JPMorgan Chase Loses More than $2B

JPMorgan Chase is trying to explain how the bank lost $2 billion and may lose another $1 billion as it settles a trade. In just six weeks, the bank's Chief Investment Office, a group that invests extra assets to hedge risks, lost this extraordinary amount of money.

In a conference call, Jamie Dimon, CEO of JPMorgan Chase, called the situation "self-inflicted":

"We're accountable, and what happened violates our own standards and principles about how we want to operate the company. This is not how we want to run a business."

Liz Rappaport, a Wall Street Journal reporter on PBS NewsHour questioned the terminology that Dimon used, specifically that the Chief Investment Office was intended as an "economic hedge." According to Rappaport, this was an "unclear thing to say": a hedge typically is used to protect against a specific investment, but "exactly...what this group actually hedges against is unclear, and the fact that this was such a large and outside position in one direction, and they got caught...flat footed with it, also doesn't sound like a hedge-it sounds like a bet." The distinction is important: did the investments hedge against risk or create more risk for the bank?

Rappaport also said that this wasn't really a "rouge trader" situation, as we saw at UBS in September 2011. Rather, at the center of the controversy is a London trader nicknamed the "London Whale" for his large investment positions. Unlike the UBS situation, the Chief Investment Office's trades were apparently "run up the flag pole," according to Rappaport.

Discussion Starters:

• What do you see as the distinction between a "hedge" and a "bet"? 
• How do you assess Jamie Dimon's response to the situation?

Is This Newcastle Brown Ale Ad Sexist?

Newcastle Brown Ale is taking some heat for a new commercial that some believe is sexist. Created by ad agency Droga5, the "No Bollocks" spot ends with the punchline: "Why do we focus so much on our brewmaster's hands? Because she is not an attractive woman."

Charles Van Es, brand director for Droga5, explained the rationale for the ad:

"With this campaign we are going to be very honest with our consumers. Our guys know it when they are marketed to, so we believe it's time for a beer brand to give it to them straight, just like their best mates would do. The people of Newcastle, England—Geordies—don't take themselves too seriously, love a good joke, and most importantly, they tell it like it is. Our ads celebrate these traits by using a no-nonsense approach, where we are not over promising anything."

Here are the top YouTube comments about the ad:

Discussion Starters:

• Why would some people consider the ad to be sexist? Do you agree with this view? Why or why not?
• The brand manager for ad agency Droga5 described the brand strategy. To what extent does this explain the commercial?

Resume Trouble for Yahoo's CEO

Did Scott Thompson purposely misrepresent his degree on his resume, or was it, as he says, an "inadvertent error"? In a recent regulatory filing, Thompson's qualifications included a Bachelor's degree in accounting and computer science from Stonehill College. However, Stonehill didn't start its computer science program until the early 1980s, and the school's records indicate that Thompson earned a"Bachelor's of Science in Business Administration (Accounting)" on May 20, 1979. This major also is conveyed on Stonehill's website:

Daniel S. Loeb, hedge fund manager, wrote a letter to the Yahoo board of directors, calling for Thompson's termination.

Yahoo is at a crucial point now and is relying on Thompson to move the company forward. According to The Wall Street Journal, someone close to the company said, "Maintaining him as CEO of Yahoo at this time is more important than whether he had a computer science degree or not."

In response to the controversy, Yahoo issued this statement: 

"Scott Thompson's degree at Stonehill College was in bachelor science in accounting. There was an inadvertent error that stated Mr. Thompson also holds a degree in computer science. This, in no way, alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies. Under Mr. Thompson's leadership, Yahoo! is moving forward to grow the company and drive shareholder value."

 Thompson also sent an email to Yahoo employees, trying to keep everyone "focused":

Update: Thompson has resigned. He also told the Board that he has thyroid cancer. 

Discussion Starters:

• How do you assess the controvery over Thompson's resume: career-ending misrepresentation, innocent mistake, or something else?
• If you were a member of Yahoo's Board of Directors, how would you handle the situation?

Reflections on the White House Correspondence Speeches

As usual, the White House Correspondents' Association Dinner was filled with laughter and high-powered guests. The annual star-studded event hosts celebrities, journalists who cover the White House and president, and other heavy-hitters in the media.

