Case 3 GROUP 6

Troubled Waters: Ranialda Hendri A191086

Chiesa Jordan A191080
An Outsourced Tazkia Karima A19097
Kim Sehee A191073
Ethical Dilemma Adma Wahyu Dwi A19107
 INTRODUCTION

A small group of investors established

Waters Paper Corporation (WPC), a
publicly traded company in the late
1800s, to convert the Upper-Midwest’s
abundant forests into paper products. To
support surgeons in World War I, the
company developed casi-cotton, an
absorbent cotton substitute, that would
later provide the basis for the first
disposable handkerchief (SneezEase) and
feminine hygiene product (SanEase)
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 Assignment Questions:
1. Discuss the pros and cons of outsourcing IT. Beyond the financial considerations, what nonfinancial factors
might contribute to a company’s decision to outsource IT?
2. Evaluate Richard’s potential responses to this ethical dilemma and the associated benefits and
consequences of each.
3. If you were in Richard’s position, which response would you choose and why?
4. As a CMA, Richard is governed by the IMA Statement of Ethical Professional Practice. What are Richard’s
ethical responsibilities under IMA’s standards? What guidance can Richard follow on the ethical conduct
resolution detailed in the IMA Statement?
5. The individuals in the case (current CEO, CFO, CIO, and Richard) have specific motivations behind their
attitudes toward the potential IT outsourcing of the company. Describe in detail the motivations of each in
the case. What factors contribute to their decision?
6. Publicly traded companies are required to provide an ethics hotline. But if Richard elects to utilize the
hotline, his identity will easily be revealed. What safeguards are in place to protect him from repercussions in
the workplace? Formulate the factors Richard should contemplate when deciding to become a
whistleblower.

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 No. 1- Pros outsourcing IT
1. Waters Paper Corporation (WPC) Don’t Have To Hire
More Employees
When you outsource, you can pay your help as a
contractor. This allows you to avoid bringing an employee 3. Waters Paper Corporation (WPC) gain Lower Labor
into the company, which saves you money on everything Cost
from benefits to training. Every company has its own reason for doing this, like
WPC chasing lower labor costs based on Ken
consideration. Outsourcing can allows WPC to get
cheaper labor. By searching a global talent pool, it’s
easier to find the right IT talent at the right price.
2. Waters Paper Corporation (WPC) gain Access To A
Larger Talent Pool
When hiring an employee, WPC only have access to a
small, local talent pool. This often means WPC have to
compromise.

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 No. 1- Cons outsourcing IT
3. Waters Paper Corporation (WPC) will
2. Waters Paper Corporation (WPC) will
Faced Problems With Quality
Faced Communication Issues
1. Waters Paper Corporation (WPC) Despite all the benefits of outsourcing, it is
This doesn’t always come into play, but
will Faced Lack Of Control only a good thing if you’re receiving the
it’s one of the biggest potential
Although WPC can provide drawbacks. According to Cameron quality you expect. Anything less than this
direction in regard to what you Herold, the founder of a COO training will be a disappointment. Like what
need to accomplish, the program, communication is essential to
richard say that if WPC outsource 25% of
company give up some control success in the business world. Since a
the IT organization, WPC will lose
large number of U.S.-based employees
when the company outsource. significant institutional intelligence
report not being engaged at work,
communication remains a major developed over many years of service
problem. Will this get worse if WPC IT that can’t be quickly transferred to
Department employee outsource? outsourced programmers.

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No. 1-Financial considerations
the IT department was seriously overstaffed. Since the company utilized a well-known ERP system with a
common operating system, the consultants recommended WPC reduce administrative costs by
outsourcing 25% of the department to offshore programmers. With an internal billing rate of $50 per hour vs.
an outsourced rate of $25 per hour, the consultants’ recommendations had the potential to save WPC $6.6
million in the first year and a total projected payback of less than four years, this decision can help WPC
overcome financial problems.

No. 1-nonfinancial factors might contribute to a

company’s decision to outsource IT
As a business owner, it’s easy to focus on the benefits of outsourcing, all without considering the
impact it can have on your company as a whole. If you plan on outsourcing, you need to take steps
to ensure that it doesn’t have a negative effect on company culture. Richard read extensively
about several epic IT outsourcing failures due primarily to severe inefficiencies in completing
programming assignments on time and on budget, with most taking more than double the amount
of anticipated time.
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No. 2
1. Evaluate Richard’s potential responses to this ethical dilemma and the associated
benefits and consequences of each.
1. Share experience based analysis result with Chris & other party

benefits :
- Saving 110 IT employees and his sister from getting severed
- chance of saving the company from using an overestimated IT outsource.
- Chance of clean his reputation in the company
- Chance getting favour from Chris Schmidt, current CIO

consequence :
- Getting fired with a limited pension fund if Ken become the CEO
- Cut his ties with Ken, the current CFO

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No. 2
2. Agree with Granderson decision and support Ken to become the next CEO

benefits :
-promoted as a contract administrator over IT outsourcing initiative with a pay raise

consequence :
- facing a moral dilemma to sever 110 IT employees
- If the granderson analysis proven wrong and the outsourced IT is inefficient Richard's
reputation & experience will also be questioned by board of directors and Chris
- Will be suspected by Chris Schmidt, current CIO

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No. 3 Decision

The Ethics Check

- Is it legal?
- Is it balanced?
- How will it make me feel about myself?

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No. 3 Decision
alternatives:

- Fired employees based on related performance appraisal

methods.
- Conduct a grand meeting with top management to discuss
alternative solutions whether outsourcing or in-house method.

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No. 4 IMA Statement of Ethical professional practice

Competence Confidentiality Integrity Credibility

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No. 4 IMA Statement of Ethical professional practice

1. Provide decision support information and

recommendations that are accurate, clear, concise,
and timely. Recognize and help manage risk.

2. Refrain from using confidential information for

unethical or illegal advantage.

3. Contribute to a positive ethical culture and place

integrity of the profession above personal interests.

4. Communicate professional limitations or other

Richard
(CMA/CIO)
constraints that would preclude responsible judgement
or successful performance of an activity.

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 No. 5 Motivation of Attitude & Factors Contributed

Tom Vollmer (CEO) Ken Fleming (CFO) Chris Schmidt (CIO) Richard McBride (CMA)
Do not really interfere CEO Wannabe. Why? Asking Richard to do Oppose Ken’s Idea.
Why?
and want to retire in • CEO position analysis from
peace. Why? vacancy Granderson Consulting • Analysis inefficiency
outsourcing
• WPC financial crisis suggestion. Why? • Jeopardize the
• Cancer survivor
• Opportunity in career of the staff
(health) savings of IT Dept • Oppose Ken’s idea
and his younger sister
• Retire next year from Granderson
Support Ken’s Idea.
Consulting Why?
suggestion
• Willing to do • Ken’s blackmail
anything to • Ken’s helps for him
convince BOD to not to get fired
despite his drug
be promoted as addiction 13
CEO
No. 6 Factors should be contemplated

1. Make sure you have a valid case

2. Only report the right kind of concerns
3. Check the approved channels
4. Consider the moral & financial implications

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THANK YOU

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