A CRITIQUE OF THE CLASH OF CIVILIZATIONS essays

A CRITIQUE OF THE CLASH OF CIVILIZATIONS essays Samuel P. Huntingtons article The Clash Of Civilizations was a rare foresight in the time it was written. One must agree that his analytical skills have proven him mostly right, up to this point. Even though his warnings on this clash of civilizations has not been taken into account by the western especially the most dominant of them the USA powers and have deepened hatred among the different values (and even managed to create a barrier among the so called same values as well). The conflicts listed in 1993 are thus almost all relevant. The article supports its thesis that the new world order of a dominant western value will end up against the rest of the world for many reasons; He names six. To begin with Civilizations are differentiated from each other by history, language, culture, tradition, and religion. In fact that is true and it has been that way for centuries. He goes on to say that the world is becoming a smaller place thus the interactions are more frequent and exposed mostly by the wealthy; the west. Everywhere one goes today around the world he/she is faced with western and more precisely American influence. Thus, spreading and exposing younger generations with these popular values. It also brings the reality of other cultures closer to the west through those who choose it to over their own country. As it is the case with Frances Muslims and Germanys Turks. Civilizations mix and point toward a universal diversity maybe that is why it is a probl em for the author that in fact Jose CAN see! There are weak points listed by Huntington; the process of economic modernization and social change throughout the world are separating people from longstanding local identities and the growth of civilization-consciousness is enhanced by the dual role of the West. He is writing this at a time where the collapse of the Soviet Union and its ideology &ndash...

Fate, Cant Live With It, Cant Get Away From It essays

Fate, Cant Live With It, Cant Get Away From It essays Oedipus Rex, a play by Sophocles, is about a king named Oedipus, who tries to escape his fate. When Oedipus hears the story of the previous kings death, it seems familiar somehow. After time and investigation Oedipus realizes that fate has finally found him. In Oedipus feudal attempt to escape fate, he had only made the outcome harder to bare. When Oedipus was young, the Oracle of Delphi said that he would kill his father and marry his mother. Oedipus, trying to escape his fate, left his home so he would not fall victim to it. The Greeks believed that your fate was decided at the beginning of your life, and you could not escape it. Oedipus should have known this and just stayed where he was. He only made it worse for himself by leaving. Shortly after Oedipus left he ran into a group of people. Harsh words were exchanged, and Oedipus ended up killing them all. Oedipus believed he was killing in self defense, so he did not think about it much, and certainly did not think he just killed his father. Oedipus was probably afraid that the group of people was going to kill him, because thieves usually hid in the forests to ambush unsuspecting travelers. When Oedipus heard that he was going to kill his father and marry his mother he had left home. Oedipus, thinking that the prophesy meant he was going to kill his adopted father and marry his adopted mother, left home and without realizing it killed his father, then later married his mother to become king. If Oedipus would have just stayed at home he would have at least known that his fate was inevitable, but leaving just made it harder for him later on. Oedipus probably would have not stabbed out his eyes, and exiled himself because he would have known when fate had caught up with him. When Oedipus found his true heritage, he was not pleased with the results. Oedipus had tried to escape his fate, but he should have known that is impossible. Oedipus, a respe ...

Business Ethics - Hiring, Firing, and Discrimination (U4DB) Essay

Business Ethics - Hiring, Firing, and Discrimination (U4DB) - Essay Example This pictures employers recruiting people to join in their companies. Employers open their doors to women and minorities for them to use their skills and education, and maintain their status without pressuring them to compete with males and the majorities in terms of capabilities, ethnicity, education, religion, and social status. These remedies go with the three moral philosophies based on consequences, rights, and duties. Employers must be well aware that people need to be given equal opportunities to work. It is immoral if discrimination in the workplace still exists because it hinders job applicants to land in jobs, and be productive. Every individual has his own right to be respected by others. This coincides with the rights philosophy that by respecting the rights of women and minorities, the moral act is being practiced as well. In relation to the rights philosophy, employers must faithfully adhere with the policies against discrimination by considering the remedies mentioned above. This is their duty as employers in hiring applicants. In conclusion, women and minorities have many things to offer beyond their education. They have incomparable skills that will fit into jobs in the market today. All they need are chances. The three moral philosophies are consistent with the remedies established by various organizations to address discrimination. They seem to be appropriate forms of remedy against discrimination with women and minorities trying to find a living to support their families. Policies established by various organizations aim to protect the rights of every woman, and any member of the minority

Experiment 6 Lab Report Example | Topics and Well Written Essays - 750 words - 1

Experiment 6 - Lab Report Example The small cost of iron nanoparticles and their ability to reduce toxic contaminants into non-toxic iron hydroxide products make iron nanoparticles application techniques preferential. I addition their installation are simple and require minimal maintenance and react with a diverse range of contaminants. The delivery method of these nanoparticle based applications are also diverse in nature and therefore can be used in dealing with many forms of contaminants either of differing concentrations or chemical and physical characteristics. From previous research, it has been observed that iron nanoparticles cause a significant reduction in the concentration of contaminants. The aim of this experiment is to analyze the change in concentration of indigo carmine dye in its reaction with iron nanoparticles. Dyes are common pollutants though not frequently recognized. From figure 1, the concentration of indigo carmine dye is observed to be relatively constant before the addition of iron nanoparticles. There is little or rather insignificant change in the concentration of indigo carmine dye before nanoparticles are introduced into the solution. From the first analysis, it was determined that the rate of change in concentration of dye in the first 60 seconds can be calculated as 0.00591 M/s. The overall change in concentration is 0.35443M. The second analysis using 0.105nm of iron nanoparticle gave a rate of change in dye concentration of0.0091M/s in the first minute with an overall change in concentration of 0.548M. Figure 2 shows a negative correlation between the changes in concentration of dye with time on addition of iron nanoparticles. The same observation was made in figure 3 where 0.42nm iron nanoparticles were used. From table 1, it is observed that the fastest rate (0.0091) in removal of dye from the solution was obtained with 0. 105 nm of iron nanoparticles. This could be contrary to expectations as 0.04nm iron particles should have

Distorted picture Essay Example for Free

Distorted picture Essay Some people regard science as the supreme form of knowledge, because science provides facts. People tend to see science as true, justified, reliable, precise and objective. However there is a significant difference between natural and social sciences. Natural sciences use the basic scientific method to find the facts about the world we live in, the natural events and processes that take place in our world. The basic scientific method or nai ve inductivism follows five stages which include observation, information, generalization, theory and explanation and prediction. However though the basic scientific method seems perfectly reliable, there may be some problems which could challenge science as the supreme form of knowledge. Social sciences study human behaviour, relationships and society. These are very subjective and very difficult to measure. The results can be distorted by the scientists because completely objective observation is even more difficult in natural sciences because seeing what you want to see gives a distorted picture. The famous philosopher David Hume (1711-1776) who was a very radical empiricist and sceptic was concerned with limits to knowledge. According to his theories science cannot give us accurate knowledge and thus should not have such a high status. The problems of natural sciences, basic scientific method and Humes theory of causation that challenges science as the supreme form of knowledge is going to be discussed further in this essay. The social sciences study human behaviour and their relationships. There are several fields of social sciences including anthropology, political science, psychology, sociology and economics. However it is important to note that human behaviour is so inconsistent and influenced by so many variables that it is impossible to measure it precisely. The problem lies also in the social scientists themselves because they are humans as well as the subjects of their attention. It is virtually impossible for them to give a completely objective observation. Firstly they are studying things that cant be measured in human behaviour such as concentration or motivation. Secondly there is the problem that if the subject of their study knows he or she is being watched, he or she can consciously or unconsciously behave in a different way than they would otherwise. Also if the person hears the prediction of the results of the experiments, they might deliberately behave in such a way either to fulfil it or not. That means that social scientists prediction can influence human behaviour. Simply being seen by the unhidden scientist distorts what is seen. Another problem of social scientists is that they see what they want to see. They cannot separate their wishes, what they want to see, from what they see in the reality. Therefore social sciences are very imprecise and unreliable. The natural sciences use the basic scientific method which contains five stages that help the scientists to come to a conclusion. Firstly, they observe through their senses a particular set of events, they record the observation that they have made and after that they make certain generalisations which form a theory. The theory helps to form prediction for the future. Natural sciences are regarded as much more reliable than social sciences because their theories can be tested more easily and the tests can be repeated several times under identical conditions. It is not so easy for the natural scientists to distort the results as for the social scientists. However, there are certain problems with this method that make it seem unreliable too. Firstly, it has to be mentioned that observation comes through our senses. Unfortunately, our senses can be quite easily deceived. It is impossible to make our senses completely objective. We often see what we believe we should see or what we want to see or our hearing can be again influenced by our belief or a wish. This means that we cannot trust our senses completely. Secondly, science as an activity that is supposed to be detached from emotional content, however the scientists doing the experiments and the observations are humans an they cannot detach from their nature. Simply they can observe things that they want to observe because of many reasons such as political, financial, practical and also personal motives. And thirdly there is the problem of the observational statement which means that the scientists have to put their observations into words, which can influence the effect that the observation makes on people. Then there is the problem of the way we treat and use our knowledge. The process of inductive reasoning that we use in our everyday life follows this pattern: the experience or the observation comes first and based on it a prediction for the future or a general statement is made. There is a big strength about this way of reasoning. Firstly, science is based on this kind of reasoning and most of the people regard science as the supreme form of knowledge. Secondly it is quite obvious that the human race couldnt function without inductive reasoning because most or even all of our thinking processes follow the rules of inductive reasoning. If inductive reasoning was wrong, then human beings couldnt be classed as rational beings. However, there are weaknesses in this inductive reasoning that really raise doubts about human beings as rational beings. It is important to see that there is no necessary connection between the past and the future and also that the observation made could have been mistaken. The unconnected past and future can be very well expressed in Bertrand Russellstory about an inductivist turkey1. This story explains that we cannot make predictions or statements based on our past experience and observations because they are absolutely independent from what will happen in the future. This flaw of inductive reasoning seriously challenges the knowledge obtained through science because science is based on past observations. But if inductive reasoning is really wrong then science is based on very uncertain grounds. The philosopher David Hume created a theory which challenged the idea of causation. Causation means one event causing another, But can we really say that one event caused another? Usually when we see event A and then event B which followed event A, we tend to say that event B was caused by event A. But actually we observed just event A followed by event B, we didnt observe the cause the link between A and B. So to say that event B happened because of event A is not the same as to say that event A happened and then event B happened. We never experience the cause. An example can be day followed by night. In the past, the day was always followed by night and yet the day is not the cause of night. Day and night are both caused by something else (rotation of the earth on its axis as it goes around the Sun). So the connection between these two things can be invariant without either of them being the cause of the other. If this all is right, then science is again put into a very strange position and it seems to be based on very uncertain foundations and we can never talk about anything with absolute certainty. According to Hume, just the reason that we believe that the sun will rise every morning is based on our past experience and though it may be true that the sun has risen every morning of our lives, this is not enough evidence to guarantee the truth of the thesis that the sun will always rise. In social sciences the major problem is the inconsistency of human behaviour. If people regard social sciences as the supreme form of knowledge, they misunderstand the way social sciences work. It is impossible to rely completely on social sciences because there are too many variables that can influence the results. However if people regard natural sciences as the supreme form of knowledge, they misunderstand knowledge very much because there are so many problems and mistakes in human reasoning and the way they process information and deduce conclusions from information that was processed in a wrong way or was inadequate to support the conclusion. This theory can be very much supported by the theory of David Hume, a famous philosopher, who challenged science very much by his laws of causation. 1The turkey found that, on his first morning at the turkey farm, that he was fed at 9 a. m. Being a good inductivist turkey he did not jump to conclusions. He waited until he collected a large number of observations that he was fed at 9 a. m. and made these observations under a wide range of circumstances, on Wednesdays, on Thursdays, on cold days, on warm days. Each day he added another observation statement to his list. Finally he was satisfied that he had collected a number of observation statements to inductively infer that I am always fed at 9 a. m. However on the morning of Christmas eve he was not fed but instead had his throat cut. http://marr. bsee. swin. edu. au/~dtl/het704/lecture3/logfals/node6. html, 20th September 2004