This year, talk-show host Jimmy Kimmel poked fun at the Secret Service, whose agents where caught with prostitutes during a recent trip to Columbia. Kimmel took frequent shots at the president as well:

"Mr. President, I know you won't be able to laugh at any of my jokes about the Secret Service, so cover your ears, if that's physically possible."

Not to be outdone, the president had the crowd going, too. Here's my favorite line, with the president referring to the recent Secret Service transgressions:

"Four years ago, I was locked in a brutal primary battle with Hillary Clinton. Four years later, she won't stop drunk-texting me from Cartagena."

The dinner has the feel of a roast, and the president insulted Donald Trump, Arianna Huffington, Sarah Palin, Mitt Romney, and others. About Romney, President Obama implied that his life mirrors The Hunger Games:

"I guess Governor Romney is feeling pretty good about things because he took a few hours off the other day to see The Hunger Games. It's a movie about people who court wealthy sponsors and then brutally savage each other until only one contestant is left standing. I'm sure this was a really good change of pace for him. I have not seen The Hunger Games - not enough class warfare for me."

Discussion Starters: 

• Do you find President Obama's speech funny? What, if any, parts were over-the-top? What about Jimmy Kimmel's speech?
• What delivery tactics do the President and Kimmel use? How do they encourage and manage laughter from the audience? 

Kraft Mac & Cheese Thanks Facebook Fans

Kraft Macaroni & Cheese hired an a capella group to show appreciation for the 4,632 fans who "liked" its Facebook page. Sung by The Yellow Jackets from the University of Rochester, the song is a great example of connecting with customers in a creative way.

The video is cute, but so far it has only 11,000 views after a week. Why hasn't it been more popular? Will it go viral still? 

Another Restaurant Serves Alcohol to a Child

Within the past year, at least three restaurants have mistakenly served alcohol to children. This time, an Olive Garden in Indianapolis gave a 10-year-old boy a rum drink.

The boy drank half of what he thought was a non-alcoholic Wildberry Frullato drink before his family became concerned. After seeing his "increasingly strange behavior," he was taken to the hospital.

In a statement, Olive Garden said that the server had been fired:

"We find this situation completely unacceptable and we are extremely upset that this occurred. We have a zero-tolerance policy for any violation of our responsible alcohol service policy, and the employee who served the wrong drink has been terminated. We are thankful that the child is OK, and we will continue to work with the family to resolve this issue."

About a year ago, an Olive Garden in Orlando served sangria in a sippy cup to a two-year-old. This incident was just days after an Applebee's in Detroit accidentally spiked a 15-month-old boy's apple juice.

Discussion Starters:  

• How do you assess Olive Garden's statement, particularly the part about their "zero-tolerance policy"?
• In your opinion, was the restaurant's termination of the server appropriate? Why or why not?

Marco Rubio Misses the Last Page of His Speech

Florida Senator and potential Romney running mate Marco Rubio forgot the last page of his speech at the Brookings Institution. Fortunately, someone nearby had a copy, and he quickly recovered, but the incident raises other issues about his presentation style. 

One media coach also criticized Senator Rubio for his reading, his lack of passion, and that he just kept going once he found the missing page. Instead, he suggested that Rubio make light of situation: "Well, since this moment will end up on YouTube, it's a great chance to tell people about our vision for the 21st Century."

Others criticized Rubio partly because of a comment he made about President Obama's delivery style in 2010. The New York Times reported that Rubio referred to the president as, "the most articulate and talented teleprompter reader in America." Of course, a teleprompter can go down, too.

Discussion Starters:

• Watch more of Marco Rubio's speech. What does he do well, and what would you suggest he change?
• What advice would you give Rubio to avoid losing a page of his speech? Stapling isn't a great option-anything else?

Google Drive for Team Projects

Google has introduced an evolution of Google Docs: Drive, a service that stores photos and videos in addition to documents. The new service will likely compete with both Dropbox for cloud storage and Microsoft's similar product, SkyDrive.

The advantages of Drive over Dropbox are clear: in Dropbox, users can only store files; they can't edit documents as they can in Google Docs and Drive. The tougher choice is between Google Drive and Microsoft SkyDrive. PCWorld compared the services in these articles:

• Four Reasons Google Wins Out
• Five Reasons Microsoft SkyDrive is Better Than Google Drive

For students, the decision may come down to ease of access (Drive doesn't require another login if they're already on Gmail) versus software (SkyDrive uses Microsoft files, which are more standard and feature rich than Google Docs). A minor issue for students is privacy. People have expressed concern over Drive's "terms of service," but the risks may be exaggerated, and I'm not too worried about my students' revealing trade secrets during their team projects.

