Specific Chapter Topic To Which Article Relates
Key Points
- The Business Value Proposition: Some L’Oréal shareholders particularly the minor shareholders feel that Ms. Bettencourt’s presence on the L’Oréal board affects the company’s business value proposition since she is not mentally fit to make effective business decisions. The minor shareholders believe that her age affects her role on the board.
- Ethics and Social responsibility: Throughout the ordeal, there are several cases of ethics and social responsibility. François-Marie Banier, a celebrity photographer, had taken advantage of Ms. Bettencourt’s frail mental state to acquire a total of €1 billion from her life-insurance policies, cash, and paintings. It is also alleged that Ms. Bettencourt’s advisers, who include Pascal Wilhelm took advantage of her mental weakness to acquire gifts or favors. Again, Ms. Bettencourt’s former butler had unlawfully and illegally recorded conversations between Ms. Bettencourt’s and her advisers. On the other hand, Ms. Meyers and her sons took corporate social responsibility by assuring stakeholders that they are committed to the growth of L’Oréal and that they are not selling the family’s stake in Nestlé.
- Responding to dynamic business challenges strategically and operationally: The whole court challenges between Ms. Bettencourt and her daughter, Ms. Meyer, are about having control over the family’s stake in L’Oréal. These court cases and Bettencourt’s hiring of Pascal Wilhelm as her financial and legal adviser to enable her to maintain her control over L’Orėal, all amount to dynamic business challenges.
Analysis
Téthys’s 30% stake in L’Orėal, which translates into €15 billion has attracted much power struggle between Ms. Bettencourt and her daughter, Ms. Meyers as each seeks to gain control of L’Orėal (Passariello 1). The minor stakeholders of L’Orėal have joined Ms. Meyers’s side as they seek to find a solution that will increase the company’s value position. Ms. Meyers, her sons, and the minor stakeholders, who in total own about 60% of the company’s stake (Passariello 10), feel that Ms. Bettencourt is not in a position to make decisions that can help the company improve its value position due to her failing mental capacity. To further respond to the dynamic management challenges that had rocked the company, Ms. Meyers and Ms. Bettencourt attend a fashion show at Giorgio Armani, a dealer in L’Orėal’s perfumes (Passariello 18), together to prove to stakeholders that the rifts have been solved and that they are committed to improving L’Orėal’s business value position.
To respond to the dynamic business challenges at L’Orėal, Ms. Meyers and the minor stakeholders have gone to court to ensure that the company’s strategic management is not affected by Ms. Bettencourt’s reduced decision making capability. As a result, lawyers of both Ms. Meyers and Ms. Bettencourt have brokered a deal (Passariello 22) that would ensure that the interest of the minor stakeholders and Meyers on one side; and the interest of Ms. Bettencourt are represented on the board.
The whole saga reveals serious ethical misconduct as different people take advantage of Ms. Bettencourt’s mental weakness. Her advisers have been taking advantage of her mental weakness to manipulate her to acquire gifts or favors from the family’s stake in the L’Orėal. Her friends are also taking advantage of her frail mental state to obtain unreasonable finances. François-Marie unfairly benefitted from Ms. Bettencourt’s mental state by acquiring €1 billion (Passariello 14). However, Meyers’ and her sons’ response to the fears over the possibility of selling the family’s stake in the L’Orėal is part of their corporate social responsibility to assure stakeholders of the future of the company.
Conclusion
Ms. Bettencourt’s frail mental state presents a great opportunity to her friends and entourage to take advantage of her to obtain finances, gifts, and favors. These cases amount to serious ethical misconducts which greatly affect the company’s business operations. As a result, Ms. Meyers and her sons as well as L’Orėal’s minor stakeholders have filed court cases aimed at putting the company in order strategically.