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This is the business case for the final project of the course in Crisis management. As said during the first session of this course, this final project will be up to 60-70% of the final grade of this course, apart from the proactive participation and engagement in class. Students will read the case below and will have to prepare a long essay or report (executive report) on the business case situation and the presented challenge. There will be no length limits for this final project, although in the case itself you will read the eventual length of such. The final project is aimed to evaluate your complete understanding of the main concepts, notions, ideas, and views covered during this course. Students should apply all those concepts to this specific case as a means for them to successfully solve the presented situation. The final report, submitted in PDF format, will include, but is not limited to, four following parts or chapters: 1.  Cover  –with the title of the case and the name of the student. 2.  A 1-page executive summary  of the report –use bullet points to highlight each specific aspect. 3.  Body of the report. The solution to the presented case study.  The report will specifically include the main guiding principles of the corporation’s crisis management strategy as well as the deployment and implementation of those principles into the employee’s daily practices and behaviors. As for the format, the report can also include charts, graphics, and even footnotes and a bibliography, if necessary. The quality of reasoning, consistency, structure, and accuracy of the report will be key to success.  4. Font type:  Times New Roman size 12 -ideally. 5. Length: 8 pages maximum

 

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1. Preliminary comments  

This is the business case for the final project of the course in Crisis management. As said during  the first session of this course, this final project will be up to 60-70% of the final grade of this  course, apart from the proactive participation and engagement in class.

Students will read the case below and will have to prepare a long essay or report (executive  report) on the business case situation and the presented challenge. There will be no length  limits for this final project, although in the case itself you will read the eventual length of such.  The final project is aimed to evaluate your complete understanding of the main concepts,  notions, ideas, and views covered during this course. Students should apply all those concepts  to this specific case as a means for them to successfully solve the presented situation.  The final report, submitted in PDF format, will include, but not limited to, four following parts  or chapters:

1. Cover –with the title of the case and the name of the student.

2. A 1-page executive summary of the report –use bullet points to highlight each  specific aspect.

3. Body of the report. The solution to the presented case study. The report will  specifically include the main guiding principles of the corporation’s crisis management strategy as well as the deployment and implementation of those  principles into the employee’s daily practices and behaviors. As for the format, the  report can also include charts, graphics, and even footnotes and bibliography, if  necessary. The quality of reasoning, consistency, structure, and accuracy of the  report will be key to success. * Font type: Times New Roman size 12. 

4. Font type: Times New Roman size 12 -ideally.  

5. Length: 8 pages maximum.

The deadline for the submission of the final report is Friday 13th of May at 2:30 p.m. (just  before the last session of this course).

2. Case  

John was about to shout after leaving the office; but, after slowly breathing, he just calmed  down –or at least tried to. “I’m so sorry to be that frank, Margaret; but the situation has gone  completely out of control. The company’s gone. This is just a mess, you know, such a complete,  absolute chaos. And you know it, or at least, you should,” he stated. That said, he closed the  door.

At that moment, for the first time ever since she had been appointed CEO three years ago,  Margaret knew what running alone was all about. She was (almost) alone and suddenly saw  herself in the abyss. So, after a couple of minutes of silence –silence and loneliness-, Margaret  stood up and started calmly and thoughtfully walking around her office. Then, she looked  through the window imagining that abyss on the horizon. It was starting to rain very heavily.  To be fair, it was just pouring down while the sky was going clouder and darker. It was going  stormy, but, in reality, the real storm has already begun within the company.

Carlton Steel Corporation’s best years seemed to be already gone. But at that precise moment,  in Margaret’s mind, there was only room for one word, the one that Margaret had just said,  “chaos.” One word, just five letters; but Margaret was only thinking of the initial “c” letter.  That chaos was a complete attack on Carlton Steel Corporation’s core values, the so-called  Carlton’s 6 Cs or Carlton’s Diamond: commitment, cooperation, communication, confidence,  corresponsibility, and care, mutual care (Exhibit 1 shows Carlton Steel Corporation’s core  values and principles in detail.)

