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  • pg 1
									                 Examples of Lessons

     Created for the November 8,2010

issue of Canadian Business     Magazine

                   Marketing / Branding
                   and Logos, p. 1

                   Labour Relations /
                   Labour Management
                   Issues, p. 5

                   Leadership /
                   Management, p. 7

                   Foreign Investment /
                   Economics, p. 9

Canadian Business Educational Focus, November 8, 2010 Issue

Course Applications: Introduction to Business: Marketing / Branding & Logos

Difficulty Level:                Level 1-2

Article:                       “Crowd-sourced chaos at the Gap”, p. 21

Article Summary:              In an effort to boost its slowing sales, American retail clothing manufacturer
                              Gap Inc. created a new logo and introduced it online. The new logo, however,
                              was greeted with much criticism on Facebook, Twitter, and various blogs. To
                              counter this backlash, the company announced that it would crowd-source a new
                              logo, but that plan was also met with much disapproval. The company has now
                              decided to revert to the old logo. Some marketing experts are suggesting that
                              this marketing fiasco was a result of the company not really knowing its brand.

 To examine the concepts of brand and branding
 To consider the role and presentation of a logo
 To observe a failed marketing initiative and brainstorm counteracting strategies

Terminology & Concepts
logo: a graphic mark or emblem used by businesses          submission: surrendering power to another
and organizations to aid and promote instant public
recognition; logos are either purely graphic               revert: go back to old ways
(symbols/icons) or are composed of the name of the
organization; a logo is a symbol that embodies             flat revenues: no decline in sales but no growth
elements of an organization such as its values, goals,     either
mission, and culture
                                                           brand: a product or service with recognizable and
fiasco: a ludicrous or humiliating failure; an effort      expected characteristics within a target market
that went quite wrong
                                                           branding: the application of marketing techniques to
crowd-sourcing: the act of taking tasks traditionally      a specific product, product line, or brand in order to
performed by an employee, and outsourcing them to          increase a product’s perceived value to the customer
a group of people or community, through an “open           and thereby increase brand franchise and brand
call” to a large group of people (a crowd) asking for      equity (the accumulated consumer
contributions                                              knowledge/dedication to a brand ); strong branding
                                                           creates an implied promise that the level of quality
spec work: (short for speculative) any job for which       people have come to expect from a brand will
the client expects to see examples or a finished           continue with future purchases of the same product.
product before agreeing to pay a fee                       This may increase sales by making a comparison
                                                           with competing products more favorable. It may also
tactical play: a calculated move designed to achieve       enable the manufacturer to charge more for the
some specific result                                       product.

consistency: the same throughout in structure or               incensed: indignant; angered at something unjust or
composition                                                    wrong

evolution: development; a process in which                     earnest: sincere
something passes by degrees to a different stage
(especially a more advanced or mature stage)                   backlash: an adverse reaction to some political or
                                                               social occurrence
revolution: a drastic and far-reaching change in
ways of thinking and behaving                                  gauge: measurement

1) Why did Gap change its logo recently?

2) What controversy was incited when the new Gap logo was unveiled on line? How did the company deal with
   this controversy?

3) According to Ted Matthews, a brand coach at Instinct Brand Equity Coaches, what did Gap do wrong in the way
   it changed its logo?

4) What is the problem with using crowd-sourcing to come up with a new company logo?

5) Despite the controversy, how may this logo debacle ultimately work to Gap’s benefit?

6) According to brand coach Ted Matthews, how should Gap have managed this uproar over its new logo?

1)   Look at the new and the old Gap logo shown in the middle of the article. Why do you think this new logo
     elicited such strong backlash when it was introduced on the Gap website? What do you think Facebook users,
     Twitters, and design bloggers have against this logo?

2)   According to Ted Matthews, a brand coach at Instinct Brand Equity Coaches, “the No. 1 rule of branding is
     consistency, and when freshening up is necessary, it should be an evolution not a revolution.” What does he
     mean? In what ways would you have changed the Gap logo, keeping in mind this rule?

3)    Do you agree with the expert quoted in the article who suggests that this whole logo fiasco is a reflection of
     the Gap management not really knowing the Gap brand?

4)   Gap recently announced it is reverting back to its old logo. Is this a good strategy? What would you have the
     company do to leverage all this public attention created by the logo change to its advantage?

5)   Cite examples of other companies that have changed their logo either recently or in the past, and evaluate the
     benefits of that change for the company. (A couple examples are KFC and Holiday Inn.)

