Jextra Neighborhood Stores in Malaysia
Introduction
Jextra Neighborhood is a Multinational chain of that operates in many countries, especially in the Asian continent. The company recently entered the Malaysian market and has experienced tremendous growth and performance. However, the company is currently facing several ethical and legal problems. One of the dilemmas facing Tom Chong, the Malaysian manager for the company is the need to expand to expand to a region that is not available due to lack of zoning (Inkpen, 2010). The mayor of Klang city demands that Jextra Neighborhood must help in building a school and a flyover so that the mayor can zone the area to allow the company to build a store. This arrangement is illegal because the cost of implementing the request is so massive and may no benefit the intended project. Therefore, the first ethical problem involves bribery. Alam, a Category Manager working for Jextra neighborhood is alleged to be receiving gifts from suppliers so that he can award contracts to them. This violates the company’s code of ethics that prohibit activities deemed as conflicts of interest. The third ethical problem involves related transactions as defined by the company’s code of ethics. Alam engages third party organizations owned by his relatives to negotiate contracts with suppliers on behalf of Jextra Neighborhood. In return, these agencies receive a commission for every contract they negotiate.
Analysis
Chong, the company’s country manager faces the social challenges of corrupt employees. Moreover, he faces an ethical challenge of making a decision that has dire consequences regardless of how he makes the decision. The suspected unethical practices propagated by Alam by receiving bribes and having conflicts of interests should be investigated and punished when they are found to be true. Chong is facing the ethical dilemma and fear that if the rumors are not true; he may lose Alam who contributes immensely to the success of the company in Malaysia. Chong is determined to make the company succeed in Malaysia because its success defines his career success. The legal issues facing Chong involves the payments of money meant to build a school and flyover at Klang to the City’s mayor. It is illegal according to the company’s code of conduct to pay money to government officials to affect business decisions. From his analysis, it is probable that the money may not benefit the school project. On the contrary, the money may end up in the mayor’s pocket. Chong’s fear that the identified site at Klang may be taken by competitors makes his legal dilemma more profound. Chong should have anticipated such problems as the manager because his experience should have exposed him to such issues. However, the lose laws in Malaysia concerning ethical and legal issues may not have been expected since many countries in the world are strict with ethical and legal behaviors of individuals and corporations.
The request from the mayor violates the company’s code of ethics in a massive way. Giving the money requested by the mayor would influence his decision to zone the area in Klang city where the company considered putting up a store. Moreover, the money is much and, therefore, not modest in value and scope. Modesty in value and scope is a requirement that warrants gifts to guests and suppliers. Chong should, therefore, decline the mayor’s request regardless of the business consequences of his decisions. Ethical behavior requires people to act in a particular manner since it is the right thing to do irrespective of the consequences.
As an ethical leader, Chong should constitute an investigation team to probe the bribery allegations leveled against the Category Manager. He should ensure that ethical concerns are addressed openly. This can be done by explaining to all employees that the same procedure would be followed even in cases involving senior managers.
Top managers should be responsible for the bribery taking place within their organizations. Their authority accompanies responsibilities to ensure that ethical behavior prevails. Communicating frequently and defining actions that may constitute bribery reminds employees of the consequences of unethical behavior. Moreover, accepting responsibility ensures that the top managers are vigilant, eliminating environmental factors that may breed bribery while discouraging personal factors. Personal factors that encouraged bribery at Jextra include Chong’s career aspirations. Chong found it hard to take action against Alam because he feared that by doing so, he could interfere with the company’s good performance. The company’s performance was the only way Chong’s career could continue to shine. Therefore, Chong’s career aspirations fuelled the bribery in the company. The situational factors that fuelled bribery included the Malaysian laws that were vague on ethical and legal issues. Personal factors included Chong’s little involvement in contracting suppliers and the freedom provided to Category Managers. The laws in Malaysia were not specific in defining actions that constituted illegal or unethical behavior. The grey areas created by the vague law encouraged individuals and corporations to exploit it. Chong’s failure to actively take part in the contracting of suppliers provided Alam with excess freedom to make decisions. Chong was the only person who had a strong ethical background since Hong Kong had a good ethical foundation. Local people in Malaysia may have been wanting in their ethical behaviors because of the weak laws regarding legal and ethical principles. Therefore, Chong was the best suited person to address ethical and legal challenges at Jextra Neighborhood. His failure to take part in the supplier contracting created a favorable environment for employees such as Alam to adopt unethical behaviors. My advice to employees faced with local expectations regarding payoffs and referral money is to bring up the issues openly to the senior managers. The managers can then decide for all employees the best course of action to take. This can help them to avoid illegal and unethical practices that can jeopardize the company and their employment tenure.
The company’s conduct code provides Chong with a detailed guideline specifying the steps to solve the problems facing the company. All the issues affecting the company have been detailed in the code of conducts and remedies are provided. The code explains how bribery, conflict of interest and related party transactions should be tackled.
Chong needs to know the actions that the law categorizes as illegal and the penalties for such crimes in the United States and United Kingdom. For guidance, Chong should go to organizations operating within Malaysia, whose home countries are United States and United Kingdoms. Such organizations can offer valuable guidance to Jextra because they know their home countries’ policies and have experienced the laws in Malaysia. In the absence of such guidance, the Hong Kong’s code of conduct should be used as the alternative laws.
Chong can recommend an exchange program between employees in Hong Kong and those in Malaysia. Employees from Malaysia can instill the sense of ethical and legal conduct in their Malaysian counterparts. This would reduce cases of bribery and unethical conduct. The exchange program can expose Malaysian employees to the real expected legal and ethical principles in Hong Kong. The employees should be taught the reasons for having such strict laws and their benefits. This would help them appreciate the value of abiding with ethical and legal principles. Another step that Chong can recommend is the harmonization of the company’s corporate culture throughout the world, with an allowance to incorporate new cultural dimensions. A harmonious corporate culture would ensure that all employees embrace similar values and principles, which prevent unethical and illegal outcomes.
Conclusion and Lessons Learned
Ethical and legal issues affecting Jextra include bribery, conflicts of interests and related party transactions. The ethical issues facing Chong and the company have been caused by both personal and situational factors. The problems can be dealt with if issues can be evaluated without considering the repercussions of the actions to be taken. Changing the corporate culture can help employees to gain new values that align with the organization’s code of conduct.
The case is a knowledge source and offers several lessons. Although managers may have experience in managing organizations for many years, values in different countries can be challenging. Long-term organizational goals should be a basis upon which decisions are made within a company. This can prevent personal goals from overriding organizational goals. Consequently, managers can make sound decisions based on organizational values.
Reference
Inkpen, A. (2010). Jextra Neighbourhood Stores in Malaysia