Online Companies Want a Piece of Old-style Media

After conquering the advertising frontier in cyberspace, Google, Yahoo and eBay are now turning to traditional media for future growth by brokering ad sales for offline media like radio, television and print. The Internet players' foray into offline advertising could drive down rates, but advertisers and media companies may not completely abandon the current system of relationship-based sales for Internet auctions, according to Wharton faculty and industry
executives. There will be little, if any, change in the way viewers see traditional media advertising. What will change are the middlemen who broker these ads. Consumer-oriented ads are currently placed through a network of companies that are paid to bring advertisers and
offline media companies together. The Internet companies hope to step into that space using automated auction technology to bring buyers and sellers of traditional advertising together the same way they now sell Internet ads for themselves and others.

Google plans to sell radio advertisements on stations through an online auction system it already uses to sell Internet ads. Google is also testing ad sales for a group of more than 50 newspapers, including the Washington Post and New York Times, that would use the company's online auction system to sell space. Meanwhile, eBay is working on a system to place an estimated $50 billion in spots for large advertisers, including Wal-Mart, Microsoft and Home Depot, on cable television. Finally, Yahoo has an agreement with 176 newspapers to carry the papers' local classified ads on its site, thereby giving newspaper advertisers wider distribution.

Driving Down Costs
Wharton marketing professor David Reibstein says the move into old-style media is a logical extension for the Internet giants, which are, at their core, distributors of advertising messages. "It would make sense that they would want to have a more complete portfolio available to advertisers. Their model is that they are going to deal with advertisers and help them reach audiences. The fact is, they can help not just in new-age advertising, but also in traditional advertising," says Reibstein.

Traditional media advertising in the United States is a $150 billion market compared to $16 billion for online advertising, although the online market is growing at a rate of 30% a year. "The somewhat untold story of the upturn in the tech world is just how much has been driven by advertising," says Kevin Werbach, professor of legal studies and business ethics at Wharton. "There has been a steady trend over the last 10 years of advertising dollars migrating online. We're still relatively early in that process, and therefore it's not surprising to see companies like Google trying to ply their expertise in targeting and brokering advertisements to venues outside of their online platforms."

While new media companies seek out avenues for growth, advertisers are hoping the introduction of Internet technology into the process of media-buying will drive down costs, says Wharton marketing professor Leonard Lodish. "What advertisers want to have happen is the commoditization of media time so that it becomes a more transparent market [that is] sold to the highest bidder."

According to Wharton marketing professor Peter Fader, online companies' invasion of traditional media buying is only the latest example of the Internet's ability to transform industry after industry. "A lot of people viewed advertising as a sacred area where only advertising people have expertise. I say 'Phooey.'
There's no reason any smart, resourceful firm should not be able to get in on the game -- particularly those with a proven track record in a related area," he says, adding that Google and the other Internet firms are looking at traditional media sales as an inefficient market where they can quickly harvest "big, tasty, low-hanging fruit."

The Internet firms' simultaneous rush into traditional media is another boon for advertisers because the companies will be competing against one another, preventing any one from gaining monopoly pricing power. In the end, says Fader, the broader economy, not just advertisers, will benefit, although the companies that currently broker advertising may be squeezed. "The biggest problem Google is going to face is both inertia from the entrenched players and natural fear and skepticism on the part of [advertisers]. But from the standpoint of technology and pleasing the customer, there is no reason Google can't revolutionize this industry."

Newspapers and other traditional media outlets may be bitter rivals with online companies when it comes to the content side of their operations, but when it comes to advertising revenue, they are willing to test new relationships with online partners, says Werbach. "To the extent a Google can deliver advertisers more efficiently to a newspaper than the other options, it would be cutting off their nose to spite their face to reject Google just because it is an online company."

According to Wharton marketing professor David Schmittlein, Google and the other online companies may have a marginal impact on offline advertising, mostly by helping smaller, do-it-yourself advertisers find spots. He says most large advertisers already use the two largest media buying firms -- Simmons Market Research Bureau and Mediamark Research -- which are so dominant that they already provide customers with hefty discounts.

