Leadrship Development and business Ethics - Essay Example

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In this case, Siemens Company, a Company with headquarters at Munich in Germany is involved in illegal ways of obtaining contracts from their clients. Siemens Company deals with production of electronic products. As a multinational Company, Siemens is involved in big lucrative…
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Leadrship Development and business Ethics
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# Business Ethics # 8th March, Leadership Development and Business Ethics Overview of Case 2: Siemens: How the Greased Wheels slid off the Ethical Track
In this case, Siemens Company, a Company with headquarters at Munich in Germany is involved in illegal ways of obtaining contracts from their clients. Siemens Company deals with production of electronic products. As a multinational Company, Siemens is involved in big lucrative government projects, and to beat their many competitors in winning contradicts, Siemens management employs unorthodox methods to lure their clients into giving them contracts; Siemens Company actually bribes their clients so as to be awarded contracts.
Siemens culture of obtaining orders illegally from their clients was exposed in 2004 when a senior executive of the Company, Michael Kutschenreuter, received a worrisome call from Al Etsalat, an employee of a Saudi Consulting firm. Kutschenreuter was actually requesting for $910 dollars bribe for having assisted the Siemens Company to obtain telecommunication contract with the Saudi Arabia government. Al Etsalat threatened to expose the scandal to the US Securities and Exchange Commission, if the Siemens Company failed to pay him the agreed bribe. Kutschenreuter reported the matter to the Siemens management Company, and the Company agreed to pay Al Etsalat $50 millions so as to settle the matter. After the Kutschenreuter’s revelation, another senior executive of the company, Reinhardt Siekaczek , confessed of being aware of the Siemens’s Company management use of illegal means to obtain contracts from the clients.
As the consequence, investigation was done, and the Company management were prosecuted for involvement in illegal deals. One of such deal was the illegal payment of 6 million Euros to an Italian government owned Company, Enel, so as to secure power generation equipment contract. The management of the Siemens Company were found guilty of bribery, and the Company was fined $ 51.4 million for the crime. The managers of the Company were also punished accordingly for the crime. Thereafter, the Siemens Company was prosecuted for many such crimes, and the Company lost more than $1.6 billion in fines for bribery. And in a move aimed at enabling the workers of the Siemens Company to freely give evidence of what really was happening in the Company, the workers were granted amnesty. This move enabled the workers to give evidence freely, without any fear of prosecution.
A look at the Siemens’ company management manner of doing business and making profits, shows that the managers were guided by the utilitarian ethical principle, whereby it is the end that justifies the means; in other words, it is the profit only that matters, not the means used to make the profits. It is actually the same utilitarian principle that guided the management of the Company to grant amnesty to the employs. The reasoning was that, as long as the amnesty would result in helping the company in unearthing what was really happening in the company, it doesn’t matter whether the employees were guilty or not, all what mattered is helping the Company to move forward and to make more profits. But although the utilitarian ethical principle is used by many Companies, the ethical principle is, however, erroneous for it encourages bribery and unfair competitions in doing business. Utilitarian ethical principle in business encourages illegal activities in the business, and this is obviously wrong. Although making profits is actually the ultimate aim of every business, Companies however should never break the law or encourage unfair competitions or other unorthodox methods for the sake of profit. The Siemens Company management therefore were wrong in their manner of doing business.
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