Case Study 11 Martha Stewart

Read the case study located in the section titled Case Studies in your textbook and prepare a 3- to 4-page report in a Microsoft Word document concerning the following situation:

This case focuses on the corporate governance aspect of Martha Stewart Living Omnimedia (MSO), a media empire founded by Martha Stewart. Stewart is a former model and devoted her career to domestic perfection and luxury. She is the brand icon of MSO; however, with new technology and the shift of consumer tastes and preferences, MSO’s business model is receiving serious threats from other competitors.

After a review of the history of Martha Stewart Living Omnimedia, the case discusses its competition, the legal problem that Martha Stewart encountered, changing leadership within MSO, Martha Stewart’s questionable compensation, and the future of MSO. The case concludes with a discussion of MSO’s future at a crossroads.

The case underscores the importance of corporate governance when conditions in the environment change. An analysis of the separation of ownership and managerial control, board of directors, and executive compensation will aid in evaluating the future of MSO. Some analysts suggest that MSO will lose its competitiveness once Martha Stewart leaves the company; others suggest that the MSO brand has lost its brand image by going into product lines such as cleaning fluids and dog poop bags. Also, a few analysts suggest that MSO is a potential takeover target.

This case is ideal for demonstrating the importance of corporate governance. The following points are to guide a review and discussion of some important concepts.

• Discuss MSO’s corporate governance. Has the company been able to separate the ownership and managerial control?

• Evaluate the effectiveness of MSO’s board of directors. Have the directors been able to monitor and control the company?

• Executive compensation is a method of governance mechanisms. Discuss Martha Stewart’s compensation and evaluate its effectiveness.

• Is MSO in financial trouble? Discuss the possibility of the market for corporate control. Will MSO become a takeover target?

• Describe MSOs next move in terms of growth and expansion.  Provide an analysis, of what additional recommendations would be required to be done to help MSO achieve its goals?

• Evaluate MSO’s international strategy and its use of alliances to achieve company objectives, what would be their best strategy?

Support your responses with examples.

Cite any sources in APA format.