1.

You have studied company valuation, capital structure policy, financing decisions
and mergers and acquisitions in your MBA classes. How does this movie change
your learnings with respect to these concepts?

We have always known that all the concepts that we study in a book may not always be
directly applicable in real life. Thus, blindly following these concepts may be dangerous
because often the decisions are based on the individual circumstances which could be
affected by their emotions, stage of life, psychological conflicts, performance of other
stakeholders, etc. In the movie, the main objective of the firm is to win (which is often
the case with text book knowledge which lead us to what strategies will be fruitful to
us and never talk about what won’t be) and keep on with the luxurious way of doing
business which backfired with a series of unsuccessful valuations and resulted in dirty
ways for Johnson to do business.

2. Identify and describe behavioural biases that you noticed in the Film.

The first bias that is clearly visible is Authority Bias. The journey of Ross is from rags
to riches and he is an extremely successful self-made guy in his own right. However,
as the story progresses, we learn that he overestimates his competence and power over
others. In view of making changes so that the company is not stagnant he would relocate
workforce, shift departments, etc referred to in the movie by the term ‘shit stirring’. To
everyone he would seem to be a revolutionary man with a bright company future even
without going to the depth of the worth of these changes. Ross is also seen endorsing
premier cigarettes despite a lack of evidence for their efficacy and making an impulsive
decision for LBO as well.

When all of the information on Henry Kravis is reviewed and actions are taken based
on it, the Envy Bias is discovered. When Ross departs to another firm to handle the
LBO deal, Henry Kravis' ego is damaged. When individuals favour Henry Kravis
because he is well-known for LBOs, we might notice this bias. The issue of unbalanced
incentives and self-interest is also present, as evidenced by Ross' avarice, which finally
led to him losing the LBO to Henry Kravis. When Peter is dealing with hostility to get
the job done, he exhibits bias resulting from envy.

3. How does the movie affect your perception about the corporate world?

When people are desperate for something, they will go to extremes. Being engrossed in
the craziness is a certain method to avoid being noticed. So much money was
squandered on pondering a price to pay. Few took a step back to consider the
consequences of the company's growing debt. In most cases, ruthlessness and greed for
money and power triumph over the greater good. Despite the fact that the corporate
world is meant to be more structured/ordered than everyday life, we can observe that
they are also prisoners to basic human tendencies. People constantly go behind each
other's backs, and one's loss is frequently another's gain. It highlights the fight of egos
and the petty politics that people engage in in order to outdo one another.