Business Ethics: Analyzing the Rusty and Dusty Slow Movers Case Study

This case study analyzes the ethical dilemma presented in the "Rusty and Dusty Slow Movers" scenario, where a company faces issues with inventory valuation and potential manipulation of financial records. The analysis delves into the ethical conflict arising from the president's request to avoid writing down obsolete inventory and to potentially mislead auditors. The report explores relevant ethical theories such as deontology, utilitarianism, and virtue ethics, offering recommendations for ethical business practices. It examines the roles and interests of various stakeholders, including the inventory controller, president, stockholders, sales staff, auditors, and customers, proposing strategies to balance their needs. The case study emphasizes the importance of ethical decision-making, the implementation of inventory control systems, and the benefits of ethical conduct for the organization, including improved transparency and stakeholder trust. The conclusion summarizes the ethical issues, the application of ethical theories, and the significance of ethical business practices in maintaining integrity and fostering long-term success. The report also provides a list of references for further reading.

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Contents
Introduction......................................................................................................................................2
Overview of case.............................................................................................................................2
Literature review..............................................................................................................................3
Ethical theories............................................................................................................................3
Ethical business practices............................................................................................................4
Recommendations............................................................................................................................5
Benefits of these ethical practices to the organisation.....................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................9

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Introduction
An ethical dilemma or ethical paradox is considered as one of the major decision-making
problems that generally occurs between the two possible moral imperatives, neither of which is
unambiguously acceptable or preferable. The report aims to analyse any case which includes the
unethical practice. The case study that has been selected is “Rusty and Dusty Slow Movers”
which shows the ethical dilemma related to the assets valuation and write down. The analysis of
the case with the theories has been done and also the recommendations on the different
operations that organisation has related to the unethical business practice that can make use of
the more effective in terms of business ethics and can balance the needs of the different
stakeholders involved within the case.
Overview of case
The case shows that the new controlled with the name Penny is there in a medium-sized
company. The goal of Penny was to identify how accurately the inventory on the books reflects
its fair market value. The company has acquired and also repossessed equipment’s that is
difficult to sell as all these machines are duty when she checked. On this, Ron who was the
inventory control clerk within the company informed her that most are either from recession or
overruns. In addition to this, at the time inventory sells that such inventory will be sold at a
discount. Penny understood the case well due to which she discussed the case with Art who is
president of the company (Andersen, 1992). Art told her that it is believed that many of such
items are sellable given suitable marketing as well as correct economic conditions. The issue
occurs when Art doesn’t want to write down about the inventory due to the concerned it will

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negatively that affect the profit. It has been found that indicated that they should assist falsify all
records if it seems like entire auditors that could learn the slow-moving inventory.
In the entire situation, the ethical issue is that penny believes the fact that it would not be
appropriate to implement the request of Art’s to not write down the obsolete and old inventory.
On the other hand, Penny is highly concerned for the second request of Art’s to falsify all the
records as well as mislead the auditors (Duska, Duska and Kury, 2018).
Literature review
Ethical theories
According to the opinions of Jaijairam (2017), the ethical theory that is applied by the individual
as guidance for making the right decisions that majorly focuses on the aspects of an ethical
dilemma. There are majorly 4 ethical theories which are vital to be concerned by the people for
taking the decision which includes deontology, utilitarianism, rights, and virtues. In the current
environment, the situations make it difficult for the employees to take the ethical decisions which
are clear from the case study of “Rusty and Dusty Slow Movers”. Deontology is considered as
one of the vital theory of ethics which presents that the people should always adhere to their
responsibility and duties when it comes to decision making (Cheung and Agrawal, 2018). This
means that the person will follow the obligation to additional society due to keeping one’s duty
that is considered morally right.
On the other hand, Gong (2017) presented the views of utilitarian ethical theories which show
that they are based on one’s ability to expect the consequences of an action. In the utilitarianism,
there are generally two categories act utilitarianism and rule utilitarianism. Act utilitarianism

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defines that the person generally performs the act that advantages the maximum people
irrespective of personal feelings or social restraints like laws. On the other hand, rule
utilitarianism that takes into account the law and it is concerned with fairness. This means that
the theory shows actions which include fairness. Thus, this has been found that this theory is
required to be considered by the individual.
Contrasting this view, the research of Newton (2017) shows that the ethical theory of rights is
essential to be considered. The rights ethical theory formed by societies that are protected and
also provided the maximum importance. Also, there is a virtue ethical theory which is also
considered as one of the vital element. The virtue ethical theory allows judging to a person by
their characters instead than by the action that might deviate from all their normal behaviour.
Ethical business practices
According to the Reamer (2019), ethical business practice is associated with the responsibilities
and obligations of the organisation within the society to uphold ethical norms as well as to live
up to the predictions of the stakeholders and other. There are certain business practices which are
required to be implemented by being beneficence, least harm, respect for autonomy and justice.
All these principles show that it is essential to consider while making the decisions for the ethical
issue. The ethical principle is considered as an extension of the ethical principle of advantages
due to the person who is independent normal prefers to have the full control over all his life
experience with the motive to get the lifestyle that they enjoy.
Considering the views of the McMurrian and Matulich (2016), business behaviour practices
include the way to ensure the leaders exhibit proper behaviour as they need to make ethical
decisions. The leaders need to develop their behaviour for acting rightly and considering all the

