Martha Stewart’s Lost Reputation
Discussion of ethical issues
1. What was the basis of Martha Stewart’s reputation?
According to how stock prices of MSO fluctuates during her law suit trials, stock prices and market shares formed the basis of her reputation.
2. Why did MSO’s stock price decline due to Martha Stewart’s loss of reputation? The public trusted MSO reputation especially in the area of stock prices, thus when Martha was accused of insider’s trading of stocks, it tarnished the very foundation of the trust the public has on MSO. Naturally, the public would worry of losses and thus sell their shares they have on MSO.
3. Who is Martha Stewart’s target market?
The target market is mostly upper-class ladies who lavished on premium products/
4. What qualities were associated with the Martha Stewart brand, before the controversy? Which of these were affected by the accusations of insider trading, and how? How would you find out for sure? Credibility, reliability and trustworthy were the qualities associated with the brand, in which all three qualities were affected by the accusation of insider trading, an illegal and unethical act which ultimately loses the trust of end users. These can be inferred from how stock prices and market shares of MSO fluctuates during the period of the law suit trials, where public begin dumping their shares of MSO during unfavourable situation to Martha and buying back shares when situation seems positive in MSO.
5. What level of sales and profits would MSO have reached if Martha’s reputation had not been harmed? Refer to SEC or MSO websites for information on financial trends. MSO would have made close to $600 million in profit should Martha’s reputation remains unharmed.
6. What range would the stock price have been in at the end of 2002 based on your estimates? With stock prices at $35.51 on February 7 2005 and falling to under $20 in...
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