01 Task Performance
CASE ANALYSIS: DMX Manufacturing
DMX Manufacturing Company suffered significant losses due to the COVID-19 pandemic. The collection of trade
receivables is delayed due to lockdown, which resulted in chain reactions of problems with respective customers and the
company operations. Mr. Abedo, the Chairman of DMX Manufacturing's Board of Directors (BOD) gathered the audit
committee (comprises of persons with expertise in accounting, legal and audit) and remuneration committee (consists of
persons with expertise in human resource policies, compensation, and benefits) to find ways on how can the entity survive
the pandemic, and at the same time provide maximum support to its employees. After two (2) weeks of careful
deliberation and study the committee arrived at the following possible solutions:
· Sustain a loss of profit for the rest of the year, and spend its surplus just for survival.
· Close an affiliate of the company composed of 10 officers and staff.
· Reduce board and top management's compensation and fringe benefit by 10%.
The board meeting has arrived. They have agreed with all the solutions, except in the reduction of the board and top
management's compensation. Mr. Dimaano, one of the board members, recommends that it is better to classify their
employees into two (2) types: essential employees and non-essential employees. With that decision, some of the
employees will be in no-work, no-pay status, with pay but with 50% reduction in their original pay and termination of
contracts (for probationary employees). In addition, a lesser loss will be sustained by the company because some jobs that
are assigned to non-essential employees will be transferred to essential employees, based on their capacity or workload.
Mr. Abedo did not agree with the recommendation of Mr. Dimaano because, for him, it is inhumane. He said, "We should
never let our employees down, especially in this crisis. Let us sacrifice for a while because it is not only them who will be
affected by this decision but also the people in their homes." As their regular practice when deciding on important matters,
they cast votes, and after tallying the result, the recommendation of Mr. Dimaano was considered.
Required:
Answer the following in no more than three (3) sentences:
1. Are you in favor of the three (3) solutions identified by the committee? Why or why not?
Yes, I support the three options that the committee has suggested. This is due to the fact that the solutions will provide the
business a chance to continue running while it waits for the epidemic to finish and the economy to recover. Additionally,
the group that put forth the proposals was made up of professionals with more in-depth knowledge of the sector.
2. Did the company complied or violated any of the eight (8) characteristics of good governance?
The business conformed with the eight good governance principles. A group of specialists came up with effective and
efficient suggestions that were made in an accountable manner with the goal of realizing the strategic vision. The board
members also participated, and there was agreement among them to assure equity in their response to the pandemic the
company was dealing with.
3. Are you in favor of the recommendation of Mr. Dimaano? Why or why not?
Yes, I agree with the proposals put out by Mr. Dimaano. It is true that a firm shouldn't desert its employees—even in
trying times. In this instance, the choice will make sure that the business and its employees can both survive during the
pandemic.
4. Do you think the board of directors has done their job properly?
No, I don't believe the board of directors performed their duties adequately. The committee's suggestions were in the best
interests of the entire business. However, because it directly touched them, they opposed the 10% cut to board members'
and upper management's remuneration and salary perks.
5. Assuming you are Mr. Abedo, the chairman of the board, what will you do after learning that a vote rejected your
opposition of Mr. Dimaano's recommendation?
If I were the chairman, I would agree to the board of directors' choice. This is due to the fact that it was carried out with
all of the board members present under the guise of equity and the rule of law. Even though it is not what I had in mind, I
will choose to use it for the benefit of the business.
6. Are you satisfied with the decision-making process of the company's BOD? If not, provide ways on how they can
improve.
The BOD's decision-making process does not meet my standards. By prioritizing the interests of the company before their
own, they may make better decisions. In order to ensure they have a thorough grasp of the problem before making a
choice, they can also include specialists in their decision-making process.
