Case 2-3

Case 2 – 3

Starnes-Brenner Machine Tool Company: To bribe or not bribe? Case analyze Differences between Frank and Bill Frank

Bill

 Frank pays “mordidas” to get equipment passed by government officials.  State business will fail without the payment of “mordidas”.

 Bill absolutely opposes the idea of “mordidas”

 Believes they are not encouraging bribery to spread but rather just accepting the Latinos ways of doing business.

 To bribe is unethical.

 State business will be successful without paying “mordidas”

Answers 1. Is what Frank did ethical? By whose ethics those of Latino or the US? Bribing is not ethical. In this case it’s ethical for Frank, because Latino bribery is seen as normal. What did Frank not justified, since no matter the part of the world in which they do, bribery is totally unethical. 2. Are Frank’s two different payments legal under the Foreign Corrupt Practices Act as amended by the Omnibus Trade and Competitiveness Act of 1988? The first payment of Frank is legal, because as a payment to the chief of the border workers to expedite the transfer, the statutes concerning the payment of these have softened. The second payment to government officials, to repair the machines is illegal. 3. Identify the types of payments made in this case; that is, are they lubrication, extortion or subornation? In both case, the types of payments are identified subordination because subordination is defined as someone with corrupt money, gifts or some kind of favor, in order to get something for that person. 4. Frank seemed to imply that there is a similarity between what he was doing and what happens in the US. Is there any different? Explain.

Frank says that when you have big dinner parties where different treatment or close businesses and stakeholders pay the bill, is a tipe of bribery. The different is that in the US these are normal business dinners and Latino bribes are large amounts of money being paid directly. 5. Are there any legal differences between the money paid to the dockworkers and the money paid the jefe (government official)? Any ethical differences? Yes, there are legal differences. First, the payment to a government official is illegal, while bribery dock workers are considered legal under Foreign Law on Corrupt Practices. If we analyze the ethical part, there aren’t differences, because it evades honestly and in both cases there is bribery. 6. Frank's attitude seems to imply that a foreigner must comply with all local customs, but some would say that one of the contributions made by U.S. firms is to change local ways of doing business. Who is right? The reality of the world tells us that when we enter or do business in other countries, we must know their culture, their traditions, their profile negotiator, among other things. This doesn't mean that we have to mold it entirely. There is a difference between adapting to certain rules or customs and depend or be enslaved them. U.S. companies are trying to establish a new business system, without bribery and honest practices, regardless of whether the country you're working with is illegal working methods, make use of bribes and this is seen as normal. Ethics must be above everything. 7. Should Frank's behavior have been any different had this not been a government contract? Frank's attitude would have been different, as with any client, ethical principles should be the same. Bribes not be admitted under any circumstances. 8. If Frank shouldn’t have paid the bribe, what should he have done, and what might have been the consequences? Frank had to wait for American mechanics or find another solution within the same country. If I had done this, you probably would have lost the client and their profits, but had established a more clean and proper business conduct. 9. What are the company interests in this problem? Within the policies of the company there is no possibility of bribing, but if this happens, as in the case of Frank, former president of the company preferred to skip

this, because he gave more importance to the profits it was generating Frank, no matter how it was generated. 10. Explain how this may be a good example of the SRC (self-reference criterion) at work. Frank has a reference about himself and his way of manage the business, and he thinks that he is the best doing his job and that the others are wrong, but he doesn´t know that he is making a mistake doing the things without ethics. This is a perfect example of the SRC, because he closed his view to himself and nothing else, and belittles the work of the other people. 11. Do you think Bill will make the grade in Latino? Why? What will it take? Bill will succeed in Latin as honest working methods establish and implement the strategy that worked well in the United States. He will need strong strategies based on cost or differentiation to compete healthily without bribes. 12. How can overseas manager be prepared to face this problem? Any manager that aims to work abroad in the future, you will need excellent training. This training should address issues such as practices, norms, lifestyles, culture, etc.., the country where you are going, so that when exercising, that person can know what will face problems and scenarios. Your skills and abilities will give you the tools to resolve conflicts that may arise.