The Commission

1 Pages Posted: 21 Oct 2008

See all articles by R. Edward Freeman

R. Edward Freeman

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

Abstract

When one is in a culturally different setting, with different business practices, how does one respond to a practice that is considered unethical in his native country?

Excerpt

UVA-E-0256

THE COMMISSION

After finishing graduate school in the United States, Mr. Havid returned to his native country X after being recruited by P.T. Pacom, a company that did business only in that country. Concerned about the poor performance of a P.T. Pacom branch in a secondary city, senior management brought in Havid as sales and marketing manager there to remedy the situation.

After several weeks on the job, Havid discovered that the problem was in the particularly poor performance of the billing and collection department, responsible for the collection of over US$ 80 million annually. He felt that increased efficiency in the department would really improve overall performance significantly. Havid recommended installing a new computer system, including a customized software package especially for billing and collection. The director of purchasing and the director of marketing approved the plan and authorized up to US$ 20,000 for the new system. Havid was given the task of finding the appropriate computer system.

Havid decided to base his decision on the best combination of price, quality, and performance. After receiving written offers from five different suppliers, he was surprised that each one called to offer him a percentage of the commission if P.T. Pacom chose their system. Accepting such an offer was prohibited by his company, and Havid asked the suppliers just to reduce the price of the computer instead. To his surprise, none of the suppliers was willing to do that. Each preferred showing the higher selling price on the invoice, to avoid possible allegations of dumping.

Although unnerved, Havid made his purchase decision based solely upon which computer he thought was the best. After making the purchase, however, the supplier still insisted that he take the commission, arguing that if Havid did not take the commission, then his invoices would not be paid on time, and other departments within P.T. Pacom would slow things down. He insisted that the commission system was the way that business was done in Country X. Havid was at a loss about what to do.

This case was prepared by R. Edward Freeman, Elis and Signe Olsson Professor of Business Administration, Darden Graduate School of Business, University of Virginia. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright ã 2003 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenpublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.

. . .

Keywords: cultural international ethical issues

Suggested Citation

Freeman, R. Edward, The Commission. Darden Case No. UVA-E-0256, Available at SSRN: https://ssrn.com/abstract=1278355 or http://dx.doi.org/10.2139/ssrn.1278355

R. Edward Freeman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
804-924-0935 (Phone)
804-924-6378 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/freeman.htm

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
11
Abstract Views
507
PlumX Metrics