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Case study for business failure of an organisation due to lack of leadership qualities and interruption of another department
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Businesses often have board of directors. The board’s key duties are to provide strategic direction, not to meddle in the organization’s day to day affairs. Board members who cross this line are undermining the authority of the executive team including that of the chief executive or CEO. Similarly, staff should not ask the board to take on day-to-day tasks that the staff should be handling. Consider the case of this board that was running an organization: On nothing more than the whim of one board member, a private company purchased a large tract of land for millions of dollars that included an abandoned shopping mall with the idea that the company would relocate to the facility after it was remodeled. The board member thought the large parking lot could be used to park all of the company’s vehicles in one place for logistical benefits, security, and maintenance purposes. The CEO of the company was against the purchase of the property for several reasons, but he did not create a counterproposal nor did he speak out against the purchase, much to the frustration of his executive team. His apathetic response was because of many reasons. He feared the board members. He also wanted to keep peace and felt that “everything will work out on its own.” The building was in such bad repair it would cost over 400,000 dollars to renovate it. Also, upon closer inspection, it was found that the huge parking area would need repavement to handle the weight of the vehicles, which included heavy equipment. The building was purchased and even after months, it sat unused and deteriorating. The surrounding property has gone to seed. That decision cost almost three million dollars of company assets. Questions: I. What was lacking in terms of leadership in the above scenario? Discuss in terms of mistakes made by the Board member, the CEO, his executive and the other Board members. II. Could the CEO have acted differently to the pressure of the Board member? What is the leadership role of the CEO and the board in controversial situations? What could have been done to prevent losses to the company?