ZINNACO: AN ETHICAL PARADOXES INTRODUCTION Kenneth Frazier, network administrator for Zinnaco, laced his shoes as he pre
Posted: Wed Jul 06, 2022 6:15 am
ZINNACO: AN ETHICAL PARADOXES
INTRODUCTION
Kenneth Frazier, network administrator for Zinnaco, laced hisshoes as he prepared to head out for his exercise break in China.It was February 7, 2011, and Frazier’s needed to decide what to dowith the information he had uncovered while performing a routinefileclean of his company’s servers. Located in Yunnan’s trendyneighborhood, software developer Zinnaco was preparing to presentto venture capital firms for its first major round of funding.Yunnan, located in Southwest China is the most diverse and colorfularea with features ranging from snowcapped mountains to tropicalrain forests and from highland lakes to canyons. It was alsofielding media interview requests the following week from theYunnan’s citizen and The National Post, both interested in writingnews stories about Zinnaco phenomenal increase in software licensesfor its Zinnaco App Creator, a mobile application softwaredevelopment platform.
ZINNACO
Zinnaco was founded in March 2010 by two successfulentrepreneurs to create software applications for the Zinuxplatform. The founders had noticed the growing popularity of Zinuxdevices and wanted to capitalize on the recent launch of the Zinuxtab. Furthermore, independent research by firms such as CathayaResearch and United Research China Ltd. suggested that the consumermarket would continue to demand these and other products designedto access content on the Internet. Fueling the popularity of ZinuxOS-based devices was Zinux’s unique combination of appealingdesign, intuitive user interfaces, and the proliferation ofdownloadable and inexpensive applications (or “apps”) forentertainment, business, and other uses. Zinnaco had developed anapplication development platform Zinnaco App Creator (ZAC) — thatallowed novice users to create their own Zinux app without anysoftware training. They began to popularize their product byallowing consumers to download a limited version of their softwarefree of charge. In order to attract media attention, Zinnaco hadbeen targeting business customers for ZAC, reporting on December15, 2010, that the number of business software licenses awarded forboth its rough and beta versions had jumped from 1,500 to 20,000 inthe last two months.
STAFFING ZINNACO
The founders had assembled their teams largely from personalconnections, and Frazier’s. was employee number two and their firstengineer hired. Although hired as chief product developer,Frazier’s. was initially tasked with everything from setting updesktop computers for the public relations consultants andmarketing personnel to fixing broken light bulbs. His projects alsoincluded configuring Zinnaco’s hardware and software to run its Website and internal operations.
4 EDWARD’S FIRST PROJECTS
Starting with personal funds of less than Chinese Yuan,CN¥20,000. Today, the term "Yuan" usually refers to the primaryunit of account of the renminbi (RMB), the currency of the People'sRepublic of China. The two founders had intended to seek angelfunding immediately. In order to do that, they needed to show thatthey were on track to building a viable business. First, theyneeded a Web site, and a staff of developers to create a workingmodel of their software program. For Zinnaco’s software platform,the company asked Frazier’s to create a functioning database on topof a ZUNIX-based operating system. Frazier’s realized that the15-yearold server and packet switching hardware that they hadrecently purchased to run the software was outdated and inadequate.He convinced the founders that they would have to acquire newerequipment to achieve the desired functionality. Reluctantly,Frazier’s request was met after a week of indecision. When the newhardware arrived in April 2010, Frazier’s offered to telephone themajor software companies to purchase the requisite softwarelicenses. Thus, Frazier’s was surprised when the founders decidedto take the discussion out of the office by inviting him to a lunchmeeting. Zinnaco had been in operation for four weeks at thispoint, and had only five employees.
THE REQUEST
Over lunch at the “Market” (as the Wayward Market was known inYunnan), Frazier’s was informed that no more funds existed for thepurchase of software. Frazier’s was told that it was hisresponsibility to load software onto the machines. Frazier’s hadseveral other projects that were awaiting his attention, but he didnot want to disappoint his friends and new employers. Relying onseveral industry contacts, Frazier’s acquired new, cracked versionsof software required to run Zinnaco’s operations. Known in thesoftware industry as “Zarez,” these were fully functional softwareprograms made available to the public by software engineers who hadcracked the software’s security and validation codes. Legitimateusers typically purchased a software license from the supplier, whoincluded a code to validate. He explained: Of course, I know it isan ethical dilemma. But which side of the line do I stand on? Thewhite line, the black line, or do I thread the fine line in themiddle?
