Caselets: Bribery and Extortion in International Business - Essay Example

Bribery and Extortion in International Business (Abridged). Caselet 1: As the sales in charge of the US telecommunications equipment of worth $ 40 million, I would agree to deposit $ 2 million in the Swiss bank account of the general in charge of the ministry in the Latin American country. Latin American countries are high-context cultures, where most of the negotiations, understandings and agreements happen on the basis of trust, relationships and social network unlike in the U.S where these activities are based on formal and coded agreements. Bribing the chief is probably one method to establish relationship and trust with the potential business prospects, which could prove to be helpful for the business in future. This practice is probably unethical from the US viewpoint, but totally acceptable in Latin American countries. Considering the quality of supplies of competitors, and assuming that the same procedure for signing business deal with this country is applicable for other suppliers, agreeing to bribe the chief seems the most appropriate step in this context. Even in the European context, the same approach would seem best to procure the business deal because the power of agreeing to conduct business with various bidders rested with the Latin American country; moreover, potential for business in these countries being extremely high, the amount paid as bribe, although unethical from the US perspective, can be recovered. Nevertheless, this unethical action can prove extremely fatal for the business as well as personnel involved in the business deal. The US being low-context culture, conducts its businesses on the basis of formal agreements and plans, which would not tolerate bribery and extortion. To prevent such unethical and illegal practices, all business managers should ensure they propose business plans only with those member countries that are formally bound by legislation, treatises etc, like the NAFTA. These treatises should strive towards creation of global culture that is free from illegal, unethical and immoral practices. Caselet 2: For successful negotiations in the African countries, it is necessary to have lawyers in the negotiation process. However, more importantly, the African business negotiations are built upon relationships and thus the business personnel would expect better understanding of their business partners. This would be the first step in negotiation process. Hiring one of the Harvard principals appointed at a local law firm would be beneficial as they could be better negotiators considering their national background and an understanding of the nature of the US businesses. These professionals can also be of great help in building lasting relationships between both parties. This will also reinforce the long-term commitment between both parties, which the Africans regard with highest priority rather than making shorter gains by striking business deals. Establishing long-term commitments with people that understand both sides would certainly add greater value to the deal. Instead of the local Speaker, as suggested by other American firms, hiring the Harvard-trained principal, who is also armed with knowledge of African regulations, will be equally beneficial in gaining approval from the House. However, chances of the local Speaker having better relationship with the House cannot be ruled out. Yet, appointing this Harvard-trained principal would be beneficial for internal management of the firm because this person can not only help in negotiation process but also in translating/transforming the main organizational policies to local setup upon successful negotiation. Moreover, chances of this Harvard-trained principal to be corrupt are lesser, unlike the local Speaker that might demand something from the parent company to bring fruitful outcome to the negotiation process. This approach of appointing negotiator that is knowledgeable of both parties and their cultures would be the best approach to avoid breeding or supporting corruption in business dealings. Caselet 3: Holding a critical position in a large American utility, it is imperative to make the right decisions to sustain and grow the business. Considering the American ways of functioning and doing business, it would not be suggestible to partner with people that lack corresponding business skills. Considering the norm in Indonesia, which is to make one of growth children of the President as partner in every government-related business, it would be a risky proposition for the American company for many reasons. Firstly, the credentials and business skills of the President’s son are not validated; secondly, he would first seek a loan from the company for his demand of 15% equity, which would be repaid after he receives dividends from the shares; thirdly, business sustenance and growth through this partnership is not guaranteed. Moreover, Indonesia comprises of diversified cultures and has many levels of hierarchy. Considering its group culture and need for respect, and their comparatively higher uncertainty avoidance nature, nobody would take the risk of owning any potential error or mistake. Any mistake or failure in the business deal cannot be dealt with fairness because no one in critical position would accept their guilt, and this can be fatal for the business. Indonesian business personnel regard status with high respect; status indicates hierarchical position. American ways of doing business will not be acceptable to the Indonesian management personnel. Moreover, practices that are regarded as unethical and immoral in American management context could question the Indonesian personnels’ credibility in future and therefore the American utility company’s image. In order to pursue such business negotiations, it is important that all business negotiations are dealt under the umbrella of global business norms and regulations. Although such initiatives cannot guarantee change in peoples’ attitudes and norms, these global norms at least serve as professional standards and help in minimizing corruption and extortion in governmental and business dealings. References Wells, L.T. (2011). Caselets: Bribery and Extortion in International Business (Abridged). Harvard Business School. Read More