For those who have read George Orwell’s allegorical novel “Animal Farm” the phrase “All animals are equal, but some are more equal than others” rings a bell. It reflects how priority is given to some people at the detriment of others in the enjoyment of certain privileges and comfort.
This segregation is also seen in the world of investment especially among Ponzi schemes or fraudulent schemes but in a very disguised manner such that it almost always goes unnoticed.
It is quite obvious that making a choice among different investment options can be a puzzling task and therefore one must be vigilant in order identify a good investment and also not to fall prey so some these predatory investment schemes. Among the factors to consider are the risk and return of the investment, investment objective, age of investor and the investor’s risk nature (profile).
Apart from these factors, potential investors need to do background checks on the company they want to invest in and some do so by reviewing financial statements if they have technical knowledge to appreciate such financial information, others rely on advice from financial experts such as investment advisors, bankers, brokers and there are still some other groups who rely on recommendation by friends, family, “big men and women” and celebrities.
For most Ponzi schemes, what they do is to try to gain the approval of the masses by using very influential people in the society such as celebrities, managers of big corporations, politicians and the like.
With all these people on board, the ordinary populace, is then convinced that things will go well and if even the worse happens these supposedly “big guys” can coerce the company to make good their debts. But this is not the case, because the schemes at the time of difficulty use the “Mendelow’s Matrix” to get their way through.
Mendelow’s Matrix
The Mendelow’s Matrix is a power-interest grid, which considers stakeholders’ power and interest to determine the potential influence of stakeholder groups.
Basically, the matrix has four quadrants consisting of low-power low-interest group; low-power high-interest group; high-power low-interest group and high-power high-interest group. Scheme operators put their investors into these groups to determine the priority and attention they attract.
High power, high interest group (Keep Players)
The investors in the High-power, high interest group are those who are closely managed and given priority in all circumstances including appropriation of funds when the scheme is about to closing down.
Members are fully engaged, and the greatest efforts are put in to keep them satisfied otherwise they can give management tough times using their power. The most influential and powerful investors are placed in this group.
High power, less interest group (Keep Satisfied)
Though members in this group have high power, they show less interest but because of their power, they are always kept satisfied lest they use their power against management. Members of this group are also prioritized by these scheme operators.
Low power, high interest people (Keep Informed)
Low power, highly interested people do not receive much attention since their power is low but they are just adequately informed so as not team up with other lower power individuals to become powerful against management.
Low power, less interested people (Minimal Effort)
Members in this group are most neglected by the scheme operators since they neither have power nor interest. Management require just minimal effort to handle them.
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