ACQUIRING FUNDING
One month later, in May 2010, Zinnaco secured CN¥3,000.000 infunding from various angel investors in China and Canada. Thefounders were extremely proud of having secured the amount, inspite of the fact that the continued downturn in the economy wasaffecting investor confidence. Euphoric, they embarked on an officeexpansion, hired another 45 people, and prepared a fall marketingcampaign. Frazier’s was rewarded with a bonus of CN¥5,000, payableupon completion of a year’s work, but was reassigned as a networkadministrator. Frazier’s did not notice any attempt by the foundersto acquire software license agreements.
5 RAPID GROWTH AT ZINNACO
With the infusion, a newly hired team of 8 engineers begancoding the first beta release of ZAC. The team of marketers weregiven the latest Zinux smartphones and travel budgets to fly toseminars and conferences to promote ZAC at key industryconferences, including Zinux ’s GDC (Global Developers Conference)in Ontario. The Chinese media, hungry for stories in the slowAugust to September period, pounced on the chance to tout Zinnacoas the most promising start-up in the app development market,generating thousands of media impressions in the process.
SLOWED DEVELOPMENT
The internal climate at Zinnaco was different. The team of 8engineers had split into two fractions, bickering over creativecontrol of the project. In the process, engineering work for ZACstalled, and key engineers tendered their resignations infrustration. By November 2010, Zinnaco had only a rough workingmodel of CIC. However, plans were still in place to approachventure capitalists in December for CN¥15,000,000, and interestedparties were still being promised a December beta release.
THE FOUNDERS STEP IN
The two founders began taking control of the situation in lateNovember, firing 4 of the software engineers and giving theremaining team new goals to meet. Within two weeks, the situationstabilized and a climate of productivity returned. It seemed that asense of urgency at Zinnaco had re-emerged, and on the 21st ofDecember, the founders announced to employees that the beta versionwas ready. A press release was issued on the 26th of December,announcing that a limited version of Zinnaco’ ZAC was being rapidlyadopted by consumers, reaching 15,000 licenses awarded. Thelicenses for the limited versions had been awarded at no cost inorder to rapidly gain market share. Zinnaco, paraphrasing a companypress release, explained that it intended to charge developers forits 1.0 release.
THE UNEARTHING
As part of his monthly duties, Frazier’s performed a fileclean-up of Zinnaco’s internal file folders. One of the foundershad purchased a new laptop and had asked Frazier’s to load newsoftware and transfer old files for him. While manuallytransferring the files on the morning of December 28, Frazier’srecovered a deleted e-mail. In the e-mail fragment, the founderoutlined that 15,000 fake accounts had been created by him todownload the CIC program. The e-mail had apparently been written tothe other founder in order to inform him of this occurrence. InChina, employee and workplace safety is regulated by the PRC'sState Administration of Workplace Safety under the Workplace SafetyLaw of the People's Republic of China. Scrolling further, hechanced upon a more recent e-mail fragment from Yunnan’s WorkplaceSafety: . . .You have not filled out the necessary forms toregister your company with the PRC's State Administration ofWorkplace 6 Safety . . . the employees of Zinnaco are not coveredand cannot claim benefits if they are involved in a workplaceaccident. You are in direct violation of workplace safetystandards. Perplexed, Frazier’s shut down the computers and headedout for his break.
FRAZIER’S PARADOXES
Finishing his run, Frazier’s decided to take an extended lunchto stroll around Yunnan’s historical buildings. Even though Frazierwas not comfortable with the weather, he had other things on hismind. Has Zinnaco paid for the software we use to create ZAC? Whatdo these e-mail fragments mean? We’re not covered under the WSIB.If I had fallen and broken my neck while changing light bulbs orelectrocuted myself while wiring computers, I would have beenfinished. Calming himself, Frazier’ headed back to his desk atZinnaco. He had a lot to think about. Source: Ivey Case,2018-01-011
QUESTION 1 Recommend TWO (2) solutions on what should Frazier’sdo pertaining to the dilemma he faces? (10 Marks)
QUESTION 2 Propose an appropriate time for Frazier’s to takeaction. Support with ONE (1) justification. (5 Marks)
QUESTION 3 Suggest to whom Frazier should speak to concerningthe solution. Support your answer with ONE (1) justification. (5Marks)
QUESTION 4 Predict TWO (2) potential risks that might be facedby Frazier. (10 Marks)
INTRODUCTION
Kenneth Frazier, network administrator for Zinnaco, laced hisshoes as he prepared to head out for his exercise break in China.It was February 7, 2011, and Frazier’s needed to decide what to dowith the information he had uncovered while performing a routinefileclean of his company’s servers. Located in Yunnan’s trendyneighborhood, software developer Zinnaco was preparing to presentto venture capital firms for its first major round of funding.Yunnan, located in Southwest China is the most diverse and colorfularea with features ranging from snowcapped mountains to tropicalrain forests and from highland lakes to canyons. It was alsofielding media interview requests the following week from theYunnan’s citizen and The National Post, both interested in writingnews stories about Zinnaco phenomenal increase in software licensesfor its Zinnaco App Creator, a mobile application softwaredevelopment platform.
