UN Global Compact

Case Summary

The case involves Ankur Grover, a young accountant working with Medical Equipment’s subsidiary in Saudi Arabia. Grover has been disappointed due to a planned cancellation of his career’s most significant potential sale. He is informed that the purchasing director at Prince Khalid Hospital and Research Centre canceled his sale in favor of an old acquaintance. The purchasing director at Prince Khalid Specialist Hospital and Research Center gave the sale contract to his old friend to get sidekicks from the payment. Grover is concerned because the sale order was given to a competitor, yet his company, Medical Equipment, manufactures technically superior medical equipment (Lawrence & Beamish, 2013).

From the case, it can be noted that most of the Saudi workforce is primarily composed of foreign expatriates. Overall, around 65% of employees occupying formal jobs are composed of foreigners. Further, the private sector comprises 90-95% of foreign employees (Lawrence & Beamish, 2013). Given that the healthcare sector is booming in Saudi Arabia, Medical Equipment has invested significantly to benefit from an expanded market. The revenue generated for the company from the Saudi market almost equaled the overall revenue from the entire European market. Grover happens to be among the foreign employees working in Saudi Arabia. His sale contract, however, was given to a local citizen of the country. The case also raises cultural issues that face employees in companies operating foreign subsidiaries (Lawrence & Beamish, 2013). According to Grover, he is the only non-Arabic employee working as a mentor for employees in the southwestern region of Saudi. Culturally, he felt accepted, had created relationships, and was fitting in. Being an expatriate specialist, he was earning highly from his job.

Grover faces an ethical dilemma. He is convinced that if he pursues the sale by offering the hospital’s management a bribe, he will win the contract. At the same time, offering a bribe might go against the culture and demands of Medical Equipment as an organization. Grover fails to understand how he can build relationships with Saudi nationals who exhibit different cultural characteristics from his.

Critical Issues from the Case

Corruption in International Business

Grover and Medical Equipment’s experience in Saudi Arabia raises eyebrows about corruption in the international business landscape and how it affects businesses. International business corruption can be classified as either grand or petty (Bahoo et al., 2019). On one hand, in petty corruption, a government or a public officer requests a small gift to perform or accelerate the performance of a given task. On the other hand, grand corruption occurs when a government official requests a bribe directly, mainly in kickbacks. Considering Grover’s case, the purchasing director at Prince Khalid Specialist Hospital and Research Center never made a direct request for a bribe, hence cannot be classified as grand corruption. However, Grover’s colleagues and cardiologists at Prince Khalid Specialist Hospital and Research Center have advised him that the director’s behavior is reminiscent of someone asking for a bribe.

Cultural Differences

The impact of cultural differences also comes to light. Just as every country has its language, it also has a specific blend of social norms and behaviors characteristic of people living there. It is therefore vital for employees working in a foreign country to familiarize themselves with the new country’s culture. Specifically, the importance of culture usually manifests, especially when dealing with potential clients (Cote, 2020). One must demonstrate knowledge of the cultural alignment and behaviors of the host country. Familiarizing oneself with another country’s culture shows that one values the host country. Besides, it will be vital in manifesting respect and the emotional intelligence necessary to conduct international business. Grover’s case, in part, shows someone who has yet to understand Saudi culture’s social norms. He does not understand whether issuing Prince Khalid Specialist Hospital and Research Center cardiology department’s purchasing director a gift will amount to corruption or it is just a way of life.

Selecting Critical Aspects

I managed to identify the critical aspects of the case by first analyzing the 10 principles of the UN Global Compact. The UN Global Compact is a set of guidelines that international businesses commit to as they undertake their global operations. There is no regulatory body to monitor compliance, but signatories are expected to improve their operations based on these guidelines.

As far as the UN Global Compact is concerned, principle 10 bars international corporations from participating in corrupt activities (Lawrence & Beamish, 2013). The guideline is most relevant for organizations operating in developing nations that may take advantage of the weak legal system to bribe senior government officials or public officers. Notably, the supply side (giver) and demand side (bribe recipient) are considered when dealing with corruption issues. From the case, it is clear that Grover faces a corruption dilemma. He has an option of proceeding to ‘gift’ the cardiology department head and stands the chance of retaining the grand sale contract. Alternatively, he may not offer a ‘bribe’ and risk losing the purchase contract altogether.

Moreover, I considered the challenges faced by corporations operating in the global environment to come up with cultural differences as the other factor at play in Grover’s case. As reported in the case, Medical Equipment runs operations in over 80 countries and has over 200,000 employees worldwide (Lawrence & Beamish, 2013). Notably, most of Medical Equipment’s recruits for top positions come from North American America, whereas junior employees are largely drawn from Saudi and different parts of the world. Saudi hosts some of the most diverse workforce globally, implying that even those working in junior positions are not necessarily Saudi nationals. A company with such diversity will inevitably face cultural diversity issues that impact its operations.

