'Jextra Case\r'

'Jextra Neighborhood Stores Case digest This report analyzes the honest dilemma antenna by Jextra’s country manager, gobbler Chong, who was creditworthy for Neighbourhood Markets in Malaysia. Jextra Stores was a Hong Kong found high society that operated retail stores in mainland China, Hong Kong, Philippines, Malaysia, Thailand, Singapore, and Vietnam. In 2005, the smart get dressed successfully entered Malaysia, operate super grocerys beneath the name of Neighborhood Markets (Inkpen, 2010). Jextra determine a promising site in Klang, near the capital of Kuala Lumpur, to open a new supermarket (Inkpen, 2010).Mr. Chong unavoidablenesss to evaluate a proposal made by the city manager of Kang, which efficiency be considered presentry. In this caseful, Mr. Chong mettles sociable and good challenges that whitethorn affect the community’s operations, performance, and warlikeness in the country as well as Mr. Chong’s c atomic number 18er. The s tudy social issues include those related to to equity, glossiness, and moral philosophy. The report in every case analyzes anti- graft corruption en telephone numbered by the U. K graft performance and the U. S. opposed slander Practices Act (FCPA).The report concludes with passs to Jextra much(prenominal) as seeking prudish honorful advice, implementing an effective job mandate of conduct, providing inter-cultural and ethics training to managers, using a geocentrism approach and conducting an internal investigation for the Malaysian house manager. Analysis Social, Ethical, or Legal Challenges world abundant firms operating oversea often demo social challenges be drive they operate in markets with various well-grounded and governmental dodges (Daniels, Radebaugh, & Sullivan, 2010, p. 111).Each country has a statutory remains that provides â€Å"the rules that regulate behavior, the processes by which truths be administerd, and the procedures used t o resolve grievances” (Daniels, Radebaugh, & Sullivan, 2010, p. 111). In the case of Malaysia, the country relies on a dual good system ground on common uprightness and theocratic fairness. English Common law is based on tradition and judicial precedents (stargon decisis). This display case of legal system is used in, among otherwises, U. S. , U. K. , India, Canada, Hong Kong, Australia, and in the buff Zealand (Daniels, Radebaugh, & Sullivan, 2010).Malaysia overly relies on Muslim law (or Sharia), which is based on religious precepts and beliefs. Muslim law prevails in Turkey, Kuwait, Indonesia, Saudi Arabia, Iran, and so forth (Daniels, Radebaugh, & Sullivan, 2010). In developing countries, much(prenominal) as Malaysia, immaterial companies and managers, such as Mr. Chong, whitethorn encounter legal risks out-of-pocket to the legal framework and the effectiveness of the legal system (Ling & Hoang, 2010). In new-made years, Malaysia has opened its market towards liberalization of trade and services and sphericalisation (Tahir & Ismail, 2007).Like other emerging markets, such as Mexico, China, India, and Brazil, Malaysia re enters an attractive market. However, MNEs atomic number 18 bound to nervus legal challenges in emerging markets because they restrain an inadequate commercialized bag, weak legal system, and high-risk environment (Pearson, 2011a; Pearson, 2011b). For instance, Malaysian polished and commercial laws regarding backing fabricatements for social purposes atomic number 18 non clear. It is a common intrust in Klang and Kuala Lumpur to determine social contributions for confederacy depicts, such as develops and roads (Inkpen, 2010). supernumerary legal issues that Mr.Chong may face in Malaysia are the â€Å"insufficient legal infrastructure for enforcing legal judgment” and â€Å"uncertainty and shabbiness of court justice” (Ling & Hoang, 2010, p. 157). In Malaysia, t he regulations regarding conflicting investment lack transparency (Inkpen, 2010) and in that respect had been many cases of grafting involving humankind officials. Malaysia has a high tendency toward corruption, which refers to â€Å"the misuse of entrusted authority for private learn headway” (Daniels, Radebaugh, & Sullivan, 2010, p. 191). According to the TI Corruption Perception Index (2010), Malaysia was rank 4. on of a scale of 0 ( more than resemblingly to pay bribe) to 10 (less like to pay bribe) (Daniels, Radebaugh, & Sullivan, 2010). Russia, People’s democracy of China and Italy precede Malaysia in price of frequency and size of bribes (Daniels, Radebaugh, & Sullivan, 2010). Mr. Chong go to beds about recent cases of bodied graft in Malaysia and in the retail industry. There had been s canisterdals regarding unlike investors who bribed public officials or financed presidential term programmes to obtain rail line privileges or co mpetitive advantage (Inkpen, 2010).Moreover, on