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Pay is the cornerstone of the employment contract. It is difficult to find any worker that is not concerned about their pay to some degree. Although no specific study is cited, in one article, U.S. President Barack Obama references the historical gender pay gap. The second article reports a study conducted by Statistics Canada revealing that black Canadians earn less than white Canadians on average. While some researchers contend pay is not a primary motivator, pay differentials continue to be an issue – important enough to occupy the attention of some world leaders.

QUESTIONS:

  1. From the standpoint of the human resource management process, why is fair pay important? Identify factors that might elevate the discussion of pay to the level of strategic HRM.
  2. Both articles describe key demographic groups with lower average pay. Is this a clear case of discrimination? Why or why not? Under what circumstances would lower pay associated with one group or the other NOT be considered discrimination? How does comparable worth relate to this issue?
  3. Imagine for a moment that pay differentials are justified. What alternatives (to direct pay) do employers have at their disposal to attract and retain qualified employees? In other words, if you were limited in terms of what you could pay, what else could you do to keep your employees committed to your organization?

SOURCE: J. Trindle, “Obama Seeks Fair Pay for Women,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704296604576196103820286140.html)

See also: T. Grant, “Black Canadians Paid Less on Average Than Whites: Study,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/black-canadians-paid-less-on-average-than-whites-study/article1929847/)

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Dealing with employee problems is rarely enjoyable, yet action is often necessary to ensure problems are not repeated. When the National Hockey League gave its toughest suspension of the season to the Pittsburgh Penguin’s Matt Cooke, it was trying to send a clear message that violent hits are unacceptable. Cooke is popular with his teammates and a valuable part of the Penguins organization, but increasingly is becoming known as a “pest” for questionable hits and penalty time. While Penguins management plan to give Cooke another chance when the suspension is served, they were quick to applaud the league’s action to curb violence on the ice.

QUESTIONS:

  1. In what way(s) does the action against Matt Cooke represent control? What type of control is being used?
  2. Refresh your memory by reviewing the reinforcement strategies in the Motivation chapter. If Cooke is a repeat offender, then it could be argued that the National Hockey League has not been reinforcing the right behavior. What strategy does the suspension represent?
  3. It could be argued that the NHL is practicing management by exception. What event made this situation exceptional? Which of the two exception situations exists in this case?
  4. Is the penalty levied against Cooke consistent with progressive discipline?

SOURCE: The Canadian Press, “Cooke Suspended for Rest of Regular Season, First Round of Playoffs,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/sports/hockey/cooke-suspended-for-rest-of-regular-season-first-round-of-playoffs/article1950495/)

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In a rare concerted move, the central banks of major economies intervened in the foreign exchange markets on Friday to keep the value of the Japanese yen from appreciating. The currency had been appreciating since last week’s devastating earthquake and tsunami, and the currency broke through to record highs in late-day trading on Wednesday. Trading in the yen had become chaotic earlier in the week, with the yen surging 4.6% within minutes, similar to the “flash crash” of stocks last May. Part of the challenge is that there are too many buyers trying to buy yen from too few sellers. Both companies and individual investors seem to be trying to buy up yen. The coordinated effort by the Bank of Japan, the European Central Bank, the Federal Reserve and monetary authorities in Canada and the United Kingdom pushed the Japanese currency down more than 3% against the U.S. dollar, though there are concerns about the sustainability of the effects.

QUESTIONS FOR DISCUSSION:

  1. Central bank interventions often have proved futile in sustaining a currency’s value over the long-run. Is this coordinated effort likely to achieve its goals?
  2. How long should central banks intervene in the exchange markets or what signals would indicate it is time to let market forces once again determine the currency’s value?
  3. What are the risks to the Japanese economy if yen trading continues to be unpredictable or if the currency’s appreciation continues?
  4. Part of the rapid climb of the yen on Wednesday seems to have been from automatic trades that were triggered when the yen hit certain levels. Given that automatic orders and trades orchestrated by supercomputers seem to dominate the financial markets, how can a company best protect against unpredictable and perhaps illogical fluctuations in exchange rates?

SOURCE: Lauricella, T., & Scott, A. (2011, March 19). G7 moves in sync to steady yen. Wall Street Journal, p. B1. (Retrievable online at: http://online.wsj.com/article/SB10001424052748703512404576208283482303132.html)

RELATED ARTICLE: Lauricella, T., & Martin, K. (2011, March 18). Behind yen’s record surge. Wall Street Journal, p. C1. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704261504576205564007066134.html)

Related video clip available at: http://www.youtube.com/watch?v=zIhk2YrpTP8

Kotecha Says G-7’s Yen Action Draws `Line in the Sand’

Related video clip available at: http://www.youtube.com/watch?v=TCr6-AkjE58

Bennenbroek Says Further G-7 Yen Intervention Possible

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The situation in Japan highlights the dangers of globally integrated supply chains. The devastating effects of the natural disaster have created product shortages for critical component parts. Disruptions to the power supply and damage to the transportation infrastructure are contributing to production challenges even for Japanese firms that were not directly damaged by the earthquake or tsunami. Uncertainty about the ability of Japanese firms to continue production is forcing firms to analyze how they need to configure their supply chains to reduce dependency on one region of the world. Firms around the world have slowed production and are searching for alternative suppliers to avoid running out of critical components. Japan is a crucial source for silicon wafers and chemicals used in making circuit boards and telephone handsets. The aftermath of the nation’s disaster has highlighted key weaknesses in the supply chains of businesses, particularly in the electronics and automotive industries. General Motors plans to suspend production at a plant in Louisiana due to a component part shortage and Honda and Volvo are developing contingency plans to locate alternative suppliers.

