Global Workshop
(Part 2)
Professor Laureen Regan
Learning Objectives
1. Expand knowledge of FCPA and OECD Anti-Bribery
Convention
2. Explore Transparency International Bribery and
Corruption Reports
3. Apply concepts to an active bribery investigation
Last Time
• The corrosive effects of bribery and corruption.
• The link between good governance within
companies and countries, and reduction in bribery
and corruption.
• The US Foreign Corrupt Practices Act (1977)
• The OECD Anti-bribery Convention (1999)
Goals for today
• Talk in more detail about why bribery and
corruption is a problem
• Evidence from the OECD Anti-Bribery Report
• Go to Transparency International Report
• Case Study: Analyze Wal-Mart’s actions in Mexico
Key Questions
• What is the impact of corrupt payments to
outsiders on internal management?
• Can a firm behave corruptly to outsiders and
expect employees to behave honestly and ethically
within the firm?
Potential Benefits of Bribery
• Assume a country allows its firms to bribe foreign
officials
• Assume a company allows it employees to bribe
foreign officials
Costs of Bribery
• To a country Potential Loss of FDI, loss of
confidence of citizenry, increased political
instability, inefficient allocation of resources to
fuel growth
• For a company operating in a corrupt country
Higher costs, fewer market opportunities
The OECD Anti-Bribery Report
Key Questions
• What is the problem for firms facing unilateral
rules from their home countries when competing
with firms whose home countries do not have or do
not enforce such rules?
• Is an international solution needed?
The OECD Anti-Bribery Convention
• Requires signatories to adopt anti-bribery
legislation
– Does not specify penalties
– Does not require all countries to join
– No full-time administrative body with
enforcement powers
– Uses a mutual monitoring method for
implementation under a peer-review model
Transparency International
• A nonprofit NGO dedicated to exposing corruption
• Goal is to encourage and shame states into
dedicating greater resources to fighting corruption
• Produces an annual report on bribery and
corruption perceptions
• Scores countries from 0 – 100 based on responses
from ~3000 executives and multiple sources
Corruption Perception Index by Transparency International
http://www.transparency.org/country
Choose two countries from the map. Don’t use your home
country.
Report on why the countries are ranked as they are.
What policies would you recommend the country adopt to
reduce corruption.
20 minutes
Wal-Mart in Mexico:
Key Questions
• This is a serious case of bribery and corruption.
• What conditions at Walmart may have allowed this
behavior to continue for so long?
• What about the accounting?
• What changes to Walmart’s operations or strategy
would you recommend to avoid this exposure going
forward?
Walmart Overview
Founded July, 1962
Officially incorporated as Wal-Mart Stores in 1969
Largest off-line retailer in the world in 2015
More than 11,000 stores in 27 countries
Three Divisions Walmart US, Walmart
International, Sam’s Club
• Walmart International generates 28% of total
revenue in 2015
– $486 B consolidated revenue total
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Walmart Overview
• Largest private employer in the world
• Products include apparel, furniture, groceries,
electronics, hardware, pharmacy, etc.
• Strategy is “Every Day Low Prices”
– Prices average 4% – 10% lower than
competitors
• Leader in supply chain management and logistics
Wal-Mart International
Expansion: Selected Stories
• First expansion in Mexico through a joint venture in
1991
• NAFTA enacted 1994 opened up price wars
• As of 2013, Wal-Mart had ~~ 2000 stores in
Mexico
• Captured ~~ 50 % of all the retail revenues in
Mexico
Wal-Mart International Expansion
Strategy: Selected Stories
• Wal-Mart entered Brazil in 1995 through organic
growth (25 stores) and through acquisition (118
stores)
– 1996 acquired 160 more stores
• Argentina entry 1995 organic growth strategy,
94 stores total by 2013
• China and Japan entry through acquisition
The Case
• Breakout to discuss Wal-Mart in Mexico
• Prepare a brief presentation of your findings
• Report back to the group
• 30 minutes
Case Questions
• Map out the timeline and key players
• Discuss conditions at Walmart that may have allowed
this behavior to continue for so long.
• What changes to Walmart’s operations or strategy
would you recommend to avoid this exposure going
forward?
• 30 minutes and then report back.
Learning Objectives
1. Expand knowledge of FCPA and OECD Anti-Bribery
Convention
2. Explore Transparency International Bribery and
Corruption Reports
3. Apply concepts to an active bribery investigation