Tony ridder analysis

Tony Ridder and Wall Street

1.     WHAT WERE THE POINTS OF TENSION BETWEEN TONY RIDDER AND

WALLSTREET

Draft 

The points of tension include:

a.      The profit pressure which came from the shareholders.

b.     Wallstreet alleged that he is coddling journalists.

c.      Wallstreet importuned Tony Ridder to implement much deeper newsroom cuts.

d.     Wallstreet also expressed disappointment over the 18.4 percent profit when they
anticipated a minimum of 25% profit. 

e.      Some Wallstreet Analysts suggested that Ridder should sell the company.

2.    DO YOU THINK TONY RIDDER LIVED UP TO HIS RESPONSIBILITIES TO EMPLOYEES

AND SHAREHOLDERS

Tony Ridder did not live up to his responsibilities to the Employees and Shareholders. 

Reasons: 

a.      Undue thirst for Profit: Despite the fact that Knight Ridder's profits started growing
post-layoff. Tony Ridder still pushed for further profits. Despite the criticisms from
employees, he ordered Harris to see to a 25% profit margin in 3 years. 

b.     He sacrificed the employees for profit: In 1966 he came down hard on less
profitable divisions and ordered an 8% cut in the work force. He further imposed job
reductions (2,200) for a saving of 100 million in the next year and sought to freeze hiring
(recruitment) in a bid to cut cost. He had a duty of care to the employees first to ensure
that they are treated fairly by virtue of the fact that they have dignity. This also extends
to the arguments against unlawful termination.

c.      Failure to sustain the core of the business: Knight Ridder was established since
1926 and has been known for integrity and concern for public good. However (because
of the diverse shareholding interest) there was increased demand for profit. Rather than
focus on journalism, Tony Ridder allowed himself to be swayed by the pressure.

d.     He had substituted the interest of the wider stakeholders.

e.      He did not live up to the shareholders’ expectation because; by relying on job cuts
only (to increase profits) he failed to be innovative to advance the business.

3.   SHOULD PROFIT MAXIMIZATION BE THE MAIN MOTIVE FOR A NEWS AGENCY.

Profit Maximization should not be the main motive for a news Agency as they should be
focused on investigation and journalism. The undue “profit pressure” led to the
resignation of Jay Harris and several other Knight Ridder publishers. This also led to a
loss of skilled manpower and vitiated the loyalty of employees.

4.    WHAT WOULD YOU ADVISE TONY RIDDER TO DO?

Tony Ridder is advised to respect the interest of all stakeholders and should not be
swayed by shareholder’s pressure for profit. Firms and Companies operate within a
society, therefore (beyond earning revenue for shareholders) they ought to behave
responsibly and ethically all other stakeholders – which includes the employees and
wider public.

Respecting the interest of all stakeholders will be in the interest of the company in the
long term because they are inextricably linked. 

Tony Ridder should therefore be conscious of the employees’ needs. The drive for profit
should not trump the interest of the employees or other stakeholders.

1. What were the points of tension between Tony Ridder and Wall Street
Ridder declines to accept Wall Street investments 

He is a pillar of support for journalists who argue against Wall Street's meddling in the
media. 

Wall Street wants Tony Ridder to increase the profit margin from the 18.4% he
anticipated for 2001 to 25%. Selling off assets that were losing money and terminating
employees allowed him to improve his profit. Wall Street was putting more and more
pressure on Tony Ridder to increase earnings and cut costs in order to increase profit
margins. Journalists on Wall Street's justification for why he was unable to raise his
margins from 18.4% to 25% made this clear. Ridder was forced to strike a compromise
between his commitment to building a premier newspaper company and his desire to
appease the financial community. He finally had to fire a lot of workers—up to 2200 by
the year 2000—in order to meet the demands of Wall Street. Despite this difficult
balancing act, Wall Street insisted on expanding its workforce and reducing expenses. 

2.Do you think Tony Ridder lived up to his responsibilities to employees and

shareholders

In the short term, he fulfilled his fiduciary duties to his stockholders, but the long term
benefits were not favourable. He failed in his duty to the workers, though, by losing a
disproportionate amount of weight over a five-year period. The standards set by his
personnel were not met by him. A bad manager would try to increase profits by laying off
workers. 

He has met his obligations to the stockholders for their benefit. Knight Ridder's financial
performance and stock price have increased (from $26 to $62) since he became the
company's CEO in 1995, and stockholders are now more actively involved in the
company's profitability. The income has increased from $2.2 billion to $3.2 billion since
last year. The improvement from a 10% margin in 1990 to a 20.8% advantage in 2000 is
notable.

3.Should profit maximization be the main motive for a news agency

This shouldn't be a news organization's primary goal. Profit maximization ought to come
second. 

 While news organizations should be able to cover their operating costs, profit
maximization should not be their primary goal. No. The coverage of news and ensuring
that the audience receives the news ethically should be the concerns of news
organizations. It is a company that operates under the service paradigm. A war-fare
paradigm will result from having profit as their primary motivation, and as a result, they
won't care about the services they provide to their clients.

What would you advise Tony Ridder to do?

. I believe Tony would benefit from taking a step back and reviewing the organization's
broad objectives. What precisely do they want to achieve as a journalistic organization?
How can they do this and yet make money is the question. The business has been
established for many years and has a solid track record. He cannot be forced into a
decision by Wall Street, as stated in the case. Additionally, he is adept at explaining to
investors the relevance of these goals. Additionally, he might look for additional
potential investors that see the value the business is bringing and the need of worker
protection. Such shareholders would serve to balance out the demands of the other
shareholders.

 Tony Ridder should rethink his strategy. Profit maximization shouldn't be given priority
right now. 

 He has to collect the team, outline the issue, and reconsider their business strategy
(stand up to irrational markets). 

 He ought to think about the organization's goals (vision and mission). How can they
accomplish it while still taking care of their needs? The company can take advantage of
its excellent reputation and popularity to reconsider how to re-engage with and win back
the public's interest.

 He should treat his staff better going ahead and guarantee them job security. 

 He should also respond accurately to the press's accusations of him and the business.