Case Analysis #4
Looking at MSO’s corporate governance, the company had been able to separate ownership and managerial control. One way to support this is the existence of the new CEO. When Stewart was released from the prison, she went back to MSO and worked under the new CEO. This is an indication that despite being the owner, she understood the managerial duties. For any business to be successful, ownership and management should be separated. In most cases, the business owners act as the investors, but all the duties are left to the managers. The management is in charge of all the activities, and in this case, there was a new CEO to oversee the business operations. Another thing to support this argument is because Steward looked for help from other individuals such as Sharon Patrick who was a former MC Kinsey partner. This partnership generated a big profit for MSO, which was an indication of good management. Looking at most of the businesses, managers prefer to partner with other organizations to have a competitive advantage in the market and make more profits. Another thing is that Steward used her personal taste, lifestyles and skills to enhance growth. This was a good example of a manager since they are supposed to be a good example for the other employees.
The directors were able to monitor and control the company effectively. This is because they received training or risk management during an orientation session. Risks are prone to occur from time to time, and the companies need to come up with mitigation strategies. Ensuring that the directors received training on risk management was going to help them predict the risks and come up with solutions. They were also trained on strategic plans, corporate governance, code of ethics and compliance program. Most of the organizations ensure that their employees receive training from time to time. It enables them to be up to date and learn how to solve different issues that might arise. The directors were also encouraged to participate in education programs which would have helped them to meet their responsibilities. This way, the directors were going to gather more knowledge on how to improve their skills. Several platforms could have been used for educational purposes such as the media and teamwork. The directors could have learnt new ways of monitoring and controlling the company effectively. The technology was bringing new changes in the industry, and the best way to be informed was through education, and that is why the directors were encouraged to participate in education programs.
Executive-level employees such as the senior managers play an essential role in the organization as they are the ones who make important decisions, solve difficult problems and come up with strategies. Hence, business owners need to set aside some benefits that can keep them motivated and satisfied. The type of benefits that they receive is known as executive compensation. Looking at Martha Steward’s compensation, it was $2.8 million in total, which was given to six different executive employees, including the CEO. This compensation was effective because it was motivating the leaders to put more effort into their work. Compensation is one of the best ways to motivate employees. It makes them feel recognized and appreciated for their efforts, and they reciprocate by working an extra mile. In the absence of this compensation, there is no morale, and the employees tend to be reluctant. The compensation also enabled the company to have a competitive advantage in the market. Competition is one of the significant threats for organizations. The best way to overcome competition is by working together to accomplish business goals. Compensation brings unity, and it becomes easier for the employees to accomplish the business goals because there is the motivation for their efforts.
MSO was in financial trouble due to the fall in subscription and news stand sales. This means that only a few individuals were subscribing to its news. Without subscribers, the company was not going to earn enough money to support its operations. The company also ended its partnership with 1800 flowers. Without this partnership, the company was likely to face more financial problems bearing in mind that at that moment, it was making more losses than profits. In the absence of business partners, there is no sharing of losses. Due to poor ratings, Steward’s daytime TV show was cancelled because only a few individuals showed interest in the show. Without this show, the company was going to make significant losses. MSO was more likely to be a takeover target because of the financial problems that it was experiencing. Another company could buy stock from this company because it was difficult for MSO to rise again. Take over was going to be a primary solution to the problems that the company was experiencing. The CEO could have sold this company to potential buyers that had enough capital to boost the operations that were declining.