6)   What are the risks of changing a company logo? How may a change in the logo affect a company’s target
     market? When is it useful to change a logo?

7)   Design a new logo for the Gap. Keep in mind the following:

          A logo is a symbol that embodies elements of an organization such as its product/service lines, values,
             goals, mission, and culture.

          A logo is used by businesses to aid and promote instant public recognition.

          Logos are either purely graphic (symbols/icons) or are composed of the name of the organization.

          Color is considered important to brand recognition. Some colors are associated with certain emotions
             that the designer/company wants to convey. For instance loud primary colors, such as red, are meant to
             attract the attention; green is often associated with health or the environment, and more subdued tones
             can communicate reliability, quality, relaxation, or other traits.

Answers to Comprehension Questions
1) Sales at Gap North America, owned by Gap Inc., have declined in the past six months, and are flat
     compared to last year. The company needed a boost.

2) When Gap introduced a new logo on its website, almost immediately, the design was trashed on Facebook,
   Twitter and design blogs. But instead of standing by its new look, Gap responded by saying it would soon
   announce a “crowd-sourcing project” that would look to the public for new design ideas. That, however, further
   enraged observers, who denounced this crowd-sourcing as glorified spec work done for the company without
   fees. Finally, Gap announced it would revert to its old logo, and admitted that crowd-sourcing was a wrong

3) Matthews says that the logo chaos came from the management not really understanding its brand. “The No. 1
   rule of branding is consistency,” he says, “and when freshening up is necessary, it should be an evolution of the
   brand, not a revolution.”

4) The problem is that if you ask 100 people, you’ll get 100 different answers. Launching outsourcing is not smart
   “because you’re going to wind up with a pile of whimsical logos that may not be right for the strategic focus of
   a clothing company,” says Dave Watson, creative director of design at Taxi Canada.

5) Gap could use the opportunity to get people to re-evaluate what the brand means to them. “The extent
   of the backlash is a gauge of how strongly people feel, and how important the brand is in the lives
   of their customers.”

6) Gap should have firmly explained its reason for the change, and moved forward. That confidence would
   have shown customers that Gap has a clear vision for the future—a strength that would have defined
   the brand more than a logo ever will.

 Canadian Business Educational Focus, November 8, 2010 Issue
  Canadian Business Educational Focus, November 8, 2010
Course Application:                 Labour Relations, Labour-Management Issues
Difficulty Level:                   Level 2-3
Article:                            Ode: Stelco (1910-2010), p. 27
                                    Stelco’s fortunes were made during World War I and II, but a half-
Article Summary:                    century of warfare between unions and management finally took their toll
                                    on the company. After many worker strikes, successive managements’
                                    inability to turn the company’s dysfunctional labour relations around, and
                                    continued financial problems, Canada’s last steelmaker was bought by U.S.
                                    Steel in 2007. Now, the American-owned company is being sued by
                                    Canada’s government for allegedly breaking promises made when it
                                    acquired Stelco, by laying off workers, cutting production during the Great
                                    Recession, and more recently, shutting Hamilton’s Hilton Works.

Comprehension / Discussion
1) Define/discuss the following terms:

merger: corporate strategy of dealing with the buying, selling and combining of different companies that can aid,
finance, or help a growing company in a given industry grow rapidly without having to create another business
strike: a work stoppage caused by the mass refusal of employees to work; a strike usually takes place in response
to employee grievances.

labour union: an organization of workers that have banded together to achieve common goals such as better
working conditions; The trade union, through its leadership, bargains with the employer on behalf of union
members and negotiates labour contracts (collective bargaining) with employers. This may include the negotiation
of wages, work rules, complaint procedures, rules governing hiring, firing and promotion of workers, benefits,
workplace safety and policies, and provision of benefits to members to insure members against unemployment, ill
health, old age and funeral expenses.

legacy costs: costs incurred by an organization in prior years under different leadership or when the organization’s
priorities and resources were different. It primarily refers to obligations to pay health care costs and pensions for
current employees and retirees. (Legacy costs are often cited as one of the major problems that diminished the
competitiveness of auto manufactueres and older airlines, but organized labour sees this criticism as a way of
ending any form of binding contracts between worker and employer.)

contract gains: new labour-management contract that contain some or all of workers’ demands
creditor protection: legal means by which an individual or company in debt can stay or stall creditors from
demanding payments until the company’s operations and finances are restructured

pension hole: shortage of money to fund pension programs; not enough money in a pension program to meet
retiree obligations

bondholders: a bond is a debt security, in which the authorized issuer owes the holders a debt; a bondholder is a
registered holder of a financial bond issued by a company

holding company: a corporation that holds a majority of the shares outstanding of a subsidiary company.

