A Struggling Company without Enough Cash

[Name]

[Instructor]

[Date]
 A Struggling Company without Enough Cash

Background

The underlying case presents a case of a struggling company purchased by Joe

Woodman. The firm is currently facing some problems in managing the operations and obtaining

sufficient funds from the financial institutions. The ruining business situation is also affecting the

trust of stakeholders and due to increasing stakeholder pressure, the company is on verge of

bankruptcy. Joe is struggling hard to devise a strategically wise solution that can be beneficial for

the business as well as his own interests. He doesn’t want to give up the control for capital

because if will redefine his position from business owner to senior manager.

Problem at hand

To save the organization from bankruptcy, Joe is currently having three options. He can

either compromise his ego and adopt the capital for control option. Or he can hire a turnaround

management by disclosing all information. In this case, newly hired managers will be informed

about the critical business situation so that an immediate and effective turnaround plan could be

devised. However, in this case, the recruitment of highly competent managers will be difficult.

Last option is to hire the turnaround management team without disclosing the reality, but in this

case, the managers will lack the loyalty and commitment.

Analysis and solution

Out of three options, the desirable option as per ethical standards is the option one, that

is, to give the control to the bank. Although, option two and three are also ethical as the owner

will disclose important information, however, putting someone in a do or die phase, or

intentionally not revealing all information required to understand the whole context is not
justified. Ethical standards are set by the perceptions of individuals within a society regarding

morals and values (Northouse, 2012). The ethical egoism proposes that an individual must act to

develop the highest good for her/himself. Such orientation causes the leader to make decisions

based on selfish motives. In this case, Joe appears to be more concerned about his control over

the business rather than saving the ruining business situation.

Altruism exists on the opposite end of egoism. The Altruistic leadership approach

suggests that leader should take actions with the prime motive of fulfilling the interests of others.

Based on this criterion, going for the control for the capital option is most altruistic than other

two options. If Joe will compromise on his ego, no one will lose the job and business will also be

saved. However, it will affect Joe’s position and he would have to sacrifice his leadership

position within the organization. An ideal solution is to go for the second option. Joe should

disclose all information honestly to the turnaround management team. This honesty will

encourage the risk taking, competitive managers to accept it as a challenge and pull the business

out of trouble. Additionally, it will also show the commitment and trust from the business owner

to keep the morale high and run the business operations instead of going for easy options like

“capital for control”.

This option will also vanish away the egoism as Joe will share the problem with

managers. Although, option 1 is a most altruistic approach it is not a feasible option for any

successful organizational leader to go for an essay option and give up the leadership position.

The option will also serve the greatest number for greatest good till business secures funds from

the organization and guarantees employees’ salaries. Hence, analyzing the whole situation,

firstly, Joe should attempt to hire a turnaround management team by disclosing the truth in a

strategically wise manner. He can persuade the competent managers by encouraging them to
accept it as a challenge. In case, Joe cannot find competent managers, then giving up the control

will be better than hiding the true business situation from turnaround management team.

References

Northouse, P. G. (2012). Leadership: Theory and practice. Sage.