubber bands around it. 
There is no actual substance on this platform, but we are rich with filler. A recent study shows that actual opportunities are limited. In this new gig economy it’s prudent to start your own satellite launching firm.  

Future of Work – science or fiction?

What is the Future of Work?

By James Connaughton, Know Nothing Digest staff writer

 

In today’s market-place we are constantly being reminded of the globalization of business and the resulting fluctuations in the labor market.  After the lure-of-cheap-labor in the emerging market steals all of America’s factory work, we are told that the machines are coming for the rest our jobs.  Should we rise up against the machines or increase our xenophobic trading policies?  Maybe, just maybe, we should take a look at what it means to have a job.

 

Claire Burge, CEO and Founder at Wndyr, believes employers are wanting employees who are creative problem solvers and require less management.  Burge points out that as machines are claiming traditional human jobs, many jobs are being invented today that never existed before.  Wndyr’s CEO sees work as a giant playground and seeks to transform the modern workplace through human acceleration and education.

 

Burge references chaos theory, defined as a complex system where multiple micro changes happen regularly in a seemingly unpredictable manner, in characterizing modern global work patterns.  Claire Burge leads a team at a firm called “This is Productivity” that focuses on three areas of work: Humans, Workspaces and Technology.  This is Productivity is building a platform enabling automation between all of the various technologies humans use in their workspaces.

 

Siemens, Asos, Roche, Credit Suisse, EY and other leading technologies utilize Burge’s Future of Work thinking, planning and interaction models.

 

John Hagel, leader of the Center for the Edge at Deloitte and former senior vice president of strategy at Atari, Inc., works to identify emerging business opportunities and consults for groups such as McKinsey & Co. and Boston Consulting Group.  His focuses have ranged from operational performance improvement and strategic management.

 

Hagel advocates learning to understand the digital economy and the social dimension of information and technology.   His research has shed light on the business implications of the disruptive technologies emerging in today’s global environment.  Hagel is an acolyte of Peter Drucker’s Management Challenges for the 21st Century and his Post-Capitalist Society.

 

This is the first of a series of investigations into what the Future of Work is going to look like in America post 2020, and more specifically what it might mean for would-be-employees in Oklahoma.