Suddenly, Margaret saw it. “This is an attack on Carlton’s DNA and I will fight to the end to  prevail. Chaos? Oh my! What the f…!,” she said to herself. “Do they say ‘chaos’? I will show  them Carlton’s real ‘C’: Carlton’s ‘C’? This is a centennial corporation and I will not stop or give  up until that ‘C’ reigns once and for all. ‘Internal fight,’ they say? I will show them all Carlton’s  authentic, real fight, the best fight they will ever see. And we will prevail, as we always have.”  Margaret’s last thoughts just summarized Carlton’s triumphant history ever since the  corporation had been founded by his great-grandfather in the late 1910s. Certainly, Carlton  Steel Corporation had been founded in 1918 by John Walter Carlton, a Bostonian self-made  entrepreneur that, at 19, left home, moved to Chicago, and there founded a little steel firm  almost from scratch.

A poor student at school, “Little” John, as he was called at home, soon saw himself doing  something bigger and making his name in business –far away from the academic world.  Indeed, while his friends went every morning to school, he just preferred staying at home  reading books on the J.P. Morgans, Carnegies, Fords, and the like, the ones that were shaping  and changing –or already had- America forever. The Western world was just seeing those days  the rise of capitalism and “Little” John wanted to also make himself an impact on the world.  John’s motto was as simple as ambitious, “See it, seek it, achieve it.” In short, determination  and fierce resolve, that is, such a unique warrior spirit.

As the corporation grew and it eventually became a conglomerate with operations in several  countries, the management and board of Carlton Steel Corporation thought of and eventually  wrote down Carlton’s guiding principles or, as they were eventually known in the business  community, Carlton’s 6 Cs. As Thomas Carlton, son of Carlton’s founder and named 2nd  President of the corporation in 1947, later said, “This company was founded upon and is  cemented and doing business in the steel industry, but Carlton’s real still is these six principles  and Carlton’s people are the glue that holds those principles together.”

As the years went by, Carlton Steel Corporation became a global conglomerate. Indirectly, the  wartime made the company rapidly grow overseas and during two decades the U.S.  Government became Carlton’s preeminent client. As some of Carlton’s top executives used to  say in private, “we liked neither the Second World War neither the Cold War, but those wars  have been a good business for us.”

Following the family business, Margaret Carlton became the 6th President and CEO of the  corporation in 2017. A daughter playing with still-made small toys ever since she had been a  child and later an MBA graduate from MIT’s Sloan School of Management, Margaret had been  grown up and educated both at school and in the family-owned business. She knew all the  aspects and parameters of the corporation, but, more importantly, she did believe in the  business –she was even said to have “faith in Carlton’s business,” that is, she was deeply  shaped and driven by Carlton’s corporate values and she wanted to epitomize those values  herself. That’s the reason why, when definitely appointed President and CEO of the  corporation, she said one of her most celebrated comments. “Carlton’s true fight is no other  than a good, winning, and shared fight –and victory.”

Under Margaret’s reigns, the corporation rapidly went much more agile not only in structure  but in strategy. She reorganized many of the corporate divisions and from the first day tried to  implement and instill her “Good steel-equipped fighters” strategy in all the staff of the  corporation (Exhibit 2 shows the main principles and goals of this strategy.)

In short, Margaret wanted all departments and divisions both in America and overseas –the  corporation was now operating in sixty-two countries in four continents- to compete as if they  were sort of friendly rivals with an ultimate, shared goal beyond themselves and the corporate  units and divisions: the so-called “1+1=3” strategy, being that “Three” the complete benefit of  both corporate units involved in soft or healthy conflicto or crisis as well as that of the  corporation.

“1+1=3” strategy had proven to be extremely successful for the corporation as a whole. So  much so, that during the last three years Carlton Steel Corporation had consistently grown at a  double-digit rate (above 14%) far above average within the sector (8%).