Discussion Starters:

• What are the advantages of Google Drive over Google Docs?
• Which service would you prefer: Google Drive or Microsoft SkyDrive? Why?

Jimmy John's Will Rehire Employees Who Put Up Posters

Sandwich restaurant Jimmy John's had disappointing news this week: a federal judge ordered the company to rehire and pay lost wages to six employees. The employees were fired after they posted 3,000 notices implying that sandwiches could be made by sick workers.

The employees claimed that if they called in sick but couldn't find a replacement, they feared being fired. In the court decision, the judge ruled that, by removing the posters, Jimmy John's violated workers' rights under the National Labor Relations Act. This decision was based on a labor dispute under way at Jimmy John's: a union held an election to organize workers and, although the union was narrowly rejected, it filed unfair labor practices, claiming that Jimmy John's interfered with the election process.

The union perspective is that the workers were terminated "for blowing the whistle on company policies that expose customers to sandwiches made by sick workers." 

MikLin Enterprises, which owns Jimmy John's, will appeal the decision.

Discussion Starters:

• What is your perspective of the posters? What is the company's perspective?
• How does this case relate to comments in social networking sites, a hotly debated topic for the National Labor Relations Board?

Apple's Impressive Second-Quarter Results

With strong sales of iPads, iPhones, and Macs, Apple reported a 94% increase in year-over-year sales (compared to second-quarter a year ago).

In a company news release, CEO Tim Cook said, "We're thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter. The new iPad is off to a great start, and across the year you're going to see a lot more of the kind of innovation that only Apple can deliver." The news comes within a month of reports that Tim Cook is the highest paid CEO, raking in $278 million last year.

The news sounds good, but a closer look at the data shows that sales are down from the first quarter (click for the PDF).

Discussion Starters and Assignment Ideas:

• Do you believe that Tim Cook's salary is justified? Why or why not?
• Rewrite Apple's news release for employees. How would you adapt this message to an  internal email?
• Imagine that you're presenting the second-quarter results as part of a PowerPoint presentation to shareholders. Convert the table to a few charts to show the results more visually. Which data would you choose to include?

Heineken Responds to Dog Fighting Accusation

Bad timing for Heineken: banners were left up after a company event at a Mongolian nightclub. Unfortunately, next on the schedule was dog fighting. Outrage quickly ensued on Heineken's Facebook page and elsewhere.

Heineken responded quickly with this statement:

"Heineken is aware of a shocking photo of what appears to be a dogfighting match in a foreign country with Heineken branding visible in the background. We'd like to thank the community for bringing this issue to our attention.

"We are as appalled by this image as you are and have asked the Heineken Global Office to immediately investigate the circumstances of this event and whether Heineken was involved in any way.

"If you have any further information regarding this picture, such as the source, or the venue where it was taken, please let us know in this thread."

In a follow-up statement, Heineken denied association with the event and explained the situation:

"Images continue to circulate in social media channels showing a dog fight, with Heineken banners clearly visible in the background. This is very distressing and totally unacceptable. As a company and a brand owner, we do not and would never knowingly support any event, outlet or individual involved in this type of activity. It is against our company and brand rules and - more important - against our company values. . . ."

The statement goes on to explain that the banners were left from a previous event and that the company has "ceased" its relationship with the club.

The situation follows a July 2011 Heineken commercial that compares the beer to a snakeskin jacket: "It's not right for every occasion. Unless, of course, you find yourself attending a secret, offsite, charity snake-fighting event." Weird.

Discussion Starters:

• How do you assess the social media response? Were people right to question Heineken's involvement, or did they overreact?
• How do you assess Heineken's response to the criticism?
• What do you make of the snake commercial? Is it just me, or is it weird even if the dog-fighting controversy didn't happen?

Communications in the Wal-Mart Bribe Inquiry

With a New York Times headline that reads, "Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle," news can only be bad for the world's largest corporate employer. Of course, the evidence is that revealer of so many corporate secrets: email.

The New York Times article reports the severity of the situation:

"Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico's top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart's headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart's lead investigator, a former F.B.I. special agent, summed up their initial findings this way: 'There is reasonable suspicion to believe that Mexican and USA laws have been violated.'"

