1.

New Management Challenges for the New Age

Today’s news is littered with scandals, new allegations of sexual assault, and tragedy. Since 2017 and the

#metoo Movement, stemming from the Harvey Weinstein scandal, more and more public figures have been

put into the spotlight to defend themselves against allegations from women around the globe.

Not only publically, but privately in companies around the world, there have been firings, and investigations

into misconduct from co-workers, managers, and CEOs. It is a relevant topic that is getting long overdue

publicity and encouraging more men and women to come forward to discuss openly rather than hide the

events and injustices of the past. Other events showcase the tumultuous and on-edge society we are living in,

such as the Charlottesville, VA attack, that left 1 dead and 19 injured when a person drove a car through a
crowd of protestors during a white nationalist gathering.

With events on a daily business, it is important for companies to take a stand against racial hatred, harassment

of any kind, and have firm policies when such events occur. Take Netflix for example, who in July of 2018
fired chief communications officer for saying the “N-word” in full form. This event occurred during an internal

meeting, not directing the slur at anyone specific, but claimed it was being made as an emphatic point about

offensive words in comedy programming. The “Netflix way”, the culture that is built around radical candor and

transparency was put to the test during this occurrence.

The offender, Jonathan Friedland attempted to apologize for his misdeed, hoping it would fade away and his

apology would be accepted. However, it didn’t work that way, instead the anger was palpable between co-

workers, and eventually led to the firing of Friedland after a few months of inaction.

Netflixers are given a high level of freedom and responsibility within their “Netflix way” culture. Blunt

feedback is encouraged, trust and discretion is the ultimate gate keeper, as employees have access to sensitive

information, and are ultimately trusted for how they expense items and take vacation time.

Between the insanely fast-paced streaming services industry, it is hard to keep this culture at a premium, but it

is imperative for the success of the company overall. “As you scale a company to become bigger and bigger

how do you scale that kind of culture?” said Colin Estep, a former senior engineer who left voluntarily in 2016.

“I don’t know that we ever had a good answer.”

In order to keep up, sometimes the company is seen as harsh in their tactics to keep the best of the best. “I

think we’re transparent to a fault in our culture and that can come across as cutthroat,” said Walta Nemariam,
an employee in talent acquisition at Netflix, in the video.

Netflix has stayed true to their cultural values despite the pressures and sometimes negative connotations

associated with this “cutthroat” environment. Their ability to remain agile, while displaying no tolerances for

societal injustices makes them at the forefront of new age companies. It is a difficult pace to stay in line with,

but it seems that they are keeping in stride and remaining true to who they are, for now.

Questions:

1. How have the current cultural environment of our country shaped the way that companies are looking at

their own corporate cultural standards?

2. What are the potential downfalls and positive influences of the “Netflix way”?

3. How does Netflix’s internal culture negatively or positively affect their ability to stay competitive and

deliver cutting edge content?

The focus of a manager or a business owner is often primarily on doing well (making a profit).

Sometimes, though, organizational leaders choose to pursue two big goals at once: doing well, and

simultaneously doing good (benefiting society in some way). Why? Generally because they think it’s an

important thing to do. The business provides an opportunity to pursue another goal that the founders,

owners, or managers are also passionate about. In the case of New Belgium Brewing, the company’s

cofounders, Jeff Lebesch and Kim Jordan, were passionate about two things: making great beer and

environmental stewardship. So it should come as no surprise that their brewery is dedicated to reducing

its environmental footprint. The brewery has created a culture that fosters sustainability in a wide range

of ways, such as by giving employees a bicycle on their one-year anniversary as a way to encourage them

to ride bicycles to work. The organization is also active in advocacy efforts, such as the “Save the

Colorado” (river) campaign, and it works hard to promote responsible decision-making when it comes to

environmental issues. In fact, in 1999, following an employee vote, the brewery began to purchase all of

its electricity from wind power, even though it was more expensive than electricity from coal-burning

power plants (which meant reduced profitability and less money for employee bonuses).

