This action might not be possible to undo. Are you sure you want to continue?
Discuss this in light of Siemens’ bribery scandal.
Bribing is unethical because it takes away the fairness of a business transaction between bidders of a contract. Bribing also has a negative impact on competition because it allows for oligopolies and monopolies to emerge in an industry due to smaller competitors being unable to financially compete with the amount of the bribes. This in turn creates a barrier for entry for prospective companies and promotes the oligopoly or monopoly in place. The lack of competition affects consumer choice by reducing their options, which then stifles innovation within the industry as there is no need to generate a competitive advantage to attain customers. The legality of bribing depends on the laws of the home country that the business is based from. For example, Siemens is a German based business and German law states that bribing officials of another country to win business contracts is illegal. So, under German law, Siemens was guilty of bribing an official when it bribed employees of the Italian company Enel to gain a contract, as Enel was 68% owned by the Italian government. The counter-argument is that bribing is the cost of doing business. We disagree with this because the economic benefits gained from bribing are not outweighing the cost to a company’s reputation. As we see in this case, Siemens paid a 6 million euro bribe to secure a contract valued at 450 million euros which would seem like a cost of doing business for Andreas Kley and Horst Vigener but the legal and political cost almost triple the value of the contract in euros and a loss of reputation. These executives were fortunate to escape imprisonment for the illegal actions that were committed. A company must avoid bribing government officials to win business contracts however they can ask their own government for some type of aid in the situation. We believe that having your home government involved in fostering or mediating the trade relationship with another company can potentially give better results than bribing. Siemens should have gone on a business trade mission with German officials to another country because trade missions can help form a relationship and are sources of contacts, which are valuable tools to win business contracts. • what options do companies have to win business contracts without bribing, especially in foreign countries? (Just supplement information, no need to read if time is limited) Companies can use a combination of a number of alternatives to gain a business contract without violating the law. Internally, the organization can build a better product through investing money into research and development which would then provide them with a competitive advantage to entice other businesses to choose them over a competitor. Externally, the organization can (1) contribute to the host country, (2) use complementary relations, (3) establish the status as a market leader, (4) provide attractive business trade agreements, (5) offer outstanding business intelligence, and/or (6) differentiate service with quality contractors. Contributing to a host country would include assistance in a country’s development in terms of infrastructure, job generation, investments, and through imports. The use of complementary relations is a common practice in the business world. An example would be the relationship between car manufacturers and host countries. For a foreign company to enter the Chinese auto market, they need to establish a joint venture agreement with a local car manufacturer. It is a policy that the Chinese government imposed to protect the local auto business from strong foreign competitors. Establishing the status of a market leader is less risky for a company with strong sales and a promising market for its products. This can be an advantage in securing a deal with a strong company status in the industry. Providing attractive business trade agreements by making
A new leader was needed to represent an ethical overhaul of the corporation’s code of conduct in order to effectively rebound from the backlash of the events. In other words. In just two years under his direction Siemens' stock price shot up and there was a shift in the way the company did business as the importance of Siemens' customers was stressed as equally important to their technology. In addition. • What is likely to be the impact of his departure on the company? Kleinfield’s departure as a CEO from Siemens had an impact on the employees. how much did the corrupt practices of bribery that Siemens was accused of impact the increased success of the company in that same time. strategies. Q2. despite both of those concerns the decision to neglect to extend him was made. as mentioned earlier. another way where Kleinfield’s departure might affect the . Kleinfied was very popular in the company and a charismatic leader to a number of young and proactive employees. This previous concern also sprouts another. Kleinfeld's drastic reform of the corporation. was visibly effective. the company’s revenues. but didn’t create a good relationship with the supervisory board. If Kleinfeld had been retained then much of these beliefs would continue and it would have been harder still for Siemens to recover from such a devastating scandal. Was the board right in not extending Kleinfeld’s term. there is a possibility that these employees to follow his departure. Also. Moreover. However. and tactics in developing quality products and services in the foreign country. One of the reasons is that although he was impressive in his short tenure. companies can stand out with this knowledge or expertise. Offering outstanding business intelligence skills is the ability to transfer organizational skills to better manage costs. With this in place. it does not absolve him because as the CEO it is his duty to be in full control of Siemens. The primary concern with this decision was that Kleinfeld had brought many benefits to Siemens in a short time. Siemens would now have to find a replacement CEO. and the intellectual property. although disliked by some of the older fashioned managers. This potentially made him expendable when the corruption scandal hit. By offering a larger bulk order discount or other forms of compensation such as a royalty after a set number of units sold. all of the successes of the corporation under his guidance are now questionable. It is for these reasons that Siemens needed a clean slate if they were to reform their public image. the board of directors. companies value intelligent partners. We know that Kleinfield did a major restructuring in Siemens. Even if Kleinfeld was truly fully ignorant to these corrupt practices. This thought alone tainted the view of Kleinfeld's time as the CEO. a task that would surely be difficult after the public backlash resulting from the scandal. especially in view of his over performance as a CEO? The decision to refrain from extending Kleinfeld's term was undoubtedly a difficult one for a number of reasons. This shifts the bribe from an illegal under the table pocketed amount of cash to an above the board legal bonus contingent on performance. because of the employees’ admiration of Kleinfield’s management style there is a possibility that these workers might regress to the old fashioned ways of doing things in the company. The transfer of these skills will most likely develop a long-term relationship between the company and the foreign nation it operates in. and opened the eyes of everyone on the board of directors to a new change in conduct and social responsibility. He failed at clearly explaining to the entire corporation their code of conduct with regards to bribery and the consequences. however it was the right decision given the awkward circumstances surrounding his term as CEO. therefore he is personally to be held responsible for the actions of his employees. Another element in the company that was affected by Kleinfield’s departure was the board of directors. by not extending Kleinfeld.bigger concessions when negotiating a deal can be a great way to win a business contract.
revenues of the company would be in the future election of a new CEO. Since the company decided to bribe. it does not mean robbing someone is without recourse. By losing a very efficient CEO. it is reasonable to recognize the company made a mistake by taking a poor risk and having it backfire. it stands to reason that they will have to overpay a new qualified person to become the CEO because that person will have to deal with resucing the company in the wake of this scandal. because Siemens acted illegally by choosing to ignore its corporate social responsibility and by abiding the rules of the country. Siemens lost a great asset that can also become a threat to the company if hired by a competitor. one of the biggest impacts of Kleinfield’s departure from the company is the loss of intellectual property. Nevertheless. we think it is unfortunate because there are many other companies that bribe in the world. Being one of the few companies caught bribing made Siemens’ situation unfortunate. Compare this with a thief: just because all the other thieves are stealing. In the end. they fully understood the consequences of getting caught. . but it didn’t exempt it from being the company’s fault. Firstly. • Was Siemens really at fault or was it just unfortunate to have got caught given the perception that many companies have to resort to bribing to win contracts? We believe Siemens was unfortunate to get caught but that it is also their fault. who transformed the company in a short period of time. Given the bad reputation Siemens acquired.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.