Ricardo Valencia recently resigned his position as controller for Tom White Automotive, a small, struggling foreign car dealer in Austin, Texas. Valencia has just started a new job as controller for Mueller Imports, a much larger dealer for the same car manufacturer. Demand for this particular make of car is exploding, and the manufacturer cannot produce enough cars to satisfy demand. Each manufacturer's regional sales manager is given a certain number of cars. Each regional sales manager then decides how to divide the cars among the independently owned dealerships in the region. Because most dealerships can sell every car they receive, the key is getting a large number of cars from the manufacturer's regional sales manager.
Valencia's former employer, Tom White Automotive, received only about 25 cars a month. Consequently, the dealership was not very profi table.
Valencia is surprised to learn that his new employer, Mueller Imports, receives over 200 cars a month. Valencia soon gets another surprise. Every couple of months, a local jeweler bills the dealer $5,000 for "miscellaneous services." Franz Mueller, the owner of the dealership, personally approves the payment of these invoices, noting that each invoice is a "selling expense." From casual conversations with a salesperson, Valencia learns that Mueller frequently gives Rolex watches to the manufacturer's regional sales manager and other sales executives. Before talking to anyone about this, Valencia decides to work through his ethical dilemma by answering the following questions:
1. What is the ethical issue?
2. What are my options?
3. What are the possible consequences?
4. What should I do?