ARB 1000 Lecture 16: Arabic vocab (general) 29

Part 1: The Paint Shop (20 points)

The Rookery Company, a large financial services organization,owns and occupies many facilities including a property that islisted on the National Register of Historic Places. Rookerymaintains a Paint Shop. The Paint Shop employs a dozen peopleincluding painters who are especially skilled.

Department executives in the various divisions of Rookery havethe decision rights regarding the choice of painters they engage.At Rookery, it has never been the case that all painting is done bythe in-house Paint Shop. Over the years outside paintingcontractors have been hired in various circumstances. For example,outside contractors were brought in for some major projects andwhen the Paint Shop was overwhelmed or not equipped to tacklejobs.

The Paint Shop is organized as a profit center as are all of theunits of Rookery that would engage the Paint Shop to providepainting services. When a department needs painting work, they cancontact the paint shop for an estimate. If the Paint Shop contractsto do the work, Rookery’s accounting department charges an expenseagainst the profit of the department requesting the work andcredits the revenue of the Paint Shop. The Paint Shop is a captivesupplier, that is, the paint shop does not do work for anycustomers outside of the Rookery Company.

Department heads have not always been pleased with theturn-around times of the in-house Paint Shop. Also, some in-housecustomers have been displeased with the price charged and theattitude of some of the staff members in the Paint Shop. As aresult, department heads have increasingly been turning to outsidepainters instead of using the Paint Shop.

The CFO noticed the falling revenues and the resulting fall inprofits of the Paint Shop. They are a high fixed cost unit. Inresponse the CFO sent memos to the department executives who havedecision rights over painting contracts to strongly urge them toalways give the Paint Shop the “rightof-first-refusal” wheneverpainting work needs to be done.

The CFO is a strong supporter of the Paint Shop and believesthat Rookery needs to maintain the inhouse paint shop. However, hisrepeated requests to the department executives to use the PaintShop have not succeeded in creating work. To be candid, many jobsare being out-sourced to independent contractors and it appearsthat the CFO’s memos are being ignored. In fact, the Paint Shop’srevised pricing structure necessitated by the need to raise pricesto improve their bottom line has only aggravated theirsituation.

The CFO is angry. At best he feels ignored, at worst he regardsthe decision of Rookery units to use outside painters as a disloyalact. But, the CFO lacks authority to require the departmentalexecutives to use the Paint Shop. If he had the authority, he wouldrequire every department within the company to use the Paint Shopunless he decides that for some reason the Print Shop is not ableto do the work.

To put an end to the practice of Rookery units selecting outsidepainting contractors, the CFO has recently communicated to theoutside painting contractors who have been doing most of the workfor Rookery units. He indicated that he does not want the outsidecontractors to accept painting work from any Rookery departmentthat he has not authorized. Of course, the CFO will not authorizeany work to go to outside contractors unless the Paint Shop isunable to complete the work.

The consequence to an independent contractor of performing worknot authorized by the CFO as outlined by the CFO is that whenRookery does need to employ an outside contractor for a majorproject the CFO will remember those who are his friends and thosewho did cooperate with his wishes. Of course, the CFO has access toall invoices making it a simple task to identify any who do notcomply with his wishes.

Required:

1. (10 points) Speculate on why the department heads areignoring the CFO’s wishes with regards to using the services of thePrint Shop.

2. (10 points) When the volume of work declined at the PaintShop, to maintain profitability the Paint Shop increased bidprices. The increase in bid prices resulted in further decreasingthe number of jobs the Paint Shop was winning and the spiralcontinued downwards. This is an illustration of what some refer toas the “death spiral.” What other responses could the Paint Shop incollaboration with the CFO have made to feedback received withinthe management control system when the Paint Shop was no longercompetitive with outside contractors? Also, speculate on why itseems to be the case that the leadership of the Paint Shop did notinitiate any of the responses you discussed. Be certain to give acomprehensive response.

Comment or give a summary of the following post. Substantive comments should be scholarly, probing, extend the conversation by beginning a dialogue, and continue exploring the concepts

Honduras

I will be providing information on Honduras, which is one of the poorest countries in the western hemisphere. I have had the chance to witness first-hand how poor the country is, and how little the people there have. In both 2015 and 2016, I had the privilege to spend a week there, working with a surgical team in a hospital to do procedures for people free of charge. They ranged from relatively simple hernia repairs and cholecystectomies to more advanced things like moving the esophagus and removal of large tumors. Honduras seemed to rank around the 125-130 mark for most of the information I found.

