Objective
The major issue of the case of Putnam is the one of the “rapid buying and selling” of funds of the company by the managers owning them (Jones, p. 144). It leads to the monthly $3 billion decreases of assets of the company and the $70 billion investment capital pull out within several months of 2003. The Putnam CEO, Charles E. Haldeman, does his best to save the company, which is an especially challenging task in light of the limitations the Securities & Exchange Commission (SEC) imposed upon Putnam. Here is the SWOT analysis of the company’s situation and the chances of Mr. Hadleman to save it.
Strengths
To begin with, the Putman Company has certain strengths in this situation due to its positive and respectable image established during the 67-year history of the firm and to the staff of the company employing skillful workers and managers. The following points can be singled out as Putnam’s strengths:
- the substantial assets and funds of Putnam which result in its being “$7.5 trillion mutual-fund industry” (Jones, p. 144);
- the qualified staff among which Mr. Hadleman, the CEO, is the leader of the awaited company’s saving (Jones, p. 144);
- the 30-year experience and positive reputation won by Mr. Hadleman through his investment management career (Jones, p. 144);
- the improvement of the organizational culture of Putnam started by Mr. Hadleman by his “guiding beliefs” and staff restructuring (Jones, p. 144);
- Timely identification of the problem and start of the work on its elimination.
These strong points observed in the Putnam Company seem to prove the company’s ability to live through the crisis and to put Mr. Hadleman in the spotlight of the company’s savings. Being “an absolutely straight arrow” (Jones, p. 144), Mr. Hadleman is the person who enjoys the respect of outside business partners and competitors and the authority among the staff of his company. Combined with the reformed organizational structure of Putman, the modifications in the organizational culture and the further discussed help from SEC, Mr. Hadleman can cope with the task of saving Putnam. However, there are certain internal weaknesses of the company that might become obstacles in the way of Putnam’s savings.
Weaknesses
As the company that lived through the change of the CEO and the respective leadership styles, the Putnam Company displays weaknesses in such areas as organizational culture, strategic planning, the market image of the company, etc. The weaknesses of Putnam are:
- the damaged market image of the company after the insider trading scandal of 2003 (Jones, p. 144);
- the past of the company that developed in the direction set by the former CEO and that Mr. Hadleman had to root out to establish the progressive vision of the company’s development (Jones, p. 144);
- the dualism of opinions among the company’s management in respect of the new Putnam policies and organizational culture (Jones, pp.144 – 145).
The majority of the above-listed weaknesses are the results of the company’s past development. Mr. Lasser, the former CEO, directed the Putnam Company to sale-oriented work in which there was no place for reasonable planning and strategizing (Jones, p. 144). The Putnam Company looked for the instantaneous benefit which, as a result, damaged the company’s long-term perspectives by destroying the organizational culture and cutting the firm’s funds. After Mr. Hadleman’s becoming CEO, these policies were changed for the progressive and strategic ones, but the remnants of the past policies could still be observed in Putnam causing the cases of insider trading and fast buying and selling of their funds by the Putnam managers (Jones, p. 144). As a result, the scandal involving all the investment management market players caused serious damage to Putnam’s reputation and made SEC interfere with the problem imposing its limitations on Putnam’s policies and business activities.
Opportunities
However, the business environment of the Putnam Company allows observing certain positive external processes and factors that can be interpreted as the company’s opportunities. They are:
- the strong position of the company in the investment market;
- the interference of the SEC that introduced the strict policies which other companies have long tried to implement but failed (Jones, p. 144);
- the positive attitude of the company’s competitors and the fiduciary companies towards Putnam’s chances for survival in the crisis.
In more detail, the first point is reflected in the fact that even though $70 billion were pulled out by the investors from Putnam assets (approximately 26% of the latter), the company can still work on its revival and the SEC is interested in its saving as well (Jones, p. 144). The second point listed has already found its realization in the policy introduced by Mr, Haldeman on the demand of the SEC, i. e. checking of the Putnam Company employees’ trade records and the ban of selling funds in the time shorter than 90 days after their buying (Jones, p. 145). Finally, the positive attitude of the market and customers towards Putnam encourages the firm and its CEO to work further.
Threats
Nevertheless, the external situation poses also certain threats to the Putnam Company in the situation considered:
- the increase of the outside, SEC, control of the firm (Jones, p. 144);
- the possible $138-million fines imposed by SEC (Jones, p. 144);
- the already started pulling out of the investment capital from the firm’s assets (Jones, p. 144).
The latter point can be viewed as the major external threats that are not involved in Putnam’s activities, while the SEC interference, already viewed as an opportunity, might also turn out to be a threat if Putnam loses its independence and becomes a role model for other firms used by SEC as an example of its methods of fighting illicit internal trading (Jones, p. 144). In other words, SEC’s imposition of the limits as for the fund directors’ tenure duration and selection principles might transfer the decision-making authority to SEC and deprive Putnam of any actual business mobility. As for the fines, they can seriously undermine the firm’s financial capacity and destroy its last chances for saving.
Conclusion
To conclude, Mr. Hadleman can play an important role in saving the Putnam Company from bankruptcy and destruction. The conditions needed for this include the proper understanding of the presented SWOT analysis and its implications. To become the savior of the company, Mr. Hadleman should use his positive reputation and respect of colleagues in the combination with the policies directed at improving the organizational culture, employment and selection policies and strategic planning initiatives of the Putnam Company.
Works Cited
Jones, Gareth R. & Jennifer M. George. Contemporary Management, 4th Edition, McGraw-Hill/Irwin, 2005. pp. 144-145