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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 |
| "The
Tragedy of General Motors," pp. 58-75: While it's almost
unthinkable that business giant General Motors could declare bankruptcy,
it is a very real possibility for the troubled company. For GM,
which held the top spot on the FORTUNE 500 for 37 out of 50 years
(it was most recently listed at No. 3), its massive size — and
that of many of its products — is its biggest problem. The
company currently pays the health costs for a staggering 1.1 million
employees, retirees and dependents, and it compensates thousands
of laid-off union workers to the tune of $100,000 each annually.
Meanwhile, its U.S. product mix, heavily weighted toward bulky,
gas-guzzling trucks, pickups and SUVs, is on the wrong side of
gas prices. Although the quality of GM products has been substantially
and indisputably improved over the years, the company still battles
an image of poor craftsmanship among American consumers that has
helped reduce its market share to 26%. To offset its losses, GM
has closed plants, terminated jobs, reduced engineering and parts
costs, and even put its finance subsidiary, GMAC, on the market.
But no company has ever turned around because of cost cutting alone.
The company will only survive by increasing its revenues. Left
to this monumental task is GM's almost irrationally positive chairman
and CEO, Rick Wagoner, who has vowed that the 98-year-old company
will not go under on his watch. Students will analyze the myriad problems facing auto industry giant General Motors and the last-ditch strategic plans its managers hope will turn the company's fortunes. Discussion Questions:
"Who Wants to Be the Boss?" pp. 76-78: Why would anyone want to be a CEO in the 21st century? Sure, it was never an easy job, but CEOs of yesteryear could at least expect to turn the crank on a good business model for a few decades. Not so for today's CEO, who must manage a constantly changing business model, thanks to the information-based economy. Speaking of information, both customers and investors have a lot more of it these days, and since knowledge is power, companies and the people who lead them are left to grovel. Even employees have cut into the corporate chief's clout — as the Baby Boomers retire and highly skilled employees become harder to find and retain, CEOs have to bend to meet the increasing demands of younger workers. Add to all these pressures the proliferation of global competition and you've got one big pair of corporate shoes to fill. Miraculously, there are still people willing to step right into them. Of course, not every company gets a fairy-tale ending. Some jobs prove too tough, and the companies involved become sad stories of decline. But in other cases, a fearless CEO takes on a situation that seems hopeless and gets the job done, producing spectacular results for investors. This article shows how the role of CEO has become more demanding as the world economy grows and evolves. Discussion Questions:
"The Best Investor of His Generation (So What Is He Doing with Sears?)," pp. 90-104: There's no question that Eddie Lampert is one heck of an investor. Set up by the legendary Richard Rainwater with his own fund to run at the tender age of 25, Lampert has built his ESL Investments into a $15 billion powerhouse that has outperformed Warren Buffett's Berkshire Hathaway during its 18-year lifespan. But plenty of heads were scratched in 2004 when Lampert acquired Sears. What did the phenom see in the venerable but troubled retailer? Many skeptics surmised that Lampert viewed Sears as a kind of personal ATM, from which he could merely pull cash to invest in the next addition to his hedge fund. But that's looking more and more like a misconception. While his official title is chairman, Lampert operates much like a CEO, calling the shots on strategy, marketing and merchandising. He spends hours at his Connecticut office analyzing sales, margins and inventory data, zeroing in on whatever isn't making money. Clearly, he wants to rebuild Sears into a great company again. That's no surprise considering he controls an $8 billion stake in its future. Whether he is successful in this venture remains to be seen, but if his investment record is any indication of his prospects — his hedge fund has delivered average annual returns of nearly 30% after fees since its launch — look for Sears to become the next great comeback story. In this article, students will take a closer look at one of the top young investors and his strategy for turning around an aging colossus of American retail. Discussion Questions:
"Deadly Caution," pp. 107-120: The recent, well-publicized withdrawal from the market of such frequently prescribed drugs as Vioxx and Bextra — and the resulting lawsuits filed against pharmaceutical manufacturers by affected patients and family members — would seem to suggest that the Food and Drug Administration isn't doing such a bang-up job of testing prescription drugs before approving them for use. So why are advocacy groups springing up to argue just the opposite — that our national obsession with drug safety is killing more people than it saves? Partly out of desperation and partly because the numbers seem to suggest it is so. Patients with life-threatening illnesses often don't have time to wait for a developmental drug to be fully tested and approved, and they are willing to accept the risks involved in taking an experimental drug if it offers hope for a cure. Activists contend that the number of patients who could be saved during an effective drug's trial period, which can last 10 years or more, is far greater than the number who are harmed if a potentially hazardous drug somehow makes it to market. Stuck in the middle of this passionate debate is the FDA, which has the almost impossible job of approving drugs "rapidly, but not recklessly." Unless it can work together with Congress, Big Pharma, doctors and patients to mend the flawed drug review process, don’t expect it to change monumentally anytime soon. Students will look at the factors that affect drug review and approval, and consider differing viewpoints on whether the process needs an overhaul. Discussion Questions:
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