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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 |
| "America's
Fastest Growing Sport," pp. 48-64: Once marginalized
as a "redneck" amusement, NASCAR (the National Association of Stock
Car Auto Racing) is now the fastest-growing, best-run sports business
in America. NASCAR's current head, Brian France, has aggressively
borrowed business tactics from other professional sports, while retaining
a business model for the private, family-controlled NASCAR that is
markedly different from that of other big-money sports. It appears
to be a successful formula — NASCAR is a multibillion-dollar
industry and the second-most-watched sport on television behind pro
football. Licensed retail sales of NASCAR-branded products have increased
250% over the past decade, totaling $2.1 billion last year alone,
and 106 FORTUNE 500 companies are involved as corporate sponsors,
more than in any other sport. Sponsors rave about the purchasing
loyalty of NASCAR fans — a licensing study showed that 72%
of fans are more likely to buy a product if it has the sport's logo
on it. NASCAR's
unprecedented expansion does pose a challenge to France, however — in
expanding its reach into new markets, NASCAR risks losing the distinctiveness
of its audience and turning off its core fan base, potentially diluting
its fans' responsiveness to ads.
This article demonstrates how clever marketing techniques and corporate buy-in can turn a regional curiosity into a mainstream marvel. Discussion Questions:
"Bigger and Bigger," pp. 104-107: How do the giants of the FORTUNE 500 continue to grow briskly, despite competition from fast-growing upstarts? The answer varies depending on whom you talk to, but one thing is for certain: it doesn't happen by chance. A.G. Lafley, CEO of Procter & Gamble, believes in channeling resources to his company's areas of strength to encourage "organic growth" — top-line expansion of the core business, without reliance on acquisitions. As a result, P&G has hit or exceeded its annual growth goal of 4-6% every year under Lafley's leadership. At Lowe's, CEO Robert Niblock's focus isn't on being the biggest but rather the best choice for home improvement in every market the company serves. Although Lowe's remains second to Home Depot by most key measures, its stock has been stronger over the past five years (tripling vs. Home Depot's 22% decline), and its per-store sales growth is unmatched. FedEx founder Fred Smith is a "field-of-dreams capitalist," recognizing change and betting on uncertainty. Skeptics questioned his 1989 investment in China, but the prescient Smith persisted. Today, China is the fastest-growing market in transport, and FedEx, which dominates the U.S.-China express market, is expanding business there by 50% annually. Students will learn that while there is no single formula for business success, companies generally succeed when they focus on one goal: growth. Discussion Questions:
"IBM Shares Its Secrets," pp. 128-136: Commoditization is a term the IT world uses to describe fast-growing, increasingly sophisticated, low-cost competition in areas of the world like India, China, and Brazil. So how does a behemoth like IBM respond to the mounting threat of commoditization? By giving away its ideas. IBM is gambling that if it shares its intellectual property in the form of software, patents, and ideas with customers, universities, open-source software groups, and even rival companies, the entire IT industry will grow. The company believes the ensuing growth will open up new opportunities for IBM to sell high-value products and services that meet the new demand, thereby helping replace profits lost to commoditization. Of course, there is a lot of risk involved — IBM is in a brutally competitive marketplace with a long list of rivals going after the same customer dollar, and even if it succeeds in spurring customer growth, there's no guarantee its shareholders will benefit. Despite some internal unease and limp stock, however, IBM is betting that as long as IT remains hard to use, expensive, and labor-intensive, with customers continuing to need help solving business problems, IBM will have the opportunity to thrive. This article shows that sometimes even the world's biggest corporations have to give a little to get a little. Discussion Questions:
"Idealab Reloaded," pp. 143-146: Prototype robots with the ability to see and recognize objects, a cellphone prototype designed to work without towers in the Third World, a very-early-stage two-person hybrid car that incorporates an unconventional Stirling cycle engine — they're all made by the current crop of companies Bill Gross is nurturing at Idealab, the original tech incubator that inspired a wave of imitators at the height of the Internet bubble. But while most of Idealab's earlier brainchildren imploded with the tech crash, the private company has survived in its original form, albeit with a more cautious approach to launching new companies. Gross now concentrates on "big, impactful, change-the-world companies" with vast potential markets in energy, communications, and transportation. Idealab has also slowed its pace, with a current roster of 16 start-ups, compared to 50 in 1999. Five are already making money — including Internet Brands, an e-commerce site that helps customers research and purchase large-ticket items like vehicles and mortgages — and six others are on track to reach profitability next year. While there's no talk of an IPO, Idealab's backers, most of whom have stuck by the company through its ups and downs, have confidence in the entrepreneurial Gross's unique business sense. In this article, students will see how Bill Gross is applying the most crucial lesson he learned from the tech crash — the importance of quality over quantity. Discussion Questions:
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