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Dear President-elect Obama: Here's How to Get the Economy out of the Ditch
President-elect Barack Obama must lead a nation mired in a worsening recession and burdened by the costs, both financial and human, of two wars and rising debt. Wharton faculty offer some counterintuitive advice: Now may be the time for the government to spend a lot of money.
Luxury Brands: Marketing the Upscale During a Downturn
Chasing aspirational 16-year-olds and new money in emerging markets is "out," while pampering the wealthiest and most loyal customers is "in," according to luxury retailers at the recent Wharton Marketing Conference. Said one panelist: "The core for a luxury brand is a customer with very considerable wealth."
Why an Economic Crisis Could Be the Right Time for Companies to Engage in 'Disruptive Innovation'
While globalization has witnessed the decline of U.S. dominance in manufacturing, energy and even finance, one thing had long been presumed unassailable: a willingness to engage in transformative, or "disruptive," innovation. But with the economy in a tailspin, will business, government and academia shy away from the risk-taking and short-term costs that come with the territory of innovating? Wharton faculty and practitioners offer their views on why companies these days should be more interested than ever in trying out radical new ideas.
Job Survival Advice: Don't Fear the Whitewater
Change is the new status-quo, and success at work will require agility, talent and the ability to learn from -- rather than fear -- failure, according to Gregory Shea, adjunct professor of management at Wharton, and business writer Robert Gunther. The two recently co-authored a book titled, Your Job Survival Guide, a Manual for Thriving in Change.
Women Executives on Work/Life Balance: Flexibility, Networks, Outside Interests
A panel of successful women acknowledged that striking a perfect balance between work and personal life is rarely possible for a first-year associate on Wall Street, but they also agreed that balance is achievable over time if the right priorities are established. Executives from Wachovia Securities, JP Morgan, Goldenridge Capital, Morgan Stanley and UBS offered anecdotes and advice at a recent Wharton Women in Business Conference.
The G-20 Economic Summit: More Symbolic than Substantive?
It seems sensible: Bring leaders of the 20 largest economies together to discuss a coordinated plan for dealing with the world financial crisis. But the upcoming G-20 Economic Summit in Washington, D.C., has some commentators wondering what can be accomplished with so little preparation time, while others express concern about the formation of any new regulations when the causes of the crisis are still not thoroughly understood. Wharton faculty and other experts discuss some potential outcomes of the November 15 gathering.
Hedging Their Bets: How Hedge Funds Can Curb Critics and Avoid Regulation
Hedge fund managers oversee $1.9 trillion in assets, but no one knows what they invest in or even what those assets are actually worth. That's because hedge funds are not regulated and consequently aren't required to make the same detailed financial disclosures that are required of publicly traded companies. The combination of potentially huge financial rewards and lack of transparency may foster ethical lapses, Wharton professor Thomas Donaldson noted during a recent talk on hedge fund ethics. His solution? An approach he calls a "microsocial contract."
For Airlines and Others, Even the Best Fuel-price Bets Can Lead to Turbulence
No one can accurately forecast what the price of oil will be in three days, much less three months, a fact that has played havoc this year with the finances of airlines and other industries that need a steady supply of fuel. For such firms, locking in prices when they seem to be at their lowest represents a high-stakes gamble.
On the Skids: Are U.S. Automakers Running Out of Time -- and Options?
The global financial crisis is hurting sales for automakers worldwide, but the U.S. Big Three are falling into a deeper hole than most. With sales down as much as 25% this year, GM and Chrysler are discussing a merger even as they are reported to be running out of cash and in line for early access to a $25 billion low-interest government loan. Kirk Kerkorian, meanwhile, is selling his $1 billion stake in Ford. Wharton professors John Paul MacDuffie and Larry Hrebiniak talked with Knowledge@Wharton about the industry's challenges.
On Energy Issues, Candidates' Funding Priorities Are Fueling the Debate
U.S. presidential candidates John McCain and Barak Obama offer only subtle differences in their approaches to the nation's energy challenges. Obama emphasizes renewable energy to reduce dependence on foreign oil, while McCain puts more faith in drilling. Obama is less enamored of nuclear power than McCain. Obama supports subsidies for ethanol production while McCain would cancel them and open the market to foreign competitors. But no matter who wins, energy prices are likely to climb.
Pajamas and Popcorn: Retailers Face a Less-than-Festive Holiday Shopping Season
As Wall Street unravels and the economy confronts its crucial holiday spending season, consumers cannot be expected to prop up retailers as they have in past downturns. Even luxury stores, whose customers have been immune in recent years to retail price sticker shock, are expected to take a hit this time, according to Wharton faculty and consumer analysts. As one commentator notes: "It will be a lean Christmas."
