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image text in transcribed APA refenced paper- about 3-5 pagesChapter 6 Discussion Questions: \"'Pokmon Go' shows Nintendo the promise of mobile\" and \"Alcoa Details Plans to Split into Two Companies\" \"Pokmon Go ...\" article: 5. Describe Nintendo's approach and how this differs from the approach taken by others. 6. Describe any barriers to entry that these companies, including Nintendo, are likely to encounter in this market. Are they structural and/or strategic barriers? Explain. \"Alcoa...\" article: 7. Which market is Alcoa exiting? Why? [That is: What issues are leading to this decision?] 8. Describe any barriers to exit you would expect Alcoa to face. 9. Will this exit be likely to hurt company profits in the short run? In the long run? This article has been reproduced with the permission of the Dow Jones Company. These materials have been made available electronically solely for use by students in Dr. Akhmedjonov's ECON 5315: Managerial Economics for the duration of the Summer2017 semester. These materials may not be further distributed to any person outside of the class, whether by copying or by transmission and whether electronically or in paper form. Citations Jeffrey Sparshott and Georgi Kantchev, Oil Prices Poised to Hit Sweet Spot for Global Economy, The Wall Street Journal, viewed online on August 29, 2016 Robbie Whelan, Trucking Company Failures on the Rise, The Wall Street Journal, viewed online on August 29, 2016 Liz Hoffman, Dana Mattioli and Dana Cimilluca, Snack Giant Mondelez Makes $23 Billion Takeover Bid for Hershey, The Wall Street Journal, viewed online on August 29, 2016 Annie Gasparro, Sales Pressure on Mondelez, Hershey Could Bolster Case for Merger, The Wall Street Journal, viewed online on August 29, 2016 Ryan Knutson and Deepa Seetharaman, Verizon Agrees to Buy Yahoo's Web Assets for $4.83 Billion, The Wall Street Journal, viewed online on August 29, 2016 Lilian Lin, 'The Great Wall' Trailer is Out: Matt Damon and Chinese Soldiers Battle Monsters, The Wall Street Journal, viewed online on August 29, 2016 Sara Randazzo and Mike Spector, Volkswagen to Pay Up to $14.7 Billion to Settle Diesel-Emissions Claims, The Wall Street Journal, viewed online on August 29, 2016 Jack Ewing and Hiroko Tabuchi, Volkswagen Scandal Reaches All the Way to the Top, Lawsuits Say, The New York Times, viewed online on August 29, 2016 Kelsey Gee and Julie Wernau, A Cheese Glut is Overtaking America, The Wall Street Journal, viewed online on August 29, 2016 Leo Lewis, 'Pokmon Go' shows Nintendo the promise of mobile, The Financial Times, viewed online on August 29, 2016 John W. Miller, Alcoa Details Plans to Split into Two Companies, The Wall Street Journal, viewed online on August 29, 2016 Laura Stevens, UPS Boosts Commitment to 3D On Demand Printing, The Wall Street Journal, viewed online on August 29, 2016 David Gelles, Taser International Dominates the Police Body Camera Market, The New York Times, viewed online on August 29, 2016 Holman W. Jenkins, Jr., That Slow Hissing Sound? The Jet Bubble, The Wall Street Journal, viewed online on August 29, 2016 Ryan Knutson, Verizon to Raise Monthly Wireless Plans by up to $10 a Month, The Wall Street Journal, viewed online on August 29, 2016 Justin Lahart, Wal-Mart Joins Amazon in Squeezing Retail Rivals, The Wall Street Journal, viewed online on August 29, 2016 Alcoa Details Plans to Split Into Two Companies - WSJ 1 of 5 http://www.wsj.com/articles/alcoa-details-plans-to-split-into-two-compa... This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com. http://www.wsj.com/articles/alcoa-details-plans-to-split-into-two-companies-1467201833 BUSINESS Alcoa Details Plans to Split Into Two Companies Parent company, called Arconic, to focus on aerospace, automotive, transportation, and building and construction markets An Alcoa aluminum plant in Alcoa, Tenn. In the company's split, the mining, refining and smelting operations will be spun off into a company that would keep the Alcoa name. PHOTO: REUTERS By JOHN W. MILLER Updated June 29, 2016 1:01 p.m. ET Alcoa Inc. detailed plans to break up the aluminum maker after 127 years, a move aimed at capitalizing on growth in the aerospace sector while insulating its shareholders from flailing commodity markets. 