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/)

Two weeks ago it was Egypt. This week it is Libya. Who knows where the unrest will be in the future. One thing is certain – the political situation in the Middle East is definitely unstable. Predictions about oil supply and pricing are equally unstable. Few will argue that oil drives the world economy and any interruption in supply will drive prices – all of them – up.

QUESTIONS:

1. What forces in the general environment come into play with the unrest in the Middle East and its potential effect on oil prices?
2. Events in Egypt and Libya are thousands of miles away. In terms of competitive advantage and strategic positioning, discuss why businesses in your region must be concerned.
3. Examine Figure 3.3 in your text. Which quadrant best characterizes the current level of uncertainty regarding oil? Why?
4. Examine Figure 8.2 in your text. Where does the current oil situation come into play in the strategic management process? How would a company assess its impact?
5. Pick a company with which you are familiar. Conduct a quick SWOT analysis and be sure to include your prediction about what is likely to happen with oil availability/pricing. Which element of the analysis does the oil situation represent? How would you advise your company to respond?

SOURCE: B. Milner & B. McKenna, “Oil’s Next Danger Zones,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/report-on-business/economy/oils-next-danger-zones/article1921789/)

See related video at: http://www.theglobeandmail.com/report-on-business/video/how-will-oil-prices-affect-the-economy/article1920267/

Following the protests in Egypt and the fall of Hosni Mubarak, many are questioning how the Egyptian government chose to respond to social media and the internet. Rather than harnessing its power or, at least minimally, trying to manage it, Mubarak’s regime simply tried to shut it down. Other governments take different approaches, some going so far as to establish units to monitor and influence the content on social media.

QUESTIONS:

1. In a very narrow sense, we might think of control as something managers use to ensure a set of correct production outcomes. Check the definition for controlling in your text again. It invites a narrow interpretation. But think about it. What does control mean for a manager, particularly one in today’s information economy? What does control mean for the various regimes mentioned in the article?
2. What type of control is being utilized by the governments that are “properly” managing social media?
3. Are governments relying on internal or external control of social media? What form does this control take?

SOURCE: E. Morozov, “Smart Dictators Don’t Quash the Internet,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704657704576150653606688990.html)

In the real-life version of life imitating art, males in their late teens and early 20s are following different personal and career paths from their fathers. The net (yes, pun intended) results are exciting developments in technology and social media. The hubris of youth is the engine for innovation and entrepreneurship. So let “boys be boys.” They may just be on the verge of producing the next great social invention.

QUESTIONS:

1. Think about the typical psychological contract that develops when an individual joins a work organization. Now extend that to a personal relationship such as marriage. The article contends that 20-something men are shunning marriage and traditional careers. What role, if any, does the psychological contract play in this?
2. What is the stereotype presented in the article? How are individuals like Mark Zuckerberg enhancing and/or changing the stereotype? Is the stereotype today any different from the one a young Bill Gates faced two decades ago?
3. Use your own experience to determine what personality characteristics drive the new 20 year-olds. What characteristics do individuals like Zuckerberg, Chad Hurley, or Niklas Zennstrom possess that lead to their success?
4. What forces lead these 20-somethings to shun the usual organizational career path in search of something different?

SOURCE: N. Rabin, “Two Cheers for the Maligned Slacker Dude,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704546704576150771426707108.html)

Until recently, the Calgary Flames were not considered a playoff contender. Shortly after Christmas, General Manager Darryl Sutter was relieved of duty and replaced by Jay Feaster. Suddenly, things began to change. The team is on an incredible winning streak and everyone, from the administrative offices on down, comments about what a different atmosphere exists within the organization.

QUESTIONS:

1. Darryl Sutter was described as an “old-school manager.” How would you describe him? From what little is reported, would you say his approach was classical or behavioral? Can you narrow it down any further?
2. Review the research on employee attitudes and performance associated with the Hawthorne Studies. Compare and contrast this to what happened with the Flames in the last two months.
3. What aspects of high-performance organizations do the Calgary Flames exhibit under the leadership of Mr. Feaster?

SOURCE: E. Duhatschek, “How the Flames Righted the Ship,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/sports/hockey/eric-duhatschek/how-the-flames-righted-the-ship/article1913818/singlepage/#articlecontent)

Ken Mikalauskas spent 15 years working in the corporate world and never felt satisfied. He wanted more control. His first move was to leave the big city and then he eventually struck out on his own. He realized that being in business for himself was not without risks, but that he had to face those fears in order to be successful – and fulfilled.

QUESTIONS:

1. The article described Ken Mikalauskas as a “good worker but not a good employee.” What aspect of motivation is missing? What level of needs is represented by his desire to leave the corporate world and be in the driver’s seat?
2. Now view the related video clip about DBB Canada. Aside from being “cool,” how does DBB’s office space contribute to worker motivation?
3. Examine the critical psychological states of the Job Characteristics Model. While all three are important, which one is dominant in Ken’s current work arrangement?

SOURCE: N. N. Farooqi, “Office Worker Ditches Big Jobs, Big City,” Globe and Mail (Retrievable online at http://www.theglobeandmail.com/report-on-business/your-business/start/business-planning/office-worker-ditches-big-jobs-big-city/article1902450/)

Related video clip at: http://www.theglobeandmail.com/report-on-business/your-business/grow/the-amazing-space/new-feature-on-cool-office-spaces/article1897762/

When former Egyptian President Hosni Mubarak shut down internet access in the country, most thought it was just an attempt to control what was being reported about the situation. What we may just now be realizing is the important role that social media played in the protests and the eventual toppling of the president. Different forms of technology figured prominently in protest movements of the past, namely Iran in 1979 and the former Soviet Union in 1989. But Twitter and Facebook appear to be more effective means for communicating information vital to such events.