While the brewery still relies primarily on wind power, it also now generates a portion of its electricity

onsite—some from rooftop solar panels, and even more from biogas, the methane gas byproduct that is

created by microbes in the brewery’s water treatment plant. The company cleans the wastewater

generated from beer production, and in doing so it generates the biogas, which is captured and used for

energy to help run the brewery.

Brewing is water intensive, so New Belgium works hard to reduce water consumption and to recycle the

water that it does use. The company also reduces other types of waste by selling used grain, hops, and

yeast to local ranchers for cattle feed. The company, which has been employee owned since 2013, also

works with the local utility through a Smart Meter program to reduce their energy consumption at peak

times.

All of these efforts at doing good must come at a cost, right? Actually, research shows that companies

that are committed to sustainability have superior financial performance, on average, relative to those

that are not. In coming up with creative ways to reduce, reuse, and recycle, employees often also find
ways to save money (like using biogas). In addition, organizations that strive to do good are often

considered attractive and desirable places to work (especially by people who have similar values) and are

also valued by the surrounding communities. As a result, employees in those organizations tend to be

extremely committed to them, with high levels of engagement, motivation, and productivity. Indeed, it

seems clear that the employees at the New Belgium Brewery are passionate about where they work and

what they do. This passion generates value for the organization and proves that it is, in fact, possible to

do well while having also made the decision to do good. And in the case of New Belgium Brewery, that

means working to protect the environment while also making delicious beer.

Discussion Questions

1. What challenges does New Belgium Brewery face in pursuing environmental goals?

2. Can you think of any other examples of companies that try to “do good” while also doing well?

3. Would you like to work for an organization that is committed to something more than just profitability, even
if it meant your salary or bonus would be smaller?
 3. Satya Nadella’s Transformation of Microsoft

When Satya Nadella became the CEO of Microsoft in 2014, he set in motion a major transformation of the

organization’s culture. He wanted it to shift from a culture that valued “know-it-alls” to one that values

“learn-it-all.” Instead of employees feeling the need to prove that they were the smartest person in the

room, he wanted them to become curious and effective listeners, learners, and communicators. Only

through continual learning and collaboration with one another, and with customers, would Microsoft

remain able to develop and provide great technology solutions.

One of Nadella’s first mandates as CEO was to ask all the members of the top management team to read

the book Nonviolent Communication by Marshall Rosenberg. The primary focus of the book is on

empathetic communication—a kinder, gentler approach than Microsoft employees were accustomed to.

Nadella believes that developing empathy leads to a heightened understanding of consumer needs and

wants and an enhanced ability to develop better products and services through collaboration.

Nadella has also embraced diversity and inclusion initiatives, though he readily acknowledges that there

is more to be done. This is, in part, an extension of his focus on empathy. However, it’s also good

business, because increasing the diversity of perspectives can help to drive innovation.

This cultural shift is reflected in Microsoft’s new mission statement: “To empower every person and every

organization on the planet to achieve more.” Empowering every person includes Microsoft’s own

employees. Achieving diversity is particularly a challenge in an industry that is male dominated, and

Nadella admits that he has made mistakes based on his own biases. At a Women in Computing

conference early in his tenure as CEO, Nadella suggested that women did not need to ask for raises when they
deserved them; the system, he said, would work it out. He later admitted that he was wrong

and used the mistake as a platform for making greater strides in this arena.

Senior management team meetings at Microsoft have apparently changed dramatically as a result of the

culture change driven by Nadella. Previously, members felt the need to constantly prove that they knew

all the right answers at team meetings. Nadella has established different norms; he seeks out honest

opinions from team members and gives positive feedback on a regular basis. By moving the focus away

from always being right and toward a focus of continual learning, the culture at Microsoft has become

more collaborative, and employees are more willing to take risks to create something amazing. The
culture shift seems to be paying off: Microsoft’s products are being described as “cool” and “exciting,”

its cloud-computing platform is outperforming the competition, and its financial performance has

improved dramatically. Transforming the culture of an organization is a massive undertaking, but

Nadella’s leadership of Microsoft clearly shows that it’s a decision that can pay off.

Discussion Questions

1. Do you think a culture focused on learning makes sense for Microsoft? Why or why not?

2. What are the advantages of a culture that emphasizes empathetic communication? Can you think of

any disadvantages?

