In 1977 Congress responded to US corporations paying bribes

In 1977, Congress responded to U.S. corporations paying bribes in foreign countries by passing the Foreign Corrupt Practices Act (FCPA), making it illegal for U.S. businesses to directly pay bribes in other nations or thorough intermediaries, such as joint venture partners or agents. Some businesses headquartered in the U.S. argued that the FCPA puts them at a competitive disadvantage because businesses headquartered in other nations continue to pay bribes as a cost of doing business. As a result, the U.S. government has pressured other nations to adopt similar anti-bribery legislation.

As the new CEO of GTC Oil Inc.,

Do you believe that all of the competing oil companies/nations are following the anti-bribery legislation they enacted? Please explain your answer in detail.

As the CEO of GTC Oil, your primary responsibility as the head of a corporation is to provide a profit for the shareholders in your company. As such, members of your organization, and also your Board of Directors, have noted that the Foreign Corrupt Practices Act (FCPA) is causing the company to lose billions and billions of dollars each year, while your competitors are not following the rules and are showing record profits. In fact, it was noted that GTC Oil will lose money this fiscal year as a result of the legislation. Your associates have suggested that you need to be responsible to the company and shareholders, and do what you have to do to make money for the company. What do you do? Explain you actions in detail and the rationale behind them.

Solution

No, we cannot ensure all of the competing oil companies/nations are following the anti-bribery legislation because it is the country where business need to done will have to ensure check on such practices. The company can find loopholes in target nation legal system and start exploiting it which by no country can be considered as wrong practice. Moreover, the financial performance of company also tells about the kind of practices that has been followed in doing business. Large profit in small time from a country where clearance on various factor is difficult clearly shows involvement of wrong practices.

Getting profit by following wrong practices can result in short profit but in long run it may have dire results which sometime result in black listing from the country thus tarnishing the brand name and its value. The company should focus on doing business in the country where no illegal practices are required. It also focuses on bringing repeated business from the current clients by focusing on Quality of product and services. For those countries where illegal practices are necessary, the company need to analyses the political structure and its involvement in infrastructure and tries to explore political options to make the business. Exploiting the loop holes in legal system is another option but for that the company has to ensure itself that it has no impact on company operation and its image in long run and also, it is legal in both the company i.e. operating company and parent company.