Case Study: Carlos Slim's Leadership, Customer Lock-in, and Power

This case study delves into the life and business practices of Carlos Slim Helu, examining his personal philanthropy, leadership styles, and strategic business decisions. The study explores Slim's philanthropic endeavors, highlighting his belief in giving back to society and supporting his business interests. It analyzes his leadership styles, including task-oriented, autocratic, and people-oriented approaches, and how these styles contribute to the success of his companies. Furthermore, the case study explains the concept of customer lock-in, using Nespresso as an example, and how Slim's Grupo Carso implemented similar strategies. It also discusses the motivation of workers under Slim's leadership, referencing management principles and theories like Maslow's hierarchy of needs and Herzberg's two-factor theory. Finally, the case study evaluates the types of power Slim possesses, including positional and personal power, and their impact on his business operations. The study concludes by emphasizing the importance of philanthropy and ethical decision-making in Slim's business philosophy.

CASE STUDY

Table of Contents
INTRODUCTION...........................................................................................................................1
Personal philanthropy of Carlos Slim.........................................................................................1
The Concept of customer “lock-in” that is adopted by another company..................................2
Leadership styles in context with Carlos Slim ...........................................................................2
Motivation of workers to follow these leadership styles..........................................................3
Type of power that Carlos Slim possess and the sources of power(360)...................................7
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................8

