COURSE CONNECTOR

 ARTICLE SUMMARIES AND QUESTIONS

"The End of Paper?" pp. 66-72: Life without paper is almost impossible to imagine, but if a few enterprising tech companies get their way, a paperless reality may not be far off. Publishers of everything from daily newspapers to monthly magazines to full-length novels are looking forward to a coming generation of so-called e-readers. These handheld gadgets use electronic "ink" rendered on a crisp screen to deliver an experience that approximates reading on paper, without the cost of paper, printing, and delivery, which often accounts for more than 50% of the overall cost of producing a periodical. E-readers have the added benefit of being environmentally friendly, as fewer trees would need to be cut down to make paper. While it all sounds good, the e-reader still might be a tough sell. This year's crop is expected to cost upwards of $800 — not nearly affordable enough for e-reader usage to reach critical mass, especially in tough economic times. Another hurdle is gadget fatigue. With computers, mobile phones, PDAs, and a host of other tech gadgets taking up space in their lives, will people be ready to accept another, particularly if they can get the same content elsewhere? Publishers and tech companies predict that it’s only a matter of time.

Students examine e-reader technology, the benefits it offers, and the obstacles it must overcome to become the latest mass-market innovation.

Discussion Questions:

1. Why has the Internet so far failed to become the moneymaker the global publishing industry had hoped it would? Why do e-reader enthusiasts believe advertisers will find the e-reader more attractive than the Internet?

2. The article suggests several business models for making the e-reader profitable to publishers. Which do you feel is most promising? Explain your answer.

3. Why does E Ink CEO Russell Wilcox believe that e-reader technology will save publishing and, in the process, civilization? Do you think the e-reader will break through? Why or why not?

"Mark Hurd’s Moment," pp. 91-100: Mark Hurd just might be the perfect CEO for these tough times. Through his obsession with numbers and his mantra of efficiency, he has lifted Hewlett-Packard from an industry doormat to the world's biggest technology company in his four-year tenure as chief at HP. Ranked No. 30 on FORTUNE's 2009 list of the World's Most Admired Companies — and No. 3 among computer manufacturers — HP has become a benchmark for operational efficiency in an industry best known for whiz-bang appeal. Hurd’s focus on expenses has set HP up to survive, and perhaps even flourish, in the plummeting economy. While HP recently forecast a 5% decline in 2009 sales, Hurd is still projecting a nearly 6% rise in profits. He’s using the company's financial strength to make tactical acquisitions, and he's pushing the notion that customers need not shop anywhere else for their computing, printing, and tech services needs. Under Hurd's leadership, HP achieved revenues of $118 billion in 2008, surpassing IBM by $14 billion. However, Hurd is not without his critics, who claim he stresses operations at the expense of innovation, an approach that could hurt the company long-term. Hurd hears them, but for now at least, he remains focused on the economic crisis and emerging stronger from it.

This article profiles Mark Hurd, CEO of Hewlett-Packard, and describes his strategy for continuing to increase the company’s profitability despite the slumping economy.

Discussion Questions:

1. What is Hewlett-Packard CEO Mark Hurd's attitude toward employees? What management code does he live by?

2. What argument does Hurd make to counter criticism about his R&D spending? In what ways has HP sacrificed technological improvement and potential revenue in favor of leanness?

3. Why did investors initially object to HP's acquisition of infotech consultant EDS last year? What benefits is HP reaping from the acquisition?

"China’s Hard Landing," pp. 114-120: Once expected to be immune to the global economic slump, China is facing the hard truth that it is not. Having grown so fast for so long — at or near double-digit rates for the past five years — China is stunned and, yes, a little angry with the West to be in this position now. Multinational interests raced into the country after Beijing joined the World Trade Organization in 2001, providing work for an impoverished population. Peasants quickly moved up the ranks to the middle class. Now foreign investment in China has slowed dramatically, and in an increasing number of cases, companies that recently spent millions on new factories are now laying off the people who worked in them. China’s own fiscal stimulus package, announced last November, is expected to help. New spending on infrastructure projects will put a floor under steelmakers and other basic industries that desperately need it, while providing jobs for some of the 20 million or so migrant workers now jobless. That's a relief to President Hu Jintao, whose biggest fear is the possibility of widespread social turmoil triggered by massive unemployment. And unlike the U.S., the Chinese government can actually afford its stimulus package — it started this year with a budget surplus.

Students take a closer look at the challenges once-prosperous China is facing as a result of the global financial crisis.

Discussion Questions:

1. Why is it unlikely that when the downturn ends, China will experience the same hypergrowth as it did over the last decade? What does political economy professor Huang Yasheng suggest is the key to unlocking the next phase of growth in China?

2. Why does a former People's Bank of China official believe that the timing of the economic crisis was a "tragedy" for China? What sorts of policy changes will be required for China to generate economic growth?

3. Why is China's appetite for U.S. Treasury debt good for the U.S.? For the Chinese government? Why does is infuriate some of the Chinese people?

"The New Sheriff," pp. 122-126: Mary Schapiro, the newly installed chair of the SEC, is a soft-spoken woman with a pleasant smile who looks and talks more like a librarian than a head-bashing law enforcer. But don't let her agreeable disposition fool you. Schapiro's been called "the Muammar Qaddafi of regulation," and she's determined to regain public respect for the institution, even if that means stepping on a few toes. Some have their doubts about Schapiro’s toughness, though, and her past performance also is suspect — she missed both Bernie Madoff's $50 billion Ponzi scheme and an alleged $8 billion scam by billionaire R. Allen Stanford. But so far, the evidence for Schapiro's fitness for the job appears to be on her side. In just her first few weeks as the first female SEC chief in history, she's already replaced the agency's director of enforcement, bringing in well-respected Robert Khuzami, Deutsche Bank general counsel and former prosecutor in the U.S. Attorney's Office in New York. She also has reversed the passive-aggressive policy of her much-criticized predecessor, Christopher Cox, that certain enforcement actions must be approved by a consensus of five commissioners. Perhaps most telling of all, however, was her solemn nomination hearing pledge — no more "sacred cows" (read: Madoff) at the SEC.

In this article, students read about Mary Schapiro, the new head of the SEC, and her plans for rebuilding public trust in the embattled regulatory agency.

Discussion Questions:

1. Why has new SEC chief Mary Schapiro’s leadership at NASD/FINRA drawn both praise and criticism? What does Schapiro’s vision of expanded regulation of the financial markets include?

2. Why is the SEC's future in jeopardy? What will Schapiro have to do to prevent the SEC from being marginalized?

3. Why does SEC Commissioner Elisse B. Walter believe that Schapiro's management style is well suited to the agency's needs at this time? How successful do you think she will be at restoring the SEC's credibility? Explain.