Case Study

Running head: CASE STUDY&nbsp&nbsp 1

CaseStudy

November5, 2014.

Kim`s&nbspdilemma

of the case history and situation

DanielKim is the chief financial officer (CFO) at Cardio-Metric, a medicaldevice company in Minnesota. Kim engages Sanchez the chief executiveand the co-founder of Cardio-Metric in a confrontation due to allegedmisappropriation of the company’s funds. The company is sufferingfrom burgeoning expenses and Sanchez together with Jones are greatdebtors in the firm. The company investors’ and co-founder ChrisWard are unaware of these issues. It is during the meeting withSanchez that he implores Kim not to reveal the issue to the companyboard. Sanchez financial misconduct began in 2007 when Sanchez beganto demand finance for unbudgeted expenses. In most cases, Sanchezimplored Kim to endorse these unbudgeted plans for funding. Kim triedto handle the problem professionally and with discretion in the hopethat Sanchez would change but he was unsuccessful (Bill, 2011).

However,the increase in unplanned expenses made Kim suspect that Sanchez andJones were using the firms’ money for personal expenses. Sanchezdenied Kim’s concerns and implored him not to disclose the matterto the board. Although, Kim obligingly promised to keep silent,Sanchez misconduct snowballed to greater fraud cases in 2009. Duringthe submission of expenses reports, Sanchez justified his absurdexpenses and even implored Kim to endorse other fishy financialprojects. As such, Kim got worried about his fate if he failed toaccept Sanchez demands. Kim was in a dilemma on whether he wouldreveal Sanchez misconduct to the company board or engage him in talk.Kim was also worried, if the company board would believe him orprotect Sanchez misconduct and frame it on him. Furthermore, Kim wasworried about how the auditors would assess him as the firms CFO as aresult of Sanchez fraud cases. In addition, Kim is worried about hisfuture career prospectus if the matter becomes public.

Part1:

Ethicalissues that Kim currently faces

Inthe case study, it is evident that Kim is facing myriads of ethicalissues which required him to trend cautiously if he was to retain hiscareer at the firm and dignity. In particular, Kim is facing the‘right’ or ‘wrong’ dilemma whether to pursue justice ormercy (May, 2013). Kim has worked at Cardio-Metric for long and thishas made him have close friendship ties with the firm co-founders(Bill,2011).In fact, it is Sanchez who approached Kim with a job offer at thefirm. After, Kim left Cardio-Metric to pursue his MBA, Sanchezapproached Kim and implored him to return to the firm afterfinalizing his degree program. In this case, Kim is faced withconflicting values dilemma whether to have mercy on Sanchez orexpose him to the board members (Week, 1).

Inaddition, Kim has a strong loyalty value to Sanchez based on pastfriendship and this withholds Kim from revealing Sanchez’smisconduct. Similarly, Kim is worried about his individual goalsversus community goals (Week, 1). For instance, in most occasionsKim’s dilemma is exacerbated by feeling that even if he exposesSanchez to the board members for financial misappropriation, theboards’ members might not believe him or might see him as anaccomplice. Furthermore, Kim is faced with the ethical dilemma thatthe case may lead to long-term career effects if the public get privyof the financial scandal at the firm (Bill,2011).

Inthe same note, Kim prefers to talk to Sanchez than revealing hisfinancial indiscipline to avoid ruining his friendship with Sanchez.It is likely that, if Kim reveals or confronts Sanchez, this mightlead to his dismissal from employment and possibly be framed forembezzlement. Kim is thus challenged on how to approach Sanchez inregard to increased financial misappropriation and the impedingfinancial audit. In this case, Kim views his friendship with Sanchezas a long-term goal which should not be destroyed with short-termgoal of revealing his financial misconduct (May, 2013). As such, Kimis faced with the ‘right’ versus ‘wrong’ dilemma in choosingthe best option. In this case, Kim’s pursuit of justice is ‘right’and might be ‘wrong’ if Sanchez dismisses Kim from employment andframes him for financial extravagant. This would in turn ruin Kim’scareer if such a case was to become public (Bill,2011).

