Deck 10: Globalization of Ethical Decision-Making

Question 1

Dun and Ready (D R) Company is a retail firm that started out in the United Kingdom. It recently expanded into Mexico. D R management are excited about the expansion because they anticipate a large market for their goods in Latin America. They hired Raul to negotiate contracts for getting the necessary permissions to begin building retail stores in Mexico City. Although Raul graduated from Cornell University, he spent his childhood in Mexico and knew the country well. Raul's manager, Ian Menkin, stressed to Raul the importance of getting the new locations approved as soon as possible so the company could begin building their stores.
Unfortunately, Raul ran into some difficulties receiving permissions in the required time frame. Due to unforeseen circumstances, the permissions process took longer than originally thought. When Raul explained to Ian that the building process would likely be delayed due to these problems, Ian was not pleased. "Look, Raul. We have a schedule to keep. The people here at headquarters will not take kindly to any delays."
"But what should I do, Ian?" Raul asked.
"Just do whatever it takes to get those permits approved," Ian said before hanging up the phone.
Raul called up Pedro, his main government contact that worked on approving zoning permits. Raul explained the situation, but Pedro would not budge.
"I'm sorry, Raul. But I can't make the process go any faster."
Raul, knowing his job could be on the line, begged Pedro to reconsider. Finally, Pedro agreed to meet with Raul to "talk things through."
Later that day, the two men met. Raul again presented his case. Pedro listened and finally spoke. "I understand your predicament. And although it's against policy, I believe I can help you get those permits approved. However, I'm going to need 6,000 pesos to complete the job."
Raul was uncomfortable with the idea. Again, he called up Ian in London. Raul explained the situation. "Unfortunately, this is really going to be the only way to get this process done quickly."
Ian was quiet for a little while. Then he spoke. "The money isn't that important. It only amounts to a little more than £ 300. Go ahead and pay him."
"But Ian, what if anyone at the company finds out?"
Ian replied, "It's our policy to respect the different cultures in which we do business. It is one of our core values. If giving small payments is the only way to get things done quickly, then that's what we have to do."
Raul agreed and paid Pedro the money. The permits were approved, and the first store was built. The success of the store convinced the company to expand to more locations in the area. Unfortunately, Raul ran into the same problem. Management at D R wanted their building permits to be approved in a reasonable time period. Raul explained that gaining approval could be a long process in Mexico, but D R assumed since he had gotten approval quickly once before, he could do it again. Raul was in a bind. So whenever Pedro offered to speed up the process in exchange for a small amount of money, Raul agreed.
As a result of Raul's success, he was promoted and relocated to the United Kingdom to the corporate offices. His pay tripled since from when he had first started. Raul enjoyed London and loved his new job responsibilities. Everything seemed to be going well.
Then one day Raul got a frantic call from Ian. "We have a problem. Somehow someone figured out about the payments made to secure building permits in Mexico. They are launching an investigation."
Although Raul was nervous, he could not understand Ian's panic. "But the payments we made were not extensive. It's just the way things work in Mexico. You said everything would be fine."
Ian's voice was sharp. "You fool! It doesn't matter whether the payments were small! Any type of bribery can be prosecuted under the U.K. Bribery Act. It doesn't matter whether the bribery took place in Mexico-any company with operations in the U.K. can be held liable."
Raul swallowed. "So what do we do?" he asked.
"Listen carefully to what I'm telling you," Ian said. "I want you to find any documentation that might be incriminating and destroy it. If anyone comes asking, deny any payments. Also, contact the person you made the payments to. Do what it takes to make sure he denies that D R made any improper payments to him."
Raul hung up the phone. He knew if found out the company could face massive fines. Perhaps he and Ian could get into legal trouble. However, he also knew covering up the bribery would make it worse for everyone if discovered. On the other hand, Raul thought there was a good probability that the payments would not be noticed. He knew that almost all companies have to make these payments to get transactions done in different countries, and many have not been caught.
What are the ethical issues in this situation?

