Martha stewart: A Brand in Crisis By Sinem Hancıoğlu İlke Denizer Zeynep Saygılı Eda Oğuz Derya Sarıal

Martha stewart Was born in 1941 in New Jersey Had passion for cooking, gardening and homemaking Worked as a model A successful stockbroker on Wall Street Had a catering business

MSLO Company Martha Stewart Living Omnimedia Inc. is a company that has interests in publishing, television, merchandising, e- commerce, and related international partnerships. The company earns %65 of its revenues from publishing and its media properties reach 88 million people a month Called as; “New York’s 100 Most Influential Women in Business” “Publishing Executive of the Year” “50 Most Powerful Women” “America’s Most Influential People”

Scandal In 2001; Sam Waskal who is CEO of Imclone company and also very close friend of Stewart learn that food and drug administration refuse to review Erbitux; a cancer drug of Imclone company before FDA declared the refusal. (Stewart has shares of Imclone) He told this nonpublic information to his broker Peter Bacanovic to transfer his Imclone stock to his daughter account. Peter was also broker of Stewart. Phone record show that Bacanovic called Stewart's office after Waskal's daughter dumped her shares. In 10 minutes Stewart's shares were also sold. Sam Waskal was charged insider trading, obstruction of justice and bank fraud. He accepted his fault. But Stewart always rejected that she engaged in any improper activities when she sold her Imclone shares. She said that she was at vacation and checked her message. One of them was from her broker Bacanovic that informed Imclone share price dropped below $60 per share. According to stop loss order between her and her broker; all her shares were sold out.

Scandal cont. Stop loss is an order that if shares value dropped below $60 per share; sell all of them. In 2002 all her phone records and emails were investigated but could not found any proof about a stop loss order. Some documents could not read because they were blacked out. In 2003; she was indicted on securities fraud, conspiracy, making false statement, obstruction of justice( lying about stock sale and cover up her activities and defrauded MSLO shareholder by misleading the gravity of situation and keeping the stock price from falling). Bacanovic also charged that false statement making and using false statement(he change his personal notes to give an impression of proper stop loss arrangement), perjury and obstruction of justice. Both pled not guilt to all charges. After indictment she resigned her position as CEO and chairman of the company but she retained a seat on board of director and remained its chief shareholder.

Scandal cont. Although she denied all accusations and said she was innocent; MSLO stock price decreased. She wanted to her customer be loyal to the company. After scandal she began a campaign to detach herself from events but could not escape questions about insider trading. Indictment of securities fraud dropped but jury convicted the indictment of making false statement and conspiracy to obstruct justice. She sentenced 5 months on prison and 5 months on home detention. After her prison released, she tried to fight rather than settle civil insider trading charges from SEC and fighting offered her a chance to reclaim her CEO and chairman position again.

How she recovered? Martha Stewart Living Omni media is identified with its founders. Martha Stewart has a very crucial roles like spokesperson, brand and TV personality. Everybody wonders how Stewart is going to be survived from scandals. Without Martha, the company is only a shell. is expressed by the one shareholder. It is hard to tell where the person ends and the brand begins. Stewart needs to make the company independent and let it go and grow. Example like Stewart: Estee Lauder. In 2005 Stewart launched a TV program which is unsuccessful. After being released from federal prison, Stewart deals with Sirius Satellite Radio Inc. to create a 24 hour channel featuring cooking, gardening and entertaining programming for women. In 2006 : The company continues better than expected as growing in magazine sector. In 2007 : In stores like Macy's, will sell home merchandise of Martha Stewart. Stewart is going to recover its image and her future looks bright. Time will show all things...

Questions: 1. Steward repeatedly denied any wrongdoing, despite the conviction and failed appeal, yet she still says she did nothing wrong. Is this the right strategy? To overcome crises, there are three options: to reject the responsibility to accept the responsibility accusing the others like the customer himself. Rejecting the accusitions and trying to overcome anyway is the best way that could be done. By rejecting the company survived.

QuestionS: 2. Did Stewart’s actions justify the subsequent sentence given to her and those around her? Martha Stewart's actions justify sentence given to her and those around to her because it is really suspicious to sell her shares on December 27. No evidence about the stock issue. She acted like she didn't want to corporate.

Questions: 3. Compare other executives’ wrongdoings versus Stewart’s Questions: 3. Compare other executives’ wrongdoings versus Stewart’s. Discuss why MSLO’s case is or is not different from what happened at companies such as Enron and Tyco? Enron Like in Martha Stewart’s Company: There is so many hidden documents. They hide their operations from their shareholders to not lose their share value. After Enron’s bankruptcy many people lose money and employees were on trial. But, different from Enron, Martha Stewart company has a chance to be recovered. Tyco Tyco is also not show all of its’ operations to the shareholders. But, like Marta Stewart Company, Tyco continued to thrive after the scandal. Both Companies made efforts and improvements.

THANK YOU Any Questions?