8/29/2016 2:10 PM Alcoa Details Plans to Split Into Two Companies - WSJ 2 of 5 http://www.wsj.com/articles/alcoa-details-plans-to-split-into-two-compa... In a securities filing laying out a split planned for later this year, Alcoa said it would change its name to Arconic and focus on engineering parts for aerospace and automotive businesses, and spin off a new company, Alcoa Corp., which will house the company's traditional mining, smelting and refining divisions. Shareholders in the existing Alcoa will receive shares in Arconic, the new parent, as well as at least 80.1% of the shares in a new, spun-off Alcoa, the company said. Arconic will hold the remaining stake in the spinoff, but said it plans to sell that stake, eventually severing its relationship with its main aluminum supplier, and its exposure to tepid aluminum markets. Arconic will take on over 85% of the company's $9 billion in debt, giving Alcoa a boost as it seeks to survive amid depressed aluminum markets. At the same time, Arconic's growth potential and its reduced exposure to the price of raw aluminum put it in a stronger position to borrow money. MORE ON ALCOA Alcoa's Plan to Split Concern Partner Alumina (http://www.wsj.com/articles/alcoas-plans-to-split-concernpartner-alumina-1464729954) Alcoa Breakup Might Not Move the Needle (http://blogs.wsj.com/moneybeat/2016/04/12/alcoa-breakupmight-not-move-the-needle/) Alcoa Results Hurt by Weak Aluminum Prices (http://www.wsj.com/articles/alcoa-hurt-by-weak-aluminumprices-1460408314) Its profitability and future prospects mean credit markets look at it differently than if it were still a commodity business with a middling cost position,\" says Andrew Lane, an analyst for Morningstar Inc. Inc. The split, which includes a non-exclusive supply agreement, also frees up Arconic to buy more raw aluminum from outside suppliers, and gives it more flexibility in purchasing. \"The Alcoa smelters will be able to sell metal closer to where they are, and the downstream can buy from anywhere,\" says Lloyd O'Carroll, an analyst for data provider and researcher CRU and an Alcoa bondholder. \"It's an optimization, and it will save on freight.\" The company didn't disclose the date for the split. Alcoa's share price closed down 2.5% at $9.10 on Wednesday in New York Stock Exchange trading. Depressed by lower demand and Chinese oversupply, the raw aluminum price on the London Metal Exchange has fallen to around $1,500 a ton, down from over 8/29/2016 2:10 PM Alcoa Details Plans to Split Into Two Companies - WSJ 3 of 5 http://www.wsj.com/articles/alcoa-details-plans-to-split-into-two-compa... $2,500 a ton five years ago, frustrating Alcoa's efforts to boost its share price. In 2015, the company reported a net loss of $121 million, compared with a net profit of $268 million in 2014. While raw aluminum was in the dumps, the aerospace sector has been hungry for fasteners and other alloyed parts, setting up the case for a split. Since 2014, Alcoa has made major acquisitions, including of U.K. jet-engine parts maker Firth Rixson Ltd. and Pittsburgh-based RTI International Metals Inc., and signed around $15 billion worth of supply deals with companies including Boeing Co., Airbus Group SE and Lockheed Martin Corp. By 2015, the company was reporting $12.5 billion in revenue for aerospace and other so-called downstream assets, compared with $11.2 billion in the raw aluminum divisions. \"Alcoa has the leading technology in the world for aerospace, and they've protected it with patents and supply-chain agreements, and they're doing everything possible to protect that,\" said Dick Evans, former chief executive of Alcan, in an interview. Splits and spinoffs are becoming \"increasingly common\" as the economy weakens, said Anil Shivdasani, a professor of finance at the University of North Carolina. \"Companies have limited options to grow their business, so if they can identify a piece of the business that has greater potential for growth, a split makes sense.