Click here to load reader

Bloomberg Terminal Scandal

  • View
    273

  • Download
    2

Embed Size (px)

DESCRIPTION

 

Text of Bloomberg Terminal Scandal

  • Media Management Case Study MEJOS3 Katrin Ehnert Olga Javits Jaana Pasonen 2013 Scandal and Consequences
  • 1. The Bloomberg Company 2. Investigation of the Crisis 3. Organization configuration 4. Analysis results - 4 levels of management & markets 5. Conclusions Presentation Structure
  • Part 1 The Company and Its Business
  • Bloomberg Terminal (The Bloomberg) is a core business and money-generating product The Company and Its Business
  • 1. Bloombergs media products and their role in the company business 2. Bloomberg News: News that move markets. Finance information 24/7 Employs more than 13 000 people in 185 locations globally Services 174 countries 5000 original articles daily Source: Bloomberg.com
  • Bloomberg is a growing company Operating profits 2006 annual revenue $1.5 billion 2011 - annual revenue $7 billion 2013 about $8 billion annually 315,000 terminals sold worldwide (by the end of 2012) 85 % from terminal sales Terminal subscription $20000 per year Bloombergs Performance on Market Competition Source: Gustin (2013) TIME Business & Money
  • Michael Bloomberg, MBA in Harvard University 1981 - Innovative Market Systems (IMS) 1986 - Bloomberg LP 1988 - 5,000th terminal installed, a financial data industry leader 1990 - Bloomberg Business News with a six-person team, based in New York, editor-in-chief Matthew Winkler 2010 - 20th anniversary, 146 bureaus in 72 countries, > 2,300 journalists and multimedia professionals Milestones in History Sources: Funding Universe (1998), Business Insider (2013)
  • Part 2 Investigation of the Crisis
  • Data breach scandal at Bloomberg L.P.'s news division: Bloomberg reporters had extended access to data about individual customers' terminal usage Publicly revealed by the New York Post on May 10, 2013 The Crisis' Triggers
  • Viewed customer information included: what functions they used on the Terminals who was logging in and at what time what they asked the help desk for Source: Horowitz, 2013
  • Bloomberg's culture Journalists considered to be representatives of the Terminals Michael Bloomberg in 1997: Most news organizations never connect reporters and commerce. At Bloomberg, they're as close to seamless as it can get (as cited by Geller, Huffington Post, 2013) Bloomberg's goal To be the most influential news service in the world Innovative ways to recognize customer needs, wants and trends quickly Reasons for the Crisis' Emergence Source: Geller, Huffington Post, 2013
  • Impacts on Bloomberg's business environment and partnerships Breach of trust with customers Several investigations against Bloomberg regarding possible misuse of other customer Terminal's confidential data No significant Terminal subscription fallout: [The Terminals] are prized as windows to information that can help brokers keep or lose fortunes (Geller, 2013) Company's transparency, reputation and business culture came into question Reactions by Bloomberg's management Public apologies Immediate restriction of reporter's access to the confidential data Initiation of 2 independent reviews on internal standards Major Consequences of the Crisis Source: Gustin, TIME, 2013; Bloomberg.com, 2013a
  • Several improvements according to the reviews' recommendations: New positions at governance level: chief risk and compliance officer Ongoing periodic independent reviews on internal compliance controls No extended access for Bloomberg reporters Enhanced training programme for employees New positions at editorial level: Independent Senior Editor and Standards Editor Current Status of the Case Source: Bloomberg.com, 2013a; Bloomberg.com, 2013b
  • Part 3 Organization Configuration
  • Bloomberg strives to have a flat organizational design with few levels of hierarchy: No private offices or enclosed meeting rooms All employees sit in long rows of identical, terminal-laden desks, including the Editor-In-Chief Employees do not stay in any one position for too long and do not have official titles. Managers are constantly rotated between different departments Employees are evaluated entirely on their performance. This allows for them to move vertically, horizontally, and diagonally throughout the firm Bloombergs Organizational Structure Sources: Bothra et al., 2008, Round Table, 2008,
  • Organization Configuration 1980 1990 2000 2013 Michael Bloomberg's role Entrepreneurial organization Years of rapid growth and expansion New divisions and products Moving towards more innovative organization Over 15 000 employees Michael Bloomberg no longer active in the company No single type of organization configuration Source: Mintzberg et al., 1998
  • Bloomberg's strategic apex and middle line work innovatively, avoids bureaucracy and hierarchies Sales division, Speed desk at Bloomberg News - Machine organization Independent divisions for products, independent goals and processes - elements of diversified organization The Bloomberg LP is more of a LEGO than a jigsaw-puzzle configuration. multiple configurations depending on division, department and time. A Jigsaw puzzle or a Lego organization? Despite an innovative culture and complex organizational structure , Bloomberg has a very clear strategy and all its parts work collectively to achieve the company's goals.
  • New Energy Finance Daniel L. Doctoroff CEO & President Executive Committee COO, Head of Financial Products & Services, Editor- In-Chief R&D News & Media Financial Products & Services Law Govern- ment Professional Service News Sports Enterprice Solutions Web &Mobile Magazines Business Week Television & Radio Terminal Markets/ Pursuits Peter Grauer Chairman of the Board Source: Bloomberg.com, 2013
  • Part 4 Analysis Results
  • Corporate Management and the Political Market Main role of corporate management is to legitimate and secure the role possibilities of the enterprise, effects influence mainly the political market Immediate reactions to the crisis were necessary: Investigations from U.S. Federal Reserve & Treasury Department Critique from European Central Bank and other big clients To reassure and to regain the trust of partners and influencers in the political market, the extensive actions were necessary -> When crisis' effects on the popular market might result in declining revenues, poor management on the corporate level after the crisis could lead to legislative and normative restrictions -> In worst case scenario might result in bankruptcy Source: Alm & Lowe, 2001, Gustin, TIME, 2013
  • Actions taken on Corporate Management level Immediate damage control PR: Public apologies in public and in person Independent reviews Results and recommendation published Enhancing the company's governance framework (Risk and compliance responsible) Approval for continuous periodic reviews The Crisis' impact on Political Market The actions taken were considered sufficient, no significant penalties or further conflicts occurred Source: Bloomberg, 2013a
  • Internal implications: Decisions /actions are aligned to support Bloomberg's core business: Selling more Terminals Reporter's access possibilities as intended strategic approach from the beginning The concept of reporters working hand-in-hand with the sales team served as a centerpiece to Mr. Bloombergs vision (Chozick, New York Times, 2013) Need for internal process innovation to regain customers' trust New CEO and 100-day-strategy at Bloomberg Media Group Strategic Management and the Open Market
  • External implications: Second strategic focus at Bloomberg: Innovative technology for its Terminals' systems Increased pressures from competitors (Thomson Reuters, Dow Jones) with new Terminal replacement strategies Dependence of open market on popular market highlighted Source: Alm & Lowe, 2001
  • Bloomberg's revealed strategic objectives: Strategic decisions set a direction Clear plan of actions to hold leading position No real strategic turnover at Bloomberg after crisis Weaknesses regarding approaches to Terminal sales and high investments in the media division Bloomberg needs to find a clear direction in innovation Source: Mintzberg et al., 1998
  • Two aspects of product and business management The Terminal - main product All the media products: Magazines, TV, radio, Mobile etc. Two approaches to Popular market: Termina

Search related