The scale of these companies also allows them to amass rich market research in the offline world that Google and the other online companies cannot match, says Schmittlein. "I understand traditional advertising and media companies are concerned about the inroads Google and the others are making, but I would be much more concerned, at least in the intermediate term, if I saw Google or Yahoo interested in buying one of the two big offline firms."

Lodish says advertisers hoping for lower rates through Internet-based systems will need to watch out for conflicts of interest as the new media companies sell space that may compete with their own advertising vehicles, such as their company web sites. Initially, he sees little cause for concern because the Internet is markedly different than print, radio and television. Ultimately, the Internet firms will be tempted to bundle packages in order to get advertisers to pay for less popular spots -- possibly on their own sites -- the way television stations often require advertisers to take time on less popular shows if they want a prime spot on a hit series. "If Google starts to bundle them all together and aggregate them, then I think [there will be] conflicts of interest it will need to watch," says Lodish.

A further challenge for Google and the other new media companies as they enter traditional advertising space is how to measure the impact of ad placement. Despite click-fraud, Lodish says Internet companies are used to operating with more information and may not have the experience or staff to give advertisers what they need in traditional media. "When you are buying radio, TV or newspaper advertising, it's much less data-driven than the Internet. It's all about what the audience is like and what its mood is at the time. A lot of that information comes from salespeople who are able to describe it well."

Lodish says in-house sales staffs at traditional media companies and firms specializing in media sales are now pivotal players in the advertising world. "I think people may be overestimating Google and underestimating how important 'people relations' are in this business. A lot of media buyers for ad agencies have been dealing with [media sales specialists] for years, trust them and get a lot of good advice from them. I don't think it's going to be simple to go around that."

Reibstein agrees that traditional media brokers will fight to hold their ground. "I can't imagine they will just go away. They will continue to try and operate and will be strong competitors. It's not as if all media are going to be automatically dominated by Google, Yahoo et al."

The Industry View
Jay Zitz, CEO of Newspapers First, a consortium that sells advertising space for dozens of major regional newspaper companies, says large advertisers are not likely to turn to Google to help them place ads because they already have plenty of clout with individual papers. "Federated Department Stores, General Motors or other major advertisers that use newspapers as a big part of their media mix already have strong relationships and high expectations about where their advertisements will run," notes Zitz.

Newspapers still retain the right to refuse advertising if they don't think the price is right, and advertisers will not be willing to risk losing space in an important newspaper market in favor of a low-cost Internet auction, he adds.

Zitz says he is not concerned that the newspapers cooperating with Internet advertisers are opening themselves up to eventual domination by their new media rivals. "If that were a serious concern, you would not see companies like The Washington Post and The New York Times doing it," he contends.

Lou Rubin, managing director of DPrime Consulting, a unit of Omnicom Group, says the internet
auction approach may work for some types of mass, high-volume advertising, but not for a more targeted approach. "If you are trying to reach an upscale C-suite executive who has influence over public equity markets, then that's where judgment and experience are difficult to replace. If all you are interested in is tonnage, then an automated or Internet-based way to buy and place media is great. It makes it efficient," he says Rubin stresses that advertising is more than putting messages in front of potential buyers. He says customer engagement is the most important goal and may require a wide range of vehicles -- including conferences, event marketing and word-of-mouth marketing. "Will Google and Yahoo create more engagement? No. They will create better efficiencies and that's fine, but I'm not sure efficiency is the root
of the issue," he says. "The root of the issue is customer engagement."

Ralph Guild, CEO of Interep, an independent national sales and marketing firm specializing in radio, the Internet and new media, points out that the evolving advertising world does not prevent traditional media players from getting involved in the Internet space. "Everything is a two-way street," he says. "Google may be getting into traditional media, but traditional media can also go the other way. You have CBS or Clear Channel with the financial power to compete in that direction if it looks like it's a viable option."

In addition, he says, the media-buying landscape could be altered again by an upstart company with a breakthrough technology or a revolutionary business model. Major radio corporations or a start-up could consolidate independent radio stations in a system that could compete with Google, says Guild, although he acknowledges that Google seems to have an unlimited ability to attract new capital to underwrite new ventures.

