Knowledge@Wharton

Time to Temp?

Fri, 06 Nov 2009 08:57:00 EST

As unemployment rises, so does temporary employment. Are employers hedging on their hiring bets?

Social Tremors

Thu, 05 Nov 2009 07:25:00 EST

A traffic decline has cut into MySpace's revenue deal with Google. Is this more evidence of a shakeout in the online social media sector?

Buffett's Big Bet

Tue, 03 Nov 2009 11:20:00 EST

By spending $26 billion to buy the rest of Burlington Northern Santa Fe, Warren Buffett's Berkshire Hathaway, which already owns 23% of the company, says it sees a big future for railroads. But that future has been overdue for decades, says a Wharton expert.

Saturn: A Wealth of Lessons from Failure

Wed, 28 Oct 2009 17:19:29 EST

General Motors' decision earlier this month to scrap its Saturn brand triggered frequent retellings of the many ways in which GM missed an opportunity to recast itself and the auto industry. But other manufacturers did adopt some of Saturn's innovations, according to Wharton faculty. Indeed, they say, the Saturn story provides a roadmap for what to do --- and what not to do -- as the auto industry adjusts to the post-financial crisis world.

Lippo Group CEO James Riady: 'Money and Power Are a Blessing and a Curse'

Wed, 28 Oct 2009 17:19:29 EST

James Riady is the CEO of Lippo Group, one of Indonesia's largest conglomerates with annual revenues of some $3 billion. The Group, among the most active property developers in Southeast Asia, has expanded into China and Hong Kong and plans to invest $10 billion over the next five years in the Asia Pacific region. It also has interests in media, telecommunications, retail and health care. Fifteen years ago, Riady was responsible for the establishment of Universitas Pelita Harapan in Indonesia, and he has a strong interest in the social impact of business. During an interview with Knowledge@Wharton, Riady explained the lessons he has learned over the years from successes and failures in business and politics.

Company Stores vs. Independent Retailers: Clash or Peaceful Coexistence?

Wed, 28 Oct 2009 17:19:29 EST

Microsoft dipped its toe into retail waters this month by opening its first company store as a way to showcase the latest and greatest in PCs, Zunes and Xbox consoles. But computer companies aren't the only manufacturers moving into the retail space, says Wharton marketing professor David Bell. Whether it's handbags from Coach, shoes from Nike or suits from Ralph Lauren, consumers increasingly have the choice to buy products either at stores operated by manufacturers or from independent retailers. Bell recently co-authored a research paper looking into competition between company stores and independent retailers in the same market.

Renault-Nissan CEO Carlos Ghosn: 'Now Is the Time for the Electric Car'

Wed, 28 Oct 2009 17:19:29 EST

The electric car is real. It's here. And before long -- when curbside charging stations become as ubiquitous as parking meters -- it won't seem all that complicated, either. So says a man who has thrown his corporate reputation into the post-gasoline car: Carlos Ghosn, CEO of Renault and Nissan. In a wide-ranging Wharton Leadership Lecture that touched on everything from managing a multicultural conglomerate to pushing for targeted government regulation, Ghosn was at his most optimistic when discussing a future where zero-emissions vehicles are embraced, not out of altruism towards Mother Earth, but because they are good business.

Starved for Financing: Is There Relief in Sight for U.S. Small Businesses?

Wed, 28 Oct 2009 17:19:29 EST

President Obama's recent move to funnel more credit to small businesses comes at a time when a fragile recovery appears to be underway in that sector. If Congress approves Obama's plan, the measures would enable community banks to borrow at low rates from the Treasury Department's Troubled Asset Relief Program, so long as the banks show they are increasing lending to small enterprises. Still, most small businesses continue to hunker down: Last month, a survey by the National Federation of Independent Business found that expansion plans for small businesses were at a 35-year low. How quickly will conditions improve for a sector that generates two-thirds of all new jobs in the U.S.?

Netflix: One Eye on the Present and Another on the Future

Wed, 28 Oct 2009 17:19:29 EST

In a year when DVD sales are falling and studios are facing major shakeups in their executive ranks, the movie industry has at least one success story to cheer about: Netflix. Despite the recession, the Los Gatos, Calif.-based company continues to thrive and is now in a race to transition to a business model focused on streaming content online while continuing to exploit its current model based on physical DVD distribution. According to Wharton faculty, Netflix has managed this balancing act deftly so far, but growing competition in digital distribution means that it may not have an advantage for long.

