Jessele Ann G.

Echavez

BSA 4

September 30, 2015

MWF 2:00 3:00

1. The case study deals with a problem on the inappropriate allocation of powers and
mismanagement of the function of the organizational chart of Selma familys businesses. The
case tells us that the family is handling a lot of ventures with different line of operations and
technically, these businesses should be handled by separate heads as much as possible.
However, the mother of the family stood as the CEO of all the businesses of the family which
obviously led to the mismanagement and conflict of the businesses internal transaction. In
addition, there is also a problem on the use of different strategies in order to maximize the
profit and operations of the business. If some strategies were implemented like diversifying the
business without the need of creating a new company such as 1Kon then the problems
associated with interlocking management couldve been avoided.
2. The objective of the study is to come up with an alternative solution to lessen the impact of the
problem. This is achieved by giving ways which would give better changes to the businesses
common practice and put them in a place where proper business principles and standards are
followed in order to prevent the same cases from happening.
3. It was more likely that the problem sprouted out due to some obvious factors that the Selma
family failed to consider at the very beginning. For one, the case didnt specify any type of
business organization that each of the business adopted like corporation or partnership. The
absence of such fact dictates that there is more probability that there would be confusion as to
who should manage the business. The family also failed to assess 1Kons performance to the
public especially to other customers because they said that the business is well-off when their
only customer is Paramount which is also a related party of the former. Related party
transactions are actually seen through the business financials and once this fact would be
uncovered (which is not far from possible), no potential customer would patronize 1Kon. Due
to these many factors left ignored, the family may have decided to leave all the decisions to the
person responsible of making their businesses profitable which is a major casualty because
they withdraw from the basic concept of segregation of duties and the creation and adherence
to an organizational structure.
4. The following are the proposed solutions in order to mend the mismanagement thats currently
happening to the businesses of Selma family:
a.

Organize a proper business structure and organizational chart which should be strictly
followed and the duties and responsibilities of members duly observed at all times.
b. Ensure that there are different managers to handle each of the business and that these
persons are capable and qualified of the positions given to them.
c. If the family would still insist that the mother be the CEO of all the businesses, create an
appropriate business organization such as corporation and merged all the business into
one company with diversified operations and appoint the mother as the president.

d. Related party transactions must be dealt with accordingly by the business. Since these
are owned by a family, one member should act in behalf of the business to ensure that
transactions go smoothly to avoid delays and further problems.
e. Hire competent officers that knows how and when to assert their positions and to still do
their task despite the improper mingling of the president on their jobs.
f. Verification and confirmation should take place in all major transactions of the
businesses to keep track of its operations.
5. If all the steps are applied seriously then expectedly, the business will adopt a major change

from its regular cycles since they would probably put a new person aside from the mother to
operate on the business. There would be more officers to facilitate the business and if they are
assigned on each business then these ventures will have a smooth flow in its operations
thereby reducing the risks of having mismanagement in the future. The mother can have
ample time to double check her decisions and look over the welfare of the business on which
she is assigned with. Generally, the business will have more corporate sense that how it is
managed currently due to the presence of hierarchal structure and delegation of powers and
duties of its officers. 1Kon would get higher chance of inviting new customers since the new
board would more likely be looking at other sources of income apart from focusing on the
benefits of Paramount. Eventually, the businesses especially 1Kon will operate at a better
phase and the management as a whole will reduce and minimize mismanagement problems in
the future.