Guild also argues that there is probably room in the market for Internet firms and traditional media placement operations to co-exist. His own company, he notes, experienced strong growth in the early 1960s as other radio representation firms defected to television sales.

Radio revenues have increased nearly every year since the 1930s, and Guild says he is not concerned that Google will drive down rates substantially or undermine the success of the medium. "Most people think that when something new comes along, it comes at the total expense of the traditional media, or that the traditional media is going to win out. The fact is they both survive and find ways of working together."

According to Fader, the models Google and others are using currently replace work that is already being done. But that may change. "Who knows where it might go from there?" he asks. "They are starting with the conventional players and mechanisms, but it's entirely conceivable that five years from now the way advertising is bought, created and consumed will be completely different."

Rubin says advertising agencies are undergoing a revolution and that creative services could be another target for Google and other Internet companies. "The combination of content, branding and individualism, and the intersection between people and the LCD screen, is ever-unfolding." Google, Yahoo and other Internet firms might be thought of as transformative distributors of content, the way railroads and highways changed distribution patterns, Rubin adds. But if they remain simple distribution networks, without control of the content they bring, they may die away as new systems rise up.

"How will they define their business going forward? If it's as an information system and a
disintermediator -- that's finite," says Rubin. "If it is as a content developer and provider, that lasts a lot longer -- perhaps indefinitely. That's the next phase for them."
At the moment, Rubin says, it seems Google can do whatever it wants. "They have created a culture, an environment and a great market cap. I think anything is possible for Google," he says. "I'm just waiting for them to set up their own country."

Courtesy : Wharton

'We missed Mahatma Gandhi'

It’s a sort of confession that Mahatma Gandhi himself would have appreciated. What do you say when the secretary of the Norwegian Nobel Committee, Geir Lundestad, says, "The greatest omission in our 106 year history is undoubtedly that Mahatma Gandhi never received the Nobel Peace Prize."
Gandhi was shortlisted five times — 1946, 1947, 1948 and twice before World War II. "But it will remain a historical fact that Gandhi never received the prize," says Lundestad, sitting in the same room where Nobel committees have decided on the winner for over a century.
Among other factors, he says, a Euro-centric perspective among the Nobel committee members then could have played an important role behind the decision. In fact, there was little appreciation of the freedom struggles in colonies, and despite his nomination, members cited relatively minor reasons — like his ‘inconsistent pacifism’ — to deny Gandhi the prize.
Lundestad adds in a self deprecating tone that almost sounds like Gandhigiri: "Gandhi could do without the Nobel Peace Prize. Whether the Nobel committee can do without Gandhi, is the question." Lundestad revealed that the committee had more or less decided to award Gandhi the peace prize in 1948. But he was shortly assassinated.

Source:TOI

One Billion, Three Hundred Thousand: The New Chinese Consumer

One billion, three hundred thousand customers: It's a number that has captured the attention of every company in the world that wants to do business in China, hoping to market everything from toothpaste to financial services to luxury cars. But once multinational companies get past the excitement of imagining the opportunities offered by the world's largest consumer market -- growing richer and more status conscious with each passing year -- there is the sobering thought of figuring out how to go about unlocking the secrets to selling to all of these people. Who are they? How much money do they have? What do they want to buy? What motivates their purchases? What are the peculiarities of the Chinese consumer?
Experts at Wharton, the Boston Consulting Group and elsewhere say China's consumers are at a crossroads. They are embracing new economic ideas and habits, and devouring goods that have long been unavailable, unaffordable or forbidden. At the same time, they are part of a consumer culture and an economic system that remain quite different from those of developed countries. In broad terms, there are multiple Chinas -- the old and the new, the urban and rural, dirt-poor peasants and multimillionaires, a land of freedom and authoritarianism whose world outlook and savings and buying preferences reflect the traditions of both East and West.

