Introduction:
Rated 52nd out of 180 countries in the Corruption Perceptions Index published by Transparency
International (Transparency International), Russia has been well-known for their corrupt business
practices, ranging from bribes to tax evasions and unethical gifts. Our team focused on the topic of
bribery, gifts and corruption, and our assigned position is that we should conduct business in Russia. This
leads us to our dilemma, “How can we successfully conduct business transactions without succumbing
to unethical practices? What guiding principles will lead us to a more efficient international ethos that
will indicate our avoidance of unethical practices?” We also support our assigned position to conduct
business in Russia because we feel it is profitable to engage in trade in the mist of these practices. Two
examples of businesses that will support our claim are Anheuser-Busch InBEV, world’s largest brewing
company, as well as Ford Motor Company, the second largest automaker in the United States
(MoneyMorning.com). We will further describe each business, its formal governance and organizational
culture, describe the advantages and disadvantages, as well as offer practical recommendations to their
ethos to ensure a communicative ethics management system.
Section 1:
For more general information on these companies, please refer to the table below:
The sections are as follows: Company, Headquarter Address, Products, Activities Owned, Countries of
production and operation, Revenue, Suppliers
AnheuserBusch InBEV
Brouwerijplein,
1
3000 Leuven
Belgium
200+
beverage
brands
including the
three most
popular:
Budweiser
Becks
Stella Artois
AnheuserBush, Inc.
A-B Packaging
Group, Inc.
Busch
Properties, Inc.
Manufacturers
Railway Co.
A-B Agriculture
Operations
Top 12
countries in
operations in
which they are
most involved:
Argentina
Belgium
2009
Sales:
$ 38.6 Billion
Revenue:
36,758 Million
Staples
Promotional
Products
Metal
Container
Corp
Brazil
Canada
Eagle
Packaging,
Inc.
China
St. Louis
Refrigerated
Car Co.
Treeline
Marketing
and
Promotions
Germany
Austria
AnheuserBusch
Agricultural
Switzerland
Netherlands
Longhorn
Glass Corp.
Russia
The UK
United States
Ford Motors
Ford Investor
Relations
World Headquarters
One American Road,
Suite 1026
Dearborn, MI
48126-2798
21 2010
models,
ranging from
the Ford EdgeFord Transit
Connect
Ford
26 Countries
located in
Lincoln
2009
North America
Sales: $1.1
Billion
Europe
Revenue:
Latin America
$997 million
Mercury
Volvo
Asia
Middle East
BorgWarner
Inc.
Bruhl
Diamond
Electric
Manufacturing
Denso Corp.
Emcon
Technologies
Faurecia
Federal Express
Nemak
Kolbenschmidt
Pierburg AG
Piston
Automotive+
Rieter Holding
AG
Saturn
Electronics &
Engineering
Team Detroit
Trelleborg AB
Uniworld Group
Zubi Advertising
Section 2:
Anheuser Busch InBev is the world’s largest brewing company; therefore business must be
strictly governed in order for all stakeholders associated with the organization to operate using ethical
practices. In order to strive to achieve the highest ethical standards possible, Anheuser Busch InBev’s
Board of Directors came up with their Corporate Governance Charter, which outlines the responsibilities
and rules in which AB InBev must comply. Being a company that is founded under the ruling of Belgian
law, AB InBev is listed on Euronext Brussels, and “adheres to the principles and provisions of the 2009
Belgian Corporate Governance Code; taking into account its specific status as a multicultural group” (AB
InBev governance charter). Also, since AB InBev is an international corporation, it is subject to the
governance the UN Global Compact and other countries’ ruling such as the United States NYSE
Corporate Governance Rules and the all the rulings under the SEC. Furthermore, AB InBev has an
established code of conduct and codes of dealings that all associated parties are subject to. Included in
the code of conduct are many sections that illustrate AB InBev’s ethical guidance and commitment when
dealing with the assigned dilemma of doing business in Russia, where corruption is a regular part of
business. AB InBev’s code of conduct states that “The giving of gifts or favors in an effort to sell
products or services or to influence business, labor or governmental decision-making is strictly
prohibited.” (AB InBev Governance Charter) It further states that Anheuser- Busch InBev is “In
compliance with Anti-bribery provision of the FCPA”. (AB InBev Governance Charter) AB InBev affirms
that they comply with the UN Global Compact’s principle, stating “Business should work against all
forms of corruption, including extortion and bribery” (UN Global Compact). To enforce their strict
prohibition of the corrupt, employees are required to participate in annual code training workshops.
