The movie Wall Street (1987), written and directed by Oliver Stone, is about a fledgling and ambitious stock broker, Bud Fox, trying to learn from and become like his idol, a greedy, immoral, and wildly successful corporate raider named Gordon Gekko. In the movie, Bud Fox makes his way into Gekko’s office initially through persistence but makes his mark by informing Gekko of inside information regarding a company, Blue Star Airlines. Gekko rewards Bud Fox by showing him the rich and fast life, and Bud Fox continues to help Gekko make money in an illegal fashion. Eventually, Bud Fox wants to be in on part of a deal that involves Blue Star Airlines, for which his father is a labor union head. The deal goes sour for Bud Fox when he finds out that Gekko plans to dismantle the company and sell its parts, destroying his father’s and father’s friends’ jobs, rather than the initial plan of changing how the company is run and helping it succeed. This causes Bud Fox to go to Gekko’s enemy, Sir Larry, for help in order to successfully save the airline. All in all, I believe that Gordon Gekko, though a greedy corporate raider, is a great strategist who brings value to the shareholder while having many skills as an effective administrator sans one in human skill that leads to his eventual downfall.

The term ‘corporate raider’ or ‘takeover artist’ often has a negative connotation associated with it in the English language. I believe this is due to one of the ways that corporate raiders improve the shareholder value of a company involving the loss of jobs; this is the dismantling of a company and liquidation of its assets, effectively destroying it. This option is often chosen when a company has little or no potential and the sum of the value of the company’s individual assets are more than the company as a whole. Rather than using the newest perspective of corporate strategy as described by Porter in ‘Corporate Strategy: A Conceptual Framework’, I believe it would be better to use “the last major perspective on corporate strategy—value based strategy, and … its emphasis on optimizing shareholder value” when evaluating corporate raiding, because each business is treated as a discrete entity. Though jobs are lost when liquidating a company, the ultimate goal of a company from a value based strategic perspective is to maximize shareholder value. By these guidelines, Gekko is a skilled strategist, ignoring his immoral and illegal methods. In Gekko’s speech during the Teldar Paper Co. annual meeting, he reports, “In the last seven deals that I was involved with, there were 2.5 million stockholders who have made a pre-tax profit of $12 billion.” Through his work, Gekko effectively created a greater economic value out of companies. I do not agree with the movie’s portrayal bias of Gekko’s sole purpose being to dismantle companies in order to make money fast. Rather, his sole purpose is to maximize a company’s economic value. For example, Gekko does not dismantle Teldar Paper Co. after acquiring it. Rather, he restructures the management and company’s strategy because he sees potential in the company. In order to further illustrate my case, I would like to take a look at the Blue Star Airlines deal. Blue Star Airlines was a new and relatively small player in the airline industry with 80 medium body jets and 300 pilots flying to Florida, Canada, the Northeast, Caribbean, with great slots in major cities. The current situation with the airline, as Bud Fox put it, involved “half-assed management being decimated by a price war they cannot win…They are ripe to fall.” Blue Star Airlines had losses of $20-30 million a year. At first, Gekko was not a fan of the idea, citing high risks involving fuel prices and union labor. However, Bud Fox countered pointing out that he could create what Porter would call a ‘unique and valuable resource.’ By convincing the unions that they would be destroyed once the company filed Chapter 11 bankruptcy, he negotiated a ‘20% wage cut and 7 more work hours per month across the board.’ If the company was profitable in a year, salaries would go back up and the company would enact a profit sharing plan with employees. The rest of Bud Fox’s suggested strategy involved modernizing into a computer based system that would increase revenue by millions of dollars, spending a lot of money on advertising, and expanding and reorganizing the feeder schedules. This would supposedly lead to Blue Star Airlines beating the majors in a price war. Gekko decides to go along with the plan, but afterwards, re-evaluates the company and changes his mind, deciding to dismantle the company and its assets. From a strategic point of view, I think Gekko made the right decision. Blue star was going to fail anyways due to the lack of a long term corporate advantage. Rather, Bud Fox’s suggestions were merely increases in “operational effectiveness,” described in Porter’s ‘What is Strategy’ to be “performing… activities better—that is faster, or with fewer inputs and defects—than rivals.” Unfortunately, the labor wage cuts were only temporary. Even if they remained in place, eventually other airlines would be able to negotiate price cuts from their unions. The productivity frontier would shift outward and competitive convergence would occur. The same would happen with computer modernization. Overall, these actions would only allow for a one time value creation rather than a corporate advantage. Instead, Bud Fox should have come up with a strategic plan for the airline that involved the creation of ‘a unique and valuable position, involving a different set of activities’ and a ‘fit among (the) company’s activities,’ according to Porter. My suggestion in this case would be to position as a low-cost airline providing affordable and timely flights with decent accommodations. I suggest this idea because it would utilize Blue Star’s valuable resource of cheap labor and leverage it into a strategic advantage, while allowing Blue Star to survive in a market that is initiating a price war.

In addition to being a great strategist, Gekko has many skills of an effective administrator; though, he has one fatal flaw in human skill that leads to his eventual downfall. According to Katz in the article ‘Skills of an Effective Administrator’, the “three-skill approach” involves technical, human, and conceptual skill. Technical skill is defined as “an understanding of, and proficiency in, a specific kind of activity.” Since Gekko started out as a stock broker and worked his way up to being a corporate raider, he has a background of technical skill. However, this is not a very important skill for him, because, according to him, he has the best trader in the world working for him. This concept is supported by Katz when he writes “as the administrator moves further and further from the actual physical operation, this need for technical skill becomes less important, provided he has skilled subordinates.” Regarding conceptual skill, Katz states that it involves “recognizing…relationships and perceiving the significant elements in any situation.” It can be assumed that Gekko has amazing conceptual skill. Not only do I agree with his assessment of Blue Star Airlines, but his record of success as described in the previous paragraph speaks for itself. Lastly, and very importantly, is human skill. Katz describes this as “the executive’s ability to work effectively as a group member and to build cooperative effort within the team he leads.” In particular, Gekko excels as a motivator. Not only is he enthusiastic and has a captivating personality, but he rewards his employees graciously. Gekko states to Bud Fox, “Now you do good, you get perks… lots and lots of perks.” Gekko buys Bud Fox fancy meals, suits, and even helps set him up with the girl of his dreams, Darien Taylor. On the other hand, Gekko’s weakness is a lack of morality. Not only does he break the law, but he cheats on his wife and hits on Bud Fox’s girlfriend. Katz emphasizes in his article that human skill “cannot be a ‘sometime thing.’” This lack of morality by Gekko leads to a lack of “cooperative effort within the team he leads,” and Bud Fox’s eventual betrayal on the Blue Star Airlines deal.

In summary, Gordon Gekko in Wall Street, is a great strategist with many skills characteristic of an effective leader but lacks the human skill of morality. Coming to this conclusion has afforded me a thorough opportunity to apply diverse concepts relating to strategy discussed in our classroom setting, and it was a very enjoyable experience. Thank you for this opportunity.