A Country of Extremes
China is rapidly urbanizing but it is still a "country of extremes," says Hong Kong-based Hubert Hsu, vice president and leader of BCG's consumer goods and retail practice for the Asia Pacific region. China is home to 1.3 billion people, but only about 400 million are in urban areas. In urban areas, incomes have been growing at the same rate as GDP -- about 10% annually, adjusted for inflation -- in recent years, while incomes of rural people rise only 1% a year. Says Hsu: "It's a land of haves and have-nots."
Wharton marketing professor Z. John Zhang agrees. "The distribution of income is very uneven," he says. "There still is a tremendous difference in wealth between people in the city and the countryside.
Even within cities you find huge disparities in income. This is a phenomenon you can't lose sight of if you're selling consumer goods. You have a billion customers, but they're not all the same." If China is a country of extremes, it is also a "country of contradictions," notes Harjot Singh, ad agency BBDO's strategic planning director for China. Consumers want products that are practical and work well, but they also covet brands that convey images of success. "Functionality of products still commands a premium," he says. "Yet Chinese consumers also want products that make them unique."
"It's difficult to generalize overall about Chinese consumers," says Joseph Wan, director and vice president of BCG in Hong Kong. "Companies are only beginning to realize the differences among consumers. In terms of geographical segmentation, most companies are pretty good at understanding that consumers in the western versus eastern parts of China are different. But there are so many intricate nuances that it's almost impossible to generalize -- and things can change so rapidly."

At the same time, a strong middle class is emerging. BCG estimates that there are 25 million to 30 million middle-class households in China, compared with 8 million affluent homes. "More people are moving into the middle class every year than into the affluent class," according to Hsu. "In general, the growth in middle-class incomes has been one of the key drivers behind the growth in a lot of consumer categories: color TVs, beer, mobile phones, personal computers. These are categories that enjoy high penetration in China."
A BCG report published in December 2005 -- titled "Wealth Markets in China: Exciting Times Ahead" -- shows that wealth in China is highly concentrated. Less than one half of 1% of Chinese households holds more than 60% of the nation's personal wealth. Among these rich households, about 70% of the wealth is held by households with more than $500,000 in assets under management.
In all, 1.59 million households have $500,000 or more in assets under management, according to the report, prepared by BCG consultants Tjun Tang, Thomas Klotz and Thomas Achhorner. Some 250 million households have $100,000 to $500,000 in assets under management, and 527 million "non-wealthy" homes have less than $100,000 in assets under management.
In recent years, the richest Chinese have gotten richer -- a trend that shows no sign of abating. "There is a polarization of wealth taking place," says Tjun. "The Chinese say, 'the two poles are separating.'"
But, significantly, the report also notes that the non-wealthy households are not getting poorer. Since 1999, households with assets under management of more than $5 million have grown from a 14.3% share to a 16.6% share of China's personal wealth. During that same period, non-wealthy households have accounted for a steady 36.6% of all wealth.
"China is going through an economic boom period and that's driving a lot of consumer behavior changes," says Hsu. "And this boom has been going on for 25 years now."
Since 1980, Chinese GDP has been growing 10% a year, on average, after adjusting for inflation. Per capita income in China has grown by a factor of seven during this period, a pace greater than that enjoyed by Japan in the quarter century following World War II. Still, it is important to note that most Chinese are very poor, and even many working couples strain to make ends meet, according to Wharton management professor Marshall Meyer.
"At the top, there's a lot of wealth," says Meyer. "Folks engaged in entrepreneurial ventures, particularly ventures where they connect MNCs (multinational corporations) with the large state enterprises, have been able to make money. But the average family probably feels like the average family in the U.S. -- less well off today than a few years ago. Now, people are optimistic in China, but there's a tremendous squeeze on family budgets, and the squeeze is due to medical and education costs and the skyrocketing cost of housing. Combine these with the need for families to save for retirement. Under the one-child policy, you've got an inverted pyramid with one child supporting four grandparents, in principle. People have to sock away a lot of money for retirement. And returns on savings are extremely low in China, so people have to sock away more."

