Since incorporation, MTCC’s speed boat unit had never been profitable except for a year or two during the distant past. Has the management ever bothered to investigate why?. If the management had taken the matter seriously and managed it responsibly, there would be no reason why the speed boat transportation would prove to be such a loss for all these years. Surely the management was aware or maybe they are just so ignorant and negligent they never bothered. Was the management that incompetent not to have realized the opportunity cost of engaging the human resource, time and capital in an unprofitable venture? The duty of the board of directors and the management is to run to run the company in a way that maximizes the long term return to the shareholders. But things have turn out to prove otherwise. Mismanagement of the speed boat unit had led the managers and even the lower level operation officers to divert the business TSD speed boat unit receives to other competitors in the launch operation industry, such that the managers and the operation officers receive a hefty commission from these launch operators. Furthermore, most of the managers and the operation officers have established their own launch operation business and they are diverting all the business to their own company. The management should seriously look into the various conflict of interest issues which are currently present at the speed boat unit so as to minimize the current mismanagement, waste and financial losses.
The following case would enlighten the seriousness of this case.
During the recent presidential election, Kapoor wanted to hire a speed boat for a campaign trip which Kapoor himself would join as DRP campaign manager along with some other members of the party. Hoping to give the trip to MTCC, Kapoor asked the quote from MTCC last, after receiving the quotes from other operators and communicated the value of the lowest quote he had received as of then. But to his surprise when the final evaluation of the quotes was done, he was shocked to find out a comparatively cheaper quote from a private speed boat operator, faxed from a TSD fax number. Investigation was under way and it turn out that, one of the Maintenance officers of MTCC has faxed the said quote under a private operators letter head. This particular person saw the quote submitted by MTCC to DRP which was left unfiled on one of the desks at TSD and since he himself is such an agent as mentioned above, he submitted a cheaper quote on behalf of a private speed boat operator in view that he would get a hefty commission once the trip gets confirmed. Such issues can only be tackled not only by strengthening the internal control procedures but by strengthening the moral and ethical soundness of the employees. On the other hand, management should pay much attention to such loss making investments and devise strategies at least to breakeven.