Business

Question One

(695 words)

In the current globalised business word, the image of a company and its impact on society has become of paramount important not only for the impact on the company’s image but also because the impact on the long term growing and company performance. In order to stick to such principle, firms should avoid unethical behaviour and should develop as well as engage withan ethic environment, which is defined as “moral principles and values that govern the behaviour of people, firms, and governments regarding right and wrong”. There are several reasons that point to the damage that unethical behavior causes to a firm, they are explained below. There are several activities that can be classified as unethical; in this case the bribery practice is presented whenreferring to the case of Siemens, a company that has been involved in several bribing scandals when trying to gain big contracts and projects carried by local companies and even governments and institutions belonging for instance to European Union, United Nations, Saudi Arabia, Russia, etc. (Cavusgil and Knight, 2008).

The first reason to avoid unethical behaviour is that in most cases it cost a lotof money to the business. The case of the multinational company Siemens and its bribing practices illustrate how expensive it can be. After a conducting review carried by a law firm appointed by Siemens, it was identified that the company spent $1.5 billion in suspicious transactions between 2000 and 2006. Such issue of bribes offered by Siemens affect also the fare competition amongparticipants of a market which means imperfect competition which should be avoided due to its negative impact on economic growth and innovation. The impact of such negative practices result affecting society that will be impacted by such slow down of economic growth in terms of for instance unemployment (Elango and Kundu, 2010).

The unethical behaviour affects the employee’s perceptions of the firm aswell as the brand image. The performance of employees is affected by such practices since there is a feeling of injustice and dissatisfaction that affect the level of operations of a firm. As a side effect, employed may be negatively influenced by such lack of ethic and therefore become a threat for the organization. In the case of Siemens, such lack of business ethics characterised the company formany years to a point that the company executives recognised at their participation on such anticompetitive practices, for instance the company played $500.000 to win a $49 million contract in 2006 and like that, the company did about 4000 bribe payments accounting $1 billion over 7 years while many fines were imposed by several institutions like the US government and the World Bank. Such actionstaken by those organizations not only affect the brand reputation but the financial stability of the firm (Cavusgil and Knight, 2008).

Firms should avoid unethical behaviour simply because it is not the right thing to do. The ideal behaviour should be on behalf not just of profit maximization but also of social and environmental wellbeing in terms of human rights and environmental protection,charitable activities, local communities welfare “education, health, access to basic resources, etc” which can be viewed as a sustainable way of doing business. In order to achieve that, companies should develop and foster a culture based on ethical standards that guaranty an ongoing compliance of process with transparent behaviours. In the case of Siemens, the problem of bribing was a complicatedissue due to its decentralised operations and its nature since it is a firm with about 430000 employees split among 190 countries that executed about 50 million banking money transactions a day trough it 5000 bank accounts. The company strategy to control such unethical practices of bribery were to contract an independent ombudsman, modify its business conduct code, new found international...