FACULTY OF BUSINESS MANAGEMENT

DIPLOMA IN OFFICE MANAGEMENT AND TECHNOLOGY

OBM260: ORGANIZATIONAL BEHAVIOR

GROUP CASE STUDY

GROUP: KBA1184I

PREPARED BY:

STUDENT NAME STUDENT ID

NATASHA AMIRA BINTI ANUAR 2019426022

NURATIKAH BINTI AMRAN 2019217462

NAJIHAH BINTI ZULKIFLI 2019244528

AYU WAHIDA BINTI ZOLKAPLI 2019443534

PREPARED FOR:
MADAM NURLIYANA ABAS

DATE OF SUBMISSION:
14 JULY 2021
 TABLE OF CONTENTS

NO CONTENT PAGE

1.0 ACKNOWLEDGEMENT 1

2.0 SYNOPSIS 2

3.0 CASE STUDY QUESTIONS

3.1 Question A

3.2 Question B 3– 9

3.3 Question C

3.4 Question D

3.5 Question E

4.0 APPENDIXES 10

5.0 REFERENCES 11
1.0 ACKNOWLEDGEMENT

First and foremost, we are grateful to Allah because give us a chance to finish this report.
We also would like to thank our lecturer in subject of behavior in organizations (OBM260), Madam
Nurliyana Abbas for the valuable guidance and advice. She inspired us greatly to work on this
project. We also would like to thank her for showing us some examples related to the case study.
Besides, we would like to thank the authority of University Technology Mara (UiTM) for
providing us with a good facility to complete this project. This report is based on the methods
given by the university.
Finally, an honorable mention goes to all friends in the group for their understanding and
support in completing this project. Without their help in the work group, we would face many
difficulties while doing this project.
Once again, thank you very much, may Allah SWT bless you all.

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2.0 SYNOPSIS

I believe that most people have trouble dealing with issues of power and influence in the
workplace. This is because some people might have made some mistakes in terms of power and
influence, such as failing to successfully influence and manage working relationships, as well as
failing to use existing power and influence. For example, Bruno Iksil who is known for his
aggressive trading style faces the problem of being accused of being the cause of trading losses
even though he has long served with JP Morgan Chase & Co.

On the other hand, usually leaders use power by instilling a feeling of hierarchy in their
organization and using threats to compel team members to do something. Therefore, this power
is gained through establishing the belief in employees of the fear that if they do not cooperate,
they will be fired or lose their position. Moreover, when a powerful leader gets control, subordinate
employees will believe they have no choice but to do the work and the task assigned. For
example, Bruno Iksil explains that the losses suffered by the CIO are not only from his actions but
there are superiors involved in the trade he manages that is the senior management of the CIO.
This makes it clear that he is only carrying out orders given by those in power.

Last but not least, influence is the act of producing an effect without force or direct execution of
an order. In contrast, influence is the effect a person or action experiences on beliefs about the
attitudes and actions of others that result in a completely voluntary approach to getting things
done. Using positive affirmations and incentives makes people feel that they have good choices
about the work they need to do and the means they need to get it done. In conclusion, to give
employees more control over their work, threats are exchanged for persuasion and negotiation.
An example of influence found in this article is Bruno Iksil known as the CIO Group's lead trader
that earned the nickname as "London Whale" by investing heavily in the derivatives market in his
hometown of London. He has the advantage of influence because his success and reputation are
admired by various parties in the world of trade before the losses as much as 7 billion occurred.

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3.0 CASE STUDY QUESTIONS

3.1 QUESTION A

What sources and contingencies of power gave Bruno Iksil considerable power in
the CIO group at JP Morgan. List and explain each power and give an example from
the case study above.
By: Najihah Zulkifli

The contingencies of power that gave Bruno Iksil considerable power is visibility because he is
known with his expert power. Visibility power is known as visible forms of power that are contests
over interests that are obvious in public settings. Specifically, Bruno Iklis is famous with his
successful trade and reputation in trading that make him leverage the power he has in the CIO
group at JP Morgan. There are five types of source of power, but Bruno has three of them that
give him considerable power in the CIO group at JP Morgan such as referent power, expert power,
and legitimate power.

