Custom «International Widgets Code of Ethics» Sample Essay
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This paper uses a case study of the company called International Widgets. It uses the case scenario presented to look at how company issues across the world appear and are resolved. Issues such as ethical code rules and adherence to them are discussed. The role of employer and employee, among other work-related issues such as fiduciary relationships, are examined. The role of company otherwise referred to as the principal, and the agent are discussed in the paper. In the end, the paper makes use of the case study presented to discuss issues affecting companies today such as conflict of interests and employees disclosing confidential information of clients to competitors.
Provisions that Prohibit John’s Behavior
Analyzing the scenario, one can conclude that John has behaved unethically and unprofessionally. He has violated the code of ethics and work that the International Widgets clearly states. Before employees are hired or given a contract, they are asked to read and understand all the dos and dont's of a company (Consultation of Employees, 2014). Then they sign a contract, meaning that they have accepted the terms and conditions of work and have agreed. The global company International Widgets expects the highest integrity from its employees. Its main goal is to make profits, and John is undermining this objective by working for a competitor, albeit indirectly. John’s personal and financial problems at home cannot be used to justify his actions: selling accounts to the competitor for a commission. It is important to revise International Widget’s code of ethics rules regarding those that John has violated.
International Widgets prohibits its employees and everyone it interacts with in the cause of doing business to share the company's data to maintain the greatest extent of integrity in all their dealings with current, potential, and past clients. The company states that its personal information should be treated with integrity and confidentiality. By John divulging customers’ accounts to the competitor, he violates this provision (Srivastava, 2006). He undermines the integrity and privacy he should have been the first to protect.
International Widgets outlined in their code of work ethics that they conduct business honorably and honestly. They expect their employees to be ethical and do business according to the interests of the company. John did business with the competitor, thus undermining the interests of the enterprise. He also served personal interests; his need for money or financial obligations cannot be used to justify his actions in this case. The fact that he has been a hardworking employee in the past cannot be used to excuse his case. The interests of the company should have come first, not personal ones.
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There also arises the conflict of interest between John and International Widgets. According to the International Widgets code of ethics, all employees must act for the benefit of the company (Srivastava, 2006). John provided services to the direct competitor, yet it was clearly prohibited by the code. In brief, John’s actions are unethical, unprofessional, and the breach of contract regulations he signed when International Widgets employed him. John should have valued the clients’ information. He should also have avoided distributing it to a third party, the competitor in this case.
Possible Legal Actions against International Widgets and John
Whereas competition is acceptable in businesses, it should be fair. Businesses are encouraged to devise competitive and fair ways of acquiring and maintaining customers. Some of the strategies include, but are not limited to, pricing, place, promotion and product. They could offer superior services and products. In case a business seeks competitive edge over the other, using unfair means such as the competitor of International Widgets did, legal actions can be taken against it (Whish, 2009). Employees who participate in fraudulent deals with other companies either for their personal gains or due to coercions can be sued by the firm that employed them according to the terms and conditions set (Whish, 2007).
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A review of anti-competitive agreements will help put things into perspective:
According to Article 101, competition law forbids arrangements, concerted business practices that restrict, distort, or prevent competition. It also discourages all actions that will lead to unfair competition. The company that “poached” John Anderson did engage in the unfair trade practices. With enough evidence, International Widgets can sue the competitor for violating the provisions of Article 101 (Whish, 2007). Companies that breach the competition law can be applied to serious penalties, including up to 10% of fines of their turnovers.
Firms, exposed to damages from competitors and the customers breaching Article 1, can provide evidence and prove that they have been harmed in any way (Whish, 2007). For instance, International Widgets can state that it lost a significant share of profits due to the unfair competition. International Widgets’ clients whose accounts were compromised can also levy charges against the competitor for whom John Anderson worked. Irrespective of whether an anti-competitive arrangement is examined regarding its effect on competition or objective, both written and verbal agreements are considered anti-competitive (Srivastava, 2006). The competitor approached John and verbally convinced him to sell clients’ accounts to the competitor. If International Widgets can prove that the conversation took place and show that customers’ accounts were indeed compromised, then legal actions can be taken against the offending organization.
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Chapter 1 or Article 101 prohibits actions such as agreements that fix purchases or sales, whether directly or indirectly. It also prohibits other trading conditions such as rebates or discounts (Whish, 2007). Also covered and prohibited are those agreements that control or limit production, investments, technical development, and markets (Whish, 2009). For the case of International Widgets, its market share was compromised in unfair competition.
John’s action is one that shows cartel behavior. It is the worst type of anti-competitive behavior as outlined in Article 101. It carries a serious penalty and involves market sharing and unfair trade practices such as those exhibited by John and the competitor. People charged with cartel behavior can face a sentence of up to five years imprisoning as well as paying unlimited fines (Whish, 2007). International Widgets thus takes an advantage of the provisions as outlined in Chapter 1 or Article 101 to take legal action against John. Employees are required to act honestly and faithfully. They must deal with the company’s information in their possession discretely. John undermined the code of ethics and the case can be investigated. If found guilty of breaching the company’s provisions, International Widgets can relieve him of duties; require him to pay for damages or any other fines as a court of law shall decide.
A fiduciary relationship is one where one of the parties places trust, reliance, and confidence on the other. One party influences another (the one having the fiduciary duty) to act for the interest of the party. Such a relationship is created through verbal agreement of the concerned parties. It could also be imposed by law or can stated in a company’s code of ethics. Fiduciary relationships exist between corporations and agents, lawyers and clients, etc. (U.S. Dept. of Labor, Employee Benefits Security Administration, 2010). According to this definition, John is in a fiduciary relationship. He is a salesperson and act as the link between the company and clients. John Anderson is an agent of International Widgets. While he engaged into the cartel behavior, he represented the company and had all information relating to clients’ account.
International Widgets seemed to have trusted John and had confidence in him, just as would be expected in a fiduciary relationship. In this scenario, International Widgets assume the role of the principal. The company is charged with the responsibility of compensating John, who is the agent. Another duty is to indemnify John against any claims, expenses, and liabilities incurred in his line of discharging duty. In a fiduciary relationship, the obligations of an agent include acting on behalf of the principal (Srivastava, 2006). It is the responsibility of the principal to supervise the agent. The agent only works according to the rules and regulations that the company sets (U.S. Dept. of Labor, Employee Benefits Security Administration, 2010). International Widgets has code of ethics that is well outlined and every employee has a copy. Agents of the company discharge their duties with due diligence and care. They avoid conflicts of personal interests and those of the company. Finally, their duty is to hand over all earnings they collected on behalf of the principal.
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Appropriate Action for John
Analyzed the case scenario and all the facts about John’s behavior, it is evident that John violated some provisions of the code of ethics. International Widgets Company is one that which holds clients’ information with utmost confidentiality, privacy, and integrity. It requires that all employees adhere to the code of ethics. John committed a grave offense by engaging in the unfair competition. He has exhibited cartel behavior and also undermined the provisions of competition law. Not only do his actions comprise the company’s reputation, but they also give the competitor mean competitive age. In light of these observations and examination of the evidences provided, John should be investigated. John should be charged according to the terms and conditions of his contract.
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