Subject: CORPORATE GOVERNANCE
Topic: Business Ethics scenario Case Study
Date: 7th March 2011
Miss. Janhavi R Joshi
Professor Mrs. Monica Khanna
1. Receiving a Holiday Gift:
A supplier sends a basket of expensive foodstuffs to your home at Christmas with a card: "We hope you and your family enjoy the 'goodies.'". What action(s) might you want to take?
Ethical dilemma: There are two reasons for such generosity from the Supplier. One could be that there is a long standing relationship with the supplier, and therefore the supplier is genuinely sending these gifts with no other intention than Christmas greetings. But the second reason and the most likely one is that the supplier is indirectly trying to influence me by sending expensive gifts and mentioning the words “goodies” to emphasize the fact they are expensive. Usually such scenario is very common in India where government official receive unusually expensive gifts from Companies/individuals (referred to as a Party) during Diwali. Under the pretext of such gifts (which are now a day’s becoming customary) these Parties try and get their work done out of turn. The ethical dilemma in this situation hence is that should it be considered as a bribe and hence unethical or just a genuine holiday gift like ones received from friends and family?? Decision criteria:
The decisions would be taken on the basis of my relationship with the supplier. Final decision:
Scenario ONE -a very old Supplier: I would send a fresh basket of expensive foodstuffs to his/her/their home with a similar note. As a result the give and take is equal and unintentional hence there would be no obligation on any ones part to return the favor otherwise. Scenario TWO- a new supplier/Unfamiliar supplier: I would send back the same basket of goods with a note “Thank you for your card & gift. I and my family only want your best wishes & blessings. May you and your family have a Very Merry Christmas and a Happy New Year”
2. Sales Expense:
The purchasing manager for a large company agrees to give you an order (their first), expecting you agree to make a $200 donation to his favorite charity, a local youth sports team. How do you respond? Answer:
Ethical dilemma: Tricky situation indeed. I may not want to pay to a local charity, but I also don’t want to miff the purchasing manager and hence loose that order of a large company. To yield to the manager’s unreasonable demand and hence get that order would be like giving indirect bribe to grab that deal (unethical).Why should the purchasing manager put forward such demands not directly related to the business deal?? (Does he have a vested interest in this charity?) Second way of looking at it is that it is a kind of charitable activity and would be good for your company’s reputation by sponsoring a local sports team. There is a saying “everything is fair in love and war.” And nowadays business is nothing less than a war where every competitor is waiting for an opportunity to strike the other down. If I let go of this offer some other competitor is surely going to grab it. The dilemma hence is should a donation intertwined with a business deal be consider ethical or unethical??? Should I Business put above Ethics or vice versa?? Decision criteria: Such relationship can become caustic over long run and it is in the best interest of my company that I do not give in to such unreasonable demands. But at the same time I just can’t let go of the order from a large company. So I will first consider all options as follows: •It is mentioned in the case this is the first order from this company. The purchasing manager is clearly playing the power game. •I cannot deny the possibility that the subsequent transactions with this purchasing manager are going to cost my company more than $200. •I would try to reverse the power game and try to project my company’s product superiorities as compared to...