Scribd
Upload
67 views2 pages

The Case of The Million-Dollar Decision: by Michael L. Hackworth and Thomas Shanks, S.J

Tom Oswald, the CEO of Pegasus International, must decide whether to expand the company's wireless business into China, where bribe-taking is common practice for obtaining necessary licenses. Pegasus managers estimate losing the Chinese market could cost the company $100 million per year. However, Oswald wants to model ethical leadership and is uncomfortable with the idea of payoffs. He must weigh the business opportunities against his principles as he determines how to proceed.

Uploaded by

akshayaec
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
67 views2 pages

The Case of The Million-Dollar Decision: by Michael L. Hackworth and Thomas Shanks, S.J

Tom Oswald, the CEO of Pegasus International, must decide whether to expand the company's wireless business into China, where bribe-taking is common practice for obtaining necessary licenses. Pegasus managers estimate losing the Chinese market could cost the company $100 million per year. However, Oswald wants to model ethical leadership and is uncomfortable with the idea of payoffs. He must weigh the business opportunities against his principles as he determines how to proceed.

Uploaded by

akshayaec
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

The Case of the Million-Dollar Decision

By Michael L. Hackworth and Thomas Shanks, S.J.


In "The Buck Stops Here," a presentation for the Markkula Center for Applied Ethics Roundtable
for Executives, Michael Hackworth talked about how he models ethical leadership in his role as
CEO of chip manufacturer Cirrus Logic. "Employees take their cue from the CEO," he said. "In
every situation, they ask, 'What does the boss want?' They give him what he wants when they
talk about the business, when they talk about the law, and when they talk-or don't talk-about
ethics. In general, people line up behind what the CEO wants."

The Ethics Roundtable for Executives brings business leaders together to discuss the moral
dilemmas they confront in the workplace. Using this case study, created with Center Executive
Director Thomas Shanks, S.J., Hackworth encouraged members of the Roundtable to imagine
how they might confront this challenge: Their company is planning to expand into a country
where bribe-taking is considered a normal part of doing business.

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.

What should he decide in this case? Why?

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy