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| Note: The FORTUNE Preview Guide is created in HTML. If you are unable to properly view the cover image, Course Connector, or hyperlinks, please view the online version at http://www.fortuneeducation.com/preview_guides/index.html. |
| COURSE CONNECTOR |
| ARTICLE SUMMARIES AND QUESTIONS |
| "Why Carly's Big Bet Is Failing," pp. 50-64: Three years after Hewlett-Packard and Compaq merged into what was supposed to be a partnership unsurpassed by any other, shareholders, industry insiders, and the editors at FORTUNE have stopped holding their collective breath. The merger with Compaq may have improved HP's status in the computer services business, but it created little value for HP stockholders – mostly by diluting their share of the lucrative printer market – and put HP/Compaq on shaky ground. Interviewed at length for the article, CEO Carly Fiorina dismisses accusations of poor judgment and rash thinking and instead attributes some of the company's lackluster performance to a longer-than-expected downturn in tech spending. She and other company executives insist that HP is on the right track, but the numbers show otherwise.
FORTUNE's in-depth review of the finances surrounding the HP/Compaq merger will be of interest to students in finance, economics, management, mergers and acquisitions, and strategies of business. Discussion Questions:
"The Ring Masters," pp. 68-76: The guys at New Line Cinema are cooking up their next big project with a pinch of caution. The $3 billion success of Lord of the Rings (which cost $350 million to make) has catapulted founder Bob Shaye and his co-CEO Michael Lynne into Hollywood big leagues, but they're treading lightly. New Line was founded on the principal of "prudent aggression" and has historically concentrated on sub-$40 million pictures to offset the risks of doing pictures at double or triple that budget. The company's plan appears to be paying off: its low- and high-budget films have done very well, but it's the mid-budget films (Little Nicky, Island of Dr. Moreau) that lose the most money. Ever wary of getting swept up in the glitz and glitter of the Hollywood machine, Shaye and Lynne are hopeful for a steady yet prosperous future. Students hoping to become entrepreneurs can find inspiration in the way Shaye and Lynne have kept New Line Cinema afloat in the cutthroat world of Hollywood cinema. Discussion Questions:
"Full Speed Ahead," pp. 78-84: FORTUNE's Asia Businessman of 2004 is Toyota's Fujio Cho, and he has quite an impressive record. Company earnings in fiscal 2003 (which ended in March) jumped 67% to $10.3 billion – more than the profits of GM, Ford, DaimlerChrysler, and Volkswagen combined. The company, which operates 47 plants in 26 overseas markets, is on track to become the No. 1 carmaker in the world. Its market share in Japan is at a record 46% and will likely increase once Toyota opens its first Lexus dealership group there. In addition, Toyota is considering opening a plant in the United States to support overwhelming demand for the Prius hybrid and is threatening Detroit's profit niches by producing more SUVs, powerful trucks, and luxury cars. By all accounts, Toyota is on the fast track to global success in auto manufacturing. Students of global manufacturing, economics, operations management, marketing, and strategy will be impressed with Cho's ability to manage a global manufacturer across language, political, and geographic barriers. Discussion Questions:
"Getting Ahead of the Weather," pp. 87-94: In the ever-growing need to predict and control situations affecting business performance, companies are banking on the latest trend: meteorological forecasting. The National Oceanic and Atmospheric Administration estimates that a third of U.S. gross domestic product is affected by the weather – through slowed transportation, inflated energy costs, interrupted sales, and so on. The need to deal with these variables has spawned a rapidly growing industry of weather consultant companies. The consultants help their clients manage risk by using science to predict weather patterns that may affect future sales. Additionally, weather derivatives help companies protect against unforeseen changes in weather that could, for example, cause work stoppages or affect fishing operations. Controlling risks associated with weather is another way companies are hoping to gain an advantage over their competitors. This article will be of interest to students in economics, trade, management, marketing, and strategy who are exploring how companies use innovative methods to capture market share. Discussion Questions:
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