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Welcome to the FT Business school newsletter, a weekly serving of management wisdom, reading recommendations and business-related challenges. FT subscribers can sign up here to receive the newsletter by email every Monday. If you have any feedback about FT Business school, please email firstname.lastname@example.org.
Andrew Hill's challenge
The FT's management editor sets a weekly test of your business, strategy and management skills.
Family businesses have a head start when it comes to culture, values and, sometimes, longevity — provided they can get the critical handover between the generations right. My column this week is about how to do just that, not by automatically switching to professional managers, but by selecting the best of the family members to run the business. I suggest, for all their faults, that the Murdoch family seem to be getting this right. Patriarch Rupert has anointed Lachlan and James as likely heirs to the media empire — and that seems to be working.
Of course, there are still pitfalls in choosing an heir, epitomised by Shakespeare's King Lear, who famously asked his daughters how much they loved him, and then disinherited the most deserving of his offspring because he didn't like her honest response. For my challenge this week, I'd like you to put yourself in the shoes of a family owner interviewing his children about their suitability to take on the business. What is the question you would pose to work out which of your sons or daughters deserved to be the next chief executive? Send your answers, as always, to email@example.com
I've been eagerly reading this week everything I can find about Google's Pixel Buds. They are smart earbuds that, among other things, give people access to Google Translate, so they can converse with those speaking another language. In the demo at Google's announcement, a Swedish speaker and an English speaker were apparently able to communicate seamlessly. Here's Engadget's gushing review in which it predicts, among other things, that "the frictions of international diplomacy could be smoothed" by the breakthrough, while alluding to the many start-ups working in the same area that Google has just "curbstomped."
Every week a business school professor or academic recommends useful FT articles.
Ciaran Heavey, associate professor at University College Dublin’s Smurfit School of Business, selects:
Amazon fires opening shot in feared Whole Foods price war Amazon’s decision to acquire Whole Foods for $13.7bn has raised a lot of eyebrows. The story illustrates just how intent Amazon is to leverage its scale and capabilities to dominate the supermarket sector. The decision to cut prices on some key staples sends a very clear signal to Whole Food’s rivals, and the grocery industry more widely, that Amazon means business. Cutting prices, however, is only a starting point in the journey of reversing Whole Food’s fortunes. Business school students should read this story as it illustrates how Amazon is now disrupting bricks-and-mortar retail.
Generic drugmakers feel pinch as prices crumble This article illustrates some of the forces that are reversing the fortunes of the generic pharmaceutical industry. For years, generic producers have enjoyed high operating margins, profiting from continued premium pricing on drugs coming off patent whilst also exploiting near-monopoly positions on older medicines. But alas, the storm clouds are gathering as intensifying competition and growing consolidation of purchasing organisations combine to limit profit potential. The slower penetration and higher cost of biosimilars also threaten to dampen the future profitability of this industry. Business school students should read this article as it shows a great example of an industry undergoing structural change.
Jonathan Moules' business school news
It is often missed by MBA graduate globalisation groupies that location still matters. This can present itself in as mundane an issue as a smartphone app. Last week I wrote about the ubiquity of the messaging app WeChat in China, where you can even access business school course materials. The software is now on an estimated 900m smartphones, according to its owner, the technology titan Tencent. But outside China, people often have never heard of WeChat. Instead Whatsapp is now the way to keep in touch with groups of friends.
Location is also important in a physical sense, as has been shown in recent events in Europe from separatist movements, most starkly in Catalonia and the independence vote. It raises the question of how business schools relate to the nation state in which they are based. Is London Business School worse off for Brexit, for instance? What does Catalan independence mean for Iese business school in Barcelona? These are questions that will become more important in the coming months.
Also, despite reports of gender discrimination in Silicon Valley, my colleague Lauren Leatherby discovers that female MBA students are keen to break into the tech field. One Harvard MBA student says: "Women are interested in entering this industry, to contribute to the progress that we all know can be made.”
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Compiled by Wai Kwen Chan — email@example.com