De La Salle University

Ramon V. del Rosario College of Business

A Case Study
on
Roger Berg (Case #1)

As partial fulfilment for

Management Principles and Dynamics (BUS500M)

Submitted By:
Group #1
Animoza, Wabel
Fernandez, Androlito
Medina, Clarice
Sandejas, Benedict
Yu, Edilyn Ruth

04 October 2014

1
I.

II.

Synopsis:
Roger Berg, VP of Planning for Lake Corporation, was developing a new project and is in need of a
contractor. His intention was to award this to Ceil Grant, a small contractor he had worked with. On a
conversation with Del Leonard, another contractor who has more experience and is more expensive,
Leonard offered Roger help on securing an appointment at a medical clinic that Del has influence
over.
In the evening of that same day, Roger thanked Del for the favor, telling him how much help it is. He
said that he will recommend Del as the contractor of choice on the selection the day after. Del then
proposed a better deal than Grants Cost Estimate. Did Roger conduct himself in an ethical manner?
Statement of the Problem
What action should Roger Berg take involving the awarding of the environmental study contract,
taking into consideration ethics and moral conduct as a Vice President?

III.

Point of View
This case is studied in the point of view of Roger Berg, the Vice President for Planning in Lake
Corporation, a real estate development firm in Northern California.

IV.
1.

Objectives
To choose a contractor which addresses the company's requirement and maximizes
Shareholder value
The selection of a contractor should be oriented towards the lowest possible cost with the highest
possible value to the Shareholder

2.

To conduct oneself in line with the ethical standards of the company

Although this is subjective, a manager should always conduct himself/herself in an ethical manner.
Roger Berg should comply with the ethical standards of his company, as well as the ethical standards
of the members in his society.

3.

To support a multi-contractor environment

To maximize shareholder value, contractors must offer reasonable contract prices. If a monopoly
exists, it would be difficult for the company to get a low contract price due to lack of
competition/alternatives.

4.

To ensure that unethical/ questionable practices will not incur

Whether or not Roger Berg's actions are deemed unethical, the company's code of ethics must be
reviewed periodically to ensure that management and employees apply these guidelines.

BUS500M Case # 2 Roger Berg | Group 1

IV.

Areas of Consideration
1.

Ethical Views (Personal & Companys Policies)

On the selection of contractors, companies usually conduct a bidding process. As an employee, one
must ensure that the companys position will not be compromised and all decisions are beneficial to
the company and its workers. However, personal preferences sometimes affect our decisions. Roger
Berg holds a key position in the company, having influence over key decisions. His personal
preferences must not put the company in a difficult position nor conflict with the companys standards/
policies.
2.

Competence of the two contractors

Ceil Grants small firm, despite its size, has built a good working relationship with Lake Corporation.
Their competence and good track record makes them a very likely candidate for the project. On the
other hand, Del Leonards firm is much bigger compared to Grants. Leonard promised to give better
output, due to their experience in the business and the number of workers that they can assign to
work on the project.
3.

Bidding Process

Grants firm had undergone the normal process of selecting the subcontractor for the project. On the
other hand, Leonards company is currently preferred not only because of the companys outstanding
achievements in the business but also because of the personal favor that triggered Berg to reconsider
Leonard.
4.

Developing relations with Suppliers/Contractors

Building relationships/networks are vital in any business as a foundation for success and growth. A
good business network is a competitive edge as it helps the business reach its goals through external
means . In the case of Berg, a history with Grants small firm gives Bergs company an assurance in
the quality & cost of work. On the other hand, Leonards big company has had more experiences in
the field, with more resources that can be an advantage for Bergs company as well. In addition to
this, since Leonard is already extending his help for Bergs wife, not being able to accommodate him
in the selection process could prevent this favor from happening. As Berg loves his wife, this decision
is very important to him.
V.
1.

Discussion of Framework
Consequentialist Theory (Mainstream Management)

Part of the Mainstream Management theories, it shows high emphasis on materialism and
individualism. The Consequentialist Theory focuses on the consequences of an action in determining

BUS500M Case # 2 Roger Berg | Group 1

3
what is ethical; thus, an an action resulting in beneficial outcomes is ethical whereas an action
with harmful outcomes is unethical. The outcome is measured through wealth/money, to be
distributed to the companys employees for the purchase of their own needs.
In the application of this theory, Berg will be examined through the outcome of his actions. Whichever
his personal motive may be in the possible recommendation of Leonard as the contractor, such as: 1.)
repaying gratitude for Leonard, or, 2.) to ensure a personal favor from him, he is considered ethical if
the outcome is beneficial to everyone - and we can see that Leonard has offered better work than
Grant.
2.

