Tag: Business

THE question of who would replace Sergio Marchionne has been in the air for a year or more, ever since the boss of Fiat Chrysler Automobiles (FCA) announced that he would step down in 2019. But the way the answer came was both shocking and sad. Complications after a routine operation around three weeks ago have had a devastating effect on the health of the 66-year-old, who was hard-working even by the standards of big-name CEOs. Not only will Mr Marchionne leave the helm of FCA earlier than planned but he will also quit as boss of Ferrari, a sportscar-maker, which he had been expected to lead until at least 2021.

A sudden deterioration in Mr Marchionne’s condition forced FCA’s board to meet on July 21st to confirm that Mike Manley, boss of the Jeep brand, would take his place. Replacing someone who is regarded as one of the all-time stars of the car industry is a tough job.

Mr Marchionne was refreshingly outspoken in an era when bosses have become ever more wary of…Continue reading

EVEN the most celebrated firms have their hiccups. On July 16th Netflix, an online-streaming giant, presented disappointing news to investors: it had added just 5.2m new subscribers in the second quarter of 2018, well below its projected number of 6.2m. Shares plunged by 14%; they have since recovered some ground.

This most recent bout of volatility may say more about the firm’s soothsaying abilities than the strength of its underlying business. Although Netflix’s subscriber growth fell short of its own projections, it was still in line with that of past quarters (see chart). In percentage terms, Netflix registered a bigger miss against projected subscriber growth in the second quarter of 2016, when its shares fell by 13%. The firm has also had much bigger forecasting misses on the upside.

When asked this week to explain the forecasting error, Netflix’s chief executive, Reed Hastings, responded that the company never worked out what happened in 2016 either, “other than…Continue reading

Going with the flow

OPEN a toolbox, pull out a spanner and you may be holding a bit of the answer to global warming: vanadium, a metal named after Vanadis, the Scandinavian goddess of beauty. Used mostly in alloys to strengthen steel, its appearance may not live up to the romance of its name. Yet vanadium could become a vital ingredient in large clean-energy batteries, in which case it will shine a lot brighter.

Its price has already been rising faster than cobalt, copper and nickel, all of which are used in lithium-ion batteries (see chart). The main reason for the run-up is prosaic. About nine-tenths of the world’s vanadium is used to harden steel; China has tightened standards on the strength of rebar to make buildings more earthquake-proof. Mark Smith, boss of Largo Resources, which mines high-purity vanadium in Brazil, says this alone should increase demand for the metal by up to 15,000 tonnes in 2018-19. Last year total production was 83,000 tonnes.

But…Continue reading

“THERE’S only two things you do in the navy,” says Vice-Admiral Al Harms, former commander of the USS Nimitz, a nuclear-powered aircraft carrier that is one of the world’s biggest ships. “You fight, and you train to fight. Hopefully, most of the time you’re training.” The navy got Mr Harms hooked on continuous education, and in his 60s he felt the need for a top-up, so he took the online MBA programme of the University of Illinois (UoI), alongside his son. “I found it a very cool way to learn. You have the self-directed portion, working by yourself, and the enriching portion with class projects.”

When the web started to shake up higher education a decade or more ago, it was widely expected that the Massive Open Online Courses (MOOCs) it spawned would disrupt universities in the same way that digital media undermined newspapers and music firms. But that assumption rested on a misunderstanding of what students are paying for. They are not…Continue reading

WORK can make you sick and shorten your life. That is the argument of a hard-hitting book* by Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business. In an obvious way, that claim is outdated. Health-and-safety rules help explain why deaths from accidents in American workplaces fell by 65% between 1970 and 2015. But one problem has not gone away: stress. As many as 80% of American workers suffer from high levels of stress in their job, according to a survey entitled “Attitudes in the American Workplace”. Nearly half say it is so debilitating that they need help.

Firms are at least aware of the issue. A study in 2008 by Watson Wyatt (a consultancy that is now part of Towers Watson) found that 48% of organisations said job-related stress affected performance. But only 5% of employers said they were doing anything to deal with the matter.

