The Shakedown
Case Analysis: The Shakedown
I. Introduction
This case portrays the widely propagated and accepted phenomena of bribes and corruption in developing countries. Specifically how it affects every sector of the Ukrainian society, therefore making it difficult for the American investors to establish companies there and to prosper solely on doing good business. The case describes the types of obstacles and ethical dilemmas being created for the investors as a result of bribery and extortion.
Situation
In analyzing these issues, we will first present a brief introduction to the situation.
Mr. Pavlo Zhuk, a young, but already well established, entrepreneur from California, is faced with a difficult ethical business decision concerning his recently incorporated company in Kiev, Ukraine. His company, Customer Strategy Solutions, is being targeted for money extortion by UTA (Ukraine Tax Authority) officials. The UTA, represented by Laryssa Ossipivna Simonenko, claims that the company owes the government close to $16, 000 in taxes due to unfiled schedules . But this is not an ordinary visit from the UTA to his development center in Kiev.
Setting up his software development center in Ukraine means more to Zhuk than just business expansion to his company. He wants to make a difference. Zhuk, being himself of Ukrainian descent, sees this as an opportunity for him to invest in this country and therefore help its economy, to contribute to Ukrainian modernization by introducing new technology. He decides to train his employees in array of skills, to raise the standard of their living by providing higher salaries than the other local companies, to enable the people to buy homes, cars and consumer durables.1 But for Zhuk this is not the first difficulty he encountered since he started his company here.
His first problem occurred when he tried to get telephone lines installed in his office. He learned firsthand how business is made in developing country, after his
I. Introduction
This case portrays the widely propagated and accepted phenomena of bribes and corruption in developing countries. Specifically how it affects every sector of the Ukrainian society, therefore making it difficult for the American investors to establish companies there and to prosper solely on doing good business. The case describes the types of obstacles and ethical dilemmas being created for the investors as a result of bribery and extortion.
Situation
In analyzing these issues, we will first present a brief introduction to the situation.
Mr. Pavlo Zhuk, a young, but already well established, entrepreneur from California, is faced with a difficult ethical business decision concerning his recently incorporated company in Kiev, Ukraine. His company, Customer Strategy Solutions, is being targeted for money extortion by UTA (Ukraine Tax Authority) officials. The UTA, represented by Laryssa Ossipivna Simonenko, claims that the company owes the government close to $16, 000 in taxes due to unfiled schedules . But this is not an ordinary visit from the UTA to his development center in Kiev.
Setting up his software development center in Ukraine means more to Zhuk than just business expansion to his company. He wants to make a difference. Zhuk, being himself of Ukrainian descent, sees this as an opportunity for him to invest in this country and therefore help its economy, to contribute to Ukrainian modernization by introducing new technology. He decides to train his employees in array of skills, to raise the standard of their living by providing higher salaries than the other local companies, to enable the people to buy homes, cars and consumer durables.1 But for Zhuk this is not the first difficulty he encountered since he started his company here.
His first problem occurred when he tried to get telephone lines installed in his office. He learned firsthand how business is made in developing country, after his