Marge Norman and the MiniScribe Corporation; Yahoo! And Customer Privacy

Midterm Exam: Marge Norman and the MiniScribe Corporation – page 58-67 Case Study
Student's Name
Institutional Affiliation
Instructor's Name
Date
The case study of Marge Norman and MiniScribe Corporation illustrates how ethical issues can arise in the business world and how important it is for managers to handle them with care. The hard-disk-drive industry was highly competitive, and this, combined with a decline in sales, forced MiniScribe to make a dramatic management shakeup. A San Francisco investment bank led by Hambrecht and Quist (H&Q) provided $20 million capital. Q.T. Wiles, the bank’s partner assumed the chairman position for MiniScribe, injecting $1.6 million in funds into the venture (Werhane et al., 2017). Wiles had a history of turning troubled companies around and seemed to have the enterprise on track despite losing $7 million in 1984. Unfortunately, the firm soon began to show signs of financial distress, with a fourth-quarter net loss of $14.6 million in 1989 and a balance sheet of negative $88 million in July of the same year. The SEC started an investigation into possible financial misstatements, which revealed that senior management had made dramatic overstatements of income and assets while Wiles was CEO and that revenue had been recognized early. Obsolete and defective inventory was counted as viable. Additionally, a "just-in-time" scheme was established to inflate revenue and scrap repackaged and reclassified as current inventory.
Marge Norman was a relatively new plant manager at MiniScribe Corporation when she had one of her professional career's most difficult ethical dilemmas. She had encountered several boxes at the plant containing obsolete parts and was unsure what to do. Norman was aware that senior management had committed financial misstatements to maintain their stock value, and she knew that if she spoke out, she could be risking her job. Therefore, she chose to remain silent.
The case study highlighted numerous ethical issues related to financial reporting. Management manipulated the financial statements by overstating revenues and inflating inventory (Sims, 2002). This resulted in the company's reported profits being significantly higher than the actual profits. Investors were also misled about the firm's financial health. Besides, management had deliberately concealed the truth about the company's financial performance to maintain the stock price.
Another ethical issue was that some employees at the Singapore plant were repackaging obsolete and defective parts as viable ones and recording them as active inventory. This practice inflated the company's inventory values, inflating its profits. Additionally, reports of raw materials were being recorded as inventory without recording the corresponding liabilities on the books until the following year, inflating profits. Ideally, MiniScribe allegedly shipped false inventory to distributors at the end of the year to artificially boost sales and profits.
Marge should have reported her discovery to her boss and raised her concerns. By keeping quiet, she allowed the problem to escalate, leading to the company's eventual downfall. This was an ethical breach of trust on Marge's part. Looking back on this case, I would...