John Paul MacDuffie - Faculty Research in Knowledge@Wharton

Can 'Cash for Clunkers' Help Jump-start the Auto Industry?

Wed, 05 Aug 2009 16:41:52 EST

Ford reported its first sales gain in 20 months, thanks to the U.S. government's "cash for clunkers" rebate program that gives consumers a rebate of up to $4,500 to trade in older cars for new and more fuel-efficient models. Other manufacturers said their continuing sales declines would have been worse without the program. All in all, the officially named Car Allowance Rebate System (CARS) provided taxpayers with a good return on their investment, Wharton management professor John Paul MacDuffie says in an interview with Knowledge@Wharton. But, he adds, the auto industry -- most notably GM and Toyota -- have a lot of work to do to prepare for a marketplace transformed by the financial crisis and growing demand for fuel efficiency.

How Hyundai Sells More When Everyone Else Is Selling Less

Wed, 10 Jun 2009 17:08:51 EST

In 2008 -- a brutal year for the auto business -- Hyundai Motor's global unit sales rose 2%, lifting revenues by 5%. In the first three months of this year, the South Korean automaker's global market share rose to 4.7%, compared to 4% a year earlier. With industry-leading guarantees, an intense focus on quality and a program to reassure buyers worried about their economic future, the once-derided company has won hearts -- and business.

Entrepreneur Elon Musk: Why It's Important to Pinch Pennies on the Road to Riches

Wed, 27 May 2009 17:28:28 EST

Superpreneur seems like a better label for Elon Musk. At 38, he has already been a co-founder of PayPal, which sold for $1.5 billion, and SpaceX, which aims to commercialize the launching of payloads into orbit. He is also an initial investor in electric-car pioneer Tesla Motors and solar energy company SolarCity, which sells and services solar energy equipment. In the second half of a two-part interview, arranged by Wharton Entrepreneurial Programs, he tells Knowledge@Wharton the story of his entrepreneurial beginnings and what he learned about the value of pinching pennies.

Tesla Motors CEO Elon Musk: 'Great Companies Are Built on Great Products'

Wed, 13 May 2009 16:53:27 EST

Entrepreneur Elon Musk has three passions: the Internet, space exploration and clean energy. The first paid off handsomely for him in 2002 when he sold PayPal to eBay for $1.5 billion in stock. The second is fueled by SpaceX, a company that makes space launch vehicles. Musk's third passion is Tesla Motors, which makes the Tesla Roadster, an electric sports car that claims to go 244 miles per charge and sells for $101,500 or more. In the first of a two-part interview with Wharton Entrepreneurial Programs and Knowledge@Wharton, Musk speaks with management professor John Paul MacDuffie, co-director of the International Motor Vehicle Program, about electric cars, hybrids, the Tesla and the mysterious ways of Detroit.

Biggest by Default: Toyota May Be Number One, But It Still Faces Challenges

Wed, 04 Feb 2009 17:07:39 EST

Toyota officially eclipsed General Motors as the world's largest automaker by sales last year, but its strength is only relative: The Japanese automaker, like its competitors, is struggling against a sharp drop-off in sales and global overcapacity. According to Wharton faculty, after years of conservative growth, Toyota accelerated its expansion in the past decade, making it harder to apply the brakes in the current downturn. The new market dynamics, which coincide with a changeover in company leadership, mean the road ahead may be especially difficult to navigate, they say.

Bailout or Bankruptcy: What Will It Take to Get the U.S. Auto Industry Back on Track?

Wed, 10 Dec 2008 17:40:48 EST

A government plan to rescue the U.S. automobile industry with $14 billion in emergency loans to General Motors and Chrysler was approved by the House of Representatives late on December 10, but the proposal continued to face stiff opposition from Senate Republicans. While the lifeline loans would give the Detroit automakers some breathing room, legislators and auto executives remain under enormous pressure to come up with a plan to resolve the industry's deep structural and management problems. Wharton faculty and other experts discuss the merits of the bailout proposal and what the potential alternative -- bankruptcy -- could mean.

