Changing Course: The Chrysler Deal, Rising Gas Prices and Other Car Talk
Earlier this month, Cerberus Capital Management bought 80.1% of Chrysler Group from German auto maker Daimler-Chrysler, effectively ending a nine-year marriage between the two that never quite worked out. The expectations created by this acquisition are huge, and revolve in part around Cerberus's ability to make a deal with the United Auto Workers union that would include restructuring billions of dollars of retirement and health-care benefits -- a burden that both Ford and GM -- but not Toyota -- also carry. We asked Wharton management professor John Paul MacDuffie, co-director of the International Motor Vehicle Program, to give his views about Chrysler, Cerberus, high gas prices and other auto-related issues.
Chief Receptionist Officer? Title Inflation Hits the C-Suite
We're all familiar with titles like chief executive officer, chief financial officer and chief operating officer. We have even grown used to chief technology officer, chief marketing officer and chief diversity officer. But what about chief talent officer, chief cultural officer, chief innovation officer, chief privacy officer, chief apology officer and chief geek, to name just some of the more contemporary titles in today's companies? On the surface, this looks like title inflation -- an overabundance of C-level jobs that cheapen the prestige that used to go along with promotions. Yet according to several Wharton faculty members, there is more to this story than inflated egos.
Finance and Investment
Documenting the Impact of Hedge Funds on Target Companies' Share Prices: The Returns Are Impressive
With an estimated $1.2 trillion under management, it's clear that hedge funds must have an effect on the financial markets. The question is: How? In one of the first studies to shed light on that subject, researchers at Wharton and three other business schools find that hedge funds' efforts to improve companies they hold big stakes in have spillover benefits for all shareholders: a quick 5% to 7% jump in stock prices. The gains, measured as an "abnormal return" on top of the broad market's, were nearly 11% when a hedge fund pushed for the targeted company to be sold.
Here Today, Discounted Tomorrow: Strategic Shoppers Know When to Buy, and at What Price
Some shoppers just can't help themselves and buy mostly on impulse without regard to price. Others are die-hard bargain hunters, who only open their wallets for a discount. Then there are the strategic consumers, who are willing to buy full-price sometimes, but at other times they will wait for a bargain. According to new research by Gérard P. Cachon, professor of operations and information management at Wharton, and doctoral student Robert Swinney, it's these customers that retailers need to focus on in order to reap the full benefits of lean retail inventory management and variable pricing.
Finance and Investment
U.S. Securities Law: Does 'High Intensity' Enforcement Pay Off?
"The U.S. pursues securities law violations with a regulatory intensity unmatched elsewhere in the world, " according to John C. Coffee, Jr., director of the Center on Corporate Governance at Columbia University Law School. At a recent Wharton Impact Conference on international corporate governance, Coffee said that although securities law enforcement can lower the cost of capital, it may deter some foreign firms from cross-listing in U.S. markets. Still, he argues, strong enforcement is critical for creating good governance and adding value to corporations, and investors stand to gain from it.
Media Moves: Will the New Online Advertising Models Click?
Microsoft buys aQuantive; Google acquires DoubleClick for $3.1 billion; Yahoo purchases the 80% of Right Media it doesn't already own, and ad firm WPP gets 24/7 Real Media for $649 million. And that's just in the last six weeks. The common thread: All the takeover targets are online advertising companies. The race to consolidate the online advertising industry is heating up at the same time that advertisers are demanding more return on their marketing dollars. Wharton professors and others analyze how this will play out for tech companies, ad companies and consumers.
In South Africa, Poor Health Can Kill Small Businesses
According to estimates, micro and small businesses contribute almost 50% of South Africa's total employment and 30% of its gross domestic product. Until recently, however, the impact of poor health, and in particular HIV/AIDS, on these enterprises -- ranging in size from single owner-workers to companies with 100 employees -- has been largely overlooked by researchers. A new study by Li-Wen Chao from the University of Pennsylvania's Population Studies Center, Mark V. Pauly, Wharton professor of health care systems, and others examines how owner health determines the fate of small businesses in South Africa, and impacts the larger economy.
Leadership and Change
(Podcast with Transcript)
Dana Gioia on the Close Connection between Business and Poetry
Dana Gioia (pronounced Joy-a) claims to be the only person in history who went to business school to be a poet. Having earned a degree from Stanford's graduate school of business, he worked 15 years in corporate life, eventually becoming vice president of General Foods. In 1991, Gioia wrote an influential collection of essays titled, "Can Poetry Matter?" in which he explored, among other themes, the nexus between business and poetry. Since 2002, he has been chairman of the National Endowment of the Arts where he has overseen programs aimed at making Shakespeare and poetry recitation more popular in the U.S. Gioia, who is a speaker at the Wharton Leadership Conference in Philadelphia on June 7, talked about these ideas with management professor Michael Useem and Knowledge@Wharton.
Articles from Around the Network
Responsible Branding in Asia: Are Companies Ready?
Jorg Dietzel was born in Germany in 1961. An advertising industry veteran, he opened his own brand consultancy, Jorg Dietzel Brand Consultants, in Singapore two years ago, and teaches classes on advertising and strategic brand management at Singapore Management University's Lee Kong Chian School of Business. Dietzel talks to Knowledge@SMU about why companies in Asia need to re-brand themselves as responsible corporate citizens or face losing out to competitors.
Indian Real Estate: Investors Are Shopping, but Are They Buying Hype?
Drive through any of India's major cities and it will be impossible to go a mile without encountering brightly colored cranes and hordes of construction workers. Commercial high rises, residential townships, industrial parks and shopping malls are exploding into existence, fueled by both long-term and speculative investors. But astute industry watchers are poking holes in that picture, pointing to the relatively small size of actual investments, sharply reduced expectations of returns and continuing concerns about the country's regulatory environment. India Knowledge@Wharton spoke with foreign and domestic private investors, property developers and brokerage firms about these issues.
Private Equity Sets Its Sights on Spain
Iberia, the Spanish flag carrier, and tobacco merchant Altadis are only the tip of the iceberg. Private equity, also called risk capital, is preparing to put 18 billion euros on the table to buy both companies and consolidate its spectacular growth of recent years. The private equity phenomenon affects every corner of the planet, and big funds in the U.S. and U.K. are also turning their gaze toward Spain. In some deals, such as Iberia, this phenomenon has repercussions in Latin America. What has happened in Spain that has awakened the interest of foreign capital? Will this interest continue to rise or will it die down as quickly as it began?
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