Presentation
Gb699
Corporate Strategies
1
Gb699 Corporate Strategies Outline
Day 1. Strategic Planning. Strategic Business Units. #2 Strategies and
Performance. Definition of Performance. Classroom. Sneakers. Attitude
and Skills. Compensation. Systems Analyst. Appraisal. Chilean Rescue.
Shane Battier.
Day 2. #3. Strategic Decision Making. MV Braer. Intuition and Sequential
Reasoning. Russian Frozen Chicken. #4. Framework for Strategies
Day 3. #5. Seek the Big Picture. Mount Everest. IBM Big Picture. Sneakers
and Mr. Lee. Cook County Hospital.
Day 4. #6. Collaborate for Better Decisions. The Tipping Point. Ghosn and
Nissan. Crossing the River. Shiller Downside.
Day 5. #7. Wartime and Peacetime Strategies. Hill A. “Monster” and the
“Whale.” Archer Daniels CEO. Jürgen Schrempp, CEO. Federal Express.
Ford and Firestone.
Day 6. TBA.
2
Gb699 Handouts
Day 1. Exercise on Personal Strategy (Handout)
Day 2. Post-American World Quiz (Handout).
Day 3. IACBE Capstone Exam.
Day 4. McDonald’s Facts
Day 5. Widely Known Facts
3
Presentation
Day 1.
Chapter 1.
Strategic Planning
4
Presentation
Strategy Exercise
A strategy is an approach to achieving a
goal. During the evaluation process, you
can decline the goal. A tactic is an approach
to achieving a goal when you cannot decline
to pursue it.
5
Question
At this point in my career I have the
following goal.
Insert behavioral objective.
6
Question
Which of the following is your behaviorial
goal?
A. It is what I am doing now.
B. It is what I will be doing if I take make few
changes in my life.
C. It is what I should be doing.
7
Question
Is your objective strategic or tactical?
• Strategy. An approach to achieving a
goal. During the evaluation process, you
can decline the goal.
• Tactic. An approach to achieving a goal
when you cannot decline to pursue it.
8
Question
What is the upside of your objective?
A. Boring.
____
B. Appropriate.
____
C. Exciting.
____
D. None.
____
9
Question
What is the downside of your objective?
A. Financial Failure.
____
B. Reputation Failure
____
C. Both of the above.
____
D. Neither of the above. ____
10
Question
Which of the following describes your
strategy?
A. Price. I cost less than others with my
background and skills.
B. Quality. I have more energy and skills
than others.
C. Differentiation or Niche. Few others
can do what I can do at my price.
11
Scoring
A. Am doing.
B. Will be doing.
C. Should do.
A. Strategic.
B. Tactical.
C. Not clear.
Upside
A. Boring.
B. Appropriate.
C. Exciting.
D. None.
____
____
____
____
____
____
____
____
____
____
Downside
A. Financial.
B. Reputation
C. Both
D. Neither
Strategy:
A. I cost less.
B. I offer more.
C. Niche.
____
____
____
____
____
____
____
12
Answer
A. Am doing.
B. Will be doing.
C. Should do.
A. Strategic.
B. Tactical.
C. Not clear.
Upside
A. Boring.
B. Appropriate.
C. Exciting.
D. None.
__0_
__5_
_10_
_10_
__5_
__0_:
__0_
__5_
_10_
__0_
Downside
A. Financial.
B. Reputation
C. Both
D. Neither
Strategy:
A. I cost less.
B. I offer more.
C. Niche.
__5_
__5_
_ 0_
_10_
__0_
_10_
__5_
13
5-1
Strategic Business Units
Strategic goals and objectives should be
consistent with the goals and objectives of
the organization as a whole. Many
organizations identify strategic business
units (SBUs) that conduct their own
strategic and tactical market planning. The
SBU can become a focal point for crafting
and executing strategy.
14
Boston Consulting Group Model
The Boston Consulting Group model
identifies 4 quadrants that reflect 2 critical
factors:
 Market Share. The percentage of the market
held by the firm.
 Growth. The likely rate of growth of the
market overall.
15
Question
The four choices are star, dog, cash cow, and
problem child. Which is which?
Low Market Share High Market Share
High
Growth
Low
Growth
16
Answer
Low Market Share High Market Share
High
Growth
Problem Child
Low
Growth
Dog
Star
Cash Cow
17
Question
High performance strategies are “Avoid,”
“Invest,” “Milk it”, and “Invest if profitable.”
Which fits each quadrant?
 Dog.
_______________
 Star.
_______________
 Cash cow.
_______________
 Problem child. _______________
18
Answer
Low Market Share High Market Share
High
Problem Child
Star
Growth Invest if profitable.
Invest
Low
Growth
Dog
Get out. Avoid
Cash Cow
Milk it.
19
General Electric’s Strategy
The GE model identifies two factors for an
SBU:
 Business Position. Strong or weak
compared to competition.
 Market Attractiveness. In terms of growth
and profits.
20
GE Model Strategies
The GE model identifies four high
performance strategies:
 Invest More. Highly-attractive.
 Protect Current Investment. Attractive.
 Harvest. Short-term attractive. Maximize
profits.
 Divest. Unattractive. Sell.
21
Which strategy matches each?
Choices: Invest, protect, harvest, divest
Business Position
Strong
Medium
Weak
High
Medium
Low
Market Attractiveness
22
Answer
Business Position
Strong
Medium
Weak
High
Invest
Invest
Protect
Medium
Invest
Protect
Harvest
Low
Protect
Harvest
Divest
Market Attractiveness
23
Product-market-growth Model
This model uses two axes:
 Existing Versus New Markets. When
undertaking a project, the firm chooses (1) to
support existing markets or (2) to develop
new markets.
 Existing Versus New Products. A firm
decides to support (1) current products or (2)
new products.
24
Product-market-growth Strategies
The four high performance strategies are to
sell:
 Market Development. More units of existing
products in new markets.
 Product Development. New products in
existing markets.
 Market Penetration. More units of existing
products in current markets.
 Diversification. New products in new
markets.
25
What strategy fits each market?
Market development.
Product development.
Market penetration.
Diversification.
Existing Products New Products
New
Markets
Existing
Markets
26
Answer
Existing Products
New Products
New
Markets
Market
Development
Diversification
Existing
Markets
Market
Penetration
Product
Development
27
Presentation
Chapter 2.
Strategies and
Performance
28
Question
Organizations pay people for performance.
What is the definition of performance?
29
Answer (1)
Definition of performance:
• Accomplishment of a task in terms of
accuracy, completeness, cost, and speed
30
Answer (2)
Definition of performance:
• Accomplishment of a task in terms of
accuracy, completeness, cost, and
speed.
• Defining a goal and achieving it with
efficiency, quality, and honesty.
31
Answer (3)
Definition of performance:
• Accomplishment of a task in terms of
accuracy, completeness, cost, and
speed.
• Defining a goal and achieving it with
efficiency, quality, and honesty.
• Winning.
32
Question
What is performance in a classroom for a
teacher?
33
Answer (1)
Performance for a teacher.
• Standing in front of students and talking.
34
Answer (2)
Performance for a teacher.
• Standing in front of students and talking.
• Providing information that the students
can read in a book.
35
Answer (3)
Performance for a teacher.
• Standing in front of students and talking.
• Providing information that the students
can read in a book.
• Taking attendance.
36
Answer (4)
Performance for a teacher.
• Standing in front of students and talking.
• Providing information that the students
can read in a book.
• Taking attendance.
• Giving grades that reflect performance.
37
Question
Two workers can make sneakers to the
same level of quality with respect to
passing inspection.
• Carlo. 8 pairs an hour.
• Molly. 10 pairs an hour.
Which individual is the “better worker?”
38
Question
Absent other factors, the best candidate is
which of the following?
• 100% qualified. Many years of
experience. Will growth occur? Will
individual have to prove anything?
• 75% qualified. Room for growth.
• 50% qualified. More room for growth.
• 25% qualified. Big room for growing
into the position.
39
Question
Two candidates for a job are below.
Which one would you rather hire?
 #1. Good attitude, 25% skills.
 #2. Poor attitude, 100% skills.
40
Question
Which of the following most describes your
view of how an organization should pay an
individual in key position for achieving
organizational goals?
• A. Below market.
• B. At market.
• C. Above market.
• D. Well above market.
41
Question
A systems analyst is a job title for a highly
qualified computer specialist. A programmer
is less experienced and qualified.
• A company paid systems analysts twice
as much money as programmers.
• It compared efficiency.
• How much more efficient was the analyst
group at completing tasks?
42
Answer
The company was IBM.
• The project was developing code for the
IBM 360 computer.
• At twice the average salary, the systems
analysts produced five times as much
usable code.
• The IBM story was told in a book,
Mythical Man-Month by Fred Brooks.
43
Question
What is the worst single word that a boss
can use to describe an employee on a
performance appraisal?
44
Question
The pool for salary increases is 5 percent.
Two individuals are star performers.
• One received 14 percent.
• The other received 13 percent.
• They learned about each other’s
percentage?
Are they happy?
45
Question
A supervisor does not believe in
performance appraisals.
• For four years he gave everyone a
satisfactory rating.
• After he left the company, the new boss
discovered that two of the employees
were a disaster to the department.
What can she do?
46
Question
A company allocated a 5% average
increase to each manager. It withheld
another 2% to be allocated by the CEO.
•The system requires no formal
performance appraisal process.
•The amount of the raise is the total record
of the employee’s contribution.
Will this work?
47
Presentation
Chilean Mine Rescue
48
Copiapó Mining Accident
Day 1. August 5, 2010
 Copiapó, Chile.
 Collapse of San José copper-gold mine
 Trapped: 33 miners 770 meters below
ground.
 Did they survive?
49
Quick Action
Day 4.
 Chilean President Sebastián Piñera took
charge.
 Andre Sougarret, head of El Teniente mine
put in charge.
 Flew immediately to Copiapó.
 Took charge.
 Did they survive?
50
Situation at the Mine
Day 5.
Sougarret:
 Found a nest of confusion with rescue
workers, firefighters, police officers,
volunteers and relatives.
 Sent rescue workers home.
 Talked to escaped workers.
 Inspected the mine.
 Gathered maps.
51
Gathering Information
Day 6.
Findings:
 Huge block of stone closed the 4-mile
corkscrew shaft to the miners.
 Collapse involved 700,000 tons of rock.
 Reopening the shaft could cause another
collapse.
 Nobody knew if the miners were still alive.
52
Hope for the Miners
Day 7.
Sougarret talked to miners who had
escaped the collapse. Learned:
 Maps were not up-to-date.
 Likely location of trapped miners.
 Safe room with 48-hour supply of food and
water. Also repair shop.
 Ventilation shaft..
 Miners had a chance to be alive.
53
Find the Miners.
Green. 4 drill
shafts to
galley near
shelter.
Blue. 4 drill
shafts to
shelter.
2 points of
collapse
Repair shop.
54
Start of Success
Day 17.
 The 8 drills are getting close.
 One drill broke through into the shaft near the
safe areas.
 Rescue team heard banging on the drill head.
 Rescue team retrieved note.
55
Step 2. Prepare for the Rescue.
Days 18 to 69
 Drill two 28-inch wide shafts.
 Send food, water, oxygen, messages,
progress reports.
 Monitor health conditions.
56
Successful Rescue
Day 70. October 13, 2010
 From midnight to 11 pm.
 One at a time.
 33 times.
57
Copiapó Situation
Copiapó was mixed risk management:
 Good. Local risk management.
 Bad. Central risk management.
58
Local Risk Management
Two safety features:
 “Safe” room.
Stocked with provisions.
 Ventilation shaft.
Separate escape route.
59
Central Risk Management
Weakness before the crisis:
 Failure to maintain safety standards in a
dangerous place.
 Failure to install ladders after failing a safety
inspection that closed the mine.
 Opportunity lost. A second collapse closed
the shaft.
60
Lesson Learned
The value of risk management is not
determined by the occurrence or outcome
of extreme events.
 With no such events, risk management may
be working.
 Or we may just be lucky.
 Who knows?
 But we should be ready.
61
Presentation
Shane Battier
62
Managing Performance with Statistics
We can use statistics to appraise
performance. To be effective, we must:
• Count the right things.
• Convert raw data into useful information.
63
Player #1. Batting Statistics
In 100 at-bats, the following happened:
Hit. Hit. Out. Out. Out. Out. Hit. Hit. Out. Out. Hit.
Hit. Out. Hit. Out. Out. Out. Hit. Hit. Out. Out.
Out. Hit. Hit. Out. Out. Out. Hit. Out. Out. Out.
Hit. Hit. Out. Out. Out. Hit. Out. Out. Out. Hit.
Hit. Out. Hit. Out. Out. Hit. Out. Out. Out. Hit.
Out. Out. Out. Out. Hit. Out. Out. Out. Hit. Hit.
Out. Out. Out. Hit. Hit. Out. Out. Out. Hit. Hit.
Out. Hit. Out. Out. Hit. Out. Hit. Out. Out. Out.
Hit. Out. Out. Out. Hit. Hit. Out. Out. Out. Hit.
Hit. Out. Out. Out. Hit. Hit. Out. Out. Out.
64
Player #2. Batting Statistics
In 100 at-bats, the following happened:
Hit. Hit. Out. Out. Out. Out. Hit. Out. Out. Out. Hit.
Hit. Out. Out. Out. Out. Hit. Out. Out. Out. Hit.
Hit. Out. Out. Out. Out. Hit. Out. Out. Out. Hit.
Out. Out. Out. Out. Hit. Out. Hit. Out. Hit. Hit.
Hit. Out. Out. Out. Hit. Out. Out. Out. Out. Hit.
Out. Out. Out. Out. Hit. Out. Out. Out. Hit. Hit.
Out. Hit. Out. Out. Hit. Hit. Out. Out. Out. Hit.
Hit. Out. Out. Out. Hit. Hit. Hit. Out. Out. Out.
Hit. Hit. Out. Out. Out. Hit. Hit. Out. Out. Out.
Hit. Out. Out. Out. Out. Hit. Hit. Out. Out. Out.
65
Question
Which player is the better hitter?
66
Answer (1)
Of Ty Cobb and Tony Gwynn, who is the
better baseball player?
•
Player #1
Player #2
•
Ty Cobb
Tony Gwynn
• Batting average
367
338
67
Answer (2)
Of Ty Cobb and Tony Gwynn, who is the
better baseball player?
•
Ty Cobb
Tony Gwynn
• Batting average
367
338
• Hits
4,191
3,141
• Home runs
117
135
• Runs batted in
1,938
1,138
68
Overlooking Formatted Data
When using statistics to provide evidence in
support of our decisions, we must
recognize when we should overlook the
formatted data.
69
Background of Shane Battier
His record:
 High School. Naismith award for best player
in the U.S.
 College. Duke University. His team won 131
games, the 2001 national championship, and
he got another Naismith award as best
college player.
70
Answer
Malcolm Gladwell says statistical
performance in a game in only a small
part of understanding the value of an
athlete:




