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Turnaround and down with Richard Brown : EDS 1999-2003 / Norman T. Sheehan.

By: Material type: TextSeries: Publisher: London : Institute of Management Accountants, 2009Description: 1 online resource : illustrationsContent type:
  • text
Media type:
  • computer
Carrier type:
  • online resource
ISBN:
  • 9781526426444 (ebook) :
Subject(s): DDC classification:
  • 338.470040973 23
Online resources: The case describes how Richard Brown, EDS' former CEO and chairman, effectively manipulated EDS' management control system to encourage its employees to aggressively chase and win billions of dollars of mega-outsourcing contracts. The new contracts boosted EDS' revenues at the same time as Brown cut staff and costs, leading to exceptional short term results. Unfortunately, EDS lacked systems to competently manage the risks which accompanied the mega-contracts and was unable to sustain this performance during a subsequent economic downturn. As a result of the unexpected decline in financial performance, EDS' share price fell precipitously and in March 2003, Brown was forced to resign his position as CEO and chairman. Students are asked to employ risk management tools, including COSO's ERM framework, to help diagnose why Brown failed. The case requires students to consider how to balance a CEO's desire to maximize organizational performance with the need to manage risk when operating in environments with high rivalry, rapid technology change, and significant economic shocks.
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Originally published in Sheehan, N. T. (2009). Turnaround and down with Richard Brown: EDS 1999-2003. IMA Education Case Journal, 2(3), Article 2.

Includes bibliographical references and index.

The case describes how Richard Brown, EDS' former CEO and chairman, effectively manipulated EDS' management control system to encourage its employees to aggressively chase and win billions of dollars of mega-outsourcing contracts. The new contracts boosted EDS' revenues at the same time as Brown cut staff and costs, leading to exceptional short term results. Unfortunately, EDS lacked systems to competently manage the risks which accompanied the mega-contracts and was unable to sustain this performance during a subsequent economic downturn. As a result of the unexpected decline in financial performance, EDS' share price fell precipitously and in March 2003, Brown was forced to resign his position as CEO and chairman. Students are asked to employ risk management tools, including COSO's ERM framework, to help diagnose why Brown failed. The case requires students to consider how to balance a CEO's desire to maximize organizational performance with the need to manage risk when operating in environments with high rivalry, rapid technology change, and significant economic shocks.

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