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"Working Globally" 

"Working Globally" . Business Ethics in a Global Business Environment Dwight King Gary Stroud. Introduction. BRICS Emerging Markets Foreign Corrupt Practices Act Global Competition Economy Beginning Recovery Cycle EU / USA Debt Issues. Overview - United States .

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"Working Globally" 

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  1. "Working Globally"  Business Ethics in a Global Business Environment Dwight King Gary Stroud

  2. Introduction • BRICS Emerging Markets • Foreign Corrupt Practices Act • Global Competition • Economy Beginning Recovery Cycle • EU / USA Debt Issues

  3. Overview - United States  • USA scored a 7.1, 22nd, on the Corruptions Perceptions Index. • Corruption and income per capita are directly related – USA (7.1), $7, 518 vs. Luxembourg (8.5), $55,100. • Ease of doing business, 5 out of 183 (Doing Business Report 2010).

  4. Influence of Government • U.S. government has a strong influence on business. Tax deductions, tariffs, subsidies and price supports. • Business also has a strong influence on government. Lobbies, special interest groups, political contributions, appointments to governmental position. • The U.S. also has a strong tradition of legal protection (predatory business practices and monopolies) of the consumer and strong environmental protections.

  5. Overview - Russia Russia is highly affected by corruption and scored a 2.1 on the Corruption Perceptions Index, 154/178 countries. Surpassed the Mafia corruption of the 90’s Corruption and income per capita are directly related – Russia (2.1), $11,200 vs. Luxembourg (8.5), $55,100. Ease of doing business, 120 out of 183 (Doing Business Report 2010). Sizable influence in some areas – energy, communication, defense

  6. What would you do? • You work for a mid-size company that has just won a contract with a Russian corporation. After signing the contract, you suggest that the group dine together that evening. The head of the Russian negotiating team recommend a restaurant near the hotel you are staying. • The restaurant is very nice and the food is excellent. You are amazed at the amount of alcohol your Russian counterparts consume. At the conclusion of the meal you pick up the bill and are alarmed that the bill is at least three times what you expected it would be, far exceeding the entertainment budget for the trip.

  7. Options for the meal • Pay the bill, chalking this experience up as a lesson for future visits? • Challenge the bill it is likely you were over charged. • Propose to your Russian counterpart that you split the bill. • Propose to your Russian counterparts that they pay for the alcohol consumed.

  8. The Answer is: • It would be rude to withdraw your offer to pay. Swallow hard, pay the bill and explain to your boss later what happened. Next time in town, check with the hotel concierge to recommend a nice restaurant this more within your price range.

  9. Overview - India  • India scored a 3.3, 87th, on the Corruptions Perceptions Index • Corruption and income per capita are directly related – India (2.9), $2,900 vs. Luxembourg (8.5), $55,100. • Ease of doing business, 134 out of 183 (Doing Business Report 2010).

  10. What would you do? • You are a contractor and would like to participate in the local import market. Traditional gifts are distributed to key officials. Several of your representatives offer monetary incentives to appropriate officials to guarantee a favorable business relationship. Unfortunately, your company has not been granted any contracts.

  11. Did your company violate the Foreign Corrupt Practices Act? • No, because the company did not do any business with the government. • Yes, because it is wrong to improperly influence a foreign official to retain / gain business from any source. • No, because it is okay to influence government official when the business does come directly from the government.

  12. And the answer is: • Yes, because it is wrong to improperly influence a foreign official to retain / gain business from any source.

  13. Case India • You have recently located to India. In order to work in India you will need a special license. While at the business license bureau you are advised by the licensing agent that it will take 90 days to process your license. However, if you were to pay him a $250 expedite fee, the license would be issued to you by the end of the week

  14. What do you do? • Don’t pay, it is better to wait than break the law. • Pay the money and record it as a meal on your expense account. • Pay the money and document it as fee to expedite the license.

  15. And the answer is: • Moderate “grease” payments are allowed as long as they are for routine services and are properly documented. These payments facilitate routine government actions (licenses, permits, utilities, local police security). • Check with your supervisor and legal department. What may be permissible under FCPA may be illegal under local law.

  16. Case 3 Overview - China • China scored a 3.5, 78th, on the Corruptions Perceptions Index • Corruption and income per capita are directly related – China (3.5), $37,800 vs. Luxembourg (8.5), $55,100. • Ease of doing business, 79 out of 183 (Doing Business Report 2010).

  17. Case - China • In the early 1990’s, Chubb insurance funded a $1,000,000 program to teach insurance classes at Shanghai University.  • In April 1999, the Chinese government announced that Chubb would be one of four foreign companies to receive licenses to open branches in China.  • Did Chubb violate or uphold the FCPA?

  18. And the answer is: • The support of this charitable program directly affects the organizations success in the foreign country. • Chubb hoped to secure a place in the market and garner support by investing in Shanghai University. • Upholds - FCPA

  19. Ethical Decision Making Questions to discuss in the various workplaces: • Do you give your employees an opportunity to express their views before decisions are made. •  Are all employees treated with respect and dignity? •  Does the company promote consistent application of the rules across situations? •  Does the company discourage the influence of personal biases on decisions? •  Are the rights of employees respected? •  Are managers consistent in their views about appropriate ethical standards?

  20. Closing Comments • Common sense and good judgment (what would Mom & Dad say?) • Know the rules – U.S. and others • Check with Legal Department • Keep supervisor in the loop • Don’t Panic (I will have to get back to you.) • Don’t give in to pressure. (I will need more time to check with my headquarters)

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