How hard does he work?
Is he a good teammate?
Is he resilient when faced with problems?
How does he perform under pressure?
71
First Team – Memphis Grizzlies
Team records:





2001-2002. 23-59.
2002-2003. 50—32.
2003-2004. Made the N.B.A. playoffs.
2004-2005. Made the N.B.A. playoffs.
2005-2006. Made the N.B.A. playoffs.
72
Second Team – Houston Rockets
Before he arrived:
 2005-2006. 34-48.
After he arrived:
 2006-2007. 52-30
 2007-2008. 55-27 (including 22 wins in a
row).
73
Battier by the Numbers
In terms of basketball statistics:





Points. Not many.
Rebounds. Not many.
Blocked Shots. Not many.
Assists. Not many.
Steals of the Ball. Not many.
74
Why is Battier Valuable?
When he is on the court:
 His teammates get a lot better.
 His opponents get a lot worse.
75
Question
What is the performance lesson?
76
Answer (1)
Do organizations measure things that are
important to performance or do they
measure things that are easy to measure?
77
Answer (2)
Should you:
 Take a bad shot or pass to an open
teammate?
 Pull down a rebound or tip it to a teammate?
 Guard a weak player or the other team’s best
player?
 Do we value individual performance or team
performance?
78
Question
Professional teams keep statistics on
players on opposing teams. They know:
 High Percentage Locations. Where many
points are scored.
 Low Percentage Locations. Where many
shots are missed.
 Directional Performance. If a player is better
going left or right.
What does this have to do with Battier?
79
Answer
He forces the opposing player into low
percentage positions and directions.
80
Lesson Learned
Statistics have a role in measuring success
and failure and other outcomes.
Subjective judgment and understanding
are needed to find the full answer.
81
Presentation
Day 2
Chapter 3.
Strategic
Decision Making
82
Presentation
MV Braer
83
Overview
Canadian Ultramar Ltd. was a worldwide
operator of general purpose and mediumrange product tankers:
 Cargoes. Hydrocarbon liquids ranging
from crude oil to refined petroleum
products.
 Voyage Routes. Worldwide.
84
Question
The company formed a crisis team. Who
would you recommend by title to be part of
the team?
85
The Team