ZINNACO
Zinnaco was founded in March 2010 by two successfulentrepreneurs to create software applications for the Zinuxplatform. The founders had noticed the growing popularity of Zinuxdevices and wanted to capitalize on the recent launch of the Zinuxtab. Furthermore, independent research by firms such as CathayaResearch and United Research China Ltd. suggested that the consumermarket would continue to demand these and other products designedto access content on the Internet. Fueling the popularity of ZinuxOS-based devices was Zinux’s unique combination of appealingdesign, intuitive user interfaces, and the proliferation ofdownloadable and inexpensive applications (or “apps”) forentertainment, business, and other uses. Zinnaco had developed anapplication development platform Zinnaco App Creator (ZAC) — thatallowed novice users to create their own Zinux app without anysoftware training. They began to popularize their product byallowing consumers to download a limited version of their softwarefree of charge. In order to attract media attention, Zinnaco hadbeen targeting business customers for ZAC, reporting on December15, 2010, that the number of business software licenses awarded forboth its rough and beta versions had jumped from 1,500 to 20,000 inthe last two months.
STAFFING ZINNACO
The founders had assembled their teams largely from personalconnections, and Frazier’s. was employee number two and their firstengineer hired. Although hired as chief product developer,Frazier’s. was initially tasked with everything from setting updesktop computers for the public relations consultants andmarketing personnel to fixing broken light bulbs. His projects alsoincluded configuring Zinnaco’s hardware and software to run its Website and internal operations.
4 EDWARD’S FIRST PROJECTS
Starting with personal funds of less than Chinese Yuan,CN¥20,000. Today, the term "Yuan" usually refers to the primaryunit of account of the renminbi (RMB), the currency of the People'sRepublic of China. The two founders had intended to seek angelfunding immediately. In order to do that, they needed to show thatthey were on track to building a viable business. First, theyneeded a Web site, and a staff of developers to create a workingmodel of their software program. For Zinnaco’s software platform,the company asked Frazier’s to create a functioning database on topof a ZUNIX-based operating system. Frazier’s realized that the15-yearold server and packet switching hardware that they hadrecently purchased to run the software was outdated and inadequate.He convinced the founders that they would have to acquire newerequipment to achieve the desired functionality. Reluctantly,Frazier’s request was met after a week of indecision. When the newhardware arrived in April 2010, Frazier’s offered to telephone themajor software companies to purchase the requisite softwarelicenses. Thus, Frazier’s was surprised when the founders decidedto take the discussion out of the office by inviting him to a lunchmeeting. Zinnaco had been in operation for four weeks at thispoint, and had only five employees.
THE REQUEST
Over lunch at the “Market” (as the Wayward Market was known inYunnan), Frazier’s was informed that no more funds existed for thepurchase of software. Frazier’s was told that it was hisresponsibility to load software onto the machines. Frazier’s hadseveral other projects that were awaiting his attention, but he didnot want to disappoint his friends and new employers. Relying onseveral industry contacts, Frazier’s acquired new, cracked versionsof software required to run Zinnaco’s operations. Known in thesoftware industry as “Zarez,” these were fully functional softwareprograms made available to the public by software engineers who hadcracked the software’s security and validation codes. Legitimateusers typically purchased a software license from the supplier, whoincluded a code to validate. He explained: Of course, I know it isan ethical dilemma. But which side of the line do I stand on? Thewhite line, the black line, or do I thread the fine line in themiddle?
