Case Study Vignette
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Business ethical theories and stakeholders involved play important roles in determining the nature of decisions made by management. This paper identifies ethical theories that can be used to evaluate a case study where a construction firm received more payment than expected yet the firm paying did not recognize the error. In the case study, a constructor whose line of business was mainly availed from public tendering received more payments for a service than was expected. This was a huge anomaly as the construction firm was not allowed to charge clients higher than quoted prices and, therefore, this incident had to be dealt with urgently. Similarly, a personal opinion will be provided based on occurrences in the case study in relation to business ethics.
Ethical Issues and Stakeholders in the Case Study
In this case study the constructor had conducted his calculations as accurately as possible as they all catered for the entire cost of the tender. However, based on the payments received, it is apparent that the client overestimated their calculations, therefore, the excess payment being made. However, the constructor, James could have made it clear where the discrepancies were identified in the payment cheque. Consequently, identifying the erroneous area would have made it easier for the client to clarify why the payment was in excess. The ethical issue is a failure by the constructor to point out the exact discrepancy in the cheque which would solve the issue (Weiss 2009).
Stakeholders in this case study include the client who is a recipient of the constructor’s services is among the stakeholders portrayed herein. The client represents the public and the council who account for a huge percentage of James’ clients. Therefore, the nature of relations between this particular council and the constructor will affect the overall relationship between the constructor and other local councils. The community living in the area where the construction was taking place is among the stakeholders as the service or facility constructed will have an impact on their daily lives (Post 2002).
On the other hand, employees are among the constructors’ stakeholders as their efforts and output are behind the firm’s success. Similarly, from the case study, the scenario with the ethical issue was taking place in their home area, therefore, increasing their vulnerability in the occurrence of unethical conduct (Pinnington &Lafferty 2002). The individuals supplying this construction firm with materials used in the course of delivering construction duties presents yet another stakeholder who could have been affected by the mishap in calculations, hence, their relationship with the constructor could be adversely affected dependent on the decision made (Woodd 1997).
Ethical Theories Applicable to the Case Study
The categorical imperative consistency theory portrays ethical conduct as activities that are guided by the moral aspect of making decisions that are consistent. This theory exhibits business ethics as decisions that are made to cut down on the questions that would be raised if unexpected moves are made (Robotham 2005).
In this case, James could have made frantic calls to the client asking them to recheck the calculations not because he wanted them to prove otherwise but rather as a formality so that he would not be accused of receiving excess payments. Consequently, based on this theory, it is apparent that calculations made by the constructors were not always accurate, hence, consistent gaps were always seen in the calculations and the only difference in this scenario is that the gaps are in the constructors favor unlike previously. It was the responsibility of James to inform the client that an anomaly had been identified in the payments which exhibit the act as an obligation of duty rather than an activity aimed at successfully completing the business transaction (Moon 2001).
The other ethical theory is the cardinal virtues theory which states that the need of business managers to conduct business ethically is based on the human desire to attain happiness. This theory points out being in control, integrity and hard work so that any business transaction should be conducted so as to sustain happiness on both sides so that none of the stakeholders are hurt or losses from decisions made by management (Cetina & Preda 2005).
According to the case study, James could have failed to point out the real problem in the calculations so that the client could concentrate on the real issue, hence, confirming the source of extra funds. However, revealing the same would have cost the client as well as the construction company plenty of resources as they would have had to start fresh calculations of the entire project and in turn inconvenience their daily activities (Smith 1997). Consequently, James thought it is wise to let everything stay as it was in terms of the already concluded calculations on his side and at the end of it all everyone was satisfied as the extra payment would be used to recover a similar loss incurred previously (Huevel 2009).
According to the case study, if I were James I would have confirmed the cost of each activity or materials used in the entire construction. This way the source of excess funds would have been identified and at the close of business each party would have no doubts as to why certain transactions did not add up (Watson 2003).
Ethical conduct is vital in any business undertaking mainly due to the fact that it exhibits the overall conduct of stakeholders affiliated to the organization as well as the overall enterprise. It is therefore important to ensure that moral laws are applied in any decision made by a business enterprise as its public image may be tainted or made by such moves. In conclusion, James made decisions based on opportunities he had at that time as he had to ensure that all stakeholders closed business satisfied although this was not attained as he was left with a lot of answered question.
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