The case analysis portrays attempts of international expansion by Jextra, a prominent Asian retailer based in Hong Kong, and Tom Chong, the country manager for the Neighbourhood Markets Division in Malaysia. Chong has been highly pressured by his boss to “aggressively grow the business (Inkpen, 2013). ” He later sees the opportunity to grow the business lines in the area of Klang, which is located near Malaysia’s capital city of Kuala Lumpur.
The opportunity, however, is accompanied with a tradeoff associated with social, ethical, and legal challenges that may negatively impact his competency, integrity, and reliability as a leader (Inkpen, 2013). Jextra Co. is considered to be a large Asian retailer owned by Sim Lim Holdings, which is also a large publicly traded industrial group. The organization dominantly operates in Asian countries such as Philippines, Vietnam, Thailand, and Singapore through the use of convenience stores, hypermarkets, and supermarkets. The company entered the Malaysian market by operating in supermarkets with the distinctive name of Neighbourhood Markets.
The company saw immediate growth and opportunities, and intended to further grow their business lines by entering the convenience store and supermarket sectors (Inkpen, 2013). Chong is certainly in the spotlight to outperform as he had only been in his position for eight months. Malaysia is considered his first assignment as a country manager, and may potentially be his last if he does not meet expectations. His background as a financial director will nevertheless aid his quest on managing his businesses objectives particularly with handling “real operational issues and profit and loss responsibilities (Inkpen, 2013).Furthermore, his career future is dependent on the number of new stores to be opened (Inkpen, 2013).
Analysis According to the Jextra’s Business Conduct Code, it prohibits unethical conduct that is morally incorrect and dishonorable (Inkpen, 2013). The code values reputation, where it is heavily committed to following ethical business practices. The code specifies fundamental principles of ethical business behavior and the responsibilities of all personnel business affiliates (Daniels et al. , 2013). The code emphasizes the importance of conducting business ethically and lawfully to uphold honesty and integrity.
Further, the code explains the standards and expectations of all business affiliates to comply with the company’s set of policies, laws, and regulations (Inkpen, 2013). The major social, ethical, and legal challenges that the company faces in operating with Malaysia would be the primary issue of bribery (FCPA and UK Bribery Act, 2012). In relation to a legal challenge, Chong and his team had identified a potential site in Klang for a new store. He anticipated the new store to bring heavy consumer traffic because of a new highway that will connect the region to the capital.The problem was that the site “was not zoned for retail and/or commercial purposes,” which served as a barrier to Chong’s quest to opening a new store (Inkpen, 2013).
In order to overcome that, he met with the mayor of Klang to discuss on the land development process associated with the new store to ensure a smooth transitioning. However, his business objectives was unanticipated by the mayor’s tradeoff proposal of the requirement to “support a primary school development fund and flyover,” which would speed up the zoning process (Inkpen, 2013).This essentially is considered a form of bribery because it does influence business behavior, which acts as a “prerequisite to obtaining a permit” to build the new store (Inkpen, 2013). According to the code, it emphasizes the importance of conducting business ethically and lawfully to uphold honest and integrity, in which Chong should be able to do so (Inkpen, 2013). In relation to an ethical challenge, Chong had considered to utilize the company’s Jextra Social Fund to support the bribery activity. The fund was managed by a small group of employees located in the company’s corporate office in Hong Kong.
He considered that the company does continually seek to aid educational and social programs particularly for the disadvantage such as children of lower-income families (Inkpen, 2013). According to the code, it specifies fundamental principles of ethical business behavior and the responsibilities of all personnel business affiliates. Chong should be able to deter from this motive of manipulating and misleading the fund despite the welfare of the school and the community because it would solely be for his personal interest.His personal interest conflicts with the interests of the company because he wants a personal gain toward opening a new store. This option would look good on his career profile but would negatively result into an infraction of the code.
