Following a year when CEO pay raises were flat, 2010 offered huge gains for many bosses of top companies. Average CEO pay jumped 11%. Topping the list was Viacom’s Philippe Dauman with compensation estimated at $84.3 million. While the biggest across-the-board raises tended to be in oil and gas and telecommunications, all industries showed substantial increases in CEO compensation. At the same time, some oil executives saw their compensation drop substantially.

QUESTIONS:

1. Is money (pay, compensation) a motivator? Argue from both sides and support your arguments with relevant models/theories.
2. Philippe Dauman rose to the top of the list on the strength of equity rewards. Using Equity Theory, defend these huge increases in compensation.
3. Imagine that you were poised to become CEO of a major company (as Michael White did at DirectTV in 2010). How would the information presented in the article influence your motivation? Use Expectancy Theory to explain.

SOURCE: J. S. Lublin, “CEO Pay in 2010 Jumped 11%,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748703992704576307332105245012.html)

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There is growing consensus that the bailout terms offered last year to Greece by the European Union (EU) and the International Monetary Fund (IMF) may need to be revised. Greece is struggling to address its budget deficit target with weak tax revenues and a shrinking economy. The bailout package has failed to convince investors that Greece will be able to pay all of its financial obligations without additional outside support. A select group of top euro zone finance officials met in Luxembourg on Friday night to discuss the situation in Greece. Although EU officials still insist publically that restructuring Greek sovereign debt is not being considered, some officials concede privately that some form of restructuring such as an extension of maturities dates referred to as a “reprofiling” of Greek bonds, may be inevitable. The euro tumbled after reports of the meeting surfaced when Germany’s Spiegel Online erroneously reported that the meeting was called because Greece was thinking of leaving the euro zone.

QUESTIONS FOR DISCUSSION:

1. If the EU and the IMF do agree to a restructuring of the bailout terms for Greece, should more favorable terms also be offered to Ireland and Portugal?
2. Not all euro-zone nations were invited to this weekend’s informal talks for EU finance ministers to discuss the situation in Greece. Was it wise to not include all the euro-zone members in the discussions if it allowed for consensus on an action plan?
3. What would be the consequences if the rumor that Greece was considering quitting the euro zone turned out to be true? Is it better for the strong euro-zone countries such as Germany to continue bailout Greece or allow Greece to leave the euro zone?
4. The EU seems to have come full circle and is back in the same situation it was last year at this time deciding what to do about Greece. What should be the EU’s next action steps?

SOURCE: Torchia, A., & Crimmins, C. (2011, May 8). Europe pressured to revise Irish and Greek bailouts. Reuters.com. (Retrievable online at: http://www.reuters.com/article/2011/05/08/us-eurozone-crisis-idUSTRE7471WV20110508)

RELATED ARTICLE: By Walker, M., Paris, C., & Forelle, C. (2011, May 9). Euro nations divided over Greek debt. Wall Street Journal, p. A12.
(Retrievable online at: http://online.wsj.com/article/SB10001424052748704681904576310903867359240.html)

Related video clip: Euro Chiefs Rule out ‘Stupid’ Idea of Greek Exit. (Retrievable online at: http://www.euronews.net/2011/05/07/euro-chiefs-rule-out-stupid-idea-of-greek-exit/)

We might as well jump on the royal bandwagon. But seriously, where else could the need for planning be more evident than with the event that took place on April 28, 2011 and what is to follow? No other monarchy in the world receives as much attention as the British royal family. In recent decades, that attention has been mostly negative. With the marriage of Prince William to Kate Middleton, public opinion is trending in a positive direction. Yet the royal family has many issues with which to deal, the most important of which is succession, and planning on a level seen with the royal wedding will be necessary for the monarchy to succeed.

QUESTIONS:

1. Imagine that you are involved with public relations for the British royal family. Using the planning process, develop a general plan for monarchy’s future. How do you go about determining an appropriate objective for something as big as this? What future conditions do you project as being important for the House of Windsor?
2. Examine the benefits of planning. Which, if any, of these might be important to the royal family? Why? Develop a list of priorities for the royal family. Obviously, the wedding of Prince William to Kate Middleton offers advantages, yet these will be short-lived if not properly managed. Identify the advantages. How would you capitalize upon them?
3. What short- and long-range planning issues exist for the monarchy?
4. [Appendix] The House of Windsor is the classic family business. One of the biggest questions looming for the monarchy is who will succeed Queen Elizabeth II. Is this a succession problem or simply an issue in need of a succession plan? No one could fault Prince Charles for wanting to be the next King of England. Should he defer and allow the title to pass to Prince William? Analyze and respond strictly from a business perspective. What issues do you believe are key to developing a succession plan for the royal family?

