Controversial Disappearance and Unethical Business Practices: A Case of X-Mobile

Abstract

Learning Outcomes On completion of case reading the student will be able to: (1) To recognize the significance of business ethics on its market reputation; (2) To interpret the strategic implications of bad decisions on company reputation; (3) To identify the legal and administrative lapses in the governance system that fail to nip fraudulent operations as smuggling, and tax envisions in the bud; (4) To evaluate the professional and ethical attitude towards regulatory laws and corporate structures related to local and international business. Case overview/synopsis In this case, the unethical business practices, and decisions of X-Mobile company (distinguished name) are analyzed that led the emerging market leader among local mobile vendors to a bad reputation and loss of market shares in no time. In Pakistan, the smartphone penetration remained at 36% in the year 2021, almost 3 times higher compared to the year 2014 (PACRA, 2021). The global manufacturing companies are the key suppliers of mobile phones to the local market as the domestic mobile market is largely imported drive. The major suppliers include Apple, Samsung, Oppo, Huawei, Xiaomi, and other Chinese brands. X-Mobile took advantage of the gap and started its operations in Pakistan by establishing its mobile assembling unit and distribution network in the region. In less than a decade, the company grabbed a larger chunk of the market shares of rural Pakistan’s smartphone industry. As the X-Mobile smartphone demand increased, the company was unable to cope with the supply of its products to the customer due to its unethical business practices of tax evasion (scandal of 2017), the bankruptcy of its vendor (ABC), over advertising budget, and mismanagement of its brand reputation. This resulted in the temporary ban of the company by the Pakistan Telecom Authority (PTA) from conducting its operations in Pakistan which pushed the company into shambles, tax shaming, reduction of market share, and the influx of several smartphone brands from China to fill in the market gap. Now outstanding smartphones from Xiaomi, Oppo, Vivo, and Infinix are easily available in the far-flung areas of the country. The case discusses the company's initial tactics to become a leading smartphone brand in a short span of ten years and its current struggle to reposition itself and reclaim its lost market shares subsequent to its involvement in unethical business practices and tax evasion. Supplement materials Supporting materials are available for the student (Teaching Notes). Complexity/ Academic level Undergraduate Level - This case is ideally suited for classroom discussions for students of management sciences undertaking courses on Business Ethics, Brand Management, Strategic Marketing, International Business, and Corporate Governance.