The customer is the most important stakeholder of any company. Companies exist to serve the needs of their customers. Therefore, it is vital for a company to ensure that it does not damage its relationship with the customers. Disregarding the wishes of customers would result in the collapse of a company (Thompson, et al. 2011).
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This is what happened to Fleming Companies, which was the largest distributor of consumer-packaged goods in the US. The company habitually provided wrong billing to its customers. The company did not stop the malpractice despite regular complaints from customers.
Fleming habitually engaged in accounting malpractice to boost its margin and restore its financial profitability. Senior executives of the company supported the company’s engagement in unethical conduct.
As an executive of the company during that period when it engaged in unethical conduct, I would have claimed that problems in the accounting systems were the major reasons why the company provided wrong billing to its customers. I would have claimed that the company was not defrauding its customers since it was willing to repay money that it owed customers due to wrong billing.
Fleming used its muscle unfairly to engage in unethical activities. The company realized that it was a vital component in the supply chain of its customers. It was the major link between the suppliers and their customers. Therefore, damaging the relationship between the company and the suppliers would have limited the ability of the suppliers to access their customers.
Fleming jeopardized the activities of its suppliers by engaging in unethical conduct. Fleming’s malpractices limited the ability of its suppliers to keep accurate financial records. Keeping accurate financial records enables companies to know their real financial position (Nikolai, Bazley & Jones, 2009).
As a manufacturer who sold its products through Fleming during the period when the company was engaging in unethical conduct, I would have looked for another distributor to handle my products. This was the main reason why Fleming engaged in unethical activities regularly.
In addition, the company was unwilling to stop engaging in unethical activities despite complaints from customers. By doing so, Fleming disregarded the wishes of its customers. Fleming’s unethical conduct made it difficult for manufacturers to determine the integrity of Fleming’s billings.
The unethical conduct necessitated suppliers to countercheck billings from Fleming. This was an expensive and time-consuming activity. Therefore, looking for an alternative distributor was the best option for manufacturers who distributed their products through Fleming.
As a Fleming shareholder during the period when the company engaged in unethical conduct, I would not have been pleased with the turnaround strategy that the company was employing. This is due to the fact that the strategy breached the trust that customers had on the company. Fleming disregarded the fact that customer loyalty was the main factor that led to the prosperity of the company.
The unethical behavior of the company tarnished the image and reputation of the company (Thomson, et al., 2011). Therefore, I would have sold my shares before the discovery of this unethical practice. Discovery of the unethical practice threatened the existence of the company. Loss of the trust that customers had on the company would have resulted in massive exodus of customers from the company.
Unfortunately, this is what happened after the Wall Street Journal reported the company’s unethical conduct. Therefore, selling my shares before this happend would enable me to safeguard my investment.
Unethical practice led to the ultimate collapse of the Fleming companies. This is despite having acquired more than 100 new customers. Fleming’s case highlights the importance of customer loyalty in the competitiveness of a company. A company should not take advantage of its size to violate the wishes of its customers.
Nikolai, L. A., Bazley, J.D. & Jones, J.P. (2009). Intermediate accounting. Belmont, CA: Cengage Learning.
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Thompson, A., Peteraf, M., Strickland, A. J. & Gamble, J. (2011). Crafting & executing strategy: Concepts and readings. New York: McGraw-Hill Companies.