The Smeal Executive MBA Team Blog

In exchange for further assistance from taxpayer-funded federal loans, the White House is forcing Rick Wagoner to resign from his post as chairman and CEO of General Motors. The Wall Street Journal calls the move “one of the most dramatic government interventions in private industry since the economic crisis began,” and Smeal’s Terrence Guay agrees. But, Guay says, “It is perfectly acceptable.”

More from Guay:

Financiers—be they commercial banks, the IMF, or private equity groups—always attach strings, or more accurately “conditions,” to their loans. It should be no different for the U.S. government. If taxpayer money is being loaned to a private company, the government should have every right to attach conditions to it, including changing GM’s management team. 

Wagoner’s almost nine-year tenure as CEO has done little to improve the fortunes of the company, and has arguably made them worse. Unfortunately, this transition comes too late in the game to have much of an effect in creating a successful restructuring plan for the company. 

The Obama administration has learned a lesson from the government initiatives over the past year to support the ailing financial sector. Public opinion simply will not support bailouts without conditions.  In effect, while banks received incentives or “carrots” to change their ways, the government is trying the “stick” approach with the auto industry. What the government may find out is that, regardless of the tactic, it is very difficult to discipline companies as the U.S. political economy is currently structured. 

When President Obama signed the omnibus spending bill last week, he also killed an 18-month-old pilot program that allowed Mexican trucks to drive on U.S. highways. In retaliation, the Mexican government announced yesterday that it is levying higher tariffs on $2.4 billion worth of U.S. goods, including beer, shampoo, and toilet paper.

Columnist Mary Anastasia O’Grady outlines the history of the Mexican truck debate in Monday’s Wall Street Journal and argues that allowing Mexican trucks on U.S. highways improves trade relations, supply chain efficiency, and border security.

Smeal’s Fariborz Ghadar agrees that the trucks should be permitted on U.S. roadways:

If we are going to take NAFTA seriously, Mexican trucks should be allowed to cross the border and continue unimpeded to their U.S. destinations. First, Washington says that they’re not allowed because they are too dirty. Then, once they were cleaned up, the argument became that they’re unsafe. We put up hoop after hoop, and they’ve jumped through all of them.

We finally installed this pilot program, which allowed the trucks on U.S. roads for a year and a half with no safety problems whatsoever, until another election put politics ahead of good policy. The fact that this fight has been going on for so long has everything to do with labor politics and nothing to do with the safety of Mexican trucks. No matter what NAFTA says, if the government continues to put up one obstacle after another in the way of cross-border commerce, they eventually end up blocking free trade.

Participation in The Smeal Executive MBA program has the potential for enormous payoff for the sponsoring company. Practical insights from company-focused projects, teaming with a top research university to address critical business challenges, and aiding succession planning are a few top-of-mind benefits. Here are more…

Project courses address your company’s strategic challenges

• Strategic assessment of the firm: a year-long project in first year critically assesses the sponsoring firm’s strategies, with critiques from faculty and fellow students.
• Team consulting projects in second year address key strategic issues in sponsoring firms and find solutions to problems.
• Classes are structured to give students the opportunity to address problems and challenges your firm faces daily.

Win the talent war

• Retain talent: education and training through an Executive MBA program is one sure way to show your best and brightest that you believe in their abilities to succeed.
• Succession planning: identify and train future leaders of the firm from within and save time and money spent on recruiting, hiring, and training.
• Employees continue working while obtaining their MBA. Skills learned will be immediately applicable on the job, so you get a better employee in real-time.
• Special seminars for sponsoring firms and supervisors will provide information on how to use a better-trained employee to create value quickly.

Curriculum and program focus create a more confident, motivated leader

• Broad based, general managerial competencies addressed.
• Working effectively in teams is a key feature of the entire program.
• Program customized to interests and backgrounds of participants.
• Award winning Communications course enhances oral and written presentation skills
• Skill sets: breadth and depth in communications, managing and leading people, value creation and capture, allocating resources, and business strategy.
• Global Immersion will expose employees to best practices of international companies.

Open windows of opportunity through networking

• Employees attend class with other high-achieving employees and nurture potential business opportunities.
• Executive Seminar series on class weekends brings distinguished executives to speak.
• All classes are taught by Penn State’s Smeal College faculty, nationally ranked and influential thought leaders in their fields.
• The Penn State Alumni Association is the largest in the world.

Free lifetime membership in Smeal Research Centers

• Students and their mentors are enrolled in the Smeal Research Center Network-communities of leading researchers, faculty, and practitioners from around the world and across a broad variety of business practice areas. Our center network includes: The Center for Supply Chain Research, The Penn State eBusiness Research Center, and the Institute for the Study of Business Markets.

Learn more at www.smealemba.com.

Here at the Smeal EMBA we are proud of the top-notch University Park faculty we bring in to the classroom.  Below you will find the thoughts of some of those professors.  When you are being taught business, you want to be taught by the best – and that is what you get in the Smeal EMBA.  Faculty ranked #7 in the country, #17 in the world.

The Associated Press, 02/04/2009—Fariborz Ghadar, director of the Center for Global Business Studies, comments on how the recession is affecting agriculture. “Yes, we have housing problems, but we’re not going to not feed our kids,”Ghadar said. (Economy Unlikely To Affect Many U.S. Farmers). This article has appeared on more than 100 Web sites.

