Case Analysis: the Bribery Scandal at Siemens Ag Essay

1771 Words Aug 14th, 2011 8 Pages
Case Analysis: The Bribery Scandal at Siemens AG
The Siemens bribery scandal brought to light a strategic dilemma facing multi-national firms attempting to gain a competitive edge by operating abroad; specifically, how can they balance adherence to their own ethical and legal standards with the customs required to do business efficiently, or perhaps at all, in foreign markets?
 Germany’s Co-Determination law has since drawn intense criticism as hampering competitiveness and creating untenable situations for management, rife with conflict-of-interest issues, not only because of Siemens, but also because of the number of other German-based companies accused of bribing labor union representatives.
 The forced resignation of CEO, Klaus
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As such, analysts opined that the bribery scandal was used as an opportunity to remove Kleinfeld, citing the need for a “new beginning”.
I agree that this is likely the case. The growth under Kleinfeld was impressive, particularly given the timeframe. Furthermore, the timing of the actual instances of bribery put them squarely during von Pierer’s tenure as CEO; and he had already stepped down from the supervisory board. Nevertheless, under the power granted by the Co-Determination law, the supervisory board opted to bring in a new CEO, Peter Loescher, indicating, in my opinion, that its issue with Kleinfeld was not performance based.
Why Such Risky Business?
The history of Siemens AG paints a picture of a successful and arguably dominant multi-national firm, with a reputation for a war chest of competencies and innovative products. The obvious question, then, is why would a firm with this resume and list of global achievements become involved with corruption and criminal behavior? The author recounts the opinions of analysts who believe the answer is simple; many firms view the types of payments at the heart of the Siemens scandal to be the necessary cost of doing business in the current global environment. At first glance, the facts of this case may seem to support this theory.
There were €420 million of…

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