Stop and Search Controversy

Stop and Search Controversy The power to stop and search has been a prominent policing tool since the Vagrancy Act of 1824. The briefing, Series 2, Edition 3 March 2012 , it has come under regular legal, political and societal scrutiny because of its broad and discretionary use by its police officers. However has also been praised as it has not only combated crime however prevented criminal acts happening as police can stop and search anyone who they have reasonable suspicion are carrying weapons, stolen goods or going equipped for stealing. Stop and search is extremely subjective in the view that we must trust the officers views are wholly unbiased and prejudice and there is no untoward intent of the officer when using stop and search legislation. Since the very onset of the enactment of legislation in this area of police discretion, there has been controversy because of the subjectiveness afforded to police officers; the controversy being this discretion may be abused. Also the broad term of reasonable suspicion and what is seen as reasonable. There are also fundamental human rights breaches that have been evident in much of the case law. Stop and Search is now governed by 2 statutes; stop and search with arrest situates under the police and criminal evidence act 1984 whilst a stop and search without an arrest comes under section 60 of the criminal justice and public order act. Section 60 of the 1994 criminal justice and public Order Act was introduced to originally tackle people going to illegal raves which were a major problem in the 1980s and early 90s. It gave police the power, if they feared violence or disorder, to stop and search suspects at a specific time and place. I will further be discussing the controversies surrounding Police stop and search and concluding with my own views on this subject. Before the introduction of the police and criminal evidence act in 1984, the police stopped and searched individuals under what was called the sus law. This being because the police only had to have suspicion on their part in order to stop and search an individual, it did not need to be reasonable. The only national stop and search legislation was for the pursuit of drugs and firearms, unlike now with the introduction of the Terrorism act and Sporting event act. Eventually the Brixton riots in 1981 brought a stop to the use of the sus provisions due to the negative relationship it caused between the police and the public, in particular, ethnic minorities. Lord Scarmans Inquiry into the Brixton riots acknowledged that stop and search was a necessary tool to combat street crime and petty crime but expressed genuine concerns over the extent to which the sus laws were used in regards to the police officers own prejudices and views. In 1999 Stop and search came under scrutiny yet again du ring the Steven Lawrence murder enquiry, when Lord Macpherson revealed the shocking disproportionate amount of stop and searches in ethnic minorities, which in turn led on to accusing the police of holding prejudices and being institutionally racist. Lord Macpherson called for stop and searches, whether or not they resulted in an arrest to be recorded so that officers could be monitored and held accountable for if any racially aggravated stop and searches were made. Police work and especially stop and search works on the provision of reasonable suspicion and discretion. Discretion, although many may disagree, is not doing as you please. Discretion is bound by norms, thus including; professional norms, correct community norms, legal norms, and moral norms. Philosophers such as Ronald Dworkin and H.L.A. Hart have cleverly referred to discretion in the police force as the hole in the doughnut ; doughnut theory of discretion, Dworkin described discretion as a donut because it is not free-standing but part of a process. Discretion, like the hole in the doughnut, does not exist except as an area left open by a surrounding belt of restriction. Discretion is not outside the law but internal to the law  [1]  and where the law runs out; natural law theory. Thus meaning unwritten law that is more or less the same for everyone everywhere, based on customary behaviour. In other words Unwritten law is the body of morals and principles everybody obeys and lives by. This idea refers to discretion as the empty area in the middle of a ring consisting of policies and procedures. It is an empty space inside of the law surrounded by statues and rules. Police discretion and the way it operates can be explained by 3 broad terms; individualistic cultural and structural. Individualistic explanation states that police work and the macho image of the police attracts people with authoritarian personalities, research however carried out by Waddington (1999a) does in fact not support this view and states that police recruits are not more authoritarian then normal civilians. Brown and Willis (1985) and Fielding (1988) explained how the training process for these new recruits has a temporary liberalizing effect however exposure to permanent practical police work leads to an authoritarian perspective and outlook. The work of Zimbardo may give some explanation as to the sudden behaviour change in these new police recruits. Zimbardo (1973) conducted the Stanford prison experiment as he wanted to study conformity and was interested in finding out whether the rough treatment reported among guards in American prisons was due to the authoritarian personalities of the guards or had more to do with the prison environment. He took a group of 75 volunteers whom he tested for psychological normalitys, and assigned them to either the role of the prisoner or prison guard. For every 9 prisoners they had 3 guards. They put them in a prison environment and watched as each volunteer began adapting to their roles. The findings were phenomenal, Within hours of starting the experiment the prison guards began to act in a sadistic manner, dehumanizing the prisoners and some even began tormenting and bullying them and alongside this the prisoners began conforming to their newly established roles by taking the rules very seriously and become depressed and telling tales on their fellow inmates. Perhaps this experiment and its findings can give an explanation on the alleged view that police recruits adopt an authoritarian perspective perhaps due to its macho nature and the control they have suddenly been ascribed. Zimbardo concluded after the experiment that people will readily conform to the roles they have been ascribed, especially when they are strongly stereotyped. Canteen Culture could also give an understanding of the individualistic explanation and racism. The police must work as a united front to not only protect the public however to also protect each other so therefore, therefore due to the close proximity of the officers in the police force it is only inevitable officers will begin to conform to certain beliefs and values held by their colleagues, especially if they are outspoken about these. Canteen Culture, Ike Eze-anyika, Faber and Faber (20 Mar 2000). Police sub-culture ( Canteen Culture) is often portrayed as a pervasive, malign and potent influence on the behavior of officers. The grounds for this portrayal are, however, insubstantial and appear to rely more upon the condemnatory potential of the concept than its explanatory power. The cultural explanation of police discretion as said by Skolnick talked about this in a different way by identifying 3 main aspects of police culture and discretion, there is a suspiciousness which they have against certain groups of potential criminals that they treat with prejudice, there is the internal solidarity and social isolation which I believe both internal and support each other; solidarity in which the police must remain a force which supports each other as police individuals against danger in the streets and also the social isolation in terms of because of this solidarity the police have it creates more of a rift in society between the protectors and the protected. This creates citizens feeling like they are just stereotypes viewed by the police and they cannot complain about the police because of this solidarity they have or that they are just merely subjects without autonomy.   New research from the official human rights body reveals racial disproportionality in the amount of Stop and searched being made. Police forces are still more likely to use stop-and-search powers against black people than white people, stopping black people up to 28 times more and therefore may be breaking the law due to breaching their powers and wasting police time. The police force has been accused of being predominantly occupied by white middle class males with old fashioned work practices and whos face fits. A report by the equality and human rights commission reviewed the police force 10 years after the Steven Lawrence inquiry, in which Lord Macpherson branded the Police and Its Officers as institutionally racist. The report found a huge amount of black men on the national DNA database as appose to other ethnicities. The power is used most by the Metropolitan police, which carried out three-quarters of the stops between 2008- 2011, almost 258,000 in total. Although they could hold the largest amount due to the population size in the metropolitan districts. The next heaviest user of these powers was Merseyside with 40,940 stops.   Due to these extortionate figures it was established that something must be done and also perhaps that many of the people they stop may not be educated in this subject and may not necessarily know their rights. A mobile application was introduced early 2012 to inform the users of their rights when being stop and searched. Many people may be unaware that The police have to follow the correct code of conduct when stop and searching an individual; An officer should tell you their name, the reason why you have been stopped and the power that you are being stopped under. They should also give you their badge number, the name of the police station and provide you with a receipt at the end. This app tells the user their rights when being stop and searched. This could be either a blessing or a curse. Perhaps if the user of the mobile application was aware of their rights they could stop any mistreatment or exploitation, However on the other hand if there is a large amount of clued up young p eople then when they do get stop and searched they may feel very confident and start telling the police how to do their jobs and maybe even state that the police did not follow one of the rules even when done so just to get out of an arrest or fine etc. h Although the police force have been branded institutionally racist It could be argued that the police get these racist perceptions from the media. If one crime has been reported, eg- a mugging, the media have been known to blow this story out of proportion and create a societal panic. Pearson was writing in the 1970s, during the time when muggings and the moral panic surrounding it was rife. The word mugging was an invented word to describe a theft against a person, the media stated that muggings were spiralling out of control and were a new dangerous crime.   The media were also highly racist and said the crime was committed most by young black males thus resulting in the police using their stop and search powers more and especially on young black males, which in turn led to the police recovering more illegal articles and led to more arrests. This only because the police stop and searched more people. With these new figures young black males were then labelled as thugs and deviant and therefore left people and also the police with a negative perception towards young black males. This has also been seen lately with the knife crime moral panic and also the London riots as the media stated that working class undeducated young males from broken families decided to revo The police force is stereotypically renown for being a macho profession, and there perception of their job role should be on the streets searching for true criminals; murderers, rapists etc, however they are on the streets stop and searching individuals for petty crimes in most cases. They therefore perhaps to gain some job satisfaction feel they have to find prohibited articles or make an arrest and fight crime therefore they want to find criminals instead of being satisfied that there are no criminals which could result in a high amount of stop and searches. They have work pressures that determine their career on the basis of how many arrest they make and illegal articles they find. They therefore obtain their job satisfaction by finding criminals, by stop and search, rather than being satisfied that they live in a society where there are no criminals. On the other hand with the higher volume of stop and searches results in a higher amount of arrests which shows that justice is bei ng done and therefore heightens the morale of the police officers who are fighting the more every day street level crime.   Along with lord Macpheresons statement he released during the enquiry into the steven Lawrence case and also Lord Scarmans statement during the Brixton riots in which he claimed that the police abuse their powers yet again Stop-and-search powers have come under criticism again when they were ruled illegal by the European court of Human rights in January 2010. The Strasbourg court has been recently hearing a case involving two civilians who were stopped near an arms fair in London in 2003. The court heard the case of Kevin Gillan and Pennie Quinton who had been stopped outside the Defence Systems and Equipment International exhibition at the Excel Centre in London Docklands in 2003, Both individuals were held for twenty to thirty minutes. The court stated that their right to respect for a private and family life was violated. The European Court of Human Rights also said their rights under Article 8 of the European Convention on Human Rights had been violated. Section 44 of the Terrorism Act 2000 gives power to the home secretary; Theresa May, to authorise the police force to make random searches in certain circumstances, but The court said the stop and search powers were not sufficiently circumscribed and there were not adequate legal safeguards against abuse. Subsequently both individuals were awarded 33,850 euros ( £30,400) to cover legal costs. Lord Carlile; the governments independent reviewer of anti- terrorist legislation stated, In my view, section 44 is being used far too often on a random basis without any reasoning behind its useThe fundamental point that the court is making is that it increases the possibility of random interference with the legitimate liberties of the citizenà ¢Ã¢â€š ¬Ã‚ ¦On the other hand, we have to be safe against terrorism. There is therefore a very difficult balancing exercise to be done and Im sure Section 44 will come under intelligent scrutiny in the coming months. Speaking to BBC Radio 4s The World At One, Ms Quinton said Its not about saying that theres no need for stop and search. What were really saying is people have a right to privacy and there needs to be a balance between police powers to ensure our safety but also our rights to a private life. To conclude; the police force and more specifically the stop and search powers they hold have come under regular scrutiny by many different proffessionals; Lord Scarman, Lord Macphereson and the European court of human rights, to name just a few. The Police force works mainly on discretion and they are trusted upon to make the right decisions, act subjectively and have reasonable suspicion however it is hard to define what is reasonable. This term is too broad and vague and a police officers perception of what is reasonable may differ from his colleagues. Another important point to remember is that each police officer has his own views and prejudices and even if they do not consciously work upon these prejudices they are still engrained into the officer and this may change or dim their view on certain individuals. I believe police should work with discretion to not only to protect the public however also themselves against any foreseeable danger. Police officers get into numerous situations daily and therefore too many laws would be needed to govern every situation in which discretion is used. On the other hand, the stop and search figures brought to the publics attention over the last two decade do indicate levels of racism in the police force however with more and more ethnic minorities and also women beginning to occupy the force there is no room for racism or sexism. Society is rapidly changing alongside peoples perceptions of other races. Finally, I strongly believe that stop and search over the past years has caused a lot of controversy. The concept of stop and search; stop anybody whom you believe to be reasonably suspicious, does seem to work on paper however in practice the officers deeply engrained morals and prejudices seem to subconsciously effect their work which is evident in past figures. Further along Stop and Search does also need reforming due to the very public way in which the individual is stopped which leads to labelling by passing people, even if the individual is completely innocent.