Team Leader
Systems Specialist
Finance Specialist
Petroleum Engineer
Logistics Specialist
Public Relations Manager
86
Situation
The MV Braer, a refined-products tanker,
was passing the Shetland Islands in
January 1993.
• It ran aground in a storm near Quendale
with 300 year-round residents and one
40-room hotel.
• Within 24 hours a crisis team arrived to
contain the oil spill, which was growing by
the hour.
87
Crisis Response Efforts
Within 12 to 36 hours after the spill:
 Tugs from London arrived with oil
containment equipment.
 150 personnel arrived to clean up of oil.
 They would work 12 hours on and 12 hours
off.
 It would take 3-4 weeks to finish the job.
88
Investigating Housing
The crisis team determined the following:
 Few local residents were willing to provide
sleeping accommodations for workers.
 The hotel was closed. The owner would not
open it for workers.
 The island had no other place to house the
workers.
89
Question
What are the alternatives to solve the
housing problem for the workers.
90
Answer
Possibilities include:





Negotiate with the hotel owner.
Negotiate with homeowners.
Bring in tents.
Bring in a small cruise ship.
Expand the search for housing to other
towns.
91
Question
What should the team leader do?
92
Answer (1)
If you ask the wrong question, you will
always get the wrong answer.
• Instead of, “What should he do,” we might
ask, “What can he do?”
• Then we ask, “Does he have the authority
to do it?
93
Answer (2)
Actual Decision.
The team leader bought the hotel.
94
Question
Was the MV Braer decision sequential or
intuitive?
95
Answer
Both. The company:
• Created a team that was capable of
reacting to a crisis.
• Gave full authority to do the job.
96
Approaches to Decision Making
Individuals make decisions using:
 Intuition. The processing of data without
identifying intermediate steps and linkages.
Conceptualize relationships and “feel” a
course of action.
 Sequential Reasoning. Process data by
identifying intermediate steps and linkages,
organizing information and consequences,
and analyzing events.
97
Question
How much of each approach to decision
making is used by different managers on
the next slide? The choices are:
 A lot.
 Some.
 Very little.
98
Worksheet
 Choices:
CEO
Marketing
Finance
Production
Technology
A lot. Some. Very little.
Intuition Sequential
______
______
______
______
______
______
______
______
______
______
99
Answer
Maybe?
Intuition
CEO
Lot
C-level Marketing Lot
C-level Finance
Little
C-level Production Little
C-level Technology Little
Sequential
Some
Some
A Lot
A Lot
A Lot
100
Presentation
Russian Frozen Chicken
101
Russian Project
A company has a project to export frozen
chicken from the U.S. to St. Petersburg,
Russia. The company will load 60 to 80
pound boxes on pallets for the ocean
voyage. Upon arrival in Russia, will be
reloaded into reefer containers and be
shipped by railroad from St. Petersburg to
Moscow, Yekaterinburg, Omsk, and
Novosibirsk.
102
Question
An expropriation exposure was identified
involving the Hotel Europa in St.
Petersburg. In the mid-1990s, the hotel
opened a foreign bank account to handle
dollar transactions. Russian banking laws
prohibited such accounts. What do you
think happened?
103
Answer
As punishment for the offense, a
government agency levied a heavy fine on
the hotel. The foreign partner was forced
to forfeit its shares of stock to the
government agency. Effectively, the
government confiscated the hotel.
104
Question
The U.S. company learned that it could
obtain insurance to reimburse it for
expropriation. The European investors in
the Hotel Europe could have purchased
similar political risk insurance to reimburse
it for confiscation of the hotel. Do you think
such insurance would cover the loss?
105
Answer
A court would have to decide. The
insurance company would deny payment
because the loss occurred from a violation
of the local law rather than from a direct
expropriation. A court could rule that it
was actually an expropriation.
106
Question
A storage risk arises because the Port of St.
Petersburg has no shore side refrigeration
to allow quick unloading of an expensive
reefer vessel. The company would incur
significant demurrage charges if the
vessel is delayed awaiting containers or
railroad cars. What action should be taken
to mitigate this exposure?
107
Answer
With the lessons of the Hotel Europa, the
company would be reluctant to build a
refrigerated warehouse in the port.
Instead, it could:
 Let the Russian partner solve the problem.
 Buy an old (and relatively inexpensive) reefer
vessel and use it for storage.
 Build a refrigeration facility on a barge.
108
Question
A credit risk arises because the U.S.
company does not have the capability to
distribute the chicken in Russian markets.
It would choose a strong and reliable
Russian distribution company as a
partner. One credit risk deals with the
timing of the transfer of the title to the
cargo. When should title, and thus
ownership, be transferred?
109
Answer
Title should pass from the U.S. company to
a Russian partner at the Port of St.
Petersburg. If any cargo is lost after that
point, it would be a loss to the Russian
partner who has control of the cargo.
110
Question
The other part of credit risk involves steps to
be taken to mitigate the risk of
nonpayment after the cargo is turned over
the Russian partner. How should that be
handled?
111
Answer
It is probably not realistic to demand
payment in advance or to obtain a letter of
credit to guarantee payment. The risk
would be manageable if the Russian
partner is required to make the payment
before the company delivers the next
shipment. Risk is mitigated if a stream of
profits is larger than the funds from a
default on payment for a single cargo.
112
Question
Once the Russian partner has received the
chicken in St. Petersburg, it must ship the
chicken by railroad. Refrigerated
containers are locked and then loaded on
flat railcars. On the fifth journey, one of the
containers was empty when it arrived in
Moscow after the 3-day trip from St.
Petersburg. What should the partner do?
113
Answer
Find a risk management solution. Buying
insurance will not work. Who would insure
a cargo with a high chance of loss?
114
Question
The risk manager proposed a risk
management solution. Place containers
door to door on the flatbed railcar so the
doors could not be opened if the locks
were broken. Did it work?
115
Answer
No. Apparently someone had access to a
crane on a siding when the train stopped
in the middle of the night? Another
container was missing on a later journey.
116
Question
What else can be tried?
117
Answer
An approach with an upside. Start by
placing a boxcar on the back of the train.
The car was fitted with heaters and cots
carried guards with Kalashnikov weapons
Whenever the train stopped, guards
stepped out to guard the containers.
118
Question
What is the upside?
119
Answer
Insurance. The Russian partner, railroad,
and Ingosstrakh (Russian insurer) can
insure the cargoes. Losses are no longer
expected. The insurance can provide
profits to all three parties. This is the
upside of risk.
120
Presentation
Chapter 4.
Framework for Strategies
121
Presentation
Post-American World Quiz
122
Question
The population of China is 1,350 million.
Most of these people lived in poverty in
1979. How many were lifted out of poverty
since then?
• 200 million
• 450 million
• 700 million
• 900 million
123
Answer
The population of China is 1,350 million.
Most of these people lived in poverty in
1979. How many were lifted out of poverty
since then?
• 200 million
• 450 million
• 700 million
• 900 million
124
Question
Many countries are making progress to
improve the lives and health of their
residents. How many of the world’s 192
countries are absorbing poor people into
productive and growing economies?
• 80
•110
•140
•170
125
Answer
Many countries are making progress to
improve the lives and health of their
residents. How many of the world’s 192
countries are absorbing the poor into
productive and growing economies?
• 80
•110
•140
•170
126
Question
Most people in the world have food, shelter, and
other basic living needs. What percent of the
world’s population had less than two dollars a
day of additional spending money in 1984?
• 56%
• 40%
• 24%
• 12%
127
Answer
Most people in the world have food, shelter, and
other basic living needs. What percent of the
world’s population had less than two dollars a
day of additional spending money in 1984?
• 56%
• 40%
• 24%
• 12%
128
Question
Most people in the world have food, shelter, and
other basic living needs. What percent of the
world’s population had less than two dollars a
day of additional spending money in 2014?
• 56%
• 40%
• 24%
• 12%
129
Answer
Most people in the world have food, shelter, and
other basic living needs. What percent of the
world’s population had less than two dollars a
day of additional spending money in 2014?
• 56%
• 40%
• 24%
• 12%
130
Question
Which of the following is defined by Alan
Greenspan in the 1990s as the most
important economic event of the 20th
century?




Fall of the Soviet Union.
Rise of the Internet.
Development of the personal computer.
Opening of China.
131
Answer
The Fall of the Soviet Union.
 Central planning was totally discredited.
 Capitalism is the only viable approach to
organizing a country’s economy.
Rise of the Internet.
Development of the personal computer.
Opening of China.
132
Question
Which of the following would you define
today as the most important economic event
of the 20th century?




Fall of the Soviet Union.
Rise of the Internet.
Development of the personal computer.
Opening of China.
133
Answer
Which of the following would you define
today as the most important economic event
of the 20th century?




Fall of the Soviet Union.
Rise of the Internet.
Development of the personal computer.
Opening of China.
134
Question
Which of the following predictions proved to
be the most accurate?
 Meteorologists on the melting of polar ice
caps.
 Demand for electricity.
 Pollution of the atmosphere.
 2008 global financial crisis.
135
Answer
All except Buffett predictions for 15 years
erred on the low side:
Polar ice caps:
Melting at twice predicted
rates.
Electricity Demand:
Has outrun expectations.
Air Pollution
Much worse.
2008 Financial Crisis Warren Buffett predicted
it accurately in 2003.
136
Question
Who mostly can take credit for winning the
Second World War?




