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This case study covers different concepts related to leadership. It should help students analyze business situations from a leader’s perspective. By the end of this case study, students would be able to understand the role and the characteristics of leadership during a crisis using the 11 dimensions of character framework, map leadership personalities using the HEXACO model to understand the effectiveness of certain traits in crisis management and apply theories of change management using the Satir and Switch models, in addition to Kotter’s theory of change.

Elsewedy Electrometer Group (EMG) was owned and operated by Emad Zaki Elsewedy as the sole founder and chief executive officer (CEO). EMG was a leading company in the meters industry in Egypt. The time span of this case study covered the period from November 2011, when Elsewedy’s health was deteriorating, to his early retirement in September 2012, and his comeback, two years later, in September 2014. In November 2011, against the backdrop of Elsewedy’s deteriorating health and subsequent early retirement in September 2012, EMG faced several challenges in achieving its vision that hindered its business growth. These arose after Youssef Salah, the former export director of EMG, was appointed as the company CEO. In Elsewedy’s absence, EMG faced liquidity problems, as the banks demanded that it repay all its debts. At the same time, the business suffered severe losses owing to its inefficient operations. Elsewedy decided to return to EMG in September 2014 to find a solution and help the business recover to ensure its continuity and sustainability. After taking a holistic view of the crisis at hand, he was faced with a dilemma and several questions: Was the company leadership effective? Would a change in leadership be required? How could he lead effective change in light of the current crisis? How could he ensure that EMG did not end up in a similar predicament in the future? This case was designed to teach leadership in crisis and change management in the metering industry.

This case study is intended for graduate and undergraduate students studying a leadership or management course. It can help students comprehend the challenges that arise when a large business undergoes a management transition during a crisis. The case study also considers how leaders are shaped by crises. This case study can be considered as level 1 on a 1–3 scale, as the full description of the situation is given in the case study and the task of the students is to analyze the leader and his decisions using various academic concepts and theories (Erskin et al., 2003).

Teaching notes are available for educators only

CSS 7: Management science

Flying J was a family-owned company that operated travel plazas, oil refineries, a bank for trucking companies, and other related businesses. In early 2009, Crystal Call Maggelet, the majority shareholder and new CEO of Flying J, was tasked with saving the company founded by her father in 1968. In the intervening forty years Flying J had grown from four gas stations to a vertically integrated $18 billion company. Declining crude oil prices, decreased cash reserves, and multiple internal challenges forced most Flying J subsidiaries to file for bankruptcy protection. This came as a surprise to the company's lenders, suppliers, customers, and employees, who did not know the company was in trouble until it was unable to meet payroll just days before Christmas 2008.

Maggelet was determined not only to return her family's company to profitability but also to repay all of Flying J's debts, retain as many of the firm's 12,000 employees as possible, and avoid compromising employees' savings (e.g., 401K retirement accounts). All of the company's advisors told her it could not be done. They thought a more likely outcome would be paying creditors nine cents on every dollar owed. If that happened, Maggelet's family's holdings would be almost entirely wiped out according to the “priority of claims” rules in bankruptcy, and the family would end up with only 1.2 percent of a restructured Flying J.

However, to the surprise of its advisors and creditors, Flying J paid its debts in full, mostly by cutting operating costs before selling assets. The family was left with a smaller, but still very profitable company.

After students have analyzed the case they will be able to:

• Determine governance issues in family-owned businesses

• Identify the pursuit of growth as a typical cause of bankruptcy

• Understand why cash flow accounting is more important than GAAP accounting

• Grasp how huge variations can occur when calculating enterprise valuations of distressed businesses

• Understand the differences among law, governance, and ethics

Determine governance issues in family-owned businesses

Identify the pursuit of growth as a typical cause of bankruptcy

Understand why cash flow accounting is more important than GAAP accounting

Grasp how huge variations can occur when calculating enterprise valuations of distressed businesses

