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Cultural Norm Ethical Dilemma

Cultural Norm Ethical Dilemma Analysis

By Sravanthi Tummala

Saint Mary's University of Minnesota Schools of Graduate & Professional Programs GM675 Management Ethics and Issues Rick Bernardo, Instructor
October 8, 2013

Cultural Norm Ethical Dilemma

Cultural norm ethical dilemma is a dilemma that arises because of different cultures. Cultural ethics indicate values, morals and principles of a society or a particular region and ethically good thing in one society may not be ethical in another society. Ethical decision-making includes discarding of bad choices in favor of good ones so when we are dealing with two different cultures we must be able to sort out the differences between the two cultures and plan accordingly to avoid clashes. Discussion is about a company that is going to build up its business in a country where bribery is a common thing in order to establish the business.

Background of Diversity Cultural-Norm Ethical Dilemma

Pegasus International Inc. is one of the best companies that manufactures integrated circuits (chips) and has some specialty markets such as communications and mass storage, PC- based audio, video and multimedia. Company also made its move towards wireless communications and was successful in its current markets of USA, Japan and Europe. As any company strives to extend its service to a broader market and Pegasus is not an exception. (Hackworth/Shacks/1998)

Pegasus CEO Tom Oswald in a meeting with his Wireless Division mangers decided to explore the opportunities of expanding business in China. Research indicated that China is a huge market for wireless because they do not have this capability and it is the only choice as wired systems are costlier and often its copper wires stolen and (Hackworth/Shacks/1998) sold in the black market.

Cultural Norm Ethical Dilemma

Another research indicated that in order to do business in China Pegasus need a payoff to get license. Tom Oswald posed a question of how other companies are doing business in China and he received answer that companies are hiring contractors to get the license. He was surprised hearing this and said that paying money for someone to do a crime is equal to doing the crime. He then posed a question of how much business will be lost if they do not expand in to China market. Wireless division manager answered that company was not going to shut down if they do not do business in China but they will lose $100 million of business per year. He also added that company would lose significant capital investments from its Japanese partners. Therefore, he says that company would lose good amount of money if they will not expand in to China. (Hackworth/Shacks/1998)

Tom Oswald is leading the company with ethics and morals. By making aggressive research and development, he framed a corporate culture that also includes integrity, honesty, teamwork, and respect for the individual. Pegasus has an excellent reputation among its customers and investors. Finally, Tom left with an ethical dilemma of going with this decision of payoffs or being moral and not expanding his business in to China. (Hackworth/Shacks/1998)

In this case, stakeholders are CEO Tom Oswald and his Wireless manager, as CEO and his wireless manager may lose their jobs if they do not support this decision because Pegasus wants to extend its business in to China a major market for wireless sector and . Tom may also face legal issues because of the disclosure statement that he signed about no instance of bribery in his

Cultural Norm Ethical Dilemma

business. Other stakeholders are Pegasus , employees and investors because if any incident occurs then Pegasus has to face legal proceedings in USA, employees lose their jobs and investors lose their amount that they will incur from expanding business in China. Pegasus has popularity among its customers for its integrity, honesty and teamwork that are at stake in this situation.

Impact would be Pegasus losing it reputation and business. As a leading manufacturer of chips and being in number one position, they must think of morals and not money. Pegasus is doing well in most of its markets and it is a successful business so by performing such type of act company is making things riskier. Impact on Tom, he will be forced to leave the company if he will not accept this deal and if he proceeds with this deal, it will not be acceptable to him because of his ethics. So negative impact is Pegasus faces legal proceedings and loses its reputation. Positive impact is Pegasus will expand its business and there is a rise in its market share. Finally, if Pegasus proceeds with this decision it will lose integrity, honesty and values or if it is not moving with this decision it will lose $100 Million business opportunity per year not expanding in China.

Why the Issue is an Ethical Dilemma This issue considered as an ethical dilemma because we need to take decision based on our ethics and values. Article states that Tom Oswald wants to expand his business in China where payoffs

Cultural Norm Ethical Dilemma

needed to do business and according to US law CEO must sign disclosure document that indicates of no bribery in their business. The ethical dilemma here arises due to the cultural differences of the two countries China and US. In China, bribery is an accepted thing, it is very normal in their society, and they are acquainted to it. In USA, giving or taking bribe is a crime and it is part of their culture. Therefore, Pegasus is doing business according to ethics of their country (USA) and finds it difficult to do business in other country like China that is having their own morals. Pegasus will have short-term profit with accepting this decision of doing business in China but in long-term company loses its name and fame earned from years. Although China is a best market for expanding business but it has a polluted government that is encouraging corruption. In my point of view, Pegasus Inc. should not give the payoff to agents and it must collaborate with other companies to stop giving payoffs. This in turn brings pressure on China government and those people can have a chance to change themselves. If everyone starts giving payoffs then they will habituated to corruption and it becomes very difficult in future to go against it.

Ethical Lenses There are four Ethical lenses are rights/responsibilities, results, relationship, and reputation. Rights/responsibilities lens allow company to focus on their duties and responsibilities that will make them to take a decision keeping in mind its effects on the Pegasus and on people associated with it. Results lens provides a view of consequences that the Pegasus have to face by going with and without this decision. Relationship lens makes the Pegasus understand the importance of justice and advantages of fair process. Reputation lens allows them to understand their

Cultural Norm Ethical Dilemma

performance according to expectations of its customers, investors etc. In this case, Pegasus has to take in to consideration all the four lenses and view through them to resolve this issue. Pegasus has good reputation among its customers for their ethical business and they must increase their market share to benefit investors. By analyzing all the four lenses Pegasus will get the picture of the situation and make a proper decision that can yield money and reputation. (Ethicsgame/pdf)

Conclusion Finally, if I have to make a choice in place of Tom Oswald then I am going with my morals and values that made me CEO of a leading integrated circuits manufacturing company. Even though Pegasus benefits and improves market share with this decision but it has morals and ethics on top of profits. As time passes, money goes away from us but only moral character remains with us. It took lot of effort and time to build a respectable position in the company, everything will be shattered with only one decision so going with morals, and values will be more beneficial rather than wealth.

Cultural Norm Ethical Dilemma

Hackworth M.L., Shanks S. J. (1998). Case of the million dollar decision. Retrieved from