United States.
Russia.
China.
United Kingdom and France.
137
Answer
Russia.
 75% of Germans fought on the eastern front
where Germany incurred 70% of its
casualties and 30 million people died.
 The European front was almost a sideshow,
yet it receives all the attention in the West.
138
Question
World affairs from 2000 to 2008 were linked
mostly to a warlike area with dry and hot
desert conditions and a foreign accent when
speaking English. Was it?
• The Middle East.
• Pakistan and Afghanistan.
• Egypt and Tunisia.
• Someplace else.
139
Answer
World affairs from 2000 to 2008 were linked
mostly to a warlike area with dry and hot
desert conditions and a foreign accent when
speaking English. Was it?
• The Middle East.
• Pakistan and Afghanistan.
• Egypt and Tunisia.
• Texas. (The Bush Years)
140
Question
World affairs from 2009 to 2014 were linked
mostly to a society in chaos as a result of a
non-functioning government. Was it?
• The Middle East.
• Pakistan and Afghanistan.
• Egypt and Tunisia.
• Someplace else.
141
Answer
World affairs from 2009 to 2014 were linked
mostly to a society in chaos as a result of a
non-functioning government. Was it?
• The Middle East.
• Pakistan and Afghanistan.
• Egypt and Tunisia.
• Washington, D.C.
142
Bonus Questions
In what country in 2012 will you find the
following?







Tallest building.
Richest person.
Largest public company.
Largest investment fund.
Largest Ferris wheel.
Largest casino.
Largest swimming pool
________
________
________
________
________
________
________
143
Answer
Country in 2012:
 Tallest building.
 Richest person.
UAE (Dubai)
__________
144
Answer
Country in 2012:
 Tallest building.
 Richest person.
 Largest public company.
UAE (Dubai)
U.S. (Gates)
__________
145
Answer
Country in 2012:




Tallest building.
Richest person.
Largest public company.
Largest investment fund.
UAE (Dubai)
U.S. (Gates)
China
__________
146
Answer
Country in 2012:





Tallest building.
Richest person.
Largest public company.
Largest investment fund.
Largest movie industry.
UAE (Dubai)
U.S. (Gates)
China
Norway
__________
147
Answer
Country in 2012:






Tallest building.
Richest person.
Largest public company.
Largest investment fund.
Largest movie industry.
Largest casino.
UAE (Dubai)
U.S. (Gates)
China
Norway
India
__________
148
Answer
Country in 2012:







Tallest building.
Richest person.
Largest public company.
Largest investment fund.
Largest Movie Industry
Largest casino.
Largest swimming pool
UAE (Dubai)
U.S. (Gates)
China
Norway
India
China (Macao)
__________
149
Answer
Country in 2014:







Tallest building.
Richest person.
Largest public company.
Largest investment fund.
Largest Movie Industry
Largest casino.
Largest swimming pool
UAE (Dubai)
U.S. (Gates)
China
Norway
India
China (Macao)
Chile
150
Question
West strove for labor efficiency while the
East considered manpower to be cheap.
• Yangtze Delta and English farmland in
1800.
• Comparable in output.
• Average farm size?
 England. ____ acres or ____ hectares.
 Yangtze. ____ acres or ____ hectares.
151
Answer
Average farm size:
 England. 150 acres or 53 hectares.
 Yangtze. One acre or .4047 hectares.
152
China versus West in 1400s
153
Answer
The result:
 China stopped global exploration and
languished.
 The West made ocean voyages selfsustaining commercial ventures.
 The western voyages contributed mightily to
growth and the creation of wealth.
154
Question
What are the five most important countries
in the world?
155
Answer
Where is China on your list?






Largest country in population.
Fastest growing economy.
Largest manufacturer.
Second largest consumer.
Largest saver.
Second largest military spender.
156
Presentation
Day 3
Chapter 5.
Seek the Big Picture
157
Presentation
Do you want to Climb
Mount Everest?
158
Looking for a New Adventure?
60 million years of
geological history.
Be part of the 1,200
elite to have
climbed the tallest
mountain on the
planet.
Be the first on your
block to touch the
heavens.
159
Climb Mt. Everest
World's highest
peak:
 29,035 feet!
 20 Empire State
Buildings.
Himalaya
Mountains, along
the border of
Nepal and Tibet!
160
The Trek
60-80 days
March – May
5 camps:
 Base
Camp –
 Camp 1
 Camp 2
 Camp 3
 Camp 4
 Summit
17,500ft
- 20,000ft
- 21,300ft
- 24,000ft
- 26,000ft
- 29,035ft
161
Climbing Requirements
Experience should
include:
 Ascents of 22,000
or more feet.
 3-5 years of
technical climbing
 Crevasse rescue
practice and rock
and ice climbing.
 Basic First-Aid and
CPR certifications
162
Here’s what you will need
 Climbing Gear
 Extreme
Outerwear
 Camping Gear
 Boil-in-the-bag
meals
 Oxygen Canisters
 Sunscreen
 Water
163
Facing the Elements
Extreme conditions!
Freezing
temperatures:
 Low’s: Minus 100°F
Highs: 15°F
 Wind: 50-177mph
 Snow: 10+ feet
 Icefalls
 Avalanches
 Falling Rocks
164
What are the risks?
 Rapid breathing
 Fast pulse rate
 Poor digestion
 Loss of appetite
 Insomnia
 Difficulty
concentrating
 Frost bite
 Cerebral Edema
 Pulmonary Edema
 Death
165
What are your Odds?
People who:
Attempted:
11,000
Were successful:
3,000
(and possibly you)
Died Trying:
240
(this will not be you)
166
Deaths since 1921-2013
•
•
•
•
•
•
•
•
Fall
Avalanche
Exhaustion
Altitude Sickness
Ground collapse
Exposure
Other
Total
65
48
18
24
24
26
35
240
167
Successful Climbs
Successful climbers in each year by
different routes to the top.
Year Nepal China Other Success
1990
40
20
12
18%
2000
85
55
5
24%
2012 409
138
0
56%
168
May 19, 2012
Hillary Step:
Hillary Step Delay
Reached the Top:
Died:
40-foot rock wall.
2 hours
234 climbers.
4 climbers.
169
2014 Khumbu Icefall
18 April 06:45.
Avalanche at 5,800 meters (19,000 ft).
25 men buried.
Mostly Sherpa guides.
16 died.
170
Carry On
First post-avalanche ascent.
23 May 2014.
Chinese businesswoman Wang Jing.
She bypassed Khumbu Icefall by helicopter.
Tamding Sherpa accused her of "cheating.”
171
What are the risks?
You can do all of this for:
 65 easy installments
 $1,000 each!
 Not counting the helicopter.
172
Famous Last Words
"Strong motivation is the most
important factor in getting you to the
top."- Edmund Hillary
"Everest is the physical and symbolic
manifestation of a dream." - Tom
Whittaker
"Because it is there”. — George
Mallory (1886-1924). Body discovered
1 May 1999 close to summit.
173
More Famous last words
”It's only a
mountain."
Junko Tabei
"Feeling Wasted?
Climb Everest
before you Die!"
Nepalvist.com
174
Still interested?
175
Question
Risk and decisions are shaped by people’s
attitudes. What happened to David Sharp
and Lincoln Hall while climbing Mount
Everest in 2006?
Answer (1)
David Sharp.
o 34 years of age.
o Froze to death under a rocky overhang just
below the peak.
Answer (2)
David Sharp.
o 34 years of age.
o Froze to death under a rocky overhang just
below the peak.
o 40 climbers walked past him while he was
still alive.
Answer (3)
Lincoln Hall.
o 50 years of age,
o Left for dead by his climbing party.
o Survived the night.
Answer (4)
Lincoln Hall.
o 50 years of age,
o Left for dead by his climbing party.
o Survived the night.
o The next morning, Dan Mazur abandoned
his own climb to help rescue Mr. Hall.
Answer (5)
John Delaney, founder and CEO of Intrade,
a prediction market which allows
individuals to take positions (‘trade
'contracts') on whether future events will
or will not occur. Did you hear about what
happened to him?
Answer (6)
John Delaney died while trying to climb Mt.
Everest in May 2011:
 He was 50 meters from the top.
 He was 42
 It was his second attempt to climb
Everest.
 He never heard that his wife had just
given birth to a baby daughter, Hope.
IBM Big Picture
Thomas Watson, Sr. (1914-1956)
• Personal Grooming. Ties and dark suits.
• High Energy. Promote company pride and
loyalty.
• Customer Service. The buyer came first.
Satisfy the users of IBM machines.
• Employee Rewards. Salaries above market
and often well above market.
Watson Sr. resisted electronic computers.
183
Question
Watson Jr. changed the strategy. Big
Picture for the Customer:
• The IBM 360 was coming.
• It was expensive to change.
• It was risky for long-term purchase.
What should be done?
184
Answer
Lease the machines.
• Cost. Leasing lowered the upfront costs.
• Flexibility. No penalty to switch.
185
Question
What was the big picture for IBM?
186
Answer
Switching to another vendor was prohibitive.
• Obsolescence. All new software.
• Capabilities. Less from manufacturers
who lagged IBM’s huge R&D.
• Operations. Training as IBM operated the
computer and ancillary equipment.
• Unknown Costs. All expenses covered in
IBM lease payments.
187
Presentation
Sneakers and Mr. Lee
188
Question
The most important technological
application in the 1980s became a key
component of the modern post-American
world. What was it? What did it do?
189
Answer
The fax machine. It changed long distance
communication from oral (telephone) or
tedious (Telex machine) to written and
simple for complex messages.
190
Question
What were the elements of the convergence
of technology and opportunity in Taiwan in
the 1980s that allowed Mr. Lee to become a
global manufacturer of sneakers?
191
Answer
 Low labor costs in Taiwan.
 Taiwanese government encouragement of
industrialization.
 Increasing consumer demand for sneakers.
 Invention of the fax machine.
192
Question
How did Mr. Lee take advantage of the new
opportunity and technology?
193
Answer
He took orders to outsource sneaker
manufacturing. Example:
 Sears in Chicago. Order for one million
sneakers.
 Mr. Lee in Taiwan. 25 page fax with sizes,
design, colors.
 Mr. Lee’s neighbor. 3 page fax with sizes,
design, colors.
194
Question
Mr. Lee and others became partners with
Sears and others. Assume that Mr. Lee was
producing 3 million pairs of sneakers in
1987. Revenues were $35 million.
 What was the total number of full-time
positions in his company.
 The U.S. dollar value of capital assets.
195
Answer
Personnel. (10)
 Mr. Lee. Wife, Mother, Two children,
Grandmother (on father’s side), Four
neighbors.
Capital Assets. $100,000
 Office in owned building, Telephone, Fax
Machine. Minor equipment.
196
Question
What are the names in Mr. Lee’s
organization?
?
?
?
Lee
?
?
197
Answer
Fill in any Chinese names. Mr. Lee farmed out
production.
Chu
Yang
Sun
Lee
Chin
Chang
198
Question
What did vice presidents do in industrial age
organizations?
199
Answer
Duties may include:
 Relay policies from the CEO and senior
executives to lower-level employees.
 Establish goals for employees in their units.
 Appraise subordinates.
 Prepare reports for senior executives.
 Read the Wall Street journal at their desks.
 Dictate memos to secretaries.
 Attend committee meetings.
200
Question
What did middle managers do in industrial
age organizations?
201
Answer
The same thing as vice presidents, often
redundant functions.
202
Question
What did secretaries do in industrial age
organizations?
203
Answer
Duties may include:




Greet visitors. Answer the telephone.
Type and file documents.
Schedule appointments and meetings.
Other.
204
Question
What has happened to vice presidents,
middle managers, and secretaries since
1980?
205
Answer
Technology has replaced many of their
duties and the need for their positions:
 Vice presidents do different things.
 Middle managers have dropped in numbers
as a percentage of employees.
 Secretaries have disappeared.
206
Question
We might observe that the real impact of Mr.
Lee had to do with risk factors that would
change the industrial age organization.
What changes did the new structure pose
with respect to global borders?
207
Answer
Global borders can be crossed by electronic
means without interference:
 Products and services were likely to follow.
 Borders would decline in importance.
 Many borders would disappear.
208
Question
What changes did the new structure pose
with respect to language?
209
Answer
English was likely to become the global
language:
 If Mr. Lee or a family member knew English,
Mr. Lee would be able to understand the
language of the world’s dominant economic
power.
 All other countries would be lining up in the
race to understand the most important
language in the world.
210
Question
What changes did the new structure pose
with respect to productivity?
211
Answer
Aside from lower costs of the workforces in
developing countries:
 Companies could pay for output rather than
time.
 This was likely to increase efficiency and
change the employment practices of
organizations.
212
Question
What changes did the new structure pose
with respect to the industrial age hierarchy
and culture?
213
Answer
Pressure would exist to:
 Eliminate redundant middle management
positions.
 Causes individuals to recognize that they
could not climb a clear hierarchy in their
careers.
 Create new organizational forms and
relationships.
214
Question
What changes did the new structure pose
with respect to long-term relationships?
215
Answer
Partnerships might be replacing business
units;
 Production might not be a line and staff
function.
 A firm might sell products produced by
partners like Mr. Lee who had their own
organization.
216
Presentation
Cook County Hospital
217
Question
In 1996 Dr. Brendan Reilly went to Cook
County Hospital and discovered 30 people
a day came to the emergency with chest
pains. Diagnosing whether it was a heart
attack was a long and elaborate process.
What was being done?
218
Answer
Diagnosing a heart attack involved:
 Taking blood pressure.
 Listening for fluid in lungs.
 Asking about prior health history, exercise,
cholesterol, drugs, diabetes, and more.
 Giving an electrocardiogram (ECG).
219
Question
What did Dr. Reilly discover when he
researched the results of the efforts to
diagnose a heart attack?
220
Answer
Dr. Reilly discovered the results were
inconclusive:




ECGs can be wrong.
Answers to questions can be misleading.
Doctors finally have to make a guess.
Doctors believed they were making reasoned
judgments.
221
Question
Reilly uncovered the research of Dr. Lee
Goldman. He developed an algorithm for
diagnosing heart attacks recommending
four actions. What do you think they
were?
222
Answer
The four actions were:




Read the ECG.
Ask about chest pain.
Check for fluid in lungs.
Check for blood pressure.
223
Question
Goldman’s algorithm for sending patients
to cardiology unit, regular hospital room,
or home was based on various
combinations of the information. What was
his goal by using it instead of the more
elaborate procedure at Cook County
Hospital?
224
Answer
Goldman’s algorithm greatly shortened
the time to reach a decision on how to
treat the patient. This can be critical:
 For medical reasons to start treatment quickly
for those who need it.
 For efficiency reasons in a busy hospital.
225
Question
Reilly began an experiment:
 For several months, doctors used the lengthy
process to evaluate patients.
 Subsequently, for several months the hospital
used Goldman’s algorithm.
 The process was reversed over two years.
 The data was compared.
Was greater accuracy obtained by the
doctors or the algorithm?
226
Answer
The algorithm was:
 70% better at making the diagnosis of
acute, mild, or no heart attack.
 Doctors were correct on acute diagnosis
75 to 89 percent of the time.
 Algorithm was correct 95% of the time.
227
Question
A man complains of chest pain. He has no
symptoms on Goldman’s algorithm. He is:





62 years old.
A hard-charging executive.
Under constant pressure.
Going through a divorce.
A smoker who does not exercise.
Is he having a heart attack?
228
Answer
Not likely according to Goldman’s
algorithm. Less is more. Still:
 This is not to say that doctors should ignore
valid information.
 It just means health care facilities should seek
less costly procedures that produce the same
or better outcomes that more elaborate
activities.
229
Presentation
Day 4
Chapter 6.
Collaborate for
Better Decisions.
230
Presentation
The Tipping Point
231
Three Premises of Tipping Point
A tipping point is a moment in time when
an unstoppable change (an epidemic) is
about to occur. Three characteristics are:
 Contagiousness. Circumstances create a
rapidly-spreading influence that excites the
emotions.
 Impact. Little causes have big effects.
 Speed. Changes happens in one dramatic
moment.
232
Question
What were the dates of the following?
 Sale of the first low-cost fax machine.
 Tipping Point for the fax.
 First cell phone call.
 Tipping Point for the cell phone.
233
Answer
 Sale of the first low-cost fax machine.
1984. Sharp. 80,000 units.
 Tipping Point for the fax.
1987. One million units.
 First cell phone call.
1973. Motorola.
 Tipping Point for the cell phone.
1998. Everybody was about to get one.
234
80/20 Principle
Proposes that 20% of people are
responsible for 80% of activity:




20% of workers account for 80% of success.
20% of customers provide 80% of profits.
20% of criminal commit 80% of crimes.
20% of motorists cause 80% of accidents.
235
Three Rules of the Tipping Point
Malcolm Gladwell maintains that an
epidemic is started by fewer than 20%. He
has three rules that cause the start of an
epidemic:
 Law of the Few. A tiny percentage of people
build momentum.
 Stickiness Factor. A message makes a
memorable impact.
 Power of Context. Human beings are highly
sensitive to the things around them.
236
Question
Gladwell claims that word of mouth appeals
are the only kind of persuasion that can
generate a tipping point. Do you agree?
237
Answer
Maybe in the days before mass media.
When was the last time a tsunami was
created by the following?
 A newspaper.
 TV commercial.
 Direct mail solicitation.
 Mass email.
Ask the same about Facebook, Twitter, YouTube.
238
Categories of the Few
An epidemic depends upon a few word-ofmouth people in three categories:
 Connectors. People with a special gift for
bring the world together.
 Mavens. Information specialists who pay
close attention to details and want to help
others.
 Salesmen. Individuals with the skills to
persuade skeptical people.
239
Question
We can identify two types of connections
with others:
 Strong Connections. As with our family,
friends, co-workers, and neighbors.
 Weak Connections. As with associates,
casual acquaintances, vendors, and service
providers.
Which form of connection occurs with
tipping points?
240
Answer
According to Gladwell, effective connections
occur when connectors, mavens, and
salesmen use their vast networks of weak
connections:
 Our friends and other strong connections
occupy our world. They know what you know.
 Acquaintances occupy other worlds. They
can be a source of social power. We rely on
them for opportunities outside our vision.
241
Presentation
Ghosn and Nissan
242
Question
In 1999, Nissan was a corporation with a
traditional Japanese culture. It had a net
loss in 1999 of $5.7 billion. What should the
board of directors do?
243
Answer
Bring in a Frenchman?
In June 1999, Carlos Ghosn was appointed
chief executive officer.
244
Question
The Renault and Nissan nameplates
traditionally had respected and positive
images. What did Ghosn do about the
Nissan brand?
245
Answer
He made many friends among his Japanese
managers when he chose to retain the
Nissan brand. Step #1 in collaboration
246
Question
Ghosn recognized the sharp cultural
differences among managers and workers
in France and Japan. How was this
handled?
247
Answer
Ghosn pointed out complimentary strengths
in Renault and Nissan.
• He directed both companies to find
synergies working together to correct
weaknesses in production and marketing.
• These efforts strengthened the mutual
respect between the managers in both
companies.
248
Question
How did Ghosn implement his strategy?
249
Answer
The company:
• Aggressively eliminated unprofitable
markets.
• Sped up development of new vehicles.
• Improved quality.
• Reduced manufacturing platforms.
• Shared power trains and technology
between France and Japan.
250
Question
French and Japanese companies have
cross-cultural barriers to collaboration. Did
Ghosn address them?
251
Answer
His effort is a study of best practices in
collaboration.
• Ghosn identified workers who knew
changes had to be made and empowered
managers to make them.
• He augmented their numbers with French
executives in cross-cultural teams,
demanding problem solving and revised
compensation and promotion.
252
Question
What about communications?
253
Answer
Ghosn encouraged extensive interaction
and actively participated himself.
• Employees at all levels shared goals and
strategies with consumers, dealers,
shareholders, and each other.
• He forced managers to recognize the
difference in Japanese and French
communication styles and accept the best
parts of both.
254
Question
The Japanese culture seeks consensus
when major decisions are made. The
Western model involves the CEO inviting
inputs from interested parties and then
making a decision. How did Ghosn handle
key decisions?
255
Answer
Ghosn knew collaboration was not
compromise and consensus.
• French: “We need to close a plant.”
• Japanese: “Yes.”
• French: “Jobs will be lost.”
• Japanese: “Yes.”
• French: “It must be done.”
• Japanese “Yes.”
256
Collaboration Strategy
Acknowledge serious problems.
Share goals, strategies, plans, and actions
with consumers, employees, and
shareholders.
Recognize difference in Japanese and
French communications.
257
Presentation
Crossing the River
258
Question
A man approaches a river. He has to decide
whether to swim upstream or downstream.
What decision criteria should he use?
259
Answer
What is the purpose of the swim?
 For exercise, upstream.
 For distance, downstream.
 For crossing the river, find a bridge.
260
Question
A man approaches a river. He has to decide
what to do next. What is the largest risk if
he takes each of the following actions?
 Swims across the river.
 Swims upstream or downstream.
 Does not enter the water.
261
Answer
Swims across the river.
 Hit by a boat. Shot by border guards. Eaten
by piranhas.
Swims upstream or downstream.
 Get lost. Drown because he gets too tired to
stay afloat. Go over Niagara Falls.
Does not enter the water.
 Miss a chance to cool down. Get captured by
the chasing police.
262
Question
What is the decision-making trap from the
previous questions?
263
Answer
If we do not broaden our horizon when
making decisions, we fall for the business
as usual trap. We are not looking for
something out of the box that can open
new doors.
264
Answer
Most creative?







Build a bridge.
Build condos.
Dam up the river and generate electricity.
Poison the river.
Buy a boat and offer dinner cruises.
Water ski.
Ice skate.
265
Shiller Downside to Collaboration
Robert Shiller, Yale economist, 2013 Nobel
Prize in economics.
• Saw the U.S. housing bubble that led to
the 2008 financial crisis.
• Was in a position to help avoid it.
• Served on an advisory panel for the
Federal Reserve.
• Agency could have raised interest rates.
266
Question
Did Shiller warn the Federal Reserve Bank
about the impending housing bubble?
267
Answer
Yes. Sort of. Shiller was quoted:
"I felt the need to use restraint. The
consensus . . . was that there was no
bubble and no need to raise interest rates.
To suggest otherwise was distinctly
uncomfortable. I [made my point] very
gently, and felt vulnerable expressing
such quirky views."
268
Question
What happened with Shiller’s warning?
269
Answer
Nothing.
"Deviating too far from consensus leaves
one feeling potentially ostracized from the
group, with the risk that one may be
terminated."
“Groupthink” is the downside of
collaboration even for a Noble Prize
economist.
270
Presentation
Widely Known Facts
271
Question
1. What is the color of the “box”
collect from an airplane after a
crash?
A. Red.
B. Orange.
C. Blue.
D. Black.
272
Answer
1. What is the color of the “box”
collect from an airplane after a
crash?
A. Red.
B. Orange.
C. Blue.
D. Black.
273
Question
2. Which of the following is the most
innovative country in the world according
to Bloomberg?
A.South Korea.
B. United States.
C. China.
D. Hong Kong.
274
Answer
2. Which of the following is the most
innovative country in the world according
to Bloomberg?
A.South Korea.
B. United States.
C. China.
D. Hong Kong.
275
Question
3. What is the only man-made object
visible from the Moon?
A. Boeing factory, Everett, Wash.
B. Dubai International Airport.
C. Great Wall of China.
D. None of the above.
276
Answer
3. What is the only man-made object
visible from the Moon?
A. Boeing factory, Everett, Wash.
B. Dubai International Airport.
C. Great Wall of China.
D. None of the above.
277
Question
4. Which of the following countries has
the largest volume of proven oil
reserves?
A. Saudi Arabia.
B. Venezuela.
C. Canada
D. None of the above.
278
Answer
4. Which of the following countries has
the largest volume of proven oil
reserves?
A. Saudi Arabia.
B. Venezuela.
C. Canada
D. None of the above.
279
Question
5. Who made the statement, "I can
see Russia from my house?”
A.Joan Rivers.
B.Sarah Palin.
C.Tina Fey.
D. None of the above.
280
Answer
5. Who made the statement, "I can
see Russia from my house?”
A.Joan Rivers.
B.Sarah Palin.
C.Tina Fey.
D. None of the above.
281
Question
6. Which city has the largest airport in the
world in terms of the number of annual
passengers?
A. Dubai. .
B. London.
C. Chicago
D. Tokyo.
282
Answer
6. Which city has the largest airport in
the world in terms of the number of
annual passengers?
A. Dubai. .
B. London.
C. Chicago
D. Tokyo.
283
Question
7. Who brought pasta from China to
Italy?
A. Greeks in ancient times.
B. Romans in ancient times.
C. Arabs in the 7th century.
D. Marco Polo in 1300.
284
Answer
7. Who brought pasta from China to
Italy?
A. Greeks in ancient times.
B. Romans in ancient times.
C. Arabs in the 7th century.
D. Marco Polo in 1300.
285
Question
8. Which of the following colors will
enrage a bull?
A. Red.
B. Black.
C. Purple.
D. None of the above.
286
Answer
8. Which of the following colors will
enrage a bull?
A. Red.
B. Black.
C. Purple.
D. None of the above.
287
Question
9. When did Europeans learn that the
earth was not flat?
A. Since ancient Greece.
B. Since Roman times.
C. Since 7th century monasteries.
D. After 1492.
288
Answer
9. When did Europeans learn that the
earth was not flat?
A. Since ancient Greece.
B. Since Roman times.
C. Since 7th century monasteries.
D. After 1492.
289
Question
10. Who invented the light bulb?
A.Humphry Davy in 1800.
B.Sir Joseph Wilson Swan in 1860.
C. Charles Francis Brush in 1878.
D. Thomas Alva Edison in 1879.
290
Answer
10. Who invented the light bulb?
A.Humphry Davy in 1800.
B. Sir Joseph Wilson Swan in 1860.
C. Charles Francis Brush in 1878.
D. Thomas Alva Edison in 1879.
291
Question
11.What percent of the the moon (dark side)
never receives sunlight?
A. Zero.
B. 25%
C. 40%.
D. 60%.
292
Answer
11.What percent of the the moon (dark side)
never receives sunlight?
A. Zero.
B. 25%
C. 40%.
D. 60%.
293
Question
12. Which is the percent of the brain that we
use every day?
A. 10%.
B. 25%
C. 50%.
D. 100%.
294
Answer
12. Which is the percent of the brain that we
use every day?
A. 10%.
B. 25%
C. 50%.
D. 100%.
295
Presentation
Day 5
Chapter 7.
Wartime and
Peacetime Strategies
296
Three Decision-making Styles
• Authoritarian. Quick decision making.
The leader dictates goals and strategies
and controls activities.
• Participative. Leader describes the goal
and encourages others to help achieve it.
• Laissez-faire. Group members to make
the decision. IGenerally the slowest form
of decision making.
297
Two Leadership Styles
Leadership can be portrayed in two
categories:
• Wartime Leader. Action trumps planning.
• Peacetime Leader. Planning trumps
action.
298
Wartime Leader
• Goal. What are we trying to do?
• Strategy. What might work?
• Action. Go for it.
299
Peacetime Leader
•
•
•
•
Goal. Should we make changes?
Options. What alternatives do we have?
Strategy. What is our best choice?
Information. What else do we need to
know?
• Planning. How will we proceed?
• Action. When should we start?
300
Question
Dwight D. Eisenhower was the Supreme
Allied Commander in the European Theater
in World War II. Was he a peacetime or
wartime leader?
301
Answer (1)
Compare him to George S. Patton.
302
Answer (2)
Who believes the following?
• Plans are nothing.
• Budgets are nothing.
• Planning and flexible budgeting are
everything.
303
Answer (3)
Wartime and peacetime leaders.
Eisenhower quote:
•In a 1957 speech he said, "Plans are
worthless, but planning is everything.”
304
Presentation
Hill A
305
Strategy
A commander has a goal to capture hill A, a
dominant terrain feature on a battlefield.
• The initial plan is to capture hills B and C
first.
• The two smaller flanking hills are
occupied by enemy soldiers.
• After taking hills B and C, all forces will
attack hill A.
306
Tactic
The commander has three infantry
companies and an artillery battery to provide
support. The tactic is:
• Send one attack unit to hill B.
• Send another attack unit to hill C.
• Keep one attack unit in reserve.
• Use artillery to soften up hills B and C.
307
Implementation
The battle is underway.
• Unit #1 attacks hill B and clears it of
enemy soldiers.
• Unit #2 attacks hill C but bogs down. The
attacking force is pinned down by intense
fire 300 meters below the enemy ridgeline
on hill C.
Question: What do you do now?
308
The Plan
Hill A
Hill B
Hill C
Unit #1
Unit #2
Unit #3
309
Move, Shoot, Communicate
Hill A
?
Hill B
Hill C
?
Unit #1
Unit #2
Unit #3
310
Answer (1)
What is the basis for your answer?