Additionally, AB InBev’s suppliers are required to abide by the Ethical Sourcing Policy which “Includes
standards on labor issues and business conduct” (AB InBev Governance Charter). These different
guidance tools should be used by managers to prevent corrupt practices of any kind while doing
business in Russia. Managers should make all codes and guidelines well known to employees and
stakeholders as well by enforcing them. Using internal monitoring and auditing, any ethical misconduct
can be accounted for and dealt with in a manner that it will not occur again. Embedded in AB InBev’s
codes of governance are several different guiding principles. Along with the UN Global Compact
principles, the principle of transparency is evident by the discloser of all information. Also the principle
of personal virtue is intertwined in AB InBev’s ethical guidelines by showing that they not participate in
any action that they would not be proud to be reported worldwide. By having an abundance of guiding
regulations, AB InBev can successfully navigate the dilemma of conducting business in Russia without
participating in corrupt practices.
Ford Motors has a more developed organizational culture, sustaining exceptional practices in
regards to corporate citizenship and responsibility, corporate governance, innovation that contributes
to the public well-being, industry leadership, executive leadership and tone from the top, legal,
regulatory and reputation track record; and internal systems and ethics/compliance
program(Ford.com,2004). An example of this culture can be found in the 2009/2010 sustainability
report, where it states “In furtherance of our commitment to business ethics and compliance, every year
we roll out new mandatory online compliance training on important risk areas. Not only do these
courses increase awareness, they also help our employees worldwide understand and access resources
that enable responsible behavior and enhance regulatory compliance. Recent courses covered the topics
of mutual respect, health and safety, and internal controls”.
Ford is also well-known for their sustainability reports; According to their 2009/2010 sustainability
report, they Ford was awarded second place in the ACCA/Ceres "Best Sustainability Report" rankings for
their 2008-2009 report. These guiding principles allow Ford to enhance their sustainability, as well as
promote their most committed principle: transparency. Ford has worked diligently in educating their
stakeholders in presenting themselves in a responsible manner on behalf of Ford, while conducting
negotiations. According to their 2009/2010 sustainability report, Ford has introduced online training
courses for global employees and targeted personnel, as well as improved their annual compliance
training course on what they believe is “responsible behavior”. Ford also goes on to say that everyone is
independently audited; from the owners to the employees and suppliers.
Section 3:
One of Ford’s biggest principles is their commitment to being transparent in their codes of ethics to
codes of conduct. Since all stakeholders and their ethical practices are evaluated every year, Ford has
the advantage of having the most current information on their stakeholders than any other American
automotive company. According to their Sustainability Report, their external guidelines are aligned with
the Global Reporting Initiative, which also gives them the advantage of having some of the most globally
accepted principles. In addition to being globally relatable, Ford has one of the most effective methods
of avoiding conflicts of interest, as stated in their 2004 Code of Conduct for CEO’s, “Directors are
prohibited from: (a) taking for themselves personally opportunities related to the Company's business;
(b) using the Company's property, information, or position for personal gain; or (c) competing with the
Company for business opportunities, provided, however, if the Company's disinterested directors
determine that the Company will not pursue an opportunity that relates to the Company's business, a
director may do so” (Ford, 2004). Since their ethical practices are carefully evaluated, stakeholders will
be more aware of how to avoid conflicts of interest to the company, as well as prevent corrupt practices
as they arise (Ford.com).