On the Skids: Are U.S. Automakers Running Out of Time -- and Options?

Wed, 29 Oct 2008 13:54:44 EST

The global financial crisis is hurting sales for automakers worldwide, but the U.S. Big Three are falling into a deeper hole than most. With sales down as much as 25% this year, GM and Chrysler are discussing a merger even as they are reported to be running out of cash and in line for early access to a $25 billion low-interest government loan. Kirk Kerkorian, meanwhile, is selling his $1 billion stake in Ford. Wharton professors John Paul MacDuffie and Larry Hrebiniak talked with Knowledge@Wharton about the industry's challenges.

Behind the Curve: Have U.S. Automakers Built the Wrong Cars at the Wrong Time -- Again?

Wed, 09 Jul 2008 17:42:19 EST

Gasoline at more than $4 a gallon has proved to be the price point at which U.S. consumers make big changes in their driving habits. With SUVs and pickups suddenly out of favor in the world's biggest automobile market, Asian manufacturers who invested heavily in fuel-saving technologies -- and European car makers who sell to markets where expensive gas is nothing new -- are better positioned to meet new consumer demands. Just how dire is the situation for U.S. auto manufacturers and is there any relief in sight?

The Global Auto Industry: New Cars, Old Problems

Wed, 23 Jan 2008 16:49:57 EST

The rise in delinquencies on auto loans is one sign that America's auto industry is in trouble -- along with the rest of the economy. How hard are the auto makers being hit and what should the Big Three do to stem the damage? Meanwhile, the global auto industry has seen some interesting developments, including the introduction in India of Tata Motors' Nano and the arrival of five Chinese auto manufacturers at the Detroit auto show earlier this month. Will China and India be big players in the global market for cars? What is the current state of Europe's auto industry? Knowledge@Wharton asked Wharton management professors John Paul MacDuffie and Mauro Guillen to steer us through the turmoil.

The U.S. Auto Industry: Dangerous Curves Ahead?

Wed, 19 Sep 2007 15:45:03 EST

Among the U.S. auto industry's many challenges are the ongoing negotiations between General Motors and the United Automobile Workers union aimed at coming up with a new contract to replace the one that expired on September 15; the recent takeover of Chrysler by private equity firm Cerberus Capital Management; and a possible slowdown in consumer spending as a result of fallout from the subprime mortgage crisis. Meanwhile, industry watchers are awaiting the outcome of reported efforts by India's Tata Motors to take over two of financially plagued Ford Motor's luxury brands, Jaguar and Land Rover. Wharton management professor John Paul MacDuffie, co-director of the International Motor Vehicle Program, spoke with Knowledge@Wharton about these and other issues.

Changing Course: The Chrysler Deal, Rising Gas Prices and Other Car Talk

Wed, 30 May 2007 16:34:39 EST

Earlier this month, Cerberus Capital Management bought 80.1% of Chrysler Group from German auto maker Daimler-Chrysler, effectively ending a nine-year marriage between the two that never quite worked out. The expectations created by this acquisition are huge, and revolve in part around Cerberus's ability to make a deal with the United Auto Workers union that would include restructuring billions of dollars of retirement and health-care benefits -- a burden that both Ford and GM -- but not Toyota -- also carry. We asked Wharton management professor John Paul MacDuffie, co-director of the International Motor Vehicle Program, to give his views about Chrysler, Cerberus, high gas prices and other auto-related issues.

Deals on Wheels: It's Rush Hour for Germany's Auto Industry

Wed, 28 Mar 2007 13:10:43 EST

For the last couple of years, auto analysts and others have focused most of their attention on the troubles in Detroit, home of General Motors and Ford, two American car companies that have been struggling to regain their footing in the auto industry. But what has been going on in Wolfsburg, the headquarters of Volkswagen, a quintessential German automaker, and in Stuttgart, headquarters of DaimlerChrysler, a German-American hybrid? Quite a bit, actually. Knowledge@Wharton looks at the situation at VW, now that Porsche has upped its ownership stake in the company, and also at Chrysler, acquired by DaimlerBenz nine years ago in a partnership deal that may finally be coming to an end.

