Reference no: EM133359468

Case Study: "Risk is something that comes naturally to Larry Ellison, Chairman and CEO of Oracle Corp. Since 1977, when he and co-founders Bob Miner and Ed Oates started the company, which harnessed the power of relational database technology and, ultimately, paved the way for enterprise computing, Ellison has been making waves¾in the industry and with rivals. For him, nothing is off limits, and corporate America, particularly the financial services sector, has benefited as a result. Oracle is the first software company to develop and deploy 100 percent internet-enabled enterprise software across its database, business applications, and application development and decision-support tools."

Over the years, Larry Ellison has used his power and influence to grow Oracle and have a profound impact on the computer software industry and beyond. Ellison wants to extend Oracle's reach wherever possible. In a conference call with stock analysts in mid-2007, Ellison said that "Oracle wants to be the leader in such areas as communications billing, utility billing, and core banking. 'We're going to expand the number of vertical industries where we have industry-specific applications and we're going to do that via acquisition.' "

Ellison's penchant for growth through acquisition is powerfully captured in the nickname The Pirate, which was bestowed upon him by independent consultant and Network World newsletter author Dave Kearns. This moniker is rooted in the 2006 rumor that Oracle was trying to acquire Novelle and that Ellison was "muscling into Red Hats action by undercutting the company's support prices, in an offering called Unbreakable Linux."

"Ellison ¼ has been changing the tech industry for years. Though skeptics doubted he could build a good tech giant through roll-ups, Ellison has kept rolling and rolling, making Oracle the world's largest provider of corporate software." All of these acquisitions contributed to Oracle's considerable successes in databases, applications, and middleware. However, "the software stage simply wasn't expansive enough for Ellison. Not that he grew bored with software and went off looking for some new diversion to soak up his vast levels of energy and curiosity. Rather, the software-only toolbox possessed by Oracle before it acquired Sun ¼ was simply becoming insufficient to drive the profound computing industry changes and disruptions envisioned by Ellison and demanded by some cutting-edge customers."

Ellison's efforts to exercise power and influence extend far beyond acquiring¾often through hostile takeover¾other business. For instance, Ellison's combative actions subsequent to the forced resignation of Mark Hurd as Hewlett-Packard's CEO in August 2010 after an investigation into allegations of sexual harassment by Hurd shows how Ellison uses his power and influence in other ways. Ellison publicly blasted HP's board for forcing Hurd's resignation¾and then he hired Hurd to work at Oracle. Leo Apotheker, Hurd's successor as Hewlett-Packard's CEO, quickly became the target of Ellison's wrath. Apotheker was immediately accused by Larry Ellison "of overseeing intellectual-property theft in his previous job at software maker SAP AG" but Apotheker maintained that Ellison's allegations were propaganda and patently untrue.

Subsequent to his initial accusation about Apotheker, Ellison "blasted the HP board and Apotheker several times, questioning their competence, intelligence, and integrity." Although Ellison carefully confined his earlier tongue lashings to HP's board and to Apotheker, he just as carefully avoided criticizing longtime strategic partner HP itself. Then in December 2010, when Ellison announced that "Oracle had achieved a new world record in database speed, Ellison hammered HP's hardware products in general and its servers in particular, ridiculing them as being pitifully slow."

According to Ellison, the best that HP's equipment was capable of was 4 million transactions per minute, whereas Oracle-Sun's new system would be capable of 30 million transactions per minute. Continuing, Ellison asserts: "We're gonna (sic) go after them [HP] in the marketplace with better software, better hardware, and better people, and we're gonna (sic) win market share against those guys in the database business, in the middleware business, in the server business, and in the storage business because we have better products."

Bob Evans, writing in InformationWeek in August 2010, observed: "Whether you admire Oracle and its celebrity CEO or wish he'd go for a 10-year sail in the South Pacific, his ability to influence competitors and customers is profound¾and, in my opinion, is on the verge of expanding dramatically." Larry Ellison's lust for dominance goes further still. Writing in Forbes Magazine in March 2011, Victoria Barrett observed that "Ellison has long desired to undo Microsoft and become, as he has put it, the 'number one' software company in the world. He's not there yet, despite having spent some $40 billion to buy up 75 hardware and software companies over the years."

Will Larry Ellison continue to be successful in his quest for Oracle's dominance? Andrew Bary, reporting in Barron's in March 2011 may provide an important clue regarding what the future holds¾Bary says that Ellison "remains as combative as ever."

Questions:

1. What forms of interpersonal power does Larry Ellison use and how does he use them?

2. How do the two faces of power relate to Larry Ellison's actions?

3. Does Larry Ellison use power ethically? Explain your answer.

4. What influence tactics does Larry Ellison use? How does he use these influence tactics?

5. Does Larry Ellison use power effectively? Explain your answer.