Case Application Summary
When we read the new OBM case application in chapter 5 we understood many new things about company ethics and responsibility. In this case we were introduced in a true story of RadioShack Corporate Company. The story is about company’s CEO David Edmondson and his fall as a chairman of it. He lied about his educational background that helped him to take the CEO-seat from Len Roberts. One of the first signs was marked from the newspaper “The Fort Worth Star Telegram” who reported a huge article for him. After his hiring as a new CEO the company lost its positions and the result was that share price dropped to a 3 year low level. Mr. David Edmondson neglects the Company ethics and than he was fired. The strange part of the story was that he received a huge worth for his job. After his management The RadioShack Code of Ethics was changed. The date was 21.02.2006 immediately after his leaving. This wind of change in company’s policy was a big step to turn back their customers.
Question 1: Evaluate this situation from the viewpoint of David Edmondson’s ethical leadership. What could RadioShack have done differently?
Answer 1: According to D. Edmondson the only thing that he has done wrong is that he lied about his educational background and also says that this is the only thing that he did not followed from the ethnical leadership. After the truth was revealed he did not try to hide or to deny it, and that issue can be consider as ethical behavior. Also he made an apology to the investors about the bad performance of the company and did not cover up his fault. However, Radio Shack could have done better and could have avoided this shameful situation. First, they have to investigate all their employees before hiring them in the company. Thus they would have understood that Edmondson did not have his two degrees and all of his educational background is just a scenario. Also they could have prevented themselves from losing more money by firing him at the moment and not paying him anything as compensation.
As a conclusion I would say that the company could have done things first to avoid the uncomfortable situation that they fell into after hiring an uneducated employee and second to save money by not paying anything to a person who have deceived the company and ruined its reputation.
Question 2: What stakeholders might be impacted by this situation? What concerns might each stakeholder have had? Was any of the stakeholders’ concern in conflict with each other? Explain. What impact might this have had on employees?
Answer 2: Radio Shack is a company with many stakeholders that are interest mainly in the good performance of the company. A situation like that with David Edmondson could have a great influence on them. From the one side are the investors who might not be very satisfied, because the company can start losing money, customers, reputation, market share etc. They are interested in the good functioning of the company as they consider it as a lucrative vehicle.
On the other side are the employees, who surely do not want to be managed by an uneducated person, but they are not capable of doing anything in order to change the situation. Last but not least are the customers that can stop buying the products after they learned about the fraud of the CEO. (although it is not very likely to happen just because nowadays people are more interested of the product itself that the company that is producing it).
Bearing all this in mind we can say that the stakeholders can do almost nothing if a situation like that occurs just because they do not have the right and the power to interfere into the manager’s business, decisions and actions.
Question 3: Do you think the board’s decision to fire Edmondson was “tough,” as Len Roberts suggested? Why or why not? Why do you think Mr. Roberts would have described this decision as such?
In our opinion, the decision to...
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