International business is risky especially when companies involved play by a different set of rules. Knowing the differences in culture, politics and the primary legal environments of a host country, allows the companies to conduct business and make quality decisions based on the business climate, creating a marketing mix specific to each country and region (CSU, module 3, 2014). Detailed research helps companies create a solid marketing mix, but does not guarantee that the obstacles of payoff’s and bribery won’t hinder the outcome. Below the surface level of many sales negotiations, like those seen in our case study of Boeing and Airbus, are driven not on their marketing mix, quality, reputation or reach, but rather on power, bribery, …show more content…
What is legal in one country might not be in another. Greasing the wheels in Latin American countries is common practice to move government paperwork through faster or gifting officials helps expedite a business through red tape (Cateora, Gilly & Graham, 2013). Gifting or bribery is never legal in the United States and this puts the U.S. at a disadvantage against our competitors who’s illegal behavior in the U.S. is legal elsewhere. Airbus develops sales tactics to coheres buyers or political figures with large cash bribes, offering buyers business opportunities that are more appealing than Boeing’s. Multi-million dollar payoffs or bribes can change the course of a buyer’s original business intentions which could lead to the loss of sales and profit for companies like Boeing who follow the legal rules. Accounting for country rules, politics and customs that allow corrupt business practices, the U.S. finds itself at a disadvantage competing for the same business with companies like Airbus who can adapt, navigate and develop sales tactics which involve personal payoffs.
Airbus Response Over the years, Airbus’ unethical business tactics have come to light. As a result, many people question
International marketing or business is uniquely different from the local market because the product price, place and promotion is vastly different from what is been offered to local customers (Johansson, 2000) With the emergence of the information technology, cross border marketing has never been a distant dream. However, it has never been easier even for giant multinational companies to face challenges that come in international business. The biggest challenge comes from the culture which varies from country to country.
In today’s ever changing and competitive modern world of business, it is critical for the companies to have activities internationally. In order to prohibit frauds and illegal activities, several acts and documents have been elaborated. One of the documents is Foreign Corrupt Practices Act that has been enacted in the 1970’s, as a result of SEC investigation of several U.S. companies that made illegal payments to foreign governmental officials, politicians, and political parties (Barnes 73). The FCPA had a critical impact on the way U.S. firms do business. Companies that did not comply with FCPA have been subject of criminal and civil enforcement actions that later resulted in huge fines and sentences for
Bribery weakens competition and diminishes free trade which can affect companies, shareholders, and stakeholders. Jacob Franklin knowingly extended bribes to governments and contractors while knowing it was against company policy. Jacob engaged in bribery even though he knew it was wrong because he was advised that it was common practice at Richard Drilling. “In 1977, President Carter signed the Foreign Corrupt Practices Act (FCPA). The law made it illegal to bribe foreign officials. The maximum punishments for violators were set at $100,000 and 5 years in jail. Companies can be fined millions” (Bredeson, 2012, p.301). Not only was extending the bribe against company policy, it was against law and could cost Jacob and Richardson Drilling money and freedom.
The Foreign Corrupt Practices Act of 1977- is a U.S. Federal Law that prohibits any U.S. citizen from bribing a foreign official for the purpose of obtaining
Author Scott Nette clearly explains that in July 2007, Anthony Tesvich, Melissa Tesvich, James P. Robinson and Ronald K. Jonston was Investigated, charged and convicted on the Foreign Corrupt Act. “The Foreign Corrupt Act States that it is illegal for an US person, entity and certain applicable foreign entity to make and/or accept bribes or offer any inducement for the purpose of obtaining or retaining business with an US firm.” – Scott Nette
Business is continually growing on a global level leading to international business partnerships, agreements, and trades. During these types of business relationships disputes are common (University of Phoenix, n.d.). If a dispute occurs one party may chooses to take legal action against the other party. Making the decision to take legal action businesses must make considerations prior to proceeding. Making the right decisions can build a strong relationship between parties. Considerations to take include contracts, local law, and local customs and culture. Steps may be taken to minimize risks in international business agreements as well.