First, the referent power is often known as charisma which is the ability to attract others and win
their admiration. In some cases, a group of people look up to or admire a specific person, and, as
a result, they follow him or her primarily because of his or her personal qualities, attributes, or
reputation. For instance, Bruno Iksil gains referent power when others trust what he does and
respect him for how he can win profitable trades. Therefore, he was admired for his success and
reputation in trading.

Second, expert power is the knowledge and skill of a particular person. As the person has
experience, knowledge in particular areas, and become thought leaders in those areas, the
person begins to gather expert power that can be utilized. For example, Bruno Iksil has the
experience of his successful trading such as "Caveman" and "the London Whale" which people
see as an expert in that field.

Third, legitimate power which comes from having a position of power in an organization, such as
being the boss or a key member of a leadership team. In other words, legitimate power exists
when others submit to the particular person because they feel that the person has a right to exert

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power in a certain domain. For example, Bruno Iksil is the lead trader in CIO group’s London
operations which makes others comply with the requests these individuals make because they
accept the legitimacy of the position.

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 3.2 QUESTION B

What influence tactics were used to hide the financial losses. List and explain
each types of influence tactics used.
By: Ayu Wahida Zolkapli

1. The influence tactic used to hide the financial losses that occur is the Upward Appeal tactic.
Bruno Iksil used his reputation and worked together with a Senior CIO manager who was also
secretly involved to start the risky trade and hide bad facts that actually happen by delaying and
withholding reports to top management. The conclusion is this tactic will delay JP Morgan's to
realize and be aware of what really happened.

Furthermore, this Upward Appeal tactics occurred because Bruno Iksil was repeatedly instructed
by the senior management of the CIO to implement this trading strategy despite having repeatedly
warned that there was a high probability of incurring losses, but they still insisted on telling him to
do the trade. For that reason, Bruno Iksil took action for aggressively risk the market position
without the permission and does not involve of a higher authority that is JP Morgan.” As a result
of the approval from the CIO Senior Manager, JP Morgan bank incurred a loss of 7 billion from
bold and aggressive bets of 100 million credit default losses caused by this “London Whale”.

2. Other than that, bruno iksil also uses information control tactics to hide the financial losses that
occur. This tactic can be seen when Bruno Iksil underestimates the size of his losses and he tries
to keep the issue out of JP Morgan and avoid scrutiny by headquarters. He hid the problem
because he was confident that he could overcome the problem he was facing and get back the
money he lost in the trade.

Moreover, Bruno Iksil and his assistants also try to hide these losses by distorting trade values
as they have discretionary power in estimating profits and losses and show losses as gains with
the aim of recouping future losses as well as efforts to reduce loss exposure.

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3.3 QUESTION C

Was organizational politics evident in the events described in this case? List and
explain the evidence and give an example from the case study above.
By: NurAtikah Amran

The first organizational politics evident in this case is sacred resources. In this case when trading
losses, Bruno Iksil relies on CIO’s senior management as safeguard to his resources and to
maintain the status quo in the company. An example from the case is after Bruno Iksil was fired,
he claimed that CIO’s senior management were involved in these trades. Bruno Iksil added that
his position was to execute a trading strategy that had been initiated, approved, mandated, and
monitored by the CIO’s senior management. That was the reason he gets the position as the lead
trader in CIO group’s London operations because CIO's senior management approved.

The second organizational politics evident in this case is complex and ambiguous decisions.
In this case iksil and his assistant avoided inspection from head office by underestimating the size
of those losses. They hid information about their trading losses, hoping that this would buy them
time to recoup those losses before the top management discovered this problem. Thus, U.S
government documents indicate that Iksil’s boss actively encouraged this practice. Besides, JP
Morgan’s chief investment officer claimed no knowledge of the problems in the London CIO office
and complained that some members in the London team hid from her important information
regarding the issue. According to that statement, JP Morgan’s Chase & Co. took action by
deciding to fire Bruno Iksil as their lead trader of CIO group’s. For example, Bruno Iksil was fired
because there is a lot of evidence which is proof that he was wrong.