The Auto Industry: On the Road to Disaster or Recovery?

Wed, 07 Feb 2007 15:59:14 EST

Last May, Knowledge@Wharton spoke with John Paul MacDuffie, a management professor at Wharton and co-director of the International Motor Vehicle Program, about the state of the auto industry. It seems that not much has changed since then, except maybe for the worse. 2006 was the first year since 1991 that Detroit's Big Three were all in the red. Ford's situation seems direr than ever; Chrysler, which was profitable until mid 2006, is now preparing a restructuring plan to roll out this month; and Toyota has claimed the number-two spot in the U.S. auto market, just behind GM. Knowledge@Wharton asked MacDuffie whether he expects any surprises, or new strategies, in 2007.

Japan Strives to Balance Energy Needs with World Politics

Wed, 29 Nov 2006 13:59:05 EST

As much of the world grapples with higher oil prices, no industrial country is as vulnerable to rising energy costs as Japan. Almost entirely dependent on foreign oil, Japan has focused on conservation and alternative fuels, but recently has begun to push hard to get new access to overseas oil. Wharton faculty and energy analysts say Japan's new posture has led to tensions with other countries as it tries to lock up much-needed energy resources.

Can China Gear Up to Sell Its Cars to U.S. Consumers? Quality Is Key

Wed, 20 Sep 2006 15:51:08 EST

First it was textiles and consumer electronics. Next may be cars. China is once again looking to target a key consumer market in the U.S. Can China become a powerhouse in the global automotive industry, and if so, when?

Does a GM-Nissan-Renault Alliance Make Sense? Skepticism Abounds, but Let's Hear What Carlos Ghosn Has to Say

Wed, 12 Jul 2006 17:48:49 EST

On July 7, General Motors' board of directors voted to study the pros and cons of entering into a three-way alliance with automakers Nissan and Renault. The alliance was proposed by GM shareholder Kirk Kerkorian who sees it as a way to revive the struggling company and expedite the restructuring taking place under GM's current chairman and CEO, Rick Wagoner. Another central figure in this drama is Carlos Ghosn, CEO of Nissan and Renault, who is credited with turning around Nissan and who is seen by Kerkorian and others as holding the keys to GM's future. What would a three-way alliance mean for GM, and for the auto industry in general?

Podcast: John Paul MacDuffie on Car Trouble: From Higher Gas Prices to Hybrids, and More...

Wed, 10 May 2006 17:28:40 EST

Almost anyone who has been following the auto industry, especially in the U.S., will agree that lately it has had a bumpy ride. For one thing, the difficulties of GM and Ford have filled the headlines for several months now, and there has been lots of speculation about how severe these problems are. In addition, the auto parts maker Delphi, which was spun off from GM in 1999, is now in the midst of bankruptcy proceedings and actively negotiating with both the United Auto Workers union and GM. Yet another challenge is growing global competition: Virtually all the Japanese brands are showing an increase in market share in the U.S. And finally, questions continue to persist about advances in technology, especially as they concern the new hybrid models. John Paul MacDuffie, a professor of management at Wharton and co-director of the International Motor Vehicle Program, spoke about these issues with Knowledge@Wharton's Mukul Pandya and Robbie Shell.

Auto Industry Consolidation: Is There a New Model on the Horizon?

Wed, 25 Jan 2006 15:13:16 EST

The turmoil and uncertainty among auto manufacturers and their suppliers have left people wondering when a shakeout can be expected. According to Wharton management professor John Paul MacDuffie and Christopher Benko, director of the PricewaterhouseCoopers Automotive Institute in Detroit, consolidation will take place among suppliers to a much greater extent than among carmakers, which may not experience mergers and acquisitions at all in the near term but will be engaged in ever-shifting strategic alliances and joint ventures. Additionally, these experts say, many Western parts suppliers are under immense pressure from lower-cost Chinese parts producers and need to consolidate to strengthen their chances of survival.

