Good Example Of Diversity: Business Case Study

Published: 2021-06-21 23:45:05
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Category: Management, Investment

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The primary ethical problem in this company is shareholder and management problems. Some of the shareholders of KOTEL are also in the top management team of both I-Tech hence there exist conflict of interest for these top management. I-Tech is not performing well and the president and vice president of KOTEL clearly know that but they decide to acquire it despite the fact that this company is not performing well. They want to acquire this company to save themselves the losses they will incur should I-Tech fall. The president and the vice president do not mind the impact that acquiring a loss making company will have on the performance of KOTEL they just mind about their own well-being.
The acquisition price that vice president and the president of KOTEL are willing to pay for I-Tech is more than its market value. This is evidenced from Sebastian’s assessments of the records of I-tech. However the president and vice president of KOTEL are willing to pay a lot of money since they will benefit from its acquisition even though the other shareholders of KOTEL will suffer a negative blow. This is evident from the statement of Konroy, “Sebastian, this purchase is very important to all of us who have helped Simkins set up his company. That report had better be good. Nobody wants a negative report on something so important to everyone here, you know?”
Question 2
The primary stakeholders of KOTEL are the shareholders being the owners and Sebastian as an employee. The shareholders of KOTEL have never received any benefits of their share investment in KOTEL since the company was making losses and when money was available for paying dividends the management of the company had changed and their management had conflicts of interest hence they opted to acquire a loss making company to save the investment in that loss making company at the expense of other shareholders. Sebastian is also a stakeholder who is greatly affected by the activities of KOTEL since being responsible for the cash outflows of the KOTEL any usage of the money in the company has to be accounted for.
The president and vice president are forcing Sebastian to sign and account for the acquisition of I-Tech which is a loss making firm and also the acquisition price is higher than its market value. This is unethical and it has put Sebastian’s career in danger since if he agrees to authorize the acquisition of I-Tech then this will result to big financial outflows and losses to KOTEL. If Sebastian fails sign this acquisition then the president and vice president may decide to sack him.
Question 3
Weisil and Konroy were responsible for the problems of KOTEL. They wanted the company to invest in another failing company and this would led to a big financial blow to KOTEL considering the two even quoted the price that Sebastian was supposed to authorize for acquisition of I-Tech and this price was higher than the market value of the I-Tech. the two were the causes of this problem and they were supposed to be the people to solve the problems by embracing professionalism and avoiding conflicts of interest in their job. Sebastian could have also helped in solving the situation my making it clear to other shareholders the plans of the president and vice president and the consequences if their decision was followed. This could thus have helped the company to be saved from losing a lot of money in their effort to acquire I-Tech.
Question 4
I would have advised Sebastian to reveal the plans of the president and the vice president to the shareholder or offer a resignation letter since by offering it, the other shareholders would question this move and this would raise alarm to them that the company was facing management problems. Being a trusted employee of the company the other shareholders would listen to him and take the necessary measures to avoid failure of business operations of KOTEL. If Sebastian revealed the moves of the president and the vice president to the other shareholders with supporting financial statements this would explain the reason as to the low or no rates of dividends in the company. The shareholders would stop the acquisition of I-Tech and instead reinvest or maybe propose for payment of dividends.
Question 5
Core values
The core values of KOTEL ware to make profits and give returns to the shareholders however due to poor management the company was making losses. The company spent a lot of money in paying the management and ignored its shareholders. Whenever the company made profits it would reinvest. Also decision of the business to acquire I-Tech was a clear indicator of failure of management to follow the core values of the business.
Relativism
According to the president and the vice president it was right for the company to acquire I-Tech even though they were aware of the poor performance of the company. According to them it was not right for them to lose the money they had invested in I-Tech, however according to Sebastian and the investing officer this was wrong since they felt that I-Tech was overvalued. Therefore the principle of Relativism applies in this case since what appeared to be wrong for one partywas right for the other party.
Kant
According to Kant principle people should embrace rationality when making decisions. For instance Sebastian and the investing officer obeyed the Kant principle by clearly stating that I-Tech was not worth the amount of money the president and the vice president had asked quoted. Also it was not rational for KOTEL to pay its employees a lot of money and give them unnecessary offers such as pizza and bash whereas they were not looking at the needs of the owners of the company.
Moral Rights
Sebastian had a right of not being forced to justify the wrong of management with the wrong of approving the acquisition of I-Tech. Also he had the right making his decisions without being forced by president.
Question 6
Milton Friedman would have supported Sebastian supported Sebastian since he adjusted his expenditure according to his level of income. However he took some debt with no guarantee of being in his current job for a long time. After the crisis in the company and Sebastian is fired it will be hard for him to adjust his expenditure below his current expenditure therefore Milton Friedman would not have supported him. Also after looking after the financial statements of the I-Tech Sebastian was not sure of what to do, therefore, Milton would have advised Sebastian to adhere with the president’s requirement since it can be hard to reduce the level of expenditure if the president decides to fire him.

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