Answer 1

The ethical issues in this situation are:
• The parent company DR is a retail firm registered in the United Kingdom. The company has to follow the U.K.laws, including the U.K. Bribery Act.
• The company DR wanted to expedite the process of getting approvals for building permits in Mexico. They did this by paying small bribes to the concerned government official. Otherwise, the company's business schedules for Mexico would have got inordinately delayed.
It is illegal for a registered company in U.K. to pay a bribe as per the U.K. Bribery Act , whereas in Mexico government approvals cannot be obtained quickly unless a bribe is paid. Speedy execution of the project in Mexico would be beneficial to both R and his boss I in their respective careers!

Question 2

After graduating from college and working a few years at a small technology firm, Preet scored a high-level job in the logistics department at Amex Corporation. Amex sells high-quality electronic products that are extremely popular among technical savvy young adults. Part of Preet's job involves working with a team to oversee Amex's contractors in China. Amex contracts with factories across Asia to build components for the company's electronics. Preet's team was to ensure the shipments were as orderly as possible. Preet's team had innovative people, and they performed so well the company began giving them more responsibility, including solving major challenges that arouse within the factories.
One day Preet was to visit the factory in the Shandong province of China. Shipments were falling behind schedule, and there seemed to be more accidents occurring there. Preet was to observe the factory and meet with management to determine where the problems occurred. Preet looked forward to her first trip to China and to actually visit a factory to learn more about the manufacturing process.
When Preet arrived at the airport, the managers of the factory greeted her and showed her around. When she got to the factory, all of the employees were hard at work. One group of workers cleaned the components using special chemicals. Preet noticed they did not wear protective face masks, even though she knew the chemicals could be harmful if inhaled. When Preet asked about this, she was told that face masks were recommended but not required because the chances of getting sick from the chemicals were low.
As Preet spent time at the factory, she noticed more things wrong. She discovered employees, on average, worked at least 12 hours per day, sometimes with no breaks. She knew company policy mandated an eight-hour work day. Sometimes employees would put in as much as 18 - hour shifts. Preet spoke with one of the employees who told her on condition of anonymity that they were denied sick leave. Any perceived idleness on the employee's part resulted in reduced pay. He also informed her there had been several suicides at the plant from overworked employees.
When Preet asked the supervisor why the factory did not hire more workers, he replied they did not have the money. When Preet returned to the United States, she wrote a list of recommendations for improving the factory. Later that month, her team met with the company's top managers in the logistics department. They expressed concern about Preet's findings but offered no recommendations for how to fix them. Afterward, Preet complained to members on her team.
"Of course they aren't going to do anything," said Jim, who had been working in the logistics department for 12 years. "Why should they? As long as the company gets their shipments, they aren't going to disrupt the process by requiring major changes."
Dawn, who had only been working for six months, chimed in. "But Jim, they have to do something. From what Preet said, the workers have terrible working conditions."
Jim sighed. "Dawn, you haven't been in this business long enough to see how things work. The factory in Shandong really isn't that bad compared to many other factories in China. It's not unusual for factory workers to work longer hours. Besides, you might think the employees there don't make much for the amount that they work, but it's a lot better than what people get in other factories. For better pay people are willing to work in less than ideal conditions."
Preet spoke up. "Just because that's normal in the culture doesn't necessarily make it right. Many of these problems could be avoided if the factory ensured their workers wore appropriate safety gear and hired more employees."
"The factory probably can't hire more workers," Jim said. "Where are they going to get the money?" "Well, maybe Amex should begin paying them more," Dawn replied. "That would translate into higher wages and the ability to hire more staff."
"You've got to be kidding!" Jim said. "The whole reason why Amex is there in the first place is because labor costs are so cheap. Besides, being able to keep costs low is the only way to price our products reasonably. Consumers want low-priced products."
"But consumers also care about how workers are treated, don't they?" Preet asked.
"They might show some concern," Jim replied. "But if it's between higher-priced products or better working conditions, I guarantee customers will choose the latter."
Discuss some of the choices of the firm and the advantages and disadvantages of each.

