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Applied Business Ethics: Moral dilemmas Problem Solution Essay

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Updated: Dec 19th, 2019

Introduction

In the business environment, there are series of moral dilemmas that often arise in the process of running or managing a situation. Reflectively, the moral dilemmas may be experienced in the balancing, management, or accounting departments of a company. Thus, this reflective treatise attempts to explicitly review an ethical dilemma in a company and provide solutions to the same.

Ethical Dilemma Description in the Dow Chemicals’ Scandal

Dow Chemicals Company was an American based retail trade company. It was the largest chain of supermarkets and stores in America in the early 1990’s. The top management of the company used complex nature of the financial statements and the weaknesses in the accounting standards to manipulate the financial records with an intention of enriching themselves.

This was characterized by manipulating the balance sheet to reflect high performances that were not accurate in those financial years. Specifically, they inflated the asset values, overstated the reported income and cash flow and eliminating the liabilities from the financial records.

In addition, the top management negotiated dubious investment contracts for the company with selfish motive of individual gains at the expense of the company’s survival (Stuart & Stuart 2004).

Ethical dilemma Justification

The crime committed by the three top management involved can be categorized into five aspects of ethical dilemma. Specifically, these are conspiracy, securities fraud, false statement, insider trading, and fraud. Based on the code of ethics, it is clear that the management breached all the ethical principles of business management and operation through falsifying the financial statements and doing dubious business deals.

The managers involved in the scandal were competent but they did not exercise professional due care and apt professional behavior that was expected of persons of their caliber. In addition, the three managers did not exercise integrity when preparing the financial statements and lied to the shareholders and the public at large.

They also lacked integrity in running the organization despite the trust that shareholders bestowed on them. Further, the three managers lacked objectivity and motivation in maintaining the trust in transactions. They deviated from the main goal of the business and failed to take into consideration the shareholders’ interests (Stuart & Stuart 2004).

The moral dilemma in the Dow Chemical’s case resulted in a massive loss that had never been experienced in the history of the United States of America at that time. First, shareholders of the company lost about $74 million as a result of the falling share prices in four years despite the fact that the general market had little and inconsequential swings.

Secondly, Dow Chemicals’ creditors and energy entities incurred hefty losses despite a stable SWOT of the company. Finally, over 10,000 jobs were lost almost immediately.

The employees also suffered losses resulting from the loss in value of the shares because over 40% of the amounts in the savings plans were used to purchase the company’s shares. The total market failure that resulted from the Dow Chemical’s scandal amounted to over $100million (Stuart & Stuart 2004).

In addition, the management of Dow Chemical Company neglected the aspired ideals in running the company such as the need for an organization to strive to develop good culture by fostering a strong alignment on the monitored path of achieving its goals, missions and vision.

They neglected the written rules of engagement, expected behavior, and repercussions for deviation (Chartered Institute of Management Accountants 2012). The management who conspired to steal from the company showed negative allegiance to the culture of morality in their management authority.

Managers are empowered by the organization’s constitution to perform the role of prefects and offer leadership solutions upon consultation with one another. To control group behavior, desirable leadership attributes are necessary. However, these managers did not practice the ideals of management ethics. They did not plans, tests and implement company policies in line with the preset ethical goals.

Solutions to the Ethical Dilemma

As it happens in other organizations, there should be laid down structures formulated in to keep staff in healthy and stable mind in their duty of serving the Dow Chemical company’s interest through regulatory ethical communication models. These models define expected behavior, procedural patterns, and response to every deviation. As a matter of fact, stable mind performs optimally with little or no supervision.

In line with this, the Dow Chemical organization should work alongside its staff to promote healthy communication ethics by recognizing and where necessary, support staff that make steady commitment in practicing accepted desirable healthy organizational communication ethics in their work departments.

Ethical dilemmas are easy to distinguish and unravel. Just like any other profession, accountants face numerous dilemmas while carrying out their duties. Some of these dilemmas are multifaceted and extremely tricky to unravel such as the Dow Chemical Company scandal. As human nature dictates, the above philosophy carries with it enticements.

When these are timely offered, they may lead to a deep attachment with the object over which such a motivation token is given in a strategically planned moral regulation model (McGraw-Hill Higher Education 2007). Motivation can be in the form of behavior review and increment, recognition for a well performed duty, equality, and fair treatment.

Whenever there is a strong professional relationship nurtured on the values of appreciation and respect, hidden talents are easily displayable and are needed for organizational ethical sustainability situations call for an elevated level of ethical behavior for those in the accounting profession (Rachels 2009). As mentioned above, the codes of ethics are educative and useful in the solutions to this ethical dilemma.

Conversely, the decision to act ethically by the management would have reversed the dilemma. This decision cannot be motivated with a reward or catalyzed by punishment for not obeying the code of ethics (Smith & Smith 2003).

Rather, comprehensive review of the situation or factors that led to such a dilemma should be analyzed with an intention of reversing the unwanted occurrence or standoff in the management of a business transaction at Dow Chemical Company.

Business ethics are presented as influenced by internal and external factors which when improperly aligned result in ethical dilemma (Mintz & Morris 2011).

The main contributory factors to ethical dilemma in the business environment include personal feelings and thoughts that are improper, especially on self-concept, motivation, attitudes, emotions and perceptions which should be controlled and aligned to the moral of the company (Kinicki & Kreitner 2009).

These factors generally influence perception, decision patterns, and attitude employees develop towards a product or a service offered by business. Besides, these factors are directly linked to internal and external interacting social aspects that control the pattern of though and expressed feelings.

Thus, in order to control this ethical dilemma, the company culture and moral goals should be used to discipline the management and recover lost funds.

References

Chartered Institute of Management Accountants. (2012). Ethical dilemmas: What would you do. Web.

Kinicki, A., & Kreitner, R. (2009). Organizational behavior: Key concepts, skills & best practices. New York: McGraw-Hill Irwin.

McGraw-Hill Higher Education. (2007). Ethics in accounting. Web.

Mintz, S. & Morris, M., (2011). Ethical Obligations and Decision Making in Accounting: Text and Cases. Boston: McGraw-Hill.

Rachels, J. (2009). The Elements of Moral Philosophy. Boston: McGraw-Hill.

Smith, T., & Smith, L. (2003). Business and accounting ethics. Web.

Stuart, I., & Stuart, B. (2004). Ethics in the Post-Dow Chemicals’ Age. Mason, Ohio: Thomson-South-Western.

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IvyPanda. 2019. "Applied Business Ethics: Moral dilemmas." December 19, 2019. https://ivypanda.com/essays/applied-business-ethics-moral-dilemmas/.

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IvyPanda. (2019) 'Applied Business Ethics: Moral dilemmas'. 19 December.

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