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| COURSE CONNECTOR |
| ARTICLE SUMMARIES AND QUESTIONS |
"Target’s Inner Circle," pp. 74-86: Target, the discount store with the ubiquitous red-and-white bullseye logo, opened in 1962, the very same year that competitors Wal-Mart and K-Mart were launched. Despite the coincidence of their founding, the stores' images couldn’t be more different. While K-Mart has merged with Sears and Wal-Mart is the king of logistics, Target has a cachet the others can't touch. With its vision statement cum marketing slogan, "Expect more, pay less," Target is a big-box retailer with the soul of an upscale department store, making design, quality, and innovation affordable for the American middle class. Though Target is almost universally respected and imitated, it is entering one of the most challenging periods it has faced in its 46 years. The leadership torch is about to be passed from longtime CEO Robert Ulrich to president Gregg Steinhafel, a difficult transition to be sure given Ulrich's lengthy, successful tenure. The timing couldn't be worse. The weakening economy favors Wal-Mart's low-price strategy. During the past two recessions Wal-Mart's U.S. stores bested Target's same-store sales by an average of 2.5 percentage points. It might look bleak — that is, until you consider that Target's real competitive advantage isn't its famous logo or catchy slogan. It’s the team that created them.
This article tells the story of Target — how it was founded, how it became so widely respected, and how it is facing difficult times ahead.
Discussion Questions:- Why does Robert Ulrich have such a low profile in spite of his admirable run as CEO of Target? What does it suggest about the corporate culture at Target? Are things likely to change under Gregg Steinhafel? Why or why not?
- What choice did Target face when Wal-Mart began making inroads into Target country in the 1980s? How has Target differentiated itself from Wal-Mart? How does it continue to follow the same strategy today?
- How do shoppers' perceptions of Target's prices differ from reality? How are these perceptions a double-edged sword for the company?
"How Bad Is the Mortgage Crisis Going to Get?" pp. 88-91: It's a tough question to answer right now in this environment of uncertainty, but if you ask economist Paul Krugman, he'll tell you straight out — it's going to get pretty bad. With indicators suggesting to him that the current credit crisis is worse than the economic disruptions of 1990 and 2001 combined, Krugman believes that what started in subprime is likely to continue cascading into the markets and keep the economy down until at least 2010. Most significantly, home prices may fall as much as 25%, leaving 20 million people with negative home equity. Krugman isn't thrilled with the government's solution — an economic stimulus plan in the form of rebate checks sent to American taxpayers — either. He fears most of the money will be given to people who aren't inclined to spend it, choosing instead to put it in the bank or pay down credit card debt. So with all this bad news, are there any signs of hope out there? Krugman wonders how serious the real consequences of the financial-market disturbance will be on Main Street. As he says, "Maybe it'll turn out that all this Wall Street stuff is just less important than we think it is."
Students take a closer look at the mortgage crisis through the eyes of former FORTUNE columnist and Princeton economist Paul Krugman.
Discussion Questions:
- According to Paul Krugman, how is the current credit crisis like past economic crises? How is it different? How has the Federal Reserve changed since the Great Depression to help prevent a similar calamity?
- What would Krugman advise to help stimulate the economy? Why would it work in this situation, in his opinion?
- How is the weak dollar helping the U.S. economy right now? What other things will have to happen to restore some semblance of order to financial markets?
"The Tombstone at Ground Zero," pp. 92-102: In February 2004, the former governor of New York, George Pataki, announced with relief that a deal to deconstruct the abandoned Deutsche Bank building, located adjacent to Ground Zero in lower Manhattan, had been struck. It was a key moment in the post-9/11 city. While the Deutsche Bank building's survival of the terrorist attacks initially stood as a symbol of resilience to shaken New Yorkers, by the end of 2002, the 40-story structure had been declared unsalvageable. Its construction was exceptionally sturdy, but the building was contaminated with a frightening list of toxins, including asbestos, lead, mercury, and dioxin, which the collapsing World Trade Center towers had spewed into the building. At the time Pataki made his announcement, the Lower Manhattan Development Corp. (LMDC) had reached an agreement with Deutsche Bank and its insurers to assume possession of the building, along with the responsibility of taking it down. It seemed the perfect solution at the time. Unfortunately, a combination of bureaucratic red tape, inept project management, the hiring of shady contractors, and over-regulation has stalled deconstruction to this day — the very situation that Pataki and the LMDC confidently believed had been averted four years ago.
In this article, students read about the legal complications that have delayed the destruction of the Deutsche Bank building, one of the last physical reminders of 9/11.
Discussion Questions:
- What incident led to the grand jury investigation that has delayed the Deutsche Bank building deconstruction for the past six months? Do you feel the court battle will resolve the outstanding issues once and for all? Why or why not?
- How have residents' concerns about the Deutsche Bank building evolved since 9/11? On the whole, have authorities been sensitive to these concerns? How have they been addressed?
- The article claims there is plenty of blame to go around in the Deutsche Bank building saga. Who are the primary players? In your opinion, which is most responsible for the delays? Explain.
"Hot Metal," pp. 104-114: Does nuclear energy seem kind of, well, 20th century to you? If so, then it's time to take another look. With global warming weighing heavily on the international conscience, there's a newfound sense of urgency to dispense with coal and other carbon fuels. No alternative energy source is more developed, economically viable, and emission-free than nuclear energy. Of course, there's no nuclear energy without uranium, and that's where Moukhtar Dzhakishev comes in. A self-made Kazakh entrepreneur, Dzhakishev operates a small, state-owned company called Kazatomprom, which he is convinced is on the brink of global domination of the nuclear energy industry. No, he's not crazy. Kazakhstan is home to the world's largest uranium mine outside of Australia, and Dzhakishev has been busy making deals all over the world to satisfy growing demand. At $74 a pound — and with 34 new nuclear reactors under construction worldwide and another 280 being planned or proposed — uranium stands to make Dzhakishev a very rich man. But can he deliver? His production forecasts are wildly optimistic, dependent upon many tenuous factors, and metals commodities are prone to volatility. If Dzhakishev is worried, he isn't letting on. "I don't think there will be any competitors," he says. "I will eat them."
Students examine the emerging uranium market in Kazakhstan and learn more about Moukhtar Dzhakishev, the man who operates the country's uranium mining company.
Discussion Questions:
- How does Kazatomprom currently serve worldwide nuclear energy needs? In what areas does Moukhtar Dzhakishev hope to expand? What challenges does he face?
- How has Dzhakishev maintained Kazakhstan's control of local resources? How would you describe his dealings with foreign partners?
- As a state-controlled entity, how does Kazatomprom differ from other companies, including its own competitors? In your opinion, is the Kazakh government more of a help or hindrance to Kazatomprom? Explain.
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