\" It also has risks. There is still a lawsuit pending with an Australian joint venture partner objecting to the terms of the split, with a trial date set for September. The primary metals business could face a harder time raising capital, and continued headwinds in global metals markets. Since 2007, Alcoa has been closing high-cost-smelters, including eight of its 10 U.S. smelters. Instead, Alcoa will make aluminum in places with plentiful energy, where the power costs of making aluminum are closer to 20%, such as Norway, Iceland, Canada and Saudi Arabia. 8/29/2016 2:10 PM Alcoa Details Plans to Split Into Two Companies - WSJ 4 of 5 http://www.wsj.com/articles/alcoa-details-plans-to-split-into-two-compa... Spinoffs tend to do well with investors, but they tend to make juicy targets for acquisition, say analysts. And Arconic's automotive-sheet business will be smaller and more vulnerable than aerospace, say industry experts. Write to John W. Miller at john.miller@wsj.com 8/29/2016 2:10 PM This article has been reproduced with the permission of the Financial Times Limited. These materials have been made available electronically solely for use by students in Dr. Akhmedjonov's ECON 5315: Managerial Economics for the duration of the Summer2017 semester. These materials may not be further distributed to any person outside of the class, whether by copying or by transmission and whether electronically or in paper form. Citations Jeffrey Sparshott and Georgi Kantchev, Oil Prices Poised to Hit Sweet Spot for Global Economy, The Wall Street Journal, viewed online on August 29, 2016 Robbie Whelan, Trucking Company Failures on the Rise, The Wall Street Journal, viewed online on August 29, 2016 Liz Hoffman, Dana Mattioli and Dana Cimilluca, Snack Giant Mondelez Makes $23 Billion Takeover Bid for Hershey, The Wall Street Journal, viewed online on August 29, 2016 Annie Gasparro, Sales Pressure on Mondelez, Hershey Could Bolster Case for Merger, The Wall Street Journal, viewed online on August 29, 2016 Ryan Knutson and Deepa Seetharaman, Verizon Agrees to Buy Yahoo's Web Assets for $4.83 Billion, The Wall Street Journal, viewed online on August 29, 2016 Lilian Lin, 'The Great Wall' Trailer is Out: Matt Damon and Chinese Soldiers Battle Monsters, The Wall Street Journal, viewed online on August 29, 2016 Sara Randazzo and Mike Spector, Volkswagen to Pay Up to $14.7 Billion to Settle Diesel-Emissions Claims, The Wall Street Journal, viewed online on August 29, 2016 Jack Ewing and Hiroko Tabuchi, Volkswagen Scandal Reaches All the Way to the Top, Lawsuits Say, The New York Times, viewed online on August 29, 2016 Kelsey Gee and Julie Wernau, A Cheese Glut is Overtaking America, The Wall Street Journal, viewed online on August 29, 2016 Leo Lewis, 'Pokmon Go' shows Nintendo the promise of mobile, The Financial Times, viewed online on August 29, 2016 John W. Miller, Alcoa Details Plans to Split into Two Companies, The Wall Street Journal, viewed online on August 29, 2016 Laura Stevens, UPS Boosts Commitment to 3D On Demand Printing, The Wall Street Journal, viewed online on August 29, 2016 David Gelles, Taser International Dominates the Police Body Camera Market, The New York Times, viewed online on August 29, 2016 Holman W. Jenkins, Jr., That Slow Hissing Sound? The Jet Bubble, The Wall Street Journal, viewed online on August 29, 2016 Ryan Knutson, Verizon to Raise Monthly Wireless Plans by up to $10 a Month, The Wall Street Journal, viewed online on August 29, 2016 Justin Lahart, Wal-Mart Joins Amazon in Squeezing Retail Rivals, The Wall Street Journal, viewed online on August 29, 2016 'Pokmon Go' shows Nintendo the promise of mobile - FT.com Page 1 of 7 Last updated: July 11, 2016 9:01 am 'Pokmon Go' shows Nintendo the promise of mobile Leo Lewis in Tokyo Share Author alerts Print Clip Comments Market betting on smartphone outings for Mario, Zelda and other Nintendo characters Nintendo's market capitalisation surged by more than $7bn on Monday as investors continue to translate the white-hot popularity of Pokmon Go into a massive bet on the Japanese company's future in smartphone games. Some have dubbed the game the potential saviour of a company that has been the clear loser to Sony in the latest generation of console wars. It may not make Nintendo much cash, say analysts, but it shines a spotlight on a market the Kyoto-based company is better positioned than its competitors to dominate. After gaining 9 per cent on Friday, shares in Nintendo leapt 25 per cent on Monday on the heels of an unusually energetic weekend for hundreds of thousands of gamers, and a frenzy of activity that kept Pokmon Go at the top of the highest-grossing charts in the US for a third day running. The game, in which smartphone users physically seek out and collect a pantheon of virtual monsters around real-world locations, has topped the \"most downloaded\" charts for both the Android and Apple app stores faster than any other game in history. Nintendo's market value now stands at 2.9tn ($28bn). Analysts at Jefferies, eyeing those numbers and referring to a previous Nintendo favourite and one of the best-selling video game titles of all time described Pokmon Go as \"like Wii Fit, but more addictive\". http://www.ft.com/cms/s/2/237ab9e6-4724-11e6-b387-64ab0a67014c.html 8/29/2016 'Pokmon Go' shows Nintendo the promise of mobile - FT.com Page 2 of 7 And, as with Wii Fit, Nintendo is once again pioneering a crossover between online games and physical exertion. Rivals have tried with much less success, and analysts say Pokmon Go is a reminder that Nintendo holds some of the most valuable character intellectual property in the world. The presence of games guru Shigeru Miyamoto the brains behind Mario, Zelda and other Nintendo blockbusters at the Pokmon Go announcement event last September added to the sense that conservative Nintendo has finally embraced the smartphone as a legitimate medium for its genius. \"Nintendo is not the main developer of Pokmon Go, but seeing Miyamoto there indicates that he was part of the process of setting the tone. That is much more important than it sounds, and . . . a big part of Pokmon Go's success,\" says Serkan Toto, a Tokyo-based games industry consultant. Analysts predict an even greater surge in usage as summer holidays make their mark, but they note the early Pokmon Go numbers suggest the game is a hit with both children and adults. Its wild success in the US has sharpened the focus on how the game will perform in Japan a smartphone games market that, according to Yano Research, still surpasses China as the most valuable in the world with annual sales of around $9bn. The speculation now is that Pokmon Go will launch in Japan on July 16 to coincide with the three-day holiday weekend. http://www.ft.com/cms/s/2/237ab9e6-4724-11e6-b387-64ab0a67014c.html 8/29/2016 'Pokmon Go' shows Nintendo the promise of mobile - FT.com Page 3 of 7 AP Pokmon GO \"Last Friday's jump in the shares was about Pokmon Go hitting the number one position in the US. On Monday, people have woken up and realised that it is going to be number one in Japan too and what a significant impact that could have on earnings,\" says David Gibson, an analyst at Macquarie Securities. \"Added to that is people now revising up their expectations for the other five games Nintendo has said it is going to have on the smartphones by next March.