Apex Art has been requested to prepare a bid on 500 pieces offramed artwork for a new hotel. Winning the bid would be a bigboost for sales representative Jason Grant, who works entirely oncommission. Sonja Gomes, the cost accountant for Apex, prepared thebid and calculated full product Costs of $121,000. Based on thecompany policy of pricing at 125% of full cost, Gomes gives Grant afigure of $151,200 to submit for the job.
Grant is very concerned. He tells Gomes that at that price, Apexhas no chance of winning the job. He confides that he spent $500 ofcompany funds to take the hotelâs purchasing agent to a basketballplayoff game where the purchasing agent disclosed that a bid of$145,000 would win the job. He hadnât planned to tell Gomes becausehe was confident that the bid she developed would be below thatamount. Gomes reasons that the $500 he spent will be wasted if Apexdoesnât capitalize on this valuable information. In any case, thecompany will still make money if it wins the bid at $145,000because it is higher than the full cost of $121,000.
Gomes suggests that if Grant is willing to use cheaper materialsfor the frame, he can achieve a bid of $145,000. The artwork hasalready been selected and cannot be changed, so the entire amountof the reduction in cost will need to come from framingmaterials.
A note regarding the bidding process:
The hotel would announce that it is seeking bids from suppliersinterested in providing the artwork. The hotel would specify theirrequirements and a deadline for submitting bids. All interestedcompanies, such as Apex Art, would submit bids in sealed envelopes.After the deadline has passed, the hotel company would unseal thebids and, assuming that at least one supplier submitted a bidwithin their maximum price (this is the info that Grant obtainedfrom the purchasing agent which is not normally known to thebidders) would award the job. Generally, but not necessarily, thejob is awarded to the company with the lowest bid.
Approaches to Ethical DecisionMaking
There is a large body of workstretching back thousands of years that discusses ethics. The listbelow is not intended to be either comprehensive or exhaustive. Itis intended merely to provide a basic roadmap of the approachesthat are commonly applied to business situations.
Long Term Self-interest(Egoism) - You should never take any action that is not inyour or your organizationâs long-term self-interest.
PersonalVirtue - You should never do anything that is not honest,open, and truthful and that you would not be glad to see in thenewspaper or TV.
Religious Injunction- You should never take an action that is unkind or thatharms a sense of community.
GovernmentRequirements - The law represents the minimal moralstandards of society, so you should never take any action thatviolates the law.
Utilitarian Benefits- You should never take an action that does not result ingreater good for society. (cost vs. benefitanalysis)
Individual Rights âYou should never take an action that infringes on othersâ agreedupon rights.
Justice - You shouldnever take an action that would result in an unfair sharing ofbenefits or obligations.
Stakeholders are persons orgroups with a legitimate interest in a company. Choose one or moreas the most significant (but not all of them).
1. State and describe the issues, if any, which may potentiallyviolate ethical principles. Whose interests could be jeopardizeddue to the potential unethical behavior that you identified?Provide reasons why these stakeholdersâ interests can bejeopardized.
2. What is Gomesâ rationale after Grant confides in her? Discussthe alternative courses of action that Gomes can take and thepossible outcomes.
3. What should Gomes do, and why? Elaborate.
4. What can you conclude if Grant were to take Gomesâsuggestions, and what could be the consequences? What could be thepossible consequences for taking the suggestion that yourecommend?
