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The collapse of communism has led many in the West to declare that capitalism has triumphed. But Henry Mintzberg, professor of management at McGill University and INSEAD, says that this idea is overly simplistic. He argues further that the push for government to become more like business ignores both the value of the alternative forms of ownership we have in the West--including cooperative and nonprofit organizations--and the purpose of balance in our societies. A business model for managing government would treat its constituents as customers in an arm's-length trading relationship. But we are not merely customers of our government; we are also subjects (who have obligations), citizens (who have rights), and clients (who have complex needs). Thus we need a wide range of management models for providing public services.

In recent years, major industries in the United States have been deregulated--for example, telecommunications, airlines, and banking--and now the winds of change are blowing through the electric utility industry. But the experts do not agree on how much change is good for the country and how fast it should occur. Thomas R. Kuhn of the Edison Electric Institute, Pradeep ("Pete") Mehra of the Ford Motor Co., Robert L. Ball of Alcan Aluminum Corp., Richard C. Green, Jr. of UtiliCorp United, Donald E. Felsinger of San Diego Gas & Electric Co., David L. O'Connor of the Massachusetts Division of Energy Resources, Michael Shames of the Utility Consumers' Action Network, and John R. Hodowal of IPALCO Enterprises express their differing viewpoints in HBR's Perspectives, covering such topics as stranded costs, aggregation of small consumers, vertical deintegration, performance-based rate making, and retail wheeling of power.

Comprises three pieces. The first piece, which forms the body of the case, is adapted from a speech delivered by the author before the Harvard Business School Political Forum in early 1995. Originally entitled "The Economic Foundations of American Social Policy: Yesterday and Today," the speech attempts to place current discussions about a Third Industrial Revolution in historical perspective. The second piece, presented in the appendices, includes excerpts from speeches by three major policy figures--Representative Newt Gingrich, presidential candidate Patrick Buchanan, and Secretary of Labor Robert Reich. Each of these speakers identifies profound changes in the U.S. economy and suggests specific public policy responses. The 11 data exhibits that form the final piece of the case offer an overview of U.S. economic performance from 1960 to 1994. The primary theme linking these materials together is the notion that the United States is now in the midst of an economic transition. What remains uncertain, of course, is the precise nature of the transition. Is it really as profound or as far reaching as the various authors suggest?

A brief history of foreign direct investment (FDI) is explored, emphasizing conflicts, developments in the legal framework governing FDI, and international agreements and nonbinding principles formulated to resolve disputes brought in by FDI. Propositions provide a context from which core issues may be discussed by the students.

Provides a brief overview of international bank lending to developing countries in the 1970s and its culmination in the Third-World debt crisis after 1982.

Presents some data showing the magnitude, direction, and composition of capital flows to less developed countries (the so-called emerging markets) in the period 1990-1995. Some potential explanations for these flows are discussed. A number of policy responses to the scale of the flows are offered.

Discusses a series of incidents of conflict between the United States and foreign governments on trade.

In 1996, PT Freeport Indonesia, the mining subsidiary of Freeport McMoRan, had just completed an expansion of its copper and gold mine in the western half of New Guinea. The mine, which had dealt with numerous environmental and sociocultural problems over the past couple of years, had recently proposed concrete plans for dealing with problems of acid drainage and spoils deposition. Now, although under widespread criticism and attack, the company is undergoing environmental and social audits and is again contemplating a major expansion.

Focuses on the efforts of Singapore's Economic Development Board (EDB) to grow the tiny island almost wholly through an expansion of its service economy. Between 1965 and 1990, Singapore achieved a remarkable rate of growth, largely by opening its economy to foreign investment and by providing these investors with a full range of business and infrastructural services. By 1990, however, the island is running out of room for expansion. To keep the economy expanding at its customary pace, the EDB crafts an ambitious strategy of regionalization. Under this strategy, Singapore plans to export its service economy, developing a string of overseas enclaves to replicate the business environment that, physically, can no longer expand in Singapore. In these enclaves, designed to rim the Southeast Asian region, foreign investors could enjoy the full range of services they had come to enjoy in Singapore. And, by providing investors in these parks with a full range of business, administrative, and infrastructural services, Singapore would become the ultimate service economy.