Outcomes/Resolutions from the Case

The UN Global Compact offers three solutions as a strategy for fighting corruption and upholding the 10th UN Global Compact principle. First, the organization should introduce anti-corruption policies internally. These internal corruption policies should outline what constitutes corruption and recommend the penalties for members participating in the graft (UN Global Compact, 2019). As identified in the Medical Equipment Company case, there are anti-corruption solid policies. Medical Equipment’s anti-graft policies are so strict that one of Grover’s colleagues advises him to conduct thorough record keeping if he is to advance any ‘gift’ to Prince Khalid Specialist Hospital’s purchasing director.

Also, collective action against corruption will come in handy. Grover’s Medical Equipment should join with industry peers and other foreign companies to campaign against corruption. A concerted collective effort in fighting the vice will ensure their voice reaches the Saudi Arabian government (UN Global Compact, 2019). Consequently, the government will make the necessary legal interventions to prevent corrupt government officers from targeting foreign companies. Also, joining the “Anti-corruption call to action” campaign will go a long way to alleviate corruption.

On the other hand, dealing with cultural issues is critical. In Grover’s case, we cannot confidently tell that the purchasing director was asking for a bribe. Medical Equipment Company should conduct a cultural competence training course to ensure its non-Arabic employees understand Saudi Arabia’s cultural norms.

Reflection on Global Leadership

Grover’s experiences in Saudi Arabia raise critical lessons regarding the leadership competencies needed by global business leaders. To run a global business entity, a global leader requires specific attributes, skills, and relevant knowledge. A leader with all these competencies is poised to run successful global operations. To begin with, one’s attributes will go a long way to ensure the success of their global company. Attributes refer to one’s personality represented through observable physical and behavioral patterns and mindset. To that end, open-mindedness ranks as a top personality attribute for a global leader. With an open mind, one must be willing to consider different ideas and ways of doing things, even if they disagree (Hassanzadeh et al., 2015). With an open mind, Grover may have considered the advice he received from cardiologists on how Saudi officials behave.

Also, global leaders require specific skills to operate optimally. Such skills are required, including smartness, communication skills, and fairness. However, experience is the most critical skill among the rest (Hassanzadeh et al., 2015). That means corporations should employ experienced professionals, not new graduates, in sensitive positions. Another essential skill is international sensitivity, which is the ability to respond to the unique needs of the host community.

Finally, global leaders should possess the requisite knowledge to run global enterprises. In this category, cultural awareness of the host country ranks top. Cultural awareness will make global leaders learn and adapt quickly to the new culture (Hassanzadeh et al., 2015). Culture, in this case, is not only about the host country’s culture but also the mother country’s culture. Cultural awareness will go a long way to enable global leaders to manage the global business environment that is full of uncertainty.

References

Bahoo, S., Alon, I., & Paltrinieri, A. (2019). Corruption in international business: A review and research agenda. International Business Review, 29(4), 101660. https://doi.org/10.1016/j.ibusrev.2019.101660

Cote, C. (2020, November 24). 5 Common Challenges of International Business | HBS Online. Business Insights – Blog. https://online.hbs.edu/blog/post/challenges-of-international-business

Hassanzadeh, M., Silong, A. D., Asmuni, A., & Abd Wahat, N. W. (2015). Global Leadership Competencies. Journal of Educational and Social Research, 5(2). https://doi.org/10.5901/jesr.2015.v5n2p137

Lawrence, J. T., & Beamish, P. W. (2013). Globally responsible leadership: Managing according to the UN global compact. Sage Publications.

UN Global Compact. (2019, August 30). Principle 10 | UN Global Compact. Unglobalcompact.org. https://www.unglobalcompact.org/what-is-gc/mission/principles/principle-10

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1. Write a brief Overview/Summary of the case in your own words describing the nature and/or background information on the case. (Minimum 1/2 -1 page)

UN Global Compact

2. In your opinion, what were some Critical Aspects of the case that were identified? What were some Critical Aspects that you perceived to be very vital? (Minimum 1 page)

3. How were you able to make those Assessments of selecting the critical aspects or components for the case author/writer and yourself? (Minimum 1 page)

4. Identify and/or list some of the Outcomes, Solutions, and/or Resolutions you extrapolated from the case. (Minimum 1 page)

5. Write a Reflection on what you learned from the case about global leadership. (Minimum 1 page)