Jean Erickson, manager and owner of an advertising company inCharlotte, North Carolina, arranged a meeting with Leroy Gee, thechief accountant of a large, local competitor. The two are lifelongfriends. They grew up together in a small town and attended thesame university. Leroy is a competent, successful accountant but ishaving some personal financial difficulties after some of hisinvestments turned sour, leaving him with a $15,000 personal loanto pay off—just when his oldest son is starting college. Jean, onthe other hand, is struggling to establish a successful advertisingbusiness. She had recently acquired the rights to open a branchoffice of a large regional advertising firm headquartered inAtlanta, Georgia. During her first two years, she was able to builda small, profitable practice. However, the chance to gain asignificant foothold in Charlotte hinged on the success of winninga bid to represent the state of North Carolina in a major campaignto attract new industry and tourism. The meeting she had scheduledwith Leroy concerned the bid she planned to submit. Jean: Leroy,I'm at a critical point in my business venture. If I can win thebid for the state's advertising dollars, I'll be set. Winning thebid will bring $600,000 to $700,000 of revenues into the firm. Ontop of that, I estimate that the publicity will bring another$200,000 to $300,000 of new business. Leroy: I understand. My bossis anxious to win that business as well. It would mean a hugeincrease in profits for my firm. It's a competitive business,though. As new as you are, I doubt that you'll have much chance ofwinning. Jean: You're forgetting two very important considerations.First, I have the backing of all the resources and talent of aregional firm. Second, I have some political connections. Lastyear, I was hired to run the publicity side of the governor'scampaign. He was impressed with my work and would like me to havethis business. I am confident that the proposals I submit will bevery competitive. My only concern is to submit a bid that beatsyour firm. If I come in with a lower bid and good proposals, thegovernor can see to it that I get the work. Leroy: Soundspromising. If you do win, however, there will be a lot of upsetpeople. After all, they are going to claim that the business shouldhave been given to local advertisers, not to some out-of-statefirm. Given the size of your office, you'll have to get supportfrom Atlanta. You could take a lot of heat. Jean: True. But I amthe owner of the branch office. That fact alone should blunt mostof the criticism. Who can argue that I'm not a local? Listen, withyour help, I think I can win this bid. Furthermore, if I do win it,you can reap some direct benefits. With that kind of business, Ican afford to hire an accountant, and I'll make it worthwhile foryou to transfer jobs. I can offer you an up-front bonus of $15,000.On top of that, I'll increase your annual salary by 20 percent.That should solve most of your financial difficulties. After all,we have been friends since day one—and what are friends for? Leroy:Jean, my wife would be ecstatic if I were able to improve ourfinancial position as quickly as this opportunity affords. Icertainly hope that you win the bid. What kind of help can Iprovide? Jean: Simple. To win, all I have to do is beat the bid ofyour firm. Before I submit my bid, I would like you to review it.With the financial skills you have, it should be easy for you tospot any excessive costs that I may have included. Or perhaps Iincluded the wrong kind of costs. By cutting excessive costs andeliminating costs that may not be directly related to the project,my bid should be competitive enough to meet or beat your firm'sbid.: What would you do if you were Leroy? Fully explain thereasons for your choice. What do you suppose the code of conductfor Leroy's company would say about this situation? What is thelikely outcome if Leroy agrees to review the bid? Is there muchrisk to him personally if he reviews the bid? Should the degree ofrisk have any bearing on his decision?