QUESTIONS:

1. How do the new technologies of Facebook, Google, and Twitter compare to older technologies (e.g., fax machines) in terms of effectiveness and efficiency?
2. Discuss the importance of persuasive and credible communication in the recent protests in Egypt.
3. Facebook and Twitter are moderately rich channels versus the public gatherings in Tahrir Square. Does channel richness matter in a large-scale political protest movement? Why or why not?

SOURCE: C. Rhoads, “Technology Poses Big Test for Regimes,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748704329104576138643482318336.html)

When SafeAuto opened its Woodsfield call center in rural southeastern Ohio, it was a boon and a position working for the company was the envy of Monroe County. While the company is still seen a positive force, many that work(ed) there are disillusioned because of changes in compensation that cut some employees’ checks in half and left them unable to maintain the lifestyle to which they had been accustomed. Employees claim those expectations were based on promises – some of them contractual – that the company and its managers made. A local judge recently ruled in favor of the plaintiffs in a class-action lawsuit against SafeAuto. The company will appeal.

QUESTIONS:

1. Discuss the decision to locate a call center in Woodsfield. Was this a good strategic move for SafeAuto (discounting the current lawsuit)? Why or why not?
2. Evaluate SafeAuto’s change in compensation. Is it legally defensible (i.e., have they violated any laws)? Is it consistent with good human resource management practices? Is it okay for the company to have different compensation systems in Woodsfield and Columbus?
3. Develop a realistic job preview for a SafeAuto call center position. Keep in mind the company’s implied goal to be a quality employer in Monroe County, but its need to adjust compensation based on the economy and competition. How would you present the position accurately to avoid unrealistic employee expectations?

SOURCE: M. Williams, “SafeAuto No Safe Haven,” Columbus Dispatch (Retrievable online at http://www.dispatch.com/live/content/business/stories/2011/02/13/safeauto-no-safe-haven.html?sid=101)

After indicating earlier in the week that he did not want to be considered for the post of the president of the European Central Bank (ECB), Axel Weber announced on Friday that he is resigning his post as Bundesbank President. Mr. Weber was considered the top candidate to replace ECB President Jean-Claude Trichet, whose term ends in October. The resignation is a political blow for Chancellor Angela Merkel who wanted a German to be the next head of the ECB as a signal to investors that the ECB was committed to conservative fiscal policies and as a way of assuring German voters and lawmakers that the euro will remain stable. Other European countries may be pleased that Germany no longer has a strong candidate for the ECB position because recently Germany has increasingly attempted to wield its political and economic clout within the European Union (EU) to pressure countries to become “more like Germany” and restrained in their spending. The lack of a clear consensus on who should fill Mr. Trichet’s position may complicate Europe’s search for a way out of its debt crisis and hinder the ECB in its attempts to keep the crisis from further impacting Spain or Portugal. The nationality of the next ECB president may complicate the search for Mr. Trichet’s replacement, as there may be less support for a candidate from one of the countries at the heart of the debt crisis, regardless of the person’s professional qualifications.

QUESTIONS FOR DISCUSSION:

1. How will Mr. Weber’s abrupt resignation from the Bundesbank likely impact plans for the EU on how to address the euro-zone crisis?
2. Mario Draghi, Italy’s chief central banker, was widely seen as Mr. Weber’s main rival for the ECB post. How will Mr. Draghi’s nationality impact his chances of replacing Mr. Trichet?
3. Mr. Weber mentioned that it might have been difficult for him to lead the ECB and work with the other euro-zone central bankers who objected his to hard-line views about dealing the euro-zone crisis, in particular his vocal opposition to the ECB buying the government debt of the euro-zone countries in crisis. Is the fact that Mr. Weber has removed himself from consideration for the post of ECB president in the long-term best interests of the EU?

SOURCE: Walker, M., & Galloni, A. (2011, February 12). Germany’s central bank chief resigns. Wall Street Journal, p. A13. (Retrievable online at: http://online.wsj.com/article/SB10001424052748703786804576138154286387320.html)

Related video clip: Weber’s Bundesbank resignation opens up ECB race. (Retrievable online at: http://www.euronews.net/2011/02/11/weber-s-bundesbank-resignation-opens-up-ecb-race/)

After a near collapse of the United States automobile industry and record bailouts by the U.S. Government, automakers are offering huge bonus payments to their UAW employees. Workers believe the move is justified because they made equally large concessions to help their employers get through tough times. The payments are being made in advance of new contract negotiations where the companies are expected to ask union workers to give up their cost of living adjustments in favor of gain-sharing plans.

QUESTIONS:

1. Discuss the strategic reasons behind the desired shift from cost of living adjustments to gain sharing.
2. The article mentions several forms of increasing pay. These include cost of living adjustments, profit sharing, and gain sharing. Compare and contrast the three approaches. Discuss the benefits and risks for workers associated with switching to a gain-sharing plan.
3. With collective bargaining on the horizon, why are Chrysler and General Motors offering generous profit-sharing payments?

SOURCE: B. Snavely, “Autoworker Bonuses Part of Detroit 3 Strategy for UAW Talks,” USA Today (Retrievable online at http://www.usatoday.com/money/autos/2011-02-05-uaw-bonuses_N.htm)