3. The job of CEO means making big decisions that impact the entire organization—like deciding to

change the culture. How do you think you prepare for that job?
4.Rob Ault, Project Manager, Bayside Community Church
Bradenton, Florida
When it comes to decision-making, ethical dilemmas require particular care. Because managers make
many decisions, it should not be surprising that some of those decisions will have ethical implications.
With multiple stakeholders to consider, sometimes what is best for one group of stakeholders is not what
is best for others. I talked to Rob Ault about his experiences with ethical dilemmas over the course of his
career. Rob has been in managerial roles for over 25 years, since he was 19 years old. He told me that he
had experienced a number of ethical dilemmas in that time.
Rob has spent most of his career working for for-profit organizations, and for about half of that time he
has worked in a union environment. What he has found most frustrating, regardless of environment, was
when it was clear to him what was right, but what was right conflicted with what his boss was telling him
to do. This included a situation in which he felt an employee should be fired for misbehavior (but wasn’t),
as well as situation in which he was asked to fire someone undeservedly. What we mostly talked about,
though, was his process. How did he go about making decisions in these challenging situations?
Rob clearly stated that his approach to these situations has changed with experience. What he did early
in his career is not necessarily what he would do now. He said that it takes experience and some maturity
to recognize that, as a leader, the decisions you make affect other people’s lives. He also explained that a
starting point for the decision-making process is always a recognition of the fact that you have been
hired to generate a benefit for your company. So a manager’s decisions need to come from the
perspective of what is going to be in the best long-term interest of the organization (in addition to what
is morally right). This isn’t always easy, because short-term consequences are much easier to observe
and predict.
I asked Rob who he talked to prior to making decisions in situations with an ethical component. Rob told
me that he felt one of the most important things you should do as a leader is to intentionally create and
build relationships with people you trust in the organization. That way you have people you know you
can talk to when difficult situations come up. He was very clear that you should always talk to your boss,
who will tend to have a broader understanding of what is going on in the context of the larger
organization. He also told me that he liked to talk to his father, who happened to work in human
resource management for a large Fortune 500 organization. His father was always helpful in providing
the perspective of how things were likely to play out long-term if one person was allowed to bend the
rules. Rob realized eventually that the long-term consequences of this were almost always negative: once
one person is allowed to misbehave, others find out about it and realize that they can do the same thing without
repercussions. Rob also seeks out the opinions of other individuals in the organization before
reaching decisions with an ethical component; he told me that when he worked in a union environment,
he tried to make sure he had a good relationship with the union steward, because it was helpful to get
the perspective of someone who was committed to the side of the employee.
The biggest ethical dilemma Rob faced was one that he actually couldn’t talk to me about. He disagreed
with what he was being asked to do, and when it was clear that he had no other choice in the matter, he
quit his job rather than do something he felt wasn’t right. He accepted a severance package in exchange
for signing a nondisclosure agreement, which is why he can’t share any details . . . but it was clear from
our conversation that he feels he made the right choice. That particular ethical dilemma makes it clear
how challenging managerial decision-making can sometimes be.
Discussion Questions
1. If you were faced with an ethical dilemma, from whom would you seek advice?
2. Describe some decisions that might be good for an organization’s profitability in the short-term, but
bad for the organization in the long-term.
3. What factors would you take into consideration if you were thinking about leaving your job rather
than do something unethical?
5.Vinyl Records Make a Comeback

The music industry has seen a series of innovations that have improved audio quality—vinyl records sales

were eventually surpassed by compact discs in the 1980s, which were then eclipsed by digital music in the

early 2000s. Both of the newer technologies boast superior sound quality to vinyl records. Vinyl should be dead

. . . yet it’s not. Some say this is simply a result of nostalgia—people love to harken back to older times.

However, some audiophiles say that vinyl records produce a “warm” sound that can’t be reproduced in any

other format. In addition, a vinyl record is a tangible product (you can feel it, touch it, and see it when you own

the physical record) and is more attractive, from an aesthetic perspective, than a CD. It is also a format that

encourages listening to an entire album at once, rather than just listening to individual tracks, which can

change the listening experience.