SOURCE: C. Bryan-Low, A. MacDonald, & J. Whalen, “Monarchy Inc. Faces Raft of Challenges,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704330404576290791327632256.html)

See related article: D. Saunders, “Britain’s Crisis of Succession: Charles and the Story Behind the Royal Wedding,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/news/world/europe/the-royal-wedding/royal-wedding-analysis/britains-crisis-of-succession-charles-and-the-story-behind-the-royal-wedding/article1995937/)

Related video at: http://www.theglobeandmail.com/news/world/europe/the-royal-wedding/royal-wedding-analysis/video-will-royal-couple-boost-the-monarchy/article1985006/

After delaying an announcement for more than a week, Sony finally admitted its network had been hacked, compromising the data of 77 million users of PlayStation and potentially putting their credit information at risk. The backlash was immediate. In its defense, Sony argued the delay was necessary to give the company time to conduct investigations. Consumers, already weary from Toyota’s delays and denials, seem less forgiving.

QUESTIONS:

1. Based on information reported in the article, assess the effectiveness and efficiency of Sony’s communication on the security breach. What advice would you give the company regarding how it handled the situation?
2. Has Sony’s communication been persuasive? Why or why not? (Why) Does this matter?
3. What communication barriers are evident at Sony?
4. [CHAPTER 5] Does national culture have anything to do with Toyota’s and Sony’s reluctance to provide full disclosures about their problems? What elements of culture might influence Sony’s response to its situation?

SOURCE: T. Kelly, “Hacked Sony Risks Repeating Toyota’s PR Gaffes,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/news/technology/tech-news/hacked-sony-risks-repeating-toyotas-pr-gaffes/article2000306/)

The U.S. dollar fell last week to its lowest point in nearly two years, but key economic policy makers in the United States have yet to take action to prevent the currency’s decline. The U.S. dollar has dropped almost 8% against a trade-weighted basket of currencies in 2011. Although Federal Reserve Chairman Ben Bernanke has publicly expressed a desire for a strong dollar, the Federal Reserve plans to leave interest rates at very low levels for now. The fact that other central banks have started to raise interest rates is promoting some investors to shed dollar-based investments. A declining U.S. dollar may help to promote exports of U.S. products, but it may also trigger inflation by increasing the cost of imported products, including oil. Economic policy makers may become more concerned about the decline of the U.S. dollar if it starts to impact other financial markets such as U.S. stocks or Treasury bonds.

QUESTIONS FOR DISCUSSION:

1. Analyze the extent to which the decline in the U.S. dollar is beneficial or detrimental to the U.S. economy.
2. How low can the U.S. dollar go before investor concerns reach a tipping point and the decline spills over into other sectors of the economy?
3. Critique the options for Federal Reserve Chairman Ben Bernanke if he did decided it was time to try to bolster the U.S. dollar. How effective would the policy tools be that he could use to try to increase the value of the U.S. dollar?

SOURCE: Reddy, D., & Hilsenrath, J. (2011, April 29). Officials unfazed by dollar slide. Wall Street Journal, pp. A1, A4. (Retrievable online at: http://online.wsj.com/article/SB10001424052748703643104576291481753119362.html)

Related video clip: Markets Hub: Officials Unfazed by Dollar Slide. (Retrievable online at: http://online.wsj.com/video/markets-hub-officials-unfazed-by-dollar-slide/F5C02489-4225-4127-99EC-BB177B2BAB4B.html)

The Doha Round of global trade talks aimed at promoting free trade may be on the brink of failure. Members of the World Trade Organization (WTO) seem increasingly gloomy about the prospects for a successful resolution in the current round of negotiations of the WTO. The Doha Round began in 2001, a time when China, Brazil and India were still considered emerging economies. Today, the European Union (EU) and the United States are more fearful of these powerful new rivals, who they argue are now less in need of developmental assistance. The Doha Round represents a comprehensive trade agreement that may have little chance of being fully accepted by all 153 WTO members. Discussions are increasingly turning to a “Plan B” option of a viable alternative to the full Doha Round that may be able to be concluded faster than attempting to reach agreement on all issues. The Plan B discussed this weekend in Geneva would likely eliminate contentious issues that have proved impossible to resolve during nearly 10 years of negotiations but would include issues on which there appears to be general consensus, including common customs standards and fishing subsidies.

QUESTIONS FOR DISCUSSION:

1. How is the legitimacy of the WTO as the referee of global trade undermined if all that can be accomplished after 10 years of negotiations is a very narrow agreement?
2. Which alternative is worse for the reputation of the WTO, a continued lack of progress on the Doha Round or agreement on a less comprehensive agreement?
3. The Director-General of the WTO, Pascal Lamy, has stated that a failure of the Doha Round “risks a slow, silent weakening of the multilateral trading system in the longer term.” To what extent is Mr. Lamy correct?
4. Analyze the benefits and dangers of creating a “Plan B” alternative that creates an agreement on only the issues on which the 153 member nations already generally agree.