QUESTIONS FOR DISCUSSION:

  1. Discuss the concerns that creating a web of production facilities spread across the global creates.
  2. What are the advantages and disadvantages of developing supply chains based on a limited number of suppliers?
  3. Evaluate the tradeoffs of using just-in-time delivery systems.
  4. One of the consultants cited in the article stated that good companies look at a supply chain “as a movie, rather than as a photo.” Explain what it means for a firm to view its supply chain as a movie.

SOURCE: Hookway, J., & Poon, A. (2011, March 18). Disaster in Japan: Crisis tests supply chain’s weak links. Wall Street Journal, p. A8. (Retrievable online at: http://online.wsj.com/article/SB10001424052748703818204576206170102048018.html)

Related video clip: Japan Disaster Raises Supply Concern. (Retrievable online at: http://online.wsj.com/video/news-hub-japan-disaster-raises-supply-concerns/550C5202-830E-46A0-B92B-7387E5F3C2A6.html?

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As Japan begins the difficult recovery process after Friday’s devastating earthquake and tsunami, the short term and long-term consequences of the wide-spread destruction on the nation’s economy are unclear. Immediately following the earthquake on Friday, the value of the Japanese yen rallied based on expectations that Japanese companies would bring cash home and buy yen to help repair the damage. After the 1995 Kobe earthquake, the yen rose and ultimately hit an all-time high. In early Asian trading on Monday, the value of the yen slumped after the Bank of Japan offered to inject a record 18 trillion yen (about $220 billion) into markets to secure confidence. The yen will face downward pressure if investors stop viewing the yen as a safe-haven currency or if investors begin to worry about the government spending on rebuilding. Japan already has the worst sovereign debt burden among industrialized countries at approximately 200% of the nation’s gross domestic product. With the exception of the construction industry, Japan faces weak economic growth which may also put downward pressure on the currency.

QUESTIONS FOR DISCUSSION:

  1. Evaluate the tradeoffs to the Japanese economy of allowing negative investor sentiment to push the value of the yen lower. Given that a lower yen could help Japanese exports, should the central bank intervene if the currency trends downward?
  2. The nation of Japan already has a heavy debt burden and the government will likely need to spend heavily and take on even more debt as part of the recovery process. Given that every currency has its weakness and people have to invest their funds somewhere, even in this time of global political and economic turmoil, evaluate the extent to which the disaster will reduce the yen’s role as a safe-haven currency.
  3. The Japanese economy was recently eclipsed by China as the world’s second largest economy, the spot Japan had held since 1967. Will the focus on rebuilding stimulate economic growth or push the Japanese economy even lower? Discuss the factors that will make the business recovery in Japan difficult.
  4. How will the events in Japan impact the global economic recovery?

SOURCE: Shah, N. (2011, March 14). Japanese act to back yen; Nikkei sinks. Wall Street Journal Online. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704893604576198210987163764.html)

Related video clip available at: http://www.youtube.com/watch?v=X1mWgsByEw0
N the Know: How will the earthquake in Japan affect the Japanese economy?

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The top appellate body for the World Trade Organization (WTO) ruled on Friday that the method the United States used to calculate punitive duties on certain Chinese goods violates WTO policies. The United States had imposed both antidumping and antisubsidy duties (i.e., countervailing duties) on certain Chinese imports of steel pipes, off-road tires and woven sacks. The United States argued that WTO policies allowed it to use the non-market economy method to set antidumping duties on goods from China to compensate for unfair pricing and government subsidies. WTO rules allow countries to impose anti-dumping duties on imports that are sold below fair market value, but in non-market economies it is more difficult to determine what a fair domestic price represents. The United States was imposing both antidumping duties based on a non-market economy and countervailing duties to offset government subsidies. China’s argument that it was inappropriately being double-penalized by the United States was upheld by the WTO. The U.S. must now remove some of the duties on the Chinese goods and change its duty calculation approach for future cases.

QUESTIONS FOR DISCUSSION:

  1. How is the WTO ruling likely to impact U.S. trade policy with China?
  2. Evaluate the extent to which China can make a justifiable case for receiving market-economy status from the U.S. and European Union. What would be the likely consequences for the U.S. and China if it did receive this status?
  3. One of the arguments for allowing China to become a member of the WTO in 2001 was that it was better to have China in the WTO than not. Many believe that China has enjoyed one-sided benefits of being a WTO member. With $1.6 trillion of exports in 2010, and a trade surplus of $184.5 billion, analyze the extent to which China’s membership in the WTO is beneficial to other countries.

