Decisions Made At Martha Stewart Living Omnimedia Incorporated

Decisions Made at Martha Stewart Living Omnimedia Incorporated

Shelly L. Wilson

MGT 350

Drew Stevens

University of Phoenix

June 2, 2004

Decisions Made at Martha Stewart Living Omnimedia Incorporated

Critical thinking is a very important part of any business. In order for successful decisions to be made, a thorough analysis of options is vital. While some decisions can be more important than others, all decisions in business should be considered with critical thinking skills in mind.

A recent personal problem for a high profile CEO has created numerous critical decisions to be carried out by the CEO's company. Even poor choices of Management's personal lives can greatly impact business decisions as seen with Martha Stewart and her founding company Martha Stewart Living Omnimedia LLC.

Martha Stewart, also known as the ultimate domestic diva, was recently found guilty of lying during an insider trading investigation of some personal stock sales. She is scheduled to be sentenced on June 17th 2004.

Her founding company Martha Stewart Living Omnimedia, Inc. (MSO) which she acted as the Chairman of the Board of Directors and served as its Chief Executive Officer, is the original and leading provider of how-to information to consumers with unique content and high-quality products for the home. This content is developed within core areas such as Home, Cooking, Entertaining, Gardening, Crafts, Holiday, Keeping, Weddings, and Baby and Kids. These domestic arts provide ideas and products for the average consumer. The company is also organized into four business segments including Publishing, Television, Merchandising, and Internet/Direct Commerce.

Due to this CEO's personal problems, the company has been forced to make drastic decisions regarding how to save the company from financial ruin.

Because MSO is traded publicly on the stock exchange, in an attempt to protect the company and its investors, the company needs to attempt to "save face" because their CEO, Martha Stewart, was found guilty of a crime, and is predicted to spend time in prison. The company's business has suffered tremendous financial loss since the news of the investigation into her stock sales first broke in 2002.

But how does the Board of Directors go about saving the company from devastation and dismantle? This is the ultimate question with several critical decisions to be made.

Howard Davidowitz, a New York retail consultant and investment banker states that "The business is getting smaller - the advertising, the TV, the magazine - everything is going down. " He goes on to state that "This company is not going to go away tomorrow. However, the losses are getting scary."

Recent decisions made have suggested that MSO is slowly removing the Martha Stewart name and moniker from the company. However, a MSO spokeswoman claims otherwise. She also suggests that subscribers and customers "buy Martha Stewart towels and read Martha Stewart Living for product quality, not for the face behind the name." In fact, Sharon Patrick, the new CEO stated that it was "a bad idea at this time" to remove Martha's name from the products. She also suggested that seventy percent of Martha Stewart Living subscribers thought so as well. (Crawford, 2004)

Evidence still suggests otherwise. CNN Money reported on May 20, 2004 that "the company plans to downplay the "Martha Stewart" on the cover of its flagship Martha Stewart Living magazine. It will strip the tag line "From the Kitchens of Martha Stewart Living" from the company's year-old Everyday Foods magazine. And the askMartha syndicated newspaper column is now called "Living", and no longer carries Martha Stewart's byline."

On March 15th 2004, it was announced that Martha Stewart has chosen to resign as a Director on the Board, and as CEO. The company claims that she will now assume a position as Founding Editorial Director. She will now be reporting to Sharon Patrick whom has been assigned the CEO position. (PRNewswire-FirstCall, 2004)

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