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SAS REAL ESTATE: TO FIRE OR NOT TO FIRE?

A REPORT

Submitted in the partial fulfillment

of

WAC COURSE

By

GROUP-03, SECTION-B, PGP 2015-17

Anmol Yadav

Fawas Mudar

Manjula Vadde

Mohit Aggarwal

Mohit Kumar Modi

Pragya Sareen

Pratibha Meena

Varun Sachan

Under the guidance of

Dr. SWATANTRA
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COVER LETTER

We are pleased to submit our report on the analysis of the SAS Real Estate case. An overview of the
situation faced by Haider Ali whether to fire Tanveer Shah along with feasible recommendations and
action plan have been provided. We thank our mentor Dr. Swatantra for providing us with the opportunity
to work on the given project.
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EXECUTIVE SUMMARY

The report seeks to address the dilemma faced by Haider Ali, the major owner of SAS Real Estate, who is
contemplating whether to terminate the employement of sole accountant Tanveer Shah, after a six-month
old, expired cheque was encashed with a fake identification proof with the companys bank. Whether Ali
should terminate Tanveer Shah employment in the light of upcoming mega project, opportunity cost of
hiring a replacement and future probability of similar events is the dilemma. We analyzed the problem
statement in light if different options and evaluation criterion. We recommended that Ali should hire a
new accountant and train him under Tanveer Shah while the on-going investigation goes on. The action
plan and subsequent contingency plan have also been analyzed.
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TABLE OF CONTENTS

1. Situational Analysis 5
2. Problem Statement 5
3. Possible Solution 5
4. Criteria for evaluation 5
5. Evaluation of options 6
6. Recommendations 6
7. Action Plan and Implementation Plan 6
8. Contingency Plan 6
9. Exhibit 1 7
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SITUATIONAL ANALYSIS

SAS was a partnership firm set up by Ali with two of his friends- Rahim Khan and Nusrat Amjad. While
Ali had a 50% stake, the other two partners owned 25% each. The real estate market was highly
competitive with about 25 other such brokerage offices in Sadiqabad city and 50 property agents. SAS
differentiated itself from other brokerage firms through its manner of operations. SAS bought land in
areas of urban sprawl where expansion was most likely to occur. The plots developed by SAS were sold
through two channels: to the public on the basis of monthly or annual instalments and through property
agents who worked on a commission basis. As a part of the real estate business, SAS frequently faced the
problem of irregular payments which caused interrupted cash flows and a liquidity crunch. This problem
was further aggravated as the firm sold most of its plots through personal contacts and thus had to be
lenient in its dealings. The company was growing at a steady rate, with an expanding customer base and
strong investor relations, but there was much to be desired in the human resource arena. Firstly, there was
a dearth of experienced financial experts, due to which there was heavy dependence on a single person for
maintenance of the business finances and extensive training was needed for new employees. Secondly,
there the cost of replacing these employees was very high and the employees had a tendency to use their
indispensability as leverage to negotiate favourable work terms. In a city like Sadiqabad, people kept a
close eye on the local news and believed what they heard through word-of-mouth. Thus public opinion
was crucial for a company like SAS whose major sales driver was an integrated network of contacts. As a
result, SAS had to be very careful about its policies as it was closely scrutinized by the locals.

PROBLEM STATEMENT

Should Ali terminate Tanveer Shah employment in the light of upcoming mega project, opportunity cost
of hiring a replacement and future probability of similar events?

POSSIBLE SOLUTIONS

Yes, we should terminate Tanveer Shah employment and set an example for other employees

No, we should not terminate Tanveer Shah employment because he is required in the organization

No, we should not terminate Tanveer Shah employment until a new employee has been trained under his
supervision

CRITERIA FOR EVALUATION

Cost Cost in terms of

training a new employee

lost business in the mean time
law suit in case Tanveer Shah files a suit against the company

Reputation

Risk losing the customers confidence and trust in case of firing a non-guilty employee
Creation of uneasy environment in the office
Reputation loss if in case Tanveer Shah files a suit against the company
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EVALUATION OF OPTIONS

In the first option, Ali will terminate the employment of Tanveer Shah to set an example in the
organization. The cost of training the new employee is high. Also, there will be a loss of business during
the training time period. Moreover, if Shah files a law suit, the company would have to incur certain legal
expenses as well as hit to its reputation. Customer confidence will take a hit if Shah is fired without
proven guilty. There will be uneasy environment within the organization because of termination of
Tanveer without an investigation.

Not terminating Tanveer Shah employment because he is required in the organization is the second
option. There will be no extra cost in terms of new employee training and development, loss of business
and possibility of Tanveer Shah filing a law suit. There will be no impact on customer confidence but
there can be possibility of such events in the future.

In the third option, Ali will hire another employee to work and learn under Tanveer Shah until he is ready.
An investigation can be undertaken simultaneously to know the truth. Training costs of the new employee
will be incurred. There will no costs associated with lost business or law suit. Also, there will no loss of
customer confidence.

RECOMMENDATION

We recommend Ali to go for the third option which is to retain Tanveer Shah as the accountant and also
train a new employee simultaneously. The existing investigation will go on as planned and if it provides
sufficient evidence supporting Tanveers involvement in the embezzlement, then his employment can be
terminated given the new employee is sufficiently trained.

ACTION AND IMPLEMENTATION PLAN

1. Ali should focus on winning the trial against the bank. The maximum accountability is with the
bank itself and the same can be proven. Recovery of the lost amount to the maximum possible
extent could be a possibility. Also, Ali should change the bank of the organization with increased
emphasis on security and accountability.
2. The reporting structure of Accountant should be such that he reports not only to the minor partner
but also to Ali himself. This will ensure that any financial transaction which gets approved is
checked by Ali as well as the partner. This would keep a check on any financial transaction.
3. Another employee should be appointed for training under Tanveer Shah to reduce the companys
over-dependence on one accountant.

CONTINGENCY PLAN

In case of failure of our recommendation, the previous employee Ahmad Shahbaz, who was familiar with
the accounting software and during whose tenure the operations ran smoothly, should be called back. He
can be appointed as the chief financial officer advisor and train the new recruit under him.
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Exhibit 1