PALATAN, Randell Jan M.

BUE311 Governance September 26, 2020

BSA-III-A31A Ma’am Dolly Abasta Case Study #1

A large American company participates in a highly competitive industry. To meet

the competition and achieve profit goals, the company has chosen the decentralized
form of organization. Each manager of decentralized center is measured on the basis of
profit contribution, market penetration and return on investment. Failure to meet the
objectives established by corporate management for these measures is not accepted
and usually results in demotion or dismissal of a center manager.
An anonymous survey of manager in the company revealed that they felt
pressured to compromise their personal ethical standards to achieve the corporate
objectives. For example, certain plant locations felt the pressure to reduce quality
control to a level that could not ensure that all unsafe products would be rejected. Also,
sale personnel were encouraged to use questionable sale tactics to obtain orders,
including offering gifts and other incentives to purchase agents.
The chief executive officer is disturbed by the survey findings. In his opinion, the
company cannot condone such behavior. He concludes that the company should do
something about this problem.

Questions:
1. What do you think are the problems mentioned in this particular case and what
are the probably causes of these problems?
2. Is it alright to do something illegal or unethical to maintain the company’s image
and profitability?
3. If you are the CEO of the company, what would you do and why?
4. If you are one of the managers given, what would you do and why?

Answers:
1. There are several problems present in this particular case. The main one is the
unethical behavior and strategies currently applied affect employees’ behavior
and operation, company’s current public image and other stakeholders. This can
be possibly rooted in the following causes. One of which is Goal Incongruence
due to Lack of Monitor which is probably rooted in unilateral or individual work
rather than collaboration and conflicting interests of each sales agent, each
manager of different plants and the corporate heads with the added intervention
of shareholders. Another problem is Ineffective Corporate Policies which is
rooted in the fear of disincentives dependent on profit levels which includes the
threat of being fired, and non-disclosure of information since there are probably
lots of neglected ethics and by-laws. The next problem is Corruption and Greed
which is rooted to takeover threats that push managers to sabotage other
PALATAN, Randell Jan M. BUE311 Governance September 26, 2020
BSA-III-A31A Ma’am Dolly Abasta Case Study #1
managers in fear of demotion. Lastly is the problem of Poor Quality due to
Pressure to Meet Deadlines which is highly rooted on the fact that managers
are pressured to cut costs and produce more outputs overlooking poor quality
and unsafetiness of the products.

2. Compromise of ethics and standards in exchange for profit or good image is

never an option. Unethical culture that prioritizes revenue over what is right might
be overlooked by managers and leaders as a simple price to pay but sooner or
later it will produce bigger problems. Small unethical or illegal acts, if repeatedly
committed, will accumulate into bigger ones such as corruption, embezzlement
and non-compliance with the law. Ethics and values must be the foundation of
every organization who wants to reach success. Good ethics is a key to the long
life of a business.

3. If I was the company’s CEO I would assess the current applied and practiced
corporate policies, maintain some things, abolish most, and in their place build
better culture. Decentralization, if done correctly, is a great competitive
advantage, however, each smaller unit must still uphold the same goals and
objectives of the company as a whole. This can be ensured by tightening
monitoring controls. Everyone must still function and operate geared towards the
same goals and guided by the same rules. As a CEO, I demolish incentivizing
based on profit level rather than good work and disincentives like threat of
demotion and layoff if profit levels aren’t met. In their place, I will put a culture
prioritizing ethics and values rather than profit. By having a clean record, the
company may woo over prospect investors and customers.

4. If I was one of the managers, I would not compromise ethics over profit. I will
build a workplace culture filled with collaboration and harmony rather than
unilateral and separate works. Equity must always be present in the workplace
and this can be done by treating each other fairly despite whether they meet their
commissions or not. A harmonious workplace can be developed through
teambuilding exercises. In order to improve skills of the personnel and
management for more effective and efficient operations to allow higher profit, I
would invest on seminars and trainings. To defend our unit from being
demolished by the company heads, I would use customer and employee
satisfaction with the overall operations as a strong counter-argument that ethics
should never be compromised for higher profit.