Reflective Journal Entry 3: Lockheed Martin Guest Speakers Rielle and Adam, Ethics Officers at Lockheed Martin, gave a presentation on February 22 about their company’s ethics program. They began the presentation by giving background information about the company and their five business areas. They explained that ethics is key in their industry, because it allows them to maintain their reputation. If their reputation gets damaged in any way, this can lead to them losing large contract bids and possible debarment.
Moreover, the Foreign Corrupt Practices Act makes it unlawful for certain classes of people and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provision of the FCPA prohibits the willful use of the mails or any means of instrumentality of interstate commerce to be corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money on anything of value to any person. While knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official. Through his or her official capacity inducing the foreign official to do or omit to do an act in violation of he is or her lawful duties, or to secure any improper advantage in order to
Over the past decade, pharmaceutical companies have spent a total of $2.3 billion in order to influence lawmakers in the U.S. Congress. This has proven to be a fruitful expenditure considering the fact that the five largest pharmaceutical companies have an evaluation of over $1.04 trillion. One of the first successful moves big pharmaceutical lobby groups was the passing of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The “non-interference” clause in this act prohibits the ability of the Secretary of the U.S. Department of Health and Human Services to negotiate the prices of prescription drugs with pharmaceutical companies. By doing so, the pharmaceutical companies are allowed to price freely and optimally. However,
As an American Businessman complained that in fact the opposite was created: U.S. business was placed at a competitive disadvantage as only U.S. companies were barred from paying bribes, whereas no such restrictions were in place for companies from other countries. For the results, these critics being charged is a major contracts that went to foreign companies willing to engage in graft. Many companies in the US have implemented all-inclusive of FCPA compliance programs in order to feel educated, prevented, and detected the improper payments by the agencies.
In 2000, Airbus Industrie’s Supervisory Board was making the biggest decision in the company history: whether Airbus should commit to develop world’s largest jumbo jet. At that time, there are only two major commercial jets manufactory companies: the younger Airbus and the bigger Boeing. Boeing had been at the forefront of civil aviation for over half century. Airbus was founded in 1970as a consortium and merged into a new company known as European Aeronautic Defense and Space Company. Airbus developed “fly-by-wire” technology and “cross crew qualification” technology to compete with Boeing in large jets (those with 70 or more seats) market. While Airbus was booked more than
The following analysis identifies the major strategic issues of Airbus and its industry, provides alternatives and a recommendation of the most optimal solution, and details a plan of implementation for the company.
Ethics is something that is very important to have especially in the business world. Ethics is the unwritten laws or rules defined by human nature; ethics is something people encounter as a child learning the differences between right and wrong. In 2001, Enron was the fifth largest company on the Fortune 500. Enron was also the market leader in energy production, distribution, and trading. However, Enron's unethical accounting practices have left the company in joint chapter 11 bankruptcy. This bankruptcy has caused many problems among many individuals. Enron's employees and retirees are suffering because of the bankruptcy. Wall Street and investors have taken a major downturn do to the company's unethical practices. Enron's competitors
Many ethical issues have been surfacing in the last decade due to the hand in hand prosper of international business globalization. The ethical concerns include corruption, bribery, human rights issues among many others. Business ethics is a form of professional ethics or applied ethics that examines moral or ethical problems that arise in a business enviroment. It involves the application of moral behavior to business situations (Adeyeye, 2012 p 22). Bribery is the offering, receiving, soliciting, and giving of something of value in order to influence an action of an official or company in offering of legal or public duties. A bribe is a gift that is bestowed in order to influence the recipients conduct and the extent of the influence
Should Harry Stonecipher have been fired for having a consensual affair with another executive at Boeing Aircraft? The answer is most decidedly yes. In many people’s eyes this affair could have violated the company’s code of conduct, and went against the reason Harry Stonecipher was hired. His actions showed flaws in his character that could have been damaging to the company had he been allowed to stay. The Boeing board of directors had no other choice than to tender Mr. Stonecipher’s resignation.