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  • General Motors Announces 2nd Quarter Profits, New CEO

    What a difference a year makes. This morning, General Motors announced second quarter earnings of $1.3 billion. That would seem to be good news for American taxpayers, who own the majority of the automaker. The Takeaway 's Celeste Headley spoke with New York Times auto reporter Nick Bunkley shortly after the report came out: And now we have the news that Edward Whitacre, who took over as CEO of General Motors at the beginning of the year, is stepping down at the end of the month. The move is not inconsistent with Whitacre's public statements all along that he would go back into retirement once righting the ship at GM, but does the second quarter turnaround suggest all is well with GM? Fortune 's Alex Taylor III writes that Whitacre's replacement, Dan Akerson, has his work cut out for him: The biggest risk for GM going forward is a slowing of the economy in the U.S and the rest of the world. Car buying is directly connected to consumer confidence, which in turn is connected to unemployment. As long as the jobless rate stays stuck in the high single digits, car sales are likely to remain at low levels. Such macroeconomic factors are expected to weigh heavily on any GM IPO. Since the automobile industry is a cyclical slow-growth business, professional investors treat auto stocks as trading vehicles -- not long-term buys. Thus they buy them in anticipation of a turnaround in the economy when prices are lowest, and then sell them as their prospects improve. But since the global economy appears to be headed downward, or at least flattening out, there is little reason for the usual investors to buy the shares, making the timing for an immediate GM IPO less than optimum -- especially with a new CEO at the hel m. Read Ed Whitacre drops a monkey wrench in a GM IPO here .

  • 5 Tips for Small Businesses When Growth Means Expansion Overseas

    When a successful small business looks for new markets, that can mean looking to reach customers overseas. Such a move can reap rewards, but it requires some significant shifts in approach. Verne Harnish , who writes under the " Growth Guy " monniker, is all for taking the leap. Over at CNNMoney.com and Fortune Small Business , Harnish, CEO of the consulting firm Gazelles Inc. , lists 5 strategies for any small business owner looking to go global: 1. Set ambitious goals; 2. Go multilingual; 3. Focus narrow and deep; 4. Source globally; and 5. Follow the customer. Click here to read Harnish's description of these strategies.

  • In Praise of Management Consultants

    You don't find a lot of people praising management consultants these days, but Walter Kiechel --former editor of Fortune and Harvard Business Publishing --argues that "pound for pound" they are the most influential workers in US business today. And they are the stars of Kiechel's new book, The Lords of Strategy . Kiechel discusses the role of management consultants in this interview with Sarah Green of Harvard Business Publishing:

  • China's Growing Debt

    China's economy continues to thrive compared to others around the globe. The growth rate for the third quarter was near 9%. Great returns for 2009, and the near future looks even brighter to most economists and investors. But at Fortune/CNNMoney.com , Bill Powell writes of some concerns over China's escalating debt. According to Powell, the Chinese government has issued massive loans to boost infrastructure, manufacturing, and real estate. The loans total $1.27 trillion, "up 136% from the same period last year." According to a recent analysis by Monaco-based hedge fund Pivot Capital Management, China's total lending reached 140% of GDP at midyear. That kind of lending makes China an "outlier" compared with other BRIC (Brazil, Russia, India, and China) countries -- and is already well beyond the levels that "have led to sharp and brief credit crises in the past," the Pivot Capital report contends. Moreover, an increasing number of Chinese loans are being funneled into projects unlikely to generate an attractive economic return. From 2000 to 2008 it took just $1.50 in new credit to generate $1 of GDP growth. Now that ratio is 7 to 1. (In the U.S., just before the financial crisis hit, the ratio was only 4 to 1.) That's because the loans are creating huge amounts of manufacturing capacity -- which is unneeded in the bears' view. China's spare capacity in the cement industry, for example, equals the total annual consumption in the U.S., Japan, and India combined. So where will the growth come from? China's export markets are tapped out. Its domestic consumption, stalled at around a third of GDP, hasn't yet started to rise significantly. Additional manufacturing investment would be crazy, leading arguably to a global deflationary bust of epic proportions. Read the full article here .

  • Managing Crisis into Opportunity

    Management guru Jim Collins --he of such bestsellers Built to Last , and Good to Great --certainly knows how to turn crisis into opportunity. He's been working on a book on how successful companies manage turbulent times. He told Fortune some of what he has found in his research. His big takeaway, it appears, is that it is all about people. In downturns and recessions, companies have an opportunity to bring in talent. The businesses that bite the bullet and acquired the key ingredient to success--the right people--will reap the benefits. The right people don't need to be managed. The moment you feel the need to tightly manage someone, you've made a hiring mistake. The right people don't think they have a job: They have responsibilities. If I'm a climber, my job is not [just] to belay. My responsibility is that if we get in trouble, I don't let my partner down. The right people do what they say they will do, which means being really careful about what they say they will do. It's key in difficult times. In difficult environments our results are our responsibility. People who take credit in good times and blame external forces in bad times do not deserve to lead. End of story. You can read the full article here , or watch a short video with Jim Collins here .
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