Essay on The Case Study of Morgan Stanley’s Return on System Non-investment

Essay on The Case Study of Morgan Stanley’s Return on System Non-investment

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The Case Study of Morgan Stanley’s Return on System Non-investment

John Mack is still the CEO at Morgan Stanley. In 2005 he focused on management and organisation changes to restore revenue and profit growth within the company. Describe the strategy he outlined to the organisation and discuss its effects to date (including cultural effects, if any).

John Mack needed to address the issue of a “one-firm culture”, stem the tide of departing productive brokers, improve technology and information integration, and improve profits (Laudon and Laudon, 2006).
The “one-firm culture” needed to unify Institutional Securities, Asset management, Retail Brokerage and Discover Card services. The synthesis of Morgan Stanley (SM) and Dean Witter needed to overcome the perception that former Dean Witter employees were second class compared to former Morgan Stanley employees. To do this Mack first tackled the technological divide to remove the disparity and integrate the different systems. To boost the one-firm culture “Mack altered the firm's compensation scheme in favor of an equity ownership structure” (Cullen, 2003). Mack himself receives over half of his $1.6+ million salary in equity (Forbes , 2007). To reduce the me-only culture Mach also holds people accountable, removes intransigent unproductive employees, empowers young people and encourages risk (Cullen, 2003). In 2007 Mack spun off Discover Card services in accordance with Purcell’s 2005 plan (Morgan Stanley, 2005). Mack’s risk taking rewarded the company with huge profits from sub-prime investments in 2006, with Mack pocketing $40 million in bonuses. Mack did not return those bonuses in 2007 when subprime losses of $11 billion hit SM (Colarusso, 2008). Zoe Cruz took the fall (Barn...


... middle of paper ...


...erg.com, viewed 13 April 2008,
< http://www.bloomberg.com/apps/news?pid=20601087&sid=aHpEPzEM4yAg&refer>

Landon, T, 2008, At Morgan Stanley, John Mack grapples with a new kind of risk, International Herald Tribune, viewed 13 April 2008,
< http://www.iht.com/articles/2008/03/11/business/wall.php>

Laudon, LC, and Laudon JP 2006, Management Information Systems: Managing the Digital Firm, 10th edn, Pearson Education Inc., New Jersey, USA.
Morgan Stanley, 2005, Morgan Stanley • 8-K • For 4/2/05 • EX-99.2, viewed 13 April 2008,


Morgan Stanley, 2007, Awards and Recognition, viewed 13 April 2008,
< http://www.morganstanley.com/about/awards/index.html>

Serwer, A, 2006, Is John Mack on the right track?, Fortune, viewed 13 April 2008,

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