Japan: From Long, Slow Decline to Long, Slow Recovery

Wed, 01 Mar 2006 17:06:37 EST

After 15 years of stagnation and decline following the spectacular collapse of its 1980s bubble economy, Japan is finally showing signs of a recovery. The Nikkei index is trading at five-year highs. Real estate prices are rebounding. Deflation appears to be under control and interest rates, effectively at zero for more than five years, may soon begin to rise. Although there have been false starts in the past, much of today's optimism stems from the September reelection of Prime Minister Junichiro Koizumi, who ran on a platform of economic reforms, including new discipline for the banking system and a proposal to privatize the country's postal savings system. These reforms are crucial to reviving the world's second-largest economy, according to Wharton faculty. And while the pace of change seems glacial by American business standards, the recovery may have come at the right speed for Japan.

One Road to Japan's Recovery Lies through China

Wed, 01 Mar 2006 17:06:55 EST

In Southern China's Pearl River delta, Japanese manufacturers Kyocera Corp. and Konica Minolta Holdings are building high-tech optical products. In plants stretching across China, Japan's Matsushita Electric Industrial Co. has 60,000 employees making everything from batteries to microwave ovens to semiconductors. And Toyota Motor Corp., Japan's premiere industrial company, just selected China for the first overseas production of its hot-selling hybrid Prius. Increasing production and investment in China's booming economy are keys to Japan's recent financial turnaround after 15 years of recession and sputtering recoveries that eventually died out.

Farewell, Peter Drucker: A Tribute to an Intellectual Giant

Wed, 30 Nov 2005 15:55:06 EST

Decades ago, Peter F. Drucker single-handedly began the exploration of what he called "the dark continent of management." That exploration, which gave birth to the field of management, came to an end on November 11 when Drucker passed away at age 95. Wharton professors point out that Drucker's most important contributions are grounded in his writings on management and marketing. Despite his death, his legacy and impact as a role model will last.

A Bumpy Road for Delphi, GM and U.S. Auto Workers

Mon, 21 Nov 2005 14:54:45 EST

On the heels of an announcement that Delphi, the nation's largest auto parts manufacturer, is filing for Chapter 11 bankruptcy, GM announced on October 17 that it had reached a tentative agreement with the United Auto Workers to cut the healthcare benefits of unionized retirees. These events and others that followed may forever alter the relationship between America's Big Three carmakers and the UAW, and they underscore the degree to which globalization is exerting downward pressure on the wages and benefits paid to U.S. workers. Meanwhile, experts at Wharton and elsewhere say the road ahead could get quite a bit bumpier for American auto industry employees and retirees.

Is General Motors Running Out of Gas?

Wed, 15 Jun 2005 15:46:04 EST

For General Motors, it's been a tough year: a $1.1 billion first-quarter loss, junk-bond status for its debt, a largely lackluster lineup of models, and a mountain of health-care and pension liabilities that builds an immediate cost disadvantage into every vehicle that rolls off the line. But experts at Wharton and elsewhere say that GM is not about to file for bankruptcy protection, that it has a talented management team and that some new models on the horizon may rev up sales. For GM to survive and thrive over the long term, however, the company needs more than a few hot models; it requires a major structural and cultural overhaul, these people say. GM must start thinking small -- not an easy task for a company that has never done that -- and accept a diminished, yet still significant, role in the global auto business.

Car Trouble: Should We Recall the U.S. Auto Industry?

Wed, 04 May 2005 14:58:50 EST

On April 19, General Motors announced a first-quarter loss of $1.1 billion, its worst result since 1992. On April 20, Ford Motor announced $1.1 billion in net income for the first quarter, a 38% decline from a year earlier, and projected that it would either post a loss or just break even in the second quarter. In Germany, shareholders at DaimlerChrysler's recent annual meeting lambasted chief executive Jurgen Schrempp, who has presided over a 50% drop in share price since Daimler and Chrysler merged in 1998. What's going on? Auto industry experts at Wharton and elsewhere say the business has been undergoing wrenching changes for years, but that the changes are accelerating. Competition from Japanese, Korean and now Chinese manufacturers doesn't help. Job number one? Pay more attention to what customers want.