SOURCE: Miller, J. W. (2011, April 28). Trade talk impasse prompts a Plan B. Wall Street Journal, p. A13. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704099704576288872290977788.html)

Research is emerging on the social implications of smart (cellular) phone usage. This research along with revelations by Apple that iPhones catalog phone usage along with location is raising ethical concerns. While firms such as Google and AT&T claim that any data gathered is done so anonymously, research clearly indicates that the level of knowing can be quite extensive. Some researchers, such as Harvard’s Nicholas Christakis, say that knowing user identities is not critical to the research that takes place. One thing is certain – increasing use of smart phones is revealing a lot about the way people act and interact. This information can be used to make very interesting predictions.

QUESTIONS:

1. Are smart phones information technology? Why or why not?
2. Discuss ways that smart phones are changing organizations. Try to go beyond what is described in the article. How are smart phones changing norms in organizations? How do smart phones affect the way people work? What do the data about sharing apps tell us about the nature of working relationships?
3. Imagine yourself as the manager-information processor. How would you put what you learned from the article to work in your organization?
4. In what ways might data generated through smart phone studies be utilized as organizations plan?

SOURCE: R. L. Hotz, “The Really Smart Phone,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704547604576263261679848814.html)

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Shawn Bravender is an avid cyclist and cycling is his preferred method of commuting. Naturally, riding a bike to and from work causes a few concerns (e.g., hygiene, appropriate business attire), so when Bravender’s employer gave him the task of figuring out how to make it work, he did. The move may become more common as companies consider the high costs of driving versus environmentally-friendly alternatives.

QUESTIONS:

1. Describe why the move to provide various facilities/accommodations for cyclists is strategic (and not just of the human resource variety) for Stantec, Inc.
2. What are the organizational benefits, in terms of individual behavior, in providing accommodations for cyclists? Do the benefits justify the added costs?
3. How do individual employees benefit from these accommodations?

SOURCE: D. Jermyn, “Companies Get Creative to Support Their Cyclists,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/report-on-business/managing/top-employers/companies-get-creative-to-support-their-cyclists/article1994642/)

Retail giant Wal-Mart is testing home delivery in California. The move is in response to similar tests by Amazon and Sears. Wal-Mart already has a successful home delivery business in Europe and recently brought a top-level executive from that subsidiary to the United States. In addition, the company purchased Kosmix to help develop a new division aimed at using social media for marketing.

QUESTIONS:

1. Is Wal-Mart’s test of grocery delivery creative? Why or why not?
2. Should Wal-Mart decide to adopt home delivery, what type of innovation would it be?
3. What model of change leadership does Wal-Mart appear to be using in this case? If implemented, would the change be incremental or transformational?

SOURCE: M. Bustillo, “Wal-Mart Tests Home Delivery of Groceries,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748703567404576280922297538578.html)

Truckers in Shanghai have mounted three days and counting of protests and work stoppages over rising costs and fees. China’s inflation hit 5.4% in March, which is its fastest pace in 32 months. The truckers contend that rising fuel costs and other expenses are making it impossible for them to be profitable. China’s level of inflation keeps rising despite repeated efforts by the government to constrain inflation. Rising inflation in China poses a risk to its social stability and there are concerns that the public unrest may spread to other sectors of China’s economy. To help calm the unrest, Shanghai officials indicated that they would reduce some fees and acknowledged the legitimacy of some of the drivers’ grievances. The seeming success of the public protests may result in requests for relief by other groups.

QUESTIONS FOR DISCUSSION:

1. What should Chinese government officials do to address the truckers’ strike?
2. Past events in China indicate the labor unrest and accommodations can spread to other groups and industries. How can China best prevent the current unrest from having a contagion effect on the broader economy?
3. Although accounts of the impact of the strike differ, what would be the impact on the global economy if continued labor unrest impacts the pace of activity at the world’s busiest container-handling terminals?
4. The desire for economic reform was one of the reasons for the protests spreading across the Middle East. How will China’s likely response be comparable or different from the actions taken by countries in the Middle East?

SOURCE: Areddy, J. T. (2011, April 25). Shanghai lowers truck fees. Wall Street Journal, p. A11. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704123204576282901112237870.html)

RELATED ARTICLE: Areddy, J. T., & Spegele, B. (2011, April 23). Truckers idle rigs in Shanghai. Wall Street Journal, p. A10. (Retrievable online at: http://online.wsj.com/article/SB10001424052748703907004576278672664493778.html)

RELATED ARTICLE: Areddy, J. T. (2011, April 22). Shanghai truckers mount rare protest. Wall Street Journal, p. A9. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704889404576276780540103342.html)

Related video clip: China Truck Drivers Stage Protest. (Retrievable online at: http://www.bbc.co.uk/news/business-13166959)