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| COURSE CONNECTOR |
| ARTICLE SUMMARIES AND QUESTIONS |
"Jamie Dimon's Swat Team," pp. 64-78: It all started with a hotel phone call, hastily placed in October 2006. The caller was Jamie Dimon, CEO of J.P.Morgan, and the recipient was William King, then J.P.Morgan's chief of securitized products. The message was simple and clear: sell off the bank's subprime positions before they go up in smoke. That fateful call marked the beginning of a remarkable strategic shift that saved J.P.Morgan, virtually alone among banks of its size, from the financial calamity that soon would befall so many of its less-prescient banking brethren. That’s not to suggest that J.P.Morgan isn't suffering from the credit crunch. Between the first quarter of 2007 and the second quarter of 2008, it had to write down nearly $2 billion on a subprime CDO that somehow escaped the notice of the risk management brass and another $3 billion in leveraged loans. But that’s small potatoes compared to what Dimon’s former employer, Citigroup, and other big diversified banks have lost. There can be little doubt that Dimon, with his unique management blend of Cartesian analysis and inspirational leadership, and the equally wise and outspoken all-stars who make up his 15-member operating committee have helped move J.P.Morgan to the front of the pack in global banking.
Students take a closer look at how Jamie Dimon and his team at J.P.Morgan have weathered the credit crisis that has devastated the banking giant's competitors.
Discussion Questions:- Describe J.P.Morgan's organization under CEO Jamie Dimon. How does
Dimon choose his lieutenants? What two hallmarks of Dimon’s team reflect
his business philosophies?
- Compare and contrast J.P.Morgan's performance over the past six quarters
to that of other large banking operations. How did the Bear Stearns
acquisition highlight J.P.Morgan's commanding position among global
banks?
- What is Dimon's "guiding principle?" Give examples of that principle working to J.P.Morgan's advantage and disadvantage.
"How the KGB (and Friends) Took Over Russia's Economy," pp. 84-94: If the new Russia is starting to seem a little like the old Russia (read USSR) lately, there's a good reason for that. While Western-style economic markets have taken hold in the vast nation, many of the leaders running the show are using the strong-arm tactics they learned in the Soviet-era KGB to maintain order. Known collectively as the siloviki, Russian for "force," these men include most notably former President and current Prime Minister Vladimir Putin and the current Russian President Dmitry Medvedev, as well as many closely connected men in key corporate and government roles. Without question, the siloviki have brought prosperity and stability, which eluded Russia during the chaotic Boris Yeltsin years. But many foreign companies operating in today's Russia — especially those in Russia's valuable energy and natural-gas sectors — are beginning to wonder at what cost. Stories of Russian power plays have grown too numerous to dismiss: of business leaders thrown in jail on bogus charges, of assets taken by dubious lawsuits, and of partnerships with Russian companies suddenly turning into struggles over control. Considering the country's healthy bottom line under the immensely popular Medvedev, it’s unlikely the rule of law will prevail in Russia any time soon.
In this article, students read how Vladimir Putin and his cronies established order in Russia — with a heavy-handedness that now threatens the country's economic boom.
Discussion Questions:
- What changes that occurred in Russia following the collapse of the Soviet Union most frustrated the members of the siloviki? How did they come to power? What do you believe is their primary motivation? Explain.
- Why are some of the economic advisors who helped Vladimir Putin organize
Russia's budget and economic policy now troubled by the government's
behavior with regard to business? How does investor Bill Browder's
experience underscore their worries?
- In your opinion, will Russia's buoyant economy last? Why or why not? What is your take on the long-term viability of state-controlled corporate assets?
"Green Gold?" pp. 106-112: Who would have thought that something so exquisite could be so, well, dirty? We're talking about gold, of course. The process involved in extracting the precious metal from the earth is an environmental nightmare. Mining enough gold to make a typical 18-carat wedding ring leaves behind 20 tons of waste. In the U.S., metal mining creates nearly 30% of all the toxic releases measured annually by the EPA, more than any other single industry. And in poor countries, where regulation is lax, gold mining has resulted in poisoned rivers, destroyed rain-forest land, and the evacuation of entire villages — issues that are obvious red-flags in an increasingly green-conscious world. But as Tiffany & Co. and Wal-Mart, two of the top jewelry retailers in the U.S., set out to ensure that their jewelry lines used only responsibly produced gold, they hit a wall. Turns out that the gold supply chain is surprisingly complex. Refineries buy gold from mines across the globe, melting it together before shipping it off. A total clean-up of the industry is a long way off, requiring previously unheard-of alliances between jewelers and gold miners to create and enforce environmental standards. But as Wal-Mart's Pam Mortensen remarks, "If we don’t start somewhere, we won’t get anywhere."
Students examine the gold mining industry and the changes that are being instituted to make it a more eco-friendly operation.
Discussion Questions:
- How is the Bingham Canyon mine a model of a responsible gold-mining
outfit? Define traceability. How did Michael J. Kowalski, CEO of Tiffany
& Co., solve his company's traceability problem?
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What prompted Pam Mortensen, jewelry buyer for Wal-Mart, to examine her company's
gold-buying habits? What particular challenge did she face? How did she resolve
it? What target has the company set for itself with regard to responsible mining?
- As a result of their experiences, what are both Tiffany and Wal-Mart encouraging other jewelers and miners to pursue? What other organizations are involved in the same effort? Why have some miners been so reluctant to get on board?
"Reality TV’s Jackpot Queen," pp. 114-121: Ever hear of Cecile Frot-Coutaz? Probably not, but you know her work. As CEO of Fremantle-Media North America, Frot-Coutaz is connected to a variety of popular reality and game shows, including Family Feud, The Price Is Right, Million Dollar Password, America's Got Talent, and, oh yeah, a little show called American Idol. The last few years have been good for Fremantle, and that’s due in no small part to Frot-Coutaz's particular management skills — a flair for corporate dealmaking, a knack for mediating feuds among volatile personalities, and a willingness to take risks. It was Frot-Coutaz who played a key role in selling American Idol to Fox and then implemented the groundbreaking and lucrative product-placement deals with Coke and Ford. And it was Frot-Coutaz who convinced Paula Abdul not to jump ship when she was unnerved by caustic co-host Simon Cowell's verbal assaults on sub-par contestants. Frot-Coutaz's next gamble, Hole in the Wall, a game show in which contestants must squeeze themselves through various openings in a moving wall or get knocked into a swimming pool, debuts Sept. 11. Will it be the next Idol? It seems like a long shot, but then again, it wouldn't be the first unexpected reality hit.
This article profiles Cecile Frot-Coutaz, the CEO of Fremantle-Media North America and the unlikely savior of network TV.
Discussion Questions:
- What concerns about American Idol have arisen over the past
year? How does Fremantle-Media North America plan to freshen up the
show's format?
- While Cecile Frot-Coutaz admits that network television is in a broad state of decline, what objective does she believe is realistic for production companies like hers? Do you agree? Explain.
- Why does Frot-Coutaz believe Hole in the Wall will be successful? What is your prediction? In your opinion, is there anything Fremantle could do to help make it a hit?
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