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    Organizational Behaviour Case Study

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    Paramveer Patel
    The document discusses the 2007-2008 US subprime mortgage crisis. It argues that allowing Freddie Mac and Fannie Mae to "privatize profits and nationalize losses" through government bailouts sets a bad precedent and encourages poor leadership. While government support was necessary, this approach can undermine organizational functioning. The crisis was also likely the result of leadership failures at these firms that prioritized personal financial goals over the long-term interests of the organizations. Leaders relied too heavily on incentives and took big risks without considering the potential dangers to the company or broader financial system. The meltdown reflects the need to learn from mistakes to build stronger leadership and more resilient institutions going forward.

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    Organizational Behaviour Case Study

    Uploaded by

    Paramveer Patel
    259 views1 page
    The document discusses the 2007-2008 US subprime mortgage crisis. It argues that allowing Freddie Mac and Fannie Mae to "privatize profits and nationalize losses" through government bailouts sets a bad precedent and encourages poor leadership. While government support was necessary, this approach can undermine organizational functioning. The crisis was also likely the result of leadership failures at these firms that prioritized personal financial goals over the long-term interests of the organizations. Leaders relied too heavily on incentives and took big risks without considering the potential dangers to the company or broader financial system. The meltdown reflects the need to learn from mistakes to build stronger leadership and more resilient institutions going forward.

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    case study of us melt down

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    Organizational Behaviour case study

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    The document discusses the 2007-2008 US subprime mortgage crisis. It argues that allowing Freddie Mac and Fannie Mae to "privatize profits and nationalize losses" through government bailouts sets a bad precedent and encourages poor leadership. While government support was necessary, this approach can undermine organizational functioning. The crisis was also likely the result of leadership failures at these firms that prioritized personal financial goals over the long-term interests of the organizations. Leaders relied too heavily on incentives and took big risks without considering the potential dangers to the company or broader financial system. The meltdown reflects the need to learn from mistakes to build stronger leadership and more resilient institutions going forward.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    259 views1 page

    Organizational Behaviour Case Study

    Uploaded by

    Paramveer Patel
    The document discusses the 2007-2008 US subprime mortgage crisis. It argues that allowing Freddie Mac and Fannie Mae to "privatize profits and nationalize losses" through government bailouts sets a bad precedent and encourages poor leadership. While government support was necessary, this approach can undermine organizational functioning. The crisis was also likely the result of leadership failures at these firms that prioritized personal financial goals over the long-term interests of the organizations. Leaders relied too heavily on incentives and took big risks without considering the potential dangers to the company or broader financial system. The meltdown reflects the need to learn from mistakes to build stronger leadership and more resilient institutions going forward.

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    © All Rights Reserved
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    Organizational behaviour

    Case 2 US Meltdown
    1. Is it fine to privatize profits and nationalize losses, is it right for organisational
    development?
    As the United States Of America had to suffer sub-prime crisis during 2007-2008. Many
    home-owners defaulted in their payments causing Freddie and Fannie to suffer multi-billion
    dollar losses. The share prices tumbled by more than 90% and the investors around the
    world felt that these two firms might not be able to live upto the guarantees which they
    have to provide to the public. It is somehow justified to Privatize profits and nationalize
    losses as the major companies(Freddie and Fannie) which required bailouts were US federal
    government entities and their guarantee was backed up by the federal government and in
    case of crisis the US government backed it with a gurarantee. Therefore the mortgage was a
    very safe option for the public. It is somehow argued that to privatize profits and nationalize
    losses is not good for the Organisational Development of the companies as this might set up
    a bad example for the future. It encourages weak leadership and poor management. The
    organisations should access the risk associated with their functioning and should adopt a
    proactive approach to counter such problems. The assured government bailout would affect
    the organisational working which would otherwise have been different.
    2. Was this a result of failure of leadership of these firms ?
    The downfall of such huge companies is not just a failure of the financial system, but also a
    huge leadership failure. Excessive interest in personal financial goals as against the larger
    interest of the organization is one of the root cause of this meltdown. These days some
    managers are not that efficient and rely on reward and incentives. They believe that if they
    hire smart people, give huge incentives for personal results, the management of the firm
    would take care of itself. Under such circumstances, taking risks to achieve personal goals
    even if that puts others or organization in danger seems acceptable. These particular
    leadership failures have been a major cause of this full-scale meltdown of US financial
    sector.
    Based on the above discussion, it can be judged that the scenario of financial sector is grim.
    Such crisis situations do require some desperate measures as has been taken by the federal
    government. It also provides us a retrospective view to analyze what went wrong and avoid
    such failures in the future. So though the melt-down is surely for real, it's by tackling it
    properly that the financial sector can come up with greater strengths in the future

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