The Birch Paper case is a classic example of ethical dilemmas in the business world. It highlights the importance of making ethical decisions and the consequences that can result from unethical behavior.
In the case, the fictional company Birch Paper is faced with a decision regarding whether to bid on a contract to supply paper to a new customer, Carter Cleaning Centers. The catch is that the contract requires Birch Paper to use a certain type of paper that is more expensive than the type of paper they currently use.
The company's president, Mr. Park, is under pressure to win the contract because it would bring in a significant amount of revenue. However, he is also aware that using the more expensive paper would significantly increase the company's costs and potentially lead to lower profits.
Mr. Park's sales manager, Mr. Brown, suggests that they could bid on the contract using the more expensive paper but then secretly switch to the cheaper paper once the contract is awarded. This would allow them to win the contract and still maintain their profits.
However, Mr. Park is aware that this would be unethical and potentially illegal. He knows that if they were caught, it could ruin the company's reputation and result in legal consequences.
In the end, Mr. Park decides to bid on the contract using the more expensive paper, even though it means potentially lower profits. He knows that this is the right thing to do and that maintaining the company's ethical reputation is more important than short-term financial gain.
The Birch Paper case illustrates the importance of ethical decision-making in the business world. It shows that although it may be tempting to take shortcuts or make decisions that are solely focused on financial gain, ultimately, it is important to prioritize integrity and ethical behavior. This is because ethical behavior not only protects a company's reputation, but it also fosters trust and respect with customers, employees, and stakeholders.
Birch Paper Co Case Study Solution and Case Analysis
Since Birch has encouraged decentralization, accepting the bid from West is the best option for Northern, since it is the lowest out of pocket cost for Northern. Another piece of evidence that also supports this strategy is the fact that the major focus of their accounting system seems to be on cost reduction. The lowest costs that associated within the company would make Birch Paper Company to earn the highest profits and revenues. As the Northern division is evaluated as an investment center, it is judged independently on the basis of its profit and return on investment. On the basis of the above discussion, it is recommended that Mr. Introduction and Key Issue Statement The inter-transactions among Southern, Thompson, Northern divisions raised issues within Birch.
Birch Case
The paper industry is struggling to say the least according to an article in The Economist, with no new clients firms have adopted a strategy of merging with one another to attain a larger market share. Consequently the report underlines as well as emphasizes of the many contributing factors of these controls. In the controversy described, how, if at all, is the transfer price system dysfunctional? However, the disadvantages of market prices are evident in this case, as BPCS was clearly not competitive with the prices its Loveless set, Ana as a result, could De losing Internal ADIOS Ana opportunities to maximize profits. In this case, Thompson division had been running over capacity and Southern division also had excess inventory. As shown in the table, cost to the company if the boxes are manufactured in Thompson division will be minimized. This causes the division to over-emphasize on profits and encourages goal incongruence.
Birch Paper Company Case Summary
One of the four divisions, Northern Division, designed a special display box and asked for bids from Thompson division and two outside companies. It is also important to note, that the division has not en at capacity the past few months and that the selling price or market transfer prices of the products are actually higher than the going market rate. If so, what specific changes do you suggest? Get your paper price 124 experts online Top management own the problem as they are responsible for company policy. Thompson division need not charge the full 20% of its overhead cost if it is not operating at its full capacity, thus passing on the burden to the other division. The underlying problem of the transfer price system could be that each division is judged based on profits and return on investment. Donors who funded WHA are interested in women having access to more health services. But, if the bid is too low it would cause a loss for the company.
