Question

Cost Accounting

Dynamic Industrial purchasing manager has a friend who owns the company (COMP Inc) that produces some of the components that go into the X370A. COMP Inc. has been losing money in recent years. To save money, COMP Inc. has begun using a lower quality component and selling their components at a lower price to the public. However, the Dynamic Industrial’s purchasing manager has not renegotiated the contract and continues to purchase the components at an above-market rate to help the friend. Is the purchasing manager’s behavior in this situation ethical? Why or why not?

Answer 1

No, behaviour of purchasing manager is not ethical.

Explanation

It is the responsibility of the purchasing manager to purchase the required resources from the best and reasonable sources in the market. Using authority given by the organisation for own benefit is not ethical and can be describe as a anti- organisation activity.

When Dynamic Industrial Purchasing manager buy components from COMP (Inc) it violates the basis ethics of working in the organation, because sole motive is to work for the benefit of the orgnisation. COMP (Inc) is selling the component at a lower price but it is purchased by the Purchasing manager at a higher price, which is not in the favour of the organisation.

Further, Components sold by COMP (Inc) is of cheap quality which in turn will make the quality of Dynamic Industrial Product also cheap.

So, the action of the purchasing manager is not only affecting at the money level but it will also affect the reputation of the Dynamic industrial in the market.

Since the behaviour of the purchasing officer is aganist the company . It can not be said to be ethical.