Fact.
Belief.
Feelings.
Opinion.
Assumption.
Bias.
311
Answer (2)
In military settings, the most common
philosophy is to continue on and commit
units #1 and #3 to take Hill A.
The slogan is “Exploit success, not
failure.”
312
Presentation
“Monster” and the “Whale”
313
JPMorgan
Commercial bank and investment bank.
• Goal was to protect capital.
• New goal to generate profits from
derivatives.
• Use assets of $2.25 trillion.
314
The Problem at JPMorgan
• It sold insurance against a decline in a
credit-default index.
• Even if parties suffered no loss,
JPMorgan would have to pay for the
decline.
• It hedged its position.
• Or so it thought.
315
Hedging Strategy
Offsetting indexes:
• Guarantee #1. Maturities in 2017.
• Guarantee #2. Maturities in 2012.
• Belief. One goes up. One goes down.
• Profits. From the fees.
316
Bruno Iksil
• JPMorgan trader.
• Took large risks for large profits.
• Nickname “The London Whale.”
317
Boaz Weinstein
Mr. Weinstein:
•New York trader.
•Ruthlessly attacked market weaknesses.
•Nickname the “Monster.”
•Spotted a weakness in the JPMorgan
strategy.
•Started buying.
318
Outcome
November 2011 to May 2012:
• Iksil sold.
• Weinstein bought
• Weinstein was losing at first.
• Weinstein told others of the weakness.
• JPMorgan could not get out.
• $2 billion loss announced.
319
Presentation
Archer Daniels CEO
320
Question
In 29 years at Chevron, Patricia Woertz rose
to executive vice president managing
30,000 employees in 180 countries.
In 2006 Archer Daniels hired her as CEO.
Some analysts were surprised as the oil
business was dominated by “alpha”
males.
Was it risky for Chevron to bring Ms. Woertz
into an alpha male environment?
321
Answer
Possibly but it worked out.
• By 2012 Archer Daniels had grown to $90
billion in revenues from $36 billion in
2006.
• Ms. Woertz was still CEO in 2013.
• Since 2006 she had received many
awards and recognition.
322
Presentation
Jürgen Schrempp, CEO
323
Question
What is the difference between strategic
and situational decision making?
324
Answer
Strategic decisions manage people, resources,
and behavior to solve problems and make
correct decisions.
 They pursue a clearly-defined goal.
 They evaluate resources and skills.
Situational decision making occurs when action
matches a situation.
 The decision is shaped by current realities.
 Action trumps strategy.
325
Question (1)
Jürgen Schrempp, CEO, led Daimler Benz
to acquire Chrysler for $37 billion in 1998.
 2007. Daimler sold 80% of Chrysler to
Cerberus for $7 billion.
 1998. Schrempp described the union as "a
merger of equals, a merger of growth, and a
merger of unprecedented strength.”
 2000. Schrempp told a German newspaper
that he always intended Chrysler to be a
subsidiary of DaimlerChrysler.
326
Question (2)
Is Mr. Schrempp an example of the failure of
strategic leadership, the failure of situational
leadership, or neither?
327
Answer
Both.
 Failure of strategic leadership. Bad
acquisition
 Failure of situational leadership. Statement to
the German newspaper.
328
Presentation
Federal Express
329
Philosophy
The philosophy of Fed Ex is to “move,
communicate, and shoot.”
• Start the package toward its destination
(Move).
• Make its position known to the receiver
(Communicate).
• Deliver it (Shoot).
330
Fed Ex Statistics
Information flows of FedEx:
 Packages a day
9 million
 Hubs
42
 Countries
220
 Airplanes
687
 Vehicles
90,000
 Employees
290,000
331
Question
In recent years FedEx spent over $1 billion
on information technology.
• Customers can track any individual
FedEx shipment using the Internet.
• What happens if the customer does not
know the tracking number?
332
Answer
A tracking number is not needed. A FedEx
product called Insight allows a customer to
see every inbound package.
333
Question
Why does a customer even need to track a
package?
334
Answer
Many examples including:
• A laboratory wants to know what it bonemarrow shipments will be received today
to prepare for testing the samples.
• A sample has a useful life span of 24
hours.
• By tracking every inbound shipment early
in the day, the company can be sure to
have enough people available to test all
335
samples.
Question
The world view of Fed Ex is expansive.
• Rob Carter was the chief information
officer of FedEx.
• He was asked the question “What
business are you in?
• How do you think he answered?
336
Answer
FedEx engineers time. As the world
shrinks and changes, FedEx offers
solutions to allow customers to make
things happen on time schedules that
otherwise would be impossible.
337
Side Story
Fred Smith was the founder of Fed Ex.
• He is a graduate of Yale University.
• At Yale he wrote a paper outlining
overnight delivery service.
• He received the grade of “C.”.
• The professor did not believe the idea was
feasible to compete with the U.S. Post
Office.
338
Question
Do you think the professor ever changed the
grade?
339
Presentation
Firestone and Ford
340
Question
In 2000, blowouts of Firestone tires caused
a series of accidents on Ford vehicles.
• Ford and Firestone fought bitterly in the
press.
• Each denied fault and blamed the other.
• The failure to respond quickly created
bad images of both companies.
Was the situation with Ford and Firestone a
decision-making issue?
341
Answer
Yes on three counts.
• Strategic Decisions. Neither company
had a structure to respond to a crisis.
• Situational Decisions. There was no
way to win a slugfest in the media.
• Risk Management Decisions. Time was
wasted with strategy sessions at high
levels to formulate a course of action for
the crisis.
342
Presentation
Chapter 8.
Violence in International Business
343
Actual Conflicts
Business leaders in developed countries are
often surprised when they discover that
many areas of the world are physically not
safe: Examples are:
 Wars. Serious between armies.
 Politicide. Harmful actions to individuals or
groups of people, often from their own
governments.
 Communal or Tribal Clashes. Sustained
horror stories of small groups.
344
Question
How many extrastate, intrastate, or internal
wars were underway in 2010? (do not count
politicide or communal conflicts)
345
Answer (1)
Thirty four “wars” in the world.
Algeria. Insurgency. 1992
Angola. Cabinda. 1975-2006
Burma. Insurgency. 1950
China. Senkaku Islands . 1968
China. Spratly Islands . 1988
China. Uighur . 1996
Colombia. Insurgencies. 1970s
Congo (Zaire) . Congo War. 1998
Georgia . Civil War. 1991
India. Assam. 1985
India. Kashmir. 1970s
India. Naxalite Uprising. 1967
Ivory Coast. Civil War. 2002
Korea. Korean War. 1953
Kyrgyzstan. Civil Unrest. 2010
Laos. Hmong Insurgency. 2000
Mexico. Drug War. 2006
Namibia. Caprivi Strip. 1966
Nepal. Maoists. 1996-2006
Nigeria. Civil Disturbances. 1997
Pakistan. Baluchistan. 2004
Pakistan. Pashtun Jihad. 2001
Palestine. Civil War. 2007
Peru. Shining Path. 1970s
346
Answer (2)
Philippines. Moro Uprising. 1970s
Russia. North Caucasus Insurgency. 1992
Somalia. Civil War. 1991
Spain. Basque Uprising. 1970s
Thailand. Islamic Rebels. 2001
Turkey. Kurdistan. 1984
United States. Afghanistan. 1980
United States. Djibouti. 2001
United States. Iraq. 1990
United States. Philippines. 1898
Uzbekistan. Civil Disturbances. 2005
Yemen. Sheik al-Houti. 2004
http://www.globalsecurity.org/military/world/war/index.html. .
347
Question
Estimate the following numbers:
 Major wars since World War II
_____
 People killed in those wars
 Civilian percent of casualties
 Women & children percent:
 Child soldiers in the world today
_____
___%
___%
_____
348
Answer
Numbers are:





Major wars since World War II
People killed in those wars
Civilian percent of casualties
Women & children percent:
Child soldiers in the world today
250
23 million
90%
75%
300000
www.worldrevolution.org
349
2010 “Wars”
Start
Name
Estimated
Deaths
1967 Indian Naxalite-Maoist Insurgency
6,000
1978 Afghanistan Civil War
1,000,000+
1991 Somali Civil War
400,000
2003 Iraq War
1,000,000
350
Question (1)
Ajmal Kasab grew up in a small town in
Pakistan with factories, farmland, and a
major paved road.
• He was neither poor nor highly religious.
• He moved to Rawalpindi seeking
employment after attending government
schools.
351
Question (2)
In the early 1990s. Afghanistan had
defeated the Soviets and radical Islamic
clerics were calling for Jihad (holy war).
• Ajmal Kasab could not find employment.
• He decided to rob houses.
• He went to a bazaar to buy a gun and
met someone who told him about a secret
training camp.
• Seeking excitement, he signed up for
352
training.
Question (3)
By joining a militant group and undergoing
terrorist training, a young man develops
skills and a sense of purpose.
• He becomes physically stronger and
knows how to use weapons and
explosives.
• He achieves a new status among his
friends and neighbors.How does the story
end?
353
Answer
The story ends in 2008 when Ajmal Kasab
became a murderer in the horrific attack on
10 sites in Mumbai.
• He was the sole surviving member of
terrorist group that killed 173 individuals.
354
Robbery and Piracy
Maritime piracy is the act of seizing vessels
at sea. Key Terms:
 Robbery. The crime of seizing property
through violence or intimidation.
 Piracy. Robbery committed at sea.
 Intent, Old Definition. Permanently deprive
the owner of the ship and contents.
 Intent, New Definition. Return the property
after paying a ransom.
355
Modern Piracy
Seaborne piracy against transport vessels:
 Annual Losses: $15 billion.
 Attack Areas. Indonesian waters, the Strait
of Malacca, and off Somali coast, and many
others.
 Robbery. Small motorboats with 4 to 10
armed attackers seek personal belongings of
the crew and contents of the ship's safe,
 Ransom. Larger boats capture vessels for
ransom.
356
Somalia Piracy 2010 Statistics
 440 attacks
 601 hostages on 25 ships (Jan 2010)
 7 mother ships.
357
Range of Somali Piracy
358
Question
Is there any legal or regulatory authority that
can address modern piracy?
359
Answer
The International Maritime Organization,
created by the U.N. and based in London,
nominally oversees maritime law.
• It has no enforcement power.
• Someone has enforcement power.
360
Question
The UN Convention of the Law of the Sea
states incidents of piracy in the territorial
sea are crimes against the state and subject
to its national laws. Under what conditions
does the Convention permit hot pursuit of a
pirate vessel?
361
Answer
The Convention states:
 Hot pursuit is permitted when the foreign ship
is within the internal waters or contiguous
zone of the pursuing State.
 Pursuit may continue if it has not been
interrupted.
 Once broken off, it cannot be resumed.
 It ceases when the pursued ship enters the
territorial sea of another State.
362
Question
Do we have any recent historical examples
of successfully capturing and prosecuting
piracy?
363
Answer
Prior to 2004, pirates plagued the Straits of
Malacca.
 Malaysia, Singapore, and Indonesia warships
patrolled the straits together and actively
prosecuted captured pirates.
 Attacks plummeted.
364
Question
Why is it difficult to gain a guilty conviction
for piracy?
365
Answer
Coordination of the prosecution effort is
complex:




Ship Owner. Great Britain.
Witnesses. Taiwanese crew.
Accused Pirates. Various nationalities.
Jurisdiction. Singapore? India? Kenya?
366
Question
In 2008, U.S. Navy ships patrolled waters
off Somalia while the U.N. considered a
resolution authorizing nations to chase
Somali pirates from international waters
onto land so they could be captured and
prosecuted. Would such a plan reduce
piracy?
367
Answer
Not likely.
 Somalia has not been able to form a central
government that controls Mogadishu, much
less the rest of the country.
 The country has more than 15 militias
commanded by “warlords” who have military
control over regions with armed forces loyal
to the warlord and not to the central
government.
 Some warlords are engaged in piracy.
368
Question
In 2008, the Royal Danish Navy intercepted
two Somali fishing boats in the Gulf of Aden
and arrested 10 suspected pirates. The men
had assault weapons and handwritten
notebooks outlining how to split spoils from
piracy with Somali warlords. What action did
the Danish government take with the
suspected pirates?
369
Answer
They held them for six days aboard a
Danish warship. Then, they released them
from custody.
370
Question
What does the British Royal Navy do with
suspected pirates it captures off the east
coast of Africa?
371
Answer
The British Royal Navy turns over
suspected pirates to Kenya, a country
willing to prosecute them.
 This recognizes no international jurisdiction
for prosecuting piracy.
 If pirates are caught storming or holding a
ship, guilt can be proved.
 If captured with automatic weapons, piracy
plans, and stolen property, it is difficult to
determined the jurisdiction and prove a crime
in most courts.
372
Question
Kidnapping in Lima, Peru, became big
business not too many years ago. What do
the kidnappers do with their victims after
carrying out the abduction?
373
Answer
Kidnappers did one of two things:
 Some held the victim until a ransom was paid.
 Others took the victim to an ATM and forced
him to withdraw money. At the same time,
other members of the kidnapping party used
credit and debit cards to make purchases.
When done, the kidnappers usually released
the victim.
374
Question
John Sidel identifies “three enduring
aspects of Philippine democracy.” What do
you think they are:
375
Answer
According to Sidel, the three enduring
aspects of Philippine democracy are:
 Elected Politicians. They are quite
entrenched.
 Economic Domination. The politicians are
quite rich.
 Corruption. Politicians engage in fraud,
buying of votes, and violence against
opponents and their supporters.
376
Question
The Philippines has powerful bosses. Is the
situation the same in Thailand?
377
Answer
Not at all. Thailand has warlords. While they
act as “bosses” with many of the same
goals as are found in the Philippines, the
situation is quite a bit less violent.
378
Question
William Nessen, a free lance reporter,
travelled for 6 weeks with guerrillas fighting
the Indonesian army.
• It was a resistance movement that killed
15,000 people over a 30-year period.
• After returning home, he read about the
end of the guerrilla movement in 2005
when a tsunami devastated Aceh, killing
170,000 people.
379
• What happened afterwards?
Answer
By 2009, a Dutchman set up Aceh Explorer.
•20 former guerillas gave trekking tours to
foreigners.
•They walked the secret trails of the
guerillas.
 One guerilla said, "We remember the old
days… It was tough in the mountains. I prefer
my job now.
 Each guide received $20 a day plus free
shoes, a backpack, and a uniform.
380
Question
In June 2009 a Roman Catholic priest and
two seminary students were murdered in
Mexico.
•No local resident would identify the bodies.
•An archbishop told friends the most wanted
criminal boss lived nearby.
•He said "everybody knows it except the
authorities.”
•What happened when the comment was
381
made public?
Answer
When the comment was made public, the
archbishop denied the statement.
382