Undoubtedly, Carlton Steel Corporation had become one of the world’s most powerful and  successful conglomerates in the industrial sector and even been recently featured in one of the  most influential business magazines with a headline that, in turn, had made lots and lots of  comments, headlines, and tweets, “Carlton Steel: 21st-Century’s GE.” Needless to say that this  headline alone had provoked a huge internal shock -if not earthquake- at General Electric’s  headquarters –not to mention the multiple headlines Margaret Carlton had made as a female

top executive and leader herself, moreover, within the steel industry, such a male-oriented –if  not Alpha-male- sector.

Carlton Steel was certainly living its Golden age just in a moment in which a woman was at the  helm of the corporation. But, in reality, this was only one side of the story (or fairy tale). The  other side was not that glamorous certainly. Over the last year, rumors on internal fights –and  actual internal fights indeed- had been increasingly occurring among various departments and  employees of the corporation. The internal competition had slowly crossed the borderline and  the not-so-long-ago healthy fights among several departments and unit (finance vs marketing,  logistics, and supply vs operations, US-region operation headquarters vs their counterparts in  Europe, the digital natives vs the blue-collar, old-fashioned –or outdated- workers…).

The paradox was self-evident. On the one hand, Carlton Steel attracted yearly some of the  most talented youngsters, being most of them MBA graduates, mathematicians, and  engineers, and the company always appear among the best-reputed companies; but, on the  other hand, the flame that had once ignited the fire was going out of control…  Suddenly, the once brilliantly-played good fight was slowly becoming dirtier and dirtier, as one  internal document conducted by John Lexington, Carlton Steel Corporation’s Global Head of  People and Culture, concluded. The report’s statements were, in this respect, as direct as  intriguing:

They just no longer regard themselves as partners nor even colleagues. The internal  competition has gone far beyond an internal fight. An in-house, domestic civil war is  subtly emerging around the corner and is about to beging. In short, the once inspiring  ‘1+1=3’ strategy is about to become the ‘1-1=0” strategy. And who is the ‘0’ in this  equation? Maybe it’s time for us to fight the enemy within. The good fight has been  deadly poisoned.” 

A quiet, educated professional, Margaret had read that internal report and was pretty aware  that there were some internal tensions among staff and departments. But she usually say, “In  a war there are always people who fall down injured. I want nobody to be ‘killed’ here, but  competition is not always peaceful and a business is not an NGO. Once again, we must stand  for, support, and celebrate Carlton’s good fight for the benefit (and care) of everyone here.  Life is not perfet, but we all must make the most of and celebrate it.”

Nevertheless, contrary to Margaret’s desires and good intentions, the situation at Carlton was  getting worse once and again and reached a peak when, one week ago, America’s branch  finance department in sabotaged a global 32-billion dollar contract deal… in China –for sure, a  contract managed by the China-based division of the corporation. Suddenly, Carlton’s good  fight had gone global… and bloody. Carlton’s internal world war had just started. Put another  way, Carlton’s once ever-lasting cooperation had definitely gone over.

At that precise moment, while still looking through the window –it was already thundering-,  Margaret’s office phone rang. It was Xio Zhen, president of Carlton Steel Corporation in Asia  and senior vice-president of the company. A well-renown and respected Asian executive, Xio

Zhen has been raised in China and educated in America. He held a Masters in Engineering from  the University of Oxford and an MBA from The Wharton School.

In sum, not only was he very well-educated but he also knew how to deal with multicultural  environments. But, on that occasion, he changed his mind on the phone and suddenly left his  calmness aside.

“Over the last week, I have personally talked with several China-based investors and one of  them is interested in proposing a spin-off. He is determined to separate the Asia-based  operations of the corporation from the corporate headquarters. You Americans have broken  our billionaire deal and we cannot tolerate it. Next Monday I will be flying to America to have a  personal one-on-one with you –you and me alone- on this particular issue. The countdown has  just started. You have five days to think about this.”

