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Abstract

Sixty-year-old Martha Stewart, founder and former CEO of Martha Stewart Living Omnimedia Inc (MSO), was charged with four legal actions alleging she breached her fiduciary duties to MSO when she made ''materially false and misleading statements'' about her involvement in trading ImClone stock. Although Stewart''s firm was not accused of any crime, both her company''s reputation and her face were being displayed in the media alongside corporate villains from Enron and WorldCom. The (A) case (UVA-OB-0793), outlines events and Stewart''s initial reactions and an opportunity for students to examine issues related to crisis containment and communication. According to Stewart, ''One doesn''t anticipate a disaster like this''. But now that disaster has struck, what might she anticipate for herself? For her role at MSO? For the very survival of the company she created? How should Stewart deal with the unwanted media attention and negative attacks that were sure to come? Should she keep quiet and trust that her reputation as the perfect homemaker would prevail, or should she speak out and go on the defensive? What audience was Stewart speaking to when she finally did appear publicly? The (B) case updates students on the post conviction situation. After the verdict, MSO stock prices plunged 23 percent. Were these financial problems just bumps in the road for MSO? Would Stewart make a come back? She created a good brand and product line - should her image be back up front and center? The situation presents an opportunity for students to understand that leadership mindset is not going from crisis to crisis but anticipating and shaping your organization.

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Abstract

Sixty-year-old Martha Stewart, founder and former CEO of Martha Stewart Living Omnimedia Inc (MSO), was charged with four legal actions alleging she breached her fiduciary duties to MSO when she made ''materially false and misleading statements'' about her involvement in trading ImClone stock. Although Stewart''s firm was not accused of any crime, both her company''s reputation and her face were being displayed in the media alongside corporate villains from Enron and WorldCom. The (A) case (UVA-OB-0793), outlines events and Stewart''s initial reactions and an opportunity for students to examine issues related to crisis containment and communication. According to Stewart, ''One doesn''t anticipate a disaster like this''. But now that disaster has struck, what might she anticipate for herself? For her role at MSO? For the very survival of the company she created? How should Stewart deal with the unwanted media attention and negative attacks that were sure to come? Should she keep quiet and trust that her reputation as the perfect homemaker would prevail, or should she speak out and go on the defensive? What audience was Stewart speaking to when she finally did appear publicly? The (B) case updates students on the post conviction situation. After the verdict, MSO stock prices plunged 23 percent. Were these financial problems just bumps in the road for MSO? Would Stewart make a come back? She created a good brand and product line - should her image be back up front and center? The situation presents an opportunity for students to understand that leadership mindset is not going from crisis to crisis but anticipating and shaping your organization.

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