I am thrilled to join Company X’s management team. My colleagues have been stellar in providing me support and helping me accilmate to the organizational culture, which is different from what I am accustomed to.
I have encountered my first challenge, a challenge that is incumbent that I bring to your attention along with three detailed solutions, inclusive of attractive and detractive aspects of each. It is also important that I share with you the methodology I employed to arrive at these conclusions, since it is reasonable for you to have access to and test the methodology employed to engender these solutions. I will also recommend to you an appropriate course of action.
Separately, I will present a report, which will report the findings of an analysis that I conducted on our company’s ethical decision-making process. This report will include strategies to mitigate against concerns I will have raised in the memorandum. I will also discuss the process of creating a code of ethics that will provide for employee growth through ethical decision making and continued company revenue growth.
Company X is the leader in the production of toy whistles for children the world over. Our principal production plant is located within the United States and, naturally, is under the purview of production guidelines set forth by the U.S. government.
The quality-assurance department recently informed me of a production issue that has arisen. Toy whistles that have been manufactured and are on schedule for shipment undergo an arduous testing process to ensure that the constitution of each toy meets federal regulations. Toy whistles that will be shipped to South American countries have, unfortunately, failed lead-level requirements; they are slightly higher in lead than what is legally tolerable. Our company has decisions to make about how we address this considerable concern.
After analysis, collaboration with team members, and sufficient reflection, I have developed three solutions to address this concern. Each solution has attractive and detractive aspects, both of which I will discuss. Ethical, legal, and financial considerations must be made with all solutions.
Solution 1: Cease shipment; Re-produce Toy Whistles
At current lead levels, the toy whistle would not be shipped to customers. The entire production process would re-apply, which includes re-securing the raw materials necessary to make replacement whistles, re-producing those whistles through the production process, and commissioning the quality-assurance department to verify that the whistles meet all federal guidelines for selling and consumption. It will also be important that the quality-assurance department provide a quality verification of its own processes. Such a verification will be necessary, since antecedent quality processes failed to identify the higher-than-normal lead levels of our toy whistles.
Solution 1: Explanation of Method Used to Select Solution
A combination of brainstorming and SWOT analysis were employed to determine three solutions for our company’s quandary. The brainstorming process involved three team members who reviewed the situation and offered ideas—any ideas—as solutions. Each team member produced two ideas, totaling six possible solutions. The following is a breakdown of submissions by team members:
Bob Jones| Celine Jiles| Patti Durant|
Stop Production; Adjust Lead Levels| Continue Production; Bribe Foreign and Domestic Government| Stop Production; Offer Different Product| Stop Production; Make Plastic Whistles| Continue Production; Ignore Lead Levels| Stop Production; Close Business|
A SWOT analysis was performed on each decision alternative to test its integrity. SWOT is an acronym for “Strengths,” “Weaknesses,” “Opportunities,” and “Threats” (Bradford, Duncan, & Tarcy, 2000). The goal is to reduce the possible responses to those that require attention.
Bob Jones Solution A
Strengths: Legal and ethical approach to doing business. Promotes high levels of customer service. Holds all parties accountable for their actions due to process review and refinement.
Weaknesses: Delayed production. Poor customer-satisfaction surveys in the short term. Costly to hold up production.
Opportunities: Favorable contract renegotiation if determined process failure with supplier. Possible acquisition of new customers if mitigative steps made known.
Threats: Possible government intervention if lead levels are exposed. Possible customer revolt if mitigative steps to lead levels not perceived correctly. Customer churn—possibly to competitor—due to production delay. Board of directors overhaul of C-level management
Based on these considerations, Solution A is a viable candidate for resolution.
Bob Jones Solution B
Strengths: No delay in production. Customer satisfaction not harmed. Foreign government receptive to bribes. No disruption to revenue.
Weaknesses: Domestic government not receptive to bribing. Massive costs due to bribing. No consideration for customer health. Short-term solution. Socially irresponsible course of action.
Opportunities: Short-term customer growth. Relationship-building with foreign government.
Threats: Considerable legal actions from both domestic and foreign government if not receptive bribes. Possible legal threats from customers.
The costs associated with Solution A indicate that it is not a viable solution.
Celine Jiles Solution A
Strengths: Legal and ethical approach to doing business. Promotes high levels of customer service due to considering customers’ health. Holds all parties accountable for their actions due to process review and refinement.
Weaknesses: Massive delays in production. Abrogation of contract with current supplier. Extensive training costs for new products. Extensive project-management costs to deploy new product. Substantial increase in customer churn due to offering different product. Possible negative press in foreign market. Possible domestic layoffs due to change in product.
Opportunities: New streams of revenue due to new product. New streams of customers due to new-product demand. New, lower cost contracts with new suppliers. Possible employment of foreign workers to replace costly domestic workers.
Threats: Legal threats from current employees subject layoff. Possible customer revolt if competitor unable to make up for our departure from whistle market. Increased regulatory scrutiny possible based on new product. Intractable board of directors.
