Gold continued on its upward trajectory last week and closed above $1,500 per ounce for the first time on Thursday. Gold closed at record highs every day last week and it has gained 5.8% so far this year. Investors are turning to gold as a safe haven investment. Many of the major currencies have issues and potential concerns that make them less attractive to investors. The U.S. dollar offers a low interest rate and there are concerns about national debt. The euro faces the sovereign debt crisis and the likelihood that Greece will eventually restructure its debt. Investors are concerned about the impact of the rebuilding costs from the earthquake and tsunami on the Japanese yen. Gold is increasingly being viewed as a lasting store of value which will not erode in value the way that currencies can. There are many who believe that the upward trajectory is not sustainable and that the value of gold may be more subject to value change as a result of changes in investor sentiment. Gold may lose value if investors become more confident in the economic recovery or if governments continue to increase interest rates.

QUESTIONS FOR DISCUSSION:

1. Do you consider gold to be a wise place to “park” money right now? What investments might represent better choices?
2. Given that gold was trading at about $600 an ounce in 2007 compared to $1,500 last week, is gold an asset bubble ready to burst or will it hit $1,600 as some are predicting?
3. Increasingly investors are now buying and holding physical gold rather than just holding positions in gold. What factors can explain this investment strategy?

SOURCE: Levitz, J. (2011, April 22). World is bitten by the gold bug. Wall Street Journal, pp. A1, A2. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704889404576277361924031364.html)

Related video clip available at: Investing in Gold: Stocks vs. Metal. (Retrievable online at: http://video.cnbc.com/gallery/?video=3000017743)

Related video clip available at: Hold up to 10% on Gold to be Safe. (Retrievable online at: http://video.cnbc.com/gallery/?video=1896241778)

Rumors indicate that medical giant Johnson & Johnson is once again looking to acquire a medical equipment manufacturer. The suspected target is Swiss-based Synthes. Johnson & Johnson’s medical equipment sales appear to be at a plateau, so the company would like to acquire a company that offers some protection against competition.

QUESTIONS:

1. Should Johnson & Johnson acquire Synthes, what level of strategy would this represent?
2. Conduct a SWOT analysis on Johnson & Johnson. What are the arguments for and against this acquisition?
3. Which of Porter’s Five Forces support a move to acquire Synthes?
4. Which grand strategy does the potential acquisition of Synthes indicate? What are your reasons?

SOURCE: D. Cimilluca, A. Das, & G. Chon, “J&J in Talks to Buy Device Maker Synthes,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704495004576265224168611148.html?mod=WSJ_hp_LEFTWhatsNewsCollection)

Recent events in the Middle East and North Africa offer many lessons, including the role of emerging technologies (e.g., social media) in dissent, conflict and negotiation, and even ethical issues. The rebellion against Col. Moammar Gadhafi’s Libyan government offers another case – that of how an emerging alternate government organizes itself. Members of the Transitional National Council have been just as busy establishing a new government as they have organizing forces to confront Col. Gadhafi’s troops.

QUESTIONS:

1. While many of the uprisings in recent months appear to be haphazard, the rebellion in Libya seems to have more structure to it. Review the definition for organizing and the managerial tasks associated with it. In a general way, describe how the events described in the article are consistent with what you know about organizing.
2. Do the actions by the Transitional National Council represent an attempt to create a formal structure? Why or why not? Why might it be important for this group to have a formal structure?
3. While the rebels are fighting against an established hierarchical and mechanistic structure (i.e., the Gadhafi regime), they are at the same time attempting to move from an organic structure to a more mechanistic structure. How so? Why is this necessary?
4. The provisional constitution and the promise to develop a broader, permanent constitution once Gadhafi is removed seems to have empowerment as a key feature. Furthermore, the current rebel leaders indicate they are willing to give way (delegate) to younger leaders. Why is this important in a new Libya?

SOURCE: C. Levinson, “Libya Rebels Build Parallel State,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748703648304576265021509675668.html)

This article is an excellent case in ethics and decision making. For more than a decade, Kenneth Robinson played the odds, gambling that he could make a fortune (he did) and not get caught (he did as well). Robinson was the middle man between lawyer Matthew Kluger, who would pass along information about potential mergers, and Garrett Bauer, a stock trader that would buy for the trio based on the tips. Mr. Robinson’s demise may have been that he did not stick with the plan. When he got irritated with Bauer, he decided to make a few purchases on his own and that is when investigators were able to link the three men. Robinson pled guilty to securities fraud and conspiracy, lesser charges, in exchange for help to gather information on the other two conspirators.

QUESTIONS:

1. Clearly Kenneth Robinson’s behavior is unethical because it is illegal. Using values as the framework, discuss why Robinson engaged in insider trading.
2. What alternative view of ethics was Mr. Robinson following? What view did he violate?
3. Discuss how moral management applies in this case. Your text talks about the role of leadership on ethics mindfulness. How can ethics mindfulness be promoted when individuals act autonomously (i.e., there is no direct influence of a leader)?
4. When ethics is so often talked about and ethical violations are so widely reported in the news, how do three educated men allow themselves to get caught up in behavior that clearly violates ethical and legal standards? What is the solution?

