What should CEO Werner say to the Division Chiefs?
Is the decision ethical? Why or why not?
This is a hard question to answer. More and more companies are doing business in China due to the lower production costs. When doing business in a different country, they could have some policies and regulations that are different than the ones in the United States. They are many officials in these countries that will take a bribe in order to ensure a fast turnaround time in order for your company to receive a license. The Foreign Corrupt Practices Act of 1977 (FCPA) was empowered by the United States to investigate allegations of bribery anywhere in the world and are stepping up their activities in China (Roberts 2010). Technically, China does have some laws against taking bribes but there is a fine line between bribes and gift giving. It is an acceptable practice to give gifts to the officials that a company works with because it shows respect and that you value their friendship. The problem is that the gifts are becoming more and more expense to ensure the company gets everything that is needed to open a division in their country. The Chinese government is getting more aggressive with cracking down on officials taking bribes in order to fast track business licenses, but there is still a long way to go. According to FCPA, it is illegal in the United States to bribe or accept a bribe in return for favors, and most statewide business will abide by these laws. However, when they relocate a division to another country, the company may overlook these laws in order to set up business sooner.
This practice is unethical and the company and the employees involved can get into a lot of trouble. According to Sarbanes-Oxley Act of 2002, a company cannot keep separate books in order to hide bribe money. Avery Dennison, UTStarcom and Siemens are just a few companies that were investigated for possible bribery in its China Division. These companies had to pay some hefty...