The last organizational politics evident in this case is tolerance of politics. In this case, JP
Morgan Chase & Co. chose the wrong person as their lead trader. Bruno Iksil was best at his
aggressive trading style but did not have talent to handle traders. For example, Bruno Iksil was
admired for his trading success and reputation, which likely gave him considerable power to
initiate trades that may have otherwise required higher authority. But Iksil’s considerable power
could not save the oversize credit default position. That is the reason Iksil’s trading losses on one
day alone are about more than a half billion dollars US.

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3.5 QUESTION D

Supposed you are a consultant to propose a solution to the distribution of power

Firstly, minimizing organizational politics that I would like to recommend is that leaders should
become a role model of organizational citizenship. Based on the study case, Bruno Iksil
should be a good lead trader in CIO group’s London operations. Bruno Iksil should not avoid
inspection from head office by underestimating the size of those losses and give the cooperation
to solve the matter.

In addition, leaders should keep employees informed about the organization. Based on the
case study, Bruno Iksil and his assistant hid information about their trading losses. Besides, JP
Morgan’s chief investment officer claimed no knowledge of the problems in the London CIO office
because some members of the London team hid from her about the important information
regarding the true risks of the book. That happened because Bruno Iksil was not informed about
the trading losses and hoped that it would buy them time to recoup those losses before the top
management discovered the problem. Bruno as leader of CIO group should inform this matter to
his employees also the higher authority and did not take any action alone because it will give
causes bad consequences.

Finally, JP Morgan Chase & Co. must acceptable political behavior norms and role models.
Besides, JP Morgan Chase & Co. must assess and change systems that encourage self-serving
conduct, as well as provide role modelling. Employees should back organization ideals that are
anti-political. One of the most effective strategies is for leaders to take on the role as role models
or organization citizens rather than symbols. That will make company or organization more
progressive and run smoothly.

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3.5 QUESTION E

Expertise can help companies cope with uncertainty in three ways. List and
explain three coping strategies in a hierarchy of importance.

By: Natasha Amira Anuar

Expert power will manage and cope with uncertainties in business environments. Expert
power who is individual or in a unit's work can influence the JP Morgan Chase & Co. based on
their expertise and knowledge. Certainty is vital in business because it helps the company to be
able to organize the production well. What are the expert’s strategies to cope with the uncertainty
in JP Morgan Chase & Co.?

Based on the hierarchy of importance, the first strategy to cope with uncertainty is
prevention. This first strategy is the most productive way to manage the uncertainty by preventing
risky investments made by JP Morgan before this. By avoiding a risky investment to traders, this
can prevent the company from experiencing a big loss such as $7 billion. It is because the
company had bad effects such as big losses from other trader’s loss. At the same time, the
company must prevent delayed informing if any related or important things to the company.

The second top strategy in coping with uncertainty is forecasting. The expertise has an
ability to predict environmental changes in business whether it will rise or fall. So, JP Morgan
should take a step to prevent the risky investment before another big loss occurs. The expert can
predict, if this action was taken, maybe the risk for the JP Morgan to lose once again will be lower
than before. In addition, the company will recover in the next one or two years.

Other than that, absorption is also one of the strategies used by experts to cope with
uncertainty. The expertise will absorb and neutralize the impact of the environment when the
initiative they had did, does not work. So, a new initiative such as JP Morgan Chase & Co. will
get financial support from other banks. Besides, with this monetary fund, JP Morgan can recover
their loss and be able to manage their business well after having a big loss.

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4.0 APPENDIXES

CASE STUDY: JP MORGAN’S WHALE (25 MARKS)

Read the following case and answer ALL questions.

