Summary of the case
Siemens, a large electronic firm headquartered at Munich in Germany, had developed a culture of corruption in its dealings. This firm’s customers are organizational buyers who make huge purchases once they make approval of the firm’s products. Most of these clients were governments all over the world, or other large organizations.
Siemens had formed the habit of giving out bribes to the decision makers in these organizations in order to win tenders. Top managers of this firm supported this corruption, and even after the German government enacted stricter laws, this firm did not stop its corrupt dealings. This went on until a Saudi Arabian who was demanding for his share of the bribe blackmailed the firm.
When the issue was finally brought before the law, several top executives of this firm were found guilty of authorizing the corrupt dealings. They were forced to resign, faced graft charges in court, and had to pay huge fines. The firm was also forced to pay fines to various governments because of its unethical acts. The board had to hire new top officials to who would bring new changes to this firm.
Ethical issue
In this case, the ethical issue that comes out is the illegal manner in which this firm was securing tender in various countries. This industry is very competitive, and other firms have a right to win these tenders if they are able to prove that they can offer the best value at the most competitive costs.
When Siemens uses bribe to win such tenders, it blinds the decision of the tendering board and this will give them an upper hand in winning the tender even if their product is not of the best value. This amounts to unfair business practice in the market.
Why this is unethical
This practice is unethical because it denies other firms a fair chance to win such tenders in the market. It is unethical to break the law. When the law states that it is illegal to bribe officials in order to win a tender, going against this law in itself is unethical.
It is important for this firm to appreciate that influencing the decision of the tendering board in their favor may have negative image on the firm in the market. The market will start doubting its ability to meet its demands. This means that the ultimate victim of this practice is the firm when these dealings are finally revealed. This is what finally happened to this firm.
The affected parties
A number of parties are affected by this unethical practice. The first party affected by this practice is the firm itself. The exposure of this practice did not only harm its image in the market but also made it lose $ 1.63 billion dollars in fine. It was also barred from bidding in some tenders for some time.
Competitors of this firm suffered due to the unfair business practice employed by this firm. They could not win tenders even with superior products. The individual employees at the top management were also affected because of the fines and jail terms they were given in courts.
Leadership issue
The main leadership issue arising from this case is the need to be responsible for all the actions taken by each of the top employees. Each of the managers must be responsible for actions taken by his or her office, and all other offices under him or her. The case also points out the need to have a centralized management approach where the chief executive will monitor and be directly responsible for all the actions of the employees.