Based on these considerations, Solution A is a viable candidate for resolution.
Celine Jiles Solution B
Strengths: Minimal delay in production. Avoid lead-level requirements. Safter products for customers, thereby increasing customer satisfaction. Avoid legal issues from foreign and domestic governments. Contract abrogation with supplier if process failure due to supplier. Socially responsible course of action.
Weaknesses: Contract abrogation with existing supplier if Company X process failure. Short-term customer dissatisfaction due to minimal production delay. Training for production of new whistles. Costly process refinements.
Opportunities: Possible acquisition of new customers. Long-term customer growth. Possibly reduced prices with contract negotiations for new suppliers. If process adjustments made public, possible acquisition of customers in other countries.
Threats: Minimal threat of legal action from domestic or foreign governments due to initlal lead-level failures. Minimal threat of substantial customer churn.
The strengths of Solution B indicate that is viable enough to be considered. Patti Durant Solution A
Strengths: Reduced production costs. Short-term customer satisfaction due to on-time delivery. Possible increased customer acquisition.
Weaknesses: Very short-term solution. Disregard for long-term customer health. Disregard for domestic legal mandates. Socially irreponsible course of action. Long-term profit loss. High customer churn in long term.
Opportunities: Short-term increase in streams of revenue.
Threats: Extensive legal threats from public and private sector. Abrogation of current contracts iminent. Long-term erosion of shareholder confidence.
Solution A should not be further considered due to the blantant disregard for customer safety.
Patti Durant Solution B
Strengths: Regard for customer health.
Weaknesses: Total loss of all revenue and profit.
Opportunities: No known opportunities.
Threats: Possible legal action from suppliers, employees, customers, and governments due to abrogation of contracts, inability to pay out on employee pensions, or willfully missed customer demand.
Solution B is unquestionably not worthy of further consideration.
Solution 1: Advantages and Disadvantages
The important advantage this solution offers is that our toy whistles’ lead levels will not detrimentally influence the health of our customers. Our identification of this issue will allow our company to take mitigative actions before the whistles are in the hands of our consumers.
Another advantage of this solution is that our customers will be unaware that there could have been an issue with the whistles. Our consumers’ ignorance allows our company to avoid a public-relations concern or public excoriation of our product and company brand. There are no government mandates that our company must disclose these sorts of issues if they are discovered before being delivered to our customers.
An important disadvantage to this solution is that the investigative process and resultant process refinements will prove costly and timely. It is evident that a production and service failure has occurred, since our whistles’ lead levels currently contravene United States legislative mandates; however, we are not certain where in the supply chain this failure has occurred. Unnecessary people-power must be devoted to resolving this issue sufficiently to prevent issues in the similitude of this one.
Another disadvantage to this solution is the effect it will have on employee morale. To be specific, the judgment of the managers of these processes is dubious and will have to be investigated. It is unquestionable that coaching and development, inclusive of corrective action, will have to be meted to all parties involved in this situation. And because of the cost of resolving this matter, some managers and their employees may have to have their employment terminated. No matter how delicately the corrective action will be handled, other employees will inevitable respond negatively. This situation may encourage discussions of unionization. It may engender unnecessary employee churn. Or for those who have their employment terminated as a result of our investigation, it may very well involve contending against ex-employee litigation for perceived wrongful termination, which will involve government agencies and their investigations.
Solution 1: Ethical Considerations
This solution is an ethically viable option. The reason is that the lead levels prescribed by the federal government are ostensibly predicated on customer saftey and, if more stringent, supersede lead-level requirements of the target country. Providing customers, especially young children, with high-lead toys is immediately unethical and demonstrates a disconnection from social responsibility.
Solution 1: Financial Considerations
This solution, however, is the most costly and will make profit from these sales impossible unless we increase the price of the toy whistles. The following are cost considerations of this solution:
1. Vetting Raw-Material Supplier: It is possible that the raw materials that we obtain from our supplier do not possess the integrity that we expect, which would cause products to fail quality verfifcations. An audit would be required of the supplier. This audit would entail the following costs: a. On-site inspections: $10,000, inclusive of labor costs and travel expenditures b. Report of findings: $5,000, inclusive of labor costs of presenting the findings c. Negative findings: $10,000, inclusive of replacing and contracting with a different raw-materials supplier. d. Positive findings: $15,000, inclusive of sunk costs of on-site inspections and reporting of findings (since no issue would have been with the supplier)
2. Vetting Production Processes: There may be deficiencies in the production process that cause higher levels of lead to result in our products. Here are the costs associated with this vetting: e. Departmental inspections: $7,000, inclusive of labor costs f. Report of findings: $5,000, inclusive of labor costs of presenting the findings g. Negative findings: $50,000, inclusive of making process adjustments, training on new processes, and follow-up labor costs h. Positive findings: $12,000, inclusive of sunk costs of inspections and reporting of findings.
As easily noted, the costs of making process changes are considerable. However, the costs of these changes should not, by themselves, be an impetus to continue to produce high-lead toy whistles.