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March 17, 2013

The Worst CEOs

At the end of each year,  rating agencies get into rapid action preparing various lists: companies that did well, the ones that did not fare well at all, leaders who made a difference, topshots whose mistakes led the company on the brink of doom, and many such. You would perhaps agree that challenging as it may be to make it to the top, it is equally difficult to feature in the list of the bottom few.

i) Brian Dunn, Best Buy

Online shopping have come a long way on present day. It has become a part of our lives and a most common place practice because of the sheer convenience it offers– one can choose from various options available for the product he needs, and it is delivered at his doorstep within a short period of time. There are various options available for payment as well as convenient return policies. And in this lucrative background, Dunn made the fatal mistake of not improving the services offered by his company, Best Buy, an online platform dealing mainly in electronic goods. The customer service also was in crying need of revamping. It is a surprising mistake on the part of Dunn, as he had been with the company for long and had risen to the top from the very bottom.

The stocks of the company kept sliding, and finally when it reached 80% in the negative, Dunn had to resign as the CEO of Best Buy. To make matters worse, Dunn was alleged to be in an illicit relationship with a female employee much younger to him.

The company has reconciled to some extent, but the stock rates are still in the negative.

ii) Audrey McClendon, Chesapeake Energy

Audrey McClendon was a name that was associated with one of the greatest businessmen the world has ever known. However, he had a habit that does not suit a person with such capabilities: he would mix personal and business finances, and use either for the benefit of the other. The Wall Street Journal has proved that McClendon was also involved in illegal and unethical transactions with banks, who allegedly bribed him to obtain the relationship of financial advisors to Chesapeake and its clients. McClendon also borrowed hefty sums of money on his personal account from a client of his company, EIG Global Energy Partners and other institutions. This is in direct conflict with the interest of Chesapeake.

McClendon resigned as the Chairman of the firm, but still continues as the CEO.

iii) Vijay Mallya, Kingfisher Airlines

Kingfisher Airlines, founded by the prolific Vijay Mallya, was an airline that plied in style. When there was stiff competition to provide low cost air travel, Kingfisher provided value for money by offering quality services with a premium cost attached. Mallya shot into headlines when he failed to pay salaries of his staff and the employees went on strike.

With a business acumen as strong as his, Vijay Mallya had invested money in multiple businesses. Somewhere, his money management and plans for the future went wrong. And there was no backup plan. Kingfisher was not doing as well as he would have liked, and was incurring heavy losses. Stock prices went down in a steep slide. He tried to revive his airlines by drawing funds from various sources and raising money from the market. He even tried selling partial stakes from his successful ventures such as United Breweries, but even such drastic measures were not enough. Mallya was into so much debt, that after a point of time, no financial institution was willing to lend any more money to revive the airline, even against personal guarantee given by Mallya.

The controversy deepened further when an employee committed suicide due to bankruptcy. Ultimately, Mallya was forced to close down his airlines. 

iv) Andrea Jung, Avon

Avon is one of the pioneers of network marketing in India. It was a premiere brand of cosmetics used by women in all parts of the country, and not only in metropolitan cities in spite of being only available for sale through its members. It grew into a multinational brand available all over the globe.

The CEO of Avon, Andrea Jung, however could not tackle the various operational issues that rose in this massive scale of operations. She allegedly attempted to bribe foreign officials and has been under scrutiny since 2011.

v)   Mark Pincus, Zynga

Lack of innovation spelt the doom for Mark Pincus, who depended heavily on Facebook portal for revenue generation. At one time, Farmville, a game devised by Zynga was extremely popular. But one cannot put all his eggs in one basket: it could be a fatal mistake!

vi) Rodrigo Rato, Bankia

Charges of bribery, fraud and other unethical practices have tarnished Rodrigo Rato’s image as well as the reputation of the Spanish financial institution, Bankia. The stock prices are down drastically and the Spanish government had to intervene.

vii) Ron Johnson, JC Penney

Unrealistic targets for sales and subsequent withdrawl of the same, along with other mistakes made by Ron Johnson of JC Penney caused the dip in share prices of the company by a whopping 26% in the recent quarter.

viii)      Antonio Perez, Eastman Kodak

Overzealous projections and under delivery by Antonio Perez was the reason why investors gradually deviated from Eastman Kodak. The company was already in dire straits, and Perez couldn’t help it in any way.

ix) Andrew Mason, Groupon

Groupon was perhaps the most over hyped IPO of 2012. Andrew Mason failed as a CEO when he could not meet the challenges faced when a company goes public.

x)   Steve Ballmer, Microsoft

Last but not the least, the final name in this list is Steve Ballmer, who took over Microsoft Inc from the legendary Bill Gates. However, in the age of smart phones, ipads and other gadgets, Ballmer is yet to rise to the occasion to meet the needs of the modern consumers.

The discussion about the businessmen who failed leaves many a lesson to learn and keep in mind for all of us, isn't it?

Tags : CEO, Mistakes, Unrealistic targets, Sliding Stock prices

About Anupama

A Transport Planner and Architect, Anupama has been blogging for about six years now. She has taken up professional content writing for the last two years, and can always be contacted for any assignments or queries. Her strength is original presentation of any topic.