Ethical Case Study Analysis: Conflicts of Interest in Business

This case study analysis examines an ethical dilemma faced by a staff accountant, Steven, and his supervisor, Kristin, highlighting conflicts of interest within an organization. The analysis identifies key stakeholders, including shareholders, regulators, and employees, and explores the ethical issues related to favoritism and misalignment of personal and professional interests. It evaluates potential alternatives, such as disclosing unethical practices, through the lenses of utilitarianism, the rights approach, and the justice perspective. The study also considers practical constraints like loss of trust and potential penalties. The analysis recommends strict disciplinary actions to protect stakeholder interests and enhance organizational efficiency, concluding that addressing conflicts of interest is crucial for long-term success.

BUSINESS ETHICS
CASE STUDY ANALYSIS

ETHICAL CASE STUDY ANALYSIS 1
Relevant Facts
The case study revolves around the ethical dilemmas that the subordinate managers
face in the organisation. The case study has two chief characters namely Steven the staff
accountant who has been working in the said organisation at the position of Assistant
Department Manager, and Kristin, the newly transferred supervisor for Steven’s team. While
Kristin has a clear aim to improve the payables section of the enterprise, Steven raises the
issue of favouritism prevailing in the organisation and thus highlighting the conflict of the
interests.
Ethical Issues
The key ethical dilemma faced by Steven as an experienced employee of the
organisation is to whether or not disclose the names of the members of the organisation who
has conflicting interests. Thus, on one hand while he is unhappy with how the promotions
and opportunities work within the organisation, on other hand he is faced with the ethical
issue of disclosing the details of the same to the senior supervisor of the entity. The prime
issue raised in the case study is the failure of the alignment of the personal and the
professional interests of the members of an organisation.
Identification of the Stakeholders
It is significant to note that even a smallest of a decision or activity in an organisation
can lead to far reaching ethical implications on the various stakeholder groups within an
enterprise directly or indirectly (Barry, 2016). In the given case study, the key stakeholders
identified whose interests are being affected are listed as follows. The first group is that of the
shareholders. The fact that the conflicts of interests are prevalent in an organisation
undermines the efficiency of an entity, which further influences the core business operations.
Some of the possible examples are baseless promotions of employees, focussing on quantity
of work to meet the periodic targets, window dressing of the revenues and core business
activities. The second group impacted is that of the regulators as the truthful financial
information is not provided. In terms of the internal stakeholders, the employees are primarily
impacted. They are possibly forced to indulge into unethical practices that are opposed to the
professional standards, in addition to the overtime work to seek the promotions. The overall
culture of the organisation is impacted.

ETHICAL CASE STUDY ANALYSIS 2
Possible Alternatives
The possible actions that can be taken to address the ethical issues identified in the
previous parts are listed as follows. The first course of action for Steven is to disclose the
unethical practices and the individuals responsible for the same within the entity. The second
course of action is not to disclose such information as it may lead to impact on the
professional employment of Steven.
Analysis of Alternatives
As per the ethical theory of Utilitarianism, an act is justified to be ethical when the
same leads to the advancement of the interests of the stakeholders at large (Hollander, 2016).
Accordingly, the possible alternative on part of Steven is to disclose the names of such
members and the acts they have indulged into along with the appropriate evidences for the
same. The cost of such an alternative is that the entity would have to engage in evaluation of
the information, investigate the allegations and take disciplinary actions which may lead to
reduction in number of employees. The benefit of the same is that the other employees would
get motivated to perform their duties in the interest of the organisation.
As per the Rights Approach, the actions are linked to the human dignity. As per the
said ethical theory an individual is free to choose the actions which lead to the fulfilment of
the basic human rights of free will, liberty to pursue happiness and an overall respect of the
individual rights and choices (Mellahi, Morrell & Wood, 2010). Thus, on one hand the
shareholders have the right to expect fulfilment of duties of members with utmost honesty, as
members are working for the shareholders. On other hand, Steven has a right to think about
his personal interests as well. Accordingly, it is Steven’s personal choice whether or not to
disclose the names of members after analysing the pros and cons of impact of such disclosure
on his professional and personal goals.
As per the Justice perspective, the actions must be fair and equitable for everyone
connected. Thus, the disclosure of the unethical practices would be fair and equitable for not
only the entity, but also the employees and other stakeholder groups. Again the benefit is
more than the cost as it will improvise the overall culture of the entity.

ETHICAL CASE STUDY ANALYSIS 3
Practical Constraints
Some of the practical constraints that may arise are loss of the trust of the investors
and the regulators in the entity, in the event of disciplinary action. This is in addition to the
loss of the goodwill of the entity in the market and the possible fall in the share prices of the
company. Penalties may be initiated as well. In the event of non-disclosure, the entity may be
suffer serious losses because of the possible employee frauds with the misuse of the power.
Recommendation and Conclusion
As per the analysis conducted in the previous parts, it has been recommended that
strict disciplinary actions are necessitated in the interests of the various stakeholders as well
as the entity as a whole. The conflict of interests would undermine the success and efficiency
of organisation in long run.

ETHICAL CASE STUDY ANALYSIS 4
References
Barry, N. (2016). Business ethics. UK: Springer.
Hollander, S. (2016). Ethical Utilitarianism and The Theory of Moral Sentiments: Adam Smith
in Relation to Hume and Bentham. Eastern Economic Journal, 42(4), 557-580.
Mellahi, K., Morrell, K., & Wood, G. (2010). The ethical business: Challenges and
controversies. UK: Macmillan International Higher Education.