From The Economist
It is
hard to overstate the importance of Toyota in Japan’s business psyche. The company has long been regarded as the pinnacle of Japanese innovation, manufacturing quality and industrial strength—particularly since it overtook General Motors in 2008 to become the world’s biggest carmaker. Its “lean” manufacturing techniques and culture of continuous improvement were the envy of the business world. Companies sent delegations to tour Toyota’s factories in the hope that some of its magic would rub off on them. Within Japan the firm was considered the nation’s industrial champion, as the sun seemed to set on other giants such as Sony and Hitachi.
But within a few weeks all this has changed. Problems with “unintended acceleration” of its cars, which the firm has only belatedly taken seriously, have triggered an escalating crisis and the recall of a whopping 8m vehicles. Toyota’s woes were compounded on February 9th when it said it would also recall 440,000 hybrid vehicles, including the celebrated Prius, to fix a problem with their brakes. The firm’s reputation for quality, on which the business was built, is shattered. Its market capitalisation has dropped by an amount roughly equal to the entire value of Ford. But the greatest damage has been done by its misreading and mishandling of the crisis.
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From The Economist
• London Business School has topped the first of the year’s important global MBA rankings. It has taken the top spot outright in the Financial Times list of the top 100 full-time programmes, after sharing the honour with Pennsylvania’s Wharton School last year.
• Two business-school heads are on the move. Arnoud De Meyer, the director of the Judge Business School at the University of Cambridge, is stepping down to become president of the Singapore Management University. Professor De Meyer had previously helped INSEAD set up its Singapore campus. Meanwhile, Ted Snyder, who confirmed he was leaving Chicago’s Booth School in December, is to take up the reins at Yale School of Management.
• No surprise that 2009 wasn’t a good one for the MBA job market. The MBA Career Services Council has just released the results of its autumn survey, which show that 79% of business schools saw a decline in on-campus recruitment last year. Traditional sectors such as financial services and consulting were hit particularly hard. But the CSC did note signs of recovery, with some areas—including energy, government and healthcare—seeing increased activity.
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From The Economist
Henry Hazlitt, one of the great popularisers of free-market thinking, once said that good ideas have to be relearned in every generation. This is certainly true of good ideas about business. A generation ago Margaret Thatcher and Ronald Reagan did an excellent job of making the case in favour of business. Today it looks as though the case needs to be made all over again.
It is hardly surprising that business has fallen from grace in recent years. The credit crunch almost plunged the world into depression. The new century began with the implosion of Enron and other prominent firms. Some bosses pay themselves like princes while preaching austerity to their workers. Business titans who once graced the covers of magazines have been hauled before congressional committees or carted off to prison.
Business people have been at pains to point out that it is unfair to judge all of their kind by the misdeeds of a few. The credit crunch was the handiwork of bankers (who lent too much money) and policymakers (who fooled themselves into thinking that they had abolished boom and bust). Corporate criminals like WorldCom’s Bernie Ebbers and Tyco’s Denis Kozlowski were imprisoned for their crimes. Avaricious bosses like Angelo Mozilo, who pocketed more than $550m during his inglorious reign at Countrywide, are exceptions. The average American boss is actually paid less today than he was in 2000.
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From, Matt Pressman Vanity Fair.
AOL went from pioneering powerhouse to laughed-at laggard when changing technologies made their business model of charging people for e-mail accounts and Internet access obsolete. So now
they are remaking the company with an entirely different strategy: selling ads against original content produced by an army of well-paid professional journalists. Unfortunately, that’s the same business model that has driven America’s newspapers to the brink of ruin.
When most people think of AOL, they think of it as the e-mail provider for people who aren’t with it enough to switch to a free service such as Gmail. But while the bulk of AOL’s revenue still comes from its old-school subscribers, the company’s future is in the content business (with a sideline in social networking). In advance of its long-awaited split from Time Warner, which will occur next month, AOL has been on a hiring-and-acquisition spree. It now owns upward of 75 niche blogs and news sites, including DailyFinance.com, Engadget.com, and Fanhouse.com, staffed in large part by reporters who used to work in print. C.E.O. Tim Armstrong said at a conference last month that AOL employs more than 3,000 journalists.
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