The Bribery Scandal at Siemens AG - Case Study Example

The practice of bribery is perceived advantageous to parties involved since it enables them acquire business gains without having to meet expected standards, developing relationship with foreign officials or being favored by potential customers. In other instances, they can also benefits from reduction of the payouts involved, thereby resulting to increased profitability for the company. Other benefits derived by these companies from the practice of bribery are such as opportunity cost since money offered as a bribe in not considered to be in productive use.

Siemens AG was involved in a case of corruption that involved bribery in 2006 and 2007, whereby this scandal involved company’s employees, who had established slush fund meant for facilitating acquisition of contracts. For instance, Siemens managers were convicted of embezzling company funds amounting to six million pounds in order to bribe foreign officials to acquire a contract involving natural-gas turbine (Akana, 1). However, the perception of the executives towards this case was that getting involved in bribery practice was worth it, since the employees were willing to break the law in order to gather huge profits.

Other employees argued that this act was not a violation of any laws since it did not result to any personal gain; instead, it was aimed at enhancing Siemens’ positioning strategy. Nonetheless, their notions were not rational since breaking the law can never be for the right purpose; thus, despite, focusing on the benefits that to be derived from practice of bribery for the Company. Question number 2: Was the Board right in not extending Kleinfeld’s term even though he had performed well and was not personally implicated and explain?

What virtuous and/or virtuous behaviors did he show with observable facts? Decision of board whereby they failed to extend Kleinfeld’s term can be considered personal due to lack of rational reason associated with the bribery scandal. This judgment is made based on considerations of the challenges that Kleinfeld was faced with as the CEO willing to rescue the company from the bribery scandal in order to sustain their growth. On the other hand, Kleinfeld had gained confidence on issues such as labor and management in the Siemens AG.

Besides, there is need to understand that the scandal caused by bribery practice was not entirely Kleinfeld’s fault; in fact, employees were the once involved in the practice. The entire company should have taken the blame; instead of laying the whole burden on the CEO. The board should have considered that engagement into these practices was due to the influence increasing competition among companies, hence these illegal payments aimed at winning international contract was the only option for these employees in the emerging economies.

Furthermore, Kleinfeld was not directly implicated in the scandal; thus, by the fact that he was responsible for behaviors of the employees, this case was out of his control. In fact, Kleinfeld was unaware of the unlawful practices that employees were engaging in within the company. In addition, the practice of bribery was hard to notice since there was commonality of spending funds amounting to four hundred and twenty million and they were unnoticeable or unquestionable (Akana, 1). Kleinfeld’