Republic of the Philippines

BATANGAS STATE UNIVERSITY

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
CITE Building, Pablo Borbon Main I, Rizal Avenue, Batangas
City

BUSINESS ETHICS CASE STUDY: THE MEDRANO MACHINE COMPANY

In Partial Fulfillment of the Requirements for the Course

MGT 209 – Governance, Business Ethics, Risk Management and Internal
Control

Submitted by:
Atanacio, John Dinson M.
Balderama, Sherwin A.
Del Rosario, Kirsten Mattieu D.
Ilagan, Kjiell Ivan C.
Petrache, Katrina G.

BSMA – 2103

Submitted to:
Ms. Annalyn C. Rayos

December 11, 2021

 A. ETHICAL ISSUE
This particular case talks about The Medrano Machine company, a per year custom
metal fabrication shop. Since this is a manufacturing business, majority of possible issues
arises from the Production/Operations Management. There are two parties involved in
this case: John Villanueva, who was recently hired to remedy problems meeting
scheduled deliveries and Digna Medrano, the Vice President of Operations as well as the
daughter of the company president.
Long story short, the company has been recently facing difficulties in meeting
delivery schedule deadlines which is the main reason John Villanueva has been hired by
the company. Now an issue has arisen on Wednesday, June 19th when the customer has
asked for an extension or delay for the delivery of his order worth Php 300,000 scheduled
on Friday, June 21st. This is because the customer’s company has unfortunately
encountered labor dispute and work stoppage and therefore, operations has been
disrupted. John and Digna has come to an agreement and heeded the request of the
customer but on certain conditions. The original payment terms are still to be complied
with. The customer will still be billed on the original scheduled delivery date and he
consented.
But on Friday morning, June 21 a problem came up when the production manager
reported to John that there would be a delay in delivery of the order and it would take
another week for it to be completed. Now John here being all prideful and worried that
his job status would be questioned or tainted, took it all upon himself to investigate the
cause of delay without informing Digna. Little did he know that Digna had just mailed
the invoice for the order as per the agreement. Further suggestion from her for John to
negotiate with the customer a storage fee as an additional payment and John doesn’t
know what to say. This is because he lacked accountability and wasn’t honest. Delayed
request from the customer aside, he still should’ve been honest and disregarded his
personal status because the company’s operations is the priority. This mistake of his
could cause further tension and misunderstanding between him and Digna.

B. WHO IS AFFECTED & HOW HE/SHE WAS AFFECTED?

 John Villanueva, Medrano’s production scheduler
- He was recently hired by the company to help them improve its company’s
performance in on-time deliveries. So far, he is adjusting and started to become
familiar with the systems of operations to come up with possible solutions, but
he’s having a hard time defining the best course of action to recommend. Upon
handling the transaction, he agreed to their customer’s request of delivery be
 delayed due to labor disputes and work stoppage with a condition of it will be
billed originally on the scheduled delivery date and to pay on the originally
contracted payment terms. Consequently, when the scheduled date occurs, the
production manager told John that the order would not be completed as scheduled
and needs to have at least one more week to finish. In this case, John Villanueva
became worried on his job status due to not envisioning what probably may
happen. Before accepting the customer’s request, he should not only consult Digna
but also coordinates with his whole team since he is new and still needs the
provisions of the company. We all know that one wrong decision can ruined and
affect everyone. So, he and his team possibly have salary deductions due to John’s
negligence. Because he is new to the company and there is more to improve, he
might get fired immediately for the result of not holding accountable for his
actions as well as not doing his job as production scheduler effectively.

 Digna Medrano, Vice President of Operations and daughter of the company

president
- She will be affected because she also permitted the customer’s request together
with John Villanueva and she was careless on not checking the arrival of order
before mailing the invoice to the customer. She does not get informed prior with
the delay of arrival and cause her to have miscommunication with John. She might
not be demoted in her position because she is the daughter of the president of the
company so consequently she would not get affected too much.

 Customer
- He/she will be affected by losing the Medrano Machine Company as their supplier
of custom metal fabrication due to the lack of credibility and became the source of
conflict.

 The Medrano Machine Company itself

- Their customer will find another shop to be their new supplier due to the late
arrival of their 300,000 pesos order which had been in the shop for 2 months. Due
to the delays and negligence, they might lose their customer’s loyalty and have
established a bad image to the society.

C. WHAT ARE THE AVAILABLE ALTERNATIVES?

Since John is dealing with ethical dilemmas and seeking a solution, he has the
following options from which to choose:
 To avoid a negative outcome, John can inform the customer about the delay
and implore him to find out a solution while keeping it hidden from Digna.
- To prevent him from being punished, John might work out a deal with the buyer
regarding the delay before telling it to Digna if the conflict has been closely
solved.

Inform the customer of a manufacturing delay and the possibility of missing

the deadline.
- It is necessary and ethical to inform or notify the customer of any delays, even if
the consumer is unaware of the delay, it is only ethical and proper to maintain
every transaction transparent in order to build long-term relationships and trust.

John can tell Digna about the delay right away and accept the punishment.
- As the company's operations manager, it is needed on John to be accountable for
his mistakes as well as being open and honest about the company's current
predicament. John should speak with Digna about the order's delay.

While choosing to hide it from Digna and to the customer about the delay,
John may ensure that the package is available when the customer wants it.
- To refrain from any penalties, John should keep the knowledge from Digna and
the customer. He must first find for an acceptable solution to the problem and
resolve the situation as what his job is.

D. CONSEQUENCES FOR EACH ALTERNATIVES