Answer 2

Some of the choices of the firm, the advantages and disadvantages of each course of action are listed below:

Question 3

Dun and Ready (D R) Company is a retail firm that started out in the United Kingdom. It recently expanded into Mexico. D R management are excited about the expansion because they anticipate a large market for their goods in Latin America. They hired Raul to negotiate contracts for getting the necessary permissions to begin building retail stores in Mexico City. Although Raul graduated from Cornell University, he spent his childhood in Mexico and knew the country well. Raul's manager, Ian Menkin, stressed to Raul the importance of getting the new locations approved as soon as possible so the company could begin building their stores.
Unfortunately, Raul ran into some difficulties receiving permissions in the required time frame. Due to unforeseen circumstances, the permissions process took longer than originally thought. When Raul explained to Ian that the building process would likely be delayed due to these problems, Ian was not pleased. "Look, Raul. We have a schedule to keep. The people here at headquarters will not take kindly to any delays."
"But what should I do, Ian?" Raul asked.
"Just do whatever it takes to get those permits approved," Ian said before hanging up the phone.
Raul called up Pedro, his main government contact that worked on approving zoning permits. Raul explained the situation, but Pedro would not budge.
"I'm sorry, Raul. But I can't make the process go any faster."
Raul, knowing his job could be on the line, begged Pedro to reconsider. Finally, Pedro agreed to meet with Raul to "talk things through."
Later that day, the two men met. Raul again presented his case. Pedro listened and finally spoke. "I understand your predicament. And although it's against policy, I believe I can help you get those permits approved. However, I'm going to need 6,000 pesos to complete the job."
Raul was uncomfortable with the idea. Again, he called up Ian in London. Raul explained the situation. "Unfortunately, this is really going to be the only way to get this process done quickly."
Ian was quiet for a little while. Then he spoke. "The money isn't that important. It only amounts to a little more than £ 300. Go ahead and pay him."
"But Ian, what if anyone at the company finds out?"
Ian replied, "It's our policy to respect the different cultures in which we do business. It is one of our core values. If giving small payments is the only way to get things done quickly, then that's what we have to do."
Raul agreed and paid Pedro the money. The permits were approved, and the first store was built. The success of the store convinced the company to expand to more locations in the area. Unfortunately, Raul ran into the same problem. Management at D R wanted their building permits to be approved in a reasonable time period. Raul explained that gaining approval could be a long process in Mexico, but D R assumed since he had gotten approval quickly once before, he could do it again. Raul was in a bind. So whenever Pedro offered to speed up the process in exchange for a small amount of money, Raul agreed.
As a result of Raul's success, he was promoted and relocated to the United Kingdom to the corporate offices. His pay tripled since from when he had first started. Raul enjoyed London and loved his new job responsibilities. Everything seemed to be going well.
Then one day Raul got a frantic call from Ian. "We have a problem. Somehow someone figured out about the payments made to secure building permits in Mexico. They are launching an investigation."
Although Raul was nervous, he could not understand Ian's panic. "But the payments we made were not extensive. It's just the way things work in Mexico. You said everything would be fine."
Ian's voice was sharp. "You fool! It doesn't matter whether the payments were small! Any type of bribery can be prosecuted under the U.K. Bribery Act. It doesn't matter whether the bribery took place in Mexico-any company with operations in the U.K. can be held liable."
Raul swallowed. "So what do we do?" he asked.
"Listen carefully to what I'm telling you," Ian said. "I want you to find any documentation that might be incriminating and destroy it. If anyone comes asking, deny any payments. Also, contact the person you made the payments to. Do what it takes to make sure he denies that D R made any improper payments to him."
Raul hung up the phone. He knew if found out the company could face massive fines. Perhaps he and Ian could get into legal trouble. However, he also knew covering up the bribery would make it worse for everyone if discovered. On the other hand, Raul thought there was a good probability that the payments would not be noticed. He knew that almost all companies have to make these payments to get transactions done in different countries, and many have not been caught.
Identify the pressures that caused the ethical issues to develop.

