Business Ethics Case Study

LEADING AND MANAGING PEOPLE

Procurement agency is the business conducted by the agents to make sure that sourcing of funds and physical resources is done, negotiation, quotations and coordination is done for business tender.  It can be said that procurement agencies are helping hands that help a business or a country need to operate a new business or new market in an efficient manner.  It is important to analyze the ethical aspect of the procurement agency before associating with them so that there are no fraudulent operation conducts against the firm or the governing bodies that govern a country. In the current assessment, there will be an analysis of the ethical aspect of procurement agencies and what are possible ethical risks that are associated with them so that King of the Middle Eastern country is able to understand the problems and go ahead with the contracts that they are going to enter within a procurement agency.

Task 1

There have been corporate scandals that have been seen in the UK as well, now some scandals that relate to the procurement activities will be discussed in this section to analyze the possible risks and problems that are related to the business of the procurement agency. This will be done to increase understanding of the customer so that they are properly able to make their decision over the contract that they enter.

  1. The incompetence scandal is a scandal that is a prominent example of procurement operations failure in this scandal the UK had to pay two US-based companies $100 million for an incompetent 6.1 billion dollar nuclear decommissioning contract. The UK Nuclear Decommissioning Authority issued a tender in which 12 nuclear sites were to be dismantled around UK Energy solutions one of the losing bidders stated that the scaring mechanism was flawed and was changed at the last minute and hence the bidding process was inconsistent in manner. This shows that the procurement agency involved in this was not able to effectively conduct ethical bidding because of which the UK governing body had to pay the penalties.
  2. One other scandal or business ethics issue that was seen in the UK was that the senior manager of the National Health Service in England submitted fraudulent invoices to the financial authority to get around £ 200,000. This was financial fraudulent conduct by top authority personnel in the NHS of England hence their risk of financial ethics as well in procurement agency services. The agent may send fraudulent invoices to gain financial resources unethically.

The potential risk that would affect the new PA operations is as follows:

  1. Risk related to accountability: There are risks related to accountability in Procurement agency operations because accountability is an obligation on what the agency thinks is right or fair to conduct. If the following activities go wrong not only the agency will have to take responsibility but the governing body will also be held accountable or responsible as well. Sometimes the agency might not take responsibility or accountability for various actions and this can impact the ethical image that has been intended by the governing bodies (Bowie, 2017).
  2. Risk relates to transparency: Sometimes the procurement agency might not be as transparent as they should be and this will impact the ethical aspect of the operations that are conducted by the governing bodies. Lack of transparency in the financial operation may result in fraudulent errors causing financial problems and damage to the financial bodies of the government.
  3. Risks relate to employee conduct: Employee conduct is also an ethical aspect that can affect the business and cause ethical risks as well as issues that the firm may have to face. The way in which the procurement agency tracts and nerves with their employees determines ethical operations of the firm. If they are not conducting their employees ethically and effectively then there will be ethical consequences and negative image created for the governing body as well.

Task 2

In order to ensure that all of these ethical problems do not exist in the firm, it is important that being a procurement agency (PA) Orion Analytics sets up an ethical standard, framework and legislations that will ensure the King as well as the prince that such ethical risks will be easily mitigated by the company through their effective operations.  Option assessment matrix below shows how well the company has to achieve the ethical standards to decrease the potential ethical risks that the governing body is fearful of (Ferrell and Fraedrich, 2015).

Category

Ethical framework/ principle

Option A (Yes)

Option B

(No)

Accountability

  • To be ethical and responsible while using fiscal or any other resources of the firm
  • Properly and responsibility maintaining records

10

0

Transparency

  • Proper reporting and recording of financial and operational  activities should be done in an unbiased manner

10

0

Employee conduct

  • Employees must be treated equally and fairly and should be given opportunities regardless of their background.