Rule Utilitarianism (Mainstream Management)

Perhaps the best known Consequentialist Theory, Utilitarianism was espoused by 19th century
philosophers Jeremy Bentham and John Stuart Mill.
Focusing on Utilitarianism, this moral philosophy gives high emphasis on productivity and efficiency,
following the principle of The greatest good for the greatest number. Utilitarianism is a resultoriented point of view: views the options benefits minus its costs. To apply this, one must consider
the effect of each alternative course of action on all parties; select the one that benefits the greatest
number of people, or maximizes the organizations profits most. Utilitarianism has 2 aspects: Act
Utilitarianism, which seeks to benefit most people regardless of feelings and societal constraints, and
Rule Utilitarianism, which takes into account the law and seeks to benefit the most people through the
fairest way possible. Following this, if Berg recommends Grant: Grant and Lake Corporation benefits;
if Leonard: Leonard, Lake Corporation and Bergs wife benefits. In applying Rule Utilitarianism, Berg
may proceed in recommending Leonard, committing no harm to all, and benefiting most.
We can see that in applying Rule Utilitarianism, Berg is free to recommend any of the choices at
hand, as the choice of recommending Leonard is considered ethical.

3.

Virtue Theory (Multi-Stream Management)

The Virtue Theory is closely associated with Multi-Stream Management, giving low emphasis on
materialism/individualism. It asks the question: Is this consistent with who I am, who I aspire to
be?. Likewise, it focuses on the character, how people practice, & facilitate the practice of
virtues in the community, thereby facilitating happiness.
In studying this case closely, we can see that the choices before Berg is a personal dilemma more
than a company dilemma. Seeing that Leonards assistance can save his wifes health with a plus
factor of better work from Leonards firm, the choice has even better outcomes than Grant. However,
Berg must ask himself: will he allow himself to make decisions primarily based on how it benefits
himself, and other concerns thereby coming in second?
Multi-stream management techniques focuses on the overall well-being of the community and on the
achievement of long-term goals and its effects. In applying this to Bergs personal virtues, allowing
oneself to make decisions driven by personal motives will not be beneficial for himself in the long

BUS500M Case # 2 Roger Berg | Group 1

4
term, as an action leads to a habit. And a good habit builds, while a bad habit destroys the person and
his community.
4.

Deontology
Deonotology, also known as Duty-Based Ethics, focuses on the moral actions of a person, and not on
the consequences. Do the right things because it is the right thing to do; do not do the wrong things
because it is the wrong thing to do. In Deontology, you cannot justify an action because it has good
consequences, and people have a duty to act accordingly. The right overcomes the good.
In view of Bergs personal decisions, it is his duty to do the right thing and focus on his actions as
much as the consequences of his actions. In choosing Grant, Berg conforms to the moral norm, and
morally correct choices is reflected upon ones character, eventually earning peoples trust and
respect and possibly leading to a promotion in the future.

VI.

Alternative Courses of Action (ACA)

ACA 1: Recommend Ceil Grants firm
PROS

CONS

They have a good work history with the

company.
Low cost compared to other firms.
They can focus more on Bergs project since
they have few clients.

Berg might not be able to get his wife a

consultation with the clinic for her treatment.

ACA 2: Recommend Del Leonards firm without informing Upper Management about
circumstance behind the recommendation

PROS
This is a large firm which has twice the
experience and twice the people of Cel.
Berg might be able to get a consultation with
the clinic for his wifes treatment.
Berg is not honest about the real reason
behind the recommendation.

CONS

Recommendation was partially leveraged

by exchanging personal favors.

This may result in Grants company

declaring poor revenues leading to bankruptcy
which will increase future contract prices due to
lack of competing firms.

ACA 3: Recommend Del Leonards firm, informing Upper Management about circumstance
behind the recommendation

BUS500M Case # 2 Roger Berg | Group 1

PROS

CONS

This is a large firm which has twice the

experience and twice the people of Cel.

Berg might be able to get a consultation

with the clinic for his wifes treatment.

This shows level of integrity since Berg

is not honest about the real reason behind the
recommendation.

Disclosing the circumstances behind

the deal makes the favor a casual one that
need not be kept as a secret, in fear of being
deemed questionable.

Recommendation was partially leveraged by

exchanging personal favors.

