When in Indonesia
Bigco International Inc., a manufacturer of auto parts, recently moved the operations of one of its divisions to Indonesia.
Bigco has hired 300 workers at wages considerably below their U.S. counterparts, but consistent with the prevailing wages in Indonesia. Not only is Bigco benefiting from the lower wages, it is also able to reduce its costs further because of the conditions at the factories used for its operations (no air conditioning and poor ventilation), it can dispose of waste without any government oversight, and government inspectors are routinely given gratuities for favorable inspection reports or to otherwise grease the skids for Bigco, in accordance with the prevailing practice in that location. Bigco’s operations are in all key respects in accordance with the laws of Indonesia.
There are increased shipping costs for the auto parts as they are being made in Indonesia, but mostly for sale in the U.S. and Europe, but the labor and other savings of the Indonesion operation more than make up for the other increased costs.
You were recently hired as a senior vice-president in charge of the Indonesian operations and you are concerned about what you have seen and heard as to how the plants are being operated. When you called a colleague in the states, he said to you “keep your mouth shut and when in Rome do as the Romans do.”
What are some of the ethical issues at play here? Is the Foreign Corrupt Practices Act implicated here or does an exception apply? What should you consider in charting your course of action and how would you resolve any differences?
In terms of what you have learned about ethics over the past weeks, has your perspective changed at all? Is there one tool, concept, or approach that resonates with you and that you believe you can use in your future endeavors?
https://saylordotorg.github.io/text_international-business/s07-04-global-business-ethics.html
https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2012/11/14/fcpa-english.pdf
https://www.jonesday.com/en/insights/2010/01/the-foreign-corrupt-practices-act-an-overview
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/a-pocket-guide-to-doing-business-in-china
https://money.cnn.com/2018/05/09/news/economy/foreign-companies-china-taiwan-compromise/index.html
https://www.bbc.com/worklife/article/20150826-the-challenges-of-setting-up-shop-in-india
https://www.weforum.org/agenda/2017/03/risks-business-latin-america/
https://learn.umgc.edu/content/enforced/607525-001154-01-2212-OL3-7387/Comparing%20Business%20Ethics%20in%20Russia%20and%20the%20US.pdf?_&d2lSessionVal=whV4u84lYQvu3MkDJoIbQM8WV
https://www.gov.uk/government/publications/overseas-business-risk-russia/overseas-business-risk-russia
https://smallbusiness.chron.com/role-government-business-ethics-65128.html
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