Answer 3

The pressures that caused the ethical issues to develop were:
• The parent company had not done proper home work of assessing the ethics culture in the Mexican government before taking a decision to launch their business in that country.
• Therefore, unrealistic project execution schedules were committed to senior management without taking into account the unethical practices followed in Mexico for granting building permits.
• Both R and his boss I did not want to own up their oversight in the planning stage. Therefore, to cover up, they paid bribes. This also ensured good career progression for both R and his boss I. They forgot that they have to comply with U.K. laws, including the U.K.Bribery Act, which forbids these kinds of payments.

Question 4

After graduating from college and working a few years at a small technology firm, Preet scored a high-level job in the logistics department at Amex Corporation. Amex sells high-quality electronic products that are extremely popular among technical savvy young adults. Part of Preet's job involves working with a team to oversee Amex's contractors in China. Amex contracts with factories across Asia to build components for the company's electronics. Preet's team was to ensure the shipments were as orderly as possible. Preet's team had innovative people, and they performed so well the company began giving them more responsibility, including solving major challenges that arouse within the factories.
One day Preet was to visit the factory in the Shandong province of China. Shipments were falling behind schedule, and there seemed to be more accidents occurring there. Preet was to observe the factory and meet with management to determine where the problems occurred. Preet looked forward to her first trip to China and to actually visit a factory to learn more about the manufacturing process.
When Preet arrived at the airport, the managers of the factory greeted her and showed her around. When she got to the factory, all of the employees were hard at work. One group of workers cleaned the components using special chemicals. Preet noticed they did not wear protective face masks, even though she knew the chemicals could be harmful if inhaled. When Preet asked about this, she was told that face masks were recommended but not required because the chances of getting sick from the chemicals were low.
As Preet spent time at the factory, she noticed more things wrong. She discovered employees, on average, worked at least 12 hours per day, sometimes with no breaks. She knew company policy mandated an eight-hour work day. Sometimes employees would put in as much as 18 - hour shifts. Preet spoke with one of the employees who told her on condition of anonymity that they were denied sick leave. Any perceived idleness on the employee's part resulted in reduced pay. He also informed her there had been several suicides at the plant from overworked employees.
When Preet asked the supervisor why the factory did not hire more workers, he replied they did not have the money. When Preet returned to the United States, she wrote a list of recommendations for improving the factory. Later that month, her team met with the company's top managers in the logistics department. They expressed concern about Preet's findings but offered no recommendations for how to fix them. Afterward, Preet complained to members on her team.
"Of course they aren't going to do anything," said Jim, who had been working in the logistics department for 12 years. "Why should they? As long as the company gets their shipments, they aren't going to disrupt the process by requiring major changes."
Dawn, who had only been working for six months, chimed in. "But Jim, they have to do something. From what Preet said, the workers have terrible working conditions."
Jim sighed. "Dawn, you haven't been in this business long enough to see how things work. The factory in Shandong really isn't that bad compared to many other factories in China. It's not unusual for factory workers to work longer hours. Besides, you might think the employees there don't make much for the amount that they work, but it's a lot better than what people get in other factories. For better pay people are willing to work in less than ideal conditions."
Preet spoke up. "Just because that's normal in the culture doesn't necessarily make it right. Many of these problems could be avoided if the factory ensured their workers wore appropriate safety gear and hired more employees."
"The factory probably can't hire more workers," Jim said. "Where are they going to get the money?" "Well, maybe Amex should begin paying them more," Dawn replied. "That would translate into higher wages and the ability to hire more staff."
"You've got to be kidding!" Jim said. "The whole reason why Amex is there in the first place is because labor costs are so cheap. Besides, being able to keep costs low is the only way to price our products reasonably. Consumers want low-priced products."
"But consumers also care about how workers are treated, don't they?" Preet asked.
"They might show some concern," Jim replied. "But if it's between higher-priced products or better working conditions, I guarantee customers will choose the latter."
Describe how Jim takes a cultural relativism approach to the problem.