Understand the differences among law, governance, and ethics

Financial accounting to assess stewardship: the case requires students to evaluate Thompson’s stewardship of McDonald’s, in part based on the company’s financial accounting information. Financial reporting performs an important societal role by helping control agency problems that arise from the separation of ownership and management. Since external stakeholders cannot “observe directly the extent and quality of managerial effort on their behalf […] the manager may be tempted to shirk […] blaming any deterioration of firm performance on factors beyond his/her control” (Scott, 2014, p. 23). However, although financial reporting helps hold managers accountable to shareholders, accounting information is not fully informative about managerial effort. For example, while net income provides useful information regarding the CEO’s stewardship, it is also “noisy,” due to recognition lags and other factors (Scott, 2014, p. 364). Efforts undertaken by Thompson in a particular period, such as marketing expenditures, might reduce current earnings, yet boost future profitability. Additionally, Thompson’s predecessor’s past efforts might have positive or negative effects on current earnings. Evaluating stewardship effectively involves considerable judgment, in addition to knowledge of financial accounting. The implication of poor firm performance is that the CEO is ineffective at formulating and implementing strategies and policies to enhance firm value (Dikolli et al., 2014). Specifically, it appears that missing earnings benchmarks matter more for relatively inexperienced CEOs. Don Thompson’s tenure of 33 months at McDonalds is 42 percent lower than median CEO tenure documented in academic research, where the median tenure of chief executives documented in large sample empirical studies is about 57 months (Dikolli et al., 2014). The evidence suggests that the longer a CEO serves, the less likely he is to be dismissed for performance-related reasons. This appears to be the result of the resolution of uncertainty about CEO’s ability and leads to subsequent declines in the level of monitoring by the Board of Directors. Performance evaluation and bias: a significant body of research explores the extent to which female managers are assessed differently than their male counterparts (Powell and Butterfield, 2002). For example, female CEOs face more threats from activist investors than male CEOs. Therefore, even after women achieve the highest managerial rank, they experience more professional challenges than their male counterparts (Gupta et al., 2018). However, the question of whether black CEOs are assessed differently is more challenging to answer empirically as a result of a smaller sample size (only one percent of S&P 500 companies are run by black CEOs). Our case attempts to develop the inference that if female CEOs are subject to bias, analogous forces are likely at work when black CEOs are assessed. Recent evidence further suggests that business students sometimes demonstrate bias in making assessments (Mengel et al., 2018). The authors discuss these findings – as well as strategies for including them in the case discussion – in the “Teaching Strategy” section herein below.

The case was written from the public record surrounding the appointment of Don Thompson and McDonald’s company filings. The record includes articles from The New York Times and The Wall Street Journal, as well as local and industry publications.

The case examines the role of financial accounting in evaluating CEO performance in the context of the appointment of McDonald’s first African-American chief executive and his subsequent two-and-a-half years on the job. The case deepens students’ understanding of the link between financial reporting and stewardship, while highlighting the subjectivity inherent in assessing managerial performance, particularly over relatively short time periods. As students analyze the case, they must consider the extent to which a firm’s results are attributable to luck vs skill. We use “skill” to refer to CEO effort and other controllable factors, while “luck” refers to exogenous factors, such as macroeconomic conditions. Assessing stewardship is of practical significance. It allows pay to be better aligned with performance and empowers stakeholders to identify when a change of leadership may be warranted. The case may also be used to spur reflection, in an applied context, on the importance of being alert to unconscious bias, even when evaluating seemingly objective financial reporting data. Recent research, discussed herein, suggests that business students sometimes exhibit bias when making assessments.

The case should be included in discussions of corporate governance, executive compensation and the role of accounting information in efficient contracting. It is appropriate in intermediate financial accounting courses for undergraduates, introductory graduate accounting courses, or other courses with an element of financial statement analysis. Standard introductory accounting textbooks offer helpful supplementary reading for students. Horngren et al.’s (2014) book, Introduction to Financial Accounting (12th ed.), Pearson, London, provides an overview of the income statement and its role in assessing performance (see Chapter 2) as well as a useful discussion on evaluating the components and trends of a business (see Chapter 12). More advanced students may benefit from the in-depth discussion of earnings quality, operating income and non-operating income found in Chapter 4 of Intermediate Accounting (9th ed.), McGraw Hill Education, New York by Spiceland et al. (2018).

Entrepreneurship.

The case has been used at Master's level but it has direct application to any MBA programme or entrepreneurship module.

Adrian Gore started Discovery in 1992 with seed-funding of R10 million from merchant banking group, Rand Merchant Bank (RMB), as a health insurance company within the RMB stable. By 2009, Discovery had become a large, listed, financial services institution employing more than 5,000 people and comprising not only Discovery Health (DH), but also Discovery Life (DL), Discovery Invest (DI) and Discovery Vitality (a wellness programme). In addition, it had operations in the USA, where it licensed Vitality for use by employers and other health insurers, and in the UK where it operated two joint ventures with The Prudential plc – Pruhealth and Prulife.

To understand the similarities and differences between corporate and start-up entrepreneurship; to understand the entrepreneurial process within an established organization; to explore the environment within an established company in terms of how much it supports or constrains entrepreneurship; and to look at creative ways to overcome obstacles to entrepreneurship in established companies.

Teaching notes.

International business, international marketing, and strategic management.

Advanced undergraduate and MBA students taking courses in international business, international marketing, and strategic management.