Diversity and Difference in Early Childhood Essay

Personal interest: My first awareness of racial identity and diversity occurred when I was in Year 3. Having being raised acknowledging acceptance of people of racial or cultural difference my thoughts of children of colour were positive and impartial. However, one day a boy in my class of Sri Lankan descent got into trouble with another student, but only the Sri Lankan boy was asked to go to the principal’s office. During our lunch break he came over to a group of us and told us that he thought he was the one that got into trouble ‘because he was ‘black’’. I remember thinking to myself, ‘why would he get into trouble just because he was black? ’ It was in fact that both boys went to the principal’s office, just on separate occasions. This was my first memory of someone thinking that they were being singled out or getting into trouble due to belief of skin colour dissimilarity and racial stereotypes. I’ve been aware of racial diversity ever since. Now that I have an opportunity to be a part of children’s learning and development I want to learn more about diversity and make a difference in children’s perspectives of themselves and others. Discussion: As educators in early childhood, it is crucial that we acknowledge and respect that children’s personal, family and cultural histories shape their learning and development. The increase in racial, ethnic, and cultural diversity in educational centres is reflected in many early childhood classrooms. Although the diverse composition of early childhood classrooms may bring challenges, it also introduces many opportunities for educators, parents, and children as we need to value and appreciate difference and variety as a positive attribute in all educational and social environments (Ashman and Elkins 2008). As adults, being ‘different’ is a decision to make a personal statement; such as deciding to change a hairstyle, get a tattoo or by wearing alternative clothing. It is one thing to be different by choice, and another for a child to discern themselves as being different based on their physical features, cultural of religious differences. One of the most stimulating aspects of early education is observing and supporting young children as they develop their individual identities. This development takes place within different social contexts where issues relating to human diversity and difference impact significantly on children’s understandings and ways of being in the world. Arguably, our education begins when we are first able to detect causes and consequences, and continue to form the basis of our identity, behaviours and knowledge of the world around us. Glover (1991) in the early 1990s found that as 2-3 year old children became aware of difference they simultaneously develop positive and negative feelings about the differences they observe. For example, racial awareness impacts on their perceptions of skin colour and on their preferences in the social relationships they initiate and foster with other children. An Australian study conducted by Palmer (1990) exemplifies how preschool children were able to make negative judgements based on racial characteristics of young Aboriginal children. Children were reportedly saying ‘You’re the colour of poo†¦ Did your mum drop you in the poo? ’ This observation suggests that children as young as 2 years old are becoming aware of diversity and differences of others, and these judgements children are making are often affecting their ability to make sound judgements of others as their perceptions of reality are distorted. Although Palmers study was conducted in 1990, there has been a significant increase in racial awareness since the 1980s of the importance of early childhood education policies, practices and curriculum aiming to positively reflect the diverse cultural identities of children and their families. Today, the embracing of children’s lives is a central focus of the different philosophies which foster early childhood education in Western society, such as the ‘anti-bias curriculum’ which emerged from the United States (Derman-Sparks and the A. B. C. Task Force, stated in Robinson 2006 p 2) and also in the perspectives of Reggio Emilia. In Australia there has been a broadening of cultural influences which has been referred to by Ashman (2008) as ‘the cultural mosaic’, which refers to those who have migrated maintain their homeland traditions while embracing the new norms, values and practices within the country. Furthermore data collected by the Australian Bureau of Statistics (2008) show that around 25% of Australians were born in other countries, nearly half the population has direct links with relatives born overseas, and over 2. 5 million people speak a language other than English at home, which should clearly illustrate to educators that learning developmental experiences need to be appropriate for multicultural children to be involved in. As stated by Robinson (2006), the early childhood years are fundamental years in the growth and development of a child’s cognition, language, social, emotional and physical competence. Early childhood educators are in an ideal position to make a positive difference in the lives of children and their families. My emerging philosophy would be to teach children to be critical thinkers specifically about prejudice and discrimination to encourage children to develop the skills to identify when something they have said or done is unfair of hurtful to another. Also to model the behaviours and attitudes I would want children to develop, particularly in situations that can either promote prejudice or inhibit a child’s openness to diversity. Furthermore, I would aim to expose children to role models from their own culture as well as to those from other cultures to encourage appreciation of their own cultural identity, as well as different cultures. As professionals who work with families, our willingness to talk openly about identity and to help foster a positive sense of self in children can make an enormous difference in affirming the rich diversity within our community and help children form bridges across cultures and traditions. The more that children have a solid grounding and understanding about who they are and where they came from, the more they learn to value differences of cultures different from their own, and the closer we get to building a world of respect of multicultural differences. Ashman, A F, Elkins J 2008, ‘Education for Inclusion and Diversity’, 3rd edn, Pearson Education, Frenchs Forest, NSW. Davis, B M 2009, ‘The Biracial and Multicultural Student Experience: a journey to racial literacy’, Corwin, Sage Ltd, USA. Glover, A 1991, ‘Young children and race: a report of a study of two and three year olds’, Australian Catholic University, Sydney. Pulido-Tobiassen, D, Gonzalez-Mena, J 2005, ‘Learning to Appreciate Differences’, Early Childhood Today, vol. 20, issue 3, viewed 2 April 2011, retrieved from Victoria University Database. Robinson, K 2006, ‘Diversity and Difference in Early Childhood Education’, Bell and Bain Ltd, Glasgow, viewed 1 April 2011, retrieved from Ebrary database.

