This is an Essay with a 1500 word count limit.
Instructions
Please read the following Situation and then consider the accompanying questions from a Business
Ethics perspective in your response.
Please note that there is no right or wrong answer. We are looking for your ability to decipher the
situation, understand the various factors at play and then make a decision on the optimal way forward –
from your viewpoint.
Situation: –
Two countries – Country X and Country Y [hereafter referred to X and Y] are active trading partners. Y
has significant business interests in X.
Y is a developed economy with an advanced industrial / manufacturing sector. X is an Emerging Market
country with a rising middle class and growing consumption and spending pattern that attracts
investment from Y.
Y has recently taken steps to further strengthen Good Governance and Business Practices across its
various industrial and business sectors. It aspires to be internationally known as a trusted hub for
Compliance, Transparency, Ease of Doing Business, and Openness.
X has had a mixed reputation in Global Reviews on Business – specially with respect to Corruption
indices. Government institutions are fraught with Bureaucracy, Inefficiency and painfully slow decisionmaking
processes. In general, the official prescribed investment procedures and roadmaps are long and
arduous and have questionable [if not impossible] timelines.
However – there has been an age-old practice of working with established local business houses and
entities [local partners] that provide a “one-window” operation for arranging / tackling various issues
that overseas investors face – for a “fee.” Investors from various countries who have worked with such
local partners in X find they can speed up work and processes substantially. These local partners often
advertise their close links with government functionaries and departments and “fast-forwarding”
capabilities. In various newspapers and tabloids – this “fee” has been described as anywhere from 10% –
25% of the value of any incoming investment deal – clearly a major cost of doing business.
You are the Head of International Business Development for your firm – a leading FMCG manufacturer /
exporter firm of Y. Your firm has received awards regularly for Business Growth, Good Management
Practice [GMP] and Corporate Social Responsibility [CSR]. You are considering a major investment in X
that could positively impact revenue by as much as 10% [approx. USD 500 million / year] over the next
decade. You have been approached by a potential local partner from X who is keen to facilitate your
investment plan for a fee.
While your firm is attracted to the rapidly growing consumer spending in X and potential market for
your firm – you are also keenly aware of Ethics and Governance concerns that will impact this deal.
There is clearly significant upside in terms of revenue and market potential. However — you are
challenged by the cost of local partner involvement and also what that fee is supposed to cover. Over a telecon you raise these concerns to the potential local partner in X. The Chief Representative of the local
partner suggests to you that the best way to go forward is to [in parallel] set up a Community
Development Foundation in the proposed locality for investment — which would fund schools, clinics,
power generation, clean water supply and sanitation facilities for the 10,000 or so villagers and
positively impact their livelihood – besides of course providing jobs for the locals. Such an initiative
would be viewed extremely favorably by the local, provincial as well as Federal Government.
You are presenting a proposal for potential investment in X to your CEO and Board of Directors in a
week’s time. Clearly you have a lot to think about.
Questions: –
What are the main factors that will impact your presentation and any recommendations?
Weigh the pros and cons of investing in X.
What could this local partner “fee” be all about?
Is the investment a win-win for both Y and X? Since X gets jobs and social and economic uplift for
thousands of people and Y gets a strategic foothold in a rapidly growing market plus more credibility as
an investor in overseas CSR.
What is your decision?
