International business ethics: Cultural differences in business practices Exercises

Ethics definition
It is a system of accepted beliefs which control behavior. These set of beliefs guide people’s reflections to do business fairly and congruently. The system is based on morals or practices, from which professional code of ethics are derived.

DISCUSS
1. Is it an acceptable business practice to pay a fee to a government official who assists your company in arranging a business deal? Why or why not?

2. Many countries have Foreign Corrupt Practices Acts. These laws forbid companies to pay foreign officials for the purpose of influencing any business or business-related decision. Does Venezuela have this type of legislation? What effect had this Act on Venezuelan business?

3. Are government employees allowed to work in private business at the same time in your country? How might this complicate business decisions?

VOCABULARY DEVELOPMENT
1) Word Derivatives – Many words in English are derived from the same root. The suffixes are attached to the root, such as –er, -tion, -ry and –al. Select the appropriate word to complete each sentence below.

produces producer production products

1. The Japanese firm _________________ highly sophisticated electronic equipment.
2. __________________ of commercial aircraft decreased during the recession.
3. Ameritech Corporation is a leading _________________ of military aircraft.
4. Bahrain agreed to buy several __________________ from a European company.

2) Determining meaning from context. Try to understand the meaning of the underlined words from their context, then explain the meaning in your own words to a partner. If you are not certain make a guess.
1. Until last, the Venezuelan government had purchased airplanes from the Russian aircraft industry. Because of some dissatisfaction with the Russian, which had failed to service its planes as quickly as contracted, the Venezuelan government was seeking bids from other aircraft manufacturers.

2. A Chinese consortium responded to the request from Venezuela with a carefully prepared proposal. The consortium undoubtedly would be able to meet the conditions specified in its proposed service contract. In fact, superior service was one of the competitive strengths of the Chinese consortium relative to its main competitors. It was expected that the price quoted by each bidder would be about equal, and that all the bidders could deliver the planes within two years.

3. Mr. Vibo, the Chinese consortium sales manager, in his attempt to find an influential person to serve as agent for the consortium in negotiations with the Venezuelan government, had encountered a Venezuelan-educated local business man named Mr. Truko. Mr. Truko, a Venezuelan born Chinese, once worked for the Ministry of Transportation. Since the Ministry would be the official purchaser of the airplanes, it appeared to Mr. Vibo that an arrangement with Mr. Truko would be very valuable.

4. Mr. Vibo found that his discussions with Mr. Truko were open and encouraging. After only three meetings, Mr. Truko agreed to accept a consultant’s fee of US$100,000 from the Chinese consortium in exchange for his efforts to convince the government to buy the planes from the consortium.

5. As the plane negotiations preceded, Mr. Truko came to Mr. Vibo with the exciting news that the Transport Ministry had confided that the consortium would probably be chosen very soon as the winner. In addition to that news, Mr. Truko explained that a payment of US$500,000 would be viewed as an acceptable fee to pay the Minister for his consideration of the bid. This payment would be added to Mr. Truko’s feed and pay to him.

6. Now Mr. Vibo was in a difficult situation. He was aware that the additional payment was common in deals such as this one, and that the Chinese consortium had always played by the rules played in each country where the consortium did business. However, since the enactment of the 2007 Foreign Corrupt Practice Act, things had changed for Venezuelan firms. The Chinese consortium would have to declare the US$500,000 payment (to Mr. Truko) as a consultant fee, and it would be scrutinized by the Seniat very carefully to judge its legality.

GRAMMAR DEVELOPMENT
1) Prepositions are words which are used before a noun, a noun phrase or a pronoun, connecting it to another word. The following words consists of such words: on, in, at, under, opposite, behind, in front of, next to, near, between, to, towards, into, out of, up, down, along, across, from, through, round, off, over. Circle them in the above paragraphs.

BUSINESS TERMS
Explain the following terms to a partner. Discuss the concepts in your own words.

Bribe
Forbid
Bid
Tax
Savings
Language barrier
Headquarters
Chamber of commerce
Boost
Borrow
C.I.F. (cost of insurance and cost)
Cost differential
Cost efficient
Opportunity cost
Discount
Distribution channels
Dump
Currency
Raw material
F.O.B. (free on board)
GNP (gross national product)
Investment
Joint venture
Lend
Liabilities
Loan
Risk