Whatever the reasons, vinyl is making an impressive comeback. Sales growth has been in the double digits for

the last several years (over 50% in 2015 and again in 2016) and is expected to exceed $5 billion in 2017. Sony,

which hasn’t produced a vinyl record since 1989, recently announced that it is back in the vinyl business.

One of the biggest challenges to making vinyl records is that most of the presses are 40+ years old. In the

record-making process, vinyl bits are heated to 170 degrees, and then a specialized machine exerts 150 tons of

pressure to press the vinyl into the shape of the record. About a dozen new vinyl record manufacturers have

sprung up in the last decade in the United States. Independent Record Pressing, a company based in New

Jersey, began producing vinyl records in 2015 using old, existing presses. Their goal upon starting up was to

produce over a million records a year. Even at that level of production, though, demand far outstrips the

company’s capacity to produce because of the limited number of presses available. They could run their
machines nonstop, 24 hours a day, and not catch up with demand.

The big question is what the future holds for this industry. Will this just be a passing fad? Will the vinyl record

industry remain a small niche market? Or is this the renaissance, the rebirth of a product that can withstand

the test of time and alternative technologies? If it’s a rebirth, then we should see demand continue to grow at

its recent rapid pace . . . and if demand remains strong, then investing in new presses may well be worthwhile.

If this is just a short-lived nostalgic return to an outdated media, however, then the large capital investment

required to purchase new presses will never be recouped. Even with the recent growth, vinyl records still

accounted for only 7% of overall music industry sales in 2015. That may be enough to get old presses running
again, but so far it hasn’t been enough to promote a lot of investment in new machines. The cost of a new

press? Almost half a million dollars.

At least one manufacturer is optimistic about the future of vinyl. GZ Media, based in Czechoslovakia, is

currently the world’s largest producer of vinyl records. President and owner Zdenek Pelc kept his record

factory going during the lean years when vinyl sales bottomed out. He admits that the decision was not wholly

logical; he continued in part because of an emotional attachment to the media. After demand for vinyl records

practically disappeared, Pelc kept just a few of the presses running to meet the demand that remained. His

intention was to be the last remaining manufacturer of vinyl records. Pelc’s emotional attachment to vinyl

records seems to have served him well, and it’s a great example of why basing decisions on pure logic doesn’t

always lead to the best results. Consumers make purchasing decisions in part based on the emotional appeal

of the product, so it shouldn’t be surprising that consumers also feel an emotional attachment to vinyl records,

as Pelc did.

When demand for vinyl records was low, Pelc stored the company’s presses that were no longer in use so that

they could be cannibalized for parts as needed. When sales began to grow again in 2005, he started pulling old

machines out of storage and even invested in a few new ones. This has made GZ Media not only the largest

vinyl record producer in the world, but also one of the only ones with new factory equipment. GZ Media

produces over 20 million vinyl records a year, and Pelc is excited to continue that trend and to remain a major

manufacturer in what is currently still considered a niche market.

1. Why do you think vinyl records are appealing to customers?

2. Do you think the sales growth will continue to be strong for vinyl sales? Why or why not?

3. What research would you want to conduct prior to making a decision to invest in new presses?
6.Wells Fargo, Crisis and Scandal

The recent widespread scandal at Wells Fargo jolted and shocked the corporate world. How could such

internal corrupt and outrageously illegal and unethical activities by professionals have occurred? Wells Fargo

is “an American multinational financial services company headquartered in San Francisco, California” with

offices nationwide and “the world’s second-largest bank by market capitalization and the third largest bank in

the U.S. by total assets.” In September 2016 it was discovered that the company was continuing to create fake

customer accounts to show positive financial activity and gains. 5,000 salespeople had created 2 million fake

customer accounts to meet high-pressure internal sales goals, including a monthly report called the

“Motivator.”

The out-of-control sales leadership pressured sales employees to meet unrealistic, outrageous sales targets.

Dramatically unrealistic sales goals propelled by continuous pressure from management coerced employees

to open accounts for customers who didn't want or need them. “Some Wells Fargo bankers impersonated

their customers and used false email addresses like [email protected], according to a 2015 lawsuit filed

by the city of Los Angeles.”