Marketing Mistakes and Successes

ELEVENTH EDITION MARKETING MISTAKES AND SUCCESSES 30TH ANNIVERSARY Robert F. Hartley Cleveland State University JOHN WILEY & SONS, INC. VICE PRESIDENT & PUBLISHER EXECUTIVE EDITOR ASSISTANT EDITOR PRODUCTION MANAGER PRODUCTION ASSISTANT EXECUTIVE MARKETING MANAGER ASSISTANT MARKETING MANAGER MARKETING ASSISTANT DESIGN DIRECTOR SENIOR DESIGNER SENIOR MEDIA EDITOR George Hoffman Lise Johnson Carissa DoshiDorothy Sinclair Matt Winslow Amy Scholz Carly DeCandia Alana Filipovich Jeof Vita Arthur Medina Allison Morris This book was set in 10/12 New Caledonia by Aptara ®, Inc. and printed and bound by Courier/Westford. The cover was printed by Courier/Westford. This book is printed on acid-free paper. Copyright  © 2009, 2006, 2004, 2001, 1998, 1995, 1992, 1989, 1986, 1981, 1976 John Wiley & Sons, Inc. All rights reserved.No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc. 222 Rosewood Drive, Danvers, MA 01923, website www. copyright. com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc. 111 River Street, Hoboken, NJ 07030-5774, (201)748-6011, fax (201)748-6008, website http://www. wiley. com/go/permissions. To order books or for customer service please, call 1-800-CALL WILEY (225-5945). Library of Congress Cataloging in Publication Data Hartley, Robert F. , 1927Marketing mistakes and successes/Robert F. Hartley. —11th ed. p. cm. Includes index. ISBN 978-0-470-16981-0 (pbk. ) 1. Marketing—United States—Case studies. I. Title. HF5415. 1. H37 2009 658. 800973—dc22 2008040282 ISBN-13 978- 0-470-16981-0 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 PREFACEWelcome to the 30th anniversary of Marketing Mistakes and Successes with this 11th edition. Who would have thought that interest in mistakes would be so enduring? Many of you are past users, a few even for decades. I hope you will find this new edition a worthy successor to earlier editions. I think this may even be my best book. The new Google and Starbucks cases should arouse keen student interest, and may even inspire another generation of entrepreneurs. A fair number of the older cases have faced significant changes in the last few years, for better or for worse, and these we have captured to add to learning insights.After so many years of investigating mistakes, and more recently successes also, it might seem a challenge to keep these new editions fresh and interesting. The joy of the chase has made this an intriguing endeavor through the decades. Still, it is always difficult to abandon interesti ng cases that have stimulated student discussions and provoked useful insights, but newer case possibilities are ever contesting for inclusion. Examples of good and bad handling of problems and opportunities are forever emerging. But sometimes we bring back an oldie, and with updating, gain a new perspective.For new users, I hope the book will meet your full expectations and be an effective instructional tool. Although case books abound, you and your students may find this somewhat unique and very readable, a book that can help transform dry and rather remote concepts into practical reality, and lead to lively class discussions, and even debates. In the gentle environment of the classroom, students can hone their analytical skills and also their persuasive skills—not selling products but selling their ideas—and defend them against critical scrutiny. This is great practice for the arena of business to come.NEW TO THIS EDITION In contrast to the early editions, which exa mined only notable mistakes, and based on your favorable comments about recent editions, I have again included some well-known successes. While mistakes provide valuable learning insights, we can also learn from successes and find nuggets by comparing the unsuccessful with the successful. With the addition of Google and Starbucks, we have moved Entrepreneurial Adventures up to the front of the book. We have continued Marketing Wars, which many of you recommended, and reinstated Comebacks of firms iii iv †¢ Preface ising from adversity. I have also brought back Ethical Mistakes, because I believe that organizations more than ever need to be responsive to society’s best interests. Altogether, this 11th edition brings seven new cases to replace seven that were deleted from the previous edition. Some of the cases are so current we continued updating until the manuscript left for the production process. We have tried to keep all cases as current as possible by using Postscrip ts, Later Developments, and Updates. A number of you have asked that I identify which cases would be appropriate for the traditional overage of topics as organized in typical marketing texts. With most cases it is not possible to truly compartmentalize the mistake or success to merely one topic. The patterns of success or failure tend to be more pervasive. Still, I think you will find the following classification of cases by subject matter to be helpful. I thank those of you who made this and other suggestions. Classification of Cases by Major Marketing Topics Topics Most Relevant Cases Marketing Research and Consumer Analysis Coca-Cola, Disney, McDonald’s, Google, Starbucks ProductStarbucks, Nike, Coke/Pepsi, McDonald’s, Maytag, Dell, Hewlett-Packard, Newell Rubbermaid, DaimlerChrysler, Kmart/Sears, Harley-Davidson, Boeing/Airbus, Merck, Boston Beer, Firestone/Ford, Southwest, MetLife, Borden, United Way, Vanguard, Continental, Euro Disney Distribution Nike, Coke/Peps i, Newell Rubbermaid, Harley-Davidson, Vanguard, Starbucks, Kmart/Sears, Hewlett-Packard, Dell Promotion Nike, Coke/Pepsi, Maytag, Vanguard, Merck, Boston Beer, Kmart/Sears, Harley-Davidson, Borden, MetLife, HewlettPackard, Southwest Air, Google, Starbucks PriceContinental, Southwest, Vanguard, Starbucks, Boston Beer, Dell, Euro Disney, Newell Rubbermaid, Boeing/Airbus, McDonald’s Non-product Google, United Way, Disney, Southwest, Continental International Euro Disney, Boeing/Airbus, Harley-Davidson, Maytag, DaimlerChrysler, Firestone/Ford, Dell, Hewlett-Packard, Nike, Coke/Pepsi, Starbucks, McDonald’s Customer Relations Newell Rubbermaid, Vanguard, Maytag, Harley, Merck, Firestone/Ford, Starbucks, United Way, Nike, MetLife Social and Ethical Starbucks, Merck, Firestone/Ford, United Way, MetLife Outsourcing Boeing/Airbus, Maytag, Nike, DellPreface †¢ v TARGETED COURSES As a supplemental text, this book can be used in a variety of undergraduate and graduate courses . These range from introduction to marketing/marketing principles to courses in marketing management and strategic marketing. It can also be used as a text in international marketing courses. Retailing, entrepreneurship, and ethics courses could use a number of these cases and their learning insights. It can certainly be used in training programs and even appeal to nonprofessionals who are looking for a good read about well-known firms and personalities. TEACHING AIDSAs in previous editions, you will find a plethora of teaching aids and discussion material within and at the end of each chapter. Some of these will be common to several cases, and illustrate that certain successful and unsuccessful practices are not unique. Information Boxes and Issue Boxes are included in each chapter to highlight relevant concepts and issues, or related information, and we are even testing Profile Boxes. Learning insights help students see how certain practices—both errors and successes cross company lines and are prone to be either traps for the unwary or success modes.Discussion Questions and Hands-On Exercises encourage and stimulate student involvement. A recent pedagogical feature is the Team Debate Exercise, in which formal issues and options can be debated for each case. New in some cases are Devil’s Advocate exercises in which students can argue against a proposed course of action to test its merits. A new pedagogical feature, based on a reviewer’s recommendation, appears at the end of the Analysis section: students are asked to make their own analysis, draw their own conclusions, and defend them, thereby having an opportunity to stretch themselves.In some cases where there is considerable updating, a new feature invites students to Assess the Latest Developments. Invitation to Research suggestions allow students to take the case a step further, to investigate what has happened since the case was written, both to the company and even to some of the individuals involved. In the final chapter, the various learning insights are summarized and classified into general conclusions. An Instructor’s Manual written by the author accompanies the text to provide suggestions and considerations for the pedagogical material within and at he ends of chapters. ACKNOWLEDGMENTS It seems fitting to acknowledge everyone who has provided encouragement, information, advice, and constructive criticism through the years since the first edition of these Mistakes books. I hope you all are well and successful, and I truly appreciate your contributions. I apologize if I have missed anybody, and vi †¢ Preface would be grateful to know such so we can rectify this in future editions. I welcome updates to present affiliations. Michael Pearson, Loyola University, New Orleans; Beverlee Anderson, University of Cincinnati; Y. H. Furuhashi, Notre Dame; W.Jack Duncan, University of AlabamaBirmingham; Mike Farley, Del Mar College; Joseph W. Leona rd, Miami University (OH); Abbas Nadim, University of New Haven; William O’Donnell, University of Phoenix; Howard Smith, University of New Mexico; James Wolter, University of Michigan, Flint; Vernon R. Stauble, California State Polytechnic University; Donna Giertz, Parkland College; Don Hantula, St. Joseph’s University; Milton Alexander, Auburn University; James F. Cashman, University of Alabama; Douglas Wozniak, Ferris State University; Greg Bach, Bismark State College; Glenna Dod, Wesleyan College; Anthony McGann, University of Wyoming; Robert D.Nale, Coastal Carolina University; Robert H. Votaw, Amber University; Don Fagan, Daniel Webster University; Andrew J. Deile, Mercer University; Samuel Hazen, Tarleton State University; Michael B. McCormick, Jacksonville State University; Neil K. Friedman, Queens College; Lawrence Aronhime, John Hopkins University; Joseph Marrocco, Boston University; Morgan Milner, Eastern Michigan University; Souha Ezzedeen, Pennsylvania Stat e University, Harrisburg; Regina Hughes, University of Texas; Karen Stewart, Stockton College; Francy Milner, University of Colorado; Greg M.Allenby, Ohio State University; Annette Fortia, Old Westbury; Bruce Ryan, Loyola; Jennifer Barr, Stockton College; Dale Van Cantfort, Piedmont University; Larry Goldstein, Iona University; Duane Prokop, Gannon University; Jeff Stoltman, Wayne State University; Nevena Koukova, Lehigh University; Matthew R. Hartley, University of California, Berkeley; Cindy Claycomb, Wichita State University; Pola Gupta, Wright State University; Joan Lindsey-Mullikin, Babson College. Also: Barnett Helzberg, Jr. f the Shirley and Barnett Helzberg Foundation, and my colleagues from Cleveland State University: Ram Rao, Sanford Jacobs, Andrew Gross and Benoy Joseph. From Wiley: Judith Joseph, Kimberly Mortimer, Carissa Marker. Robert F. Hartley, Professor Emeritus College of Business Administration Cleveland State University Cleveland, Ohio R. [email  protected] ED U ABOUT THE AUTHOR Bob Hartley is Professor Emeritus at Cleveland State University’s College of Business Administration. There he taught a variety of undergraduate and graduate courses in management, marketing, and ethics.Prior to that he taught at the University of Minnesota and George Washington University. His MBA and Ph. D. are from the University of Minnesota, with a BBA from Drake University. Before coming into academia, he spent thirteen years in retailing with the predecessor of Kmart (S. S. Kresge), JCPenney, and Dayton-Hudson and its Target subsidiary. He held positions in store management, central buying, and merchandise management. His first textbook, Marketing: Management and Social Change, was published in 1972. It was ahead of its time in introducing social and environmental issues to the study of marketing.Other books, Marketing Fundamentals, Retailing, Sales Management, and Marketing Research, followed. In 1976 the first Marketing Mistakes book was published and brought a new approach to case studies, making them student-friendly and more relevant to career enhancement than existing books. In 1983, Management Mistakes was published. These books are now in the eleventh and ninth editions, respectively, and have been widely translated. In 1992 Professor Hartley wrote Business Ethics: Violations of the Public Trust. Business Ethics Mistakes and Successes was published in 2005. He is listed in Who’s Who in America, and Who’s Who in the World. ii This page intentionally left blank CONTENTS Preface About the Author Chapter 1 Introduction PART I ENTREPRENEURIAL ADVENTURES Chapter 2 Chapter 3 Chapter 4 Google: An Entrepreneurial Juggernaut Starbucks: A Paragon of Growth and Employee Benefits Finds Storms Boston Beer: Is Greater Growth Possible? 