Investor’s Business Daily, 02/04/2009—Fariborz Ghadar, director of the Center for Global Business Studies, comments on how chip manufacturers are responding to the recession. “What chipmakers are going through is a microcosm of what is happening to many U.S. exporters generally,” Ghadar said. (Chip Manufacturers’ Tactics Differ For Dealing With Global Recession).

Wisconsin Public Radio, 02/04/2009—Timothy Pollock, professor of management, discusses executive compensation in light of President Obama’s plan to limit CEO pay at firms receiving federal bailout funds. (Conversations With Kathleen Dunn). This programs aired on 18 stations in Wisconsin.

Orlando Sentinel, 01/18/2009—Wayne DeSarbo, executive director of the Center for Sports Business & Research, comments on the effect of the economy on the sports industry. “It’s hard to predict exactly what’s going to happen, but one thing is clear: Those types of activities involving monetary outlay will most likely decrease as consumers tighten their belts,” DeSarbo said. (Sports Are Not Recession-Proof—And The Worst May Be Yet To Come).

The Associated Press, 01/16/2009—Austin Jaffe, chair of the Department of Insurance and Real Estate, comments on the real estate market outlook for 2009. “I think in 2009 we’re still going to see more foreclosures, certainly,” Jaffe said. “There’s more resets coming from ARMs that are still out there, and as the economy gets weaker that’s likely to increase the number of foreclosures and increase the supply of houses on the market.” (Home Repossessions Nearly Doubled In Pa. Last Year). This article appeared in several newspapers around Pennsylvania, including the Pittsburgh Post-Gazette.

BusinessWest (Massachusetts), 01/05/2009—Gary Lilien, Distinguished Research Professor of Management Science, comments on marketing during a recession. “Companies that have been looking at marketing as an investment, and not an expense, and have been running their business through customer knowledge are the ones that are going to come out of this [recession] really, really well,” Lilien says. (A Time To Thrive?).

Among top Executive MBA programs nationwide, more than 60% of students cover some or all of the program costs on their own. Lack of or limited corporate financial support should not be a barrier to your enrollment in an Executive MBA program. Several student loan products are available to help cover the costs of the program.

All candidates are eligible for the federal Stafford Loan program which provides up to $20,500 in low-interest federal student loans per academic year. In addition, federal graduate PLUS loans can cover all remaining costs of the program. Low interest rates and flexible repayment timelines make these products an attractive option for those considering an Executive MBA. For more information on student loan options, please visit the Penn State student aid Web site. To learn more about financial aid options, please contact the Executive MBA Program office at 1-866-999-EMBA.

Scholarships are regularly offered to students who work for the non-profit sector.  To learn more about scholarships that Smeal offers to executive MBA students, please contact us directly at 866-999-3622 or visit our website www.smeal.psu.edu/execmba.

While the stock market is generally believed to be merely a barometer of economic health, new research co-authored by one of our EMBA professors here Penn State’s Smeal College of Business finds that the pessimism in our stock markets may actually be the cause of our struggling economy, rather than just an indicator of it.

In the current financial crisis, the rapidly spreading negative beliefs about the value of mortgage‐backed securities may have contributed more to the economic meltdown than the actual properties of those securities. That is, negative perceptions about the economy may weigh more heavily on economic performance than the actual health of production and investment activity that drives the economy.

“Our research shows that markets can exacerbate the negative,” says Anthony Kwasnica, associate professor of business economics at Smeal, who conducted the research along with Shimon Kogan of the University of Texas and Roberto Weber of Carnegie Mellon University. “Even when fundamental economic properties remain unchanged, we find that financial markets can lead investors to highly pessimistic beliefs that become self-fulfilling and can cause the economy to underperform.”

Kwasnica says that short selling and other techniques that reward negative performance communicate pessimism about the economy that can infiltrate the markets and may actually cause economic performance to dip into the negative.

Kwasnica just completed teaching an EMBA favorite this past week, bringing an incredible amount of current events into our dynamic classroom environment.

Cardiff University in Great Britain is holding a conference next month to mark the 30th anniversary of a seminal book in the management discipline co-authored by Charles Snow, Mellon Foundation Faculty Fellow at Penn State’s Smeal College of Business.

“Organizational Strategy, Structure, and Process: A Reflection on the Research Perspective of Miles and Snow” will be held Dec. 3-5 in honor of Snow and Raymond Miles, professor emeritus at the University of California, Berkeley, co-authors of one of the most influential books in the strategic management literature, Organizational Strategy, Structure, and Process.

The conference, which is sponsored by Cardiff University and the Advanced Institute for Management Research, will feature presentations from researchers in various fields who have used the Miles-Snow strategy typology in their research. Approximately 20 researchers from management, marketing, information technology, and public sector management will present at the conference, and Miles and Snow will deliver the opening address. The conference papers will be published in a book.

Originally published in 1978 and reissued by Stanford University Press for its 25th anniversary in 2003, Organizational Strategy, Structure, and Process bridges the fields of strategic management and organizational behavior. The book has been cited in more than 1,100 scholarly works, has been translated into Japanese, German, and Chinese, and is used widely in classrooms around the world.

Smeal Executive MBA students learn from the 7th best faculty in the US, 17th best in the world.