ACQUIRING FUNDING
One month later, in May 2010, Zinnaco secured CN¥3,000.000 infunding from various angel investors in China and Canada. Thefounders were extremely proud of having secured the amount, inspite of the fact that the continued downturn in the economy wasaffecting investor confidence. Euphoric, they embarked on an officeexpansion, hired another 45 people, and prepared a fall marketingcampaign. Frazier’s was rewarded with a bonus of CN¥5,000, payableupon completion of a year’s work, but was reassigned as a networkadministrator. Frazier’s did not notice any attempt by the foundersto acquire software license agreements.
5 RAPID GROWTH AT ZINNACO
With the infusion, a newly hired team of 8 engineers begancoding the first beta release of ZAC. The team of marketers weregiven the latest Zinux smartphones and travel budgets to fly toseminars and conferences to promote ZAC at key industryconferences, including Zinux ’s GDC (Global Developers Conference)in Ontario. The Chinese media, hungry for stories in the slowAugust to September period, pounced on the chance to tout Zinnacoas the most promising start-up in the app development market,generating thousands of media impressions in the process.
SLOWED DEVELOPMENT
The internal climate at Zinnaco was different. The team of 8engineers had split into two fractions, bickering over creativecontrol of the project. In the process, engineering work for ZACstalled, and key engineers tendered their resignations infrustration. By November 2010, Zinnaco had only a rough workingmodel of CIC. However, plans were still in place to approachventure capitalists in December for CN¥15,000,000, and interestedparties were still being promised a December beta release.
THE FOUNDERS STEP IN
The two founders began taking control of the situation in lateNovember, firing 4 of the software engineers and giving theremaining team new goals to meet. Within two weeks, the situationstabilized and a climate of productivity returned. It seemed that asense of urgency at Zinnaco had re-emerged, and on the 21st ofDecember, the founders announced to employees that the beta versionwas ready. A press release was issued on the 26th of December,announcing that a limited version of Zinnaco’ ZAC was being rapidlyadopted by consumers, reaching 15,000 licenses awarded. Thelicenses for the limited versions had been awarded at no cost inorder to rapidly gain market share. Zinnaco, paraphrasing a companypress release, explained that it intended to charge developers forits 1.0 release.
THE UNEARTHING
As part of his monthly duties, Frazier’s performed a fileclean-up of Zinnaco’s internal file folders. One of the foundershad purchased a new laptop and had asked Frazier’s to load newsoftware and transfer old files for him. While manuallytransferring the files on the morning of December 28, Frazier’srecovered a deleted e-mail. In the e-mail fragment, the founderoutlined that 15,000 fake accounts had been created by him todownload the CIC program. The e-mail had apparently been written tothe other founder in order to inform him of this occurrence. InChina, employee and workplace safety is regulated by the PRC'sState Administration of Workplace Safety under the Workplace SafetyLaw of the People's Republic of China. Scrolling further, hechanced upon a more recent e-mail fragment from Yunnan’s WorkplaceSafety: . . .You have not filled out the necessary forms toregister your company with the PRC's State Administration ofWorkplace 6 Safety . . . the employees of Zinnaco are not coveredand cannot claim benefits if they are involved in a workplaceaccident. You are in direct violation of workplace safetystandards. Perplexed, Frazier’s shut down the computers and headedout for his break.
FRAZIER’S PARADOXES
Finishing his run, Frazier’s decided to take an extended lunchto stroll around Yunnan’s historical buildings. Even though Frazierwas not comfortable with the weather, he had other things on hismind. Has Zinnaco paid for the software we use to create ZAC? Whatdo these e-mail fragments mean? We’re not covered under the WSIB.If I had fallen and broken my neck while changing light bulbs orelectrocuted myself while wiring computers, I would have beenfinished. Calming himself, Frazier’ headed back to his desk atZinnaco. He had a lot to think about. Source: Ivey Case,2018-01-011
QUESTION 1 Recommend TWO (2) solutions on what should Frazier’sdo pertaining to the dilemma he faces? (10 Marks)
QUESTION 2 Propose an appropriate time for Frazier’s to takeaction. Support with ONE (1) justification. (5 Marks)
QUESTION 3 Suggest to whom Frazier should speak to concerningthe solution. Support your answer with ONE (1) justification. (5Marks)
QUESTION 4 Predict TWO (2) potential risks that might be facedby Frazier. (10 Marks)