29 46 PART II MARKETING WARS 61 Chapter 5 Chapter 6 Chapter 7 Cola Wars: Coca-Cola vs. Pepsi PC Wars: Hewlett-Packard vs. Dell Airliner Wars: Boeing vs. Airbus; and Recent Outsourcing Woes 63 86 PART III COMEBACKS Chapter 8 Chapter 9 Chapter 10 McDonald’s: Rebirth Through ModerationHarley-Davidson: Creating An Enduring Mystique Continental Airlines: Salvaging From the Ashes PART IV MARKETING MANAGEMENT MISTAKES Chapter 11 Chapter 12 Borden: Letting Brands Wither United Way: A Nonprofit Tries to Cope with Image Destruction DaimlerChrysler: A Merger Made in Hades Newell’s Acquisition of Rubbermaid Becomes an Albatross Euro Disney: Bungling a Successful Format Maytag: An Incredible Sales Promotion in England; and Outsourcing Kmart and Sears: A Hedge Fund Manager’s Challenge Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 iii vii 1 9 11 103 127 129 147 161 175 177 190 203 220 233 251 67 ix x †¢ Contents PART V NOTABLE MARKETING SUCCESSES 281 Chapter 18 Chapter 19 Chapter 20 Southwest Airlines: Success Is Finally Contested Nike: A Powerhouse Brand Vanguard: Is Advertising Really Needed? 283 302 319 PART VI ETHICAL MISTAKES Chapter 21 Chapte r 22 Chapter 23 Merck’s Vioxx: Catastrophe and Other Problems MetLife: Deceptive Sales Practices Ford Explorers with Firestone Tires: A Killer Scenario Ill Handled 335 351 Conclusions: What We Can Learn 380 Chapter 24 Index 333 365 400 CHAPTER ONE Introduction A t this writing, Marketing Mistakes has passed its thirtieth anniversary. Who would have thought?The first edition, back in 1976, was 147 pages and included such long-forgotten cases as Korvette, W. T. Grant, Edsel, Corfam, Gilbert, and the Midi. In this eleventh edition, seven cases from the tenth edition have been dropped, and seven added, several of these being modified from earlier editions. Other cases have been updated, and in some instances reclassified. Two exciting new entrepreneurial cases, Google and Starbucks, are introduced, and the entire Entrepreneurial Adventures moved to the front of the book as Part I. I think your students will find these cases particularly interesting and even inspiring.The popular â€Å"Marketing Wars† is again included, this time as Part II, and it follows major competitors in their furious struggles. Two new parts have been added from older editions: Part III Comebacks, and Part VI Ethical Mistakes. In response to your feedback, the section on notable successes has been continued. Some cases are as recent as today’s headlines; several still have not come to complete resolution. A few older cases have been continued or brought back. For example, Borden last appeared in the ninth edition, but some of you thought the learning insights were important enough to reintroduce the case.We continue to seek what can be learned—insights that are transferable to other firms, other times, other situations. What key factors brought monumental mistakes to some firms and resounding successes for others? Through such evaluations and studies of contrasts, we may learn to improve batting averages in the intriguing, ever-challenging art of decision making. We will encounter organizational life cycles, with an organization growing and prospering, then failing (just as humans do), but occasionally resurging. Success rarely lasts forever, but even the most serious mistakes can be (but are not always) overcome.As in previous editions, a variety of firms, industries, mistakes, and successes are presented. You will be familiar with most of the organizations, although probably not with the details of their situations. We are always on the lookout for cases that can bring out certain points or caveats in the art of marketing decision making, and that give a balanced view of the spectrum of marketing problems. The goal is to present examples that provide 1 2 †¢ Chapter 1: Introduction somewhat different learning experiences, where at least some aspect of the mistake or success is unique. Still, we see similar mistakes occurring time and again.From the prevalence of such mistakes, we have to wonder how much decision making has really progr essed over the decades. The challenge is still there to improve it, and with it marketing efficiency and career advancement. Let us then consider what learning insights we can gain, with the benefit of hindsight, from examining these examples of successful and unsuccessful marketing practices. LEARNING INSIGHTS Analyzing Mistakes In looking at sick companies, or even healthy ones that have experienced difficulties with certain parts of their operations, it is tempting to be overly critical. It is easy to criticize with the benefit of hindsight.Mistakes are inevitable, given the present state of decision making and the dynamic environment facing organizations. Mistakes can be categorized as errors of omission and of commission. Mistakes of omission are those in which no action was taken and the status quo was contentedly embraced amid a changing environment. Such errors, often characteristic of conservative or stodgy management, are not as obvious as the other category of mistakes. T hey seldom involve tumultuous upheaval; rather, the company’s competitive position slowly erodes, until management finally realizes that mistakes having monumental impact have been allowed to happen.The firm’s fortunes often never regain their former luster. Mistakes of commission are more spectacular. They involve hasty decisions often based on faulty research, poor planning, misdirected execution, and the like. Although the costs of eroding competitive position due to errors of omission are difficult to calculate precisely, the costs of errors of commission are often fully evident. For example, with Euro Disney, in 1993 alone the loss was $960 million from a poorly planned venture; it improved in 1994 with only a $366 million loss.With Maytag’s overseas Hoover Division, the costs of an incredibly bungled sales promotion were more than $300 million, and still counting. Then there was the monumental acquisition of Chrysler by Germany’s Daimler, maker of p roud Mercedes, for $36 billion in 1998. After nine tumultuous years, Daimler gave up and sold Chrysler to a private equity firm in 2007 for only $7. 4 billion. Although they may make mistakes, organizations with sharp managements follow certain patterns when confronting difficult situations: 1. Looming problems or present mistakes are quickly recognized. 2.The causes of the problem(s) are carefully determined. 3. Alternative corrective actions are evaluated in view of the company’s resources and constraints. 4. Corrective action is prompt. Sometimes this requires a ruthless axing of the product, the division, or whatever is at fault. Learning Insights †¢ 3 5. Mistakes provide learning experiences. The same mistakes are not repeated, and future operations are consequently strengthened. Slowness to recognize emerging problems leads us to think that management is incompetent or that controls have not been established to provide prompt feedback at strategic control points.Fo r example, a declining competitive position in one or a few geographical areas should be a red flag that something is amiss. To wait months before investigating or taking action may mean a permanent loss of business. Admittedly, signals sometimes get mixed, and complete information may be lacking, but procrastination is not easily defended. Just as problems should be quickly recognized, the causes of these problems— the â€Å"why† of the unexpected results—must be determined as quickly as possible. It is premature, and rash, to take action before knowing where the problems really lie.Returning to the previous example, the loss of competitive position in one or a few markets may reflect circumstances beyond the firm’s immediate control, such as an aggressive new competitor who is drastically cutting prices to â€Å"buy sales. † In this situation, all competing firms will likely lose market share, and little can be done except to stay as competitive as possible with prices and servicing. However, closer investigation may reveal that the erosion of business was due to unreliable deliveries, poor quality control, noncompetitive prices, or incompetent sales staff.With the cause(s) of the problem defined, various alternatives for dealing with it should be identified and evaluated. This may require further research, such as obtaining feedback from customers and from field personnel. Finally, the decision to correct the situation should be made as objectively as possible. If drastic action is needed, there usually is little rationale for delaying. Serious problems do not go away by themselves: They tend to fester and become worse. Finally, some learning experience should result from the misadventure. A vice president of one successful firm told me,I try to give my subordinates as much decision-making experience as possible. Perhaps I err on the side of delegating too much. In any case, I expect some mistakes to be made, some decision s that were not for the best. I don’t come down too hard usually. This is part of the learning experience. But God help them if they make the same mistake again. There has been no learning experience, and I question their competence for higher executive positions. Analyzing Successes Successes deserve as much analysis as mistakes, although admittedly the urgency is less than with an emerging problem that requires quick remedial action.Any analysis of success should seek answers to at least the following questions: Why Were Such Actions Successful? †¢ Was it because of the nature of the environment, and if so, how? †¢ Was it because of particular research, and if so, what and how? 4 †¢ Chapter 1: Introduction †¢ Was it because of particular engineering and/or production efforts, and if so, can these be adapted to other operations? †¢ Was it because of any particular element of the strategy—such as service, promotional activities, or distribution methods—and if so, how, and is it transferable to other operations? Was it because of the specific elements of the strategy meshing well together, and if so, how was this achieved? Was the Situation Unique and Unlikely to Be Encountered Again? †¢ If the situation was not unique, how can these successful techniques be used in the future and defended against competition? ORGANIZATION OF THIS BOOK In this eleventh edition we have modified the classification of cases somewhat from earlier editions. As mentioned before, Part I, Entrepreneurial Adventures, describes and analyzes well-known recent endeavors.In Part II, Marketing Wars, we examine the actions and countermoves of archrivals in hotly competitive arenas. Part III, Comebacks, studies three firms that faced adversity, and came back better than ever. In Part IV, Marketing Management Mistakes, we delve into seven firms guilty of a variety of mistakes that offer great learning insights. Part V, Notable Marketing Success es, offers paragons of successful marketing strategies and operations. Finally, in Part VI, Ethical Mistakes, we examine three firms whose mistakes had major ethical and legal consequences.Let us briefly describe the cases that follow. Entrepreneurial Adventures Google is arguably the most outstanding successful new enterprise ever. It was founded by Sergey Brin and Larry Page who dropped out of Stanford’s Ph. D program to