The “abusive sales practices claimed in a lawsuit that Wells Fargo employees probably created 3.5 million

bogus accounts” starting in May 2002. Wells Fargo is awaiting final approval to settle that case for $142
million.

However, regulators and investigations found that the misconduct was far more “pervasive and persistent”

than had been realized. “The bank’s culture of misconduct extended well beyond the original revelations.” For

example, regulators found that the company was (1) “overcharging small businesses for credit card

transactions by using a ‘deceptive’ 63-page contract to confuse them.” (2) The company also charged at least

570,000 customers for auto insurance they did not need. (3)The firm admitted that it found 20,000 customers

who could have defaulted on their car loans from these bogus actions; (4) The company also had created over

3.5 million fake accounts attributed to customers who had no knowledge of such accounts.

Wells Fargo has had to testify before Congress over these charges, which have amounted to $185 million

dollars, and more recently the company has been ordered by regulators to return $3.4 million to brokerage

customers who were defrauded. The CEO and management team have been fired and had millions of dollars

withheld from their pay.

consumer abuses committed by the company, the CFPB (Consumer Financial Protection Bureau) and Office of

the Comptroller of the Currency (OCC) imposed a $1 billion fine on Wells Fargo for consumer-related abuses

regarding auto loan and mortgage products. The OCC also forced the company to allow regulators the

authority to enforce several actions to prevent future abuses, such as and including “imposing business

restrictions and making changes to executive officers or members of the bank’s board of directors.” The new

president of the company, Tim Sloan, stated, “What we’re trying to do, as we make change in the company

and make improvements, is not just fix a problem, but build a better bank, transform the bank for the future.”

1. What happened at Wells Fargo with regard to past activities that led to this major scandal?

2. What internal dimensions of the company were part of the problems that occurred?

3. How might the organizational structure of the company have been part of the problems that occurred?

4. Identify and use relevant concepts from this chapter as well as your own thoughts and analysis to

diagnose the scandal at Wells Fargo. How could such a scandal have occurred in the first place? Who and

what was at fault?

5. Suggest some solution paths the company might consider, using your own thoughts/research, to avoid such a
scandal from reoccurring.
7.Sustainability and Responsible Management: Can LEGO Give up Plastic?

“In 2012, the LEGO Group first shared its ambition to find and implement sustainable alternatives to the

current raw materials used to manufacture LEGO products by 2030. The ambition is part of the LEGO

Group’s work to reduce its environmental footprint and leave a positive impact on the planet our children will
inherit.”

Danish toy company LEGO announced in 2015 that it would invest almost $160 million dollars into its

efforts to meet the goal it announced in 2012. You know LEGO—they are the colored plastic bricks that

snap together to make toys ranging from Harry Potter castles to Star Wars fighter craft. The family-

owned company was founded in 1932 by Ole Kirk Christiansen and has since grown to be the world’s

number one toy brand.

Given that LEGO and plastic seem to go hand in hand, why would the company want to give up on the

material that makes their toys so successful? LEGO’s manufacturing process relies on plastic to make

highly precise plastic bricks that always fit together securely and easily. Replacing the plastic with

another material that is durable, can be brightly colored, and can be molded as precisely is a difficult

task. LEGO’s leadership has decided that a strategic position based on fossil fuels is not sustainable and

is making plans now to transition to a more environmentally friendly material to manufacture its

products.

Switching from oil-based plastic might make economic sense as well. Manufacturers who rely on

petroleum-based products must weather volatile oil prices. LEGO’s raw materials costs could skyrocket

overnight if the price of oil climbs again as it did in 2011. That price spike was due to conflict in Libya and

other parts of the Arab world,10 something entirely beyond the control of any business.

Technological innovations in bio-based plastics may be the answer for LEGO,11 which is working with

university researchers around the globe to find a solution to its carbon-footprint problem.

Critical Thinking Questions

1. How would you approach this issue if you were the manager in charge of sourcing raw materials for

LEGO? How would PESTEL analysis inform your actions?

2. What PESTEL challenges is LEGO trying to address by changing the raw materials used in its

products?
3. Explain what favorable PESTEL factors support LEGO’s efforts.