"The lead investigator recommended that Wal-Mart expand the investigation.

"Instead, an examination by The New York Times found, Wal-Mart's leaders shut it down."

The article also points to several internal communications about the situation:

• Rather than hire outside, independent investigators, Wal-Mart leadership decided that its own legal counsel would oversee a "preliminary inquiry." 
• In what is referred to in the article as a "terse report," the director of corporate investigations for Wal‑Mart in 2005, says that the situation is "not looking good."

Apparently, more than $16 million dollars was paid in "donations" or "contributions" to the Mexican government since 2003 to secure permits and build several stores in Mexico.

The first comment selected by the NY Times staff reflects public cynicism about the company:

Discussion Staters:

• Does the news about Wal-Mart in Mexico surprise you? Why or why not?
• Once again, how can people protect their communications from becoming public?
• How, if at all, should Wal-Mart respond to this situation?
• A follow-up NY Times article says that "...Bribery Is Taken in Stride" in Mexico. How, if at all, does that affect your perspective of this Wal-Mart situation?

Secret Service Responds to Scandal

While in Columbia planning for President Obama's arrival, 11 U.S. Secret Service agents and 10 military personnel were involved in a scandal: 21 prostitutes were hired to entertain the fellas. A hotel manager learned of the situation when an argument over payment ensued between one of the prostitutes and an agent.

 

Image source.

Although prostitution is legal in parts of Columbia, other issues help us determine whether this behavior was ethical. One issue is that hiring a prostitute was been banned for military personnel in 2006. This ruling was put in place during the Bush Administration, partly to address human trafficking, a practice in Columbia as well.

In addition, a writer of an Atlanta blog sums up potential risks and consequences of the situation:

"Most importantly, while there is no evidence that the security of the president of the United States was endangered in this incident, an agency with this kind of internal culture could be easily manipulated by those with reason to do so. At the very least, the scandal has created a significant embarrassment for the U.S. government and put at risk the generally good reputation of the Secret Service."

How has the Secret Service handled the response? One PR and marketing manager gave the Secret Service an A- for its response-not a bad grade for handling a difficult situation. Here's his analysis (a rubric, of sorts): 

1. Communication. Following the breaking news of the scandal, the federal government appeared to work fast to alleviate concerns about a widespread issue. Many, however, feel this incident is possibly symbolic of a bigger cultural issue in the Secret Service. Grade: B+

2. Acknowledgement. When the story broke on April 13, Edwin Donovan, a Secret Service agency spokesman addressed the rumors by stating that an unspecified number of agents had been recalled and replaced by others. Army Gen. Martin Dempsey and White House Spokesman Jay Carney acknowledged the incident and have already voiced deep concern, plus several members of Congress have spoken out to defend the Secret Service vowing to launch a full investigation. Grade: A

4. Accountability. By all accounts, the military and Secret Service have appeared to take accountability. Although the story broke via a Washington Post reporter, the federal government has taken full responsibility for the agency's actions. Grade: B+

5. Timely updates. Following the news, the federal government steered the conversation to itself and became the irrefutable source of timely updates. Grade: A

6. Rectification. U.S. Secret Service agent Mark Sullivan swiftly announced that he is leading an investigation of the incident with support from Congressman Peter King, Chairman of the Homeland Security Committee, and Senator Susan Collins, the ranking Republican on the Homeland Security Committee. By all accounts, it appears that the Secret Service, military and Congress wish to assuage any concerns that this incident somehow compromised national security. Grade: A 

Overall grade: A-

Discussion Starters:

• How do you assess the response to the scandal? Do you agree with the "A-" grade?
• What else does the Secret Service agency need to communicate at this point? How should its leaders provide updates to rebuild confidence?

Study: 98% Are Tethered to Email

According to a new study of more than 500 executives, people check email often. When not at work, 98% of people check email. Authors of the study conclude, "Work is not a place anymore. It's a state of mind." 

Discussion Starters: 

• Are you in the majority of people who check email every 1 or 2 hours? 
• Organizations benefit from people checking email often and when on vacation, and the consequences to people personally may be obvious, but what are the potential negative consequences to organizations? 

GSA Overspending Scandal: "Aggrieved by the Gall"

The General Services Administration (GSA) is under investigation for spending $823,000 at a Las Vegas conference in 2010.  The GSA is responsible for purchasing products, transportation, and office space for other government agencies, and ironically, is charged with developing cost-containment policies.

