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Other People's Money
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Reference: F-858-E
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Year: 1990
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Number of pages: 4
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Geographic Setting: América del Norte
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Publication Date: Jan 30, 2012
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Source: IESE (España)
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Type of Document: Case
Description
This case - based on the movie "Other People's Money" (1991) directed by Norman Jewison - provides an excellent basis for the discussion on what is the fundamental goal of business. A Wall Street tycoon intends a hostile takeover of an esteemed industrial company on which the local community is dependent, with the aim of liquidating it. The case features the dichotomy between short-term vs. long-term objectives, management accountability to stakeholders vs. to shareholders, and Corporate Social Responsibility vs. Shareholder Value Maximization.
This case has been replaced by case F-887-E: Other Peoples Money: The Fight for Control of The New England Wire & Cable Company.
Learning Objective
The students take the role of shareholders during the Extraordinary General Shareholders Meeting. Should they pass the management of the company from its long-time dedicated President, shareholder and Founder's son to a Wall Street financier who wants to liquidate it?
The case highlights:
Short-term vs. long-term goals of the firm: the is stable and low debt, but its profitability is low, its assets are more valuable than the stock price, and its future is uncertain.