Sword Technology Case Summary

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including its subsidiaries abroad. The issue arises on the manipulation of gross sales by reporting an understatement of gross sales in order to avoid paying US corporate tax liability (Mann & Roberts, 2014). Transfer pricing is very common in business settings; however, it is closely related to false accounting by corporate executives. Companies who engage in such activities are highly liable to hefty penalties. Transfer pricing must be conducted appropriately to avoid the ethical implications concerned with business ethics. For example, intra-firm transactions should be conducted as independent suppliers and customers; however, there is a thin line because corporate executives can easily manipulate information (Mehafdi, 2000). In the Sword Technology case, is Stephen’s actions of intra-firm transactions between Excalibur and Sword Technology with the purpose of reducing Sword Technology taxable income ethical or unethical in nature? The bribery ethical implication also concerns Excalibur for export of the manufactured computer…show more content…
The purpose of the second off-shore corporation is similar to Excalibur as a manufacturing facility with the purpose profit maximization in the Liarg market and lower manufacturing cost of the computer hardware. Liarg was a difficult market to enter because its government officials required Sword Technology to enter into a joint venture with the government because wholly owned foreign subsidiaries were not an acceptable practice. Marian sought a Liarg consulting firm that specialize in lobbying government officials and made several contributions to reelection campaigns. Marian was able establish a wholly owned subsidiary in Liarg and upon closing the contract provided an all-expense paid vacation to several Liarg officials, which were recorded in the company books as legal and consulting

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