Business Ethics Dr. Aravind Banakar –
Business Ethics CASE STUDY (20 Marks) The new CEO of a corporation learns that he has inherited problems with growth and profitability. A fourday workweek and, eventually, layoffs prove necessary. Who is the CEO obligated to inform and when? George Anderson was just a few months beyond his 40th birthday on the day he became CEO of Astratech Communications International (ACI). What an upper! He was still basking in the glow of his good fortune, eager to try out his skills as the CEO. He hoped to get the chairmanship one day when the company's founder, Mike Marcus, decided to step down. Life was good. ACI was a leading supplier of fiber optic transceiver components for the telecommunications industry.
It sold to companies like Alcatel, Northern Telecom, and Ericsson, who put ACI's components into the lightwave equipment they manufactured. The company was based in Irvine, Calif., a great place to live, work, and raise a family. ACI's annual sales were around $500 million with 2,500 employees in locations in Mexico and Scotland, in addition to its Southern California headquarters. All of ACI's hourly employees in the United States and abroad were represented by the IBEW, a union with a history of good working relationships with management. The Mexican operation was launched to take advantage of lower labor costs and close proximity to headquarters. The Scotland plant gave the company relief from onerous European tariffs. Both offshore facilities enjoyed excellent employee relations. After settling into his new position, George busied himself identifying the major issues facing the company.
Coming in, he had realized that ACI's growth and profitability were problems, but he wasn't sure if the source was the management team, product development, marketing and sales, or something else. After several months, George was clear that it wasn't the people. Sure, there were a few problem areas, and some employees seemed a bit too comfortable. But the main issue was a lack of focus and a general weakness in the business systems required in this fastpaced industry. There was no clear vision of what ACI wanted to be and no acceptable plan on how to get there. What was it that someone said? "If you don't know where you are going, all roads will lead you there." To address this weakness, George implemented a task force made up of middle managers from all the various disciplines, as well as the executive team. He chaired the task force because he believed strongly that CEOs shouldn't delegate strategy.
Answer the following question. Q1. What were the reasons for the business downturn? Comment. Q2. How did new CEO Mr. George Anderson respond to the business downturn? Discuss, what was ethical in his decision.
Global Study Solutions Dr. Aravind Banakar –