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Starnes-Brenner Case

Starnes-Brenner Case

Every country has its ethical standards that influence the behavior of its members. In some countries, ethical regulations are enforced strictly, while in others, their administration is lenient. As a result of the differences in ethical standards and enforcement, multinational corporations face ethical dilemmas when operating beyond their borders. The representatives of these companies must make decisions on a daily basis that could be illegal due to ethical considerations. Some of the actions that make economic sense to the firms may be unethical. Failure to follow the local procedures of doing business may lead a company to a loss of its competitive edge since competitors may have no problem behaving unethically. Current paper answers the case study questions regarding the ethics of Starnes-Brenners staff in Latino.

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The answer to the question on Franks behavior depends on the ethics used for making the determination. From the United States perspective, what Frank did was unethical because giving bribes is prohibited. The United States laws view bribery as a crime that can lead to the prosecution of the perpetrators. On the other hand, Franks action was acceptable according to Latinos point of view. The culture of the Latinos views bribes as a common practice in doing business. As such, Franks action was ethical if evaluated from the Latinos perspective.

The two actions performed by Frank do not have the same legal status according to the Foreign Corrupt Practices Act (FCPA). FCPA classifies the two actions differently. When Frank paid people to work fast in loading and offloading the cargo, the action was legal under the FCPA because it facilitated the speed with which the activities were carried out. On the contrary, the payment to the government engineer was illegal because it made him accept the products, despite his claim that they were faulty. According to Franks words to Billy, he acknowledged that he was aware that the products had no defects, yet he paid the government official. Additionally, he told Billy that he knew he had paid a bribe when he paid the government official in the pretext that the money would rectify some unidentified defects.

The payment to the workers who were loading and offloading the machine parts was lubrication because it expedited the performance of their duties. Additionally, the action for which the payment was done was legal. The payment made to the government official was subornation because it involved large sums of money and the process was induced by the official. The payment also qualifies to be subornation because the money was not accounted for properly as both Bill and Frank did not notice any changes in the parts. The money was used for other purposes other than rectifying the problems the official claimed to exist.

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There are some differences between what Frank did and what happens in America. The dinners and drinks can be viewed as lubrication cost, which creates a friendly environment for business to be transacted. The activities in America are thus incomparable to the payment Frank made to the government official since he knew the payment was a bribe. In addition, the dinners are most likely accounted for in the financial statements of the organizations concerned while the payment to the Latino official was never accounted for in financial documents.

The two cases in which the dockworkers and the jefe were paid have different legal standings. The payment to the dockworkers is provided for by the FCPA. According to the FCPA, money paid for loading and offloading is legally allowed as it is aimed to facilitate the speed of the activity. However, the payment paid to the jefe is illegal because it has made the official accept the machine parts, which he would never have except for the money. The jefes official duty was influenced by the payment of the money, which constitutes a violation of FCPA. Ethically, the cases have no differences because people in both cases solicited for payments. When analyzed from the Latinos point of view, both were acceptable actions in business. From the United States perceptive, both are unethical.

No one is right because there are some local customs that should be maintained while others should be discarded. Franks attitude may be wrong in a way that some of the local norms such as bribery should not be encouraged. In this case, the influence of American corporations would be welcomed to help the locals improve and do away with corruption. On the other hand, total disregard of local norms through the influence of American corporations would amount to cultural imperialism. Consequently, it would lead to the loss of norms and virtues unique for local people that would promote healthy business relationships.

Franks behavior should have been the same regardless of whether a government contract was involved or not. The reason he paid the bribes is because other corporations from different countries did the same. The corrupt culture in Latino was evident not in government alone, as Frank told Bill. He said that Latinos bribe even fellow countrymen. A different behavior on the part of Frank would mean not giving the bribes, which would disadvantage Starnes-Brenner, since competitors would still offer bribes. A business relationship with another entity apart from the government would not have made a difference. Frank had to comply with the corrupt culture if his company was to survive in Latino, but do his best to avoid bribes where possible.

If Frank decided not to pay the bribes, he should have declined the jefes request and report to Starnes-Brenners headquarters. The consequence of his action would be losing the contract and competitive advantage. Additionally, he would have put strife between the company and the government, which would have made its operations almost unbearable. Future relations with the government would have been compromised and the company would have to quit the market in the worst case scenario because of the hostile environment.

The companys interests in this problem are threefold. First, it is concerned that the behavior of its staff in Latino may lead to prosecution for violating the FCPA. Such an eventuality would reduce its credibility, reputation and incur heavy penalties. Second, the company is interested in promoting an ethical work environment. The problem in Latino challenges this goal because upholding the ethical standards has economic ramifications for the company. Thirdly, the firm is interested in building and developing the Latino market as part of its global expansion strategy.

The argument propagated by Bill about the standards that the company should uphold in Latino is an example of a self-reference criterion. Bill assumes that the ethical standards and norms of Americans should be applied in the Latino market without alterations. Such an expectation reflects Bills notion that the United States standards are superior to those in other countries. When he evaluates the decisions Frank has made, he disagrees with them because they do not conform to the United States guidelines, which he perceives as ideal. Consequently, he fails to consider the unique culture of Latino people and the fact that it may require Starnes-Brenner to conduct its business differently.

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Bill will most likely not make the grade in Latino. His adherence to ethical standards and guidelines of the company will restrict him from offering bribes. Consequently, he will not have the same chances as competitors who are willing to pay. As a result, he will not make the amount of sales required to sustain a viable business for Starnes-Brenner in the Latino market. For Bill to succeed, he will have to adjust and accept some of the corrupt practices in Latino. Failure to adjust will make him incapable of generating business for the company and will be deemed a failure.

Overseas managers are prepared to deal with the problem of cultural and ethical differences by being open-minded. First, Open-mindedness allows managers to be receptive of other peoples beliefs and practices without feeling as if their own beliefs are being challenged. Second, the managers can cope with the problem by being flexible. The dynamics of the international markets require the managers to be ready for adjusting to changes in their immediate environments. For the overseas managers to acquire these qualities, they need to be informed through training that there are fundamental differences between the home country and the overseas markets. Such prior awareness prepares the managers for handling new challenges.

In conclusion, Franks action can either be ethical or unethical depending on whose ethics is used. The fee paid for cargo loading is legal while that paid to the government official is illegal. The cargo fee is lubrication while the payment to the jefe is subornation. There is a difference between what happens in Latino and the United States. The dinners in the United States create a friendly business environment and are accounted for in the accounting books. The jefe payments are not accounted for and do not facilitate anything. The two payments by Frank are ethically similar. Some local norms should be preserved while American corporations should influence locals to do away with vices such as corruption. Franks behavior should have been the same because bribery was not designated to the government sector alone. Frank should have reported to the head office. The consequences of his actions would include loss of the contract, strained relationships with the government, loss of competitive edge and exit from the market. The companys interests in the problem include probable prosecution, the need to promote an ethical work environment and developing the Latino market. Bills judgment based on American culture and standards is an example of self-reference criterion. Bill will not make the grade unless he complies with local norms. A manager can be ready for such challenges by being open-minded and flexible.

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