“But Xio…,” Margaret said.

“Margaret –Xio interrupted her. I have worked for this corporation for over twenty years. I  cannot understand my professional career without this company. I admired your father’s  honesty and also admire you, Margaret. I admire and respect you both professionally and  personally. But the situation has crossed the limits.”

“Xio, you know, this is a global…”

“This is a global… fight. I humbly do not want to get things worse by phone. Next week we will  talk about it personally. Now I have to go.”

“OK, Xio. I understand. We will quietly talk about all this stuff once you be here next week. I  will talk to my personal assistant will to block all my agenda for a few days so we can meet at  the corporate headquarters or anywhere else. But, in the meantime, just make me a favor,  please. Keep calm and think about it for a while” –Margaret insisted.

“I will, but all novels and dramas have a beginning, a plot, and an end. And this story is coming  to an end, Margaret. Next week we’ll see whether or not our personal meeting is the last  chapter of this story. Meantime, have a nice week, Margaret.”

Xio’s phone call left Margaret cold. But the story has no tended yet. After that cold, shocking  call, she sat down at the desk and checked her email… And suddenly she saw an email from  Brian, Europe’s president of the corporation. The message, as short as direct (he had been  educated at Cambridge University but, nevertheless, was as direct as polite), was as follows:

Dear Margaret,  

This is Brian Morton from London. I would like to personally talk to you as soon as  possible. Let me know when you will be available for a quiet video conference. The  situation is getting rough and we must do something before it is too late.  

Sincerely,  

Brian 

“Not only Asia but also Europe. Damn it! Chaos’s ‘C’ is already here. It’s time to fight this war  and get peace,” Margaret said to herself.

Margaret took a 5-second breath and immediately called both John and Ken, the former being  the global chief compliance officer and secretary of the board of directors of the corporation.  The message was clear: “Leave everything you are doing and come to my office right now.”  Once together in Margaret’s office, Margaret was direct to the bottom of the matter. Below  you will find this direct, concrete mandate and goal:

Guys, for so long this corporation has been on fire, but, sadly, the company is instead  under fire these days. The DNA of the corporation, that is, the organization’s soul, is at  stake. Our operation in China is considering a spin-off or a complete break while our  European colleagues are considering something similar. We must fight this war as soon  as possible, and must –and will- do it from our very core, soul, and DNA: our corporate  values.  

We have five days to prepare an official report, an institutional corporate statement,  one completely based upon, rooted in, and, therefore, absolutely aligned to our  corporate values, vision, mission, culture, strategy, and daily behaviors.  

It will be a 5-to-10 page official report and statement highlighting the corporating  strategy against any kind of crisis among the staff of this corporation. Next week I will  have a personal, one-to-one meeting with Xio Zhen, president of Carlton Steel  Corporation in Asia, and will arrange another online meeting with Brian Morton,  president of Carlton Steel Corporation in Europe. I will discuss that preliminary draft  with them both and, if approved, I will bring it up to the members of the board so they  will eventually sign it. It will be our official corporate statement against crisis at Carlton  Steel Corporation. It will be titled “Carlton’s good fight statement against crisis. Carlton  Steel Corporation’s crisis management corporate guiding principles.  

Based on our corporate values, Carlton’s 6 Cs, this document will set the behavioral,  ethical, moral standards at work for the whole staff to collaboratively compete for a  common purpose, goal, and victory, and therefore to overcome crisis at the expense of  nobody. In essence, I just want the three of us will outline and write down the  foundations of the future of Carlton Steel Corporation. If this company has ultimately  gone completely global is because it is rooted in profound, deep values and principles.  It’s, therefore, time for us to deploy those values and win this fight against crisis.  