Onanother front, Kim may be right for having mercy on his friendSanchez as this offers an opportunity for the two to talk. However,Kim’s ‘mercy’ on Sanchez is wrong as the firm’s funds aremisappropriated, and with Kim being the CFO he will be heldresponsible for any funds misappropriation. On a differentperspective, Kim is faced with individual versus organization concern(Week, 2). Kim is concerned with the repercussions that Sanchezmisbehavior has on his career as well as the organizations interests.These opposing interests lead to justice versus compassion ethicaldilemma. It is also evident that Kim is faced with a foundationalversus situational dilemma on the bases that, he believes thattalking to Sanchez will make him change his financial indisciplineand recouple the lost finances. Kim on the other hand is challengedby his strong ethics (foundational) to reveal Sanchez misconduct tothe rest of board members (Week, 2).

Recommendations

Utilitarianand duty perspectives – three Options available for Kim

Thereare three opposing yardsticks for determining ethical course ofaction when faced with a dilemma like Kim’s. According to theconsequence based utilitarian perspective, the potential outcomes ofdifferent alternatives are assessed (May, 2013). In a broader sense,the utilitarian perspective looks at the end result of variousjudgment and end results (Week, 3). The underlying tenet in thisapproach is assessing alternatives that do not go against ones valuesand archives the best results. In the case study, Kim should weighthe potential consequence of his actions, message and decision whendealing with Sanchez or the firm board members. For instance, Kimshould asses if the board members would believe him and support hisconcern or if they are likely to protect Sanchez and blame Kim forfinancial extravagant (Bill,2011).

Inaddition, Kim should consider the potential consequence of facingSanchez with facts before communicating with the board members (Week,3). Furthermore, Kim needs to assess the consequence of endorsingSanchez misappropriation bills and remaining quiet over the deals.The choice deemed ethical and one that would lead to the greatestgood of many people should be selected. The first and best ethicaloption for Kim is to gather all evidence and facts pertaining Sanchezfinancial misconduct in collaboration with the executive team, thehuman resources and the legal team. Armed with this proof and facts,Kim should approach Sanchez and request him to handle the problemwithin a given timeframe. In the event Sanchez fails to handle thisproblem, Kim should go ahead and expose Sanchez to the firm boardbefore Sanchez has a chance to incriminate Kim.

Theconsequence utility of this approach is two prolonged by lettingthird parties have privy of Sanchez financial misconduct, this wouldsave Kim from any attempt by Sanchez to incriminate him. Secondly,armed with facts and evidence of arbitrary expenditures, non-budgetedprojects and other extravagance, Kim has sufficient proof incollaboration with the legal team to convince the firm board members.Revealing Sanchez financial misappropriation is for the greater goodand would limit further misappropriation of company’s funds. It isillogical and suicidal to believe that Sanchez will address thematter considering the gravity of financial misappropriation. If Kimwaits for Sanchez to handle the matter, he might be tempted toimplicate Kim as a scapegoat, dismiss him from employment and ruinhis career through tainted public image. Sanchez had already firedseveral executives who showed disdain for his financial indiscipline.

Revealingthe financial problem to the board would lead to more financial losesand tainted public image to the firm. Nonetheless, Kim shouldconsider his individual interest based on the situational context hefinds himself in. As such, the next best option is for Kim to facethe board members with gathered facts pertaining summary of allsuspect expenses, suspect purchases and a formal letter elaboratinghis concerns. After, Kim would then advice the board to keep thematter closed from public to save reputation image and financialloses. The legal team as well as the human resources team wouldsupport Kim and this would help proof to the board about hisinnocence (Bill,2011).

Alternatively,Kim can use the non-consequence-based approach in addressing the caseas his prerogative duty to inform the board about Sanchez fundsmisappropriation (May, 2013). In this case, revealing Sanchezmisconduct to the other board members would be an obligatory role andin accordance to ‘moral law.’ Kim would thus negate anyconsequence and volunteer information to the board on Sanchezmisconduct. Kant termed this ‘moral duty’ as a ‘categoricalimperative’ that employees should poses in doing what is rightregardless of the consequences. As the chief finance officer, Kim isunder official duty and right to expose any matter that contravenesthe expenses policy at the firm (Week, 1).

Furthermore,if Kim remains quiet, it would lead to more harm than good. The boardmay regard Kim as an accomplice or enabler in the embezzlement orthat he is responsible and is implicating Sanchez as a scapegoatsince Sanchez is not the finance officer. By applying thenon-consequence approach, Kim would be rational and impartialmaintaining his dignity and respect. The non-consequence approach issimilar to rights perspective in which the collective good is betterthan individual goals. On another front, Kim should reveal to theboard Sanchez misconduct as part of cultivating good virtues withmajority stakeholders rather than protecting ungrateful individual(May, 2013).