1) What made The Steel Company of Canada profitable in the past?

 the First and Second World Wars

2) What caused the 1946 worker strike? How did this strike change the relations between the company’s
   management and its workers?

 Demanding higher wages, a 40-hour workweek and recognition of their union, about 2,000 employees lay siege
  to the Hilton Works mill. This strike put management in a state of war with Hamilton workers. Since the 1946
  strike, Stelco workers have walked off the job about once every decade.

3) What problems did Stelco have to deal with in the 1990s? How did Steeltown residents help the company?

 In the early 1990s, the company ran into problems dealing with the market downturn and competition form east
  Asia. Steeltown residents launched a share-buying spree to help then-CEO Fred Telmer deal with these

4) What action by then-CEO Fred Telmer enraged Hamilton workers in 1996?

 In 1996, Telmer enraged Hamilton workers by using pension holiday legislation to stop fully funding retiree

5) In addition to the market downturn and competition form east Asia, Stelco’s Hamilton Hilton Works was
   also showing its age. How did these problems come to a head in 2001? What did the management ask the
   employees at Hamilton Hilton Works to do to help the company?

 After Stelco lost $178 million in 2001, Telmer’s replacement Jim Alfano pleaded with Hamilton employees to
  help him deal with the mix of weak market conditions, legacy costs and cheap imports that had driven more than
  25 competitors bankrupt. But Stelco had just granted contract gains to Lake Erie employees, so USWA Local
  1005, which represents the Hamilton mill, demanded similar wage increases.

6) When Courtney Pratt took over Stelco in 2004, the company filed for creditor protection with $545 million
   in long-term debt and a $1.3-billion pension hole. What management error did Pratt make while the
   company was under creditor protection?

 Chinese demand for steel started to heat up after Stelco obtained creditor protection, and the company started
  posting record profits while claiming to be insolvent. Bondholders became aggressive—they forced the
  company to wipe out shareholders and legally separate the newer, better Lake Erie operation from the Hamilton
  mill and its obligations. Lake Erie workers accepted the restructuring after winning wage increases. Calling
  the process a fraud, Local 1005 refused to participate.

7) What happened to Stelco after it emerged from creditor protection?

 Stelco emerged from CCAA in 2006 as a holding company. After continuing to struggle with only 3,500
  employees, Canada’s last steelmaker was bought for $1.9 billion in 2007 by US Steel, which allegedly broke
  promises to Ottawa when it laid off workers and cut production during the Great Recession. While fighting
  related fines for these broken promises, U.S. Steel recently announced Hamilton’s Hilton Works will be idled

Analysis / Assignments
1) What role did the labour union play in Stelco’s eventual takeover by U.S. Steel? What role did the management
   play in this outcome?

2) An important aspect of Stelco’s management-union conflict was wage increases, but legacy costs were also a
   hot button issue. Explain what legacy costs are and how these can cause deep financial problems for a

3) What does the fact that Stelco returned to profitability immediately after gaining CCAA protection suggest
   about the steel maker? How would this affect its relationship with its workers?

4) Did the government make the right decision in allowing U.S. Steel to acquire Stelco? Could the sale of Stelco to
   U.S. Steel been averted? How did this deal work out for Canada?

5) Research the 1946 strike which gave rise to Stelco workers’ union, and prepare a report on this event. What led
   to this strike? What happened during the strike? What was the outcome of the strike? What is the signficiance
   of this event for Stelco and Canada’s labour unions?

6) Labour relations refer broadly to any dealings between management and workers about employment conditions.
   Most commonly, however, labor relations refers to dealings between management and a workforce that is
   already unionized, or has the potential to become unionized. How would you characterize Stelco’s labour

Course        Leadership, Management
Difficulty Level: Level 2-3
Article:          “Why it pays to be a jerk”, p. 28
Article Summary: Since co-founding the Redwood Shores, Calif.–based Oracle in 1977, Larry Ellison’s
                        antics have earned him the distinction of Silicon Valley’s consummate
                        meanie. He’s been described as a “modern-day Genghis Khan who has elevated
                        ruthlessness in business to a carefully cultivated art form. His weapons are not the
                        marauding hordes but his company’s possession of a key technology platform, his
                        willingness to exploit it, and his disdain for anyone who gets in his way.” The incredible
                        success that Ellison has enjoyed goes against the current ideas of what good leadership
                        is all about, yet Ellison has managed to built Oracle into one of the most important tech
                        firms on the planet, with annual revenues of $27 billion—about a billion dollars shy of
                        his personal fortune.