So let’s go. I will ask my personal assistant to block both my personal agenda as well as  that of you both –if you have any personal meeting these days, please, just cancel or  reschedule it. We must completely focus and accurately work on this report. The war  against crisis and our internal civil war has just begun and it’s up to us to defeat the  enemy within. Let’s transition from chaos to commitment, and from commitment to  Carlton; in sum, from chaos to Carlton. We are just about to build the future of this  corporation and therefore there is no time to lose neither room for failure. We will fight  this war and will win. 

As John and Ken left Margaret’s office, she spent a few minutes on the couch. Then she stood  up and went back to the window. The storm has already finished out there and the sky was

getting clearer. Even the sun seemed to appear on the horizon. But, unfortunately for  Margaret, the sky was now much darker at Carlton Steel Corporation. It’s was time for her to  take the lead and win the fight. As another Margaret had once said, “We knew what we had to  do and we did it.” This comment by another Margaret -Margaret Thatcher, UK’s former Prime  Minister, just after the aftermath of the Falklands war against Argentina in 1982- had long  inspired Margaret and shaped her determined character. Now that she had been put to the  most dramatic test herself, she had to play her best. “From crisis to character,” she said to  herself. From crisis to Carlton.

Exhibit 1. Carlton Steel Corporation’s core values and principles  

1. Commitment. Carlton’s employees are committed to making their best and  unleashing their potential to the fullest at work, because they are made of  Steel themselves. They challenge themselves every single day so they will  definitely go beyond themselves. They share a higher, common purpose, and,  accordingly, not only do they want to be up to themselves but also to exceed  their own aspirations and dreams from within. In sum, Carlton’s employees  individually and collectively grow as the company grows, and vice versa.

2. Cooperation. From the first day, Carlton’s employees help each other and  mutually build on their own capabilities and competencies because they  eventually want to be and act as a unique (collective) professional –or team.  Rather than let their personal differences aside, they make the most of their  own, different, unique individualities and personalities by joining forces into a  collective higher purpose. So they selflessly give each other mutual aid,

because it is such aid that eventually helps them grow from within. That’s  when cooperation among Carlton’s employees becomes Carlton’s coopetition:  cooperation-based competition and competitiveness.

3. Communication. Transparency, honesty and frankness are a definite must for  Carlton’s employees, because they know that being able to look into one’s  eyes and tell and speak out the truth is the only way to build and nurture  confidence.

4. Confidence. Carlton’s employees do not keep things from each other, because  their mutual confidence is built upon mutual transparency and trust not only  about themselves but also about the purpose, mission, and goals of the  corporation. They all know why they are here, where they come from, and  where they are ultimately heading. Such a shared destiny informs, enlights,  and eventually inspires and shapes their work at Carlton. It is, in fact, by means  of such a deep sense of trustworthiness that they make a meaningful

contribution at Carlton.

5. Co-responsibility. Carlton’s employees do commit to their share of

responsibility in Carlton’s shared destiny, so they take charge of and be

accountable for their own, individual work in the company. Carlton nurtures  and celebrates such a spirit of corps by promoting and encouraging both self responsibility and self-management. The more self-responsible is any single

employee at Carlton, the more co-responsible Carlton’s entire staff and  management will be.

6. Care. Carlton’s owes its shared future and destiny to Carlton’s own employees,  so the company takes care of all employees while employees themselves take  care of each other.

Exhibit 2. Carlton Steel Corporation’s “Good Steel-equipped fighters”  strategy  

Carlton Steel Corporation’s employees will strive and excel by deploying their own talents,  competencies, and capabilities as if they were warriors, that is, real Steel-equipped fighters,  because they are indeed made up of Steel themselves.

In this respect, Carlton’s employees share several special traits and competencies:

1. Determination.  

2. Agile.  

3. Flexibility.  

4. Adaptability.  

5. Passion.  

6. Endurance.  

7. Stamina.  

8. Selflessness.  

In sum, Carlton’s employees behave as true fighters: they never give up nor quit. Indeed, they  go all the way until the final triumph. Because Carlton’s shared destiny is finishing the job.

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