The Human Side of Mergers: Those Laid Off and Those Left Aboard

Wed, 30 Mar 2005 10:14:34 EST

The initial headlines announcing mega-corporate mergers and acquisitions typically focus on Wall Street's appreciation for improved finances, less duplication of services and staff, the ability to grow faster, and the anticipation of higher returns for shareholders. When P&G recently announced that it would buy Gillette, for example, the fact that 6,000 people would lose their jobs was all but buried in the details of a deal that would link some of the world's most well-known household brands. Yet, as Wharton professors point out, companies that fail to factor in the costs of layoffs, declining morale, and the chaos that comes from restructuring are headed for trouble.

Hybrid Autos: Will the Big Three Catch up with Toyota and Honda?

Wed, 10 Sep 2003 00:00:00 EST

The news that Toyota outsold Chrysler in August to take the No. 3 position in U.S. car sales for the first time is the latest reminder of the vulnerability of Ford, General Motors and Chrysler to foreign competition. In addition, it focuses attention on a growth area where all three U.S. manufacturers are lagging several years behind � the market for gasoline/electric hybrid vehicles. What plans do U.S. manufacturers have for developing hybrids? And how likely are these cars to catch on with the public?

Another Reorganization? What to Expect, What to Avoid

Wed, 02 Jul 2003 00:00:00 EST

It�s a familiar scenario: A company brings in a new department head who immediately decides that the way to show leadership is to reorganize. Then a new division head comes on board, or a new CEO, and there are more reorganizations, sometimes several in one month. Yet according to Wharton management professor Peter Cappelli, frequent reorganizations �are like doctors treating patients with antibiotics.� The medication might work short-term, but �long-term it can be harmful.� Knowledge@Wharton looks at why some reorganizations succeed and others fail.

The Best Technology is Invisible

Wed, 07 May 2003 00:00:00 EST

According to Wharton management professor John Paul MacDuffie, �we�re here at a time of consolidation. Organizations are working hard to catch up to technological changes�� MacDuffie spoke at �Catching Our Breath: Reorienting Strategy During the Internet�s Quiet Time,� a May 1 conference sponsored by the Reginald H. Jones Center and the Wharton eBusiness Initiative. Conference participants talked about some of the more successful web sites in operation and noted that companies these days have a better idea of what works and what doesn�t in a tough e-business economy.

How Global Is the Internet Economy?

Wed, 26 Mar 2003 00:00:00 EST

In recent times tome after tome has appeared chronicling the high-stress, caffeine-charged, stock-option driven atmosphere in Internet start-ups and the meteoric rise and fall of teenage CEOs. Books that take a balanced view � and separate the speculative frenzy surrounding the Internet bubble from its measured, unobvious, long-term impact on business and society � have been few and rare. A book published last month, The Global Internet Economy, however, fits that bill.

U.S. Steel Users Claim Tariffs �Protect a Few at the Expense of the Majority�

Wed, 12 Feb 2003 00:00:00 EST

U.S. steel users are paying about a third more for their raw material than they did a year ago, forcing thousands of job losses and leading some to seek cheaper steel from overseas suppliers. Others are threatening to move their own businesses offshore, a decision that could result in a permanent loss of business for U.S. steel makers. The surge in steel prices has been caused, in part, by the Bush administration�s controversial tariff program which, depending on your point of view, is either a bid for votes in steelmaking states, or a necessary adjustment to steel prices that had been held too low for too long.

