CEO Decision-Making at the Brink of Margin Collapse
Having watched the documentary Panic: The Untold Story of the 2008 Financial Crisis, I could put myself in the place of the CEO of the firm in Margin Call. To emerge from a state of crisis, you need to reflect on the past, utilize it as a resource, and encapsulate the important and useful knowledge and experiences it holds. Upon learning that my company was on the brink of bankruptcy, my first step would be to take cost-cutting measures. With respect to the sales nomenclature, I would identify the least marginal segments, as well as those experiencing sales problems, and stop working on them.
Evaluating the Ethical and Strategic Choices of the CEO
The actions of the firm’s CEO under the circumstances are correct. The crisis is the period in which those who manage to stay calm and ask themselves important questions emerge victorious (Polymeropoulos, 2021). The main question is, “Can I use the circumstances to my firm’s advantage?” If the honest answer is no, it is crucial to have the courage to make a radical decision; therefore, CEO tactics are justified.
Moral Hazard Implications of Asset Liquidation
A CEO’s behavior in a crisis is always psychologically deliberate. Since a crisis is always associated with loss, the liquidation of assets is a consequence of the fear of becoming a victim of previously unpredictable circumstances. Evidence of the moral hazard of the decision is the fear of becoming a victim of new economic circumstances. It is more comfortable to make a radical decision on one’s own than to let external conditions dictate the company’s fate.
Leadership Takeaways from the 2008 Financial Crisis
One of the main conclusions drawn from watching the documentary is that in critical times, literacy and experience are not enough to cope with the situation. The film Panic: The Untold Story Of The 2008 Financial Crisis shows that the crisis demands personal qualities and psychological resilience from people, enabling them to confront their emotions as they work to solve the problem (Council on Foreign Relations, 2019). The critical idea is that the leader’s reaction to difficulties is always a reference point for subordinates. They tend to read the fears and panic of leadership or, conversely, to share common sense and rationality.
References
Council on Foreign Relations. (2019, May 1). Panic: The untold story of the 2008 financial crisis. YouTube.
Polymeropoulos, M. E. (2021). Clarity in crisis: Leadership lessons from the CIA. HarperCollins Leadership.