Problem:
A mid-sized American company wants to expand into a country where the payment of bribes is considered a normal part of doing business.
The systems and products of Alpha Wireless have been selling well in its existing markets in North America and Europe. Alpha Wireless is eager to grow the business. At a strategy session, the company CEO and division managers decide to explore the potential of expanding their business to Russia.
Initial research indicates that Russia is likely to develop into a huge market for mobile phones because the country has an expanding middle class and the government has made spending on wireless infrastructure a priority. Subsequent research does raise one concern for the managers at Alpha Wireless. They tell the CEO, "The Russian government allocates frequencies and makes franchise decisions. A payoff is usually required to get licenses."
The CEO says, "A lot of companies are doing business with Russia right now. How do they get around the problem?"
The managers reply, "We believe most other companies contract with agents to represent them in the country and get the licenses. What these contractors do is their own business, but apparently it works pretty well because the CEOs of all those companies are able to sign the disclosure statement required by U.S. law saying that they know of no instance where they paid a bribe to do business."
The CEO says. "I'm not comfortable with the idea of bribery. If we don't expand into Russia, how much business will we lose, potentially?" One manager responds, "The countries that expect payoffs have the fastest expanding markets. Russia alone represents $50 million of business per year. All things considered, we have a lot to gain. What will we really lose if our local contractors are forced to make payoffs every now and then?"
The CEO wants his company to succeed, and is committed to maximizing shareholder value. He wants to model ethical leadership. He has made an effort to build a corporate culture characterized not only by aggressive R&D and growth but also by integrity, honesty, teamwork, and respect for the individual (See the Values Statement below). As a result, the company enjoys an excellent reputation among its customers and suppliers, employee morale is high, and ethics is a priority at the company.
What should he decide in this case? Why?
Alpha Wireless Values Statement:
"Alpha Wireless has always placed a high premium on its relationship with its employees. Although the nature of our business and markets may change as the company evolves to meet different market conditions, a strong emphasis on ethical behavior and respect for each other will remain constant."
Required Elements
- What are the relevant facts?
- What are the ethical issues?
- Who are the primary stakeholders?
→ What are the rights of the stakeholders? (I.e. what is owed to the Stakeholders?)
→ What are the duties of the stakeholders?
→ Who derives the benefits of an unrealistic analysis?
→ Who bears the heaviest burden of an unrealistic analysis?
→ What is the most fair and equitable way to distribute the benefits and burdens across all stakeholders?
- What are the possible alternatives?
→ Which alternative is the most fair to all stakeholders?
- What are the ethics of the alternatives?
→ What is the cost and benefit of the alternatives?
→ Which alternative provides the greatest benefits or the fewest costs for all concerned?
- What are the practical constraints
- What action(s) should be taken?