do so. With its search engine, it raised advertising to a new level: targeted advertising. In so doing, it spawned a host of millionaires from its rising stock prices and stock options and made its two founders some of the richest Americans, just under Bill Gates and Warren Buffett. How did they do it?Starbucks is also a rapidly growing new firm—not as much as Google, but still great—and a credit to founder Howard Schultz’s vision of transforming a prosaic product, coffee, into a gourmet coffee house experience at luxury prices. Boston Beer burst on the microbrewery scene with Samuel Adams beers, higher priced even than most imports. Notwithstanding this—or maybe because of it—Boston Beer became the largest microbrewer. It proved that a small entrepreneur can compete successfully against the giants in the industry, and do this on a national scale. Marketing WarsPepsi and Coca-Cola for decades competed worldwide. Usually Coca-Cola won out, but it could never let its guard down; however, it recently did so in Europe. Now a Organization of this Book †¢ 5 trend toward noncarbonated beverages along with Pepsi’s non-drink diversifications is swinging the momentum to Pepsi. But Coca-Cola is trying hard to recover. Dell long dominated the PC market with lowest-prices, direct-to-consumer marketing. Hewlett-Packard, the world’s second biggest computer maker, chose Carly Fiorina, a charismatic visionary, to be its CEO, and she engineered a merger with Compaq.But growth in profitability did no t follow, and early in 2005, the board fired Fiorina. Mark Hurd, an operational person, replaced her, and brought the company to PC dominance. But Michael Dell is fighting back. Boeing long dominated the worldwide commercial aircraft market, with the European Airbus only a minor player. A series of Boeing blunders, however, coupled with an aggressive Airbus, brought market shares close to parity. Both firms are now introducing strikingly new planes, but are finding problems with their outsourcing key components to foreign suppliers.Comebacks McDonald’s had long dominated the fast food restaurant market. Then it began to falter, and hungry competitors made inroads into its competitive position. As it fought to regain its momentum, it explored diversifications and ever more store openings, while profitability plummeted. Recently, it found a new formula for profitable growth. In the early 1960s, Harley-Davidson dominated a static motorcycle industry. Suddenly, Honda burst on the scene and Harley’s market share dropped from 70 percent to 5 percent in only a few years.It took Harley nearly three decades to revive, but now it has created a mystique for its heavy motorcycles and gained new customers. And its Rallies are something else again. The comeback of Continental Airlines from extreme adversity and devastated employee morale to become one of the best airlines in the country is an achievement of no small moment. New CEO Gordon Bethune brought marketing and human relations skills to one of the most rapid turnarounds ever, overcoming a decade of raucous adversarial labor relations and a reputation in the pits.Marketing Management Mistakes Borden, with its enduring symbol of Elsie the Cow, was the country’s largest producer of dairy products. On an acquisitions binge in the 1980s, it became a diversified food processor and marketer—and a $7 billion company. But Borden allowed consumer acceptance of its many brands to wither through unrea listic pricing, ineffective advertising, and an unwieldy organization. United Way of America is a nonprofit organization. The man who led it to become the nation’s largest charity perceived himself as virtually beyond authority.Exorbitant spending, favoritism, conflicts of interest—these went without criticism until investigative reporters from the Washington Post publicized the scandalous conduct. With its public image plummeting, contributions nationwide drastically declined. The real concern was whether United Way could ever regain its former luster. 6 †¢ Chapter 1: Introduction The merger of Chrysler with Daimler, the huge German firm that makes Mercedes, was supposed to be a merger of equals. But Chrysler’s management quickly found otherwise, and the top Chrysler executives were soon replaced by executives from Germany.Assimilation and coordination problems plagued the merger for years. Nine years later, Daimler sold Chrysler to a private equity firm f or tens of billions of dollars less than it paid. Newell, a consumer-products firm, successfully geared its operations to meet the demands of giant retailers, particularly Wal-Mart, whereas Rubbermaid had in recent years been unable to meet those stringent requirements. In 1999, Newell acquired Rubbermaid, confident of turning its operation around, only to find that Rubbermaid’s problems were not easily corrected and that they negatively impacted Newell’s fortunes as well.What do you do now? In April 1992, just outside Paris, Disney opened its first theme part in Europe. It had high expectations and supreme self-confidence (critics later called it arrogance). The earlier Disney parks in California, Florida, and more recently Japan were all spectacular successes. But rosy expectations became a delusion as marketing miscues finally showed Disney that Europeans, and particularly the French, were not carbon copies of visitors elsewhere. The problems of Maytag’s Hoov er subsidiary in the United Kingdom almost defy reason.The subsidiary planned a promotional campaign so generous that the company was overwhelmed with takers; it could neither supply the products nor grant the prizes. In a miscue of multimillion-dollar consequences, Maytag had to foot the bill while trying to appease irate customers. What can we learn from Maytag’s travails? Two faltering retail chains, Kmart and Sears, merged under the auspices of a hedge fund manager, Edward Lampert. Whether two weaklings could become one strong operation to compete with the likes of Wal-Mart and Target was uncertain, though investors bid both stocks up to extravagant levels in anticipation.The rosy expectations collapsed as we moved into a recession in 2007 and 2008. Notable Marketing Successes Southwest Airlines found a strategic window of opportunity as the lowest cost and lowest price carrier between certain cities. And how it milked this opportunity! Now it threatened major airlines in many of their domestic routes. However, by 2008, competitors were beginning to counter Southwest’s price advantage. Nike and Reebok were major competitors in the athletic footwear and apparel market. Nike was overtaken by Reebok in the late 1980s, but then Nike surged far ahead, never to be threatened again.What is the secret of Nike’s increasing dominance? Vanguard has become the largest mutual fund company, charging past Fidelity. Vanguard’s strategy is to downplay marketing, shunning the heavy advertising and overhead of its competitors. It provides investors with better returns through far lower expense ratios and relies mostly on word of mouth and unpaid publicity to General Wrap-Up †¢ 7 gain new customers, while old customers continue to pour in money. Is Vanguard vulnerable to aggressive new competitors? Ethical MistakesMerck, the pharmaceutical giant, learned that its blockbuster arthritis drug, Vioxx, doubled the risk of a heart attack or stroke. Over five years and $500 million in advertising, it had 20 million users in the United States at the time it recalled the drug September 30, 2004. Critics and tort lawyers assailed the company for waiting so long to recall this drug, since some research studies as early as five years before had raised questions about the safety of Vioxx. What can we learn from Merck’s handling of its great profit-making drug now discredited?The huge insurance firm MetLife, whether through loose controls or tacit approval, permitted an agent to use deceptive selling tactics on a grand scale, in the process enriching himself and the company. Investigations by several state attorneys general brought a crisis situation to the firm that it was slow to react to. Eventually, fines and lawsuits totaled almost $2 billion. Product safety lapses that result in injuries and even loss of life are among the worst abuses any company can confront. Worse, however, is when such risks are allowed to continue fo r years.Ford Explorers equipped with Firestone tires were involved in more than 200 deaths from tire failures and vehicle rollovers. After news of the accidents began surfacing, Ford and Firestone each blamed the other for the deaths. Eventually, inept crisis management brought a host of lawsuits resulting in massive recalls and billions in damages. GENERAL WRAP-UP Where possible, the text depicts major personalities involved in these cases. Imagine yourself in their positions, confronting the problems and facing choices at their points of crisis or just-recognized opportunities.What would you have done differently, and why? We invite you to participate in the discussion questions, the handson exercises, the debates appearing at the ends of chapters, and the occasional devil’s advocate invitation (a devil’s advocate is one who argues an opposing viewpoint for the sake of testing the decision). There are also discussion questions for the various boxes within chapters. W hile doing these activities, you may feel the excitement and challenge of decision making under conditions of uncertainty. Perhaps you may even become a fast-track executive and make better decisions.QUESTIONS 1. Do you agree that it is impossible for a firm to avoid mistakes? Why or why not? 2. How can a firm speed up its awareness of emerging problems so that it can take corrective action? Be as specific as you can. 8 †¢ Chapter 1: Introduction 3. Large firms tend to err on the side of conservatism and are slower to take corrective action than smaller ones. Why do you suppose this is? 4. Which is likely to be more costly to a firm, errors of omission or errors of commission? Why? 5. So often we see the successful firm eventually losing its pattern of success.Why is success not more enduring? PART ONE E N T REPREN E U R I A L A D V EN T UR E S This page intentionally left blank CHAPTER TWO Google—An Entrepreneurial Juggernaut I n 1998 Sergey Brin and Larry Page dropped out of the Ph. D program at Stanford to start Google in a friend’s garage. Along the way, they discovered a powerful marketing tool that would revolutionize advertising. Six years later, on August 19, 2004, they took this Internet search and advertising firm public at a price of $85 a share. One year after the initial public offering (IPO), Google stock closed at $280.By 2007, the stock had gone over $700, and lots of people had become very rich. But this was to cause some serious concerns for the firm. Brain Drain Craig Silverstein, a fellow Stanford Ph. D student, was the first hire of Page and Brin. He helped them move their equipment out of Page’s dorm room and into a place with more space and, more importantly, a garage. In early 1999, five months later, the enterprise had grown enough to move into offices on University Avenue in downtown Palo Alto. The firm’s fortunes continued to improve, and Craig became director of technology in charge of product develo pment.Before many years, Craig realized he had become very rich indeed. From the beginning, Google gave its employees stock options in lieu of competitive salaries that in those days it could ill afford. These options gave employees the right to purchase a given number of shares of stock at a certain price, called a vested price, some years in the future. Even before going public in 2004, it had granted two big batches of such options. A 2002 grant that was priced at 30 cents a share vested in 2006. Another, priced at $4 a share in 2003, also vested in 2006.In May 2008, another round of options would be exercisable at $35, far more costly than the 30 cent option, but the way the stock was going up since the IPO, this higher price was of little consequence. By 2007, Craig was worth well over $100 million in Google stock and was becoming richer with every passing day. He knew that some 700 of his associates were worth at least $5 million, and he knew that many