Middle-Class Growth
Nonetheless, the growth of the middle class is good news for companies selling in China. The Chinese middle class numbers 25 million to 30 million households, according to BCG. BCG defines the "middle class" as those households with an annual income of $4,300 to $8,700. "Mass affluent" households are those with incomes of $8,700 to $11,600. "Affluent" households earn at least $11,600 a year.
Middle-class Chinese are both savers and spenders. Since China's financial-services sector remains relatively primitive, and consumer credit is still virtually non-existent, consumers squirrel away money for long periods of time so that they will have enough to purchase the highest quality products and services they can afford.
Noting that the personal savings rate in China represents a whopping 50% of GDP, BCG's Hsu calls China "a culture of extremely frugal people. They've gone through hard times, starting with the Cultural Revolution [under Mao Zedong] in just the last generation. Most never went to university."

On the whole, Chinese have more money than ever before. But because the days of harsh poverty are not that far behind them, many middle-class consumers insist that products be practical in nature and function well, according to Hsu.
At the same time, however, people are beginning to look beyond the functionality of goods. Middle-class and affluent consumers spend much of their discretionary income on items that will help them rise in stature compared to their neighbors. "Incomes have increased so much that some people have already taken care of their basic needs," according to Wharton's Zhang. "Their aspirational level is much higher now. They're looking to consume things that are not entirely necessary. Yet the Chinese are also frugal and will reject products they see as impractical or of low quality."
Some of the most popular products among the middle class and affluent are color televisions, mobile phones and personal computers, according to BCG consultants. Providing schooling for children is also vital. "Education is always a priority, since Chinese couples can only have one child [by government
decree]," Zhang notes. "Parents are always concerned that they don't spend enough to give their kids a head start."
People with the means to do so also tend to spend a lot on real estate, an outgrowth of the importance that the Chinese, in what is still a largely agricultural nation, have always placed on land. It is not unusual for wealthier city dwellers to have multiple apartments or houses, Zhang says. Affluent Chinese also enjoy traveling in Asia and around the world. China has become one of the largest tourist-originating countries in the world, adds Zhang.

Eye-Opening Behavior
Hsu says a visit to a middle-class Chinese home can be an eye opener into the idiosyncratic behavior of consumers. "You see amazingly insightful things -- where consumers trade up and trade down. Actually, they do both at the same time because there are not enough dollars to go around. A couple with a child
will spend a lot on that child. If you go into homes without kids, you see that people spend their money on products that make them feel and look good or give them social status. It can be clothes, mobile phones, fragrances or skin-care products. They don't spend money on products their friends and neighbors can't see. They may not be willing to pay premium prices for brands like Windex window cleaner or Kiwi shoe polish.
"It's important for companies to segment consumers and understand where they're willing to trade up and trade down," Hsu says. "Chinese consumers are experimental. They will pay a premium price for a new brand to try it. But if it's not better, they won't buy it again."
Instead, the buyer will go back to using his or her local brand of laundry soap or dish detergent. Brands like Safeguard soap and Tide detergent are national brands, and they are so popular now that they dominate their share of the market. But many local brands exist in China, especially in less cosmopolitan
regions where many of today's city dwellers grew up. In local or regional markets these homegrown products offer consumers choices that can compete strongly with global brands.
Companies must also pay attention to how the Chinese shop. "For some items they go to the store more often but spend less, and vice versa," says BCG's Wan. "It's a very complicated picture. The rate at which they adopt certain products will also change by demographics, and they have different behaviors
across price points and brands."
By way of further explanation, Wan echoes Hsu's comments about the unpredictable, ever-changing way in which Chinese consumers trade up and trade down. This is one key difference, by and large, between Chinese and American consumers and it is the kind of behavior that can make life challenging for corporate marketers. Says Wan: "A Chinese consumer may say, 'I can trade down on my car.' He may decide that a car is no longer important, even if he is making more money than he ever has before. If he has additional savings or income, he might decide to buy better kinds of wine [to impress other people]
and spend less on a car. He is balancing his portfolio, so to speak. This happens all the time, across demographics and incomes."

