Case ID: KEL776     Solution ID: 37127     Words: 1681 Price $ 45

Corporate Governance at Martha Stewart Living Omnimedia Case Solution

Case Solution

"The case opens with Martha Stewart's 2005 discharge from jail tailing her conviction for discouraging an insider-exchanging examination of her 2001 offer of individual stock. The outrage managed a handicapping hit to the capable Martha Stewart brand and drove results at her namesake organization, Martha Stewart Living Omni media (MSO), profound into the red. In any case, as proprietor of more than 90 percent of MSO's voting shares, Stewart kept on controlling the organization all through the embarrassment. The organization confronted huge outside difficulties, including changing buyer inclinations and mounting rivalry in the majority of its business sectors. Notice rates were under weight as publicists started dividing spending over various stages, including the Internet and online networking, where MSO was frail. New contenders were drawing perusers from MSO's leader distribution, Martha Stewart Living. Furthermore, in its second greatest business, marketing, retailing juggernauts, for example, Wal-Mart and Target were squashing MSO's most critical deals channel, Kmart. Interior difficulties lingered much bigger, with various disappointments of administration while the organization endeavored a turnaround. This case can be utilized to instruct either corporate administration or turnarounds. "

Excel Calculations

Questions Covered

1. In what ways did Stewart’s control of shareholder voting rights disrupt the functioning of the board? How did her control of the board interfere with directors’ carrying out their fiduciary duties?

2. What changes in the makeup of the board would have improved governance?

3. How might changes in corporate bylaws have improved governance?

4. What situations might have been improved or avoided through better risk management?

5. What are the advantages and disadvantages of having one person serve as both a company's dominant brand its controlling shareholder?

6. In what ways did MSO fail to respond to competitive trends and changes in consumer preferences? Why?

7. What might management have done to stabilize revenue and reassure investors after Stewart's legal troubles surfaced?

8. What were the internal and external symptoms of trouble in the years following Stewart's 2005 return to the company?