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Case Study: Martha Stewart Living Omnimedia

830 Words4 Pages

In the construct of major businesses, the reputation of their Chief Executive Officer (CEO) can influence the achievement of the company. Martha Stewart Living Omnimedia (MSLO) had an abundance of success as an organization in the early twentieth century, but because of the detrimental decisions that Martha Stewart made, her company significantly decreased profit after the incident. The consequences of the unethical decisions that Stewart made as the CEO and president of MSLO gives an example of the major effect that this occurrence could have on the entity, especially with her serving as the face of the company. Martha Stewart’s Incident In Martha Stewart’s early life, she became passionate about housework from learning about baking, sewing, …show more content…

After the scandal occurred in 2002, Stewart tried to defend her reputation and her case on a segment from the Morning Show of CBS with additional statements that her spokeswoman, Susan Magrino, gave in her place (O’Rourke, 2004). After the initial attempts that she gave to defend herself, the only public or press coverage from the following year only came from The New Yorker magazine article written by Jeffrey Toobin from his lunch interview with Stewart (O’Rourke, 2004). Ten days after the incident, she resigned from the board of directors of MSLO while retaining the title of founding director of editorials, where she could still give advice for design and development of products (O’Rourke, 2004). The MSLO Company relied on the image of Martha Stewart for the sole source of the equity of their brand of products and ventures and that represent the main problem with the incident occurring and effecting the business (Argenti & Druckenmiller, 2004). If other companies that did not have the image of the company resting on an individual’s reputation had the same occurrence from a CEO or business leader, the brand equity would not have as much of a probability to suffer. Conclusion The insider trading scandal with Martha Stewart represents an important example of the risk associated with branding a company with an individual. As soon as the company brands themselves under an individual’s name, the corporation has the risk of rising or falling in profits based on the reputation and the ethical implications of the individual. Businesses should exercise care with branding a company on an individual and avoid it as much as

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