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Janet H. Kim

Case Study #1

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Case Study #1
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Managerial Self-Readiness Analysis

Case Analysis: Nicolo Pignatelli and Gulf Italia

1. What should Pignatelli do? What would you do and why?
Pignatelli should ask his more-influential partners to put pressure on government officials to grant quickly the two needed permissions. If this doesn't work, then he should just play it straight and try to gain government authorization. Even though getting permission may take months or even years, at least in the end, if everything runs smoothly, he will be able to run a successful multi-million dollar refinery. If he were to hire a consultantant; or bribe government officials, and his plan backfired or was exposed to the public, his entire reputation and business would go down the drain. He would lose millions of dollars anyway, so he might as well wait and get permission the morally correct way. I would do the same as Pignatelli because I would think in terms of the long run, and doing the ethical thing would be more successful in the end not only for myself but shareholders and employees included.

2. Pignatelli seems to be leaning in the direction of hiring a consultant who might use part of the money for bribes. If Pignatelli does not pay the bribes directly, does this absolve him of responsibility?
If Pignatelli hires a consultant who might use part of the money for bribes, he is still not absolved from the responsibility, because he made the decision to hire the consultant knowing that the money would be going towards a bribe. Later on, the consultant may tell the media or officials that Pignatelli was the source providing the money. Pignatelli would be in a lot of trouble if his name was to be linked with bribery even if he wasn't the one directly handing/transferring the money under his name, and his entire refinery would be on the line.

3. Bribes are illegal in Italy. Even if bribes are common practice there, does this justify paying them?
Just because bribes are a common practice in Italy, it does not justify Pignatelli paying them because they are still illegal. For example, it is illegal to murder in the U.S., but it still occurs very often, that does not make murder justifiable by any means. The government can foster unethical behavior, like bribes, through the Foreign Corrupt Practices Act. Therefore, everything Pignatelli does can be monitored and followed by the government. However, as long as he's complying with the law and keeping records of everything he's doing, he shouldn't be getting in trouble.

4. Does Pignatelli have a responsibility to Italian citizens to build an environmentally friendly refinery above and beyond what the law requires? Is it appropriate for Gulf to spend this extra money and essentially take it away from shareholders?
Pignatelli doesn&'t have the responsibility to Italian citizens to build an environmentally friendly refinery above and beyond what is required by law, however, he should the efficiency perspective states that markets are competition and to win in these competitive forces, a firm must fulfill societal needs as expressed by consumer demand. If Pignatelli does not respond to consumer's demands in terms of products, price, delivery, safety, environmental impact and other issues, the may be forced out of business. Therefore if the Italian citizens want an environmentally friendly refinery, he should build it before he needs to take corrective action. Hence it is necessary for Gulf to spend this extra money, taken from the shareholders, to put it towards building a refinery that will satisfy the demands and values of the Italian citizens. According to the social responsibility perspective, corporations owe their existence not only to their shareholders, but also to society, at large. Therefore, managers should provide a reasonable return of capital to shareholders while also meeting the demands and concerns of society.

5. How would you feel if you were a lower-level employee in the company and learned that Pignatelli intended to pay bribes to get things debottlenecked. What would your ethical obligations be? Should you ignore the situation or confront Pignatelli? Should you inform your direct boss or go to the media?
If I were a lower-level employee in the company and I learned that Pignatelli intended to pay bribes to get things debottlenecked in the company, I would definitely feel a little worried but at the same time, that would mean I have a higher chance of keeping my job because the company wouldn't be shut down or losing millions of dollars. However, ethically, it is wrong for Pignatelli to do this but I don't think I would confront Pignatelli or go to the media because I had no direct responsibility in making this decision. However, knowing that it happened would make me feel guilty but in this case, the pros would outweigh the cons. I would be able to keep my job, the company would continue running, and Pignatelli would get what he was initially permitted by the government (6 million ton capacity). Also, in the end if Pignatelli were to get caught, at least as a lower-level employee, I wouldn't be the one blamed for the bribery because of the proximity level between me and Pignatelli and the concentration of effect. I wouldn' want to be the whistle-blower in this case and be responsible for the downfall of a company.

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