Windsor A Failed Attempt to Save a Company John Ledgerwood MSA CPA CMA CFM CGMA Tamilla Curtis DBA EmbryRiddle Aeronautical University Daytona Beach Florida Agenda Background Problems ID: 459424
Download Presentation The PPT/PDF document "Pinturas" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Pinturas Windsor
A Failed Attempt to Save a Company
John Ledgerwood, MSA, CPA, CMA, CFM, CGMA
Tamilla Curtis, DBA
Embry-Riddle Aeronautical University
Daytona Beach, FloridaSlide2
Agenda
BackgroundProblemsThe Decision
An Ethical Dilemma
Conclusion
Questions
1Slide3
Background
2Slide4
Pinturas Windsor
Company established in Ecuador on March 24, 1995A subsidiary of Windsor Group, based in Miami, Florida
Owned several manufacturing and chemical companies
Presence in Chile, Peru, and Colombia
Specialized in aerosol paints, shampoo, cologne, and talcum products
3
http://previews.123rf.com/images/
thirteenfifty
/thirteenfifty1201/thirteenfifty120100337/12093449-can-of-spray-paint.jpg
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide5
Francisco Cevallos
First General Manager
10 years of management experience in manufacturing
Hired to set up the business
4
http://
www.leicestermercury.co.uk
/images/
localworld
/
ugc
-images/275788/Article/images/19418435/4994214-large.jpg
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide6
Initial Investment
Old factory in Quito
Hired 30 employees
Purchased new machinery and equipment (about $4.0 million)
Set-up costs that included a $5 million insurance policy
Total: approx. $6.0 million
5
http://farm8.static.flickr.com/7269/7464143826_2d02ffba37.jpg
http://hz00.i.aliimg.com/img/pb/323/749/468/468749323_732.jpg
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide7
problems
6Slide8
Successful Years
Great success from 1995 to the end of 1997
7
http://
www.gdbinternational.com
/paint/
wp
-content/uploads/2011/03/GDB0335.jpg
By end of 1997, had 5 stores in Quito, and were suppliers to customers in other big cities throughout Ecuador
Cevallos
received congratulatory remarks from Board of Directors
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide9
Successful Years (2)
Ecuador’s government expecting to invest heavily in construction
Cevallos
decided that in 1998, production should be doubled from 5 million units/year to 10 million units/year
8
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide10
Competition Moves In
Cevallos did not consider effect that competition would have……..
9
http://www.pinturascondor.com/images/paint/generico.jpg
Two weeks after accelerating production,
Pinturas
Condor (a major competitor) announced the start of operations in Quito
Cevallos
realized they were in trouble
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide11
Pressure from the U.S.
Windsor Group decided to send Mary Petravsky, a senior level accountant to try and remedy the situation
CMA - Certified Management Accountant
Member of IMA (Institute of Management Accountants)
10
http://dccorporateheadshots.com/wp-content/uploads/2012/05/Haase_Alice.jpg
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide12
THE DECISION
11Slide13
In Trouble
Pinturas Condor (the competition) signed contract with government to be the sole provider in construction projects
Cevallos
remembered he had purchased an insurance policy
…
12
http://dccorporateheadshots.com/wp-content/uploads/2012/05/Haase_Alice.jpg
By December 1998,
Pinturas
Windsor sales were down and inventory was huge……
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide14
The Accident
On March 25, 1999 (3 months after Mary arrived), Mary picked up the newspaper to find that a fire at 3:00 a.m. had burned down half of the factory
She was worried about how to communicate news to Windsor Group
Cevallos
claimed it was an electrical malfunction, however firefighters did not jump to a conclusion
13
http://
www.nfa.com
/pic12.jpg
http://murciatoday.com/images/articles/22322_two-injured-in-molina-de-segura-aerosol-factory-fire_1_large.jpg
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide15
The Accident (2)
A few months later, investigation concluded that fire was caused by an electrical malfunction
Cevallos
and Mary met to discuss what to do with the $5 million, which the insurance company agreed to pay
Cevallos revealed to Mary that he had been the one who caused the fire
14
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide16
An ethical dilemma
15Slide17
What Should Mary Do?
Cevallos had behaved unethically and illegally….
Mary knew she could lose her job if she didn’t save
Pinturas
WindsorThe $5 million was enough to save the company from bankruptcy
16
https://nargaque.files.wordpress.com/2010/04/decision.jpg?w=300
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide18
Reference
The Institute of Management Accountant’s (IMA) Statement of Ethical Professional Practice
Principals, Standards and Guidelines
Four Standards
Competence
Confidentiality
Integrity
Credibility
IMA Statement of Ethical Professional Practice
17Slide19
IMA Guidelines for Resolution of an Ethical Conflict
Follow employer’s established policies.
If this does not work, consider the following:
Discuss the conflict with immediate supervisor or next highest uninvolved managerial level.
If immediate supervisor is the CEO, consider the board of directors or the audit committee.
Contact with levels above the immediate supervisor should only be initiated with the supervisor’s knowledge, assuming the supervisor is not involved.Slide20
IMA Guidelines for Resolution of an Ethical Conflict
Except where legally prescribed, maintain confidentiality.
Clarify issues in a confidential discussion with an objective advisor.
Consult an attorney as to legal obligations.Slide21
What Mary Did
Followed the IMA standardsRevealed truth to Board of Directors of Windsor Group, as well as authorities in Ecuador
20
https://nargaque.files.wordpress.com/2010/04/decision.jpg?w=300
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide22
conclusion
21Slide23
Conclusion
Ethical situations occur in business.Follow your professions code of ethical conduct.
Mary chose professional ethical conduct over keeping her job
Things turned out better than she thought they would…. Returning to the US and later being promoted….
22
https://nargaque.files.wordpress.com/2010/04/decision.jpg?w=300
Background
Problems
The Decision
Ethical Dilemma
ConclusionSlide24
questions
23