Background of Siemens
Siemens is a Germany-based company that established in October 12, 1847. It is one of the world’s largest electronics and industrial engineers firms. The products produce by Siemens includes industrial controls, lighting products, power generation equipment and transportation systems. Siemens operates in 190 countries worldwide with recent annual revenues exceeding $100 billion.
The case started when a senior executive at Siemens Company received a phone call from their business partner in Saudi Arabia. The person who made the call blackmailed Siemens to pay $190 million in U.S currency otherwise he will disclose the corruption made by ...view middle of the document...
In the wake of the scandal, Siemens has appointed a law firm to conduct independent review of its compliance systems and uncover possible improprieties, hired independent ombudsman to strengthened its business-conduct codes, reduce number of bank accounts, require full details on transaction made by subsidiaries and German government tightened ethics code and standard for managers.
1) What does the case suggest is the value of ethical behaviour? What did Siemens gain by introducing controls to minimize the likelihood of corruption?
Ethical behaviour is an essential component for every company to become successful especially for the businesses that want to grow globally, including Siemens. There are four important components of ethical behaviour which are ethics, corporate governance, sustainability and corporate social responsibility that help in strengthen the ethical behaviour of a firm. Siemens was involved in the bribery and corruption around the world. In the case, Siemens company has lack in these four components of element. Ethics is moral principles and values that govern the behaviour of firms, people, and governments regarding right and wrong. Among the employees, the culture of corruption and bribery has been endorsed especially by senior managers. Therefore, it showed that the ethics among the people in the Siemens was unethical towards the business that can harm other people and business especially their competitors.
The management in the Siemens thinks that the corruption and bribery was right. In the case, it can be related to sustainability component. It is suggested in the case, that the bribery and corruption could give positive impact in the short run, however, in the long run it will give bad impacts in the business. However, positive impact only in their financial statements and it is still unethical behaviour toward the globally business by using bribery in order to wins the contracts. This company are willing to spend more than $1 billion by bribing the government officials around the world. Through this action, the Siemens win the contracts especially in its communications and power-generation divisions. Thus, their profit was increased in the short run. Bribery has produced harmful consequences. Starting from 2004, the action of bribery and corruption give bad impacts towards their business. Their business image was looked badly. The Siemens need to pay $800 million as fines to the Foreign Corrupt Practices Act, U.S. Additionally, this scandal caused the customers delay ordering telecommunication equipment from Siemens and Nokia Corporation announced it would postpone a planned joint venture. Therefore, their profits were declined due to bribery investigations. Other than that, the Siemens required to pay $100 million to the World Bank in 2009, in order to help global anticorruption efforts and to forego bidding on World Bank development projects for two years. Other than that, corporate governance is the system...