This may result in Grants company declaring

poor revenues leading to bankruptcy which will
increase future contract prices due to lack of
competing firms.

The management might deem Berg as

familial/subjective in making professional decisions.

ACA 4: Look for additional firms

PROS

CONS

Increases the chances of getting better

quotations which may increase shareholder value.

This will give Berg a chance to be more

professional decision.

Unfamiliar firms may yield to unfavorable

results.

Bergs wife might not get the consultation.

Project delays may occur.

ACA 5: Berg to inhibit himself in making recommendations

VII.

PROS

CONS

This will open opportunities to sound

choice from other decision makers.

Berg will no longer have a dilemma

involving personal matters.

Bergs wife still doesnt get the treatment.

This will make Berg look unreliable since

he is not doing his job.

Project can be delayed.

Recommendation
ACA1

ACA2

ACA3

ACA4

ACA5

Obj.1 - Shareholder Value (40%)

35%

40%

40%

30%

28%

Obj.2 - Ethical Conduct (35%)

34%

27%

31%

27%

26%

Obj.3 - Multi-Contractor Environment (10%)

6%

7.2%

3.4%

10%

7.4%

Obj.4 - Prevent Unethical Behavior (15%)

8%

4%

10%

7%

7%

78.2%

84.4%

74%

68.4%

TOTAL 83%

BUS500M Case # 2 Roger Berg | Group 1

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Our recommendation is that Berg should still recommend Leonards company for the environmental
study, however he should disclose the additional circumstances surrounding this recommendation.
Although he was already ready to recommend Leonard, Berg did not neglect his company by making
sure that the contract price should be the same as the price given by Grant. He was still protecting his
Shareholders. Since the company can get Leonard's company, which was noted to be bigger and had
more resources, for the same price as Grant, Bergs company got a better deal, increasing
Shareholder Value. With regards to Ethical Conduct, Berg did not put the Lake View in a financially
disadvantageous position by recommending that Leonard get the contract. Unlike most ethical
decisions which affect the owner's wealth, Lake View actually benefited from it. Also, most of the
people affected by this decision will benefit from this, with the exception of Grant.
Since Berg had informed his superior about his agreement with Leonard, Upper Management is
aware that ethical problems may exist, especially when it comes to personal issues. A review of their
ethical standards can be conducted to check if it was violated and if sanctions should be imposed.
Other employees should be reminded that these standards exist to prevent problems arising in the
future.
VIII.

Implementation Plan
Deliverables

Deadline

People

Objectives

Involved
1. Roger Berg
recommends Leonard on
the basis of his rates and
ability to deliver

Within the next few

days

Roger Berg
Roger's Boss

Start the process of awarding

the environmental study

2. Roger Berg discloses

his discussion w/ Leonard

Same deadline as the

1st deliverable

Roger Berg
Roger's boss

Disclose the ethical problem

Roger Berg is facing

3. Review Lake View's

Ethical Conduct
Documents

Before any other

Management
important business
HR
decisions are made by Legal
any employee

IX.

Check if Roger Berg is in

violation of any rules and if
so, how he should be
disciplined

Learning
This case studies the ethical and moral values which each person encounters every so often. It is said
that our ethical and moral values are strongly influenced by the way we are brought up by our parents
or guardians. In encountering gray areas, we often refer to our own code of ethics. Apart from the
law, our own code of ethics contributes to our decisions, and it varies in standards we have defined
for ourselves. For us Filipinos, some believe that in this present time, it takes ethics plus diskarte
(tactic) to win in the game of life. Such is the dilemma of Berg in choosing which contractor to
recommend.

BUS500M Case # 2 Roger Berg | Group 1

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In ethics, we can give more importance either to the actions or its consequences (utilitarianism versus
deontology). The answer may vary per person as both are considered ethical. Likewise, we believe a
balance of both must be achieved. There should be no unethical action/s committed in the process of
achieving an outcome that is beneficial to the majority. To make this happen, all factors involved in
decision-making must be mapped out, giving more weight the priorities and crossing out unethical and
immoral actions. Then, the options must be also be weighed according to how they help reach the
goal. This practice helps the decision-maker get a clear view of the decision to be made, both in micro
and macro aspects. Applying this practice will help gray areas turn fifty shades whiter.
X.

References
http://plato.stanford.edu/entries/ethics-deontological/
Dyck, B., & Neubert, M. (2012). Management: Current Practices and New Directions. Cengage
Learning.

BUS500M Case # 2 Roger Berg | Group 1