SOURCE: M. Rothfeld, S. Pulliam, & V. O’Connell, “The Confessions of an Inside Trader,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748703983104576262921972017168.html?mod=WSJ_hp_LEFTTopStories)

The digital workplace puts more pressure on employees to attend to multiple tasks at the same time. Research shows that this can be counterproductive because employees are more error prone. Switching between tasks can lead to 20 minutes of lost time for each switch. The solution is focus. Managers have to create a culture where employees do not feel pressure to respond immediately to e-mails, texts, and cell phone calls.

QUESTIONS:

1. We typically think about control at the managerial or organizational level. How does controlling relate to the present article? Should individuals be concerned about control? Why or why not?
2. Elaborate on the type(s) of control represented in the article.
3. Now let’s consider the impact these demands (e.g., increasing workloads, multi-tasking) place on workers. What type of stress does this represent? What are the potential implications?

SOURCE: R. Pulfer, “Multi-Tasking: Tuning Out the Noise,” Canadian Business (Retrievable online at http://www.canadianbusiness.com/managing/employees/article.jsp?content=20090817_10017_10017)

Finance officials from the G-20 economies met on Friday to develop plans on how to measure if nations are causing imbalances that could pose a risk to the global economy. Among the concerns are large government budget deficits and debt, high personal saving rates and debt, and large trade surpluses or deficits. The ministers also settled on approaches for evaluating the causes of the imbalances and barriers for reducing them. At a previous meeting in Pittsburg in 2009, the members of the G-20 agreed that the global economy was too dependent on U.S. consumers. During this meeting in 2009, the members committed to “rebalancing” global growth. They developed plans to encourage countries such as China and Germany which have current-account surpluses to focus more on stimulating domestic consumption and import more and countries such as the United States to focus more on exporting their products. In the meeting this weekend, the members provided a communiqué that they had agreed to subject the policies of seven of the world’s largest economies to greater scrutiny. The International Monetary Fund (IMF) will be responsible for assessing how nations are performing compared to the benchmark measures created by the G-20, but the IMF and the G-20 only have peer pressure as a way to encourage members to change their policies. The U.S., Japan, Germany, China, France, the U.K. and India are the seven countries that will be subject to the detailed review.

QUESTIONS FOR DISCUSSION:

1. The U.S. current-account deficit and the Chinese current-account surplus are roughly similar to where they were in 2009 during the Pittsburgh summit. What are the challenges the G-20 faces in attempting to “rebalance” global growth?
2. Given that there is a two-speed recovery to the global financial crisis with fast-growing emerging markets recovering more quickly than advanced economies, is there any incentive for the emerging markets to comply with the G-20 recommendations?
3. Part of the reason that the G-20’s efforts to stimulate growth has yet to gain steam appears to be that China may be concerned that the desire to rebalance is simply a way to put political pressure on China to boost the value of its currency, the yuan. What sanctions could be imposed to force China to change its policies? What would be the potential trade-offs of imposing sanctions on China?

SOURCE: Reddy, S., & Davis, B. (2011, April 16). G-20 sets plan on imbalances. Wall Street Journal, p. A7. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704495004576265190925831576.html)

RELATED ARTICLE: Davis, B. (2011, April 15). G-20’s efforts on growth stall. Wall Street Journal, p. A9. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704547604576262942600178716.html)

Related video clip: G-20 Looks for Next Hot Spot. (Retrievable online at: http://www.reuters.com/news/video?videoId=202590349

Related video clip: G-20 Claims Major Step Forward with Plan. (Retrievable online at: http://www.euronews.net/2011/04/16/g20-claims-major-step-forward-with-plan/)

France’s ban on full face veils went into effect last Monday. The law does not mention any specific religion or the word veil, but it makes it illegal to hide the face in public spaces. Anyone who wears the Muslim niqab or burqa in public faces fines of €150 ($216) and civil education classes about the country’s values of tolerance and respect for “human dignity.” A small group of people protested the new policy outside of Notre Dame Cathedral in Paris claiming that the ban violates freedom of expression and religion. French President Nicolas Sarkozy supports the new policy asserting that full-faced veils imprison women and contradict the secular nation’s values of dignity and equality. Although only a very small percentage of Muslims in France wear full face veils, many view the ban as an affront to the country’s second-largest religion.

QUESTIONS FOR DISCUSSION:

1. Under national law, France separates church and state but it has struggled with how to integrate the nation’s increasing Muslim population. Is the ban likely to integrate the Muslim faith into “traditional French culture?”
2. Some in France argue that the new policy is needed to promote women’s rights. Discuss the advantages and disadvantages of this policy in achieving the goal of advancement of women’s rights.
3. France is the member of the European Union, but the only country within trade bloc to have a ban on full face veils. Will France’s policy violate the rights of EU citizens to move within the EU member countries?