According to ISO26000, the stakeholders that are influenced by the decisions of a company are
other “companies, government, the media, suppliers, peers, customers, and the community in which it
operates” (ISO26000), and when it comes facing a dilemma like doing business in a vastly corrupt
country similar to Russia, the reputation of the company is going to be distressed. There are some
advantages that Anheuser-Busch InBev have in regards to the way their corporation is ethically ran with
accountability, integrity, and social responsibility, when dealing with such dilemmas. Their code of
conduct states that “Relationships with customers, suppliers, competitors, employees and governmental
bodies and officials are to be based on compliance with all applicable laws and regulations” (AB InBev
Governance Charter). Therefore, as general procedure, AB InBev governs their company so that it
complies with laws and regulations of all countries, which leads to further advantages in the ethical
management of the corporation. In addition to customer awareness of company practices, directors,
managers, and employees prepare to ethically deal with corrupt situations. Suppliers perform according
to the same ethical standards, ease of internal reporting for better monitoring, furthering sustainable
development, through environmental responsibility, social responsibility and long term decision making.
These advantages are obtained by the sound ethics management systems that AB InBev upholds in
order to control protect and develop their company in Russia. The way that AB InBev does this is
through several key factors in their codes of governance. Transparency is a key factor to customer
awareness. The code of conduct states that, “It is essential that the integrity, accuracy and reliability of
Anheuser-Busch InBev’s books, records and financial statements be maintained. No transaction shall be
entered into with the intention of it being documented or recorded in a deceptive manner. No false or
artificial documentation or book entry shall be made for any transaction. Similarly, all funds, assets and
transactions must be disclosed and recorded in the appropriate books and accounted for properly and
punctually” (AB InBev Governance Charter). This ensures that not only customers, but all stakeholders
are aware of all AB InBev’s negotiations so that no discrepancy will arise about corruption. Along with
training that all directors, managers and employees must go through annually, AB InBev has a reporting
system that makes it easy to report an action that is not in compliance with the codes of governance.
“Anheuser-Busch InBev has made available a whistle blowing system, which is administered by a third
party and allows to forward confidentially, and if so desired anonymously, concerns or complaints via a
secure internet site (“AB-InBevtalkopenly”) or via a 24/7 available toll free hotline” (AB InBev
Governance Charter). Further, to ensure the protection and control of their company, AB InBev states in
their code of dealings that any “Short-term” transaction of shares is prohibited; collectively with the UN
Global Contract, which ensures environmental responsibility. AB InBev strives for sustainable
development in all countries. By respecting the businesses goals, environmental goals, and respecting
every community in which they are a part of, AB InBev is able to gain respect and cooperation from all
stakeholders. By strictly prohibiting of all associates to participate in any corrupt action using the
advantages of their ethical management system AB InBev is likely to have many good consequences of
doing business in Russia. Some of these positive consequences could include gaining more following
from customers, increasing profitable returns for owners, increases in job opportunities, enhanced final
products with lower costs from suppliers, encouragement to other companies to follow ethical business
practices and an increase in reputational capital for conducting ethical practices in a corrupt country.
In regards to Ford and ISO 26000,
Section 4:
While Ford has one of the most transparent codes of ethics, they lack the promotion of a more
diverse culture in their organization. Having a more diverse organization would allow Ford to figure out
how to improve in international markets, as well as help them improve on international relations
(UNGC). Although it is obvious that Ford employees make it their duty to be open and honest about
their ethical practices, this transparency will not do the organization any good if they cannot sufficiently
communicate themselves to the proper channels in regards to expanding their business. For example, it
is hard to want to conduct business in Russia if the ethical practices that you currently implement do not
coincide with the locals. One suggestion would be to find alternative methods that are within the legal
and economic market guidelines that will allow Ford to evaluate the needs of these international
markets. And once they can improve on their methods of communications and unifying different
markets and networks, they can begin to hire people from these markets. This, in return, will bring them
the advantage of attracting and retaining innovative people.