Opportunities -- and Obstacles -- for the B2B Market in Tough Economic Times
While discussion at the recent Erin Anderson B2B Research Conference at Wharton focused on cutting-edge research in the field of business-to-business relationships, participants also acknowledged the impact on marketers of the ongoing financial meltdown. Along those lines, three university professors and a moderator took part in a panel that analyzed the effect of the economic downturn on the B2B global marketplace. The Conference, sponsored by the Wharton INSEAD Alliance, was held in honor of Erin Anderson, a marketing professor at Wharton from 1981 to 1994, and at INSEAD from 1994 until her death in 2007.
Show Me the Money: Aura of Top M&A Banks Often Obscures Low Returns for Clients
In merger-and-acquisition advice, an investment bank's market share does not seem to equate with value delivered to clients, two scholars from Wharton and the Massachusetts Institute of Technology conclude in a research paper. Indeed, the opposite may be true: The more market share an investment bank has, the less value it will deliver to clients.
Think the Credit Crisis Is Bad? Coalition Sees Bigger Problems Down the Road
A "Fiscal Wake Up Tour" is warning voters that today's financial crisis is a mere ripple compared to the tsunami that will wash over the U.S. Treasury as millions of Baby Boomers demand what they have been promised by Social Security and Medicare. The tour, sponsored in part by Wharton's Business and Public Policy Department, was organized by a bipartisan coalition concerned about the unchecked growth of entitlement programs and ever-deepening federal debt.
A Billion Here, A Trillion There: Calculating the Cost of Wall Street's Rescue
How will the U.S. pay for its plans to prop up the financial sector? Answer: by borrowing -- raising worries about how the country's ballooning annual budget deficits and aggregating debt will affect the economy and financial markets. Some guidelines, such as interest rates and the ratio of debt and deficits to gross domestic product, suggest the new debt will be digested easily. But some experts think those guidelines are misleading, warning that obligations are piling up like tinder on a forest floor.
Feeling the Pain: How the Financial Crisis Is Affecting Brazil, Russia, India and China
As the financial crisis continues to roil credit and stock markets around the globe, it seems that no country or continent is being spared the consequences. Brazil, Russia, India and China -- the BRIC countries -- are no exception. In this Knowledge@Wharton podcast, Shiv Khemka, vice chairman of SUN Group, based in London, New Delhi and Moscow; Silas K.F. Chou, president and CEO of Novel Holdings, based in Hong Kong; and Odemiro Fonseca, founder of Viena Rio Restaurantes in Rio de Janeiro, discuss their countries' response to the crisis, its impact on specific sectors, the decoupling hypothesis and the dangers of protectionism, among other topics.
Richard Marston and Jeremy Siegel: Will the Bank Plan Revive Global Markets?
With stock markets in free fall, U.S. Treasury Secretary Henry Paulson announced on Tuesday that the government's effort to unlock credit markets would include direct investments of $250 billion in bank equities. He also warned bankers not to hoard the money, but to use it to make the loans that lubricate the nation's economy. In separate interviews, Wharton finance professors Richard Marston and Jeremy Siegel tell Knowledge@Wharton that while the investment is not without risk, it appears to be the best hope for restoring confidence in credit and stock markets -- and reducing the severity of a recession that is all but certain to come.
'Financial Shock': Mark Zandi on the Risky Loans Behind the Meltdown
Days before the government stepped in to rescue Fannie Mae and Freddie Mac, Knowledge@Wharton chatted with Mark Zandi, the chief economist and cofounder of what is now Moody's Economy.com, about his new book, Financial Shock: A 360-Degree Look at the Subprime Mortgage Explosion, and How to Avoid the Next Financial Crisis.
It's a Breeze: European Firms Bring Years of Experience to U.S. Wind Power Market
European wind-power firms see an opportunity in the United States' increasing interest in alternative energy. Indeed, the inroads that electricity-generating wind turbine technology has made in the U.S. are due in large part to the efforts of companies based in Europe. Gamesa, Siemens and others ply their expertise in a country where public policy has not consistently encouraged domestic investment.
Public vs. Private Company Managers: Which Are More Likely to Impact the Bottom Line?
Executives who hone their skills at the helm of private companies tend to be more driven, more bottom line-oriented and have much more flexibility than CEOs at publicly owned companies, who are constrained by their need to balance multiple objectives in a corporate ecosystem. That was the consensus of four panelists who discussed the management challenges at private equity-backed firms during the recent Wharton General Management Conference.