Martha Johnson, head of the GSA as of February 2010, has resigned amid the controversy.  In her testimony to Congress, Johnson admitted that the Western region training conference "evolved into a raucous, extravagant, arrogant, self-congratulatory event that ultimately belittled federal workers and would stain the very work that other committed staff and I were preparing to do." She also said that "[T]he expensive planning for that conference was well under way when I entered GSA, and I was unaware of the scope" and that she was "extremely aggrieved by the gall of a handful of people to misuse federal tax dollars, twist contracting rules and defile the great name of the General Services Administration."

Johnson's strong statement was in sharp contrast to that of Jeffrey Neely, a GSA executive who evoked his Fifth amendment right not to answer any questions. As reported by CNN, Rep. Elijah Cummings of Maryland criticized Neely specifically:

"'In one e-mail...Mr. Neely invited personal friends to the conference, writing, and I quote -- and this is simply incredible -- quote: "We'll get you guys a room near us, and we'll pick up the room tab. Could be a blast." End of quote. He then went on and wrote this -- "I know I'm bad, but as Deb and I often say, why not enjoy it while we have it and while we can. Ain't gonna last forever." End of quote. Well, Mr. Neely, it stops now.'"

Included in the evidence of the overspending scandal is this video, showing a GSA employee's joke about perks and then an award given to that employee at a GSA dinner at the conference.

Discussion Starters:

• Review the steps for ethical decision making. Which would have helped these administrators re-think their choices?
• How do you assess the GSA employee's video and award? Is this incriminating, just office fun, or something else?
• Grammar Check: The section above about Rep. Cummings has a quote within a quote within a quote. Is it punctuated correctly?

KFC Apologizes to Thailand Earthquake Victims

Connecting chicken to the earthquake in Thailand, KFC posted this on its Facebook wall as people were being evacuated from the beaches: "Let's hurry home and follow the earthquake news. And don't forget to order your favorite KFC menu."

People didn't respond well. Admitting its mistake, KFC removed the post within a day and replaced it with this statement:

"KFC Thailand expresses its sincere regret for the improper post on its Facebook page and apologizes for the insensitivity and timing of the message." 

This isn't the first time a company used a tragic or emotionally charged event to promote its products (and it probably won't be the last). Kenneth Cole learned a tough lesson when he encouraged people to buy his "spring collection" clothing during the uprising in Cairo. And a blogger called Amy Winehouse's death a "wake-up call for small business owners."

Companies need to be smarter about how they use social media. Sure, they can take some risks, but mixing sales and disaster likely leads only to disaster.

Discussion Starters:

• Can you think of any time when using a tragedy to promote a company's products would be viewed positively, for example, after a certain period of time? 
• Assess KFC's apology. Do you find it convincing? Should the company have done anything else to demonstrate its regret?

World's Longest Rejection Letter

How would you like to get a 3,000-word rejection letter with a "42-point plan to help job seekers"? If you were one of 900 applicants for a writing job at Salon.com, you may have received it. 

Sean Gunther, the author of the rejection letter, thought he was being helpful, but the letter is long and confusing. For starters, it's unclear whether the receiver was rejected. It isn't until the end of the second paragraph that readers are told (sort-of) where they stand: "Those of you who are passed into the second round of consideration will be hearing from us soon, if you haven't been contacted by us already."

In an article, "Here's How to Condescend to 900 Job Applicants With a 3,000-Word Rejection Letter, " Gawker blasted the email as "arrogant" and called the writer worse names. 

Gunther responsed to Gawker's criticism by saying that some applicants appreciated his advice. He quotes the following from one of the applicants: 

"I read your email this morning, and to be honest, I was a little irritated at first. I didn't particularly want to know that there were 900+ applicants for the position. The email looked lengthy, and I wasn't sure where you were going to go with it. For sure, it didn't say that I was hired.

"I gradually realized that this is the sort of advice that every writer looking for work should read. I don't think I made many of the mistakes that it mentioned, but I do I wish I had read it years ago. It's also a rare thing that people applying for work should get anything out of it at all, especially something so useful."

Gunther defends his letter compared to other rejection letters: 

'Applicants learn nothing about their approach when the only response they receive is 'Thanks for applying, but the position has been filled.'"