Question 5

Dun and Ready (D R) Company is a retail firm that started out in the United Kingdom. It recently expanded into Mexico. D R management are excited about the expansion because they anticipate a large market for their goods in Latin America. They hired Raul to negotiate contracts for getting the necessary permissions to begin building retail stores in Mexico City. Although Raul graduated from Cornell University, he spent his childhood in Mexico and knew the country well. Raul's manager, Ian Menkin, stressed to Raul the importance of getting the new locations approved as soon as possible so the company could begin building their stores.
Unfortunately, Raul ran into some difficulties receiving permissions in the required time frame. Due to unforeseen circumstances, the permissions process took longer than originally thought. When Raul explained to Ian that the building process would likely be delayed due to these problems, Ian was not pleased. "Look, Raul. We have a schedule to keep. The people here at headquarters will not take kindly to any delays."
"But what should I do, Ian?" Raul asked.
"Just do whatever it takes to get those permits approved," Ian said before hanging up the phone.
Raul called up Pedro, his main government contact that worked on approving zoning permits. Raul explained the situation, but Pedro would not budge.
"I'm sorry, Raul. But I can't make the process go any faster."
Raul, knowing his job could be on the line, begged Pedro to reconsider. Finally, Pedro agreed to meet with Raul to "talk things through."
Later that day, the two men met. Raul again presented his case. Pedro listened and finally spoke. "I understand your predicament. And although it's against policy, I believe I can help you get those permits approved. However, I'm going to need 6,000 pesos to complete the job."
Raul was uncomfortable with the idea. Again, he called up Ian in London. Raul explained the situation. "Unfortunately, this is really going to be the only way to get this process done quickly."
Ian was quiet for a little while. Then he spoke. "The money isn't that important. It only amounts to a little more than £ 300. Go ahead and pay him."
"But Ian, what if anyone at the company finds out?"
Ian replied, "It's our policy to respect the different cultures in which we do business. It is one of our core values. If giving small payments is the only way to get things done quickly, then that's what we have to do."
Raul agreed and paid Pedro the money. The permits were approved, and the first store was built. The success of the store convinced the company to expand to more locations in the area. Unfortunately, Raul ran into the same problem. Management at D R wanted their building permits to be approved in a reasonable time period. Raul explained that gaining approval could be a long process in Mexico, but D R assumed since he had gotten approval quickly once before, he could do it again. Raul was in a bind. So whenever Pedro offered to speed up the process in exchange for a small amount of money, Raul agreed.
As a result of Raul's success, he was promoted and relocated to the United Kingdom to the corporate offices. His pay tripled since from when he had first started. Raul enjoyed London and loved his new job responsibilities. Everything seemed to be going well.
Then one day Raul got a frantic call from Ian. "We have a problem. Somehow someone figured out about the payments made to secure building permits in Mexico. They are launching an investigation."
Although Raul was nervous, he could not understand Ian's panic. "But the payments we made were not extensive. It's just the way things work in Mexico. You said everything would be fine."
Ian's voice was sharp. "You fool! It doesn't matter whether the payments were small! Any type of bribery can be prosecuted under the U.K. Bribery Act. It doesn't matter whether the bribery took place in Mexico-any company with operations in the U.K. can be held liable."
Raul swallowed. "So what do we do?" he asked.
"Listen carefully to what I'm telling you," Ian said. "I want you to find any documentation that might be incriminating and destroy it. If anyone comes asking, deny any payments. Also, contact the person you made the payments to. Do what it takes to make sure he denies that D R made any improper payments to him."
Raul hung up the phone. He knew if found out the company could face massive fines. Perhaps he and Ian could get into legal trouble. However, he also knew covering up the bribery would make it worse for everyone if discovered. On the other hand, Raul thought there was a good probability that the payments would not be noticed. He knew that almost all companies have to make these payments to get transactions done in different countries, and many have not been caught.
Discuss the advantages and disadvantages of each decision Raul could make.