Selling to the Affluent
Some MNCs, such as Procter & Gamble, General Motors and Carrefour, have had success in penetrating China's mass market. But makers of luxury goods have yet to fully exploit China's growing affluent class.
"There is no way that luxury companies are paving the way in China in terms of penetration," according to Hsu. "Because luxury-goods companies are not doing a very good job of presenting their products in China, customers go to London or New York to spend money. In China, a lot of these companies give what I call a 'constrained offer.' If you go into a store, the amount of merchandise is a third of what you see in same store in New York or Hong Kong. Of course, luxury-goods companies are glad people are spending money in New York, but they can't target them and get information on them or send them brochures and so forth. They're missing opportunities."
Hsu estimates that there are at least one million Chinese with access to $1 million in cash. He adds that Bentley sold more cars in China than any other country in 2004.
Even though practicality still reigns when it comes to product choice among Chinese consumers, the emotional and social benefits derived from shopping, so well known to Western consumers, are growing in importance, says Singh, the strategic planning director for China for BBDO. The growth of the economy is changing "the way people look at buying brands and the way they look at themselves as people with money," he says. Even in the years immediately following the economic liberalization begun by Deng Xiaoping in 1978, people viewed money exclusively as a means of security and a "protector," giving little thought to luxury. In recent years, however, Chinese have come to see that money can be an "enabler" and that economic freedom means, in part, the "freedom to be wooed by brands."
Many Chinese citizens, especially the affluent, "have become extremely aggressive, demanding, high-maintenance consumers," explains Singh. "Instead of controlled consumption restraint and denial, there is much more affluence. There's this need to seek some form of expression by buying brands and
wearing them as a badge."
But Singh puts a different twist on the need by affluent Chinese to buy brands. Brands are important -- not necessarily because people need the esteem and want to stand out, but because they actually want to fit in with everyone else who buys brand-name goods. This has led to a form of anxiety heretofore unknown in China. "It's been called 'consumptive anxiety,'" says Singh, who defines the term as the need for people to buy products so as "not to be left behind."
Citing the work of Helmut Schutte, professor of international management at INSEAD in France, Singh notes that the "hierarchy of acceptance and belonging" is inverted in China when contrasted with the West. "The higher-order needs in China are still collective rather than individualistic. Everyone in China
wants to conform to standards in a way that gives them social acceptance. Therefore, symbols become important. People want to subscribe to success. For brands to make a dent over here, it's no longer a game about creating esteem, it's a game about creating popularity."
According to Singh, some of the most popular luxury brands in China -- not only in the largest, so-called "tier one" cities like Shanghai and Beijing, but also in tier two cities in the interior of the country – are BMW, Giorgio Armani, Rolex and Louis Vuitton. "Vuitton is trying to open a least three stores a year in China," says Singh. "The number-one brand of clothing is Armani, and not just in the tier one cities."
De Beers is another popular brand. Its diamond engagement rings are big sellers, even though the concept of Western-style engagement prior to marriage does not exist in China. A De Beers ring is not a gift from a man to his fiancee; it is a symbol of love and commitment. "People understand that wearing those engagement rings gives them 'face' outside [the relationship] -- acceptance and validation."
Another well-known brand with an unusual image in China is Procter & Gamble's Oil of Olay. Oil of Olay, the top advertiser in China, is an aspirational brand, not a common drug-store brand as in the United States. "In the West, Oil of Olay is about telling women to love their skin," Singh notes. "Here, the ads say, 'Oil of Olay will get you a handsome husband.'"
What makes China a complex challenge for marketers is the need to position products so that they are accepted by the largest number of consumers yet are still differentiated, according to Singh. Oil of Olay does just that. "The number-one challenge in this market is to achieve consistency of brand communication, yet permit sufficient flexibility to meet specific needs of individual markets within the bigger China market. For different targets there are different products and for different products there are different tasks."
Beginning in December 2006, foreign financial services companies will enjoy some of the most exceptional business opportunities in China, and Chinese institutions will be pressed to respond to the competitive pressure. That is when the Chinese banking industry will be fully liberalized, allowing foreign institutions to serve individual customers in businesses using the renminbi.
In the report "Wealth Markets in China," the BCG authors say China represents the second largest wealth market in Asia (after Japan), with $1.44 trillion in assets being managed for wealthy people. BCG projects annual asset growth among the wealthy of 13% over the next several years, with assets under
management reaching $2.63 trillion by 2009. "BCG expects foreign banks to create some tough competition in the wealth-management market, as they enter the retail market and attempt to cherry pick the most attractive customers," the report states. "Unless Chinese banks can respond, there is a real and significant threat that many wealthy customers will be lured away by the highly evolved products and services that foreign banks can offer."