that point was a recent case of bribery involving a Jextra’s country manager in the Philippines. More likely, this manager withal encountered similar ethical dilemmas like Mr. Chong. several(prenominal) individual factors that may turn over set him to act unethically in the Philippines could have been pres incontestable from the troupe to expand and gain competitive advantage in the region. Alternatively, he might have simply cute to advance his career as a country manager, lacked of ethics or did non know the local laws regarding bribery.Additionally, he might not have take ond or requested support from the apex oversight regarding the social and ethical issues raised in the Philippines. Mr. Chong, as an experienced manager, should have pass judgment that he would encounter legal and ethical risks in Malaysia. Mr. Chong face major challenges due to the weak legal framework and wide spread corruption in Malaysia. Addi tionally, Mr. Chong is not familiar with Malaysian domestic law and world-wide law. For instance, Mr. Chong does not know whether pass judgment the mayor’s declare would go against Malaysian law.It is against the International law to offer specie, calculately or indirectly, to officials of foreign governments (in this case the city manager of Klang), to obtain a pipeline advantage (help Jextra with the land zone) (Inkpen, 2010). According to Daniels, Radebaugh, and Sullivan (2010), it is life-or-death for foreign firms and managers that operate oversea to be familiar with domestic law and impertinent(a) law. Moreover, Mr. Chong does not know the legal policies of his dwelling country, and therefore, if contributing to obtain a subscriber line benefit would be considered illegal in Hong Kong, if it were not through the right comport (Jextra Social Fund).Jextra Social Fund provides support for educational and social projects (Inkpen, 2010). However, Mr. Chong is not positive(predicate) whether he should go through this bloodline to propose the contribution in inn to expedite the zoning process. Additionally, Jextra’s assembly line reckon does not help Mr. Chong to mould a decision regarding this matter. Mr. Chong is not sure whether financing the primary indoctrinate in Klang would be against Jextra’s Business stock Code. Jextra’s Business Conduct Code states â€Å"employees could not offer benefits to third busties in connection with business matters” (Inkpen, 2010, p. 3). However, Mr.Chong does not know if the contribution would really benefit the connection or individuals, such as the city manager of Klang or his sis; the sister of the city manager is a member of the school board. Mr. Chong excessively faces challenges with regard to the differences of culture between Malaysia and his rest home country, China. enquiry shows that individuals from disparate cultures may face challenges in to a lower placestanding the behavior and set of others in the server country. Thus, this can cause a cultural clash (Tahir & Ismael, 2010). However, China and Malaysia are culturally shut, so it can be expected that Mr.Chong adjust more easily than if he were to do business in countries with more cultural hold, such as France, U. S. or Germany (Daniels, Radebaugh, & Sullivan, 2010). Both, Malaysia and China present many similarities regarding its culture. Based on Hofstede’s cultural dimensions theory, both countries have a high degree of power distance (PDI), collectivism, masculinity (MAS), and high uncertainty dodge (UAI). (Daniels, Radebaugh, & Sullivan, 2010). Additionally, Mr. Chong may have a different level of ethical sensitivity than its counterparts in Malaysia (Chan & Cheung, 2012).People from different cultures have different ethics, which are influenced by their beliefs and cultural values (Chan & Cheung, 2012). former(a) challenges that may rise are problems regarding communications. As noted by Daniels, Radebaugh, and Sullivan (2010), â€Å"cross-b wander communications do not always translate as intended” (p. 67) and can lead to mis lowstandings. For instance, Mr Chong is not sure about what the Mayor meant when he asked to pay for the primary school; whether he asked to pay the entire cost of the school or just a part (Inkpen, 2010). Resolving the Mayor’s RequestsAccepting the Mayor’s offer and financing the project without using the right company’s channel (Jextra Social Fund) would be illegal. It too might go against Jextra’s corporate culture and Business Conduct Code. bribery is wrong and unethical, and as noted by Daniels, Radebaugh, and Sullivan (2010), â€Å"it affects both company and country economies” (p. 192). Research shows that high levels of corruption have a strong cor simile with gloomy levels of per capita income and low national growth rates (Daniel s, Radebaugh, and Sullivan, 2010). Having another(prenominal) bribery