Study Guide 20: The Role of the Firm
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Guide overview:
This segment explores the role of business in a society and looks at the standards by which business performance should be judged. Classic theory holds that the first responsibility of any firm is to produce wealth for its stockholders, maximizing profit by charging as much as the market will bear while producing goods and services at the lowest possible cost. A number of intangible factors may affect a company’s ability to sell its products. For example, a corporate image of excessive greed or unfair labor practices may lead to consumer boycotts or discriminatory practices may lead to consumer boycotts – lessons learned by companies as diverse as J. P. Stevens, California grape producers, Haggar Corporation, GM, Denney’s and Nordstrom. The Guide uses The Godfather series to explore the role of the firm and how that role is affected by the social, political and economic demands of the society in which it operates.
Guide opening:
You’ve made a killing in your business – in fact, you’ve made more killings than you like to think about. You’ve also made lots of money – and lots of enemies. You’ve seen the company grow and diversify. You started at the very bottom and worked your way to the top. Now you head the dominant franchise; but now that you’ve shown them the way, everyone wants a piece of the action, capiche? When you go, you’re afraid your empire will lose sight of its mission. You know that the next leader of the company must be a different kind of leader – someone who can help the company further diversify, tighten its financial controls, make long-term investments in new properties and, uh, become “legit.” You love your eldest son, but he’s a hothead and not very smart. He’s too much like you. Your second son is a mentally unstable idiot; no one will ever follow his lead. Your youngest son is your best bet: he’s smart, thoughtful, well spoken and brave – a war hero. Unfortunately, he has other prospects outside the company. He’s also the only one who has any sense of what the company is supposed to be about. You value his opportunities and respect his independence, so you’ve declined to make him an offer he can’t refuse. The company, however, must find its soul if it’s to go on. What’s a Godfather to do?
Summary of the commentary:
The Godfather movies are considered as a unit and viewed as a case study in corporate life stages: Startup, Growth Period, Maturity, Decline, Senescence and, in some cases, Renewal.
Commentary focuses on the issues of corporate mission and governance. It also explores the management succession issues that will be continued in a later chapter. The commentary holds that Godfather’s Mob originates in a community need for safety and justice, but soon oversteps its bounds and loses sight of its roots in its quest for growth and diversity. Don Corleone, the patriarch, for example, is opposed to entering the illicit drug trade, while his rivals and dissident capos believe drug dealing is consistent with the gang’s mission and essential to its continued success.
Other issues covered include key-man insurance, entrepreneurial motives, delegation of authority, legal departments, international investments and corporate alliances.
The commentary is supplemented by Breakout Boxes dealing with these topics:
- Corporate Life Stages (Chart and Description of the Stages)
- Successful Succession: Reg Jones to Jack Welch at GE
- The Godfather Delegates
- Competitive Analysis for The Mob (This Good-Humored Chart Applies Michael Porter’s Competitive Analysis Model to The
- Godfather Mob at the Point of Michael Corleone’s Succession!)
THE GUIDE also includes an essay that looks at business as depicted in the movies. For an introductory section on how to use the Management Goes to the Movies™ program, click through to Using The MGTTM Training Program.
This guide will soon be available for purchase as an instant download for $5.95.