Straddling the Fence
As China's economy continues to grow, consumerism will become more prevalent. But it will not be a smooth transition from communism to capitalism. Wharton's Zhang, who was raised in poverty in China, lived much of his life under an authoritarian regime and says those days are far from completely gone.
Chinese citizens today straddle a fence dividing the old times from the new, and are never certain where freedom begins and ends.
Says Zhang: "When I was a boy, [China] was a totally different world. Everybody grew up wearing exactly the same clothes and doing the same things. Now there is more wealth in the country and aspiration is high."
"The country is moving very fast," he adds. "Never in my dreams could I imagine that a country this big with this many people could move so fast. It's astonishing to me, and probably astonishing to most people in the world."

Source: Wharton

How would Ghosn fix GM?

Nissan turnaround whiz Carlos Ghosn wants a chance to fix General Motors too. Here's how he might steer the ailing automotive giant.
Fortune Magazine) -- Carlos Ghosn circumnavigates the planet in his Gulfstream 550 once a month. He typically spends two weeks in Paris, ten days in Tokyo, and what's left of his time in the U.S. and the rest of the world.
But now the Nissan (Charts) and Renault CEO - the first person ever to run two companies on FORTUNE's Global 500 simultaneously - has decided he doesn't have enough places to go.
At the invitation of financier Kirk Kerkorian, Ghosn has proposed an alliance between his two auto companies and General Motors (Charts) that could put him at the helm of the troubled industry giant.
Add Detroit to the flight plan! Putting one man in charge of three companies separated by thousands of miles in an industry as complex and competitive as automobiles is a bizarre prospect and at the moment still an uncertain one.
The boards of Renault and Nissan backed Ghosn and have expressed wary interest in the proposal, under which each would buy 10% of GM's shares. But their support is conditional on GM's management and board endorsing the plan. The current forecast is for a lengthy GM study of the arrangement, with no guarantee of a favorable conclusion. Still, Kerkorian, who owns 9.9% of GM's stock, wants action. He is known to be unhappy with the pace of change under current CEO Rick Wagoner and has been prodding him to do more.
Ghosn is equally impatient. He performed a historic turnaround of Japan's Nissan after taking charge in 1999, embarked on a similar effort with France's Renault a year ago, and has reportedly been considering new strategic options for both companies.
Despite GM's gargantuan problems - it lost $10.6 billion last year - Ghosn would find the challenge of fixing it appealing, particularly if he could benefit Renault and Nissan by doing so. Even if Ghosn doesn't end up in charge at GM, it's useful to contemplate just what the world's most celebrated auto executive might change at the world's largest auto company.
Some of GM's problems, such as its huge health-care and retiree obligations, seem relatively intractable. For the others, a playbook already exists - the history of the Nissan turnaround that Ghosn has taken pains to document. Here%

The Nobel science prizes

This year's Nobel science prizes have been awarded for cosmology and two sorts of genetics



WELL, the waiting is over for another year. The great and good of Sweden's Royal Academy of Science and of the country's principal medical school, the Karolinska Institute, have deliberated. The laurels have been assigned, if not yet awarded (that happens in December). And the disappointed will no longer have to cling to their telephones like politicians hoping for a ministerial posting. With much fanfare, the Nobel science prizes have been announced.