Crackdown on Executive Pay: Too Much or Not Enough?

Wed, 28 Oct 2009 17:19:29 EST

Last week, the Obama administration's "pay czar," Kenneth Feinberg, announced that the government will impose caps on compensation for the 25 highest-paid executives at seven companies that received "exceptional assistance" through the Troubled Asset Relief Program -- including American International Group (AIG), Bank of America, Citigroup, Chrysler, Chrysler Financial, General Motors and GMAC. Under the new regulations, salaries will be reduced by an average of 90%, and total compensation (including bonuses and stock options) will be lowered by 50%. Knowledge@Wharton spoke with Wharton accounting professor Wayne R. Guay and then with finance professor Alex Edmans about what these changes could mean for Wall Street, company shareholders and taxpayers.

New Approaches to New Markets: How C.K. Prahalad's Bottom of the Pyramid Strategies Are Paying Off

Wed, 14 Oct 2009 15:33:51 EST

Five years ago, C.K. Prahalad published a book titled, The Fortune at the Bottom of the Pyramid, in which he argues that multinational companies not only can make money selling to the world's poorest, but also that undertaking such efforts is necessary as a way to close the growing gap between rich and poor countries. Key to his argument for targeting the world's poorest is the sheer size of that market -- an estimated four billion people. How has Prahalad's book -- a revised, fifth-anniversary edition of which has just been published -- affected the behavior of companies and the well-being of consumers in the years since its publication? Knowledge@Wharton checked in with the author for an update, including examples of specific companies that are implementing Bottom of the Pyramid strategies.

Early Tremors: Is It Time for Another Social Network Shakeout?

Wed, 14 Oct 2009 15:33:51 EST

Faint rumblings have begun in the social networking landscape. Facebook acquired smaller rival FriendFeed in August; Friendster, viewed as an also-ran in the U.S., has refocused its operations on the Asia-Pacific region; and News Corp., owner of MySpace, has reshuffled executives and restructured the unit as traffic to the site slows. Experts at Wharton say there's still a lot of growth left in the sector, but a round of consolidation, reinvention and restructuring is likely in the not-too-distant future.

Rx for the Pharmaceutical Industry: Focus on Innovation, Not Marketing

Wed, 14 Oct 2009 15:33:51 EST

The good news for the pharmaceutical industry is that, short-term, it may emerge as a winner in the health care reform battle as new customers enter the system and price protections remain in force. The bad news is that while big pharma has used increasingly large megamergers to support its reliance on blockbuster products, it still faces the long-term need to develop fundamentally new business models to cope with its most significant problem -- a failure to come up with new treatments, according to Wharton faculty.

'Too Big to Fail': Can Regulation Control Systemic Risk?

Wed, 14 Oct 2009 15:33:51 EST

The phrase "too big to fail" debuted during the financial crisis as a buzzword for mega banks and institutions that pushed the world economy -- and themselves -- to the brink of meltdown. Yet, they could not be allowed to fail because of the havoc this would wreak on the economy at large. With the worst of the crisis apparently over, attention now focuses on how to rein in the behemoths without encouraging even riskier behavior. Wharton faculty members offer their suggestions.

The Good, the Bad and the Exaggerated in Michael Moore's New Film, 'Capitalism: A Love Story'

Wed, 14 Oct 2009 15:33:51 EST

Michael Moore's movie, Capitalism: A Love Story, doesn't pull any punches in its depiction of capitalism as the monster that is destroying America. Moore's villains range from Wall Street bankers to Wal-Mart to Treasury Secretary Timothy Geithner, while capitalism's victims include those who are losing their jobs, their houses and, in some cases, their faith in a system that is supposed to reward hard work and playing by the rules. Knowledge@Wharton asked Kent Smetters, a professor of insurance and risk management at Wharton who describes himself as "generally right of center," to review Capitalism: A Love Story.

Pay for What You Get: Putting Performance-based Contracting to the Test

Wed, 14 Oct 2009 15:33:51 EST

Every company wants to improve the efficiency and cost-effectiveness of its supply chain, but what's the best way? Since 2004, the United States Defense Department has required its suppliers to adopt performance-based contracting so that it pays them a fee based on the amount of time big-ticket items like F-22 fighter jets are in use without requiring repairs. But is that better value than more traditional contracts that charge customers for time and materials when products break down? According to a new study co-authored by Wharton researchers, the answer is yes.

