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ethics Guide

yikeS! BikeS

Suppose you are an operations manager for Yikes! with a strong, quality brand. She says she will take a few
Bikes, a manufacturer of high-end mountain bicycles. Yikes! weeks to orient herself to the business and its environment
has been in business more than 25 years and has an annual and plans no major changes to the company.
revenue of $35M. The founder and sole owner recently sold You are reeling from all this news when Parks calls you
the business to an investment group, Major Capital. You into her office and explains that she needs you to prepare
know nothing about the sale until your boss introduces you two reports. In one, she wants a list of all the employees in
to Andrea Parks, a partner at Major Capital, who is in charge the manufacturing department, sorted by their salary (or
of the acquisition. Parks explains to you that Yikes! has been wage for hourly employees). She explains that she intends
sold to Major Capital and that she will be the temporary to cut the most costly employees first. “I don’t want to be
general manager. She explains that the new owners see great inflexible about this, though,” she says. “If there is someone
potential in you, and they want to enlist your cooperation whom you think we should keep, let me know, and we can
during the transition. She hints that if your potential is what talk about it.”
she thinks it is, you will be made general manager of Yikes! She also wants a list of the employees in the customer
Parks explains that the new owners decided there are support department, sorted by the average amount of time
too many players in the high-end mountain bike business, each support rep spends with customers. She explains, “I’m
and they plan to change the competitive strategy of Yikes! not so concerned with payroll expense in customer support.
from high-end differentiation to lowest-cost vendor. Accord- It’s not how much we’re paying someone, it’s how much
ingly, they will eliminate local manufacturing, fire most time they’re wasting with customers. We’re going to have a
of the manufacturing department, and import bikes from bare-bones support department, and we want to get rid of the
China. Further, Major Capital sees a need to reduce expens- gabby chatters first.”
es and plans a 10 percent across-
the-board staff reduction and a
cut of two-thirds of the customer
support department. The new
bikes will be of lesser quality than
current Yikes! bikes, but the price
will be substantially less. The new
ownership group believes it will
take a few years for the market
to realize that Yikes! bikes are not
the same quality as they were.
Finally, Parks asks you to attend
an all-employee meeting with the
founder and her.
At the meeting, the founder explains that, due to his
age and personal situation, he decided to sell Yikes! to
Major Capital and that starting today Andrea Parks is the
general manager. He thanks the employees for their many
years of service, wishes them well, and leaves the building.
Parks introduces herself to the employees and states that
Major Capital is very excited to own such a great company
Source: Claudiu Paizan/Shutterstock, PSD photography/Shutterstock
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