Category: Writing

Club Med: Going Upscale (Case #4, Notes) Overview Club Mediterranee, a corporation in the all-inclusive resort market, has found that customers preferences have changed. As stated in the case, vacationers are no longer willing to spend large amounts of money for vacations which include many activities that the vacationers are not using as much as they had in the past. This change in preference poses a problem for the company because Club Med s competition has not been able to customize travel packages for each customer at prices that vacationers feel more comfortable with.

1. Where were Wal-Mart’s questionable payments made, and where did this result in serious damage to the company and its executives? Why? 2. The “gestores” payments were made to third parties, who then bribed local officials. How would a company ensure that its third party vendors are operating within the law? 3. Some of Wal-Mart’s senior executives knew about the bribes, but did not take any effective actions to curtail this activity. What steps should the board of directors take to ensure that systems and internal controls are in place so that they are involved about questionable managerial activities and actions? 4. Wal-Mart Mexico seemed to have a culture of the goal justifying the means. How can the board of directors ensure that the operational activities of the company do not subvert proper governance objectives? Wal-Mart has a brand image that triggers strong reactions in North America, particularly from people whose businesses have been damaged by the company’s overpowering competition with low prices and vast selection, and by those who value the small business-small town culture that has been supplanted. The company doesn’t need any more controversy, and has taken on causes such as environmental sustainability and rushing aid to hurricane victims, partly to build brand support. Consequently, according to the New York Times,1 from September 2005 when a report of significant bribery in Wal-Mart de Mexico was received, senior officers in Mexico and then the Unit

1. Think about the research evidence discussed in the book. Would you expect the Sullivan & Cromwell associates to feel their pay structure is fair? What comparisons would they likely make? What work behaviors would you expect Sullivan & Cromwell’s pay structure to motivate? Explain. 2. What about associates who joined the firm four years ago? If the salaries for new associates increased by $20,000, what would you recommend for other levels in the structure? Explain. 3. Partners make around 10 times the highest-paid associates. A Wall Street Journal writer laments that law firms form “giant pyramids. (in which) associates at the bottom funnel money to partners at the top.” What is missing from the writer’s analysis? Hint: Speculate about the likely differences in content and value of the work performed by partners compared to associates. Any parallels to Merrill Lynch’s FAs and SVPIs? 4. A few years ago, Sullivan & Cromwell announced that year-end bonuses will be cut in half, with a maximum of $17,500 for early-career associates and $32,500 for eighth-year associates. However, last year, bonuses ranged from $2,500 to $20,000 and for the current year, bonuses are estimated to be $1,000 to $5,000. Should Sullivan & Cromwell be concerned about difficulties in recruiting or retention? 5. How does the Sullivan & Cromwell approach to compensation differ from that of Dewy & LeBoeuf? What are the advantages and disadvantages of each approach?