Identify from the Video the Ethical Issues That Rolls-Royce Is Being Accused of Violating. Who Are the Relevant ‘stakeholders’ Affected by These Issues?
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1. Identify from the video the ethical issues that Rolls-Royce is being accused of violating. Who are the relevant ‘stakeholders’ affected by these issues?
From the video, the ethical issues that Rolls-Royce is being accused of violating is that Rolls-Royce in bribery by employing middleman to win the engine contracts. It means that Rolls-Royce through the employment of intermediary companies in at least 12 countries, such as China, India, Brazil, etc in order to obtain a contract, and intermediary companies may be suspected of bribery negotiations process.
Since these information was found out by the investigation from the British and American Anti-corruption department, it pointed out that Rolls-Royce was involved in paying some money to some companies to get the contract through the middleman. And these contracts are involved in Rolls-Royce’s engine which can be used on the military airplane’s engine. Therefore, it showed that Rolls-Royce used money to employ middleman to contact the government officials from different countries, then the middleman would contact or even bribe the contract to help the company win the contract for Rolls-Royce.
The contract maybe involved in the military airplane’s engine because it contains enormous amount of money. For example, a report doubted that Rolls-Royce through Unaoil and Fana Hongwane to obtain Iran, Iraq and other places of the contract. Actually, these actions is a corruption because it is not fair to other aircraft and ship engine companies. Rolls-Royce used an unethical way to win the contracts by paying money. According to Foreign Corrupt Practices Act, it is not ethical to make payments to government officials to secure business. It is the ethical issues that Rolls-Royce is being accused of violating which is involved in bribery the government officials to obtain the engine contracts.
Moreover, there are few relevant stakeholders affected by these issues. First of all, it is the involved government. Since these different government is doubted that involved in the corruption problem with Rolls-Royce, its credibility will be affected indeed. It is because the people will think that their government is not believable, the government may have other corruption with other companies. The citizen also would judge the government officials. Secondly, the stakeholder is the other companies which also produce aircraft and ship engine. They are the competitors of Rolls-Royce. Since Rolls-Royce win the contracts with different countries by bribery. It is not fair to these companies because they lose the contracts by the unethical methods. It is supposed to be fair to compete the contracts.
As for third one, it is the employee of Rolls-Royce. The managers of Rolls-Royce may get punishment when these ethical issues are reported to the public. They may get fired so they will get affected. Also, the employee may get affected too. When the corruption problem is reported to public, the goodwill of Rolls-Royce must be affected directly, the investor will not trust Rolls-Royce, they may withdraw the investment in order to affect Rolls-Royce.
As for customers of Rolls-Royce, they may change other aircraft and ship engine companies because there is a corruption problem of Rolls-Royce. The customers may think that Rolls-Royce is not believable anymore. On the other side, the customers also lose a choice of aircraft and ship engine company. As for investor, they may withdraw the investment because it is some worries about the corruption, such as, Rolls-Royce may need to compensate to the government for its unethical issues. That means, Rolls-Royce may need to suffer the compensation and punishment if the unethical issues are reported to the public. It will make the investor lose their confidence to Rolls-Royce because Rolls-Royce was a clean company and iconic company in British.
2. Why do you think Rolls-Royce has been making so called ‘facilitating payments’ in many developing markets? Identify the pressures that led Rolls-Royce to take this action.
In my opinion, Rolls-Royce has been making so called “facilitating payments” in many developing markets contains several reasons. “Facilitating payments” means that it is used to speed up the payment and it does not affect the results. It is different with bribery because bribery will affect the final results of some business actions.
Therefore, I think that the reason is that there are some pressures from another competitor which produce aircraft and ship engines. It means that there are some competitions for winning the contracts from different countries’ government for the engines. If one of these companies, including Rolls-Royce can get the contract, the profit will be really great. Therefore, Rolls-Royce wants to win the contract, it use facilitating payments in many developing markets. For example, Rolls-Royce allegedly through Unaoil and Fana Hongwane to obtain Iran, Iraq and other places of the contract. Iran and Iraq are the developing market. If Rolls-Royce can win the contract of engines, it will be a future profit and benefit absolutely. Therefore, Rolls-Royce just use “facilitating payments” to win the contracts. It can more easily to win the contract without the competition with other competitors in the same industry.
Moreover, the reason is that giving a ‘facilitating payments’ in many developing markets can increase the speed of getting a contact. And then, Rolls-Royce can reduce their time to produce the engines to different countries in order to decrease its time cost. In fact, getting a contract from the government need a unexpected period for the administration indeed. If Rolls-Royce provide the ‘facilitating payments’, it can speed up or ensure that government can take action as fast as possible. In addition, Rolls-Royce can produce the required engines for a particular government. It can increase the efficiency of Rolls-Royce actually. Therefore, “facilitating payments” can benefit Rolls-Royce in developing markets.
To conclude, the pressures of Rolls-Royce is that Rolls-Royce has to win the contract by winning the competitors. Therefore, it uses ‘facilitating payments’ in many developing markets.
3. What can Rolls-Royce do to improve its ethical performance? Identify concrete actions can the firm take to ensure that practices considered unethical do not take place any