In this exercise, you will be given the opportunity to consider several ethical questions involved in making “encouragement payments” overseas. You will make choices, and as in real life, you will deal with the consequences of your choices as they relate to the handling of a criminal case.

The simulation presented several areas for decision making, involving profitability for the organization, ethical considerations, and potential legal liability.

Business ethics is the study of how managers and other employees are to act in certain
situations. This simulation provides an opportunity to consider challenges presented to
employees seeking to act ethically in the performance of their duties within a
multinational corporation.
MegaComp International, Inc. is a leading manufacturer of antivirus software, firewall
software and other computer security components. The company enjoys an excellent
reputation among its customers and suppliers. Employee morale is high, and ethics is a
priority at the company.
The systems and products of MegaComp have been selling well in its already existing
markets in the United States, Japan and Europe; but like any company, MegaComp is
eager to grow the business.
At a strategy session, the MegaComp CEO, Jan Werner, and division managers decide to
explore the potential of expanding their business to China. The market looks like a good
fit to MegaComp products, but there could be a problem. MegaComp managers tell CEO
Werner that China makes franchise decisions city-by-city, district-by-district. A payoff is
usually required to get licenses.
What should CEO Werner say to the division chiefs?
Ethical decisions made by senior officers in a corporation can impact their subordinates
as they try to carry out their duties. A natural loyalty to the company can come into
conflict with ethical decision making.
MegaComp begins business in China, making facilitating payments through
intermediaries to ensure the necessary licenses. The business contacts in China are
pleased with the arrangement and do not see any ethical implications to the practice.
You have been recently hired by MegaComp and just relocated to its Hong Kong
contracting office, handling the new business in China. You have just gone over the
business arrangements and have noticed the facilitating payments issue. You can also see
that the CEO approved the plan. You’ve just received a phone call from CEO Werner,
who asks you how you are enjoying the new position in Hong Kong.
Leaders have a special role in setting ethical standards within a corporation and are
frequently asked to be mentors for junior personnel who face ethical issues in the
workplace.
One of your subordinates comes to you with questions regarding the facilitating payments
aspect of business operations in China. She tells you that she is uncomfortable with the
practice and wonders if she will face criminal liability when she makes the first payments
next week. You assure her that Chinese law does not prohibit these payments in any
way. Relieved, she returns to her office and makes plans to meet with her intermediaries
to make the facilitating payments. As you sit in your office, you wonder if you should
check with the legal office back at MegaComp’s American headquarters to see if there is
any liability under United States law.
Even though giving bribes, or facilitating payments, is an acceptable business practice
around the world, bribery is becoming more expensive around the world because of its
business transparency. This has led to more government agencies cracking down on the
practice. Globally, consumers are also becoming aware of the costs of corruption. While
bribes and payoff requests are frequently associated with large construction projects,
turnkey capital projects and large commodity or equipment contracts overseas,
companies that do business internationally, and their employees, must be aware that
bribes are an ethical issue subject to legal scrutiny. Prudence, as with all ethical issues,
should be the starting point in analyzing such situations.

Write a 4-page paper with your answers to the questions.

1, What should CEO Werner say to the Division Chiefs? Is the decision ethical? Why or why not?

2, How are you enjoying the new position in Hong Kong? Do you keep your job? Why or why not?

3, What are the implications of payments being made by the subordinate?

4, Epilogue: From your perspective, how does the simulation impact ethical considerations for organizations?