Critical analysis

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• Identify the ethical business dilemma(s) presented in the scenario, and discuss why it is an issue.
• Discuss, in detail, at least two (2) separate  “frameworks” for resolution of the ethical business dilemma (as applied  to the situation), and how the outcomes from each “framework” will  affect various stakeholders (pro or con).  Please refer to your textbook  and to the article “Framework for Ethical Decision-Making” to assist in  your analysis.
• Based on your critical analysis of the situation, recommend a decision and provide a rationale for the same.

“The Case of the Million-Dollar Decision”

by Michael L. Hackworth and Thomas Shanks

               Pegasus International Inc. is a leading manufacturer  of integrated circuits (chips) and related software for such specialty  markets as communications and mass storage, as well as PC-based audio,  video, and multimedia. With a focus on innovation, Pegasus is committed  to “technology leadership in the new millennium.” Its long-standing  strategy has been to anticipate changes in existing and emerging growth  markets and to have hardware and software solutions ready before the  market needs them. The company has also made significant strides in  wireless communications.

            The systems and products of Pegasus’ wireless business  have been selling well in its already existing markets in the United  States, Japan, and Europe. But, like any company, Pegasus is eager to  grow the business. At a strategy session with the Wireless Division,  Pegasus CEO Tom Oswald and division managers decide to explore the  potential of expanding their business to China.

            Initial research indicates that China is likely to  develop into a huge market for wireless because its people do not  currently have this capability and the government has made spending on  wireless a priority. Wireless is really the only choice for China  because of the high cost of burying the communications cables necessary  in wired systems; further, in underdeveloped countries, copper wires are  often stolen and sold on the black market.

            Subsequent research does raise one concern for Pegasus  wireless managers. They tell Oswald, “We have this problem. China  allocates frequencies and makes franchise decisions city by city,  district by district. A ‘payoff’ is usually required to get licenses.”

            The CEO says, “A lot of companies are doing business with China right now. How do they get around the problem?”

            His managers have done their homework: “We believe most  other companies contract with agents to represent them in the country  and to get the licenses. What these contractors do is their own  business, but apparently it works pretty well because the CEOs of all  those companies are able to sign the disclosure statement required by  law saying that they know of no instance where they bribed for their  business.”

            “I wonder if paying someone else to do the crime is the  same as our doing the crime,” Oswald says. “I’m just not very  comfortable with the whole question of payoffs. So, let me ask you, if  we don’t expand into China, how much business will we lose,  potentially?”

            His Wireless Division manager responds, “It will be huge  not to do business in all the countries expecting payoffs. China alone  represents easily $100 million of business per year. It’s not life and  death, but it is a sizable incremental opportunity for us, not to  mention potential Japanese partners who will make significant capital  investments. All we have to do is add our already-existing technology.  When you consider all that, we have a lot to gain. What will we really  lose if our local contractors are forced to make payoffs every now and  then?”

            Oswald wants his company to succeed, he wants to maximize  shareholder value, he wants to keep his job, and he wants to model  ethical leadership. He has made an effort to build a corporate culture  characterized not only by aggressive R&D and growth but also by  integrity, honesty, teamwork, and respect for the individual. As a  result, the company enjoys an excellent reputation among its customers  and suppliers, employee morale is high, and ethics is a priority at the  company.

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• Identify the ethical business dilemma(s) presented in the scenario, and discuss why it is an issue.
• Discuss, in detail, at least two (2) separate  “frameworks” for resolution of the ethical business dilemma (as applied  to the situation), and how the outcomes from each “framework” will  affect various stakeholders (pro or con).  Please refer to your textbook  and to the article “Framework for Ethical Decision-Making” to assist in  your analysis.
• Based on your critical analysis of the situation, recommend a decision and provide a rationale for the same.