EXECUTIVE SUMMARY In this report, we will go through what happened in the Martha Stewart Living Omnimedia (MSO) and provide some suggestions to solve their problems. MSO is a diversified media and merchandising company that inspires and engages people with distinctive lifestyles contents and goods. The company was formed in 1997 by Martha Stewart and Sharon Patrick. Stewart became the first female self-made billionaire when the company went public in 1999. Despite becoming the preeminent brand name, MSO has faced several issues concerning the management efficiency of MSO itself. The first issue was risk management on severe competition because of the advent of competing magazines like Time Inc. and other competitors in the early 2000s. Other than that, Stewart used the decision-making powers of the boards to her advantage as a controlling shareholder, CEO, and Chairman of the board. As a result, arose an issue on the inefficiency of corporate governance that led to the independence issue among the Board of Directors. The last issue was the brand relied entirely on Martha Stewart's image as a brand icon; Martha's insider-trading probe in 2002 dealt a significant setback to MSO's sales and prospects. In order to solve those issues, we have recommended several solutions for each of the above problems. For the first issue, we propose that MSO should collaborate with well-known e-commerce and technology providers to handle competition in the market. Furthermore, we also recommend which MSO have to increase the diversity among the Board to overcome the inefficiency of the company's corporate governance. Last but not least, we conclude that MSO needs to strengthen the Board's independence to reduce the company's reliance on its owner's image. RECOMMENDED SOLUTIONS ISSUE 1: Risk management on the new competition and new threat After considering the pros and cons of the two solutions above, we agreed that in order to keep ahead of the competition, MSO should collaborate with well-established e-commerce and technology providers. During this 21st century, we cannot deny the power of e-commerce and technology as both play an essential role in the marketplace, both nationally and internationally. The explosion of E-commerce has resulted in new trends in our way of life, particularly in our buying habits. Customers can easily purchase products or services such as magazines and plane tickets over the Internet. Hence, by collaborating with well-known e-commerce companies, MSO is able to gain more customers and indirectly get the trust of their loyal customers. For instance, MSO may collaborate with IKEA, a furniture retail company whereby Stewart uses her talent for cooking and decorating a house by using IKEA’s furniture or home accessories in a television show. This collaboration will help MSO raise their sales and enable the company to exchange marketing knowledge, techniques, resources, creatives, and labor forces, and talents. Besides, it is possible to ensure effective eCommerce partnerships by exploiting existing technologies. Perhaps, the most effective alternative could be the partner marketing Software-as-a-Service platform, which already satisfies all industry requirements and corporate needs. Meanwhile, a differentiation focus strategy is effective when the company is dealing with severe competition. However, it involves substantial financial and non-financial capital such as time, effort, and resources. Detailed and comprehensive research and development must be conducted before producing different and unique products or services. Therefore, it is clearly justified that collaboration with well-established e-commerce and technology providers would bring more advantages to the MSO, especially to sustain in the new competition and changing markets on all fronts. ISSUE 2: Inefficiency of corporate governance that led to the independence issue among Board of Director The best alternative solution applicable in dealing with the independence issue was to increase diversity among the Board in the MSO. Board diversity is critical for more excellent corporate governance since it comprises individuals with diverse skills, knowledge, information, power, and time to offer. The data, which covered the years 2018 to 2020, revealed that higher levels of gender, age, and ethnic diversity on boards of directors were roughly connected with higher levels of organizational success (Board Ready, 2021). According to another McKinsey and Company report, organizations with more diverse executive teams outperformed in terms of financial performance (Barta, Kleiner, & Neumann, 2012). In line with that, MSO shall wisely consider the collective abilities and experiences of the Board's candidates in order to identify the needed attributes while evaluating new nominations of the Board. The Board should be selected for their corporate leadership skill, knowledge, qualifications, experiences, proficiency, as well as ability to complement the Board. In short, MSO has to increase the Board's diversity to solve the corporate governance inefficiency issue. ISSUE 3: Heavy reliance on the personal image of owner Due to the civil charges filed by the Securities and Exchange Commission against Stewart, MSO dealt with a significant setback to the company's sales and prospects. This is because the brand relied entirely on Martha Stewart's image as a brand icon. Consequently, we suggest that MSO should enhance the Board's independence in order to remove the company from the owner's image. In addition, the company can strengthen its independence by formalizing ownership structures, power, and processes. Separating ownership and management control is frequently an essential aspect of corporate governance to ensure the company's remained profitable and survives. Moreover, it will also assure the going concern of MSO in the market, even if the founder or future successors might not be interested in being involved in the company's management. On the other hand, enhancing the directors' credibility appeared more complicated because it is challenging to train an individual to become more ethical and competent. To sum up, the Board should strengthen the company's independence towards reducing the reliance of Stewart's image on MSO. References Barta, T., Kleiner, M., & Neumann, T. (2012, April 1). Is there a payoff from top-team diversity? Retrieved from McKinsey: https://www.mckinsey.com/business-functions/people-and- organizational-performance/our-insights/is-there-a-payoff-from-top-team-diversity Board Ready. (2021, July). Board Diversity Benefits Revenue. Retrieved from Board Ready: https://www.boardready.io/report-july-2021
