Application of ethical theory Case Study

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Introduction

Businesses have the obligation of providing goods and services to the public. This comes with different responsibilities to different parties. The parties include the stakeholders. They have to maintain a healthy relationship with all these parties. To do this, they have to do their work in ethically.

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The ethics they follow is either set up by the enterprise or forces outside the enterprise. However, the business has to ensure that it operates under these ethics in order to ensure that the services it is rendering are not causing harm to the stakeholders. This is the case with the sole- owned company run by James. He has both legal and ethical responsibilities to consider before making any decision. This also means that he has to consider the effects and consequences of his decision on both employers and his customers.

Stakeholders and ethics

A stakeholder is any person or enterprise affected by the activities undertaken in the company. This means that there are four stakeholders; James; the owner of the company, the employees, the council and the residents of the council. These are parties that have a say in the activities undertaken by the company.

The interest can either be direct or indirect. Other stakeholders in this case include suppliers and financial lending institutions. The public tender and the town council are also part of the stakeholders. This is because both parties contribute to the operations of the company. Therefore, any action taken by James will affect the company and vice versa.

Ethics is the honorable deeds either right or wrong made by the business. It depends on the judgment of the stakeholders concerning organization related issues. There are no set values set aside, and seen as the ideal ethics for any business. The enterprise is responsible for deciding and designing the ethics to use (Tittle, 2001 pp 147).

In the case, of James’ company; there is a variety of ethics that concern his business. One of the ethical issues John has to solve is the one concerning fixed priced contracts. This stipulates that James should not receive extra money from a contract. However, the dilemma in this case arises from the previous transaction where he encountered a £10,000 loss.

According to the public tenders there should be no extra money paid to the contractor apart from the money pertaining to the transaction. This means that James should give the money back to the council. This will also cast a good image for the company to the wider public.

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The other ethical issue in this case concerns his employees. Most of them come from the same town that they lost £10,000 in the previous contract. This means that the operation of the business affects their lives at work and home. Therefore, it raises concern as to whether to take the money or not.

This is because the extra cash will mean a raise in their allowances from the previous contract. However, this is not ethical because the rules laid out by the public tender do not support discrimination. This is also unethical because it seems like bribery. This is in accordance with the number of workers coming from the town where the project took place.

The most fundamental ethical issue in this case concerns honesty and trust between James, his employees and the council. James has a duty to remain honest in his transactions. Therefore, he has to come out and explain to the town council that the transactions were separate, and he was not going to take the extra money.

The utilitarianism theory

There are two theories applicable in the case that James is currently facing. The first theory is the Utilitarianism theory. It states that a person takes into account the effects of these actions to the rest of the people. The theory takes into consideration the outcome of their actions and its effects to the stakeholders.

The theory is part of the consequential theory. These theories focus on the rights and wrongs of their actions. Its focus is on the actions whose consequences will be beneficial to many and harm few. Therefore, this theory will assist James in making the right decision. The theory will help James decide what to do concerning his dilemma. The theory prioritizes the welfare of the stakeholders before any other thing.

Therefore, if James is to use this theory to solve this dilemma, he will have to return the check. This is because it is not right to take the extra money considering that the effects of his action on the employees.

This is because by taking the money, he is breaching the ethics and rules set by the public tender. If he takes the money, the business may lack the trust it has among the local people. This is because the theory states that these actions should contribute to the growth of the company, (Melden, 1967 pp 78).

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Therefore, taking the money will compromise the growth of the businesses. This is because the council might see the business as an opportunistic one that does not strive to correct an overpayment. Even, though, taking the cheque and keeping quiet is not the best decision in this case.

This is because, the theory focuses on sacrifices made in order to ensure growth in the business. Therefore, this is a sacrifice he has to take in order to ensure that he maintains the trust he has on the people who give tenders. It is all about giving the company the first priority before anything else. Therefore, foregoing the £10,000 will mean the growth of the business through the trust built by the company. This way he will uphold justice and fairness in his day to day activities.

Deontology theory

The other theory that James can use as a guide is the Deontology theory. The theory states that a person should use the set rules to make any decision. The theory forces an individual to think about the action and not about the outcome of the action. However, difficult it might be to make the decision or how painful it is the person has to follow the rules.

The theory has some of the religious teachings. It states rules that desist the individual from doing something negative that will cause harm to others. The rules are the only ethical thing in this theory. This means that the people accept the rules and consider them ethical.

The deontologist does what they consider as morally right despite the effects it will have on others. This means that even if James loses the £10,000 he will have to bear with the situations as long as his action does not hurt others.

In this case, James has done things in rules set by the public tender. The tender states clearly that no one should take more than what one earns. Therefore, it is not right to take the money with the claim that they run to a loss the previous time.

This is because the theory will term it as theft on James’ part from the council which is a representative of the society. This theory focuses on the duties of a person to the society and those under him. Therefore, James has a responsibility to play in this case. He has put the interests of the stakeholders first.

If I were in the same situation as James, I would return the extra amount of money. This is because I have to serve the society with honesty. This is because he managed to keep their trust in him for the past twenty years. Taking the money may be a source of distrust among the people providing the tender. Therefore, the right thing is to give the money back.

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I will follow the rules set by the public tender that states that a person collects only the money that he gets from the current contract. Even, though, it seemed unfair that I lost £10,000 in the previous contract, it would be unethical for me to collect the extra amount with the claim of covering up the loss.

I would use the ethical theories as guide. The Utilitarian theory is useful in this situation. It will be of immense use in solving the dilemma. This means that the priority in this case is the people and business. The consequence of collecting the money might be diverse and lead to the downfall of the business.

This is what will force me to return the money because my priority will be keeping the companies’ name clean through clean deals. The outcome of this sacrifice will be an increase in the belief that people have in the operations of the company. As a result, there will be an increased number of tenders which will increase the profits.

The deontology theory will also be of considerable importance. It makes an individual conscious of his actions. It forces one to think of the righteousness of his actions. I would not compromise my company in the name of taking the extra cash to make up for a loss.

Conclusion

For any business to be successful, it has to put the interest of the people first. It has to follow the rules and codes set to guide it in its day to day decision making. The same case applies to James’ company. The public tender set a rule that no one is to collect mere money that what the one earned.

Therefore, this is the first guide that James should use in his decision making. The Deontology theory and the utilitarianism are also useful in guiding an individual in such a dilemma.

The two theories arrive at the same conclusion in regards to ethical issues. The best thing he can do in this situation is to return the money and explain to the council that it is unethical to collect the £10,000.This will also clear his conscience as they also conduct further business with the council.

List of References

Melden, A 1967. Ethical theories: a book of readings, Prentice-Hall, London.

Tittle, P 2001. Ethical issues in business: inquiries, cases, and readings, Broadview Press, New York.

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IvyPanda. (2020) 'Application of ethical theory'. 3 July.

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IvyPanda. 2020. "Application of ethical theory." July 3, 2020. https://ivypanda.com/essays/application-of-ethical-theory-to-a-case-study/.

1. IvyPanda. "Application of ethical theory." July 3, 2020. https://ivypanda.com/essays/application-of-ethical-theory-to-a-case-study/.


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IvyPanda. "Application of ethical theory." July 3, 2020. https://ivypanda.com/essays/application-of-ethical-theory-to-a-case-study/.

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