When dealing with the dilemma of doing business in Russia, there could be many disadvantages
presented in the way that business ethics is handled. Some disadvantages that Anheuser-Busch InBev
face in their codes of governance are the lack to sentencing, auditing is done internally rather than by a
third party, room to participate in bribery is evident, code of conduct does not mention that the
appearance of misconduct, and the code of conduct states that associates cannot participate in
“knowingly in illegal of improper activity” (AB InBev Governance Charter). When looking at these
disadvantages, it is easy to see how it could only take the event of one wrong action to gain an
undesirable reputation from stakeholders. Due to the lack of evidence, in sentencing guidelines, AB
InBev does not disclose that employees receive penalties for violating guidelines in the code of conduct.
AB InBev also uses an “auditing committee” that is appointed by the board of directors within the
corporation to do all internal auditing. This causes a conflict of interest that leaves room for corruption
to occur within the company due to the fact that auditors are employed by directors, and they would
not want to lose their job by displeasing associates with their reporting. Furthermore, the disadvantages
in AB InBev’s ethical guidance codes hinder the control and protection of the company because they
leave room for bribery to occur if approved by the board. In AB InBev’s code of conduct it states that
“Small amounts for entertainment, gifts or gratuities consistent with applicable laws and accepted
business practices in the country where they are given are not affected by the above mentioned
principle, provided they are recorded accurately in the company’s books”. (AB InBev Governance
Charter) This leaves a fine line between what is considered small and what is not, which could lead to
acts of bribery to be conducted within the organization. Finally these disadvantages hinder the
company’s ethical development by not implicitly stating that employees are absolutely prohibited from
conducting any act that is, or appears to be, unethical; while being knowledgeable or unknowledgeable.
Allowing room for mistakes in the organization could have many bad consequences for the organization.
Some of these possible consequences include owners suffering profit loss for conducting business in
Russia, difficulty finding any supplier that is not corrupt in Russia, corruption or the appearance of
corruption, within the organization, loss of socially conscience customers and a continuing cycle of
misconduct due to the lack of sentencing and prevention standards.
Section 5:
A good recommendation for Ford would be that they take a look into a more diverse code of
conduct for the suppliers, as well as different styles of communication on how to directly negotiate in
the midst of corrupt practices. It is admirable that Ford has a more in-depth, accountable organizational
culture, but they will not be able to sustain sales if they do not begin to accommodate the culture
differences of the global market. Some suggested places to research diverse environments would be a
report of diversity by the United Nations Global Compact entitled, “Doing Business in a Multicultural
World: Challenges and Opportunities” (UNGC). Some recommendations could be implemented in
regards to how Anheuser-Busch InBev could improve their current ethics management system, as well
as improve their responsibility and accountability towards international business conduct. It could be
recommended that along with earlier excerpts in the code of conduct, saying AB InBev’s is in
“compliance with Anti-bribery provision of the FCPA” (AB InBev Governance Charter) and abides by the
principles of the UN Global compact, that they are associated with Transparency International.
“Transparency International [is a] global civil society organization leading the fight against corruption
[that] brings people together in a powerful worldwide coalition to end the devastating impact of
corruption on men, women and children around the world “ (Transparency international). In addition to
a strong association with this group, AB InBev would reinforce the fact that they disclose all information
and they will not succumb to corruption in Russia. Also AB InBev should prohibit the appearance of any
misconduct, such as conflicts of interest. McDonalds’ code of conduct avoids conflict of interests well by
stating “We must avoid the appearance of conflict of interest that might cause others to doubt our
fairness or integrity” (McDonalds Code). This would ensure that all associates would consider the
Personal Virtue principle to guide their actions. The Personal Virtue principle would guide the
organization to never take any action that they would be ashamed of and would not be proud to report
worldwide. The final recommendation for improvements on AB InBev’s Ethical Management System
would be to ensure external, third party auditing. Again this would prevent any misconduct to occur
within the business reporting at employee actions. By being in compliance with these recommendations,
AB InBev would make a “win-win” situation for the organization and the stakeholders. It provides
further insurance that all associates will conform to the ethical management system and practices of
corruption are avoided at all costs. If for some reason misconduct was to occur, these new regulations
would reprimand and correct these actions; therefore AB InBev would be able to uphold the pristine
reputation they desire.
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