Professor Len Schlesinger discusses the success, impact, and future of the program. Open for comment; 0 Comment s posted.
The Great Recession Definition
Read the Transcript. Open for comment; Comment s posted. James Heskett's readers debate how this can be done. Kasturi "Kash" Rangan. As a marketing scholar Rangan is optimistic about strategic CSR efforts that provide value in communities and society. CSR should be treated as a business discipline and practiced with the same professionalism and rigor as other aspects of a firm's strategy.
Good examples are the early childhood literacy initiative of PNC, a financial services organization based in Pittsburgh, and the 10, Women initiative of Goldman Sachs, which facilitates a business education for underserved women. Companies should classify their CSR programs according to the ability to enhance and even transform the firm's business practices.
Closed for comment; 0 Comment s posted. An economic crisis is a charter for business leaders to rewrite and rethink how they do business, says Harvard Business School professor Lynda M. The key: Don't think retrenchment; think growth. Key concepts include: Companies that survive the financial crisis by identifying and exploiting innovation will serve as economic growth engines in the future—and will be the industry leaders of tomorrow.
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- The Effects of an Economic Recession.
This is a time of unprecedented opportunity to rethink offerings, markets, business processes, and organizational structure—and to improve them to achieve growth. Success will depend on leaders who are able to stabilize the company as they identify and exploit opportunities, find new market niches, create innovative new offerings, and restructure and reposition. This downturn has likely changed people's buying habits in fundamental ways. Professor John Quelch discusses why marketers must start planning today to reach consumers after the recession.
Key concepts include: Marketers must think through how the recession has changed consumer preferences and what they think of your brand. At its core, finance does just two simple things. It can also act as a safety net, insuring against floods, fires or illness. In addition, as investors seek out people and companies with the best ideas, finance acts as an engine of growth. Yet finance can also terrorise. When bubbles burst and markets crash, plans paved years into the future can be destroyed.
As the impact of the crisis of subsides, leaving its legacy of unemployment and debt, it is worth asking if the right things are being done to support what is good about finance, and to remove what is poisonous. History is a good place to look for answers. Often what starts out as a post-crisis sticking plaster becomes a permanent feature of the system. If history is any guide, decisions taken now will reverberate for decades.
This makes the second trend more troubling. The response to a crisis follows a familiar pattern.
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It starts with blame. New parts of the financial system are vilified: a new type of bank, investor or asset is identified as the culprit and is then banned or regulated out of existence. It ends by entrenching public backing for private markets: other parts of finance deemed essential are given more state support. It is an approach that seems sensible and reassuring.
But it is corrosive. Yet well-intentioned reforms have made this problem worse. The fact that professional investors can lean on the state would have made him angry. But they also highlight the way in which successive reforms have tended to insulate investors from risk, and thus offer lessons to regulators in the current post-crisis era.
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- The Problem Of A Economic Crisis!
If one man deserves credit for both the brilliance and the horrors of modern finance it is Alexander Hamilton, the first Treasury secretary of the United States. In financial terms the young country was a blank canvas: in , just 14 years after the Declaration of Independence, it had five banks and few insurers.
Hamilton wanted a state-of-the-art financial set-up, like that of Britain or Holland. This new bank was an exciting investment opportunity. The initial auction, in July , went well and was oversubscribed within an hour. This was great news for Hamilton, because the two pillars of his system—the bank and the debt—had been designed to support each other. The plan therefore stoked demand for government debt, while also furnishing the bank with a healthy wedge of safe assets. The bank opened that December.
The first was an old friend gone bad, William Duer. The scheming old Etonian was the first Englishman to be blamed for an American financial crisis, but would not be the last. Duer and his accomplices knew that investors needed federal bonds to pay for their BUS shares, so they tried to corner the market. To fund this scheme Duer borrowed from wealthy friends and, by issuing personal IOUs, from the public. He also embezzled from companies he ran.
The other problem was the bank itself. Awash with credit, the residents of Philadelphia and New York were gripped by speculative fever. Markets for short sales and futures contracts sprang up. As many as 20 carriages a week raced between the two cities to exploit opportunities for arbitrage. The jitters began in March The BUS began to run low on the hard currency that backed its paper notes.
As credit tightened, Duer and his cabal, who often took on new debts in order to repay old ones, started to feel the pinch. By March 23rd Duer was in prison. But that did not stop the contagion, and firms started to fail. As the pain spread, so did the anger. A mob of angry investors pounded the New York jail where Duer was being held with stones. Hamilton knew what was at stake. And he knew Thomas Jefferson was waiting in the wings to dismantle all he had built.
Indicator 2: The Yield Curve
Hamilton attacked on many fronts: he used public money to buy federal bonds and pep up their prices, helping protect the bank and speculators who had bought at inflated prices. He funnelled cash to troubled lenders. Even as the medicine was taking effect, arguments about how to prevent future slumps had started. Everyone agreed that finance had become too frothy. Seeking to protect naive amateurs from risky investments, lawmakers sought outright bans, with rules passed in New York in April outlawing public futures trading.
In response to this aggressive regulation a group of 24 traders met on Wall Street—under a Buttonwood tree, the story goes—to set up their own private trading club. That group was the precursor of the New York Stock Exchange. With confidence restored, finance flowered.
Companies Need to Prepare for the Next Economic Downturn
Within half a century New York was a financial superpower: the number of banks and markets shot up, as did GDP. But the rescue had done something else too. By bailing out the banking system, Hamilton had set a precedent. Subsequent crises caused the financial system to become steadily more reliant on state support.
Crises always start with a new hope. In the s the excitement was over the newly independent Latin American countries that had broken free from Spain. Investors were especially keen in Britain, which was booming at the time, with exports a particular strength.
Wales was a source of raw materials, cutting 3m tonnes of coal a year, and sending pig iron across the globe. As a result, cash-rich Britons wanted somewhere to invest their funds. Government bonds were in plentiful supply given the recent Napoleonic wars, but with hostilities over and risks lower the exchequer was able to reduce its rates. They were safe but boring. Luckily investors had a host of exotic new options. The rise of the new global bond market was incredibly rapid.
In there was just one foreign bond on the London market; by there were Debt issued by Russia, Prussia and Denmark paid well and was snapped up. But the really exciting investments were those in the new world. The crumbling Spanish empire had left former colonies free to set up as independent nations. And there were other ways to cash in: the shares of British mining firms planning to explore the new world were popular. The big problem with all this was simple: distance.
To get to South America and back in six months was good going, so deals were struck on the basis of information that was scratchy at best. This shocking fraud was symptomatic of a deeper rot. Investors were not carrying out proper checks. Much of the information about new countries came from journalists paid to promote them. More discerning savers would have asked tougher questions: Mexico and Colombia were indeed real countries, but had only rudimentary tax systems, so they stood little chance of raising the money to make the interest payments on their new debt.