(A Firm's External Macro Environment PESTEL: Political, Economic, Social, Technological,

Elon Musk cofounded Tesla in 2003 with the vision of making electric cars that could rival, and even replace,

traditional gas-engine cars in the consumer marketplace. At the start of the 21st century, the external

environment was beginning to show favorable signs for the development of electric cars: people were

becoming more concerned about the environment and their carbon footprints, and gas prices were beginning

a steep climb that had already spurred the sales of hybrid gas-electric cars such as the Toyota Prius.

The automobile industry was not responding to these environmental trends, instead relying on the fact that

trucks such as the Ford F-150 and Chevrolet Silverado were still the two top-selling vehicles in America in
2003.

Musk saw a different future for vehicles, and Tesla introduced the all-electric Roadster in 2008. Four years
later, the more practical Model S was introduced, and Tesla sales began to climb.

As a new entrant in the automobile industry, though, Tesla faced several challenges. Manufacturing and

distribution in this industry are extremely expensive, and Tesla had to develop the capability of efficiently

manufacturing large quantities of cars. Tesla also had to establish dealerships for its cars, although it also

decided to sell cars online, taking advantage of tech-savvy consumers’ comfort with online shopping. Perhaps

Tesla’s greatest challenge was convincing consumers to trust the new technology of all-electric cars. Range

anxiety became an actual term, describing people’s fear that their car batteries would run out before they

reached their destinations. To combat this, Tesla developed an extensive network of charging stations so

consumers could be confident that they could charge their cars conveniently.

Elon Musk has been a master of raising money to fund Tesla’s efforts to successfully enter the mainstream

automobile manufacturing industry; so far, Tesla’s entry has cost billions of dollars. Tesla has also taken

advantage of tax incentives to develop its charging stations and to sell its cars, because Tesla customers

receive tax credits for the purchase of their cars. Tesla cars are not inexpensive, however, and that has limited

their marketability. Most Americans cannot afford the Model S or more recent Model X’s high prices (up to and
exceeding $100,000).

In 2017, Tesla launched the Model 3, designed to transform the car industry by being its first mass-market,

affordable model. The company started taking “reservations” for the model in 2016, promising that it would

arrive with a $35,000 price tag. By mid-2017, the reservations list had reached half a million customers,

creating a new problem for Tesla. How could it possibly manufacture that many cars when production levels
for all of 2016 were less than 84,000 cars?

Critical Thinking Questions

1. What PESTEL factors supported Tesla’s success? Which factors posed challenges?

2. How has Tesla’s strategic position changed since it was founded in 2003?

3. What kind of responses would you expect from Tesla’s rivals in the automobile manufacturing industry to

the Model 3’s popularity?

(A Firm's External Macro Environment PESTEL: Political, Economic, Social, Technological,

Amazon.com has become the place everyone buys from. It wasn’t always that way, though. In 1995, Jeff

Bezos founded Amazon in the garage of his house as an online book-selling company. Even then,

however, he had a bigger mission: he wanted Amazon to be "an everything store." In a little over two

decades, Bezos has achieved his vision by growing Amazon in almost every possible way. Amazon

reaches across international borders, with 14 country-specific websites, and has expanded product

offerings to include almost anything a shopper might be looking for. They have developed their own

products, like the Kindle reader and Echo/Alexa digital home assistant, and now, with the acquisition of

Whole Foods grocery stores, Amazon operates physical “brick-and-mortar” stores. Amazon uses the

expertise it has developed along the way to serve other online retailers by hosting their stores and also

by offering other tech services.

Amazon’s online business model has transformed how people shop, which has impacted the retail

industry. Malls and brick-and-mortar stores have struggled to match Amazon’s prices, selection, and

convenience. Exhibit 9.8 shows the stock market’s reaction to retail’s struggles: Amazon’s share price

has soared even as shares of stores such as Macy’s and Best Buy have lost value.