Question 6

After graduating from college and working a few years at a small technology firm, Preet scored a high-level job in the logistics department at Amex Corporation. Amex sells high-quality electronic products that are extremely popular among technical savvy young adults. Part of Preet's job involves working with a team to oversee Amex's contractors in China. Amex contracts with factories across Asia to build components for the company's electronics. Preet's team was to ensure the shipments were as orderly as possible. Preet's team had innovative people, and they performed so well the company began giving them more responsibility, including solving major challenges that arouse within the factories.
One day Preet was to visit the factory in the Shandong province of China. Shipments were falling behind schedule, and there seemed to be more accidents occurring there. Preet was to observe the factory and meet with management to determine where the problems occurred. Preet looked forward to her first trip to China and to actually visit a factory to learn more about the manufacturing process.
When Preet arrived at the airport, the managers of the factory greeted her and showed her around. When she got to the factory, all of the employees were hard at work. One group of workers cleaned the components using special chemicals. Preet noticed they did not wear protective face masks, even though she knew the chemicals could be harmful if inhaled. When Preet asked about this, she was told that face masks were recommended but not required because the chances of getting sick from the chemicals were low.
As Preet spent time at the factory, she noticed more things wrong. She discovered employees, on average, worked at least 12 hours per day, sometimes with no breaks. She knew company policy mandated an eight-hour work day. Sometimes employees would put in as much as 18 - hour shifts. Preet spoke with one of the employees who told her on condition of anonymity that they were denied sick leave. Any perceived idleness on the employee's part resulted in reduced pay. He also informed her there had been several suicides at the plant from overworked employees.
When Preet asked the supervisor why the factory did not hire more workers, he replied they did not have the money. When Preet returned to the United States, she wrote a list of recommendations for improving the factory. Later that month, her team met with the company's top managers in the logistics department. They expressed concern about Preet's findings but offered no recommendations for how to fix them. Afterward, Preet complained to members on her team.
"Of course they aren't going to do anything," said Jim, who had been working in the logistics department for 12 years. "Why should they? As long as the company gets their shipments, they aren't going to disrupt the process by requiring major changes."
Dawn, who had only been working for six months, chimed in. "But Jim, they have to do something. From what Preet said, the workers have terrible working conditions."
Jim sighed. "Dawn, you haven't been in this business long enough to see how things work. The factory in Shandong really isn't that bad compared to many other factories in China. It's not unusual for factory workers to work longer hours. Besides, you might think the employees there don't make much for the amount that they work, but it's a lot better than what people get in other factories. For better pay people are willing to work in less than ideal conditions."
Preet spoke up. "Just because that's normal in the culture doesn't necessarily make it right. Many of these problems could be avoided if the factory ensured their workers wore appropriate safety gear and hired more employees."
"The factory probably can't hire more workers," Jim said. "Where are they going to get the money?" "Well, maybe Amex should begin paying them more," Dawn replied. "That would translate into higher wages and the ability to hire more staff."
"You've got to be kidding!" Jim said. "The whole reason why Amex is there in the first place is because labor costs are so cheap. Besides, being able to keep costs low is the only way to price our products reasonably. Consumers want low-priced products."
"But consumers also care about how workers are treated, don't they?" Preet asked.
"They might show some concern," Jim replied. "But if it's between higher-priced products or better working conditions, I guarantee customers will choose the latter."
Since Amex does not own the Chinese factory, are they still accountable for the working conditions of its suppliers? Why or why not?