KPJ Healthcare Group started its operations in 1979. By the end of 2012, the Group operated 22 hospitals in Malaysia, two in Indonesia, one in Thailand, and one retirement resort in Australia. Its internationalization efforts began in mid-1990s with the provision of hospital management service in Indonesia, Bangladesh, and Saudi Arabia. Since 2010, the Group had pursued international acquisition projects in Australia, Indonesia and Thailand. In early 2013, the Group's newly appointed CEO and his management team had to decide on the strategies to ensure the success of these international acquisition projects. This case stimulates discussion on international strategies of a large healthcare group, operating in a highly competitive, high-growth industry in an emerging economy.

Understanding of approaches to service internationalization (incremental versus rapid), strategies in service internationalization, forms of service internationalization ventures will enable case analysts to apply and consider these concepts in many business situations involving internationalization process and business growth in general.

Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Ben Chang, the CEO of a small credit union, Neighbourhood Credit Union (Neighbourhood), located in Atlantic Canada was evaluating a possible merger with another larger credit union, Pleasantview Credit Union (Pleasantview). Chang and Neighbourhood’s Board of Directors (Board) were interested in a merger that would enhance member benefits via improved technology, innovative delivery channels and a more robust financial planning and wealth management capability. Chang, along with a team of experts, was methodical in seeking out interested credit unions. Pleasantview emerged as a strong candidate from the expression of interest stage. The initial due diligence review was complete, the memorandum of understanding signed and a working group comprised of members from both credit unions formed. Chang, however, was becoming increasingly concerned about the lack of strategic fit between Neighbourhood and Pleasantview. In conversation with the consultant hired to assist with the merger process, Chang was considering recommending to the Board that the merger process with Pleasantview be halted. It was January 2015 and Chang was set to retire in May. Before he retired he wanted a plan in place that ensured increased member benefits, as well one that balanced growth and sustainability for Neighbourhood. Chang was scheduled to meet with the Board in four days. He needed a recommendation that would address the current merger situation, as well as provide other options for Neighbourhood.

This case is based upon primary and secondary data collection. Formal and follow-up informal interviews were conducted in 2015 with the CEO and “merger” consultant at Neighbourhood Credit Union. Organisational documents and publicly available documents were also consulted. To ensure the confidentiality terms of the merger discussions, the case is disguised with respect to the name and location of the credit unions, the names of the CEO and consultant, as well as the financials. The timeline, process followed, key decision and opinions of the CEO and merger consultant as presented in the case are real.

This case is formulated for university undergraduate students in their third or fourth years of study and graduate students. It is appropriate for strategic management and co-operative/not-for-profit management classes intended for a 60–75 min class session.

In October 2016, Timothy Sloan, the newly appointed CEO of American banking giant Wells Fargo, faced a massive public-relations crisis. A few weeks earlier, a United States government agency had announced the results of its regulatory review of the bank and exposed a shocking practice common in the retail division, in which aggressive community bankers had created more than a million fraudulent accounts and credit card applications on behalf of unaware customers for the past several years. Over the next few weeks, the bank—and Sloan's predecessor, John Stumpf, in particular—suffered from harsh criticism from politicians, journalists, and former employees alike, ultimately forcing Stumpf's resignation. As Sloan sought to minimize the public-image backlash and restore general trust in Wells Fargo, he struggled to construct the best communication strategy for the bank's next chapter.

When a consultant recommends an overhaul of the HR compensation practices that the family business is known for and prizes, what should be the next steps?

Evaluating business advice when it is contrary to one's strengths, values, and beliefs.

The non-executive Chairman, Chaturvedi, must lead the Board of Directors of ICICI Bank as it deals with the adverse findings by a former Supreme Court judge against Ms. Chanda Kochhar, the former Chief Executive of the Bank. She had not disclosed a conflict of interest regarding a loan to a corporate group that had business dealings with her husband. Months earlier, the Board had exonerated her and also allowed her to retire from the Bank. Could and should the Board now reclassify Kochhar's retirement as ‘Termination for Cause’ and claw back her past bonuses?

After decades of continuity, Luse Holdings faced a new challenge in 2015. The company needed to pivot in a changing industry context—specifically, Luse had lost a bid to a non-union competitor for the first time—and CEO and fourth-generation member Steve Luse was considering three primary options: (1) continue as is, while also adding non-union services; (2) sell part of the business to reduce family risk; or (3) sell the entire business to fund other family interests. A fourth possible option was a maximization-of-growth alternative.

This decision involved more than business considerations alone. The family's legacy as an industry champion and community philanthropist also required considering all relevant stakeholders, including immediate and extended family, employees, and community. Complicating the situation was the lack of an immediately identifiable successor in the next generation of the Luse family, though several fifth-generation members had completed internships with the business including Steve's daughter Ashley, a recent MBA graduate. Students will step into Steve's shoes as he considers what recommendations to make to the advisory board six months from now. Students can also take the perspective of Ashley, a rising next-generation member: should she join the family business?