case bear sterns: stakeholders and negotiation

Make sure they are in on it.What ever it is.

HARVARD UNIVERSITY

Stakeholder analysis

George Wendt | Stephan Hufnagl | Gabriel Porlan | Edward Lindqvist

Evolution of Theories

Bear Stearns

Negotiations

Applying theories

HARVARD UNIVERSITY

Theory evolution - the business processes

• Preston• Studied GE in 1930’s

• Key stakeholders• Limited analysis

• Freeman• Power Based Stakeholder Analysis

• Some actors are more importnt than others

• Grimble and Wellard• Predictive tool• Looks at Objectives and relevant actors

HARVARD UNIVERSITYBear Stearns | Applying theoriesEvolution of Theories | Negotiations |

Policy and Political Science

• Laswell• Power Structures are key

• Lump groups by interest• Benson

• Organizational Understanding requires Internally and Externally• Sometimes considered the first

”modern” stakeholder analysis structure

• Lindblom• Incrementalist approach to

process• Numerous agreements

HARVARD UNIVERSITYBear Stearns | Applying theoriesEvolution of Theories | Negotiations |

Combining models to achieve agreements

• Fisher and Ury

• Getting to Yes• Interests not positions• Power dilemmas

• Getting past No /Power of Positive No• Emotions play important role in

decision making• Qualitative analysis is superior

to quantitative

• Mnookin

• Applies Fisher/Ury to stakeholder analysis

• Maps Power Structures• Comprehensive

analysis including who listens to whom

Bear Stearns | Applying theoriesEvolution of Theories | Negotiations | HARVARD UNIVERSITY

How to negotiate in practice

• Structural

• Strategic

• Behavioral

• Processual

• Integrative


• Reduce Transaction costs

• Improve Results

• Don’t bargain over positions

• Adversial vs. Problem-solving approach

How to negotiate in practice


• Identifying interests

• People

• Alternatives / Options

• Objectivity

• Communication

Bear Stearns | Applying theoriesEvolution of Theories | Negotiations |

Practicing negotiation theories

HARVARD UNIVERSITY

• Balancing stakeholder interests• Selective alliance building• Understanding participants

Practicing negotiation theories

• When to negotiate• Preparation• Sufficient time


Bear Stearns taking the lead to a bears market

Rumors of liquidity problems - US$170/share < US$4Triggering the financial crisis in March 2008

US$ 174

US$ 4

13 months

Bear Stearns | Applying theoriesEvolution of Theories | Negotiations |

9 years

HARVARD UNIVERSITY

•Business Structure•Risky structure being a seeling

bond bank

•Rumors•Liquidity problems from

August 07 - March 2008•Slow decisions•More than $18 Billion in reserve•S.E.C. Investigation show a

”bear raid”

Bear Stearns taking the lead to a bears market


Buyers offersAmbivalent CEO’s

Seeking positive press

28 daysFED and J.P. Morgan

Alan Schwartz, CEO Bear Stearns Jamie Dimon, CEO J.P. Morgan


• Bear Stearns• Alan Schwartz and Sam Milinaro

• Helping banks• J.P. Morgan, Lazard Bank

• Possible buyers• Goldman Sachs, Credit Suisse and

Deutsche Bank• Shareholders

• Government• FED

• Media• CNBC

Identifying the stakeholders


Time to let the bear fall

• Loosing confidence and not capital

• Poor management performance made it worse

• Share-price reduction

• Decision to let Bear fall


• Bear Stearns• Alan Schwartz and Sam Milinaro

• Helping banks• J.P. Morgan, Lazard Bank

• Possible buyers• Goldman Sachs, Credit Suisse

and Deutsche Bank• Shareholders

• Government• FED

• Media• CNBC

Identifying the most important stakeholders


Lump stakeholders by interest

Potential buyers Protectors

Collaterals


The qualitative analysis is the most important

- Emotions play an important role (Fisher and Ury)- Board members


Applying theories in practice

• Balance stakeholders interestsFED’s concern

• PrepareThe calculations


"Praeparatus supervivet"- The one prepared survives

case bear sterns: stakeholders and negotiation

Education