This year, the prize committees have done well. They have managed to pick winners who, if not exactly household names, have at least done work that has had some resonance in the wider world. The physics prize is for a piece of research that has enabled cosmologists to map the universe as it was before the first star formed. The physiology prize (or “prize for physiology or medicine”, as it is known in the citation) is for the discovery of a phenomenon called RNA interference, which helps cells fight off viral infections and is widely touted as a possible basis for a new class of drugs. The chemistry prize is for a piece of X-ray crystallography, a favourite subject of the academy's prize committees over the decades, and a way of awarding an extra physiology prize (since X-ray crystallography is used mainly to examine large biological molecules) without confessing that much of the intellectual oomph has gone out of chemistry in the century since Alfred Nobel, himself a chemist, drew up his will.

And the winners are

The physics prize went to John Mather of America's National Aeronautics and Space Administration (NASA) and George Smoot of the University of California, Berkeley. Together, they were responsible for discovering irregularities in the microwave radiation formed soon after the beginning of the universe, and which bathes the universe to this day.

The cosmic microwave background, as this radiation is known, began its journey about 300,000 years after the Big Bang in which everything started. When discovered, it appeared to be perfectly uniform. Some researchers, however, reasoned that it ought to carry imprints of the slight concentrations of matter that must have existed in the early universe if structures such as galaxies—and eventually stars and planets—were going to form. These concentrations would have acted as gravitational nuclei, drawing in gas from their surroundings and thus forming galaxies.

To test this idea, NASA built and launched a satellite called the Cosmic Background Explorer. Dr Mather ran the instrument on this satellite that looked for telltale variations in the microwave background, and Dr Smoot analysed the results, which were published in 1992. Their work, and subsequent refinements of it using a second satellite called the Wilkinson Microwave Anisotropy Probe, not only showed the ultimate roots of galaxies, it also provided evidence that the early universe underwent a sudden, massive expansion known as inflation.

Andrew Fire, of Stanford University, and Craig Mello, of the University of Massachusetts, were not the first people to notice the phenomenon now known as RNA interference, but they were the first to have an inkling about what was happening. The observation they built on, first made in plants, and then extended to animals, was that the activity of individual genes can be silenced by versions of a molecule called RNA. This substance is similar to DNA (the chemical difference is in the group of atoms employed to stand as one of the four chemical “letters” of the genetic alphabet). The main physical difference is that RNA's molecules usually come in single strands, unlike those of DNA, the material of the genes, which are usually double-stranded (the famous double helix).

One of RNA's jobs in the cell is to act as a messenger: RNA copies of DNA genes are translated into protein molecules in cellular structures called ribosomes. In a nutshell, what Dr Fire and Dr Mello found, in 1998, was that what silences genes is adding double-stranded versions of their RNA messengers to the mix. This stimulates the formation of what are known as RISC complexes, which carry part of the double-stranded RNA around as a reference, and destroy any RNA that matches it.

The reason, from the cell's point of view, for doing this, is that healthy animal and plant cells never make double-stranded RNA. On the other hand, many viruses do. Recognising and destroying double-stranded RNA is thus a safe way of attacking infection. Whether that insight can be turned into drugs remains to be seen. But many are trying, and billions of dollars rest on their success.

Roger Kornberg, the winner of the chemistry prize, and another member of the faculty of Stanford University, studied the process by which genes are copied into RNA in the first place. This is done by an enzyme called RNA polymerase, which binds to the DNA and runs along one of the strands of the double helix. Each time it comes to a new chemical letter on the strand it is reading, it reconfigures itself to add a complementary letter to the RNA molecule it is creating.

Dr Kornberg worked out the details by crystallising the complex of DNA, RNA and polymerase at various stages of the process. He then photographed each version of the complex with X-rays.

That process of X-ray crystallography, which calls for a lot of complex mathematics rather than the mere creation of a photographic image, was invented by two Britons, Sir William Bragg and his son Lawrence. They jointly won the Nobel prize for physics in 1915. Coincidentally, Dr Kornberg's father, Arthur, is also a Nobel laureate. He won the physiology prize in 1959 for working out the details of how DNA is synthesised. Whether such familial talent is a matter of nature or nurture will, no doubt, be the subject of a future prize.

Source : Economist