Case Study 4 Culture Clash In Boardroom – Case Study Example
Case Study 4 Culture Clash in Boardroom Identify the most important facts surrounding the case. The case of whether the German-Chinese joint venture should follow the ethical rules of the parent company or the country of operation presents a decision dilemma to the management. The most important facts that surround this case include the socio-cultural differences that multinational companies experience. In this case, the German-Chinese joint venture has its headquarters in Germany and this means that its entire operation management principles and business practices are traditionally Europe. On the other hand, China hosts its subsidiary and offers a better business prospects. The challenge is that in China it is operating in a different cultural environment which is likely to contravene its ethical standards of business practices.
Identify the key issue or issues.
The key issue in this case is adherence to ethical standards of the company versus the need to accept the bribe culture in China to realize sales. Mr.Liu Peijin faces a difficult decision to make since the customer insists on 1% commission as a reward to complete the negotiation and finish the deal. This is the local culture in china but is against the ethical standards of the firm.
Specify alternative courses of action.
The causes of actions possible in this case are to compromise the ethical standard of the company, give the commission to the customer and gain in huge sales. An alternative cause of action is to withdraw from the deal by rejecting the 1% commission demand thereby holding on the ethical principles of Almond China.
Evaluate each course of action.
Offering a 1% commission will compromise the ethical principles of the multinational which will affect its ability to negotiate future deals on allegations of corruption and lacking integrity. Sticking to the company’s ethical principles and rejecting 1% commission demand will cost the company a huge sale—30 million Yuan.
Recommend the best course of action.
The long run survival of the firm is primary and this makes it important to have clean hand in its transactions. Since it is in another country with better business potential, it would be advisable to protect its public image by adhering to its ethical standards. Tis has long term benefits in positive public image of Almond’s as a compromise on its ethics or safety standards may affect its ability to secure contracts in the future.
Katherine Xin and Wang Haijie Should a German-Chinese joint venture follow the ethical rules of the parent company or the country of operation? Culture Clash in the Boardroom.2011