For our second discussion paper, we are expected to watch the movie Other People’s Money and write about its connection to entrepreneurship. Other People's Money (OPM) is a term used to describe financial leverage by using borrowed capital to increase potential returns. The movie, directed by Norman Jewison, follows Lawerence Garfield and his process of taking over the New England Wire & Cable company. Garfield is the president of Garfield Industries, and he owns a large portion of the wire company's shares. The New England Wire & Cable division is a failing part of a company owned by a small family from Rhoad Island. Although the Wire & Cable division isn’t making much money, it employs many of the citizens in their town. Without this division, many families would lose their jobs, homes, and food. Garfield just wants to dissolve the Wire & Cable division; he doesn’t care about the families employed there. Garfield would instead invest his money in a growing business and not a failing one. The main point of this movie is to show the impact shareholder decisions, and corporate restructuring can make on companies and individuals.
Lawrence Garfield is a famous corporate raider in the stock market who buys up companies and sells their assets. This process has made Garfield a wealthy guy. Garfield identifies his next target as the Wire & Cable Company in Rhoad Island; he realizes they are a dead business and his money is worth more elsewhere. Andrew Jorgenson and his family own the Wire & Cable Company. Andrew isn’t sure how to handle Garfield, so he asks his stepdaughter Kate, who is a big-city lawyer, to help them. Andrew sends Kate to discuss and make deals with Garfield, but Garfield is attracted to Kate. Kate decides to use that to her advantage and attempts to make a deal. Kate tries to change Garfield's mind, but he isn't budging, so she sends her mother. Kates's mother, Bea, offers Garfield 1 million dollars in Greenmail to leave their family alone. Garfield doesn’t take her up on her offer, and he even threatens to move the process faster. The President of the Wire & Cable Company, Bill Coles, decides to make a deal and give his shares to Garfield in exchange for a million dollars. The value is if the claims make a difference and shut down Wire & Cable, Bill gets a million dollars. If Bill's claims don’t make a difference, Garfield will still pay him ½ million dollars for the claims. Garfield and Andrew Jorgenson both agree that the takeover will voted on at the Annual Shareholder meeting. This leaves the decision in the hand of longtime friends and investors. On the day of the meeting, hundreds of shareholders and investors attend the meeting and vote on what they want. Andrew tells the audience that Garfield doesn’t care about them; he only cares about money and never creates new products. The audience is on Andrew's side until Garfield stands up. Garfield discusses how the shareholders should get whatever money they can from their stock because the company is about to collapse. Andrew convinces the shareholders that the Wire & Cable Company is dead and there is nothing they can do about it. At the end of the meeting, the votes counted. Garfield is given the controlling interest in the company. Bill Coles's shares did not help Garfield, so he only gets paid ½ million dollars. Bill Coles betrayed his company for nothing. Although the Wire & Cable company will be shut down, Kate has an idea to save it. Kate made a deal with some Japanese businessmen that would give her resources and money to make airbags. At this time, airbags were not a requirement of cars, so they weren’t prevalent. Kate was smart enough to jump on the gun before others knew about it.
When considering the movie Other People’s Money, there are multiple sides to the story to look at. There is Lawrence Garfield’s side of the story, Kates's side of the story, Andrew’s side, etc. This allows the report to show the different relationships entrepreneurship and society have with each other. Lawerence's side of the story is about how he only cares about money and taking down the Wire & Cable company, but its also about how Garfield actually cares about the shareholders. Garfield wants the wire companies, and shareholders, to be smart with their money and invest money in growing businesses. It also shows how quickly Garfield was ready to destroy the wire company before he met Kate. Garfield only extended the takeover process because he was interested in Kate, while Kate was seducing Garfield to give her family more time. Kate’s side of the story shows how her education has taught her that the wire company is dead and she should just give up. She knows that her family should dissolve the wire division and invest their money in something more modern. Kate decides that she cares about her family and their community more than she cares about business. She knows her family's community will suffer without the Wire & Cable company, and many families will lose their only source of income. Kate doesn’t give up on her family and continues to find new ways to help them. The movie also shows how Kate is benefitting from her society. The Wire & Cable company pays Kate to help them with Garfield and their case. The longer the case goes on, the more Kate gets paid. Society is another factor that benefits from the Wire & Cable Company; this is because it provides jobs for people in their community. The wire company receives labor while the community gets a growth in income. An increase in community income can lead to an increase in affordable education and safe housing. Greenmail is an entrepreneurial term that is used multiple times in this movie. Greenmail is the action of buying enough shares of a company to challenge a firm's leadership; this usually happens when there is a threat of a hostile takeover. The wire company decides to do a greenmail deal and save their company. The character Bea offers Garfield 1 million dollars in greenmail to take control of the firm's leadership. Bea believes that if they take control over the firm, they can improve it and start making money. Garfield declines the offer because he doesn’t believe it will benefit the shareholders. Garfield’s obligation is to the shareholders, he wants them to have smart investments. In the movie, Garfield stated, “The company was dead when I got here.” The shareholders are able to make their own decisions, but voting against the wire company is the wrong decision. This movie gives crucial insight to people who are interested in becoming an investor. For example, maximizing your wealth should be a top priority when investing. Garfield is maximizing his wealth when he decides to dissolve the Wire & Cable company. In a small community, a company maximizing its wealth can appear like murder. While in the stock market, it’s just another day. It is a brilliant idea for entrepreneurs not to forget that their success connects to society, like other businesses, individuals, and organizations. If your business doesn’t have a relationship with society, it will not flourish. You have to constantly nurture these relationships to stay in the business world.