Let’s say that you work for a large multi-national US firm as the VP of Purchasi
ID: 389525 • Letter: L
Question
Let’s say that you work for a large multi-national US firm as the VP of Purchasing. Your firm has been trying to get a large contract approved with a foreign government. This contract has the potential to provide $500 billion in sales revenue to your firm. If you were asked to provide a small tip to an officer of the foreign government to get this contract approved and signed would you? Think deeply. This is outside of the US. Read the section on the government market in chapter 6 for some guidance in framing your response.
Explanation / Answer
There is no doubt that the giving and accepting of gifts and hospitality has an important role in facilitating business relationships and practice all over the world. A meal out with a supplier can help build a relationship or a pen with someone’s firm’s name on it can remind a customer of them when they need a quote. The ethics of giving and receiving corporate gifts can sometimes be confusing, and require care and attention to cultural sensitivities. Often it may happen, the line between what constitutes a gift or hospitality and what constitutes a bribe, can be unclear and the acceptance of gifts, services and hospitality can leave an organization vulnerable to accusations of unethical, or even unlawful conduct. Employees need guidance and proper knowledge on the company’s protocol on giving or accepting gifts or hospitality. This includes seeking approval from their line manager or someone more senior, recording it in a gifts and hospitality register. Sometimes gifts of a high value might be required to be donated to charity or to the company. While gifts are given based on goodwill, overly generous gifts tend to put pressure on the receiver of the gift. The line between sincere gifting and bribery is becoming increasingly thin. Bribery is viewed with intolerance in many countries. While we agree that accepting bribes is wrong, we are sometimes confused as to where to draw the line between gifts and bribes. Generally, a gift is given with no expectations while bribes are given in return for a favor. In some cases, accepting the gift may be a proper part of professionalism and business relationship, whereas in some cases, it becomes a breach of ethics.
Bribery is the practice of offering, giving, receiving, or soliciting something of value for the purpose of influencing the action of an official in discharge of his/ her public or legal duties. Any kind of bribery is illegal in the country in which it's paid. Every single country has a law against it, some might enforce and some might not, but it's illegal. We know that, Ethics is universal hence bribery is considered unethical whether it is the norm or not, anywhere in the world. Corporate houses sometimes resort to such unethical practices, for the benefit of the company and to get a upper hand in some kind of deal, to ultimately bring profit to the organization. Companies that use bribery to win foreign contracts grow their revenue faster but earnings don’t keep up as per researches done by various experts. The researchers suggest that any gains from bribing corrupt officials get eaten up by the costs of the bribes and other bad corporate behavior that comes with poor oversight. There is always the cost of building an inefficient organization, when building a corporation that competes on the basis of bribes and corruption, and not efficiency and innovation. So, one should focus primarily on making their company an efficient organization worldwide, so that clients are more keen to have tie-ups with the company rather than their competitors, even if no bribes are promised to the other party. In the given case study, though the company would incur huge profit margin initially for bagging the deal, but eventually giving a small tip to the concerned person, would force the company to constantly cover up their tracks and would lead to other miscellaneous costs negating the profit earned from the deal. Also, the organization culture would get hamper if one of the top management shows this kind of unethical and corrupt path to the other officials and employees. This can tarnish the reputation of the organization in the long run, and might lead to legal complications if things go hay where. The tip can be meager in compared to the earnings of the company, but no matter how small the amount is, a wrong step can lead the company to attract the wrong kind of attention, and even it might happen that all the future dealers would demand money to get their work done, leading to a state of confusion and rise in miscellaneous cost of the organization. Hence, if I was the VP in charge of this particular deal, I would first try to get things done in legal and ethical manner, so that it is beneficial for the organization in the long run. Also if I believe that my company is competent enough to get the deal, I would try to reach the higher authorities in case of such demand from the officer, and this would surely help my company to bag the deal. We should all take necessary steps to prevent corruption at any level, all over the world, as this would lead to a more just and healthier society for our future generation.
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