How have traditional brick-and-mortar retailers adjusted their strategies and objectives in response to

changing customer shopping habits? Clothing retailers like Macy’s have had to adopt defensive

strategies by lowering prices, reducing the number of locations, and expanding their own online sales

capabilities. Big-box stores like Best Buy, in an effort to sustain their business, have fought back against

“showrooming,” the process that occurs when a customer visits a brick-and-mortar store to check out a

product in person and then goes home to order it online. To combat this practice, big-box stores offer

installation services and price match the online retailers.

The transformation of the retail industry has hurt some stores, like Macy’s, whose share price has

declined as they shrink their operations in order to try to survive. Best Buy, on the other hand, is trying to

adapt by choosing defensive actions that will maintain their operations. Best Buy has had some success

in figuring out how to attract buyers in the era of online retail, and market investors have approved their

actions, as shown in their share price increases. Will these retailers survive over the long term? It’s hard to say.
Macy’s and JCPenney have announced that they are closing stores, and Sears recently filed for
bankruptcy. Analysts have predicted the death of Best Buy for years and still think that over the long

term, physical retail stores are going to have to become service providers to differentiate themselves

from product retailers like Amazon. For example, in 2002, Best Buy acquired Geek Squad, a computer-

repair company, in order to provide in-home computer repair services.

1. What PESTEL forces have contributed to the transformation of the retail industry?

2. Amazon has entered into the brick-and-mortar store business with the acquisition of Whole Foods.

Do you think this is a good move or a bad move for Amazon? Why?

3. What strategic actions do you think a store like Macy’s can undertake to survive in the current retail

industry?

(A Firm's External Macro Environment PESTEL: Political, Economic, Social, Technological,

Is Coming Soon

Although the ride-sharing industry is still relatively new, it has seen explosive growth, and its two main

rivals, Uber and Lyft, are looking for ways to increase their capacity to serve riders. Both firms, and rivals

like them, operate in basically the same way. A person needing a ride uses a smartphone app to alert a

nearby person with a car of their location. The driver, usually an independent contractor for the service
(meaning they are just a person with a car that has signed up to provide rides in exchange for a portion

of the fare the customer pays), picks up the customer and drives them to their destination. Paying for the

ride is also handled through the app, and the driver receives about 75–80% of the fare, with Uber or Lyft

keeping the balance.

The popularity of ride-sharing services has soared, and both companies are constantly recruiting more

drivers. However, both companies have also explored alternatives to independent drivers: self-driving

cars. Uber and Lyft have taken different paths to develop this capability. Uber has worked to internally

develop its own software technology and self-driving car technology, while Lyft has focused on software

interfaces that can accommodate other companies’ self-driving cars.13 Lyft’s partnerships with firms

such as Google and GM that are already developing self-driving cars has put it ahead of Uber in the race

to get driverless vehicles into its ride-sharing network, and it was able to test self-driving cars in Boston

by partnering with NuTonomy in 2017.14 Lyft offered a demonstration to journalists at the Consumer

Electronics Show in Las Vegas in 2018, offering rides in self-driving cars developed by Aptiv.15 Uber had

been testing similar technology in Pittsburgh but suspended its self-driving car program after a fatal

pedestrian accident in Arizona.16

Sources: Ridester (2017). “How Much do Uber Drivers Actually Make? The Inside Scoop.” Ridester.com.

https://www.ridester.com/how-much-do-uber-drivers-make/ Accessed July 29, 2017; Bensinger, Greg (2017).

engineers and open new Silicon Valley office.” The Wall Street Journal. July 21, 2017; Edelstein, Stephen

(2017). “Lyft Finally Launches Its Boston Self-Driving Car Pilot Program.” The Drive. Dec. 17, 2017.

http://www.thedrive.com/tech/16779/lyft-finally-launches-its-boston-self-driving-car-pilot-program;

O’Kane, Sean (2018). “I took a gamble by riding in a self-driving Lyft in Las Vegas.” The Verge. January 8,
2018. https://www.theverge.com/2018/1/8/16860590/self-driving-lyft-las-vegas-ces-2018; and Korosec,

Kristen (2018). “Uber self-driving cars back on public roads, but in manual mode/” Tech Crunch. July 24,

2018. https://techcrunch.com/2018/07/24/uber-self-driving-cars-back-on-public-roads-but-in-manual-

mode/.