INTRODUCTION
This case study is about the richest man in the world Carlos Slim Helu. This man owns
more than 89% of telephone market in Mexico and accounts 7.5% of the states gross domestic
product(GDP).In this case study we will examine the personal philanthropy of Carlos Slim in
support to his business interest. The leadership styles that is adopted by this man in order to
expand his business will also be discussed in this case study. This case study will explain the
concept of lock-in customer by giving suitable example. The capability and power of Carlos
Slim will also be evaluated with this case study.
Personal philanthropy of Carlos Slim
In the case study Carlos Slim believes in the idea of giving rather than on taking from
others. As per the Forbes Magazine he is one of the richest man in the world. The one ingredient
that makes him so successful is his modesty. He wants to enhance the well-being of the people
by helping them to solve their issues. He believes that he would take nothing with him when he
dies all his business and money will stay. The Grupo Carso organization of Slim operates on the
outskirts of Mexico City (Ferrari, 2017). He is the foremost collector of Rodin sculptures. His
interest is also in arts and sciences and philanthropy. With the help of “just cause” philanthropy
Slim motivates others to deliver best performance and make effective decisions regarding the
success of business.
Slim believed in the idea of philanthropy and provided help,support and money for a good cause
in a business. For an instance in the given case Slim does not work for hardware but he invested
in software companies in order to help and support his friends. This clearly indicated that he
believed in the concept of philanthropy and worked for the betterment of well-being .The
corporate social responsibility is the initiative that is taken by the corporation in order to take
responsibility regarding factors such environment,philanthropy and ethical labour practice at
workplace .The corporate social responsibility and philanthropy are not same as in corporate
social responsibility other factors that are related to environment,ethical practice at workplace
are also included. The word ' ethical' helps to distinguish between what is right and what is
wrong. In the business the correct course of action need to be taken .In this case study Slim
ensure that ethical decision are taken in the business .He also ensure that factors such as
regulation are structured favourably in his company. Slim did not make fortune in the business
by making use of new technology such as e-business and computing (Carlson, de Vries and
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Taylor 2017). He followed his interest of infrastructure led sectors of business in
telecommunication and mining.
The Concept of customer “lock-in” that is adopted by another company
In this case study the implementation and formulation of very simple business model lead
to the rise of Grupo Carso. A meeting was called by Slim in 1990 where the business models was
presented to all the partners for the mobile phone sector. After the name of razor company this
models was named as “ Gillette plan”.In this model;s the customers are locked-in to the business
as Gillette sells razors to the customers and lock-in the customers by selling blades for that
customer. A high level of brand loyalty is ensured by this effective model.
The concept of customer “lock-in” is used to hold the customers in the business for a
longer period of time. This locking concept can help a firm to earn profit as the customers will
remain loyal to the company for a longer time period. In the business the customers are mainly
locked due to commitments in the contract,durable purchase,training regarding the specific
product,loyalty programs etc. In the contractual commitment , a certainty is made between both
seller and buyer but they create switching costs and lock-in. In this case the switching cost is the
damage for breach of contract. In business to business commerce the contractual commitment
have been ubiquitous. It has been experienced by the consumers more frequently (Reich, 2016)..
One such company that used the concept of customer “lock-in” is Nespresso .With a base
product Nespresso lure customers into their Ecosystem. The base product Nespresso coffee
machines are sold at a particular price and are available at major retailers so that anyone can
purchase it. The juicy margins are absorbed by the company as the highly profitable pods of
coffee are only sold through owned sales channels ales of Nespresso. Until 2015, there was no
way to buy pods from another manufacture as the exclusive rights were owned by Nespresso to
produce them. Thus locking customers in for that product.
Leadership styles in context with Carlos Slim
In this case study, the success of companies is attributes to the style of leadership under
the control of Carlos Slim. In some instances Slim adopted the task-oriented and autocratic styles
(Helo,Gunasekaran and Rymaszewska, 2017). However the people oriented and transaction
styles are also adopted by Slim. In the task-oriented leadership that is performed by Slim in order
to pay attention on the tasks that need to be done so as to meet the goals and to achieve desired
performance of businesses. The jobs need to be completed in the task-oriented leadership. The
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main focus is on the task that have to be done. The structure,plan and schedules have been made
in this leadership styles. The various elements are include in the task-oriented leadership such as
the plans and schedules are created in detail. The goals are prioritize in order to see which tasks
need too be done first. In order to make sure that project is on track the tasks are reviewed
constantly. For all aspects of the project the tight schedule is set .All the elements that are related
with the project are review with the employees.
In the people-printed leadership the decisions are made by the employees. A little
guidance is given to employees ta workplace so as to make effective decisions. The workers that
are working in the company feel empowered and meaningful (Klein, 2017). A better
understanding in the staff developed by the management by encouraging feedback and ideas
from the employee.
The autocratic leadership that is followed in this case study .Under this leadership all the
decisions are taken and controlled by one person and a very input is taken from other members
of the group. Based on the belief of owner the decisions are made in this leadership style. The
suggestion of other employees and advice is not involve in this leadership. When the decisions
need to be made quickly this style is adopted by organization.
In the learning style used in the case study,the needs of people and relationship building
is duty of country club manager ,manger looks at building commitments to the shared
purpose,the middle-of the road manager focuses to maintain a balance on work output and
morale. The efficiency of tasks and operations are looked after by authority-obedience manager.
Motivation of workers to follow these leadership styles
The motivation to the workers to follow these leadership styles can be given through the
principle of management (Hur, 2017). The hint to leadership style and philosophy of Slim was
given with the help of these management principles. These principle are as follows-:
 The structure of organization need to be simple. The opportunities can be responded
quickly and flexibly if the hierarchies in organization are minimum. The decisions can be
made more rapidly and effectively.
 The difficult economic constitution in the company can strengthen the company and a
great scope of capitalization is offered to business that can contribute towards the growth.
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 The cost of the business can be reduced and efficiency can be increased and brand loyalty
of customer can be maintained by making use of modernization,simplicity and
improvements in the business.
 The owner and manger both can take initiative for the expansion and growth of business.
The growth of company should not be limited to the parameters of the owner.
 The organizational goals and culture can be achieved by the collective will and active
collaboration of workers. All the workers need to work collectively so as to achieve the
desired goals of business (Klein, 2017).
 The main focus of the business is not on earning money but is to make profit in the
market. Rather than money re-investment need to done on profits.
 The innovative and creative ideas and plans need to be made in the business as creativity
solves all the issues of the business and can lead to growth and profit.
 A positive attitude in the business need to be maintained as it will help shape the culture
of organization .In a business one should remain optimistic in order to achieve the
objectives of the company (Healy, 2016.). Education,training,and development is given
by Slim in order to support these management principles in the company. In a
company,the emphasis on teamwork and the role of individual in the team work.
The maslows theory of motivation can be used in order to motivate the employees. The
motivations to on the various needs can be provided by using this theory
Physiological needs - All the basic needs such as air,water,clothing and shelter (Oishi, 2017).
Safety needs – All the needs regarding safety and security such as financial security ,job
security etc.
Social needs - These include care,support,friendship etc.
Esteem needs – These consider needs related to power,status ,confidence,self-respect etc.
Self-actualization – This include self-fulfilment,realization of personal potential etc.
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Illustration 1: Maslow's motivation theory
(Source:Maslow's motivation theory, 2017)

