Essay Instructions: Instructions: You are to write a 4-page paper, APA format, Times New Roman and double-spaced. After you read the Case Study “Vying for Control of Molson Inc.” **You are to answer 3-questions and write Full Page Response**. You Are to State the Question First and then Continue with Response
to the question that is being asked. “The Maximum for Outside Sources is 2.”The reference page will be separate from paper. Lastly, I have included a list of Key Terms that may aid you in answering or a starting point in answering questions for the Molson case study.
Case Study: Vying for Control of Molson Inc.
Molson Inc., the Canadian brewing company, was founded in 1786 by John Molson and has remained family controlled for all but a few years since then. After era of extensive diversification into such businesses as lumbering, furniture making, and pipe and furnace manufacturing, Molson sold control of its brewing operations to Australia’s Foster's Group Ltd. in the mid-1990s. The sale was made in part in anticipation of “tough competition from US beer makers as trade barriers fell.” At about the same time a dispute began brewing between rival factions of the Molson family for control of the Molson business empire. Eric Molson and Ian Molson were pitted against one another in the struggle for control.
Family Relationship as a Backdrop for the Struggle
John Molson passed the ownership of the company to the family’s eldest sons, whereas the top management positions at the company were given to outsiders or Molson relatives with business acumen. This long-established tradition eventually create a rift in the family—“ the shareholders considered themselves ‘real’ or ‘brewery’ Molson’s and viewed other family members as hired help.”
Eric Molson’s side of the family held the majority of shares and controlled the top operating positions throughout the latter half of the 20th century. In 1988, Eric became the company’s chairman and inherited his father's voting shares in the company. Eric is a shy man who was uncomfortable with public speaking. Eric's supporters say that he deserves more credit for his business competence than he has received.
Eric's younger cousin Ian eventually became an aspirant for the chairman's job. Ian’s branch of the Molson family, which was not viewed as being “brewing line,” fell into disfavor after it sold the Montréal Canadiens hockey team in 1971. Ian began working at the brewery during the summer when he was a teenager in the early 1970s and then went on to become a Harvard educated international banker. In 1996, Ian joined the Molson board of directors. “Ian used his deal-making skills to sell non-core business and buying back control of Molson’s beer operations.” Ian also was primarily responsible for the acquisition of a Brazilian brewer, which turned out to be a poor investment decision. Further, Ian increased his holdings of Molson's voting stock.
The Evolving Conflict
Ian maintains that Eric endangered the company’s future due to his lack of business acumen. Ian charged that Eric's refusal to work with him had destabilized the company. Eric's supporters, however, stress that Ian has destabilized the company through his impatience and aggressiveness.
Eric and Ian clashed at board meetings, with Ian often interrupting Eric. Their differences became increasingly intense and embittered. At a January 2003 board meeting, Eric announced a review of Molson's corporate governance. While a surprise to the board, the review was nonetheless conducted. The governance report recommended eliminating Ian’s position as deputy chairman. Ian confronted Eric, but nothing was resolved. At the end of November board meeting, the recommendation to eliminate Ian’s position was defeated. At the May 2004 meeting, three board members, including Ian, resigned in protest over Eric's leadership of the company. The remainder of the board chose to reaffirm Eric's status as chairman. At the company’s annual meeting the following month, Ian and four other members of the family-controlled board refused to stand for reelection.
In an effort to wrest control of the company from Eric after the May board meeting, Ian began “lobbying family members to pool votes and blunt Eric's voting control.” Some members of the Molson extended family were quietly questioning Eric's leadership of the company. At the company’s annual meeting, Ian’s brother William openly challenged Eric, pointing out that “Ian’s involvement has been good for the company and the shareholders.” Eric denied that the feud with Ian was having a negative effect on the board and the company. He insisted that the board was being pared down for governance reasons.
Meanwhile, Molson Inc. and Adolph Coors Co. initiated merger talks. The two companies had been working together since 1998 with each company distributing the other’s products in its home territory. The major hurdle to the proposed merger was the feud between the two factions of the Molson family. Eric, who along with allied family members controlled more than half of voting shares, favored the merger. Ian, with approximately 10 percent of the voting shares, was against the merge. A shareholder agreement between Ian and Eric prevented either one from transferring or selling his voting shares without the consent of the other. Eric maintained that he had found a legal way to circumvent the agreemen t. Ian, on the other hand, was preparing to offer as much as $ 4 billion to acquire Molson Inc. in order to prevent the merge with Coors.
On July 22, 2004, the two companies jointly announced the merge of Molson and Coors. The merged company would be known as Molson Coors Brewing Company and would have established brands in Canada, the United States, the United Kingdom, and Brazil. The merger would make Molson Coors Brewing Company the world's fifth largest brewer and is expected to deliver substantial value to shareholders.
Discussion Questions
1.From your perspective, were the consequences of the conflict between Eric Molson and Ian Molson positive or negative?
2. What structural factors and personal factors were likely causes of the conflict between Eric Molson and Ian Molson?
3. What conflict management styles do Eric Molson and Ian Molson seem to be using?
Key Terms
Functional conflict: a healthy, constructive disagreement between two or more people.
Dysfunctional conflict: an unhealthy destructive disagreement between two more people.
Jurisdictional ambiguity: the presence of unclear lines of responsibility within an organization.
Interorganizational conflict: conflict that occurs between two or more organizations.
Intergroup conflict: conflict that occurs between groups or teams in an organization.
Intragroup conflict: conflict that occurs within groups or teams.
Interpersonal conflict: conflict that occurs between two or more individuals.
Intrapersonal conflict: conflict that occurs within an individual.
Interrole conflict: a person's experience of conflict among the multiple roles in his or her life.
Intrarole conflict: conflict that occurs within a single role, such as when a person receives conflicting messages from role senders about how to perform a certain role.
Person-role conflict: conflict that occurs when an individual is expected to perform behaviors in a certain role that conflict with his or her personal values.
Fixation: an aggressive mechanism in which an individual keeps up a dysfunctional behavior that obviously will not solve the conflict
Displacement: an aggressive mechanism in which an individual directs his or her anger toward someone who is not the source of the conflict.
Negativism: an aggressive mechanism in which a person responds with pessimism to any attempt at solving a problem.
Compensation: a compromise mechanism in which an individual attempts to make up for a negative situation by devoting himself or herself to another pursuit with increased vigor.
Identification: a compromise mechanism whereby an individual patterns his or her behavior after another's.
Rationalization: a compromise mechanism characterized by trying to justify one's behavior by constructing bogus reasons for it.
Flight/withdrawal: a withdrawal mechanism that entails physically escaping a conflict (flight) or psychologically escaping (withdrawal).
Conversion: a withdrawal mechanism in which emotional conflicts are expressed in physical symptoms.
Fantasy: a withdrawal mechanism that provides an escape from a conflict through daydreaming.
Nonaction: doing nothing in hopes that a conflict will disappear.
Secrecy: attempting to hide a conflict or an issue that has the potential to create conflict.
Administrative orbiting: delaying action on a conflict by buying time.
Due process nonaction: a procedure set up to address conflicts that is so costly, time-consuming, or personally risky that no one will use it.
Character assassination: an attempt to label or discredit an opponent.
Superordinate goal: an organizational goal that is more important both parties in a conflict than their individual or group goals.
Distributive bargaining: a negotiation approach in which the goals of the parties are in conflict and each part y seeks to maximize its resources.
Integrative negotiation: a negotiation approach that focuses on the merits of the issues and seeks a win-win solution.
Conflict: any situation in which incompatible goals, attitudes, emotions, or behaviors lead to disagreement or opposition between two or more parties.