Part2 Stakeholders that need communication

Inthis case study, the most important stakeholders who requirecommunication are the board members, investors, the co-founder, theauditing tam and the legal team. Each of these stakeholders needs allfacts indicating suspect expenses, purchases and financialembezzlement by Sanchez.

Boardmembers

Theboard members should be informed first about the fraud cases, andthen the information would be passed to auditors, the co-founders andeventually the investors. The rationale is to first address theproblem at board level to see what measures may help forestall apossible reputation and financial damage that may arise if investorsget information on finance misappropriation. Kim needs to engage theboard members in discussing the issue of financial misappropriationby tabling all evidence. This is necessary to give the board memberstime to investigate and assess the extent of funds misappropriation.Kim should then implore the board members inform the co-foundersabout Sanchez funds misappropriation. The board members and theco-founders should then discuss how the firm investors are to beinformed. This is important in enhancing accountability andtransparency. Kim should suggest the board investigate Sanchez ordemand he reimburse the embezzled funds.

Furthermore,the board should institute an internal auditing committee for eachdepartment rather than relying on outside auditors. Kim shouldpropose for the amendment of expenditure policy restricting allexpenses plans under one department. Employees and co-founders whowant funds for expenses should seek approval from the expenditurecommittee before funds or expenses are authorized. The board shouldset policies limiting co-founders undue influence on company’sstaff in regard to endorsing unbudgeted projects.

Inaddition, the board needs to redefine the roles of co-founders andensure that each member is consulted before certain actions in anydepartment are undertaken. The board as well as the co-foundersshould agree to have open communication where staffs can reportanything. This should encourage transparency and accountability amongthe employees and the co-founders. Far from this, the board needs toset a legal committee which can address internal issues in regard towork ethics. The legal committee should be responsible for makingregular assessment on individuals conducts and recommending effectivemeasures to handle the problem.

Employees

Inorder to clear his name and enhance more transparency andaccountability, Kim should inform other employees’ about Sanchezwrong doings. In particular, Kim should inform the executive in thefinance department to be cautious on Sanchez who may use theiroffices to cover up the misappropriation evidence. The key messageshould be they report any suspicious move by Sanchez that may makematters worse. All employees’ expenses should be approved by theCFO department for authorization. Furthermore, all employees shouldnot have access or authority to spend company funds without approvedconsent. Money spent on expenses should be accompanied by properdocuments indicating the use of funds. Kim should inform allemployees the need for filing their expenses report early to enhancepanning and assessment. No employee should be allowed to use companyresources for personal use unless during official duties which shouldbe approved by the CFO or the company board.

Investors

Investorsare essential for business financial stability and overallreputation. As such, Kim with the support of board members andco-founders would inform the investors about the problem and measurestaken to avert future financial loss as well as recovering themisappropriated funds. Kim should re-assure the investors that theproblem will be solved by boosting sales volume and that they shouldincrease investment to enhance the stability of the company.Investors should be given timely feedbacks on company’s progress asper audited records to enhance transparency and reputation image.

Part3 Daimler Case study&nbsp

CompanyCulture

Hierarchyculture the Daimler company lacked effective communication strategydue to its militaristic form of leadership. The company had highlyformalized and structured culture. Leaders served as coordinators andvalue was placed on efficiency and predictability.

WhyDaimler`s brand remained strong

Thecompany brand remained strong due to an elaborate communicationmeasures taken to address the crisis. The leadership showed concernto stakeholders by reassuring them that the company catered forcriminal and civil fines. Effective engagement with stakeholders andtransparency helped to address the problem quickly and reducedreputation damage as well as financial losses. Engaging in dialogiccommunication and transparency enhanced brand survival despite thescandal.

Potentialshort-term results of not being transparent

Organizationinstability and conflicts

Lossof market share low sales

Financiallosses as a result of poor performance in the stock market

Long-termresults of not being transparent

Organizationfailuredeteriorated international commercial relations

Lossof brand image

Disintegrationof the firm

Adversefinancial loses

References

BillGeorge. (2011). Daniel Kim’s Dilemma (A). Boston: Harvard BusinessSchool Publishers.

MaySteve. (2013). Case studies in Organizational communication. Ethicalperspective and practices. 2ndEdition. The University of North Carolina, United Kingdom: SagePublishers.

Week1. Ethical Issues in organization communication. NortheasternUniversity, College of Professional Studies.

Week2. Ethical Issues in organization communication. NortheasternUniversity, College of Professional Studies.