SOURCE: Miller, J. (2011, March 12). Trade body rules in Beijing’s favor. Wall Street Journal, p. A11. (Retrievable online at: http://online.wsj.com/article/SB10001424052748703327404576194783274423052.html)

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Entrepreneurial activity has been increasing slightly each year during the three years of recession. The paths to business ownership taken by four individuals are chronicled and provide a nice case study in entrepreneurship.

QUESTIONS:

  1. Discuss how Rino Greenwood’s story parallels that of Anita Roddick in your text. What are the common entrepreneurial elements in the stories of Greenwood, Lauryn Chun, and Jack D’Alelio?
  2. Review the research on the characteristics of entrepreneurs. Which of these are confirmed by the article? Are any of the characteristics called into question?
  3. Your text implies that necessity-based entrepreneurship is associated with minority status. Should we broaden our understanding of what creates necessity-based entrepreneurship? Why or why not?

SOURCE: L. Petrecca, “Recession Inspires People to Start Own Businesses,” USA Today (Retrievable online at http://www.usatoday.com/money/perfi/basics/2011-03-07-lifestages07_ST_N.htm)

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On the eve of the company’s 40th anniversary, USA Today’s Bruce Horowitz interviewed Starbucks CEO Howard Schultz. Topics include the company’s iconic status, its resiliency, plans for the future, as well as an analysis of successes and failures. One thing appears clear – Schultz is deeply committed to the company and plans to be out front leading it into the future.

QUESTIONS:

  1. Between your own personal experience with the company and your reading of the interview, how well has Starbucks responded to the performance criteria identified in the “Working Today” section of your text?
  2. Does CEO Howard Schultz appear to have a solid understanding of the changing nature of organizations? Analyze Starbucks in terms of the trends listed in your text.
  3. What evidence exists in the interview suggesting that Starbucks embraces the concept of the upside-down pyramid?

SOURCE: B. Horovitz, “Starbucks at 40: An Interview with CEO Howard Schultz,” USA Today (Retrievable online at http://www.usatoday.com/money/industries/food/2011-03-07-starbucks07_CV_N.htm)

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Without question, Google is the leading search engine on the internet. Advertisers flock to the company. Businesses (and other websites) clamor to move up in Google’s rankings. Yet not everyone is satisfied that Google’s results are the best they can be. University of California Visiting Scholar Vivek Wadhwa says a lot of spam makes its way into the rankings. He sees this as a problem with the exponential growth of information available on the world-wide web. For its part, Google is tweaking its algorithms and cracking down on companies that use gimmicks to improve their ratings.

QUESTIONS:

  1. Let’s begin this mini case study by stepping back to Chapter 3 and the general environment. Most current college students do not remember a time when Google was not the dominant internet search engine. Google is the leading search engine because of its superior algorithms. The present article calls that into question. Is Google’s position guaranteed because of these algorithms? What forces might dislodge the giant?
  2. What is the value creation performed by Google? Describe it in detail from your own perspective. Why would some other company spend its advertising money with Google?
  3. Place Google at the center of the value chain shown in Figure 18.1 of your text. Work your way forward and describe how the last two steps take place. Now work backward and describe the first two steps. Where does Google’s crackdown on “cheaters” fit in the model?

SOURCE: A. Efrati, “Google Revamps to Fight Cheaters,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704150604576166390281747136.html)

See related video at:

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The much anticipated annual letter to shareholders from Berkshire Hathaway CEO Warren Buffett is out and the picture is quite rosy. Berkshire reported a 61% increase in earnings for 2010 and net income swelled to $13 billion. The company is poised to make major acquisitions in 2011. The success of 2010 is due largely to the acquisition of Burlington Northern Santa Fe and a dramatic turnaround at NetJets. The company did not outperform the S&P 500 – Buffett says such expectations year in and year out are unrealistic – for the second consecutive year and just the eighth time in the last 46 years.

QUESTIONS:

  1. In terms of usefulness, how would you classify Warren Buffett’s annual letter to shareholders? If you believe it is useful, what criteria does it satisfy?
  2. Try to imagine what goes on when Mr. Buffett makes investing decisions. What type of thinking is involved? Is it possible that a successful investor, like Mr. Buffett, utilizes more than one style?
  3. Investing always involves a certain degree of risk. In 46 years at the helm of Berkshire Hathway, Mr. Buffett has been able to outperform the S&P 500 in all but eight. Scan the article to see if you can identify some of the strategies he uses to minimize risk.
  4. Consider this issue not directly related to decision making. Mr. Buffett currently serves as chairman of the board, CEO, and chief investment officer at Berkshire. What do you think about this?

SOURCE: S. Ng & E. Holm, “Berkshire’s Buffett Eyes More Major Deals as Earnings Surge,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748703796504576168160901144564.html)

See also: Associated Press, “Warren Buffett Remains Optimistic About U.S. Economy,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/report-on-business/economy/warren-buffett-remains-optimistic-about-us-economy/article1922176/)