of them were talking abo ut quitting, with some wanting to start their own businesses. He knew that Bismarck Lepe, for example, who began working 11 12 †¢ Chapter 2: Google—An Entrepreneurial Juggernaut or Google in 2003, had left the firm immediately after his four-year options vested in 2007. He now had a few million dollars that would help him start his own firm—2 million in only four years, wow! Craig couldn’t help pondering whether he should do the same. After all, how many hundreds of millions does one man need? But he did not really see himself as an entrepreneur. At his young age, about the same age as Sergey and Larry, he was not ready to retire to some South Sea island and count coconuts. So he stayed, caught up in the challenge of solving tough problems with other smart Googlers. Making the brain drain all the more tempting for many of these employees was Google’s hiring of the brightest young people, the very ones most likely to become entrepreneurs, if given the chance. Their ambitions fed on the great example of Google, as well as a plethora of smaller enterprises in this hotbed of innovation that was Silicone Valley with its great research universities such as Stanford. SERGEY BRIN AND LARRY PAGE AND THE START OF GOOGLE In 1998 when the venture that was to be Google was only an idea, Sergey and Larry were both 25 years old and were doctoral students at Stanford.Sergey was a math whiz, having completed his undergraduate degree at 19, and aced all ten of the required doctoral exams on his first try, and teamed easily with professors doing research. His parents’ backgrounds were rich in science and technology. His mother was a scientist at NASA’s Goddard Space Flight Center. His father, Michael, taught math at the University of Maryland. Sergey was born in Moscow, but he and his family left the Soviet Union when he was six, fleeing anti-Semitism and seeking greater opportunity for themselves and their children.Larry Page grew up in Michigan, also the son of a professor whose Ph. D was computer science, and who taught at Michigan State University where Larry’s mother also taught computer programming. He followed in the footsteps of his father and brother by going to the University of Michigan where he studied computer engineering, receiving his undergraduate degree in 1995. At first he had felt uneasy about being one of the select few to be admitted to Stanford’s elite Ph. D program. In those early days, these sons of esteemed professors were focused on pursuing their Ph. Ds, not on getting rich. In their families, nothing trumped the value of a great education. Neither of them had the slightest idea just how soon their heartfelt commitment to academia would be tested. †2 The Beginning In the mid-1990s, the Internet was just emerging. Millions of people were logging on and communicating through email. But researchers grew frustrated with the clutter of Web sites. Searching it for relev ant information often resulted in an abundance of completely meaningless data. Search engines began to organize the Internet, and thus Yahoo and AltaVista among others were born. But they still left a lot to be 1 2Examples can be found in Quentin Hardy, â€Å"Close to the Vest,† Forbes, July 2, 2007, pp. 40–42. David A. Vise, The Google Story, New York: Delacorte, 2005, p. 31. Sergey Brin and Larry Page and the Start of Google †¢ 13 desired. The answer to more relevant research seemed to be a better use of links, such as a highlighted word or phrase. In 1996, Page and Brin teamed up to work on downloading and analyzing Web links. In the process they developed a ranking system for searching the Internet that yielded prioritized results based on relevance to the object of the search, and useful answers could be found swiftly.In 1997, they made the search engine available to students, faculty, and administrators on the Stanford campus, and popularity grew by word of mouth. As the database and number of users burgeoned, more computers were needed. In these early days, Brin and Page were able to scrounge around for unused computers and string together inexpensive PCs. By July 1998, they had an index of 24 million pages, with more coming. But their growth was stymied by lack of capital. They decided to take a leave of absence from the Ph. D program and start their own firm.This way they could develop a business of their own that would fit their search engine. If it was as good as they thought, and with Internet use growing so rapidly, growth could be virtually unlimited. Rather than selling out to some existing firm, wouldn’t they be better off keeping control? Still, by August they had run out of cash and badly needed an â€Å"angel. † One of their professors suggested they meet his friend, Andy Bechtolsheim, a legendary investor in a string of successful start-ups. After listening to their presentation, he said, â€Å"This is the single best idea I’ve heard in years.I want to be part of this,† and he left them a check for $100,000 made out to Google Inc. 3 It took them two weeks before they could formally incorporate the company, Google Inc. , and then open their first bank account. The check sustained the two entrepreneurs at first, and in fall 1998 they moved their computers from a dorm room into a garage and several rooms of a house. They also hired a friend, Craig Silverstein (mentioned earlier), as their first employee. After five months they outgrew the garage and moved into offices in downtown Palo Alto, barely a mile from the Stanford campus.By now, their search engine was handling 100,000 queries a day, all this through word of mouth, emails, and instant messages. But they were again running out of money, despite the now $1 million in funding that they had collected from Bechtolsheim and other early investors, and through borrowing on their credit cards. But it was clear that with upwar d of 500,000 searches per day toward the end of the year, they needed much more money. In the boomtown climate of Silicon Valley in early 1999, a public stock offering was one option, even though Google had no profits.But Brin and Page resisted this option, not wanting to reveal their trade secrets and lose some control. Efforts to license their search technology to other firms wishing to use it for research, found few takers. Eventually they went the venture capital route. But Brin and Page insisted on keeping control of Google’s destiny and remain majority owners, or it was no deal. On June 7, 1999, less than one year after they left Stanford, they issued a press release announcing that two venture capital firms, Kleiner Perkins and Sequoia Capital, were investing $25 million in Google.On the Stanford campus and around Palo Alto, amazement reigned at the enormity of the sum seemingly without the two giving anything up in return. â€Å"The announcement included details of t he funding as well as additional information about Google, its impressive list of investors, and its growth 3 Vise, p. 48. 14 †¢ Chapter 2: Google—An Entrepreneurial Juggernaut rate of 50 percent per month. All this put the company in the global limelight, giving it the opportunity to grow further through free media publicity. †4 But Google still had not earned any appreciable revenue to upport its heady growth, and no plan for this was revealed in the press release. THE EARLY GROWTH YEARS By the end of 1999, Google was averaging 7 million searches per day, but its revenue from licensing remained small. If the business could not be reasonably profitable, they could hardly maintain their vision of vast information available to users without charge. With licensing its search technology to businesses proving to be such a limited revenue source, they finally were forced to consider allowing advertisers access to their multitude of users.Brin and Page could see a relati onship between their search engine and the television networks: those offered entertainment and news for free, while charging millions for the advertising. But the two shuddered at the flashy banner ads that littered the Internet. Still, they belatedly recognized that advertising was where vast sums were being spent, not in licensing, Creating a Different Advertising Model They wanted to avoid the clutter of almost out-of-control, irrelevant ads, and they developed strict standards for size and type of ads.They separated the free search results from the ads, which they would label â€Å"Sponsored Links. † These â€Å"Links,† because of their relevance to the search, would be clicked on more often than if they were labeled simply â€Å"Ads. † They decided to display the links in a clearly marked box above the free search results. The ads would be brief and look identical, with just a headline, a short description, and a link to a web page. But these would be targ eted ads, offering a major advantage for advertisers confronted with the huge wastage of advertising reaching uninterested audiences.At first Google sold this advertising to large businesses that could afford expensive ad campaigns, but it soon found substantial market potential in letting smaller advertisers easily sign up online with a credit card, and their ads could then be running within minutes. This gave Google an edge over similar providers unable to offer such fast service, and also minimized its own costs of selling advertising. Shortly after turning to its advertising model, Brin and Page had another innovative idea—they would rank ads based on relevance.And relevance would be determined by how often ads were clicked on by computer users. This would provide valuable feedback to advertisers and influence the selling and pricing of ads. CHARGING AHEAD When the Internet stock price bubble burst in 2000, it ravaged the former highflying entrepreneurial firms of Silicon e Valley with major layoffs and bankruptcies. But Google stood poised at the nadir of its great growth to come and was one of 4 Vise, p. 69. Charging Ahead †¢ 15 the few firms able to hire outstanding software engineers and mathematicians, many holding worthless stock options.This pool of talent stimulated Google’s growth as it moved to a large headquarters in Mountain View, named the Googleplex, forty minutes south of San Francisco. There Brin and Page developed a work environment practically unprecedented. See the following Information Box for some examples of this culture that was designed to cultivate strong loyalty and job satisfaction and to foster a creative, playful environment where Google’s employees, mostly young and single, would be willing to spend their waking hours. By early 2001, Google was recording 100 million searches per day.It was also entering the dictionary as a verb, as for example, to â€Å"google each other before dates. † Now larg e firms, such as Wal-Mart, the world’s biggest retailer, and Acura, a major automobile manufacturer, joined the entourage of firms advertising their wares on Google. What was the secret behind the rapid growth of Google’s advertising program? As we saw before, Google came up with an unique approach to advertising, an INFORMATION BOX WORK CLIMATE AT GOOGLE Employees worked long hours but were treated like family. There was even a gourmet chef, with free meals, healthy drinks and snacks.The chef took pride in providing better meals than found in area restaurants. Given the international mix of employees, the menu was varied to cater to all tastes: Southwestern, classic Italian, French, African, Asian, Indian, etc. The Wall Street Journal sent a reporter out to investigate. â€Å"Where else but the Plex can you zip around on a bicycle and choose from multicultural comfort food, American regional food, small plates, entrees made with five ingredients or less, and dishes b ased on raw materials supplied from within 150 miles of Mountain View?Many employees eat three meals a day at the Plex’s 17 food venues, open any time day or night. . . . We were told that Messrs. Brin and Page chow down with the troops. † (Raymond Sokolov, â€Å"Googling Lunch,† Wall Street Journal, December 1–2, 2007, pp. W1 and W5. ) Also furnished were such conveniences as on-site laundry, hair styling, dental and medical care, a car wash, day care, fitness facilities with personal trainers, and a professional masseuse. Brightly colored medicine balls, lava lamps, assorted gadgets and sports equipment gave the appearance of a college campus.Chartered buses had internet access so that commuters to San Francisco could use their laptops. Social events and entertainment were Friday afternoon and evening features. As a spur for creativity, a policy was set that software engineers spend at least 20 percent of their time, or one day a week, working on whateve r projects interested them. Do you see any downside to these workplace amenities? Would these influence your choosing to work for Google despite less money? Would some of these be appropriate to other firms? If so, what kind of firms? 