Accounting in the U.S. and Europe: Arrogance, Angst and Ideas for Reform

Wed, 23 Oct 2002 00:00:00 EST

Following the business scandals of the past year, the initial focus of reform has been on accounting and auditing practices. But going forward, reform will branch out beyond technical rule-making to confront deeper notions about corporate governance in the United States and abroad, according to participants in a panel entitled �What Rules, Who Enforces? Accounting Standards and Auditing Practice.�

What Happens to the Inner Circle of the Ousted CEO?

Wed, 19 Jun 2002 00:00:00 EST

When Dennis Kozlowski resigned on June 3 as chief executive of Tyco International � shortly before he would have been removed by the board � it raised questions about the future of top executives around him. Assuming they supported, or at least knew about, the strategies of their former boss, should they be ousted as well, or would the loss of institutional knowledge and expertise be too disruptive to the company? Wharton faculty offer their opinions.

Family Matters: Are Fords, Hewletts and Packards Right to Exercise Their Clout?

Wed, 21 Nov 2001 00:00:00 EST

Now that William Clay Ford Jr. has replaced Jacques Nasser as CEO of Ford, and the Hewlett and Packard families have decided to oppose H-P�s merger with Compaq Computer, one wonders whether family members have become wrecking balls, spoiling the well-laid plans of professional managers and jeopardizing the company�s future. Not exactly, say Wharton faculty and others, who point to the importance of values, standards and personal net worth.

The Evolution of B2B: Lessons From the Auto Industry

Wed, 21 Nov 2001 00:00:00 EST

Only a few years ago, B2B exchanges were expected to completely alter conventional buyer-supplier relationships. The reality has been otherwise. Only 10% of the 1,000 B2B exchanges launched in the past 18 months are reportedly still in operation. Meanwhile, the important B2B action seems to have shifted to industry-wide exchanges run by incumbent firms, such as Covisint in the auto industry and Transora in the consumer products sector. In a new research study, Wharton management professor John Paul MacDuffie and colleague Susan Helper explore this evolution.

Will Covisint Thrive As a B2B Exchange?

Wed, 25 Apr 2001 00:00:00 EST

Now that dot-coms are no longer in fashion, discussions about business-to-business (B2B) e-commerce exchanges have sharply declined. Still, if they work, such exchanges will dramatically transform the way that so-called Old Economy companies do business with one another. One such exchange to watch is Covisint, backed by Detroit's auto giants, which hired a CEO last week after a year-long search. Covisint's fate will have major implications for the way large companies approach Internet-based business in the future.

Has DaimlerChrysler Hit the Breakdown Lane or Just Stopped to Fill Up?

Wed, 20 Dec 2000 17:40:31 EST

Two years ago, the merger � or was it an acquisition � of Daimler-Benz and Chrysler made eminent sense in an industry that was experiencing worldwide consolidation. Today, DaimlerChrysler�s capitalization is about half what it was two years ago, it has been sued by shareholders, its debt has been downgraded, its leadership is depleted and auto sales in general are in the midst of a slump. Talk about a turnaround challenge.

Buildyourowncar.com: Where E-Business is Driving the Auto Industry

Wed, 07 Jun 2000 15:47:53 EST

While made-to-order cars � with, for example, a Honda engine, a Ford body and a Bose sound system - may not be in your immediate future, e-business is definitely offering the auto industry new economies, new capabilities and new opportunities for business development. Two researchers look at recent changes in the way automakers sell, and consumers buy, their cars.

Why Efforts to Implement High-Involvement Work Practices Fail

Wed, 13 Oct 1999 13:35:08 EST

Frits K. Pil, professor and research scientist at the University of Pittsburgh, and John Paul MacDuffie, professor of management at Wharton, explore the diffusion and use of best practice work systems in manufacturing in a new study. Despite clear evidence that high-involvement work practices and policies result in superior quality and productivity, the authors find tremendous variation in the use of such practices. Pil and MacDuffie examine why efforts to implement high-involvement work practices fail when the positive outcomes prove so compelling. The study appears in the book Employment Practices and Business Strategy edited by Peter Cappelli, director of the Center for Human Resources at Wharton.