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Bmgt 510 – Business Law And Ethics Question Paper
Bmgt 510 – Business Law And Ethics
Course:Masters Of Business Administration (Mba)
Institution: Kabarak University question papers
Exam Year:2012
1
KABARAK UNIVERSITY
MASTERS OF BUSINESS ADMINISTRATION
COURSE CODE: BMGT 510 – BUSINESS LAW AND ETHICS
SEMESTER EXAMINATION – APRIL 2012
Date: Time:
INSTRUCTIONS FOR CANDIDATES: ANSWER QUESTION ONE AND ANY THREE
QUESTION ONE
CASE STUDY
The Case of the Million-Dollar Decision
Pegasus International Inc. is a leading manufacturer of integrated circuits (chips) and
related software for such specialty markets as communications and mass storage,
as well as PC-based audio, video, and multimedia. With a focus on innovation,
Pegasus is committed to "technology leadership in the new millennium." Its longstanding
strategy has been to anticipate changes in existing and emerging growth
markets and to have hardware and software solutions ready before the market
needs them. The company has also made significant strides in wireless
communications. The systems and products of Pegasus' wireless business have been selling well in
its already existing markets in the United States, Japan, and Europe. But, like any
company, Pegasus is eager to grow the business. At a strategy session with the
Wireless Division, Pegasus CEO Tom Oswald and division managers decide to
explore the potential of expanding their business to China.Initial research indicates that China is likely to develop into a huge market for wireless because its people do not currently have this capability and the government has made spending on wireless a priority. Wireless is really the only choice for China because of the high cost of burying the communications cables necessary in wired,systems; further, in underdeveloped countries, copper wires are often stolen and
sold on the black market.
Subsequent research does raise one concern for Pegasus wireless managers. They
tell Oswald, "We have this problem. China allocates frequencies and makes
franchise decisions city by city, district by district. A 'payoff' is usually required to get
licenses."The CEO says, "A lot of companies are doing business with China right now. How do
they get around the problem?",His managers have done their homework: "We believe most other companies contract with agents to represent them in the country and to get the licenses. What
these contractors do is their own business, but apparently it works pretty well
because the CEOs of all those companies are able to sign the disclosure statement
required by law saying that they know of no instance where they bribed for their
business." "I wonder if paying someone else to do the crime is the same as our doing the
crime," Oswald says. "I'm just not very comfortable with the whole question of
payoffs. So, let me ask you, if we don't expand into China, how much business will
we lose, potentially?" His Wireless Division manager responds, "It will be huge not to do business in all the countries expecting payoffs. China alone represents easily $100 million of business
per year. It's not life and death, but it is a sizable incremental opportunity for us, not
to mention potential Japanese partners who will make significant capital investments.
All we have to do is add our already-existing technology. When you consider all that,
we have a lot to gain. What will we really lose if our local contractors are forced to
make payoffs every now and then?" Oswald wants his company to succeed, he wants to maximize shareholder value, he wants to keep his job, and he wants to model ethical leadership. He has made an effort to build a corporate culture characterized not only by aggressive R&D and
growth but also by integrity, honesty, teamwork, and respect for the individual. As a
result, the company enjoys an excellent reputation among its customers and
suppliers, employee morale is high, and ethics is a priority at the company.
Answer the following Questions:
a) What should he decide in this case? Why?
b) "I wonder if paying someone else to do the crime is the same as our doing the
crime," Oswald says. "I'm just not very comfortable with the whole question of
payoffs. So, let me ask you, if we don't expand into China, how much
business will we lose, potentially?" In the light of this question, discuss the
dilemma facing the Pegasus management team and what would be the right
approach to solving the puzzle? 25 Marks
QUESTION TWO:
With the rapid growth and expansion of the world financial and business
communities, it is increasingly important for business to have an established method
of resolving business disputes quickly, efficiently and constructively. In the light of
this statement, what is arbitration and how is it different from the normal judicial
process? How is arbitration conducted in international business dispute and what are
the advantages and disadvantages of arbitration? 15 Marks
QUESTION THREE
International anti-corruption conventions are increasingly important in today’s
globalizing environment in which states and private actors are increasingly
interconnected through travel, communications, trade and investments. Anticorruption
conventions and instruments are especially important in providing a
framework to address cross-border issues. Discuss at least three anti-corruption
conventions and how they contribute to global business ethics. 15 Marks
QUESTION FOUR
Breach of contract is a cause of action, or grounds to bring a lawsuit against another
party to the contract. What constitutes a breach of contract depends on the terms of
the contract. What are the causes of an action for breach of contract? Discuss the
four distinct categories of breach of contract. 15 Marks
QUESTION FIVE
A partnership acts as an unincorporated business operated by two or more
individuals. Once two or more individuals agree to go into business, partnership is
automatically formed. Discuss the essentials of partnership and the rights of partners
in such business arrangements. 15 Marks
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