JP Morgan Chase & Co. suffered $7 billion loss (plus and other $1 billion in government fines)
from highly speculative investments by a handful of traders in its London office. The ill-fate trades
occurred in JP Morgan’s chief investment office (CIO), a special unit whose original objective was
to use the bank’s own money to conservatively protect against its investment risks. With top
management’s approval, however, the CIO became an active profit center by investing in higher
risk products, the unit’s portfolio tripled over three years to $350 billion (15 percent of JP Morgan’s
total assets) and apparently generated more than 10 percent of the bank’s net income. It had
gained senior management’s highest respect.

Bruno Iksil, the lead trader in CIO group’s London operations, had developed a reputation for
making bold, but ultimately profitable, bets on whether companies would default on their bond
payments. A few years ago, traders nickname Iksil the “Caveman” for his aggressive trading style.
But Iksil’s most famous nickname was “the London Whale” because of his mammoth $100 billion
credit default bet that ultimately cost the bank $7 billion. Iksil was admired for his trading success
and reputation, which likely gave him considerable power to initiate trades that may have
otherwise required higher authority. But Iksil’s considerable power couldn’t save is oversized
credit default position. Iksil’s trading losses on one day alone were more a half-billion dollars.

As those losses mounted, Iksil and his assistant avoided inspection from head office by
underestimating the size of those losses. They hid information about heir trading losses, hoping
that this would buy them time to recoup those losses before the top management discovered this
problem. U.S government documents indicate that Iksil’s boss actively encourage this practice.
The losses were revealed only after the bank completed one if its regular reviews. Until then JP
Morgan’s chief investment officer claimed no knowledge of the problems in the London CIO office.
She later complained that “some members of the London team hid from me important information
regarding the true risks of the book.” After he was fired, Iksil claimed that CIO’s senior
management were involved in these trades. “The losses suffered by the CIO were not the actions
of person acting in an unauthorized manner,” wrote Iksil in a public letter. My role was to execute

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a trading strategy that had been initiated, approved, mandated, and monitored by the CIO’s senior
management. When JP Morgan’s top executives did become aware of Iksil’s losses, the
apparently delayed informing the of directors.

a) What sources and contingencies of power gave Bruno Iksil considerable power in the CIO
group at JP Morgan. List and explain each power and give an example from the case
study above. (9 Marks)

b) What influence tactics were used to hide the financial losses. List and explain each types
of influence tactics used. (4 marks)

c) Was organizational politics evident in the events described in this case? List and explain
the evidence and give an example from the case study above. (3 marks)

d) Supposed you are a consultant to propose a solution to the distribution of power in JP

e) Expertise can help companies cope with uncertainty in three ways. List and explain
THREE coping strategies in a hierarchy of importance. (6 marks) END OF QUESTIONS

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5.0 REFRENCES

Anna Jammeson. (2016, February 24). 'London Whale'. Retrieved from

Black, S., Gardner, D. G., Pierce, J. L., & Steers, R. (2019, February 27). Power in
Interpersonal Relations. Organizational Behavior.
https://opentextbc.ca/organizationalbehavioropenstax/chapter/power-in-interpersonal-
relations/

Contingencies of Power in Organizations in Principles of Management Tutorial 13 July 2021 -

McNulty, L., & Zuckerman, G. (2016, February 23). J.P. Morgan's 'London Whale' spouts off:
'For no good reason, I was singled out'. Retrieved July 13, 2021, from
https://www.marketwatch.com/story/jp-morgans-london-whale-speaks-out-for-no-good-
reason-i-was-singled-out-2016-02-23

McShane, Steven L. & Von Glinow, Mary Ann. (2018). Organizational Behavior: Emerging
Knowledge, Global Reality (9th Ed.). McGraw-Hill Education, 2021. (pp.372).

Successdotinc, P. (2018, July 11). Understanding power and influence at work. Retrieved July
13, 2021, from https://successdotinc.com/2018/07/14/understanding-power-and-
influence-at-work/

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