Ethical dilemma (Learning Objective 4)
Ricardo Valencia recently resigned his position as controller for Tom White Automotive, a small, struggling foreign car dealer in Austin, Texas. Valencia has just started a new job as controller for Mueller Imports, a much larger dealer for the same car manufacturer. Demand for this particular make of car is exploding, and the manufacturer cannot produce enough cars to satisfy demand. Each manufac¬ turer’s regional sales managers is given a certain number of cars. Each regional sales manager then decides how to divide the cars among the independently owned deal¬ erships in the region. Because most dealerships can sell every car they receive, the key is getting a large number of cars from the manufacturer’s regional sales manager.
Valencia’s former employer, Tom White Automotive, received only about 25 cars a month. Consequently, the dealership was not very profitable.
Valencia is surprised to learn that his new employer, Mueller Imports, receives over 200 cars a month. Valencia soon gets another surprise. Every couple of months, a local jeweler bills the dealer $5,000 for “miscellaneous services.” Franz Mueller, the owner of the dealership, personally approves the payment of these invoices, not¬ ing that each invoice is a “selling expense.” From casual conversations with a sales¬ person, Valencia learns that Mueller frequently gives Rolex watches to the manufac¬ turer’s regional sales manager and other sales executives. Before talking to anyone about this, Valencia decides to work through his ethical dilemma by answering the following questions:
1. What is the ethical issue?
2. What are my options?
3. What are the possible consequences?
4. What should I do?