Further, the company’s code prohibits any “assets of the company or other funds to be used to bribe or influence any decision by an officer, director, employee, or governmental official (Inkpen, 2013). ” In addition, the fund was primarily directed for Hong Kong educational contributions, and not elsewhere in Malaysia (Inkpen, 2013).All these valid reasons of a bribery indication should be able to strengthen Chong’s confidence level toward observing ethical business behavior. In relation to a social challenge, Chong realized that most of the behaviors in Malaysia were not criminal, but were considered a regional cultural value of collectivism (Daniels et al.
, 2013) He discovered that the country’s political system was “unclear in the area of business payments for social purposes made specifically for regulatory approval (Inkpen, 2013). ” The business contributions to city projections were particularly common in those particular region(s).Although Chong also considered the mayor’s proposal to be a philanthropic act toward the community, his tradeoff however, was still unacceptable to the company’s code of standards (Inkpen, 2013). According to the code, it prohibits excessive “gifts to guests or suppliers that are unreasonable and inconsistent with good business practices,” which appear improper (Inkpen, 2013). The considered excessive gift(s) if he were to proceed with the bribery were potentially the entire cost of the school’s facility construction, which is quite a large sum of money that would not be an acceptable minor gift.The code prohibits a gift and/or benefit that are relatively “large enough to influence the recipient’s business decisions (Inkpen, 2013 & FCPA and the UK Bribery Act, 2012).
” The major social, ethical, and legal challenges associated with being a country manager should have been anticipated because the company performs in a global scale (Daniels et al. , 2013 Emerging Markets, 2013). International business involves different business identities, cultures, values, and/or affiliates to agree on a compromise to better negotiate on favorable business objectives.Chong should have anticipated the political risk associated with the bribery. The characteristics of the political risk was a systematic class, a unilateral breach of contract type, and the host government approving a local firm’s doing was the outcome (Daniels et al.
, 2013 & Goodwin, 2013). ” Chong should have anticipated the country as having a differentiated legal system capable of conflicting with the interests of the company (U. S. Dept.
of Justice, 2012). As a resolution to resolve the requests from the mayor, Chong should be able to decline his offer, and to seek other ways to obtain the zoning approval.If Chong succeeds to look for alternative(s), the flyover would be of a less concern later on (Inkpen, 2013). Although he would be faced with the predicament that he might potentially loose a perfect retail site for his business initiatives as a country manager pressured to grow the business, he would still comply with company standards (FCPA and UK Bribery Act, 2013).
The company has nothing to loose because it is doing tremendously well in the Malaysian market. However, the lost of the site would be a setback for Chong, who may have to better strategize his business initiatives to outperform his financial targets (Inkpen, 2013).In relation to the rumors of bribery and kickbacks to the category manager, Chong should be able to dismiss those allegations about Arif Alam’s job performance. Alam was considered to be the company’s top buyer for vegetables and fresh fruits, where he manages to always negotiate far better contracts than with the company’s competitors.
The assumption that Alam was involved with “dirty buying” would be a major issue if there were evidence present because it would be considered an infraction of the code (Inkpen, 2013).However, in this case is not, and the effort to pursue further investigations can result to an added cost because of the duration and expense of a formal investigation. If the allegations prove to be false, Chong would risk jeopardizing the performance and relationship of his category manager, suppliers, and other business affiliates as well as his personal credibility (Inkpen, 2013). In relation to upholding global ethics and standards, top managers are ultimately responsible when corruption is afoot.
They are the brand representatives of the company that significantly build the organization’s valuable reputation (Daniels et al. , 2013). They are the “associates who supervise others, who have an important responsibility to lead by example and maintain the highest standards of behavior (Inkpen, 2013). ” They are the leaders that implement the code, policies, laws, and regulations that affect the workplace in a global scale. Leaders should be able to observe law, which is necessary to enforce the right conduct, punish wrongful act(s), or settle dispute(s) to provide stability, justice, and order (Goodwin, 2013).