Discussion Starters: 

• What do you think of Gunther's approach? How do you think you would feel if you received the letter? 
• Read the entire letter, including his suggestions. Which are useful, and which are not? 
• Considering that the letter caused some hard feelings, what could have been a better approach, if Gunther sincerely wanted to help job applicants?

Facebook Wants You to Use Its Email

Facebook has a new program on the horizon: your timeline address will now be your email address. Unless you already have a @facebook.com email, you'll be assigned one.

Facebook describes the change for consistency:

"Starting today, we're updating addresses on Facebook to make them consistent across our site. Now, the address people use to get to your timeline and send you email on Facebook will be the same."

Clearly, Facebook is continuing to push its email application, previously called messaging. Speculation is that Facebook is trying to match the integration of Google+ with Gmail. Also, a recent study showed that people are more likely to use the Internet for email (85%) than for social networking (62%). Despite early reports of its demise, email remains a frequent tool for communication.

Discussion Starters:

• Do you use Facebook email? Would you if you were assigned an email address? 
• What's the value of email to Facebook? How has the company's "messaging" strategy evolved? 

Few CIOs Use Social Networks

Despite their companies' increasing use of social media, CIOs are not at all active on social networking sites. TechCrunch calls this group "a little anti-social" and describes the results of a study by harmon.ie:

"...only about 10 percent of CIOs in the top companies - Fortune 250 and and Global 250 - actively use public social networks. Within that group, only four CIOs write blogs, and more than one-third either do not have LinkedIn profiles, or have profiles with fewer than 100 connections."

We could explain the data by saying that CIOs hire people to manage the social networking for them or that they are active on intranets rather than on the public web. But Mark Fidelman, lead author of the study, explains the issue:

"These 250 CIOs are charged with transforming the world's largest enterprises, yet our analysis shows that most have relatively little experience using the kinds of tools that are needed to drive that change."

Fidelman also says, "If CIOs are charged with building a social business, shouldn't they have a social presence?" He also suggested to Information Week that "CIOs who don't get social might not be CIOs next year."

On a more positive note, harmon.ie identified the Top 25 Social CIOs in the Fortune 250. The top five include CIOs of technology companies (no surprise) SAP, Google, and Microsoft, but also includes CIOs of the Corporate Banking division of the Royal Bank of Scotland and Mexican petroleum company Pemex.

Discussion Starters:

• Do you find this news alarming? Why or why not?
• What advice would you give CIOs who want to be more active in social networks? Where should they concentrate their efforts? Would your advice vary by industry?

Best Buy CEO Resigns

In the midst of an internal investigation about "personal conduct," Best Buy CEO Brian Dunn has resigned. The news was unexpected, although Best Buy has experienced declining sales, attributed to the access people now have to visit stores, compare prices, and then buy elsewhere. Two weeks ago, Dunn announced plans to close 50 stores and cut 400 staff.

A 28-year employee of Best Buy, Dunn was selected as CEO in 2009. Some said Dunn was a poor choice given the company's challenges: he has sales experience but lacks the knowledge and expertise to fix the deeper problems.

The conduct issue remains a mystery, and because Dunn resigned in the middle of it, we may never know the outcome.

In a news release about new leadership, Best Buy assured the public that the decision wasn't business-related:

"The board of directors of Best Buy Co., Inc. (NYSE:BBY) today announced that Brian Dunn has resigned as chief executive officer and director. There were no disagreements between Mr. Dunn and the company on any matter relating to operations, financial controls, policies or procedures. There was mutual agreement that it was time for new leadership to address the challenges that face the company."

At the same time, the company did acknowledge the investigation in a statement to the press:

"Certain issues were brought to the board's attention regarding Dunn's personal conduct, unrelated to the company's operations or financial controls, and an audit committee investigation was initiated. Prior to the completion of the investigation, Mr. Dunn chose to resign."

Focusing on business continuity, Best Buy's news release named an interim CEO:

"Director G. Mike Mikan has been named interim CEO to lead the company while a search for a new CEO is underway. Richard Schulze, the founder of Best Buy, continues to serve as chairman."

Read an update about the potential misconduct issue.

Discussion Starters:

• Analyze Best Buy's news release as a bad-news message. What principles does the release follow, and what principles does it not use? What is the rationale for these decisions?
• Evaluate the quotes in the news release by Dunn and Mikan. Do you find these reassuring?