An Engineering Corporation Siemens - Case Study Example

Siemens: Case Study Question one Between the year 2001 and 2007, Siemens, an engineering corporation is said to have used corruption and bribery in its efforts of securing tenders and contracts from governments and public corporations. There are various instances Siemens is believed to have done this. During this period, Siemens Corporation is said to have made cash payments with various government officials from Nigeria to ensure that they secured contracts in four projects involving telecommunications in Nigeria. The corporation also gave out cash handouts to senior officials of Enel (Bharath 5). Enel is a parastatal company in Italy and it is believed that Siemens gave out bribes to the company’s officials in order to get contracts for two projects in Italy that involved power plants. During the 2004 Summer Olympics in Athens Greece, the corporation is accused of involving itself in bribery and corruption in securing the security system deal with the Greek government. The company is also accused of giving bribes to government officials in Venezuela in regard to the metro project in Maracaibo and Valencia. Siemens is also said to have secured seven projects involving metro construction in China as a result of the use of bribery and corruption. Siemens corporation officials were also accused of securing contracts in Israel for servicing of electrical plants in the country, by giving money to the person who was formerly in charge of the Israel Electric company since it was natural for him to have a lot of influence in the awarding of contracts by the company. The company also gave money to top Argentine government officials in order to win the tender for printing of identity cards for citizens in the country. Siemens is also believed to have secured a contract for selling medical equipment in Vietnam by giving bribes to high ranking government officials in Vietnam (Bharath 7). The company also secured a contract for installing cell phone services in Bangladesh by giving money to high ranking government officials of the Bangladesh government. Siemens also used other aspects of bribery in ensuring that they got high value contracts from governments around the world. For example, the company offered vacation travel for doctors in the Republic of China, in order to secure a contract for the provision of medical equipment in China. When confronted Siemens officials cited various reasons why such rampant bribery and corruption was used in ensuring the company got high value contracts from governments around the world. Firstly, many Siemens officials denied the knowledge of these practices taking place. The other defense used by officials in the Siemens Corporation was that they had introduced rules in the company between 2006 and 2007 to ensure that corruption and bribery did not occur in the company’s dealings with governments or parastatals. Officials also argued that the payments in Argentina were in the form of production rights and not as cash handouts in form of briery. When one considers the first two defenses it is evident that they have no validity. First of all, it is impossible for such a company to secure high value contracts without the participation of high ranking officials in the company. Secondly, even if the Company had introduced security measures to ensure bribery did not takes place, it is the duty of officials in the company to ensure that the system was implemented perfectly without any loop holes. As for the third defense, it has some validity since it is well known that one can pay an amount of money in order to own certain production rights. Question two Despite the fact that Siemens chief executive officer was not directly implicated to the bribery and corruption scandal that hit the company, there are various reasons that can be attributed to the board of directors’ decision to let the former chief executive officer of the company go. Firstly, it is obvious that the name of the company had been tarnished by the bribery scandals that the company was implicated in. This being so the company’s chief executive officer’s reputation had also been tarnished because he was the public image of the company thus any allegation associated with the company was also associated with him. This means that despite him being innocent the board knew that the public would find him guilty by association hence affecting the Company’s business operation. Another reason that can be cited for the board’s decision to let Kleinfled go is the fact that the company needed fresh start. In order for the company to experience a fresh start in reality, it needed to have a face that would communicate to both investors and customers that the company had changed and it no longer entertained bribery in its operation. This being the case, it was impossible for Kleinfled to remain as chief executive office of the company since, he would always remind investors and customers of the bribery scandal Siemens corporation was involved in thus losing the company a lot of its investors and customers globally. This is due to the fact that not many people were following the proceeding s of the Siemens corporation cases hence they would not b able to distinguish if the Kleinfled was either responsible for the bribery scandal or he was not. Finally, the board of directors of Siemens might have arrived at the decision to remove Kleinfled a chief executive officer due to the fact that they had lost faith in him. Bribery took place in many occasions for the company to secure high value contracts. If the chief executive officer did not know what was going on as he claimed, then he was poor at his job. This is so since chief executive officer must be efficient in performing his or her roles of planning and coordinating which are roles of a manager. If he had executed these roles carefully then he would have known what was going on. Hence the board of directors might have sacked him because it meant either he was lying and knew about the bribery incidents or he did not perform a good job as overall manager of Siemens corporation. Despite the bribery scandals happening under Kleinfled’s watch a lot most of Siemens’ success can be attributed to his role in the company as the chief executive officer. It is through his guidance that the company grew to be one of the top engineering giants in the world. During the bribery scandals trials, Klein fled came out as a straight forward person who said what his mind without fear or malice was. Klein filed is also a good leader as he tried his level best in defending the actions of his workers citing that being involved in the bribery scandal did not mean that each and every employee of Siemens was involved in the scandal hence the company should not be held responsible. Question three There are various governance issues that are associated with Mitbestimmung. Mitbestimmung is a germen ideology also known as co- determination where in the management of a corporation, employees usually play a major role. This was first introduced into Germany’s laws where representatives were to hold seats in the board of the company if it employed over five hundred workers. One governance issue that occurs where Mitbestimmung is implemented is the fact that there are problems when it comes to respecting authority. This where employees feel they are important just as much as their managers hence they do not have to follow protocols set by the managers. This results in cases such as that of the Siemens corporation bribery scandals since people make decisions for the company without due process. Another issue that arises in governance as a result of Mitbestimmung is the fact that issues are decided upon mostly with regards to the employees point of view rather than the company’s point of view. When it comes to decision making in large corporations, there are various ethical theories that are applied. However, there is no one theory that can be applied alone and satisfy the process of decision making. For instance, Utilitarianism is a theory used in decision making where a decision is considered depending on the consequences that accompany the decision. For example, in the Siemens case study, managers made decisions to offer bribes in order to get high value contracts since they felt at the time the money outweighed the consequences. When it comes to ethical theories a problem arises in decision making especially in large corporations. When ethics are applied in business decision making then the saying one man’s meat is another man’s poison. This means that what might seem as ethically right to one person, might be wrong when it comes to another person thus creating the problem that no decision is universally ethically right (Broad 123) Chief executive officers should involve themselves more in decision making in the companies they run. They should not be administrative only, but also participative. It is also important for corporation to make public all their business transactions since it will ensure that cases such as those of Siemens corporations do occur. Work Cited Bharath Khrishna. The Bribery Case at Siemens AG. Center Of Management Research, 2010. Broad Charlie. Five Types of Ethical Theory, Volume 2: London: Routledge, 2000. Print. Read More