The individual(s) that had encouraged the alleged bribery and kickbacks at the company was a conversation by two of Chong’s accounting employees alleging their category manager with the involvement of bribery associated to his high performance (Inkpen, 2013). In relation to advising staff on similar scenarios of bribery particularly with local expectations of “payoffs” or “referral money,” I would personally advise them to conduct business ethically and lawfully. I would recommend them to “bring good judgment and a sense of integrity to all their business decisions (Inkpen, 2013).I would ensure that they thoroughly understand the company’s Business Conduct Code, to assist them on making the right decisions. In addition, I would recommend them to “disclose information immediately to both their supervisor and Human Resources for review (Inkpen, 2013)” for the purpose(s) of protection. Further, I would ensure that they seek guidance if they have any questions or concerns in relation to a suspected violation(s) of the code (Inkpen, 2013).
The company’s Jextra Business Conduct Code does help Chong in resolving the issues because it provides him with a set of standards, rules, regulations, and laws to be followed.The code provides him with the company’s expectations for business and associate conduct, which is key to making the right decisions. The code provides a guideline for the fundamental principles of ethical business behavior and defined responsibilities of a leader (Inkpen, 2013 & Daniels et al. , 2013).
Despite the company being located in Hong Kong, Chong would need to know the potential jurisdiction of laws such as the U. S. FCPA and the U. K. Bribery Act in order to avoid any legal, ethical, and/or social challenges associated with the international markets.
The act prohibits corrupt activity from occurring, and promotes liability of offenses (FCPA and Bribery Act, 2013). This will allow him to overcome barriers in relation to the legality or legitimacy of any suspected business behavior. In addition, I would highly recommend Chong to thoroughly understand the definition and consequences of the three offenses of the FCPA and Bribery Act to ensure compliance and the prevention of bribery. Chong would need to know how to execute effective anti-corruption procedures to reduce the risk of violations for purposes of responding and detecting to improper conduct (Inkpen, 2013).
Furthermore, Chong should be able to reference the Jextra’s Business Conduct Code for guidance within or outside the company. The code outlines procedures on business conduct or behavior. In the absence of guidance, I would recommend Chong to utilize global moral standards and man-made law on behavior (Daniels et al. , 2013 & Goodwin, 2013).
Bribery is considered morally incorrect, and should be treated with responsibility and good judgment (FCPA and UK Bribery Act, 2013).In order to build a corporate culture for the long-term benefit of the company, I would recommend Chong to consistently follow the Jextra Business Conduct Code when conducting business either domestically and/or internationally. The code would benefit the company long-term because it provides the highest business standards of ethical and legal behavior. The code will benefit the company long-term by eliminating and/or reducing the amount of potential lawsuits that may hinder business expansion or capital gain (Inkpen,2013).Conclusion The lessons that were learned from this case analysis as a future leader for an international organization would be to observe ethical and legal behavior in a global scale (Daniels et al.
, 2013). As leaders, we tend to feel pressured to outperform expectations to showcase our competency, reliability, and capability. As we do so, we tend to forget the set of rules, regulations, and laws associated with conducting best business practices because of our tendency to drive results (FCPA and UK Bribery Act, 012 & U. S. Dept. of Justice, 2012).
As leaders, we need to consider the bigger picture of the company on upholding honesty and integrity for instilling valuable reputation (Inkpen, 2013). The organizational reputation is key to increasing market appeal and/or brand loyalty customers (Emerging Markets, 2013). We need to ensure that our personal interest(s) does not conflict with the interest(s) of the company to avoid unethical behavior from occurring (Inkpen, 2013).More than that, as leaders, we should be inconclusive of a person’s job performance based on unreliable sources of information such as rumors in the workplace.
As leaders, we should not assume any allegations to be factual unless evidence has been presented (Inkpen, 2013). We should be able to deter ourselves from rumors because of the high uncertainty and implausibility. If we confine ourselves with the rumors, then we would refrain ourselves from the truth, therefore increasing our vulnerability to bias and injustice (US Dept. of Justice, 2012).
