Case Studies

Business Cases

1. The Shakedown |1|

2. Left on a Mountainside |8|

3. Cross Selling or Cross Purposes? |14|

4. The Micromanager |21|

5. Succession and Failure|27|

6. Oil and Wasser|34|

7. Class--or Mass? |41|

8. None of Our Business? |48|

9. The Broken Employment Contract|55|

The Shakedown

Phil Bodrock

Harvard Business Review, Mar2005, Vol. 83, Issue 3

"HOW MANY OF THEM WERE THERE? Were they armed? Did they confiscate any papers or disks?"

Pavlo Zhuk suddenly realized he was shouting, though for once the telephone line to Kiev was crystal clear. Zhuk was in a state. The grandfather clock in his sprawling farmhouse in Redwoods, California, had struck 6 AM, and the young software entrepreneur had just come down to the kitchen when the telephone startled him. His friend Kostya Hnatyuk, who headed Zhuk's software development center in Kiev, was calling to say that the center had had visitors that day -- and not very welcome ones.

Hnatyuk patiently repeated what he had said a moment earlier. "I'm on my way to the office, Pavlo, so I don't have all the details. Taras Borovetz called me 15 minutes ago as I was getting off the plane and said that three or four UTA agents showed up this afternoon. That's Ukraine Tax Authority. Only one of them, a woman, entered the office. I suppose the men could have been armed, but Taras didn't say so--"

"What did the woman say, exactly?" Zhuk interrupted.

"She said that her name was Laryssa Ossipivna Simonenko. She claimed to be a UTA special agent. She told Taras that she and her boss, who heads something called the Special Audits Department, want to meet with us soon," Hnatyuk replied. "She says that we haven't filed five of the 17 schedules we were supposed to last quarter and we owe the government tax arrears of 86,954 hryvnia." Zhuk quickly converted the figure in his head: close to $16,000. "It's a shakedown," Hnatyuk concluded.

"I can't believe it!" Zhuk cried. Had his life...