Managerial Decision Making



Managerial Decision Making

1. In 2001, Polaroid filed for bankruptcy protection. Investigate this filing. What caused the bankruptcy? Can it be traced to an escalation of commitment?

With a quick snap, the deed was done. The instant photography specialist Polaroid has filed for bankruptcy after becoming embroiled in a fraud scandal which has put the founder of its parent company behind bars. The US electronics company this week sought protection from its creditors for the second time in seven years, saying its financial condition had been "compromised" by a legal furore engulfing its Minnesota-based owner, Petters Group. Petters, which bought Polaroid for $426m (£277m) in 2005, was founded by a millionaire entrepreneur, Tom Petters, who was jailed in October for allegedly swindling investors out of $3bn.

Federal prosecutors have charged Petters with 20 criminal counts including mail fraud, wire fraud, conspiracy and money laundering (Jewell, 2008). He is accused of using fabricated documents to raise money under false pretences, which was used to finance sham companies and bankroll a lavish lifestyle - including losses of up to $10m a month at the luxurious Bellagio casino in Las Vegas. Petters was arrested after allegedly preparing a yacht with bags of cash, ready to make an escape with his mistress and two children. The scandal arose just as Polaroid was shipping the last of the instant film products which have made it a household name for half a century. It is striving to reinvent itself by diversifying into a broader range of electronics including digital cameras, photo frames, televisions and printers (Jewell, 2008). Announcing bankruptcy, the company stressed it was not going out of business but merely needed time to restructure. Polaroid is one of several subsidiaries of Petters Group to have filed for protection since the fraud fiasco unfolded. Court-appointed receiver Doug Kelley said the credit crunch and the stigma of Petters's actions had made it difficult for Polaroid to raise funds it needs to move into new products.

2. During the Cold War and post-Cold War eras, the United States and the Soviet Union have been competing with one another in attempts to gain a strategic advantage over one another. The Strategic Defense Initiative (SDI) was born out of that competition. Discuss the SDI and how the United States and the Soviet Union applied the competitive escalation paradigm.

President Ronald Reagan in a speech on 23 March 1983 called for a program in research and development toward possible deployment of nonnuclear missile defenses that would make strategic offensive ballistic missiles obsolete.1 His reasons for doing so were complex. The initiative had not come from the bureaucracy but from the President. As a result, the public relations offensive for the Strategic Defense Initiative (SDI), as it came to be called, was poorly prepared. Even Project High Frontier is now only one of a number of possible architectures under study for various phases of a missile defense system; earlier it had been the only candidate system.The news media and the academic community assumed ...