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| COURSE CONNECTOR |
| ARTICLE SUMMARIES AND QUESTIONS |
"Paulson to the Rescue," pp. 68-82: Henry "Hank" Paulson didn't immediately jump at the chance when he was offered the job of U.S. Treasury Secretary in 2006. In fact, he wasn't sure he should take the post at all. The former Goldman Sachs CEO's biggest worry at the time was that he wouldn't be able to make much of a difference. How very ironic in retrospect. While it took him about a year to get his footing in the job and recognize the severity of the financial crisis, he’s been a tenacious man of action — "my wartime general," as President Bush calls him — ever since. It was Paulson who brokered the compromise between Congress and the White House that produced this year's $168 billion economic-stimulus package. He was the point man for the Bush administration during the rescue of Bear Stearns. He orchestrated the recent bailout of Fannie Mae and Freddie Mac, putting the U.S. government at least temporarily in charge of providing financing to America's troubled housing market. And he has laid out a blueprint to modernize regulation of the financial markets, ideally to prevent a future economic catastrophe. Paulson has some work left ahead of him, and he is not without his critics, but no one on either side of the aisle can deny that he has brought people together to get things done.
This article profiles U.S. Treasury Secretary Henry Paulson, who has the unenviable job of wrestling down the greatest financial crisis of our time.
Discussion Questions:- According to the article, what are Henry Paulson's strongest assets?
How have they helped him in his role as Treasury Secretary? What are
the primary complaints of his detractors?
- What measures has Paulson taken to deal with the housing downturn? Which have been successful? Which have not? Why?
- Why was the Fannie Mae-Freddie Mac bailout such a "shocker"? How are the two banks unique? What is the plan for fixing them? Do you think history will look kindly on Paulson's decision? Explain.
"The Art of Selling: IBM's All-Star Salesman," pp. 110-119: Most large, successful corporations are renowned for some key aspect of business in which they excel. Apple is known for design. Wal-Mart is known for low prices. GE is known for churning out impeccably trained managers. And IBM? More than anything, IBM is famed for knowing how to sell. IBM has a 40,000-strong global sales force, and six of IBM's eight CEOs, including the current one, made their bones in sales before reaching the executive suite. So if you're IBM's top salesperson in the company's fastest-growing industry (wireless) in the fastest-growing part of the world (India), that’s really saying something. Right now, that exalted title belongs to one Vivek Gupta. A five-year veteran of the company, Gupta has figured out how to shine in a market where relationships, trust, and blood trump everything. He does it first by identifying his customer's pain points, and then by convincing them that IBM can run their business — save for strategy and marketing — better than they can. His sales acumen, combined with IBM's dependence on emerging markets to power revenue growth, have put Gupta on the front lines of IBM's business. Given that he's never lost a deal he has pursued, count on Gupta to make an impact in a more global role at IBM soon.
Students take a closer look at how salesman Vivek Gupta cuts deals for Big Blue in its most important emerging market — India.
Discussion Questions:
- Why is Vivek Gupta's deal with Bharti Airtel now used as a case
study in IBM's emerging-markets training? How did it enable him to
convince Vodafone — which vowed never to do business with IBM — to
sign a five-year $600 million contract with the company?
- To what does Gupta's boss, Ramesh Awtaney, attribute Gupta's success
at IBM? What steps has Gupta taken to provide the best possible service
to clients?
- What role do you see Gupta playing at IBM down the road? What does he need to do to continue to move ahead at the company?
"California's Hedge Fund King," pp. 145-156: Anyone looking for a study in contrasts need look no further than Thomas Steyer. The founder of Farallon Capital Management, a $33 billion San Francisco hedge fund, is both a self-made billionaire and an unreconstructed liberal. A financial whiz with a hankering for social justice, Steyer worries as much about getting Barack Obama elected president as he does about his hedge fund losing ground (5% this year). How can Steyer support so fervently a candidate who promises to boost every imaginable kind of tax he pays? Because he embodies a different breed of investment professional — one who believes his crowd ought to be pitching in more. It should come as no surprise, then, that Farallon has always looked for investment ideas outside the New York feedback loop. The fact that this year is the only one since Farallon's creation 22 years ago that it might post a loss is belied by Steyer's relative obscurity outside of hedge funds and California politics. What he lacks in name recognition, however, is more than made up for in respect from colleagues. If only he were as good at picking pols as he is at stocks (he supported Bill Bradley in 2000, John Kerry in 2004, and Hillary Clinton before her loss in the primaries), Obama would have this race sewn up by now.
In this article, students read about the principles that hedge fund manager Thomas Steyer uses to choose stocks — and political candidates.
Discussion Questions:
- Define the "absolute return" investment concept that Thomas Steyer
has helped pioneer. What are its advantages and disadvantages?
- In what ways does Farallon Capital Management differ from other hedge funds? How has Steyer managed to be successful in diverse areas of investment?
- What social causes does Steyer champion? How has he used his wealth and position to effect action in support of his ideals? Do you think Steyer might have a future in politics, as some of his peers predict? Explain.
"Home Depot's Total Rehab," pp. 159-166: Once considered a model of outstanding customer service in the retail world, Home Depot, No. 22 on the 2008 FORTUNE 500, and the second-largest retailer in the U.S., has slipped in recent years. On the University of Michigan's American Customer Satisfaction Index, Home Depot fell eight points in seven years (to 67 at the end of 2007) while its rival Lowe's has held steady at 75. How did this happen? Many blame the store's woes on the corporate strategy implemented by former CEO Bob Nardelli, which emphasized growth and efficiency, but neglected attention to detail. As a result, stores became dirty; employees, surly or scarce. And in the retail business, where the customer experience is what matters most, that negligence eventually showed up at the cash register. Exit Nardelli, enter Frank Blake. While not an obvious choice for the faltering company's top job, the lawyer-by-trade has thus far displayed a quiet but aggressive resolve to turn Home Depot around. Instead of slashing and burning in the midst of the worst housing decline in decades, Blake is spending money on the folks in the orange aprons to prime Home Depot for life after hard times — and to earn back his customers' trust.
Students examine Home Depot CEO Frank Blake's strategy for restoring the retailer's lost luster in a challenging economy.
Discussion Questions:
- How does Frank Blake's treatment of Home Depot employees differ from
Bob Nardelli's? Do you agree with Blake's assessment that employee
morale is one of the keys to retail success? Explain.
- What specific changes has Blake made since taking over the reins of Home Depot in 2007? Have they paid off? How?
- Why does Claes Forrell, director of the American Customer Satisfaction Index, believe it is worse for a company to squander a customer service advantage than to have never had one in the first place? Do you think Blake will be successful in repairing Home Depot's reputation? Why or why not?
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