Bramer Corporation’s controller, Mara Jossen, was asked to prepare a capital investment analysis for a robot-guided aluminum window machine. This machine would automate the entire window-casing manufacturing line. She has just returned from an international seminar on the subject of qualitative inputs into the capital investment decision process and is eager to incorporate those new ideas into the analysis. In addition to the normal net present value analysis (which produced a significant negative result), Jossen factored in figures for customer satisfaction, scrap reduction, reduced inventory needs, and reputation for quality. With the additional information included, the analysis produced a positive response to the decision question.
When the chief financial officer finished reviewing Jossen’s work, he threw the papers on the floor and said, “What kind of garbage is this! You know it’s impossible to quantify such things as customer satisfaction and reputation for quality. How do you expect me to go to the board of directors and explain your work? I want you to redo the entire analysis and follow only the traditional approach to net present value. Get it back to me in two hours!”
What is Jossen’s dilemma? What ethical courses of action are available to her?

  • CreatedMarch 26, 2014
  • Files Included
Post your question