Inside the Bunker: CEO John Mack on Saving Morgan Stanley

Wed, 14 Oct 2009 15:33:51 EST

During the depths of the global financial meltdown in September 2008, John Mack faced the most critical moment of his tenure as CEO of Morgan Stanley. The investment bank was nearly out of cash, its stock price was plunging into the single digits and Treasury officials were pressuring him to sell the firm to JPMorgan Chase for a price as low as $1. During a recent Wharton Leadership Lecture, Mack offered an insider's take on his battle to preserve thousands of jobs as well as one of the best-known names on Wall Street.

Comcast and NBC Universal: The Rise of a Content King?

Wed, 14 Oct 2009 15:33:51 EST

Philadelphia-based Comcast, the largest cable company in the U.S., has made a bid to merge its operations with NBC Universal -- home to the NBC television network, Universal Studios and popular cable channels including Bravo, USA, CNBC and MSNBC. If the deal goes through, it would create a programming giant, allowing Comcast to produce and distribute content throughout its cable networks and on web sites such as Hulu, which is partially owned by NBC Universal. Steve Ennen, managing director of the Wharton Interactive Media Initiative, spoke with Wharton marketing professor Pete Fader and Ken Shropshire, professor of legal studies and business ethics, about what the deal could mean for content distribution and for consumers.

John Thain: It's 'Unfortunate That the American Dream Has Been Demonized'

Wed, 30 Sep 2009 17:48:04 EST

After he lost his job as CEO of Merrill Lynch following its sale to Bank of America last year, John Thain found himself pilloried by the press for having spent exorbitant sums decorating his Merrill office. During a recent presentation at Wharton, Thain addressed this issue head-on, and then proceeded to offer his opinions as to what caused the crisis, what can be done to prevent it from happening again, and when it will be over -- not just for the financial industry but also for Main Street. One piece of advice: "Relying on the world continuing to look like it used to look is a really bad idea."

Pushing Zune: Is Microsoft Fighting an Uphill Battle?

Wed, 30 Sep 2009 17:48:04 EST

In what was billed as "a significant step forward," Microsoft on September 15 launched its next-generation Zune HD media player, touting the device's ability to play high-definition (HD) video and receive HD Radio signals, along with a state-of-the-art, organic light-emitting diode screen. Experts at Wharton say that despite its advanced technology, it isn't yet clear whether these features will matter to consumers. Zune HD already faces the nearly impossible task of competing against Apple and its iPod, which had 73% of the market as of July. Should Microsoft continue to fight this battle?

Will the Future of Advertising Be a Blend of Old and New Media?

Wed, 30 Sep 2009 17:48:04 EST

Marketing executives commonly complain that old forms of advertising are dead -- but do emerging forms such as advertising through social networks deliver better results? Or would marketers be better off combining old and new media in a portfolio-driven approach that delivers strong results across different consumer segments? Those questions and more are being researched as part of the Future of Advertising Project at Wharton's SEI Center for Advanced Studies. The project was in the spotlight during Advertising Week in September with the launch of a new video channel called Fast.Forward in collaboration with Google.

Available All the Time: Etiquette for the Social Networking Age

Wed, 30 Sep 2009 17:48:04 EST

As social networking sites and 24-hour Blackberry access blur the lines between business and personal lives, managers and employees are struggling to develop new social norms to guide them through the ongoing evolution of communications technology. Wharton faculty and other experts say the process of creating rules to cope with the ever-expanding reach of modern communications has just begun, but will be shaped largely by individuals and organizations, not top-down decrees from a digital Emily Post.

The Impact of High-frequency Trading: Manipulation, Distortion or a Better-functioning Market?

Wed, 30 Sep 2009 17:48:04 EST

According to some estimates, high-frequency trading by investment banks, hedge funds and other players accounts for 60% to 70% of all trades in U.S. stocks, explaining the enormous increase in trading volume over the past few years. But critics of the practice worry that those profits are coming out of ordinary investors' pockets. Defenders, on the other hand, say high-frequency trading improves market liquidity, helping to insure there is always a buyer or seller available when one wants to trade. Wharton faculty and others weigh in.