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1. McGraw-Hill/Irwin Understanding Business, 8e © 2009 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh * * MONTHLY NEWSLETTER QUICK LINKS VIDEO INDEX ABSTRACT INDEX * May 2009 * * 1-1

2. VIDEO INDEX • Good Banks, Bad Banks • Where Does the Bailout Money Come From?

3. ABSTRACT INDEX • America’s Patent Problem • Revamping Executive Pay • Office Alumni • Tough Times in Tinseltown • The Dangers of Flextime • Products for the Poor • Europe’s Dash for Stimulus Cash • Companies Settle (Some) of Their Debts • Marketing the Recession • A Canvas on a Kleenex Box

4. America’s Patent Problems • For the first time, the US Patent and Trademark office issued more patents to foreigners than to Americans. • Countries like Japan, Germany and South Korea have made innovation a top priority. • Cost-conscious companies may be to blame as well, but even when the economy upturns the U.S. will not likely make up its lost ground. Article indexVideo index

5. What do you think? • Should the U.S. government offer incentives (tax credits or grant assistance) to American businesses to encourage them to get back in the patent race? • What has caused American companies to lessen their commitment to innovation? Article indexVideo index

6. Revamping Executive Pay • Americans are enraged at the bloated pay packages given to executives of failed or failing companies. • World Fuel Services ties executive compensation directly to performance through restricted stock. • Profit gains and non-financial indicators like customer satisfaction are other ways to reward execs responsibly. Article indexVideo index

7. What do you think? • Should the federal government set regulations concerning executive pay? • Since boards of directors set executive compensation, should board membership include worker representatives and small stockholders? Article indexVideo index

8. Office Alumni • More and more companies are setting up private social networking sites for ex-employees. • These sites help attract “boomerang” employees (staff members who left the company, but are rehired later). • They also allow companies to track popular topics being discussed by employees. Article indexVideo index

9. What do you think? • Will the presence of such alumni sites help the image of participating companies? • How do the alumni sites serve as a research base for participating companies? Article indexVideo index

10. Tough Times in Tinseltown • Hollywood production budgets are being slashed due to the credit crisis. • Banks and hedge funds have become picky about which movies they invest in. • As a result, guaranteed blockbusters like Harry Potter and Spider-Man and low-budget independent films will get produced, while movies costing between $50-$100 million will become scarcer. Article indexVideo index

11. What do you think? • Why does the movie industry appear to be so recession-sensitive? • Why is production on shoestring independent films expected to increase in coming years? Article indexVideo index

12. The Dangers of Flextime • In an economic downturn, some managers eliminate flextime workers and telecommuters first, thinking their work ethic indicates a lack of motivation. • Most managers see a tremendous benefit in part-time staff, especially when they are more productive than full time staff. • Some companies are altering their entire work plans to implement more flextime schedules and four day workweeks. Article indexVideo index

13. What do you think? • Will the number of flextime workers rebound when the economy recovers? • Does it make sense to translate a lack of face time and unorthodox work hours with a lack of commitment? Article indexVideo index

14. Products for the Poor • Stanford business professor Jim Patell teaches a class on creating inexpensive but profitable products for developing countries. • Two of his students started D.light, a company that makes solar-powered lights to replace dangerous kerosene lamps. • After receiving $6 million from private investors, D.light and other alums of Patell’s class are starting to get attention from Silicon Valley. Article indexVideo index

15. What do you think? • Why is Patell’s class catching the eye of Silicon Valley investors? • Outside of humanitarian reasons, how does helping the developing world ultimately benefit developed nations? Article indexVideo index

16. Europe’s Dash for Stimulus Cash • $80 billion of President Obama’s stimulus plan is allotted for renewable energy. • The opportunity for outside investment has caught the attention of many European energy companies. • Europe’s clean energy companies plan to invest over $11 billion into the U.S. over the next few years, creating thousands of jobs and abundant supplies of renewable energy. Article indexVideo index

17. What do you think? • How is this actually a “win-win” situation for both American taxpayers and European energy leaders? • Why do you think U.S. companies lagged behind European companies in renewable energy production? Article indexVideo index

18. Companies Settle (Some) of Their Debt • Many large companies are erasing their debt with multi-billion dollar buyouts with their lenders. • Though the bondholders end up taking a huge cut on their principal, they’d prefer to get a portion of their money back now rather than lose it if their borrowers go bankrupt. • In 2008, American companies exchanged $36 billion worth of debt for lesser amounts; 2009’s number could be larger. Article indexVideo index

19. What do you think? • Why would creditors be willing to accept less than what is owed them by companies such as Harrah’s and Ford? • Do you think companies like Harrah’s and Ford will be able to secure future debt funding if they survive the current economic downturn? Article indexVideo index

20. Marketing the Recession • As the unemployment rate worsens, some companies are trying “altruistic marketing.” • Hyundai has offered to allow any recent customer to return their car if they end up losing their job. • FedEx lost $200,000 when 24,000 people showed up on March 10 following an offer to print their resumes for free. Article indexVideo index

21. What do you think? • What risks do companies take making such altruistic marketing offers? • What advantages do companies receive from so called altruistic marketing efforts? Article indexVideo index

22. A Canvas on a Kleenex Box • After Kleenex lost business to cheaper brands, it is trying to attract customers back by focusing on upscale box designs. • New box designs are planned two years in advance and are meticulously produced and reviewed. • All boxes must be targeted towards women, fit home décor trends, and look “trustworthy.” Article indexVideo index

23. What do you think? • Why is one of Kleenex’s ground rules that every box design must appeal to women? • Can you think of other products where the package is as important as the product inside? Article indexVideo index