Critical Thinking Questions

1. What resource or capability challenges have Uber and Lyft faced because their fast company

growth?

2. What PESTEL factors do you think are contributing to the popularity of ride-sharing services?

3. What industry challenges (think of Porter’s Five Forces) does the use of self-driving cars address?

11. Servant Leadership Personified: Aaron Feuerstein at Malden Mills

Aaron Feuerstein, a third-generation owner of Malden Mills in Lawrence, Massachusetts, suffered his

factory burning to the ground on December 11, 1995. Feuerstein had the option of using the insurance

money to rebuild the plant, but he instead paid the salaries and complete benefits of all the 3,000

workers for 6 months while the factory was rebuilt. He later said that he had no other option than to help

the employees. His action was based on his study of the Talmud, and he presented at Xavier University:

“I have the responsibility to the worker, both blue-collar and white-collar. I have an equal responsibility

to the community. It would have been unconscionable to put 3,000 people on the streets and deliver a

deathblow to the cities of Lawrence and Methuen. Maybe on paper our company is worthless to Wall

Street, but I can tell you it’s worth more.”

Feuerstein exemplified the two ethical leadership styles of stewardship and servant leadership, which

focus specifically on how leaders work with followers. (Ethical leadership as a whole concerns the

leader’s characteristics and encompasses actions in both the internal and external organizational

environment.)

Source: Xavier University News and Events, “Former Malden Mills CEO Aaron Feuerstein speaking at

Heroes of Professional Ethics event March 30”, March 24, 2009, https://www2.xavier.edu/campusuite25/

modules/news.cfm?seo_file=Former-Malden-Mills-CEO-Aaron-Feuerstein-speaking-at-Heroes-of-

Professional-Ethics-event-March-30&grp_id=1#.W6FLZPZFyUk
Questions

1. How does Aaron Feuerstein exemplify servant leadership principles?

2. If Feuerstein had decided to use the insurance money for other purposes, would he have not been

acting ethically?

12.From Regional to Global Bayer Crop Science

Bayer Crop Science is a division of Bayer, a leading global company based in Leverkusen Germany. The

Crop Science division’s main goal “is to be able to produce enough food, feed, fiber and renewable raw

materials for a growing world population on the limited land available.”33 It has been involved in many of

the latest innovations in agriculture, such as developing apps for farmers to help them understand their

crops, climates, and so on and developing the ability to use drones to assess crop quality.

One of Bayer Crop Science’s units is the Global Public and Government Affairs (GPGA) division, which is

in charge of monitoring and proactively complying with local government policies. In 2012, Bayer Crop

Science had a large number of independent country GPGA divisions that acted independently, thereby

limiting collaboration and cooperation. As a result of this regional strategy as described earlier, critical

information about policy priorities from different regions was slow to reach headquarters, and Bayer Crop
Science was not able to quickly address policy challenges worldwide.

In 2013, Bayer Crop Science hired Lisa Coen to implement a more global strategy in the GPGA division.34

Her main task was to make the GPGA division a truly global organization. To accomplish her task, she

first travelled extensively around the world to meet with the business unit leaders and the public affairs

team members. Through this process, she wanted to engage with the key stakeholders to prevent any

resistance to change from building up. During these meetings, she discovered that the various local and

regional GPGA units had deep knowledge that would greatly help Bayer Crop Science face and manage

public policy issues all over the world. The meetings also allowed her to come up with the best strategy

to turn the various regional units into a global unit.

To build a more collaborative organization, Coen had to move from a traditional and hierarchical

organization based on regions to a globalized network of units. To demonstrate the need for such a

system, Coen invited key individuals to a global meeting to work collectively on public policy issues.
Through this exercise, she was able to show the group the critical importance of a network organization.

Through team-building exercises, Coen showed how the entire group had to move around to meet with

the key people in each region. This interaction allowed the group to commit to a network model that

would support and build a global organization.

Discussion Questions

1. Why did Bayer Crop Science decide to move from its original regional organization of units to a

more global network of units? What were the advantages and disadvantages of this approach?

2. How did Coen build support for the change? Do you believe this was an appropriate way?

3. What challenges do you anticipate as Coen continues to build a network organization?**