Comprehension / Discussion
1) The incredible success of Oracle founder and CEO Larry Ellison goes against all accepted literature on
  the qualities it takes to make a good leader. What are those qualities? In what ways does Ellis differ from
  this model?

 Qualities like empathy, mediation skills and humility. By all accounts, he is a bad listener and a big talker, whose
 brash, take-no-prisoners approach tends to alienate employees and customers alike.

2) What main strategy has Ellison been deploying in his plan to make Oracle into one of the most important
   tech firms on the planet?

 Acquisition. Ellison’s willingness to buy out the competition has been essential to sustaining growth. “This is an
 industry in which basically growth has slowed to a crawl. The only way...you as a company can make progress is
 by acquisitions.” After acquiring more than 65 tech firms in the past five years, Ellison announced in September
 that he would be “buying chip companies,” suggesting that Oracle is positioning itself for “another level of world

3) How did Ellison start Oracle? What was his “vision” from the beginning?

 Working at Ampex in the mid-1970s—a firm that did contracts for the U.S. government— he got his first taste of
  database software while working on a project for the CIA with the code name “Oracle.” Around the same time,
  he read a paper published by IBM, which outlined a way to make it easier to store and retrieve data—a prototype
  for the first relational database. “I saw the paper, and thought that, on the basis of this research, we could build a
  commercial system.”

 “His plan was to start with database software and move into tools and applications years before any code was
  written on those areas....”

4) What is Ellison’s approach to human resource management?

 His strength is to hire very good people—the right people for the job, and for being able to work with him.
 Ellison’s willingness to constantly refresh the talent pool is also seen as a strength.

 He has a habit of casting off previously trusted executives, oftentimes shortly before their stock options are due
 to vest. Some say he does this if certain executives start to outshine them.

5) How does Ellis manage Oracle?

 Leaving the traditional management duties to trusted associates has enabled him to focus on thinking big—a
 crucial element for success in today’s tech world. “It allows him to be the visionary, the guy who determines
 what companies he’s going to buy and where he’s going to go,” he says. “He’s the strategic leader.”

6) According to psychoanalyst Michael Maccoby, author of Narcissistic Leaders: The Incredible Pros, The
  Inevitable Cons, what makes Ellison so successful?

 “What makes Ellison so successful, even though he’s a narcissist visionary and really not very good at working
  with people, is that he understands himself, and he understands who he needs to work with.”

7) According to Charles O’Reilly, an expert in organizational leadership at Stanford, what is the potential
  downside of a leader with a “cocksure attitude” like Ellison’s?

 It can have dramatic consequences. “When they’re right, everybody loves them,” he says of leaders like Ellison.
  “But it only takes one major mistake and you can destroy the company.”

1) What kind of leader is the founder and CEO of Oracle, Larry Ellison? Is he a leadership model for present
   times, in your opinion?

2) According to this article, to what qualities and strategies of Ellison’s does Oracle owe its success?

3) What do the following show about the kind of leader Larry Ellison is and his business strategies?

     his public attack on Hewlett Packard

     his confrontation with Bill Gates
     his takeover of PeopleSoft

4) Author Michael Maccoby wrote a book entitled Narcissistic Leaders: The Incredible Pros, The Inevitable Cons.
   Maccoby identifies Ellison as a narcissistic leader. What do you think would be Ellison’s “incredible pros” and
   his “inevitable cons?”

5) Respond to the following quote: “If anything, Ellison is merely the poster boy for what it takes to thrive in
  an increasingly ruthless environment…And his stunning trajectory offers a valuable lesson: in the cutthroat arena
 of big business, sometimes it pays to be a jerk.”

6) Read the article “Evolution of leadership” on page 58. How would Larry Ellison respond to the thesis of this
  article? How would he respond to the ideas of Frederick Winslow Taylor, whose seminal 1911 book, The
  Principles of Scientific Management, advocated the establishment of management as a formal discipline?