\" Social media has exploded with stories and commentary about Pokmon Go's qualities and quirks. Many users have posted images of the elusive Pokmon turning up in unusual or embarrassing contexts, while others have griped that it has made their legs ache from unfamiliar amounts of walking. http://www.ft.com/cms/s/2/237ab9e6-4724-11e6-b387-64ab0a67014c.html 8/29/2016 'Pokmon Go' shows Nintendo the promise of mobile - FT.com Page 4 of 7 Still, the financial impact of Pokmon Go is more difficult to calculate in spite of Nintendo's rocketing share price. \"The most-downloaded charts are good, but what the industry really cares about is the grossing charts and the fact that this has been well monetised, and that all the buzz we are seeing around the game is actually making money,\" says Mr Toto. Pokmon Go was produced jointly with US-based Niantic, a developer in which Nintendo invested $30m last year and which has scored a huge hit in Japan with another \"augmented reality\" game called Ingress. That game has allowed Niantic to pioneer a variety of tie-ups with convenience stores and banks that coax Ingress players to those locations: the potential for similar marketing deals with Pokmon Go, say analysts, is huge. Analysts at Macquarie calculate that Nintendo's investment in Niantic means it is making about 10 per cent of the Apple and Android store revenues churned out by Pokmon Go. Nintendo also holds a 33 per cent stake in the Pokmon Company, which receives about 30 per cent of the game's revenues. Assuming Pokmon Go generates monthly gross revenue of 10bn, JPMorgan analysts calculate the game would boost Nintendo's annual profits by less than 10bn. http://www.ft.com/cms/s/2/237ab9e6-4724-11e6-b387-64ab0a67014c.html 8/29/2016 'Pokmon Go' shows Nintendo the promise of mobile - FT.com Page 5 of 7 Morgan Stanley says the game would need to reach a minimum monthly turnover of 15bn-20bn or more to have a meaningful impact on Nintendo's final earnings. But the bet being placed by the market is on the potential future of smartphone outings for Mario, Zelda and other Nintendo characters. \"This has been a reminder that Nintendo is sitting on some incredibly powerful intellectual property. Given that strength, we have been saying for a while that, in the longer term, the best relationship might be some sort of joint projects between Nintendo and Disney,\" says Macquarie's Mr Gibson. Fickle fads: four crazes and how they fared Tamagotchi: Before there were smartphones, there were not-so-smart digital pets cared for in a computer the size and shape of an egg. The animals needed to be fed and kept happy or risk premature death. Bandai, the company behind the original Tamagotchi, has revived it as a standalone device and an app for iPhone and Apple Watch. Beanie babies: Made by Ty Inc, these super-soft cuddly toys proliferated in bedrooms, car boot sales and even auctions in the 1990s. As toys were sometimes suddenly retired, collecting rare versions became a craze as people dreamt of owning a million -dollar teddy. The 'boom' lasted from 1996 to 1999, when Ty said all beanie babies would be retired. http://www.ft.com/cms/s/2/237ab9e6-4724-11e6-b387-64ab0a67014c.html 8/29/2016 'Pokmon Go' shows Nintendo the promise of mobile - FT.com Page 6 of 7 Candy Crush Saga: The online chase for sweets busied fingers on smartphones and tablets across the world, with 93m people playing every day by the end of 2013. It also contributed 78 per cent of revenues for owners King Digital Entertainment, prompting fears that it would flail as the band of Candy Crushers dwindled. King was bought by Activision Blizzard for $5.9bn last year. Draw Something: Zynga, the online game maker most famous for the purple cows of FarmVille on Facebook, bet $200m that Draw Something would become its next big hit. Zynga acquired OMGPOP, maker of the Pictionary-style app, after it saw instant success, with 35m downloads in the first six weeks. But it ended up writing down OMGPOP's value by $90m six months later, as Draw Something's popularity faded. Additional reporting by Hannah Kuchler in London and Kana Inagaki in Tokyo http://www.ft.com/cms/s/2/237ab9e6-4724-11e6-b387-64ab0a67014c.html 8/29/2016

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