The Herzberg two-factor theory can be used to motivate the employees. As per this
theory,there are certain factors of job that lead to satisfaction whereas there are some factors that
lead to dissatisfaction. The job factors were classified by Herzberg into 2 categories
Hygiene factors - These factors are essential for the existence of motivation at workplace. For
long-term the positive satisfaction cannot be achieved. They can lead to dissatisfaction if these
factors are absent at workpeople (Prabhakar and Yaseen, 2016). The environment of job is
described by these factors. The working conditions,security of job etc are employed in hygiene
factors.
Motivational factors - In order to give a superior performance these factors motivate employees.
The growth,recognition,responsibility is included in motivational factors.
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Illustration 2: Herzberg theory of motivation
(Source:Herzberg theory of motivation, 2017.)

Type of power that Carlos Slim possess and the sources of power(360)
The power can be termed as the capability to make things happened the way you want or
to get another person do the things you want to do. There are basically two types of power that
is position and personal power. In the position power the owner takes advantage of his positions
in order to get his work done (Shimoni, 2017).To show his position power the rewards is given
by him to employees and other staff in order to get the work done. He also shows his position
power by punishing staff if the work is not done as per his desire. He also thinks that things
should be dome as per his decisions and employees need to follow it as he is the boss. In this
case study in many ways Slim use his position of power so as to influence others what they
should to do. The personal power is also used by Slim in this case study as he is an expert who
has a special knowledge and information (Reich, 2016).
CONCLUSION
Thus summing up this case study it can be concluded that Slim believes in the idea of
philanthropy so as to help the others to make effective decisions. He works for the well-being
and care of other people. The concept of customer “lock-in” can be used to grab a customers for
a longer period of time. Many leadership styles are used by Slim in the business. The task-
oriented leadership help the business to focus on the occupation of particular task in that time-
period. The people oriented leadership style allow the employees and staff to make decisions.
The various theories such as maslow's theory is used by Slim to motivate employees. Both
position and personal power is used by Slim in order to get show his power at company.
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REFERENCES
Books and journals
Carlson, J., de Vries, N.J. and Taylor, A., 2017. Go with the flow: engineering flow experiences
for customer engagement value creation in branded social media environments. Journal
of Brand Management. 24(4), pp.334-348.
Ferrari, J.R., 2017. Male and female ministers: Comparing Roman Catholic and Methodist
deacons on personality structure, religious beliefs, and leadership styles. Journal of
Pastoral Care & Counseling. 71(1), pp.5-11.
Healy, K., 2016. A Theory of Human Motivation by Abraham H. Maslow–reflection. The British
Journal of Psychiatry. 208(4), pp.313-313.
Helo, P., Gunasekaran, A. and Rymaszewska, A., 2017. Value Chain Effects. In Designing and
Managing Industrial Product-Service Systems (pp. 83-87). Springer International
Publishing.
Hur, Y., 2017. Testing Herzberg’s Two-Factor Theory of Motivation in the Public Sector: Is it
Applicable to Public Managers?. Public Organization Review, pp.1-15.
Klein, G.A., 2017. Sources of power: How people make decisions. MIT press.
Oishi, K., 2017. Contemplation and Philanthropy. Coleridge and Contemplation, p.123.
Prabhakar, G.V. and Yaseen, A., 2016. Decision-making styles and leadership: evidences from
the UAE. International Journal of Management Development. 1(4), pp.287-306.
Reich, R., 2016. Repugnant to the Whole Idea of Democracy? On the Role of Foundations in
Democratic Societies. PS: Political Science & Politics. 49(3), pp.466-472.
Shimoni, B., 2017. Mega Donors’ Perspectives on Philanthropy and Government Relations in
Israel. Society, pp.1-11.
Online
Maslow's motivation theory. 2017. [Online]. Available through:
<https://www.simplypsychology.org/maslow.html/>. [Accessed on 28th September 2017].
Herzberg theory of motivation. 2017. [Online]. Available through:
<https://www.linkedin.com/pulse/herzbergs-motivation-hygiene-theory-ashwini-dasari/>.
[Accessed on 28th September 2017].
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