scandal would erode Jextra’s reputation and image.It would compromise the legitimacy of the company worldwide and its operations (Daniels, Radebaugh, and Sullivan, 2010). It is challenging for foreign managers to avoid bribe payments when these are regarded as a usual business coif in the host country (Daniels, Radebaugh, and Sullivan, 2010). up to now though, it would be easier for Mr. Chong to just pay the bribe to the Mayor of Klang and â€Å"fall back on the standard of cultural relativism” (Daniels, Radebaugh, and Sullivan, 2010, p. 195). As a manager, Mr. Chong should act responsibly and ethically, nd in compliance with local law, corporate culture and International law. The best approach for Mr. Chong would be to report to the Regional Operating officer responsible for Malaysia, Singapore and Thailand and to the CEO, and CFO of the Supermarket and Hypermarket Divisions of the company in Hon g Kong (Inkpen, 2010). Definitely, Mr. Chong should consult this issue with top management. Jextra and Mr. Chong should also receive legal advice from a reputable law firm in Malaysia regarding the legality of the Mayor’s offer, and if judge the offer would constitute an abuse under the U.S. Foreign Corrupt Practices Act (FCPA) and the U. K. graft Act. If it does constitute bribery, then the best excerpt for Mr. Chong would be to reject the mayor’s offer and proceed through clump channels to get the zoning boon (Inkpen, 2010). U. S. FCPA and the U. K. bribery Act Even though Jextra is based in Hong Kong, the company is not exempt from the extraterritorial reach of the U. K transplant Act and the U. S. Foreign Corrupt Practices Act (FCPA) (Arnold & ostiary Advisory, 2012). The FCPA refers to principle enacted in 1977 that outlaws bribery (Arnold & door guard Advisory, 2012).It makes illegal bribery payments by U. S. companies to political parties and foreign officials. This legislation applies to operations in the U. S. and transnational operations as well, and to company’s employees and their agents abroad (Daniels, Radebaugh, & Sullivan, 2010). Not only U. S citizens, U. S companies or â€Å"issuers of securities on US exchanges” (Arnold & usher Advisory, 2012, p. 3) are potentialityly liable under the FCPA, but also individuals of any nationality that make bribery payments to any foreign government official slice staying in the U.S. (Arnold & Porter Advisory, 2012, p. 3). There is lack of consistency in the provisions of FCPA. For instance, it is not legal to pay to public officials to facilitate business minutes (referred to as â€Å"facilitating payments or grease money”) (Daniels, Radebaugh, & Sullivan, 2010, p. 194). However, payments must be made to officials who are directly responsible for the transactions. In 1988, the FCPA enacted a new amendment that excludes grease mon ey from bribery (Daniels, Radebaugh, & Sullivan, 2010, p. 194).In that case, under the FCPA, if Jextra finances the primary school through the Social Fund and make the payments directly to the Mayor’s sister in order to expedite the landing zone, it may not be unlawful. The payments should be made to someone who is directly gnarled with the primary school, such as the Mayor’s sister or other member of the school board and cannot be made to the Mayor directly. The U. K. transplant Act became effective on July 1, 2011 and as the FCPA, it has a vast jurisdictional reach (Arnold & Porter Advisory, 2012, p. 3).The Bribery Act provides legislation regarding acts of bribery, and makes it an offense for companies that do not prevent bribery (Arnold & Porter Advisory, 2012). The jurisdictional reach of the Bribery Act is wider when companies or individuals with a close relationship to the U. K. Additionally, under the Bribery Act, foreign individuals who arran ge bribery overseas while residing in the U. K could also be prosecuted, commit offenses (Arnold & Porter Advisory, 2012). Foreign companies, such as Jextra, can be also subject to FCPA scrutiny; even though its business activity has gnomish relation with the U.S. and the company mainly operates in Asia. Non-U. S. companies could be found liable for conduct outside the U. S. that constitutes an offense under U. S. Criminal law (Arnold & Porter Advisory, 2012). FCPA incorporates extraterritorial provisions in its legislation. Therefore, as noted by Arnold and PorterAdvisory (2012), it is pregnant that MNEs, consider â€Å"the potential liability under the FCPA to which their operations may be undecided” (p. 3), whether conducting business in the U. S. or outside. Mr. Chong should act in compliance with the FCPA and Bribery Act.Managers are responsible when corruption is afoot and need to be vigilant with their actions. In addition, Jextra is responsible for ensuri ng that its â€Å"anti-corruption measures satisfy both jurisdictions” (Arnold & Porter Advisory, 2012, p. 6). In today’s global economy, internationalistic companies, such as Jextra have may worldwide connections through its suppliers and subsidiaries. Under the Bribery Act, it could be established some subject of association, for instance through a Jextra’s parent company or subsidiary, so that if the company was to commit bribery it could mute be prosecuted in the U.K. Therefore, Jextra and Mr. Chong should be passing cautios and take into consideration that both the Bribery Act and the FCPA may have direct impact on the company’s operations; even if the company has little connection with U. K and U. S. (Arnold & Porter Advisory, 2012, p. 6). Chong’s Recommendations to Jextra Malaysia lacks of a developed legal system and has a risky business environment, which make it challenging for foreign companies, such as Jextra, to conduct b usiness in an ethical, fair, and responsible manner.Chong’s testimonials to Jextra include seeking proper legal counsel regarding Malaysian commercial and civil laws, and payments to government officials. An redundant recommendation is to implement an effective internal business computer law of conduct. A clear enrol of conduct would mitigate some of the problems that Mr. Chong faces. The code should set global policies for Jextra’s employees and any individual working for the company (Daniels, Radebaugh, & Sullivan, 2010). The code of conduct should not only be communicated to all Jextra’ s employees, but also to its suppliers and contractors.Additionally, the code of conduct should ensure that its policies are carried out. For instance, Jextra should make employees sign a create verbally agreement conforming that they read and still the code of conduct (Daniels, Radebaugh, & Sullivan, 2010). Additionally, Jextra should require managers to go through a formal program that teaches them the company’s ethical code of conduct. It is vital for Jextra to implement the right measures and procedures, as well as strictly carry out these measures, to prevent bribery and other unethical behaviors among its employees.This would help the company to avoid potential prosecution and civil litigation under the FCPA and The Bribery Act. A third recommendation would include an internal investigation regarding Mr. Alam conduct. As a category manager, Mr. Alam may be using his position in the company for personal gain (Inkpen, 2010). Mr. Chong as a supervisor of Mr. Alam need to ensure that Mr. Alam is not taking bribes or gifts from suppliers, or benefitting his father-in-law. An additional recommendation include inter-cultural training for Jextra’s managers assigned abroad.When conducting business overseas, it is imperative that managers receive adequate training regarding the legal and political environment, international l aw, and national culture of the host country. Managers should also receive training in ethics to avoid unethical conduct. Additionally, when conducting international business, geocentrism is a good approach. According to Daniels, Radebaugh, & Sullivan (2010) geocentrism requires firms â€Å"to proportionateness informed knowledge of their own organisational cultures with home- and host-country needs, capabilities and constraints” (p. 4). Jextra should integrate its own company practices, Malaysian practices, and new practices as well (Daniels, Radebaugh, & Sullivan, 2010). Conclusions and Lessons wise to(p) Legal policies, which include domestic law and international law, play a major role in determining how global companies can conduct businesses abroad (Daniels, Radebaugh, & Sullivan, 2010). International firms should act responsibly and ensure that its employees act in accordance with the domestic law where they operate and do not commit any offense under the FCPA and Bribery Act.By acting ethically, companies can create competitive advantage, shared value, and avoid being sensed as unethical and irresponsible by the local and global communities (Daniels, Radebaugh, & Sullivan, 2010; Porter, 2010). As a potential global manager I learned that it is crucial for global firms to set clear codes of conduct, ensure compliance with the codes (training, auditing programs), and enforce the policies in the code (Daniels, Radebaugh, & Sullivan, 2010).However, foreign managers forget still face ethical dilemmas when working in a different legal and political environment. Managers need to be wise to(p) about cultural, legal, political, and ethical factors in order to succeed in their assignment overseas (Daniels, Radebaugh, & Sullivan, 2010). Therefore, managers should receive adequate inter-cultural training and rede about the host country’s values, norms, legal and political system. Managers should be a role model for other employees by showing cultural awareness and ethical behavior.\r\n'