Reference no: EM132829707

Karim is the Chief Executive Officer (CEO) of ARRYAN Berhad, a domestic airline company. In the recent years, ARRYAN's operational costs have escalated, resulting in a huge decline in profits. A fall in Malaysian Ringgit has caused ARRYAN's main competitor to offer cheap airline tickets with a variety of inflight and terminal services. Karim received many complaints from shareholders and because of this, he is considering downsizing ARRYAN's business operations by selling three aircrafts and terminating 1,500 employees comprising administration staff, the in-flight crew and staff from the technical and marketing divisions, without paying any compensation or conducting any voluntary separation scheme (VSS).

By embracing on these actions, operational costs would reduce by 70% while market share, sales volume and profit would increase by 50%. Eventually, shareholder's dividends would increase. Nevertheless, Karim realizes that ARRYAN is one of the companies in the country that provides employment opportunities. He knows that taking these action will cause economic disruption since customers will be affected by the reduced service level provided by ARRYAN and employees' services would have to be terminated thus increasing the unemployment rate in Malaysia.

With reference to the above mentioned case, answer all the following questions.

1. What is Karim's ethical dilemma?

2. What are the consequences of Karim's cost reduction actions that might affected the employees?

3. Discuss FIVE (5) ways in which Karim could help to protect employees' right in carrying out the lay-out exercise.