The country has a population of just over 8 million, with about half residing in urban areas (WHO, 2017). They also ranked around that area for infant mortality, which was 17.7%, and literacy rate runs around 89% (Factbook, n.d.), which surprisingly ranks it as 149th, well below half of the other countries in the world. Life expectancy averaged 71.1 years, broken down to 69.5 years for males and 72.8 years for women (WHO, 2017). Surprisingly, 93% of the population are subscribers of cell phone service (U.N., 2016). Healthy life expectancy at birth was 64.9 years, slightly lower than average life expectancy. Cause of death registration coverage was very low at 17%. Many of the people in the country work either in some type of agricultural setting or working to make textiles. Knit sweaters and knit t-shirts both account for about 12% of exports. Coffee came in at the same percentage. Banana exports are about 4% of total exports, and sadly the major money from that is not kept in-country.

The companies that own the plantations and factories do not have an interest in the country and send the money elsewhere. Insulated wire is another large export with 9% of the exports from that. 1.9% of exports are created from rolled tobacco, mostly cigars (OEC, n.d.). As a cigar aficionado, I believe they produce fine tobacco there. Textile scraps, narrow woven fabric, undergarments, melons and other fruit, fish, vehicle parts, soap, gold, and petroleum each hold less than 2% each of export totals. All are important to the economy of the country. The country ranks very low in many health-related areas. For example, the cause of death registration coverage does not seem very high.

One of the patients I dealt with in the hospital had been in a motorcycle accident and had a severe closed head injury. He eventually died, but they continued to manually ventilate him until his heart stopped on its own. His heart rate fluctuated for many hours due to the swelling in his head, but I am unsure how they documented his death, whether it be cardiac arrest or a vehicle accident. There is little to no tracking of patients in a hospital, and there are many risks associated with that. Patients do not wear identification and their charts are stacked at the nurse's desk. Documentation is all done on paper, which can be misread or even get lost. Access to healthcare is limited to those who can afford it, and I would not say they have much of a public health system. While nurses, physicians, and other healthcare providers are highly educated, many citizens that work other jobs do not have the need or luxury for obtaining further education.

There is an obvious gap between those who have money and those who do not. There is not much of a middle-class, as we have here in the United States. While the country has improved slightly over the past decade, it is still far from being a developed country. Nearby countries like Belize and Costa Rica offer tourism, which can draw in money to improve conditions. Unfortunately, the biggest draw for Honduras tourism is the island of Roatan. This does not provide much income to the country. Hopefully, the trend of improvement will continue for years to come, and increase the level of health in the country.

Comment this discuss in few paragraph ?

Cultural Differences and Ethical Standards

Should you pay the 10 percent commission? Justify your response.

The type of country in which this scenario takes place. As Hill (2009) points out there are high and low context countries. Asian, Latin American, and Middle Eastern countries are high context countries where the message must be interpreted based on not only what was said, but the person's social status, and other cultural indicators present (Hill, 2009). In low context countries, what is said is the message and there is no need for further interpretations (Hill, 2009). Therefore, it would depend on where this interaction is occurring and who is asking for the commission (status, rank, business title, etc). These commissions may be a normal part of doing business in a certain region of the country. However, there are strict laws governing bribes (Mestre, 2015) and if I suspected that this commission was a bribe for business or personal advantage, then I would not pay the commission. This would eventually have a detrimental effect on my business and go against my ethics.

Does it make a difference if your competitors routinely pay such commissions? Explain why this may or may not have an impact on your decision.

As Mestre (2015) explains, bribes are so wide spread that the fundamental alter the business landscape in certain markets. As he states, there is a, "barrage of extortionate demands for bribes in foreign markets (p.2)." Unfortunately, bribes reward the corrupt and not eh efficient which a free market should award the most competitive and efficient company (Mestre, 2015). So these types of "commissions" are frequent around the world and should be calculated in to a SWOT (strengths, weaknesses, opportunities, and threats) analysis when deciding to enter a certain foreign market. A company needs to decide what risks they are willing to take to enter into a new market. Will they pay bribes furthering the decline of a market and risk large legal penalties? Or will they not pay the bribes knowing that this will make it harder for them to do business in that market?

Do you think there should be more or fewer attempt to regulate international ethics? Why? Justify your answer using the research you have done in preparation for this assignment.

The United Nations (UN) and the World Trade Organization (WTO) both have areas that monitor and regulate ethics (websites, ND). Additionally, the United States and other countries have, for example, anti-bribery laws that penalize both the bribe giver and taker (Mestre, 2015). Given all of the regulation, there is still wide spread corruption in the global marketplace (Mestre, 2015). Additionally, new technologies far exceed the pace of legislating new laws and policies (Herther, 2018). Therefore, it seems like a combination of corporate ethic policies, government intervention, and international trade agreements can help to combat unethical behavior in international business. It is important to have multiple areas of regulation as ethical behavior varies by country. For example, what Americans consider unethical may not be unethical in another country.