THE MANAGER'S MEMO

FROM: E. Grainger, Vice President
TO: F. Blackstone, President
RE: Potentially Damaging Resignation

Pat McDonnell has just submitted her resignation to me, effective in 2 weeks. Because Pat was responsible for designing Galaxy Detective, our most successful video game to date, this departure will be a great loss for the company. I am particularly concerned because a major distributor of children's games and video products has just asked us to submit a bid to produce another game similar to the one Pat designed. I believe that two other companies are also bidding on this contract.

As you know, Galaxy Detective currently represents over 90% of our business. I am afraid that, without Pat, our ability to produce similar products will be seriously compromised, at the very time when getting new products into the market is extremely important. Pat has hinted that for a substantial raise plus a stock interest in the company, she would reconsider her decision to resign from the company. To me, this sounds vaguely like blackmail. I find these tactics unpleasantly coercive. What do you advise that I tell Pat?

CASE DISCUSSION QUESTIONS
Assume that you are the president, and write a response to the vice president's memorandum. What power does Pat McDonnell have relative to the company? What power, if any, does the company have relative to Pat? Use your answers to these questions and your knowledge about power to guide you in considering the alternatives available to the company.