Course        Foreign Investment, Economics
Difficulty Level: Level 3
Article:          “Bay Street protectionism”, p. 12
Article Summary: Australian-based mining giant BHP Billiton has made a $40 billion hostile takeover bid
                       for Canada’s Potash Corporation of Saskatchewan Inc., the world's largest fertiliser
                       producer. Since the bid was announced it has been mired in controversy, largely
                       because the company’s business is one of Canada’s strategic natural resources. The
                       federal government and the government of Saskatchewan are reviewing the offer, and
                       corporate Canada—and Canadians—are considering the implication of this deal for
                       Canada in terms of economic and national risks and benefits. This latest foreign
                       acquisition bid for a Canadian company has many questioning the net benefits to
                       Canada of what they perceive as a growing extent of foreign investment in Canada.

Comprehension / Discussion
1) What is the view of the majority of chief executives and business leaders polled by Canadian Business on
   the takeover of Saskatoon-based Potash Corp. by Australia’s BHP Billiton?

 A majority of chief executives and business leaders polled think Ottawa should block a Potash Corp. sale, even if
 shareholders support the acquisition.

2) What is the argument of Dick Haskayne, a Potash Corp. shareholder and board member of many
Canadian companies, against the takeover of Saskatoon-based Potash Corp. by Australia’s BHP Billiton?

 “With major foreign takeovers, there has to be a net benefit to Canada. And with BHP, I see no net benefit.

 Haskayne doesn’t want control of more resources exported overseas, especially not when he thinks Potash Corp.
  will eventually be worth more than BHP is offering.

3) What is Dick Haskayne’s view on foreign investment in Canada?

 Haskayne argues corporate Canada has been dangerously “hollowed out” by takeovers of industrial giants such
 as Alcan and Falconbridge, not to mention our major steelmakers.

4) What has been the response of the federal government to the BHP takeover bid?
 Lynn Meahan, press secretary to Minister of Industry Tony Clement, declined to comment until a review of the
  matter, if needed, is completed under the Investment Canada Act.

5) Although Prime Minister Harper is a supporter of foreign investment, what evidence is there that the
  government is getting more aggressive with foreign-controlled companies?

 The Harper government has started being more aggressive with foreign-controlled companies. Ottawa, for
 example, is currently suing U.S. Steel for cutting jobs and production at the former Stelco plants it bought in
 2007, after promising to maintain certain levels of production and employment.

6) According to a Conference Board of Canada study, what is the potential impact of a BHP acquisition of
   Potash Corp.? What is BHP’s response to this finding?

 A BHP acquisition of Potash Corp. could cost provincial coffers $2 billion over a decade if the Australian
  company proceeds with a new $12-billion mine proposal, which would create more than 2,000 jobs but generate
  capital write-offs.

 BHP executives point out that the benefits gained from the construction and operation of Saskatchewan’s first
  new potash mine in four decades could offset the negative implications of deferred tax payments.

7) What did a 2008 Conference Board study on the impact of foreign takeovers of Canadian companies find?
What does the University of Calgary’s School of Public Policy say about foreign takeovers in Canada?

 In 2008, the Conference Board concluded that, on average, foreign takeovers of Canadian companies
  were more positive than all-Canadian deals because “product and geographic overlap of businesses is less with
 foreign owners.”

 The University of Calgary’s School of Public Policy recently pointed out that Canadian corporations
 actually do more taking over than getting swallowed.

Analysis / Assignments
1) What could be some of the potential effects of Potash Corp. acquisition by Australian-based BHP on the
   province of Saskatchewan?

2) Why would fund manager Stephen Jarislowsky warn that Canada’s politicians will contribute to the “suicide of
   the country” if a takeover of Potash Corp. is allowed to take place?

3) What are the views of free market supporters on Canada’s government suing U.S. Steel for cutting jobs and
   production at the former Stelco plants it bought in 2007, after promising to maintain certain levels of production
  and employment? What is the view of the economic protectionists on this issue?

4) “I don’t think Canadian companies should be taken over by companies that can’t themselves be taken over,”
   says Ian Telfer, chairman of Vancouver-based Goldcorp. “Whether Canada should designate some companies as
   takeover-proof is another question.” What is your response to this statement?

5) What are some of the major concerns about foreign investment in Canada? What are the benefits of foreign
   investment for Canada? What is the position of the Harper government on foreign investment in Canada?

6) Research to find out the circumstances surrounding the takeover of Inco by Brazil's Companhia Vale do Rio
  Doce, and the takeover of Stelco by U.S. Steel. What have been the outcomes of these foreign takovers for
  Canada? (You may want to read “The Ode” on page 27 of this week’s issue of Canadian Business for
  information about Stelco.)


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