Pirate Steel Ethics Case Study Case Study

  • Length: 5 pages
  • Sources: 3
  • Subject: Business - Management
  • Type: Case Study
  • Paper: #83603289

Excerpt from Case Study :

Pirate Steel Ethics Case Study

Three issues are the main challenges in this case study. One is the theory of rights, which is particularly imperative in the existence of an organization. This theory claims that all parties should be well represented and has utmost satisfaction. There should be no violation of rights for any of the parties. In this case study, all the parties should have information on the proceedings of the company. This is to avoid any of them being on the dark on matters of the organization. The top-level management has all the right to know the destination of their finances. Violation for this is when there are unreliable reports on the purchases. There should be transparency in all the issues that deal with the top-level management, as they are the most answerable. The investors also have the right to know all the transparent issues for the company. In this case, there should be reliable financial statements that reflect all purchases of the expensive material, as they are the most affected (Battaly 2011,-page 57).

It is also necessary to adhere to the theory of justice in the company. This theory should offer fairness to the stakeholders of the company. Internal Revenue Service should offer reliable information so that there is transparency for all the actions that they undertake. In this case, there should be following of the right procedures in the capitalization and depreciation processes. It is not fair that material is capitalized and then depreciated as write-offs. This especially happens when the company wants to gain the tax credit. Finally, it is imperative that the company takes into account the virtue theory extremely carefully. Whenever there is no transparency in the financial statements, this is dishonesty to the stakeholders. In addition, the company is not adhering to the rule of reliability in this case. All the purchases should be transparent in order to avoid conveying the perception of unreliability. Trust is essential in the perception that the company gives to the rest of society. This is especially to the potential investors who should have total knowledge on the company just by scrutinizing the statements (Hoffman 2009,-page 206).

Pirate steel ethics case study presents three core problems of interest; theory of rights, theory of virtue, and theory of justice. Under the theory of rights, pirate steel fails to respect the rights entitled to stakeholders in the context. Ethics demand that the formal leadership of the organization should have an idea on how the corporate money is spent. According to this case study, the right to know is limited to the formal leadership through falls information in relation to the procurement process. The formal leadership has no clue on who is obtaining what on behalf of the company. The records should be precise in order to give a clear indication on the goings under the purchasing department. The formal reports by the company are critical from the perspective of the investor. Since they rely tremendously on the external financial projections in order to determine the position of the company, the reports provided should be accurate. The pirate steel offers invalid facts about the financial status of the organization hence violates the rights of the potential and actual investors (Hoffman 2009,-page 206).

According to the theory of justice, the process of accumulation of property belonging to the company by the tax body is unethical. The IRS does not correspond with the ethical principles when dealing with the common case of transparency within pirate steel Stammler 2000,-page 236). By adopting false information in terms of purchase orders, pirate steel organization violates the ethics of virtue. The organization should project reliable financial reports that are significant for the position knowledge of the company. The ethics of virtue is an ethical dilemma in the context pirate steel case study. Financial investors and formal leadership should obtain reliable information from all departments of the company (Battaly 2011,-page 57).

Stakeholders refer to individuals affected by the ethical issue. In this context, the stakeholders experiencing this ethical dilemma issue are the formal leadership and the investors. The formal leadership fails to obtain transparent financial reports. This financial report is inadequate from procurement sector of the company. This violates the rights of the formal leadership on three accounts. The other stakeholders experiencing effects of ethical dilemma issue are the investors. Both potential and actual investors have no idea on the correct financial reports of the organization. In order to plan for the future of an organization, investors need to acquire accurate and valid financial reports of the organization. These reports should come from all departments particularly the procurement section of the company. The ethical dilemma facing pirate steel affects management and investors under similar accounts. This makes the two categories main stakeholders.

The best solution for this ethical case is the virtue theory. However, there are different alternatives that are suitable which include the theory of justice, theory of rights and the utilitarian method. Under the theory of rights, the company would fill the right information in the reports. Thus, would ensure that the reports are reliable, and there is maintenance of transparency. This would help the management in determining the purchases that have occurred in the company over the financial period. Therefore, the purchase orders should be perfect so that they can provide the information that is suitable to the stakeholders. These stakeholders also include the investors who have a particularly immense interest in the proceedings of the company. There should be no expensing of materials especially in instances where capitalizing would be more appropriate. In such a case, the investor is unable to understand the financial statements. Through this solution, all the stakeholders get the fair share of rights and transparency.

The theory of justice would also come in handy as a solution for the ethical issue in this case study. It is unjust that the Internal Revenue Service handles the material in such a manner. The problem in this case is that the IRS declares that the materials are capitalized. Worse still the same IRS takes the material and then depreciates it as a write-off. The motive for writing-off the material is to avoid the tax credit. This theory is appropriate because it take into account the importance of justice. The solution is that the IRS avoids writing-off the material and instead avoids claiming of materials that are not worth writing off.

The utilitarian theory also comes in handy as a solution fir this case. This theory focuses on the consequences of the issue and not the reason for doing it. This way, the action can always be avoided later because of the negative effects. The company should be teaching the employees on the equipment that they use in the company. This education will help them in that they will avoid filling the purchase orders falsely. The employees should have the ability to maintain the equipment and this will deter them from lying in the purchase orders. Otherwise, the consequences that the company will face will be long-term, and there will be brooding of the lying culture. Therefore, the utilitarian method would also serve as a perfect alternative solution to these ethical issues.

In order to solve the problem-facing pirate steel in relation to the ethical, the company needs to promote honesty culture within its ranks. The procurement department experiences adverse case of transparency insufficiency. This drags the company into unethical dealings with investors and formal leadership. Employees of the company should follow their values and principles in dealing with financial reports. If the company is to realize the vision and the missions defining the objectives, all employees must be honest in their actions. This will help provide investors with accurate and valid information. This enhances the reliability essence of the firm hence attraction…

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"Pirate Steel Ethics Case Study" (2012, May 15) Retrieved January 21, 2017, from

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