Mr Pfeffer’s book focuses on America, where the problem seems particularly acute. One survey found that 55% of employees log into…Continue reading

“THE making of a big tech reckoning,” blared one typical headline earlier this year. “The case for breaking up Amazon, Apple, Facebook and Google,” touted another. Based on media coverage alone it might seem as if the tech titans are in trouble. Add in the news, on July 18th, of a record €4.3bn fine for Google by the European Commission and that impression is strengthened. But if you look hard at where the regulatory rubber is actually hitting the road, the techlash seems much less brutal. Notwithstanding this week’s fine—which amounts to just over $5bn and is the biggest antitrust penalty ever—the online giants are nowhere near being reined in.

To be sure, the mood has changed. In America a survey for Axios, a news website, found that between October and March the favourability ratings of Facebook, Amazon and Google had fallen by 28%, 13% and 12%, respectively. Republicans such as Ted Cruz, a senator, now employ anti-tech rhetoric. Last month the Federal Trade Commission (FTC)…Continue reading

A PUBLIC spat between two warring and wildly popular Chinese apps has had the feel of a teenage dance-off. “Sorry, Douyin Fans”, ran an article from the short-video app on its WeChat account, in which it accused the mobile-messaging service of disabling links to Douyin’s most popular videos. “All hail Douyin the drama queen,” retorted Tencent, WeChat’s parent, which said it had acted because the content was “inappropriate”.

On June 1st Tencent sued Douyin’s parent company, Bytedance, for 1 yuan (15 cents) and demanded it apologise for its accusations—on its own platforms (and presumably without the snark). Tencent also alleged unfair competition. Within hours Douyin counter-sued for 90m yuan. Bytedance and Tencent later swapped accusations of tolerating smear campaigns against the other on their apps, and filed police reports about defamatory posts.

Rarely has an upstart so piqued Tencent, a Chinese gaming and social-media titan which in November became Asia’s first…Continue reading

LONG hours have been the bane of the legal profession for ages; few of them involve thrilling courtroom antics. As a junior corporate lawyer at Davis Polk & Wardwell, a law firm in New York, John Bick remembers spending most of his waking hours poring over contracts looking for clauses that could complicate or kill off a deal. Even once he became a partner he still had to pitch in on due diligence for large transactions. In 2015 nearly a third of British lawyers were looking to leave the profession, according to the job searches of more than 1,000 of them by Life Productions, a career-change consultancy, perhaps because of the drudgery.

Such dissatisfaction may recede in future. Now on his firm’s management committee, Mr Bick is drafting in artificial intelligence (AI) to do the gruntwork—like many others at top law firms in New York and London. The shift could transform lawyers’ work and slash costs for clients.

Prestigious firms make their money by throwing large…Continue reading

Stretch targets

BOSS wanted for firm with tarnished reputation in troubled industry. On the face of it, the vacancy to become chief executive of Lululemon doesn’t ooze appeal. It is a clothing company, an industry that has been battered in recent years. And its previous two bosses have both left under a cloud.

In February its chief executive, Laurent Potdevin, resigned for conduct that the firm said fell short of its standards on integrity and showing respect for all employees. Industry observers considered his sudden departure to fit into a succession of corporate resignations sparked by the #MeToo movement against impropriety in the workplace. Mr Potdevin’s exit came three years after Lululemon’s founder, Chip Wilson, left the firm after more than a decade running it. Mr Wilson won notoriety for his on-air proclamation in 2013, after the company had to recall nearly a fifth of its yoga pants for being too sheer, that some women’s bodies “just don’t…Continue reading

WITH his flowing locks and hip clothes Adam Neumann, co-founder and chief executive of WeWork, looks less like a property baron than the frontman of a rock group. He speaks expansively on the subjects of character, destiny and God. His four-year-old daughter wanders through his office during an interview with The Economist. Yet Mr Neumann, a veteran of the Israeli navy, also has a reputation for being an intense and demanding businessman. Both sides to his character come together in WeWork. Mr Neumann thinks of his property startup as a profit-making version of Israel’s famed communal farms—a sort of “capitalist kibbutz”.

Shaking up the market for commercial offices globally is the firm’s mission. WeWork’s “co-working” offices, in more than 250 locations and over 70 cities worldwide, are a blend of small private spaces and large public areas designed to encourage a sense of community among its users. The firm rents huge chunks of space from landlords, kits them…Continue reading