10

0

Table 1: Option assessment matrix

(Source: Self-generated)

The options assessment matrix shows that there are some principles, legislations and framework guidelines that have been set by the company in order to counter issues and risks that can be there in the PA operations. Orion Analytics has defined some key requirements that will help the firm in countering the unethical aspects and elements that can be there within the firm. The following guidelines and laws are discussed as below:

  1. In order to manage and mitigate the ethical risks related accountability, the firm has chosen to use to make sure that every individual and personnel that operates as a procurement agent responsibly and fairly uses the fiscal and physical resources of the firm. The firm also wants to make sure that the following financial and physical resources transaction is recorded and reported to the governing bodies in an effective manner to make sure that the firm is accountable for the use of the resources that are being done by the firm in order to conduct operations of the country.
  2. In order to manage and optimize the risks related to the transparency of the procurement agency, the company has chosen to report its operation to the governing bodies in a regular and consistent manner. It should be made clear that through the use of proper reporting to the governing body Orion Analytics will be able to effectively provide information and knowledge regarding the firm’s operation in the procurement operations that they will be entitled to conduct in three operational activities (Crane et al. 2019).
  3. At last in order to manage the employee conduct risks that have been observed the management of the company has made sure that the company employs employment legislation which eradicates problems, unfair employment, employee discrimination and employee workplace safety. The company has made sure that through not discriminating in the workforce the company will be able to create a favourable employee work environment that will make sure that an ethical workforce operation is conducted in the procurement operations of the firm.

Task 3

Leadership model

In order to effectively manage and optimize the ethical risks that have been identified and seen in the previous cases, it can be said that there is a requirement for effective leadership strategy that leaders of Orion Analytics must use as this will help the company in optimizing the overall risk that is associated within the ethics of procurement activities. Ethical leadership is a leadership theory and strategy that the company should use in order to effectively manage the ethical operations of the firm. Under the ethical leadership strategy, the company will be able to effectively keep high values on ethical beliefs and values and hence the features of ethical operations such as trust, honesty, consideration and fairness will increase. This will increase the overall focus of the company in maintaining a high level of ethical standard that the management and employee of the firm will follow in the operational activities of the firm (Bedi et al. 2016).

Figure 1: Ethical leadership

(Source: Bedi et al. 2016 )

The factors that have been mentioned above in the image are the part of the leadership features that a leader poses such as respect others, serves others, shows justice, manifests honesty, and builds community. Using these qualities of leadership the leader will be able to ethically conduct the operations of the country ensure accountability, transparency and employee conduct.

The leadership management of change initiative

Change management strategies for leaders can be used as a tool or strategy through which the company will be able to manage them and implement the change necessary. In one of the cases above it is seen that due to inconsistent bidding process the UK Nuclear Decommissioning Authority had to pay a penalty of $100 million to two of its borders since the company from next time should have a changed bidding process which is consistent in nature and is fair for the entire bidder. Through the use of this change initiative, the organization will be able to make sure that such problems do not occur further and that there are no ethical problems faced by the firm in future (Lawton and Páez, 2015).

Recommendation for PA

Looking at the requirements of the firm it can be recommended that Orion Analytics should set ethical principles and guidelines so that it is able to ensure ethical operation to its clients and customers. It is also recommended that the firm implements ethical leadership theory to ethically operate and create an ethical working environment so that there is an ethical operation conducted by the firm increasing the trust of customers.

Conclusion

Concluding in the light of above context it can be said that by implementing ethical framework and by following the ethical leadership style the firm will be able to meet the ethical requirements of accountability, transparency and employee conduct. This will further help the company in making sure that the king and prince’s trust increases over Orion Analytics and they enter a contract of Procurement agency with the firm.

 

References

Bedi, A., Alpaslan, C.M. and Green, S., 2016. A meta-analytic review of ethical leadership outcomes and moderators. Journal of Business Ethics, 139(3), pp.517-536.

Bowie, N.E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.

Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press, USA.

Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.

Lawton, A. and Páez, I., 2015. Developing a framework for ethical leadership. Journal of Business Ethics, 130(3), pp.639-649.

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