Apex Art has been requested to prepare a bid on 500 pieces of framed artwork for a new hotel. Winning the bid would be a big boost for sales representative Jason Grant, who works entirely on commission. Sonja Gomes, the cost accountant for Apex, prepared the bid and calculated full product Costs of $121,000. Based on the company policy of pricing at 125% of full cost, Gomes gives Grant a figure of $151,200 to submit for the job.

Grant is very concerned. He tells Gomes that at that price, Apex has no chance of winning the job. He confides that he spent $500 of company funds to take the hotels purchasing agent to a basketball playoff game where the purchasing agent disclosed that a bid of $145,000 would win the job. He hadnt planned to tell Gomes because he was confident that the bid she developed would be below that amount. Gomes reasons that the $500 he spent will be wasted if Apex doesnt capitalize on this valuable information. In any case, the company will still make money if it wins the bid at $145,000 because it is higher than the full cost of $121,000.

Gomes suggests that if Grant is willing to use cheaper materials for the frame, he can achieve a bid of $145,000. The artwork has already been selected and cannot be changed, so the entire amount of the reduction in cost will need to come from framing materials.

A note regarding the bidding process:

The hotel would announce that it is seeking bids from suppliers interested in providing the artwork. The hotel would specify their requirements and a deadline for submitting bids. All interested companies, such as Apex Art, would submit bids in sealed envelopes. After the deadline has passed, the hotel company would unseal the bids and, assuming that at least one supplier submitted a bid within their maximum price (this is the info that Grant obtained from the purchasing agent which is not normally known to the bidders) would award the job. Generally, but not necessarily, the job is awarded to the company with the lowest bid.

Approaches to Ethical Decision Making

There is a large body of work stretching back thousands of years that discusses ethics. The list below is not intended to be either comprehensive or exhaustive. It is intended merely to provide a basic roadmap of the approaches that are commonly applied to business situations.

Long Term Self-interest (Egoism) - You should never take any action that is not in your or your organizations long-term self-interest.

Personal Virtue - You should never do anything that is not honest, open, and truthful and that you would not be glad to see in the newspaper or TV.

Religious Injunction - You should never take an action that is unkind or that harms a sense of community.

Government Requirements - The law represents the minimal moral standards of society, so you should never take any action that violates the law.

Utilitarian Benefits - You should never take an action that does not result in greater good for society. (cost vs. benefit analysis)

Individual Rights You should never take an action that infringes on others agreed upon rights.

Justice - You should never take an action that would result in an unfair sharing of benefits or obligations.

Stakeholders are persons or groups with a legitimate interest in a company. Choose one or more as the most significant (but not all of them).

Primary Stakeholders

Primary Stakeholders	Secondary Stakeholders
Shareholders Employees Customers Suppliers Governments Local communities	Special Interest Groups Trade Associations Media

Questions:

1. State and describe the issues, if any, which may potentially violate ethical principles. Whose interests could be jeopardized due to the potential unethical behavior that you identified? Provide reasons why these stakeholders interests can be jeopardized.

2. What is Gomes rationale after Grant confides in her? Discuss the alternative courses of action that Gomes can take and the possible outcomes.

3. What should Gomes do, and why? Elaborate.

4. What can you conclude if Grant were to take Gomes suggestions, and what could be the consequences? What could be the possible consequences for taking the suggestion that you recommend?