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Bmgt 510: Business Law And Ethics Question Paper
Bmgt 510: Business Law And Ethics
Course:Master Of Business Administration (Mba)
Institution: Kabarak University question papers
Exam Year:2011
KABARAK UNIVERSITY
UNIVERSITY EXAMINATIONS
2011 ACADEMIC YEAR
FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION
BMGT 510: BUSINESS LAW AND ETHICS
DAY: TUESDAY DATE: 17/04/2011
TIME: 3.00 – 6.00 P.M. STREAM: SEM 1
INSTRUCTIONS:
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 long-standing 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. Anti-corruption 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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