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factors for making the decisions. However, this way of taking the right or ethical decision is not
easy for the company as they need to face the negative consequences of such things which affect
the working.
Recommendations
In this ethical dilemma, Penny needs to take the required steps through which they can deal with
the situation which is possible by applying the appropriate theories of ethics and their practices
which guides them for the right actions. For all these options, penny must try to manage the
balance between the decision and the needs of the stakeholders (Turyakira, 2018). The primary
stakeholders of the company consist of Penny, Rhonda, Ron, Art, Stockholders, sales staff,
auditors, customer and shipping as well as receiving personnel.
By applying the theory of deontology, Penny should adhere to the responsibilities and duties for
managing the inventory. One of the recommended options to the Penny is to establish an
inventory control system which shows in how many days the inventory will get old in several
days. Being working as the controller of the inventory it becomes the duty to consider the fact
that in how many days they need to sell that stock to their customers otherwise they won’t be
able to make use of the inventory again (Singh, 2018). For the better check, they can install the
computerised inventory control system which is necessary to pinpoint when the item will lose
their market value. This option will help the company to take the actions before it will get
overburn. At that time, the company can pay a high amount to the sales staffs in the form of
commission to sell the inventory that is considered as vital stakeholders. While making the
decision, Penny can ask support from Rhonda and Ron as they are aware of all situations which
are taking place within the company since long. According to the situation, they can guide well

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to the penny for their steps as this will help them to develop the attitude of being ethical towards
the business. After the valuation, the penny should write it down in the records which are
considered as the ethical way of performing the activity.
Another option that is left with the penny is to always apply the first step that is moral sympathy.
Penny should identify the issue of morality which is present in Art’s request that is to don’t
reveal or present the fall records to the auditors, and it is must to stall the inventory revaluation.
It is recommended to take the action of enhancing the moral sensitivity, Penny should openly
discuss the problems with the opposing Art request which might improve the risk for the
company. It is advisable to the Penny that this step needs restraining of the entire emotions,
determining the likely obstacles and also determining pragmatically what can and can’t be
attained. This shows the implementation of the theory of utilitarian which shows that the actions
of the penny include the fairness and approach of doing the right thing in the entire situation
which is considered as one of the ethical moves of a penny (Chonko, 2020). This step of the
penny will be in favour of the auditors and customers as this is the way through which they can
tell the auditor about the company. However, this is the fact that this way of the penny will
contribute to bringing the decline valuable of the company and they will be highlight just
because of their products. In addition to this, the benefits of the customers will be that they will
not purchase such inventory which is there for long. Thus, all these customers will not feel
cheated and they will be able to purchase the fresh products. This action of a penny is considered
as ethical for the company but while taking this step penny has not abided with the trust of the
Art.

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Benefits of these ethical practises to the organisation
The business will be able to attain the benefits if they abide by the ethical practices within the
company. The actions of the penny might lead to the problem at the initial stage for the company
and its related stakeholders but latter it will bring the decline. The installation of the inventory
controller device will help the company to take the required steps on time. The company can
bring the system of extra commission to its employees for selling the products before they get
old.
In addition to this, the company will be able to manage their inventory in the nice manner which
will make the work simpler for the inventory controller and for the employee who checks the
inventory (Arnold, Beauchamp and Bowie, 2019). The company won't have any fear or things to
hide with the auditor of the company due to which they will not be there in any kind of
misconduct. This will help Art to run the company without any issue with the help of the right
decision. The company should perform their work in the right manner by applying all the
principles of ethics which allows the business to manage the ethical practice.
Conclusion
At the end of the report, this is concluded that ethical issues are generally witnessed by the
company because they try for any wrong activities which affect their business to the most. In this
case, it has been determined that there is an ethical issue of the asset valuation /writing down. It
is summarized that being the inventory controller the situation has become tough for the
company. The issue which is faced that there is high old inventory in the company but they are
accurately on the books with the fair market value. On this president of the company said to wait
and see the auditors notice or not. If they do notice then tries to manipulate the things which are

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not right on the penny part. The analysis shows the different ethical theories and practices that
are present in the literature. The viable recommendations for the options are provided considered
the balance with the stakeholders of the company. In the end, the benefit of the ethical practical
practices to the company has been discussed.

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References
Andersen, A. (1992) Rusty and Dusty Slow Movers [Online]. Available from:
http://public.tepper.cmu.edu/ethics/AA/acct01-case.pdf [Accessed on 28th March 2020]
Arnold, D.G., Beauchamp, T.L. and Bowie, N.E. (2019) Ethical theory and business. Cambridge
University Press.
Cheung, R.W.Y. and Agrawal, R.K. (2018) Ethics, accounting education and recruitment in
Hong Kong. International Journal of Accounting and Finance, 8(3), pp.228-244.
Chonko, L. (2020) Ethical theories [Online]. Available from:
https://www.dsef.org/wp-content/uploads/2012/07/EthicalTheories.pdf [Accessed on 28th March
2020]
Duska, R.F., Duska, B.S. and Kury, K.W. (2018) Accounting ethics. John Wiley & Sons.
Gong, J.J. (2017) Ethics in Accounting: A Decision-Making Approach.
Jaijairam, P. (2017) Ethics in Accounting. Journal of finance and accountancy, (172705), pp.1-
13.
McMurrian, R.C. and Matulich, E. (2016) Building customer value and profitability with
business ethics. Journal of Business & Economics Research (JBER), 14(3), pp.83-90.
Newton, M.T. (2017) A Comparison of Ethical Theories.
Reamer, F.G. (2019) Ethical theories and social work practice. The Routledge Handbook of
Social Work Ethics and Values.

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Singh, A.K. (2018) Ethical Business Practices and Improving Business Performance. GST
Simplified Tax System: Challenges and Remedies, 1(1), pp.202-206.
Turyakira, P.K. (2018) Ethical practices of small and medium-sized enterprises in developing
countries: Literature analysis. South African Journal of Economic and Management
Sciences, 21(1), pp.1-7.