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Business ethics

  1. Introduction

This paper seeks to answer two questions on ethics in relation to theory of ethics used.  The first question is about the ethics of closing a US plant and moving the jobs to a factory in India while the second question is on the ethics of the duties of purchasing of a hospital and being a consultant of another company that wants to sell equipment to the hospital.  The paper will also discuss the ethical theory involved in each case.

  1. Answers to Questions
  • Answer to question number 1.

The ethics of the decision of company’s decision to close down a US Plant and move the jobs to a factory in India will depend on the purposes that it will have to attain.  Based on the theory of survival, that is my company just want to survive because of the high cost of operation, then the same decision to transfer would be justified.  However, if the transfer will not result to survival of the company since the products that it will produce will not be contained by the existing market, then the decision would be less ethical than having maintained its business in the US.

The theory of ethics that is applied is John Rawl’s theory of justice under the social contract theory (Henderson, et al., 2005), where the company’ management is bound to respect a duty to respect its contract with employees in the US in relation to its duty to stockholders. Thus, the duty to protect the employment of employees and paying the salaries of employees in the US is limited by the right of the company’s duty to pay also its stockholders or investors at a return above costs of capital. Therefore if the US company’s closing down its business in the US due to high cost of doing in business in the US in order to make the company more competitive, the company is justified in doing so because the obligation of the management to stockholders to provide sufficient return is above the obligation to provide to employees continued employment.  If putting up of new plant in India will result to continued losses for the company, the same would be less ethical to stockholders too than just merely closing down the US plant.

2.2 Answer to question number 2

Being a purchasing agent for a large hospital that I work for, I have responsibilities to discharge my duty to avoid conflict of interest with my duty in another company that deals medical equipment of which I am a consultant.  To practice ethics in the case, the hospital that I work for should take priority before the other company which develops medical equipment and which now bids to sell a large piece of equipment to the hospital that I work for.  As a person in charge of all purchases for the hospital, I should protect the interest of hospital so that it could purchase the equipment at the most reasonable price for the equipment without having to compromise my consultancy engagement with the company that deals in equipment.

In the bidding process, I should make sure that the necessary specifications of equipment that would be purchased as defined by the end-user department and not one that should fit in to the capability of the second company to supply.  It is in this manner that that the interest of my hospital employer would be protected.  In other words, I should behave in a manner that would not allow the second company that deals with the medical equipment to win the bidding necessarily because I happen to be the purchasing agent of the hospital.   I should in fact disclose to management of the hospital about my connection with the company that deals with equipment and which now bids to sell equipment so that hospital management would know what to do and may decide that I should limit my participation in the bidding process.

The ethics in play involves the avoidance of profiting from possible conflict of interest where I stand to gain from a transaction involving two companies.  The theory of ethics involved is John Rawl’s theory of justice under the social contract theory (Henderson, et al., 2005).  Under said theory of justice, what is what is not fair to all concerned is simply unethical.

  1. Conclusion

Not all actions are ethical at all times since actions could be subject to different laws, customs value, and code of ethics for each community.  A stakeholder is also more important than another stakeholder (Williams, 2000).  As found in the first case, the interest of the stockholders is more important than employees, and in the second case, the interest of the employer is above the client in a consultancy contract.

References:

Henderson, et al. (2005), Issues in financial accounting, 12th edn, Pearson Education Australia, Frenchs Forest, NSW, pp. 958–83.

Williams, C. (2000) Management, South-Western College Publishing