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| COURSE CONNECTOR |
| ARTICLE SUMMARIES AND QUESTIONS |
"A Glove Story," pp. 29-32: Suppose you're a marketing executive. The world's top manufacturer of baseball equipment approaches you to nail a few endorsement deals for its newest product, a baseball glove made of rich Italian leather hand-stitched over a two-day period, featuring an innovative design that allows the glove to be broken in to suit specific positions on the playing field. No matter that the glove costs $400. These are baseball players; they can afford it. Sounds almost too easy, right? Wrong. The glove in question is the Primo, launched in 2006 by Rawlings. To date, the Primo, for all its luster, claims only three major-leaguers — all of them pitchers — as supporters. Seems ballplayers are notoriously loyal to their old gloves and won't make the switch. For some, it's a matter of superstition, while for others, a matter of comfort (the Primo, it has been said, is a bit heavier than other gloves). Rawlings is now targeting the minor leagues as a market it hopes is less set in its ways. In the meantime, the 120-year-old company is learning a valuable lesson. Regardless of its experience and success, no company can ignore the No. 1 rule of marketing: know thy customer. Students examine the difficulties Rawlings has faced in persuading major-league baseball players to use and endorse the most lavish baseball glove ever made. Discussion Questions:
"Risk Returns with a Vengeance," pp. 50-56: Over the past five years or so, if it ever seemed a little 'risky' to you that so many folks with dubious payment histories were getting steep lines of credit on property that appeared to be way overvalued, you can consider yourself wiser than most of Wall Street. Lured by rich rewards, banks, hedge funds, and lenders spent the last half-decade behaving as if home prices always rise, borrowers never miss a payment, and companies never blunder into bankruptcy. Now a crisis of confidence that began with subprime mortgage defaults has some financial companies tapping lines of credit just to remain solvent. Ordinary investors are feeling the pinch, too, as their homes and 401(k)s lose value and interest rates rise. Of course, anyone with even a rudimentary understanding of finance and economics could have predicted that the credit bubble would pop eventually, and like all asset bubbles, it has left its share of carnage in its wake. However, there is some good news for investors on the horizon — an appealing assortment of bargain-priced stocks and bonds will soon hit the Street, creating plenty of opportunities to make money even in risky new markets. In this article, students read about the causes and effects of the recent subprime mortgage collapse. Discussion Questions:
"Crisis Council," pp. 59-67: While no one denies that the economy is in crisis, there is some disagreement in the business world as to how grave the situation truly is. On the glass-half-empty side is Jim Rogers, founder of Rogers Raw Materials Index, who believes we have yet to experience the brunt of the losses as a result of the "worst bubble in credit we've ever had in American history." Wilbur Ross, chairman and CEO of W.L. Ross & Co.; Jim Chanos, president and founder of Kynikos Associates; and Stephen S. Roach, chairman of Morgan Stanley Asia, agree with Rogers' assessment. The picture is a bit rosier for a slew of others, including John Mack, chairman and CEO of Morgan Stanley; Robert Shiller, professor of economics at Yale University; Amy Brinkley, chief risk officer at Bank of America; and Henry M. Paulson, U.S. Secretary of the Treasury. They feel the current crisis is "endogenous to the system," as Bill Miller, chairman and chief investment officer of Legg Mason Capital Management, points out, and the long overdue corrections to the market will ultimately be healthy for the economy. Moreover, some believe the crisis will have a secondary beneficial effect by encouraging much needed reforms to the system. Students take a closer look at how some of the sharpest minds in business are reacting to the economic downturn and what they predict lies ahead. Discussion Questions:
"China's Mobile Maestro," pp. 98-107: Like China itself, China Mobile is a force to be reckoned with. As of July 2007, the mobile-phone company boasted 332 million subscribers — five times that of AT&T, the largest U.S. carrier — and it signs up five million more each month. Its network, which stretches from Hong Kong to the Himalayas, consists of more than 230,000 base stations, offering mobile coverage to 97% of China's citizens. Quite a feat considering that two-thirds of the country's population of 1.3 billion people live in rural areas. And despite all its breakneck growth, China Mobile is also highly profitable. In the first half of 2007, the company reported net profits of $5 billion on sales of $21.1 billion. It would appear that Wang Jianzhou, CEO of China Mobile, is one of the luckiest guys on the planet. In reality, he may have one of the trickiest jobs of any FORTUNE Global 500 CEO. Wang doesn't just answer to investors, customers or even employees. First and foremost, he must heed the wishes of the Chinese government, China Mobile's regulator and controlling shareholder. Having thus far appeased so many masters is a testament to Wang's strengths as a business leader. This article reveals how Wang Jianzhou runs his highly successful telecom company within the clutches of the Communist Chinese government. Discussion Questions:
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