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CASE15_SwordstoPloughshares - From Swords to Ploughshares...

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From Swords to Ploughshares: Three Generations INTRODUCTION The case study, which is a detailed history of the McNeely family business, sheds light on a variety of strategic leadership issues and imparts an inside look at the mechanics of corporate governance. It presents an interesting opportunity to discuss the following topics. How successful has the business been at recognizing and satisfying stakeholder interests? What mechanisms are available to manage relationships with stakeholders and to influence the strategic direction and performance of the company? Was the board of directors for Space Center Enterprises successful in fulfilling its governance role and in meeting the challenges it faced? Based on strategic leadership responsibilities, was Paddy qualified to fill in his father's footsteps as CEO of the newly-merged Meritex organization? ANALYSIS Stakeholder Interests Stakeholders are affected by the strategic outcomes achieved by the organization and have enforceable claims on the firm's performance. Of course, different parties have their own sets of expectations and levels of influence over the commitments, decisions, and actions of the company. Balancing stakeholder interests is challenging and is often managed by prioritizing interests which have the most power or are the most urgent. In the management of the McNeely enterprises, two major stakeholder groups experienced inadequate satisfaction with the company: the minority shareholders and the professional managers. Capital market stakeholders expect the firm to preserve and enhance the wealth they have entrusted to it. Together holding a 22% interest in the company, the minority stakeholders (the sisters), were frustrated by their lack of influence in planning and decision making. Without representation on board, they believed that they did not have full access to relevant information. In addition, they were critical of the executives' misuse of assets and failure to distribute profits in the form of dividends. On the other hand, organizational stakeholders expect the firm to provide a dynamic, stimulating, and rewarding work environment. In this case, the emphasis was on "rewarding". The success of Space Center depended upon the talent and performance of an important group of professional managers. Although the retention and attraction of these key managers was a clear priority, the company's compensation and organizational structure did not lead to the equity interest coveted by this group. In fact, the mechanisms used to motivate members of the management team promoted behavior Space Center - 1
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From Swords to Ploughshares: Three Generations which could be at odds with McNeely interests. In addition, the independent negotiation of each new business deal created ongoing uncertainty for the managers and an endless source of intraorganizational conflict.
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