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Copyright: © 2013 The Wharton School of the University of Pennsylvania
The biggest takeover battle in the global steel industry came to an end in late June when Mittal Steel the world’s biggest steelmaker acquired Arcelor the industry’s second-largest company. For five months before shareholders signed off on the $32.2 billion transaction both sides were engaged in an acrimonious fight. At times it seemed as though the deal would collapse but finally after Mittal Steel significantly increased its offer it went through. What was Mittal Steel’s strategy in pursuing this acquisition? When the company encountered resistance how did it frame its negotiation strategy? What will the deal mean for the world steel industry? Aditya Mittal president and chief financial officer of Mittal Steel -- and son of founder Lakshmi Mittal -- spoke recently with Knowledge at Wharton.
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For the 41 million Mexican voters who went to the polls on July 2 the major decision was whether they were going to continue to follow the same free-market model with limited spending and greater foreign investment that the country has had for the past six years or opt for change. Ultimately in one of the most expensive and contentious elections in the history of the country Mexicans chose the continuity represented by Felipe Calderón -- by a mere margin of 236 000 votes. Now that the election is over tensions are running high and the defeated candidate leftist Andrés Manuel López Obrador has rejected the results announcing that he will appeal the election in the courts. Scholars and other analysts believe that Calderón has no other course but to sit down and negotiate with the opposition so that the country can move forward on the most urgent reforms that it needs. In the process Calderón also has to try to convince the half of the population that did not vote for him that he can redistribute wealth more effectively create jobs and foster stable economic development.
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Earlier this week Warren Buffett made a $31 billion gift to the Bill and Melinda Gates Foundation to help find cures for the world’s 20 worst diseases and to improve the educational opportunities for all Americans. Buffett’s contribution -- in the form of 10 million shares of Berkshire Hathaway stock to be transferred in increments over a number of years -- will more than double the size of the existing Foundation which is already the world’s largest. But questions have immediately arisen as to how $60 billion can be effectively managed what impact the donation will have on other donors and whether the Foundation has come up with the best approach to solving systemic health problems in developing countries. Ian C. MacMillan Wharton professor of innovation and entrepreneurship and director of the Sol C. Snider Entrepreneurial Research Center talked with Knowledge at Wharton editorial director Robbie Shell and senior editor Steve Guglielmi about this gift. MacMillan’s areas of interests include societal wealth creation technology strategy and managerial and entrepreneurial approaches to knowledge management.
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At Wharton’s 10th annual leadership conference on June 13 the theme of ”Leading with Resilience: Coming Back from Challenge and Adversity” brought together speakers who had faced hardships in a number of different areas. Perhaps none of the speakers however had experienced as much physical danger as David Breashears filmmaker and mountaineer who recounted how he and his team survived one of the deadliest accidents in the history of Mt. Everest. ”So where does a mountaineer and filmmaker fit into this conference?” Breashears asked. ”Resilience excellence determination conviction resolve” -- words that are often used to describe a successful team anywhere whether on Wall Street or on a cliff. Another speaker at the conference -- organized by Wharton’s Center for Human Resources and The Center for Leadership and Change Management -- was Sylvia M. Montero who recounted her own journey from a farm in Puerto Rico to a position as senior vice present human resources at Pfizer.
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Risk is part of the landscape when investing in start-up firms and venture capitalists need to approach this peril across a range of dimensions including geography industry and the timing of investments in the product development cycle according to speakers at a Wharton conference titled Innovation and Organic Growth: Balancing Risk and Reward hosted by the Mack Center for Technological Innovation. ”We have generated a lot of wealth for people and also created our fair share of losses ” noted one firm’s principal. In a panel discussion called ”Financial Perspectives on Managing Risks ” he and others from the industry described how their firms determine which new technologies -- whether from the energy high-tech or healthcare sectors -- are good investments and what strategies they employ to manage and mitigate risk.
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The greatest future growth in the United States is likely to take place in the West the Sunbelt and along the I-85 corridor between Raleigh N.C. and Atlanta Ga. In a literal sense Americans are following the sun since factors such as the number of ”bright” or ”sun” days in January and the absence of winter heating costs are significant aspects of this anticipated redistribution of population note Wharton real estate professors Peter Linneman and Albert Saiz in their study ”Forecasting 2020 U.S. County and MSA Populations.” The areas that can expect the largest drop in population or a slow-down in their rate of growth are mostly in the Northeast Mid-Atlantic and Midwest. ”Americans are rapidly leaving cold damp and snowy areas for sunnier and drier climates ” the authors write.
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Ray Ozzie is in. Bill Gates is heading out (but not entirely). And Steve Ballmer is staying right where he is (at least for now). What does this game of musical chairs among the members of Microsoft’s high command portend for the world’s biggest software company? Far from being a source of confusion and uncertainty Gates’ recently announced decision that he will relinquish his full-time day-to-day involvement in the company in July 2008 may be just the breath of fresh air needed for a firm facing major challenges to its core business according to Wharton experts. At the same time it’s not yet clear just how successful Gates will be in removing himself from a company that has been his life for three decades.
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Over the past three decades index-style investing has moved from the fringes to the mainstream with an estimated $3 trillion now committed to this simple strategy -- to match broad market returns and give up as little as possible to fees and taxes. Clearly indexing has served investors well and is here to stay. But can it be made even better? Wharton finance professor Jeremy Siegel thinks so. The standard index which gives more weight to stocks of bigger companies should be replaced by ”fundamental indexing” that assigns each stock a role based on factors like corporate sales or dividend payments Siegel says. But many index-investing experts are unconvinced. ”I don’t believe in new paradigms ” says John C. Bogle founder of the Vanguard Group mutual fund company which specializes in traditional index investing. Siegel and Bogle offer their different views on indexing.
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In the spring of 1980 ”Dallas” ended its season with the biggest network television cliffhanger ever. Viewers waited all summer to discover who shot conniving oilman J.R. Ewing; when CBS finally provided the answer that fall a record 76% of American TVs in use were tuned into the show. In that pre-Internet pre-podcast pre-TiVo world networks had only each other to compete with. Today under pressure from on-demand media networks are using new tricks to retain viewers. Their strategy this time around? Turn shows into communities and viewers into cult-like fanatics. ABC’s ”Lost” is probably the most visible example of this recent phenomenon but it’s not the only one. What strategies are networks and advertisers using to gain the attention of that ever-important consumer?
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On June 8 the House of Representatives squashed an amendment that would prevent telecommunications companies from charging Internet content companies more to deliver enhanced services such as high quality audio and video content. The amendment would have required ”network neutrality ” an often-debated term that means different things to different people. To its supporters like Google Yahoo and eBay it means that telecommunications companies should be required to treat all Internet traffic -- whether bandwidth-hogging video or a brief email message -- the same. To companies like Verizon and AT&T imposing network neutrality would mean that they could not charge for enhanced services on networks that cost them billions of dollars to build. Experts from Wharton and elsewhere weigh in on the issue.
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