16 †¢ Chapter 2: Google—An Entrepreneurial Juggernaut pproach that most advertisers previously could only dream of: i. e. , Targeted Text Ads. The unobtrusive ads are seen only by potential customers who are searching for information on that specific topic. In one swell swoop this advertising virtually eliminates the great waste of most mass media advertising that is viewed by a vast audience who have no interest whatever in the product being advertised despite millions and hundreds of millions of dollars being spent. For an example of the waste of such untargeted ads, consider an airline spending $1 million or more on a TV ad campaign that gains only 100 new first-class customers as a result. Furthermore, in Google-placed ads no intrusive banners compete for attention. The text ads (links) and websites are read carefully by users or potential users, and these often find the ads as valuable as the actual search results. A New CEO In early January 2001, at the urging of its venture capitalists, Larry and Sergey reluctantly consented to hire a chief executive officer to run operations. Eric Schmidt was highly recommended by one of the venture capitalists. He not only had entrepreneurial experience as founder of Sun Microsystems, and CEO of Novell, but also academic credentials—a Ph.D in computer science from the University of California at Berkeley, and a degree in electrical engineering from Princeton. Then there was research experience at Xerox Palo Alto Research Center and Bell Labs. At 46, he was a seasoned tech executive and brought a needed mature balance to this organization of young people. Besides, he was willing to invest $1 million of his own money to buy preferred stock in Google, this at a time when the company was running short of cash again. (It would soon never again run short of cash. ) Google entered into pacts with Yahoo, AOL, EarthLink, and Ask Jeeves.This gave it relationships with most of the biggest Internet properties. By the end of 2002, Google and its venture capitalists could see that the search engine was going to be a huge financial success. For the year, it had recorded $440 million in sales and an amazing $100 million in profits. Virtually all of these profits came from people clicking on the text ads that were on the right side of search results pages at Google. com and the pages of its partners and affiliates. But the world did not realize the extent of this profitability since Google was still a private company.This silence about the profitability of the online search and advertising business model undoubtedly kept other firms, especially Microsoft and Yahoo, from investing in or developing search engines of their own—until Google had an almost insur mountable head start. The advertising industry was being transformed as well, as billions of dollars of advertising was being shifted from television, radio, newspapers, and magazines to the Internet. But the time was nearing for Google to go public, and with this full disclosure would shock the investment community and make Google stock the darling of investors and employees alike. Example cited in Seth Godin, â€Å"Your Product, Your Customer,† Forbes, May 7, 2007, p. 52. Going Public †¢ 17 GOING PUBLIC Finally in early 2004, Larry and Sergey reluctantly started the process of taking Google public. In truth, their decision was practically dictated by federal rules that required public disclosure of financial results by companies with a substantial amount of assets and shareholders, and Google had exceeded these limits with many of the company employees having been given stock in the then-private firm. This move would enable them to convert their holdings to cash.The ve nture capitalists who had supplied the early crucial funds would also benefit from the liquidity that going public would provide. For most entrepreneurs, taking their new firm public was the ultimate goal since the IPO (initial public offering) would often make them instant millionaires. But for Brin and Page, the reality of being billionaires was not all that appealing. They both lived relatively modestly, loved the privacy, and cared little for the accumulation of wealth and the accoutrements of wealth—such as grand homes, planes, and yachts to attest to their success.The company was debt free, self-funded, had plenty of cash, and had no need to sell stock to the public to raise money. They were not sure they wanted the immense publicity and what it would entail and affect the freedoms they had enjoyed, and that of their families. For example, would they need bodyguards? How about the paparazzi? And their employees who would become instant millionaires, how would this affec t their intensity and focus? And would they even stay with Google, or go out on their own? (We know that many left to start their own enterprises. In early 2004, the employees were quietly told that the company was going to file a public offering. And thousands of Google employees, spouses, and interested others began an eight-month guessing game of how much the company and themselves would be worth. The eight months proved to be a stressful time for almost all concerned, but probably most of all for Brin and Page. Their reluctance to disclose much before the public auction did not endear them to the media. Then an ill-advised Playboy interview did not go well and even triggered a SEC investigation.To make matters worse, the stock market was tanking as world oil prices spiked, and many analysts were warning of a global recession. Also, the Athens Olympics were starting amid great fears of terrorism. Google and its bankers realized that the initial price range of $108–$135 wou ld probably not be acceptable to the market at this time, and on August 19, Google finally went public at $85 a share. By the end of the first day, the stock had reached nearly $100. By the next day it was $108. It reached $200 in November and kept climbing from there.Forbes, in its listing of the 400 Richest Americans cited Brin and Page’s wealth at $4 billion each at the end of 2004, due to the success of the IPO. Then in 2006, â€Å"The Google Guys crack the top 10 of the Forbes 400, each now worth $18. 5 billion. † This placed them as the fifth richest Americans, in the company of Bill Gates and Warren Buffett, ahead of Michael Dell of Dell Computer, and way ahead of Donald Trump. And they were both only 34. 6 6 Forbes, Forbes 400 The Richest People in America, October 8, 2007, p. 78. 18 †¢ Chapter 2: Google—An Entrepreneurial Juggernaut AFTER THE IPOAfter the IPO, the pace of innovation at Google got into high gear. New products and innovations were be ing spawned and made available to millions of customers around the world. Google became the darling of the media; no other firm or individual got the press coverage of Google. The fact that it was now a public company with its financial performance readily available—and as such now well covered by financial analysts who did not cover private firms—made its promising results and potential very visible. It expanded the lead in its core search and advertising business in the United States and much of the world.And with its new cash horde, it eagerly branched out into new areas, even such far out visions as a Green renewable-energy program to find ways to generate electricity more cheaply than by burning coal. 7 Not surprising, the growth of Google was being compared with that of Microsoft two decades earlier. Google was also becoming a major competitor of Microsoft, not in PCs, but in a later phase of technology that was surpassing the earlier technology, this time by the power of the Internet revolution. But perhaps the real competition was in recruiting and retaining the brightest technology minds in the world.But more about this later. For now, let us compare this early growth of Google with Microsoft in the Information Box beginning on page 19. Google’s Poaching of Talent As the business burgeoned in the spring and summer of 2005, Google added more than 700 employees in just three months. The total headcount now was 4,183, nearly double the total the previous year. Google was hiring Ph. Ds from the top universities across the country, and even trespassing on Microsoft’s own neighborhood, at the University of Washington.It opened a facility in a Seattle suburb just down the road from Microsoft’s Redmond plant, and now it was easy for their engineers and scientists to move over to Google. They didn’t even have to move to a new city or change their commute. In these days, Microsoft was viewed as a mature business. It no longer had the sex appeal that Google had grasped. Microsoft was struggling to keep its best people, even offering more money and perks. But the amazing growth and potential of Google brought the lure of great riches as stock options became valuable.As mentioned before, not the least of the perks that Google offered were the free restaurants and other amenities at its Googleplex headquarters in the Silicone Valley 40 minutes south of San Francisco. The increasing poaching of talent climaxed with Dr. Kai-Fu Lee, a highly regarded scientist, who wanted to leave Microsoft to become president of Google China. Microsoft began an all-out legal assault alleging that Google improperly sought to induce Lee to violate the terms of his employment contract with Microsoft. A temporary triumph over Google raised the specter of litigation for any senior Microsoft employee who left for Google.The wide publicity served to illustrate how seriously Microsoft regarded the threat posed by its smaller ri val. 8 7 Rebecca Smith and Kevin J. Delaney, â€Å"Google’s Electricity Initiative,† Wall Street Journal, November 28, 2007, p. A16. 8 Vise, p. 274. Analysis †¢ 19 ANALYSIS Here we have seen perhaps the greatest growth ever of a new enterprise. In the exuberance of this growth, investors bid up its stock market price to make the company more valuable than such long-established firms as Coca-Cola, Hewlett-Packard, Time Warner, AT&T, Boeing, Disney, McDonald’s, and General Motors and Ford.INFORMATION BOX COMPARISON OF MICROSOFT AND GOOGLE Table 2. 1 Comparison of Microsoft and Google Growth in Revenues from Their Beginnings Microsoft Beginning Went Public Years from Beginning 1975 1986 11 years Revenues (millions) 1986 1987 1988 1989 1990 1991 1992 Google Y/Y Growth $ 1996 2004 8 years 40. 7% 75. 1 70. 1 36. 0 47. 3 55. 8 49. 7 197 346 591 831 1,183 1,843 2,759 1996 28,365 32,187 36,835 39,735 44,282 Y/Y Growth $ 409% 233. 9 117. 5 92. 5 72. 8 9. 400 2002 200 3 2004 2005 2006 Revenues (millions) 13. 5 14. 4 7. 9 11. 4 439 1,466 3,189 6,138 10,605Source: Calculated from company annual reports. Commentary: The much faster start of Google is mind-boggling. The experts thought Microsoft was the model of the most successful entrepreneurial start ever. Bill Gates did not rush to take his venture public, waiting 11 years to do so, at which time revenues were almost $200 million. Google on the other hand delayed only six years before going public, but its revenues were already over $3 billion. As we can see, the year-to-year growth rate also strongly favored Google, with around a hundred percent growth since 2004. The two years before going public showed growth over 400 percent and 200 percent each year. ) The comparison between a young growth company and a mature Microsoft is clearly evident. (continues) 20 †¢ Chapter 2: Google—An Entrepreneurial Juggernaut COMPARISON OF MICROSOFT AND GOOGLE (continued) Table 2. 2 Comparison of Micr osoft and Google Net Income from Their B