Monday, April 23, 2012
Post from the Road: Dallas Morning News
I am on a mutli-city road trip for the next couple of weeks so I will take my inspiration from news stories found in the local newspapers: As I am currently in North Texas I will comment on the Dallas Morning News cover story regarding the alleged bribery scandal at Walmart in their Mexican operations.
One significant challenge all multinational companies face is adapting their current business practices to foreign cultures.
The Walmart story is a perfect example of just such a challenge. Walmart (it is claimed) paid bribes mostly in 2005 to local government officials in order to accelerate the process of Walmart expansion in Mexico. Obviously bribery is an illegal business practice.
The second questionable behavior is in terms of Walmart's investigation of the in incident and the subsequent silence and evasion to regulatory agencies.
This second issue reflects the requirement for transparency in private companies and is testament to the need for the "Spirit of Law" mandate I set out in a prior post (April 12, 2012). Companies need to at a minimum attempt to play by the rules and not try to hide findings purely for the desire of avoiding poor press and subsequent drops in share holder value. It is inherent in any fairly run organization, that shareholders have access to truthful information in order to make educated decisions in terms of financial investment. Executive level management has to come to believe in this philosophy and "the Spirit of Law" provisions would be useful in ensuring appropriate behavior. In instances like this though whereby obviously illegal activities are being undertaken then the Executives need to be liable and subject to criminal punishment.
The bigger issue of course goes back to the first point regarding the bribes. In the era when Sam Walton was in charge, Walmart was generally seen as an extremely admirable and ethical organization in context of its operations. Walton would never have authorized or condoned bribery as he knew that was bad for business in the long run. Short-term profiteering once again is just testament to the selfishness and shortsightedness of many of today's CEO's. It is also representative of the win at all cost too many of today's boomer possess overall in their attitude towards life in general.
American companies specifically have to become the role model for appropriate corporate behavior globally. There can be no challenge to put ethical agenda as a primary objective of business expansion. American companies have to be the benchmark on how foreign companies conduct their operations and also how foreign governments learn to work with them. Economic expediency can never be the only purpose of an American company in a foreign land. The era of exploiting foreign nations is long over.
Finally, as more and more countries around the world have access to capitalism then there is more and more competition for investment dollars. American companies have to be the ones that lead the way in making their profits honestly and ethically in countries where they operate. American companies have to embrace the mindset that if they do business in a foreign land then they have to bring the experience and advanced business knowledge to those regions in order to expedite global development. Successful business practices by these American companies will have positive influence over foreign areas and aide to bring them into a positive, honest and free market environment. Under this model, American companies can thrive by opering new markets without having to embrace the poor business environment that preceded them.
The notion of "ethical capitalism" I put forth earlier (February 28, 2012) is the future for American companies. Brand value and revenue streams will flow to the companies that operate in the most humane and honorable way possible. Corporate valuation and investor confidence will be given not from just domestic operations but international as well.