SOURCE: Colchester, M. (2011, April 12). French veil ban takes effect. Wall Street Journal, p. A16. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704662604576256493482608356.html)

Related video clip: Face Veil Protesters Detained as French Ban Begins. (Retrievable online at: http://www.euronews.net/2011/04/11/face-veil-protesters-detained-as-french-ban-begins/)

When Evan Williams decided to walk away from an everyday role at Twitter last October, he easily could have faded into a comfortable life of retirement. Rather than do so, Mr. Williams is working on a new startup company. As his role began to change at Twitter, Williams realized the time was right to move on. He will remain involved at Twitter by serving on its board of directors.

QUESTIONS:

1. While Evan Williams acknowledges he will be spending far less time at Twitter, he is not retiring. Why can he not be satisfied with a comfortable retirement?
2. Do a little internet research of your own. Find out what you can about Mr. Williams’ education and pre-entrepreneurial work experience. Discuss what you learned in relation to the characteristics of entrepreneurs presented in your text.
3. Examine why small businesses fail and the life cycles of entrepreneurial firms. In what life cycle stage is Twitter? Why is now a good time for Mr. Williams to step aside and let others take control of the company?

SOURCE: M. Evans, “What Follows for Twitter’s Williams?” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/report-on-business/your-business/start/mark-evans/what-follows-for-twitters-williams/article1964785/)

For weeks the battle raged. Democrats and Republicans were locked in a battle over budget cuts that ultimately would determine whether the United States Government would remain open for business. And there was President Barack Obama, stuck in the “middle” of the conflict. Both leaders – Speaker of the House John Boehner and Senate Majority Leader Harry Reid – seemed committed to their party’s position with no willingness to budge. In the end, both sides gave a little, as did the President, and a last-minute deal was reached to avoid a government shutdown.

QUESTIONS:

1. Review the rules for active listening. Using what you can glean from the article, did any party (Democrats, Republicans, the President) appear to engage in active listening? Given that this situation will occur again in the near future, what advice would you offer each side? Note: focus on communication issues and ignore the politics.
2. Comment on President Obama’s decision to bring Rep. Boehner and Sen. Harry Reid to the White House for a series of face-to-face meetings. Was this an effective strategy? Was the choice of channel appropriate for this issue?
3. What type(s) of conflict was/were present in this negotiation?
4. Analyze how this conflict was resolved. First, identify the issues that both sides were seeking to satisfy. Next, evaluate the degree of assertiveness and cooperativeness displayed. Finally, determine the conflict style that led to an agreement. Defend your choice.
5. What role did the President play in this negotiation? Would you characterize what he did as mediation?

SOURCE: P. Kane, P. Bacon, Jr., & D. A. Fahrenthold, “Budget Battle Came Down to 3 Men and Their Weaknesses,” Washington Post (Retrievable online at http://www.washingtonpost.com/politics/budget-battle-came-down-to-3-men-and-their-weaknesses/2011/04/09/AFLotbAD_story.html)

Related video:

Voters in Iceland have once again voted to reject a repayment program negotiated by their government to reimburse the United Kingdom (U.K.) and the Netherlands for losses incurred by their citizens when Iceland’s banking sector collapsed in 2008. The governments of the U.K. and the Netherlands reimbursed their citizens when Iceland’s deposit-insurance program ran out of money to cover losses from an Icelandic Internet bank called Icesave. Iceland’s voters had overwhelmingly rejected a repayment program back in 2010 and Iceland sought to negotiate better re-payment terms. The margin of defeat for the current reimbursement program was notably smaller than the 2010 referendum—93% rejected the referendum in 2010, but only 60% of the voters rejected the referendum this weekend. Many in Iceland believe it is not the responsibility of taxpayers to pay for the risky actions of failed private companies. The rejection is likely to complicate Iceland’s bid to join the European Union (EU) and the U.K. and the Netherlands are likely to turn to litigation rather than more rounds of negotiation to address the dispute. Iceland is a member of the European Economic Area and is required to follow EU financial directives, including the requirement to maintain deposit-insurance systems.

QUESTIONS FOR DISCUSSION:

1. Analyze the advantages and disadvantages for Iceland of the second failed referendum.
2. The U.K. and the Netherlands appear to be resigned to pursuing litigation rather than continuing to re-negotiate with Iceland. Given that the margin of defeat was dramatically smaller for this referendum compared to the first, is litigation the best path for addressing the dispute?
3. The U.K. is seeking £2.35 billion and the Netherlands is seeking €1.32 billion from Iceland. Even though the proceeds from the sale of the defunct bank will be used toward reimbursing the U.K. and the Netherlands, is it reasonable to expect Iceland’s 320,000 citizens to share the burden of the collapse of the nation’s banking system?

SOURCE: Forelle, C. (2011, April 11). Icelanders reject deal to repay U.K., Netherlands. Wall Street Journal Online. (Retrievable online at: http://online.wsj.com/article/SB10001424052748704641604576254661016938274.html)

Related video clip: Voters in Iceland Reject Bank Collapse Compensation Deal. (Retrievable online at: http://www.bbc.co.uk/news/business-13028090)