Describes the IMF, the World Bank Group, the regional development banks, the Bank of International Settlements, the OECD, and the Group of 7.

Supplements Toys "R" Us Japan.

In April 1995, the Japanese yen hit a post-World War II high against the U.S. dollar. The yen's relentless ascent affected firms on both sides of the Pacific, but fell particularly hard on Japan's big four automakers. This case explores how endaka--or"high yen"--changes the competitive environment for the automakers and how they respond to the change. Examines how macroeconomic and political shifts can dramatically affect the competitive position of firms operating in a global economy. Also describes how firms can reshape their strategies to compete even in starkly different domestic environments.

Should politicians turn to business leaders for advice in formulating economic policy? Not according to economist Paul Krugman, who argues that executives' advice is often disastrously misguided. Business leaders who have been promoted to economic advisers are no more likely to be great economists than are military experts. People who have mastered the complexities of running a multibillion-dollar enterprise may think they can make pronouncements whenever the subject is money, but before they can offer sound economic advice, they must master a new vocabulary and a new set of concepts. In short, they must go back to school.

The electric utility market is in upheavel. Deregulation and a wave of megamergers are sweeping the industry. With states proceeding in piecemeal fashion however, it is unclear what final form deregulation will take. In his article, Peter Navarro, an expert on utility regulation at the University of California, Irvine, argues that removing most regulation and opening up the electricity market to free competition would improve U.S. competitiveness. He contends that the state-by-state approach to deregulation will create more turmoil than a rapid, federally coordinated restructuring.

This case focuses on the contractual relationship between a state's office charged with forestalling child abuse and neglect and one non-profit provider of social services for those purposes. The case points out the reasons the state of Massachusetts decided to contract for services and how it chose to define that contractual relationship. At the same time, the case also allows for discussion of whether the non-profit provider La Alianza Hispana would be well-advised to take on the work proffered by the state, given its organizational mission and capacity. Ultimately, the final part of the case reveals the disastrous end to which the Massachusetts-Alianza contract led. [See also High Stakes and Frightening Lapses: DSS, La Alianza Hispana and the Public-Private Question in Child Protection Work (C16-94-1265.0).]

In 1994, Lenzing AG, the world's largest rayon manufacturer, is deciding whether to expand production in South Pacific Viscose, its Indonesian subsidiary. Indonesia is a booming market for rayon, but management still has some concerns about the expansion. First, for the plant to remain successful, Lenzing's downstream customers--textile producers--must also remain in Indonesia. Second, despite being located in an area of tropical forests, the Indonesian plant has no local access to wood pulp, its most critical input. Finally, with the expansion, Lenzing would be increasing its exposure in a country that remains politically and economically uncertain.

As businesses expand worldwide, corporations are increasingly being forced to grapple with definitions of "acceptable" foreign conduct. What differentiates a "bribe" from a "commission"? Should managers abroad refer to local custom or their own national laws in determining how to respond to ambiguous or conflicting situations? The case contains 10 short scenarios and asks students to evaluate how they would respond to each.

Documents the American retailer's process of entry into the Japanese toy market. Discusses the history of Toys "R" Us in the United States as well as the history of the Japanese toy market, distribution, wholesaling, and retailing systems. Eager to enter the world's second largest toy market, Toys "R" Us executives begin in the late 1980s to formulate strategies for opening large discount toy stores in Japan. The American company faces a series of setbacks due to Japanese store-size regulation, application procedures, and a long-standing multilayered distribution system. Continued effort and the acceptance of a Japanese partner enable the company to prepare for the opening of a Toys "R" Us outlet in 1991. Faced with a lack of direct distribution deals and high land and labor costs, executives of Toys "R" Us Japan worry about the ultimate success of their new venture.

Spreadsheet supplement for case 796-077.

Growing fiscal deficits, persistent economic recession, and underinvestment in the nation's telecommunications infrastructure lead the Argentine government to privatize its state-owned monopoly provider of telecommunications services, ENTel, in late 1990. The privatization process and the resulting ownership structure is complex, and the new regulatory framework appears to offer both significant opportunities and risks for investors.